Wrap Text
Quarterly Activities Report for Period Ending 30 September 2017
Orion Minerals NL
Incorporated in the Commonwealth of Australia
Australian Company Number 098 939 274
ASX share code: ORN
JSE share code: ORN
ISIN: AU000000ORN1
QUARTERLY ACTIVITIES REPORT FOR PERIOD ENDING 30 SEPTEMBER 2017
HIGHLIGHTS
Safety, environment and community engagement ongoing:
- Another LTI-free quarter achieved for the Prieska Project with 78,922 hours worked.
- Mine workings safety improved by upgrading the second means of exit from underground.
- Engagement with the local business chamber indicates a supportive community.
Mine feasibility studies progressing as scheduled:
- Lead consultants advance Phase 1 of the feasibility studies and environmental impact assessments.
- Reviews of historical data and existing conceptual plans nearing completion.
- Environmental baseline studies and monitoring commenced.
Mine Re-entry and geotechnical studies progressed:
- Inspection of underground workings to collect geotechnical information for mine planning in progress.
- Hutchings Shaft probed down to 900m, some 600m below the accumulated water level height and the
shaft has determined to be clear of obstructions. This further confirms the integrity of the existing
infrastructure for mine re-establishment.
- Orion’s intensive drill program on both the +105 Level Target (Open Pit) and Deep Sulphide Target
are on track to deliver JORC compliant Mineral Resource estimates by Q4 CY17 and Q1 CY18
respectively.
- Regional exploration is planned to recommence in the December 2017 Quarter, including a large
airborne electromagnetic survey and regional geochemistry.
- Leading mining-focused private equity group, Tembo Capital, confirms its continued support of
Orion through a $1.75M Share Placement in the Company at 2.4 cents per Share and a $6M Bridge
Loan, in addition to the previous $3M Share placement and $3M in Orion convertible notes which
it already holds.
- Orion’s shares listed on the Main Board of the Johannesburg Stock Exchange. The secondary
listing is anticipated to add further momentum to Orion’s base metal development strategy in
South Africa and provides an additional market through which the funding of the Company’s South
African projects may be facilitated. Orion’s primary listing will remain on the ASX.
- Post Quarter, commitments received for a Share placement of $5.5M at 2.4 cents per Share from
sophisticated and professional investors. Tranche 1 totals $3.47M and Tranche 2, which is subject
to shareholder approval, totals $2.03M. Shareholder approval to be sought for Orion’s Chairman,
Mr Denis Waddell, to subscribe for Shares at the same price as the Placement Shares.
“Figures" referred to throughout this announcement can be viewed on the pdf version of the announcement,
available on the Company's website, www.orionminerals.com.au.
EXPLORATION
Areachap Belt Projects (South Africa)
The Company continued an intensive drilling campaign at the Prieska Zinc-Copper (Prieska) Project. Work
intensified on drilling at the Deep Sulphide Target and +105 Level Target (Open Pit) with the aim of outlining
Mineral Resources compliant with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (2012 edition) (JORC Code). The Mineral Resources, along with other key
studies, will be used as the basis of a Bankable Feasibility Study (BFS) which the Company has commenced
and aims to complete by Q4 CY18.
Prieska Zinc-Copper Project
The Prieska Project covers unmined dip and strike extensions from a historical underground mining operation.
Mineralisation was delineated by extensive drilling by the previous owners. Orion has digitally captured,
validated and modelled all relevant project drilling data available from hard-copy sources. This work has enabled
the Company to define targets for near surface mineralisation comprising oxide, supergene and primary
sulphide material to a depth of 100m which is potentially accessible via an initial open pit (+105 Level Target
(Open Pit)) and the deeper sulphide mineralisation identified by historic drilling (Deep Sulphide Target) (Figure
2). The targets are based on 182 historical drill intersections, which can be relied on for width and depth of
mineralisation, while 88 historical drill holes provide information on the grade of mineralisation (Table 1). Since
the acquisition of Agama, 160 additional drill holes have been digitized from historic mine plans below the -
800m level. While the data has shortcomings due to loss of some historic records which prevent estimation of
Mineral Resources compliant with the JORC Code, the Company is encouraged by the infill and confirmatory
drilling results to date.
SAFETY AND ENVIRONMENT
No lost time injuries were reported during the Quarter.
Category of Work Hours Worked
Quarter Year to Date
Exploration 73,113 109,234
Mine re-entry 5,809 7,394
Total 78,922 116,628
The year to date Lost Time Injury Frequency Rate (LTIFR) for 200,000 hours worked is 1.71. The Quarterly
LTIFR for 200,000 hours worked is zero. These compare well to industry averages of 10.32 and 1.50
respectively.
Level 3 first aid training was undertaken to provide continuous onsite coverage for first response to any injuries
that may occur onsite. The second means of egress from underground was upgraded by the installation of a
Skyjack hoisting assembly and supplementary emergency communications infrastructure. Preventative safety
audits continued with an illuminations assessment conducted sitewide to ensure all workplaces were
adequately illuminated for safe working.
