Wrap Text
Orion secures option to acquire and consolidate dominant ownership of a premier historic copper
mining district
Orion Minerals Limited
Incorporated in the Commonwealth of Australia
Australian Company Number 098 939 274
ASX share code: ORN
JSE share code: ORN
ISIN: AU000000ORN1
Orion secures option to acquire and consolidate dominant ownership of a premier historic copper
mining district in South Africa’s Northern Cape Province
Proposed acquisition of the Okiep Copper Complex represents a significant growth opportunity
- Exclusive option to undertake due diligence and acquire a 56.25% interest in Southern African Tantalum
Mining (Pty) Ltd (SAFTA) – alongside Industrial Development Corporation of South Africa Limited (IDC)
with 43.75%, 100% of Nababeep Copper Company (Pty) Ltd (NCC) and 100% of Bulletrap Copper
Company (Pty) Ltd (BCC).
- These entities, collectively known as the Okiep Copper Complex (OCC), hold the mineral rights to the
majority of the large historical mines of the Okiep Copper Company, which historically produced more
than 2Mt of copper metal from a significant copper-producing district in the Northern Cape Province,
~570km north of Cape Town.
- The OCC Project includes several unmined, drilled copper deposits – many with mine access declines
and shafts in place. The current owners have completed resource estimates and a scoping-level
Feasibility Study that Orion will subject to due-diligence scrutiny in coming weeks.
- Based on in its initial investigations and based on the Sellers’ estimates, Orion believes there is an
opportunity to restore mining at OCC to historical production levels when it was operated by Newmont,
establishing a second base metal production hub that could supplement production of copper and zinc
concentrates from Orion’s flagship Prieska Project, located 450km east of OCC.
- Orion intends to apply its proven expertise in permitting and developing large-scale base metal projects
to the OCC opportunity, with work to commence immediately on resource modelling to upgrade the
Sellers’ estimates using good quality drill data, mostly from the Goldfields ownership era.
- The 2019 scoping-level Feasibility Study will also be reviewed before reporting and, if appropriate,
advancing to a Bankable Feasibility Study.
- The total acquisition cost assuming the option is exercised, payable in stages at various milestones
through a combination of cash and Orion Shares (subject to any necessary Orion shareholder
approvals), amounts to an aggregate total of ~A$7.5 million of initial purchase consideration, with
possible deferred consideration of an additional ~A$8.5 million, subject to future exploration success.
- The deferred consideration is payable on successful definition of JORC compliant Mineral Resources
above cut-off grades ranging from 1% - 1.2% Cu in addition to a baseline of 8.9Mt.
Commenting on the proposed acquisition, Orion’s Managing Director and CEO, Errol Smart, said:
“This is a unique opportunity to acquire a dominant position in a historic world-class copper mining district – an
exceptional growth and diversification opportunity. We believe that the complementary combination of the
advanced Okiep Copper Complex with our flagship Prieska Copper-Zinc Project will transform Orion into a
significant base metals mining house, accelerating our journey to become a major producer in the Northern
cape region.”
Orion Minerals Limited www.orionminerals.com.au
Incorporated in the Commonwealth of Australia
Suite 617, 530 Little Collins Street, Melbourne, Victoria 3000 ASX Code: ORN
ACN: 098 939 274 JSE Code: ORN
Ordinary shares on issue: 3,414m I Options on issue: 234m ISIN: AU000000ORN
“The option, if exercised will deliver Orion a 56.25% stake in South African Tantalum Mining (Pty) Ltd, alongside
South Africa’s highly-regarded Industrial Development Corporation, which will hold 43.75%, plus, we will hold 100%
of two other companies (NCC and BCC) with adjoining prospecting rights.
“Between them, these companies control a significant majority of a major copper-producing district that has
produced more than 2 million tonnes of copper over a 150-year period to 2003. This production history was
dominated by Newmont, which produced up to 40,000 tonnes a year of copper before exiting South Africa in
1984. We believe that subsequent owners Goldfields and Metorex never really maximised the value of the assets,
and the result is a richly endowed copper complex with numerous fully-developed dormant mines and large,
shallow deposits with extensive historic (non-JORC) resource estimates.