Community and Stakeholder Engagement
The Company continued constructive engagements with the local government and communities in preparation
for mine development. A collaboration framework is being negotiated with the Siyathemba Municipality to
facilitate cooperation on community and social investment projects. A memorandum of understanding is
expected to be entered into between the Company and the Municipality in Q4 2017. The Municipality will be
co-opted to participate in some of the social and labour planning projects that are a mandatory requirement
during mine development and operations.
During the Quarter, a meeting was held with a local business chamber to give an update on the progress of
the Prieska Project. The key topic raised by the business community was the need for collaboration in creating
opportunities for jobs and commerce locally. Further briefings will be held with the community throughout the
development of the Prieska Project, and the Company will establish an office in the town of Prieska by Q4
2017 to facilitate more communications with the local residents.
Feasibility Studies and Environmental Impact Assessment
Mining studies are being progressed in three stages, these being: Phase 1 – a review of historical information
and all existing conceptual studies; Phase 2 – option studies; Phase 3 – detailed design and completion of a
BFS.
Phase 1 work is nearing conclusion with project management protocols now established and the review of
historical data and conceptual plans encapsulated in draft reports.
Mining
Geotechnical investigations to determine inputs into open pit and underground mine designs are in progress.
Geotechnical logging of core and structural mapping of underground excavations are being conducted. High
resolution digital scanning of excavations is scheduled for Q4 2017. All gathered information is being
interactively incorporated into mine designs.
A technical review of historical data and conceptual mine studies (e.g. Figure 3) is almost complete with a draft
report being reviewed internally.
Pit optimisation models have been prepared and await preliminary results from mineral resources evaluation,
geotechnical investigations, mine design review and metallurgical scouting testwork programs, before
assessing preliminary pit dimensions and likely mine layouts.
Ore processing investigations during the Quarter have involved a progressive review of historical testwork,
scouting testwork on both hypogene and supergene rock types, metallurgical domaining of the various
exploration targets and formulating a metallurgical testwork roadmap to ensure sample representatively and
guide spacial variability of metallurgical characteristics in the targeted mining zones. Results of Phase 1 work
will be reported in Q4 2017.
Environmental
Preparation of a Social and Labour Plan (SLP) is a mandatory requirement when building or operating a mine.
Work on the SLP commenced during the Quarter, with the appointment of a specialist consultant,
engagements with both the Department of Mineral Resources and Siyathemba Municipality and drafting of an
SLP template. Several potential SLP projects were identified and are being discussed with various potential
collaborators.
Draft baseline reports on soils, ecology, heritage, and hydrology were completed. Sample preparation of
potential ore and waste rock for geochemical characterisation work was also completed.
A draft environmental design criteria, to be used to guide the feasibility studies, was completed. Baseline dust
monitoring network was established and monitoring commenced.
A water use licence application was prepared for the use of accumulated underground water for prospecting
activities. This application will be submitted to the Department of Water and Sanitation in Q4 2017.
Mine Re-entry and Geotechnical Appraisal
Orion has further improved its understanding of the existing mine workings with continued inspections of
underground workings to collect geotechnical information for mine planning and design purposes. The
Hutchings Shaft was probed down to 910m, some 600m below the accumulated water level height and the
shaft was determined to be clear of obstructions. This further confirms the integrity of the existing infrastructure
for mine re-establishment.
Deep Sulphide Target Drilling program
During the Quarter, the Company continued with an intensive drill program on the Deep Sulphide Target aiming
to extend and validate the mineralisation along strike. At the date of this report, 11 surface diamond drill rigs
were in operation. A total of 18,140m of diamond drilling and 8,456m of percussion drilling was completed to
systematically test and confirm the extensive historical drilling data. Results from Orion’s drilling aim to provide
statistical validation of historic drilling that intersected unmined mineralised zones and add infill data so that
the resultant data spacing meets the requirements for a Mineral Resource estimate.
During the Quarter, the Company announced drilling results of 11 drill holes from the Deep Sulphide Target (refer
ASX releases 17 July 2017, 27 July 2017, 6 September 2017 and 19 September 2017, Figure 4, Table 1).
Drill hole Deflection East North Depth From To Length Cu Zn Au Ag
(UTMz34S) (UTMz34S) (m) (m) (m) (m) (%) (%) (g/t) (g/t)
OCOD046 624610 6686251 1074.05 1017.00 1027.65 10.65 0.80 4.19 0.15 5.72
1031.70 1034.00 2.30 1.04 4.14 0.33 5.4
Including 1022.00 1027.65 5.65 1.16 6.19 0.20 7.5
OCOD048 Parent 624452 6686375 1179 1060.00 1082.45 22.45 1.34 5.33 0.26 10.60
Including 1060.80 1066.50 5.70 0.54 10.89 0.07 3.45
D2 From 702m down hole --- 1064.00 1066.35 2.35 0.56 5.13 0.09 3.45
parent
--- 1070.59 1089.69 19.10 1.58 3.38 0.39 15.30
OCOD052 Parent 624419 6686406 1164 1089 1091 2 0.08 1.40 0.39 5.51
1116.00 1132.15 16.15 1.72 3.30 0.26 13.72
Including 1119.55 1123.55 4.00 1.35 5.34 0.26 8.45
D2 From 785m down hole --- 1117.59 1133.51 15.92 0.95 5.55 0.22 7.5
parent
OCOD054 Parent 624576 6686282 1080 1026.20 1037.94 11.74 1.23 3.11 0.17 10
1003.43 1004.11 0.68 0.09 5.45 0.08 14.0
OCOD059 Parent 624824 6686282 1096.51
1010.89 1011.89 1.00 0.07 4.5 0.08 9.0
D1 998.00 1009.15 11.15 0.33 3.42 0.15 9.7
Including 1004.83 1009.15 4.32 0.31 5.08 0.22 15.9
1023.60 1033.40 9.80 0.72 7.96 0.13 5.5
1040.86 1045.32 4.46 0.55 5.06 0.10 8.42
1122.26 1123.30 1.04 0.20 7.93 0.08 3.0
OCOD062 Parent 625647 6685275 1230.02
1124.70 1127.60 2.90 0.74 3.51 0.21 11.3
D1 1108.45 1110.52 2.07 0.61 5.33 0.28 7.60
OCOD063 Parent 625400 6685250 1250 1045.00 1048.00 3.00 0.43 2.41 0.16 5.3
OCOD065 Parent 624520 6686338 1052.72 1022.20 1029.45 7.25 1.09 5.07 0.22 6.69
OCOD066 Parent 624349 6686476 1221.49 1111.95 1114.50 2.55 0.70 0.99 0.05 4.9
1126.15 1126.78 0.63 5.39 2.61 0.91 38.0
OCOD068 Parent 624691 6686077 1037 974.55 997.85 23.30 0.84 5.45 0.18 6.8
Including 977.65 988.00 10.35 0.70 6.92 0.18 5.95
OCOD072 Parent 625714 6685217 1303.23 1101.70 1107.05 5.35 0.72 5.14 0.22 6.28
Table 1: All drill hole intersections from the Deep Sulphide Target (refer ASX releases 6 September 2017, 17
September 2017, 5 October 2017 and 9 October 2017). All intersections weighted by length and specific gravity.
A number of holes validated intersections returned in historical drilling. OCOD048_D2 was drilled as a
deflection from OCOD048 and intersected mineralisation 21m from OCOD048 and 27m away from the historic
hole F2007 drilled from underground (Figure 5). The correlation between these holes is shown in table 2.
Hole number Distance from Intersection Zn % Cu % Au g/t Ag g/t
OCOD48 (m) length (m)
OCOD048 0 22.45 5.33 1.34 0.26 10.6
OCOD048_D2 21 19.10 3.38 1.58 0.39 19.1
F2007 27 19.39 3.56 1.38 No Assay No Assay
Table 2: Comparison of the intersection made in OCOD048_2 with adjacent holes.
Drill hole OCOD065 tested mineralisation 160m east of OCOD048_D2 and intersected 7.25m at 5.07% Zn,
1.09% Cu, 0.22g/t Au and 6.7g/t Ag (Figure 6). Again, the results compare favourably with and validate historic
drill results as shown in table 3.
Hole Distance from Intersection Zn % Cu % Au g/t Ag g/t
number OCOD065 (m) length (m)
OCOD065 0 7.25 5.07 1.09 0.22 7.25
F1712 28 8.85 4.96 0.90 No Assay No Assay
F2028 25 14.76 2.99 0.58 No Assay No Assay
Table 3: Comparison of the intersection made in OCOD065 with adjacent holes.
OCOD046 and OCOD068 intersected mineralisation in an area where historic mine plans show mineralisation
to be blocked out but not stoped prior to the mine closing in 1991. The intersection of mineralisation in this
area represents a key finding as it confirms the limited extent of previous mining. Importantly, this is in an area
of high tenor in accessed mineralisation and strong geotechnical conditions, presenting an attractive target for
potential early development
OCOD046 intersected mineralisation 20m away from historic hole F2001 (Figure 7). Both holes intersected
two zones of mineralisation separated by 9.70m and 6.97m respectively.
The correlation between these holes is shown in table 4.
Hole number Distance from Intersection Zn% Cu% Au g/t Ag g/t
OCOD46 (m) length (m)
OCOD046 0 10.65 4.19 0.80 0.15 5.7
OCOD046 0 2.30 4.14 1.04 0.33 5.4
F2001 20 8.47 4.42 0.72 No Assay No Assay
F2001 20 6.39 4.45 0.52 No Assay No Assay
Table 4: Comparison of the intersection made in OCOD046 with adjacent holes.
OCOD068 intersected mineralisation in an area with a number of historic intersections (Figure 8). The
correlation between these holes is shown in table 5. True widths are quoted for the historic underground holes,
while OCOD068 intersection is at high angle to mineralisation and is close to true width. The results of
OCOD068 fall well within the range of the historic intersections and further validate the historic data.
Hole number Distance from Intersection Zn% Cu% Au g/t Ag g/t
OCOD068 (m) length (m)
OCOD068 0 23.30 5.45 0.84 0.18 6.8
True Width (m)
D348 25 19.46 5.29 1.52 No Assay No Assay
F1991 32 9.06 6.59 1.84 No Assay No Assay
And 5.41 2.66 2.31 No Assay No Assay
And 19.37 4.22 1.13 No Assay No Assay
F1985 53 6.07 4.60 1.59 No Assay No Assay
And 2.88 3.90 1.87 No Assay No Assay
F1990 55 3.27 5.53 1.05 No Assay No Assay
And 8.66 3.58 2.11 No Assay No Assay
And 3.32 3.27 0.99 No Assay No Assay
Table 5: Comparison of the intersection made in OCOD068 with adjacent holes.