“Given the shallow nature of many of the deposits – many of which have been extensively drilled out – we see
an outstanding opportunity to fast-track resource delineation and feasibility studies to underpin near-term
production. Our immediate focus will be to upgrade the existing SAFTA resources and Feasibility Study to JORC
status, which we anticipate will be a relatively quick and cost-effective process. If due diligence confirms the
Sellers’ projections, we are confident that this project, with a Mining Right under application, can deliver
production within 18-24 months as per the submitted mining works program.
“Should this work be successful, production from OCC would supplement Prieska’s forecast production of 22ktpa
of copper and 70ktpa of zinc. This would transform Orion into a substantial base metal mining house with two
operating hubs in Tier-1 mining districts in the Northern Cape.
“We are very excited about the synergies and opportunities that we expect to flow from this potential acquisition,
and we are looking forward to completing due diligence and moving ahead with this significant growth
opportunity.”
Orion Minerals Limited (ASX/JSE: ORN) (Orion or the Company) is pleased to announce that it has entered into
an agreement giving it exclusive rights and a clear pathway to acquire and consolidate a significant interest in
an extensive copper mining complex, the Okiep Copper Complex (OCC), located approximately 570km north
of Cape Town in the Northern Cape Province of South Africa (Figure 1).
Acquisition Overview
This potentially significant growth opportunity could become a future second base metal production hub for
Orion in the Northern Cape alongside its flagship Prieska Copper-Zinc Project (Prieska Project), located 450km
east of OCC.
Figure 1: Location of the Okiep Copper Complex (OCC) in relation to Orion's existing Areachap projects.
Figure 2: Location of the Okiep Copper Complex (OCC) Mineral rights.
The OCC companies hold the majority of large historical mines in this significant copper-producing district, which
has produced more than 2Mt of copper metal over a 150-year period to 2003. The mineral rights held by the
OCC companies include numerous existing drilled copper orebodies with decline mine access and services in
place.
SAFTA has filed a Mining Right application based on the owner’s resource estimates and feasibility studies which
have not yet been confirmed by Orion’s due diligence and are therefore not yet presented by the Company.
Most importantly, a vast database, including approximately 150,000 technical reports and data for 26,000 drill-
holes (surface and underground), is available for OCC and is expected to fast-track the estimation of mineral
resources on the property.
From 1940, Newmont mined at rates of up to 40,000tpa of copper production, averaging 1.9% Cu on a run-of-
mine basis, before exiting South Africa and selling the project to Goldfields, which in turn divested it to Metorex
in 1998.
The Company intends to apply a similar strategy to the successful approach adopted at its Prieska Project, which
saw it rapidly advance from project acquisition to establish a globally significant Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC) compliant Mineral Resource and Ore
Reserve, high-quality Bankable Feasibility Study and secure full permitting – making it one of the few
development-ready base metal assets worldwide.
Orion’s initial focus will be on SAFTA, where a Mining Right application has been submitted to the Department of
Minerals and Energy and an Environmental Approval has been applied for, based on a Mine Works Program that
will allow initial mining of three deposits within a 2km radius. The works program under application will permit the
construction of a central milling and float concentration plant and a new tailings storage facility.
The application is for underground mine access via three declines from surface. Initial mining is targeted from
already-developed stopes less than 150m below surface at Flat Mine North. These stopes were the last producing
sections of the Wheel Flat Section of Metorex’s operations. Production ceased when the central processing plant
was closed.
Figure 3: SAFTA Flat Mines application for siting of works plan.
Figure 4: SAFTA Flat Mine North Decline Portal (Previously Metorex Wheel Flat Mine).
Background of The Okiep Copper Complex (OCC)
The OCC comprises the core of a premier historical copper-producing district that produced >2Mt Cu over a
150-year period ending 2003. About 20% of recorded production was pre-1920 including production from the
Okiep Copper Company that produced approximately 2.2Mt of hand-sorted ore and concentrates at an
average grade of 14% copper1. Main sources of ore production pre-1920 were:
• Okiep Mine (907,000 tonnes at 21% copper);
• Tweefontein (at least 139,000 tonnes at 25% copper); and
• Nababeep South (816,000 tonnes at 5.5% copper).