Down hole electromagnetic (EM) surveys conducted in two holes prove EM to be a successful geophysical
method to apply. Down hole EM surveys in drill holes OCOD59_D1 and OCOD_66 identified off-hole
conductors. Significantly, both conductors were drill tested and were explained by massive sulphides. The
intersection in hole OCOD066_D1, drilled as a deflection from OCOD066 intersected two zones of massive
sulphides. The main intersection consists of 14.50m of massive sulphides between 1072.20m and 1086.70m.
A second intersection of 3.15m of massive sulphides appears 4m into the footwall of the main zone. The
massive sulphides causing the conductor were intersected 100m along strike and to the north western most
historic drill intersections (Figure 9). It defines a priority target for additional drilling and proves the potential for
discovery extensions to known mineralisation, beyond the margins of historic drilling.
Drilling continues on the Deep Sulphide Target.
+105 Level Target (Open Pit) Area
The drilling program at the +105 Level Target (Open Pit) is designed to confirm, in-fill, extend the historical
drilling and target mineralisation expected to be amenable to open pit mining (Figure 10).
Resource drilling from surface on the +105 Level Target (Open Pit) is completed and Orion is currently operating 3 rigs
drilling from underground to test the supergene and primary sulphide zone immediately up-dip of historical
stoping (Figures 11 and 12).
The Company has announced drilling results of 24 drill holes from the +105 Level Target (Open Pit). Best
results at time of printing are shown in table 6.
East North Depth From To Length Cu Zn Au Ag
Drill hole
(UTMz34S) (UTMz34S) (m) (m) (m) (m) (%) (%) (g/t) (g/t)
39 23 31 8 0.31 0.92 0.03 0.5
OCOR012A 624166 6686808
36 39 3 0.50 1.36 0.02 0.6
42 15 20 5 0.92 1.56 0.04 0
OCOR013A 624199 6686776
36 42 6 0.60 0.68 0.03 0.3
OCOR014 624228 6686776 42 35 40 5 2.10 0.34 0.01 0
OCOR015 624228 6686744 108 83 86 3 0.40 1.40 0.05 2.3
108 57 79 22 1.38 10.8 0.30 9.7
OCOR016 624340 6686653
incl. 62 69 7 1.41 17.8 0.26 6.9
OCOR017 624361 6686618 77 57 69 12 4.14 1.89 0.29 9.9
incl. 63 66 3 7.40 4.34 0.08 1.3
OCOR020 624300 6686626 38 10 20 10 0.39 1.13 0.16 1.0
OCOR023 624347 6686621 85 48 68 20 2.21 8.58 0.36 12.1
incl. 63 66 17 2.01 9.98 0.37 2.3
OCOR025 624378 6686544 49 8 25 17 0.86 1.00 0.55 8.1
110 55 97 42 2.36 4.41 0.42 13.6
OCOR027 624393 6686556 incl. 55 60 5 9.28 0.10 0.65 31.6
incl. 75 81 6 0.90 12.4 0.29 6.7
OCOR028 624363 6686561 43 7 24 14 0.94 0.56 0.09 0.9
OCOR029 624394 6686534 46 5 25 20 0.53 0.65 0.10 1.5
OCOR030 624292 6686713 103 71 77 6 1.90 0.85 0.39 8.2
61 17 20 3 1.22 0.26 0.03 1.0
OCOR031 624252 6686723
46 60 14 0.30 0.71 0.01 0.6
186.14 161 163 2 0.14 1.02 0.14 7.0
OCOD033 624503 6686323
170.71 180.05 9.34 1.40 4.00 0.13 9.0
184.7 156.1 176.7 20.6 0.63 1.36 0.11 8.9
OCOD035 624477 6686355
incl. 167.9 170.5 2.6 0.49 5.20 0.11 13.9
149.25 103 105 2 3.25 0.52 0.37 20.1
112.6 142 29.4 1.52 3.06 0.36 9.0
incl. 115 123.5 8.5 2.17 4.33 0.35 11.3
OCOD036 624375 6686455
incl. 129.06 131.11 2.05 1.09 4.86 0.24 7.4
incl. 134 137.35 3.35 3.82 3.31 0.47 23.5
incl. 139 142 3 0.44 7.13 0.13 2.9
OCOD037 624406 6686417 157.29 147.53 152.75 5.22 1.42 4.95 0.38 15.6
141.21 103.8 106.5 2.70 1.20 1.02 0.21 2.7
110.98 111.90 0.92 3.04 0.06 0.14 4.0
OCOD038 624406 6686417 113.80 115.63 1.83 1.38 0.50 0.07 3.3
126.44 130.88 4.44 1.46 3.03 0.13 4.2
132.28 137.17 4.89 1.19 1.78 0.16 5.7
OCOD040 624553 6686302 149 119.48 123.60 4.12 2.83 0.35 0.01 0.5
OCOD043 624563 6686287 202.3 187.76 199.29 11.53 0.97 3.23 0.22 8.8
incl. 189.22 192.56 3.34 1.51 5.26 0.36 8.3
OCOD044 624483 6686360 94.6 59.56 65.50 5.94 0.58 1.16 0.01 0.9
OCOD047 624844 6686154 117.8 143.70 147.47 3.07 0.47 1.06 0.09 1.3
75 50.00 54.82 4.82 1.10 0.63 0.33 12.7
OCOU073 624777 6686284
56.00 59.00 3.00 5.65 1.00 0.34 17.0
Table 6: Drill hole intersections from the +105 Level Target (Open Pit) (refer ASX release 6 September 2017). All
intersections are length weighted.