After 1940, Newmont consolidated the mines of the district and mined at a production rate of up to 40ktpa Cu
at an average ROM head grade of 1.9% Cu, sourcing ore from multiple mines feeding to central plant and smelter
facilities. Goldfields and later Metorex focused on lower cost, massive mechanised mining, yielding diluted lower
grades. Mining since the 1960’s was characterised by the extraction of large dimension orebodies amenable to
bulk mechanised mining, with simple favourable metallurgy and predominantly very strong ground conditions.
Figure 5: Historic underground mining activities at the Nigramoep and Carolusberg mines, showing the extensive underground development and
infrastructure in place.
Much of the unmined, drilled mineralisation is adjacent to, or down-dip of historic mines with good quality
underground access via shafts and ramp declines. The district is infrastructure-rich with good roads, grid power,
and a water pipeline from Orange River.
The well-serviced and well-maintained town of Springbok lies at the heart of the mining district, with three smaller
1 - Cairncross, Bruce. “History of the Okiep copper district: Namaqualand, Northern Cape Province South Africa.” The Mineralogical Record,
vol 35, no. 4, 2004.
mining villages located around OCC. The OCC mines are also located 160km by sealed road from Vedanta’s
Black Mountain and Gamsberg mines, providing support for a well-established mining supply and services
community.
Geology and Exploration Opportunity
Copper deposits are hosted by easterly-trending mafic/ultramafic dykes, with plug like bodies forming at the
intersection with less common northeast-trending dykes of the same composition. A structural control on intrusives
in the form of “steep structures” or monoclinal folds is well established.
Copper mineralisation occurs as disseminations of chalcopyrite and bornite with local massive sulphide
concentrations within and adjoining mafic intrusive bodies. A strong correlation is recognised between high-
grade massive ore and favourable lithological target horizons, with high grade blows forming where the dykes
cut three specific lithologies:
• Springbok Quartzite and Schist;
• Mixed Zone or Wolfram Schist; and
• Ratelpoort Quartzite and Schist.
The individual orebodies mined varied in size from 25kt - 38Mt (Carolusberg Mine). Twenty-seven larger mines
within a 25km radius produced a total of 105.6Mt at 1.71% Cu between 1940-1998 (Newmont & Goldfields
production records).
Importantly, dozens of mineralised intrusive outcrops were located and drilled, but were not tested lower down
dip of the discovery outcrops and projecting down to where these should intersect the most favourable horizons.
Near-mine exploration ceased in 1993 and the district has not had the benefit of advances in modern geophysics
over the past 40 years.
The district has not had regional or ground electromagnetic surveys (EM) applied apart from a single survey over
a small area that was covered with an experimental drone survey in 2018. Orion has identified the potential to
identify the massive sulphide blows that are the historic source of the highest-grade ore in the district using EM
methods and other modern geophysics.
In addition, Orion recognises the significant opportunity to explore beneath up to 250m of more recent sediment
cover that obscures approximately 25% of the most prospective area of the district that has never been explored.
During the Newmont and later Goldfield eras, a substantial amount of exploration was undertaken and many
mineralised outcrops were intensely drilled at shallow depths, but without progressing to mine development on
all of the discoveries that were drilled. A massive data library detailing all of GoldField’s work and all the post
1940’s mining records is available in hard copy, with a lot of data also available in digital form.
Strategic Rationale
The proposed acquisition of a majority interest in the OCC provides Orion with the opportunity to develop a
second base metals production hub in the Northern Cape, alongside its existing flagship Prieska Project located
450km to the east.
Importantly, the advanced nature of the OCC, provides the opportunity to target progress to production within
the next 18-24 months.
The OCC complex will benefit from the substantial engineering, administration and logistic supply chain being
developed by Orion for Prieska and the combined assets could contribute to typical cost savings resulting from
consolidation.
Orion believes there is strong potential to recommence production at OCC in the near term and grow to similar
production levels as Newmont’s historical mining operations. The acquisition has potential to significantly increase
the Company’s total production and enhance its status as a meaningful new base metals miner.
The OCC properties also provide an exceptional opportunity for new Cu discoveries both at surface and at
depth, with the ability to apply modern exploration techniques, including EM. Importantly, the district offers many
untested and underexplored mineral outcrops and occurrences which have been subject to very little
exploration over the past 30 years.
Agreement Overview
Under the terms of the agreement, Orion is granted an exclusive right to undertake a due diligence investigation
in relation to the OCC mineral interests, which are held by Southern African Tantalum Mining (Pty) Ltd (SAFTA),
Nababeep Copper Company (Pty) Ltd (NCC) and Bulletrap Copper Company (Pty) Ltd (BCC)(Target
Entities)(Exclusivity Undertaking) and an exclusive option to acquire all of the shares in, and shareholder claims
against, SAFTA, NCC and BCC (excluding those shares in and claims against SAFTA held by the Industrial
Development Corporation of South Africa Limited (IDC)) (Option).
The key terms of the agreement are:
• Exclusivity Undertaking
o The Target Entities and their respective shareholders (excluding the IDC) (Selling Shareholders) have
granted Orion the exclusive right to carry out due diligence investigation in relation to the Target
Entities, their business, status and their respective mineral projects (Mineral Projects);
o In consideration for the Exclusivity Undertaking, Orion will make periodic cash payments to the Selling
Shareholders of up to ZAR1.8 million (~A$157k) (Exclusivity Payments) during the Exclusivity Period,
which ends on 31 July 2021. Orion is entitled at any time to withdraw and it will then not be obliged
to make any further Exclusivity Payments and the Option and the Exclusivity Undertaking will lapse;
and
o During the Exclusivity Period, Orion undertakes to spend up to ZAR5 million (~A$435k) in carrying out
the due diligence Investigation, which may include engineering and geological investigations such
as geophysical surveys, exploration drilling and resource and reserve estimation.
o Orion will engage with IDC regarding its shareholder rights enshrined in SAFTA memorandum of
incorporation in order for the transaction to proceed.
• Option to Purchase
o The Selling Shareholders have granted Orion the exclusive option to acquire all of the issued shares in
the Target Entities held by the Selling Shareholders (Sale Shares) and all of the claims which the Selling
Shareholders may have against the Target Entities (Sale Claims) (collectively, the Sale Equity);
o Orion is entitled to exercise the Option in relation to the Target Entities at any time during the Exclusivity
Period; and
o As noted above, IDC will retain an initial 43.75% interest in SAFTA.
• Option Exercise Price
o The purchase price payable by Orion to the Selling Shareholders for the sale of the Sale Equity
following Orion’s exercise of the Option (Option Exercise Price) is as follows:
? ZAR24.1 million (~A$2.1 million) cash; and
? ZAR62.0 million (~A$5.4 million) Orion fully paid ordinary shares (Shares) (Consideration Shares).
o The aggregate of the Exclusivity Payments made to the Selling Shareholders will be deducted from
the cash portion of the Option Exercise Price; and
o The issue price of the Consideration Shares will be equal to the 30-day volume weighted average
price (VWAP) of the Orion Shares traded on the Australian Securities Exchange (ASX) and the
Johannesburg Stock Exchange (JSE) in the period immediately prior to the date on which the
Suspensive Conditions have been fulfilled and/or waived.
• Suspensive Conditions to the Sale
o The Sale will be subject to the fulfilment (or, where possible, waiver) of various suspensive conditions
on or before the second anniversary of the date that Orion exercises the Option (refer Appendix 1).