Estimation of Mineral Resources compliant with the JORC Code is anticipated to be completed during
November 2017, with these resource estimates to be fed, along with inputs from other studies, including
metallurgical testwork, into feasibility studies with a target completion date of Q4 CY18.
Regional Exploration
With the completion of the Agama transaction in March 2017, the focus of the Company has been on rapidly
advancing the Prieska Project through feasibility studies towards a development decision point. The Company
maintains a substantial and highly prospective landholding in the Areachap Belt (Figure 1) and intends to
continue systematic exploration for potential satellite deposits to feed into the life of mine plan for the Prieska
Project and for new discoveries. It is noteworthy that Volcanogenic Massive Sulphide (VMS) deposits almost
always occur as “clusters” associated with volcanic centres with four such centres having been identified in
the Areachap Belt. The Company’s prospecting rights overlie the bulk of the Copperton and Boksputs Volcanic
Centres. Further details of the work programs will be released as they are designed and implemented, with
results to be released as they are received. Regional exploration is planned to recommence in the December
2017 Quarter, including a large airborne EM survey and regional geochemistry.
Marydale Gold-Copper Project
In addition to the Prieska Project, the Agama transaction gives the Company exploration rights over the
Marydale Gold-Copper Project, a virgin gold discovery of possible high sulphidation epithermal origin located
60km from the Prieska Project (Figure 1). Historical drilling following the discovery was carried out in various
orientations and, despite wide zones of mineralisation being returned at the NW Quadrant Prospect, the
majority of these are now seen to be sub optimal.
Orion drilled 6 holes on the property, including two at the NW Quadrant, which intersected broad zones of
mineralisation consistent with historical drilling and four holes testing an extensive induced polarization (IP)
anomaly which returned low levels of Cu-Au mineralisation from zones of disseminated sulphides.
The IP survey was undertaken in 3D array using high powered modern instruments. The IP survey delineated
several strong, shallow chargeability features (Figure 13) which are interpreted to be related to the gold-copper
anomalism intersected in drill holes and further work is planned to explore the project for gold-copper
mineralisation.
Kantienpan Zinc-Copper Deposit (Masiqhame)
Orion has previously conducted reverse circulation (RC) drilling, EM and magnetic surveys at the Kantienpan
Deposit. A high-powered fixed loop electromagnetic survey identified a highly conductive body below the extent
of historical drilling at the Kantienpan deposit. The KN1 conductor was modelled to be substantially larger and
3-4 times more conductive than the shallower portion of the deposit (Figure 14).
The survey also detected smaller conductors in the footwall of the current known mineralisation. Stacking of
mineralised bodies is a common occurrence in VMS deposits.
Drill testing of the conductors yielded encouraging results including 2.05m at 9.93% Zn and 1.91m at 4.35%
Zn (Figure 15, refer ASX release 29 September 2016).
Detection of the previously unknown, deeper KN1 conductor, using modern geophysical methods highlights
the potential for new discoveries and extensions of known mineralisation in the Areachap Belt. An exploration
program consisting of geological mapping, airborne EM and geochemistry to identify further drill targets within
the Masiqhame Prospecting Right is intended to intensify during late 2017.
Jacomynspan Nickel-Copper-PGE Project (Namaqua- Disawell)
During the Quarter, the Company continued to review data relating to the Namaqua – Disawell Tenure (Figure
1). A substantial amount of pre-digital data exists from exploration pre 2000 by (amongst others) Anglo
American/AAPS, Phelps Dodge, Anglovaal and Iscor (now Kumba). Richard Hornsey, an internationally
renowned nickel geologist with extensive knowledge of the area was contracted to complete a data review and
target generation exercise.
The Jacomynspan Project area contains numerous known occurrences of VHMS style zinc-copper deposits
and is highly prospective for magmatic hosted nickel-copper mineralisation similar to that seen in Proterozoic
mobile belts worldwide including the Thompsons Belt in Canada and the Albany-Fraser Belt in Western
Australia. A number of mafic-ultramafic intrusions have been recognised within the project area, with most
historical work focusing on the Jacomynspan Deposit (Figure 16).
The Jacomynspan Deposit was first identified by Anglo American Prospecting Services (AAPS) with drilling
carried out along a 4km strike length. In one portion of the deposit, AAPS drilled to a depth of 900m.
Disseminated nickel sulphide mineralisation was intersected with widths between 30 – 70m.
Orion believes a substantial exploration opportunity exists within the project area to search for higher grade,
massive and semi-massive accumulations of nickel-bearing sulphides, analogous to the Nova-Bollinger
deposit in the Fraser Range Province of Western Australia.