• Deferred Payment
o In addition to the Option Exercise Price, the Selling Shareholders will be entitled to a conditional
deferred payment of up to ZAR98.3 million (~A$8.5 million) (Agterskot);
o The Agterskot will be calculated on the basis of the number of tonnes of Mineral Resources published
by Orion in relation the Mineral Projects in compliance with the JORC Code in addition to the initial
baseline of 8.9Mt and calculated in accordance with the table set out in Appendix 1;
o The Agterskot will be settled by way of Orion issuing Shares to each Selling Shareholder in the Target
Entity concerned (Agterskot Shares) where:
? the relevant number of Agterskot Shares will be issued twice-annually within 30 days after the
publication by Orion of each of its half-year results and its full year results, in each case in relation
to the Mineral Resources identified and reported in relation to each Mineral Project since the last
half-year or full-year results publication (as the case may be); and
? the issue price of the Agterskot Shares will be equal to the 30-day VWAP of the Orion Shares traded
on the ASX and the JSE in the period immediately prior to the publication date of the relevant
half-year or full-year results (as the case may be).
• Post-Closing Expenditure Commitment
o Orion will, within a period of 12 months after the Closing Date of each Target Entity, incur aggregate
exploration expenditure of at least ZAR12.0 million (~A$1.0 million) in exploring the Mineral Projects and
in seeking to satisfy the Mineral Resource requirements on the basis of which the Agterskot will become
payable to the Selling Shareholders.
The agreement otherwise contains such undertakings, warranties and terms and conditions as would be standard
and customary to include in transactions of this nature.
Full details regarding the agreement are included in Appendix 1.
Next Steps
Orion will immediately commence due diligence programs, with an initial focus on verifying the data quality and
estimation modelling work and if satisfactory, report Resources as baseline estimates. A large inventory of historic
non JORC compliant estimates will then be systematically remodelled and if satisfactory, will be reported to JORC
compliant resource status. The Company expects to complete an initial JORC Resource and Scoping Study for
the OCC by the end of the March 2021 Quarter.
In addition, planning has commenced for initial exploration programs, including EM surveys, to identify and
prioritise targets for initial drill testing.
Investor Conference Calls
A conference call and webcast on the proposed OCC acquisition will be held for the investment community
on Tuesday, 2 February 2021 commencing at 1pm (WST) / 4pm (AEDT). Investors, brokers, analysts and media
can join the webcast via http://redback.events/ir-160bf8.
A second conference call and webcast on the proposed OCC acquisition will also be held on Tuesday, 2
February 2021 commencing at 3pm South African time / 9pm (Australian WST). Investors, brokers, analysts and
media can register for the webcast via https://zoom.us/webinar/register/WN__VZsY5O9TLmVuTZYLnxtQA.
A presentation on the OCC opportunity will also be lodged separately today.
For and on behalf of the Board.
Errol Smart
Managing Director and CEO
2 February 2021
ENQUIRIES
Investors Media JSE Sponsor
Errol Smart – Managing Director & Nicholas Read Monique Martinez
CEO
Denis Waddell – Chairman Read Corporate, Australia Merchantec Capital
T: +61 (0) 3 8080 7170 T: +61 (0) 419 929 046 T: +27 (0) 11 325 6363
E: info@orionminerals.com.au E: nicholas@readcorporate.com.au E: monique@merchantec.co.za
Competent Person Statements
The information in this report that relates to Exploration Results has been compiled under the supervision of Mr Errol Smart, a
Competent Person who is registered with the South African Council for Natural Scientific Professionals, a ‘Recognised
Professional Organisation’ (RPO). Mr Smart is a full-time employee of Orion in the role of Managing Director. Mr Smart has
sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity
being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves. Mr Smart consents to the inclusion in the report of the matters based
on his information in the form and context in which it appears.
Disclaimer
This release may include forward-looking statements. Such forward-looking statements may include, among other things,
statements regarding targets, estimates and assumptions in respect of metal production and prices, operating costs and
results, capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates, and are or
may be based on assumptions and estimates related to future technical, economic, market, political, social and other
conditions. These forward-looking statements are based on management’s expectations and beliefs concerning future
events. Forward-looking statements inherently involve subjective judgement and analysis and are necessarily subject to risks,
uncertainties and other factors, many of which are outside the control of Orion. Actual results and developments may vary
materially from those expressed in this release. Given these uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. Orion makes no undertaking to subsequently update or revise the forward-looking
statements made in this release to reflect events or circumstances after the date of this release. All information in respect of
Exploration Results and other technical information should be read in conjunction with Competent Person Statements in this
release (where applicable). To the maximum extent permitted by law, Orion and any of its related bodies corporate and
affiliates and their officers, employees, agents, associates and advisers:
• disclaim any obligations or undertaking to release any updates or revisions to the information to reflect any change in
expectations or assumptions;
• do not make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the
information in this release, or likelihood of fulfilment of any forward-looking statement or any event or results expressed or
implied in any forward-looking statement; and
• disclaim all responsibility and liability for these forward-looking statements (including, without limitation, liability for
negligence).
Appendix 1:
The key terms of the Option are:
• Exclusivity Undertaking
o SAFTA, NCC and BCC (collectively, the Target Entities) and their respective shareholders (excluding
the IDC) (collectively, the Selling Shareholders) grant Orion the exclusive right to carry out a
comprehensive due diligence investigation (Due Diligence Investigation) in relation to the Target
Entities, their business, status and their respective mineral projects (Mineral Projects);
o The Target Entities and the Selling Shareholders also undertake that, for the duration of the Exclusivity
Period (as described below), they will engage exclusively with Orion and will not solicit, entertain or
consider any proposal or discussion, or enter into any agreement, which would be the same as or
substantially similar to the Option (or any acquisition contemplated in terms of the Option);
o In consideration for the Exclusivity Undertaking, Orion will make the following cash payments to the
Selling Shareholders:
Payment Date Exclusivity Period Exclusivity Payment
SAFTA NCC BCC
Acceptance Date until 31 Mar 2021 ZAR200,000 ZAR200,000 ZAR200,000
1 April 2021 until 30 Apr 2021 ZAR100,000 ZAR100,000 ZAR100,000
1 May 2021 until 31 May 2021 ZAR100,000 ZAR100,000 ZAR100,000
1 June 2021 until 30 Jun 2021 ZAR100,000 ZAR100,000 ZAR100,000
1 July 2021 until 31 Jul 2021 ZAR100,000 ZAR100,000 ZAR100,000
o Orion is obliged to make payment of the first Exclusivity Payment within 5 business days after the
Acceptance Date (30 January 2021), being an aggregate payment amount of ZAR600k), but
thereafter Orion will be entitled at any time to withdraw and Orion will not be obliged to make any
further Exclusivity Payments and the Option and the Exclusivity Undertaking (including the Option) will
lapse;
o During the Exclusivity Period, Orion undertakes to spend the following minimum amounts (Minimum
Due Diligence Expenditure Amount) in carrying out the Due Diligence Investigation in each Due
Diligence Period as described below. In addition to corporate, financial and legal due diligence, the
due diligence work may include engineering and geological investigations such as geophysical
surveys, exploration drilling and resource and reserve estimation:
Due Diligence Period Minimum Due Diligence Cumulative Due Diligence
Expenditure Amount Expenditure Amount
Acceptance Date to 31 March 2021 not less than ZAR500,000 ZAR500,000
1 April 2021 to 30 April 2021 ZAR1,000,000 ZAR1,500,000
1 May 2021 to 31 July 2021 ZAR3,500,000 ZAR5,000,000
o If Orion at any time elects to withdraw from the Due Diligence Investigation, it will be obliged to pay
the remaining Minimum Due Diligence Expenditure Amount (if any) in relation only to the Due
Diligence Period concerned in cash to the Selling Shareholders, but will not be obliged to incur or pay
any Due Diligence Investigation amounts in relation to any subsequent Due Diligence Period(s); and
o Orion and the Selling Shareholders will establish a technical forum through which they will engage
with each other and discuss, advise, guide and monitor the interim business and activities of the Target
Entities during the Exclusivity Period.