Orion has identified many similarities to the Fraser Range-style of mineralisation from historical data available
for the project area and the surrounding Areachap belt. This includes:
- mafic-ultramafic intrusives of late Proterozoic age;
- intruded in intercratonic/craton margin tectonic setting;
- hosted in high metamorphic grade rocks (garnet, amphibolite gneisses) within a mobile belt;
- the presence of evolving magmas yielding multi-phase intrusives, including mafic to ultramafic rocks.
Importantly, lithologies observed at the Jacomynspan Project include anorthosites, hartzburgites and
various metamorphic equivalents;
- the identification of nickel and copper-bearing sulphides with minor cobalt and PGE’s (higher
concentrations than in Fraser Range) at numerous localities;
- low-grade, disseminated nickel-copper sulphide bodies are re-intruded by cumulate textured mafics, with
net textured and massive sulphides present; and
- shallow, recent cover sequences (calcrete and soil) obscures much of the surface expression on the belt.
Orion will be utilising its experience and expertise developed in exploring for magmatic nickel-copper deposit
in the Fraser Range Province of Western Australia to reinterpret the extensive database for the Jacomynspan
Project area and rank the exploration targets. These will then be followed up with modern high-powered
geophysical tools and methods which have not previously been applied in the Areachap belt before drill testing.
Connors Arc Epithermal Gold Project (Queensland)
During the Quarter, no work was undertaken at the Connors Arc Project due to the fast tracking of drilling and
the BFS at the Prieska Project. The Company is actively seeking opportunities to progress the Connors Arc
Project through a joint venture or similar partnership.
Fraser Range - Nickel-Copper Projects (Western Australia)
Orion maintains a sizeable tenement package in the Fraser Range Province of Western Australia which
Independence Group NL (ASX: IGO) is currently earning into via a Joint Venture Agreement (JVA, refer ASX
release 10 March 2017).
During the Quarter, Orion was advised by IGO that aircore drilling is continuing on the tenements which form
the JVA, specifically in the northern portion of the package. IGO stated that the exploration aims to better map
the bedrock geology in the project area. Under the JVA, Orion will receive data from this drilling at the end of
the program and will release any results which are material to the Company at this time.
Walhalla Gold and Polymetals Project (Victoria)
During the Quarter, the Company did not carry out any exploration activity on the Walhalla Project.
Tenement Schedule
Ownership
Tenement Project Change in Quarter Joint Venture Partner
Interest
South Africa
NC30/5/1/1/2/10445PR PCM 73.33% --- ---
NC30/5/1/2/2/10244PR Marydale 73.33% --- ---
Western Australia
Ownership
Tenement Project Change in Quarter Joint Venture Partner
Interest
E28/2367 Fraser Range 30% --- Independence Group NL
E28/2378 Fraser Range 30% --- Independence Group NL
E28/2462 Fraser Range 30% --- Independence Group NL
E28/2596 Fraser Range 30% --- Independence Group NL
E39/1653 Fraser Range 35% --- Independence Group NL &
Geological Resources Pty Ltd
E39/1654 Fraser Range 10% --- Independence Group NL & NBX
Pty Ltd
E69/2379 Fraser Range 10% --- Independence Group NL &
Ponton Minerals Pty Ltd
E69/2380 Fraser Range 10% --- Independence Group NL &
Ponton Minerals Pty Ltd
E69/2707 Fraser Range 10% --- Independence Group NL &
Ponton Minerals Pty Ltd
Queensland
EPM19825 Connors Arc 100% --- ---
EPM25122 Connors Arc 100% --- ---
EPM25283 Connors Arc 100% --- ---
EPM25703 Connors Arc 100% --- ---
EPM25708 Connors Arc 100% --- ---
EPM25712 Connors Arc 100% --- ---
EPM25714 Connors Arc 100% --- ---
EPM25763 Connors Arc 100% --- ---
EPM25764 Connors Arc 100% --- ---
EPM25813 Connors Arc 100% --- ---
EPM26081 Connors Arc 100% --- ---
EPM26082 Connors Arc 100% --- ---
EPM26083 Connors Arc 100% --- ---
Victoria
MIN5487(1) Walhalla 100% --- ---
EL5340 Walhalla 100% --- ---
EL5348 Walhalla 100% --- ---
(1) MIN 5487 has been sold to Centennial Mining Ltd.
Corporate
Cash and Finance
Cash on hand at the end of the Quarter was $4.2 million.
Placement
Following Quarter end, on 30 October 2017 the Company announced that it is undertaking a capital raising of
$5.5 million, made up of $3.47 million in Tranche 1 and an additional $2.03 million in Tranche 2.
The Placement to sophisticated and professional investors will be for up to 229.167 million ordinary fully paid
shares (Shares) at an issue price of 2.4 cents per Share to raise up to $5.5 million. It is proposed that the
capital raising will occur in two stages, being:
- Tranche 1 – 144.583 million Shares using the Company’s 15% placement capacity under ASX Listing
Rule 7.1 to raise $3.47 million; and
- Tranche 2 - up to 84.583 million Shares to raise $2.03 million (subject to shareholder approval, at a
general meeting planned to be held mid-December 2017),
(together the Placement).