• Option
o The Selling Shareholders grant Orion the exclusive option to acquire all of the:
? issued shares in the Target Entities held by the Selling Shareholders (Sale Shares); and
? claims which the Selling Shareholders may have against the Target Entities (Sale Claims),
(collectively, the Sale Equity);
o The Option excludes 43.75% of the shares in SAFTA held by the IDC;
o Orion is entitled to exercise the Option in relation to the Target Entities at any time during the Exclusivity
Period, provided that Orion may only elect to exercise the Option in relation to all (and not only some)
of the Target Entities and all (and not only a portion) of the Sale Equity;
o Upon the exercise of the Option by Orion, an agreement of sale of the Sale Equity by and between
Orion (as purchaser) and the Selling Shareholders (as sellers) (Sale) will be deemed to have come into
existence; and
o Should Orion elect to exercise the Option then the Exclusivity Period will be extended until such time
as the Option has been implemented or the Suspensive Conditions have failed, Orion will not be
obliged to make any further Exclusivity Payments and/or incur any further Minimum Due Diligence
Expenditure Amounts and Orion will be entitled to nominate one of its representatives for appointment
to the Board of each of the Target Entities for the duration of the Exclusivity Period.
• Option Exercise Price
o The purchase price payable by Orion to the Selling Shareholders for the sale of the Sale Equity
following Orion’s exercise of the Option (Option Exercise Price) is as follows:
Target Entity Option Exercise Price
Cash Shares Total
SAFTA ZAR7,593,750 ZAR37,968,750 ZAR45,562,500
NCC ZAR10,500,000 ZAR10,000,000 ZAR20,500,000
BCC ZAR6,000,000 ZAR14,000,000 ZAR20,000,000
o The Option Exercise Price above will be adjusted as follows:
? The aggregate of Exclusivity Payments made to the Selling Shareholders will be deducted from
the cash portion of the Option Exercise Price;
? If a proposed IDC loan facility to SAFTA is not concluded and/or is not capable of draw down on
or prior to 31 July 2021, the Orion cash consideration portion of the Option Exercise Price for SAFTA
will be reduced; and
? On the basis that the Target Entities are being acquired on a “debt free-cash free” basis, the
aggregate value of outstanding creditors, claims against and liabilities of the Target Entities
(excluding the Sale Claims) will be deducted, first, from the cash portion of the Option Exercise
Price and, thereafter, from the Orion shares portion of the Option Exercise Price.
o The portion of the Option Exercise Price in respect of each Target Entity to be settled by way of Orion
fully paid ordinary shares (Orion Shares) will be settled by way of Orion issuing the Orion Shares to each
Selling Shareholder (Consideration Shares), where:
? the issue price of the Consideration Shares will be equal to the 30-day volume weighted average
price of the Orion Shares traded on the Australian Securities Exchange (ASX) and the
Johannesburg Stock Exchange (JSE) in the period immediately prior to the date on which the
Suspensive Conditions (described below) have been fulfilled and/or waived; and
? Orion will procure that the Consideration Shares issued to the Selling Shareholders are admitted to
trading on the JSE within 10 business days after the Closing Date.
o The Sale in relation to the Sale Equity of each Target Entity will be implemented on the 5th day after
the date on which the Suspensive Conditions in relation to that Target Entity have been fulfilled and/or
waived (each a Closing Date). Due to different Suspensive Conditions being applicable to each
Target Entity, the Closing Date for each Target Entity may occur on different dates.
• Suspensive Conditions to the Sale
o The Sale will be subject to the fulfilment (or, where possible, waiver) of various suspensive conditions
(Suspensive Conditions) on or before the second anniversary of the Option Exercise Date (Suspensive
Conditions Deadline Date):
? approval, where required or so elected by Orion, from Orion’s shareholders for the terms of the
Sale (including the issue of the Consideration Shares);
? receipt of any and all regulatory approvals as may be required for the purposes of implementing
the Sale, including (but not limited to):
• approval from the Minister of the Department of Mineral Resources and Energy in terms of
section 11 of the MPRDA; and
• approval from the Financial Surveillance Department of the South African Reserve Bank in
terms of the Exchange Control Regulations;
? confirmation to the satisfaction of Orion that all of the relevant Mineral Project data is owned and
held by or under the control of the Target Entities;
? there being no material adverse change in the business, operations, assets, compliance, position
(financial, trading or otherwise) or prospects of the Target Entities between the Option exercise
date and the Closing Date (Interim Period);
? the applications made by a Target Entity for the grant and/or renewal of its prospecting rights
and/or mining rights in relation to their respective Mineral Projects have been successful (as
evidenced by the letter of grant issued by the Department of Mineral Resources and Energy to
the Target Entity concerned); and
? agreement between the IDC and Orion regarding the principal terms of a revised memorandum
of incorporation and shareholders’ agreement in relation to SAFTA.