The Company has received commitments from investors to subscribe for the Placement, with Tranche 2 being
subject to shareholder approval.
Proceeds from the Placement will be used principally to progress the intensive resource drilling campaign at
the Company’s Prieska Zinc-Copper Project, where significant drill results have been returned in recent months
(refer ASX releases 9 October 2017, 5 October 2017, 19 September 2017 and 6 September 2017). The current
program is the next step in the process to define a maiden Mineral Resource estimate as defined in the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code)
and will be fed into the bankable feasibility study (BFS) (refer ASX release 11 July 2017). The BFS will build
on both the substantial existing historical dataset relating to mining and processing activities as well as the
new information being generated by the onsite activities. Funds will also be used to continue exploration
programs, including a large airborne electromagnetic survey and regional geochemistry on the Company’s
Northern Cape South African tenements, and for working capital purposes.
The Company will seek the required shareholder approvals (to ratify Tranche 1 and for the issue of Tranche 2
of the Placement) at a General Meeting of shareholders planned to be held mid-December 2017. In addition,
approval will also be sought at the General Meeting for Orion’s Chairman, Mr Denis Waddell to subscribe for
Shares at the same price as the Placement Shares.
Johannesburg Stock Exchange
On 18 September 2017, the secondary listing of the Company’s Shares on the main board of the Johannesburg
Stock Exchange (JSE) commenced. Orion’s secondary listing of its Shares is in the “Gold Mining” sector,
under the abbreviated name “ORIONMIN”, JSE share code “ORN” and ISIN “AU000000ORN1”. The
Company’s primary listing remains on the ASX and the Company continues to be regulated by the Australian
Securities and Investment Commission.
Bridge Loan Facility and Share Placement
On 18 August 2017, the Company announced that it had issued 73,000,000 Shares at 2.4 cents per Share to
raise $1.752 million by way of placement (Placement) to leading mining-focused private equity group Tembo
Capital Mining Fund II LP (Tembo), and that a $6.0 million bridge loan facility has been agreed with Tembo
(Bridge Loan Agreement).
Tembo’s agreement to the Placement and the Bridge Loan Agreement follows its decision to become a
cornerstone shareholder in Orion to facilitate the acquisition of the Prieska Project via its initial $3.0 million
investment in Orion by way of convertible notes issued as part of the convertible notes issued in March 2017
and the placement of 125,000,000 Shares to Tembo in June 2017, at an issue price of $0.024 per Share
raising $3.0 million.
Under the terms of Bridge Loan Agreement, Orion agreed that it will use best endeavours to undertake a
capital raising by 15 December 2017, to raise additional equity to progress the Prieska Project BFS and to
continue its South African exploration programs. Orion has also agreed that Tembo will be offered the
opportunity to participate in the sub-underwriting of any rights issue on standard market terms and conditions.
The key terms of the Bridge Loan Agreement are:
- Bridge Loan Amount - Up to $6.0 million, available in two $3.0 million tranches;
- Interest - capitalised at 12% per annum accrued daily on the amount drawn down;
- Repayment – repayable on the earlier of 15 December 2017 and the completion of a capital raising(s)
whether by way of a pro rata issue and/ or security purchase plan of Shares and/or a placement or
placements of Shares undertaken by the Company to raise such amount as is required, in Tembo’s
reasonable opinion, to progress the Prieska Project BFS, continue exploration programs at the
Company’s South African projects and for working capital (Equity Capital Raising);
- Equity Capital Raising - the Company will use its best endeavours to undertake an Equity Capital
Raising before 15 December 2017. Orion shall procure that Tembo (or its affiliate) is offered the right
to underwrite or sub-underwrite any pro rata issue and/or security purchase plan which form part of an
Equity Capital Raising, on standard market terms and conditions;
- Set-off under Entitlement Offer – repayment of the Bridge Loan will be set off against the amount to
be paid by Tembo for the issue and allotment of Shares to Tembo under the Equity Capital Raising
and/or at Tembo’s election against the underwriting amount payable by Tembo in respect of any
shortfall under any ‘pro rata issue’ which form part of an Equity Capital Raising in its capacity as
underwriter or sub-underwriter. Any surplus amount owing by Tembo after the set-off will be paid by
Tembo in accordance with the terms of the relevant Equity Capital Raising and the underwriting
arrangements (as applicable);
- Establishment fee - capitalised at 5% of the Bridge Loan facility amount; and
- Security - the Bridge Loan is unsecured.
As at the end of the Quarter, $3.0 million had been drawn down against the Bridge Loan.
Anglo American Sefa Mining Fund Loan
On 2 November 2015, Repli Trading No 27 (Pty) Ltd (Repli) (a subsidiary of the Company) and Anglo American
Sefa Mining Fund (AASMF) entered into a loan agreement for the further exploration and development of the
Prieska Project. Under the terms of the loan, AASMF shall advance R14.25 million to Repli. The key terms of
the agreement are as follows:
- Loan amount R14.25 million;
- Interest rate will be the prime lending rate in South Africa;
- The disbursement of the loan will be subject to AASMF notifying Repli that it is satisfied with the
results of the updated scoping study;
- Repayment date will be the earlier of 3 years from the date of the advance or on the date which
Repli raises any additional finance for the further development of the Prieska Project; and
- On the advancement of the loan, 29.17% of the shares held in Repli by the Agama group (a wholly
owned subsidiary of Orion), will be pledged as security to AASMF for the performance of Repli's
obligations in terms of the loan.