o The Suspensive Conditions (except any Suspensive Conditions that are not, in terms of applicable law,
capable of being waived in order to implement the Sale) may at any time prior to the Suspensive
Conditions Deadline Date be waived by Orion; and
o If Orion, in its reasonable opinion, considers that the Suspensive Conditions might be fulfilled within a
reasonable period after the expiry of the Suspensive Conditions Deadline Date then Orion may extend
the Suspensive Conditions Deadline Date by a further period not exceeding 6 months.
• Deferred Payment
o In addition to the Option Exercise Price, the Selling Shareholders will be entitled to a conditional
deferred payment (Agterskot). The Agterskot will be calculated on the basis of the number of tonnes
of Mineral Resources published by Orion in relation the Mineral Projects in compliance with the JORC
Code, estimated with reference to the relevant cut-off grade described in the table below, less the
tonnes of the baseline JORC Code Mineral Resource, as follows:
? for SAFTA, ZAR11 per tonne of JORC Code Mineral Resource in excess of the baseline Mineral
Resource for the SAFTA Mineral Project of 8,900,000 tonnes and above the relevant cut-off grade
described in the table below; and
? for BCC and NCC, ZAR20 per tonne of JORC Code Mineral Resource that is above the relevant
cut-off grade described in the table below (there being no baseline Mineral Resource applicable
to BCC and NCC),
subject to the maximum Agterskot amount in relation to each Target Entity described in the table
below.
o The Agterskot is payable for JORC compliant resource tonnes declared by Orion that are in excess of
an agreed baseline of 8.9Mt of ore; and
o The table below sets out the relevant parameters in relation to the Agterskot and the potential
maximum Agterskot value in relation to each Target Entity:
SAFTA NCC BCC TOTAL
Agterskot value ZAR38,812,500 ZAR29,500,000 ZAR30,000,000 ZAR98,312,500
Agterskot payment per tonne of ore ZAR11.00 ZAR20.00 ZAR20.00 –
Required Tonnes ore 3,528,409 1,475,000 1,500,000 6,503,409
Lower Cut Off Grade: Ore 0 - 400m below 1% 1.1% 1.1% –
surface (% Cu)
Lower Cut Off Grade: Ore more than 400m 1.2% 1.2% 1.2% –
below surface (% Cu)
o The Agterskot will be settled by way of Orion issuing Shares to each Selling Shareholder in the Target
Entity concerned (Agterskot Shares) where:
? the relevant number of Agterskot Shares will be issued twice-annually within 30 days after the
publication by Orion of each of its half-year results and its full year results, in each case in relation
to the Mineral Resources identified and reported in relation to each Mineral Project since the last
half-year or full-year results publication (as the case may be); and
? the issue price of the Agterskot Shares will be equal to the 30-day volume weighted average price
of the Orion Shares traded on the JSE and the ASX in the period immediately prior to the
publication date of the relevant half-year or full-year results (as the case may be).
• Post-Closing Expenditure Commitment
o Orion will, within a period of 12 months after the Closing Date of each Target Entity, incur exploration
expenditure of at least ZAR4,000,000 in exploring the Mineral Projects of each Target Entity (for an
aggregate exploration expenditure commitment of no less than ZAR12,000,000 for all of the Target
Entities) and in seeking to satisfy the Mineral Resource requirements on the basis of which the Agterskot
will become payable to the Selling Shareholders.
• The agreement otherwise contains such undertakings, warranties and terms and conditions as would be
standard and customary to include in transactions of this nature.
Date: 02-02-2021 08:54:00
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