On 1 August 2017, Repli drew down on the available AASMF loan in full (~$1.350 million (R14.25 million)).
Earn-In Right - Jacomynspan Nickel-Copper-PGE Project (South Africa)
On 14 July 2016, the Company announced that it had entered into a binding term sheet to acquire the earn-in
rights over the Jacomynspan Project from two companies, Namaqua and Disawell, which hold partly
overlapping prospecting rights and mining right applications.
Orion’s earn-in right is via a South African-registered special-purpose vehicle (SPV), which will be established
by Orion as its vehicle for investment in the joint ventures and of which historically-disadvantaged South African
(HDSA) shall hold a minimum of 26% of the issued shares. Key terms of the transaction are set out below:
- Orion SPV has the exclusive opportunity to earn up to an 80% interest (Orion 59.2%) in the
Companies. The Companies are privately owned South African companies with 26% or greater HDSA
ownership.
- Conditions precedent to the commencement of earn in rights (Earn-In Commencement Date) include:
- Due diligence to be conducted by Orion;
- Orion providing the Companies with an initial exploration program to be carried out for the first
6 month period following the Earn-In Commencement Date (Initial Program);
- The Companies obtaining all necessary approvals for Orion to access the Jacomynspan
Project and conduct exploration activities including the Initial Program;
- Orion providing proof of financial capacity to execute the Initial Program; and
- The parties entering into a comprehensive earn-in agreement.
- Orion SPV is able to earn an initial interest of 25% (Orion 18.5%) in the Companies via staged
expenditure of US$0.5 million on the Jacomynspan Project over the 12 months from the Earn In
Commencement Date (First Earn In Right) including:
- Expenditure commitment of US$0.25 million in the first 6 months; and
- A further $0.25 million must be spent within 12 months of the Earn-In Commencement Date
(US$0.5 million in total expenditure).
- Once Orion SPV has earnt the initial 25% interest:
- The Companies will issue Orion with fully paid ordinary shares in the Companies (Shares)
which shall result in Orion SPV being the holder of 25% of the total Shares on issue
immediately following such issue of Shares;
- The Companies will record a shareholder loan account in favour of Orion SPV to the value of
the First Earn In Right expenditure incurred by Orion and shall continue to record further
expenditure by the Orion SPV as an increase in the shareholder loan account (Orion Loan);
- Orion can elect to increase its interest via further expenditure, as detailed below, or maintain
its 25% interest by contributing pro-rata to exploration; and
- Within 30 days, the parties will negotiate the terms of a shareholders agreement to govern the
terms of relationship between the shareholders.
- Following the First Earn-in Right, should Orion elect to increase its interest via further expenditure, the
Orion SPV can earn a further 25% interest (making its total interest 50% (Orion 37%)) by expending
a further US$1 million on the Jacomynspan Project (US$1.5 million total expenditure) over a further
12 months (2 years from Earn-In Commencement Date) (Second Earn In Right).
- Once Orion SPV has earnt a 50% interest:
- The Companies will issue Orion with Shares which shall result in Orion SPV being the holder
of 50% of the total Shares on issue immediately following such issue of Shares; and
- Orion can elect to increase its interest via further expenditure, as detailed below, or maintain
its 50% interest by contributing pro-rata to exploration.
- Following the Second Earn in Right, should Orion elect to increase its interest via further expenditure,
Orion SPV can earn a further 30% interest (making its total interest 80% (Orion 59.2%)) by:
- Expending a further US$0.5 million on the Jacomynspan Project (US$2 million total
expenditure) over a further 12 months (3 years from Earn In Commencement Date);
- Completing a bankable feasibility study, which has been reviewed and signed off by an
independent external expert; and
- Providing or securing project finance terms to develop a mining operation within the Project
Area as per the bankable feasibility study and which shall not result in any Shareholder
dilution.
- On the Earn-In Commencement Date, Orion will be appointed as the operator and manager of the
joint ventures and will have the right to appoint a minimum of one director to the boards of the
Companies.
- The Companies shareholders on the date of execution of the Term Sheet (Signature Date) shall be
entitled to a 2% royalty in proportion to their beneficial interest in the Companies at the Signature Date,
on net smelter returns arising from the production and sale of metals from the Jacomynspan Project’s
SAMREC resource as at the Signature Date (Royalty). At any time following the Earn-In
Commencement Date, Orion shall have the right at its sole discretion to buy out the Royalty for an
aggregate value of US$2 million.
- As noted above, all expenditure by Orion shall be advanced to the Companies as an Orion Loan. In
addition to the Orion Loan, the Companies have existing shareholder loans of ZAR78.5 million
(~US$5.4 million) as at the Signature Date (together Shareholder Loans). Following the completion
of the First Stage Earn In, the parties will negotiate the terms of a Shareholders Loan to govern the
terms of the Shareholder Loans. The Shareholder Loan agreement will contain clauses normally
contemplated by a formal agreement negotiated in good faith between the parties.
Should Orion fail to meet its earn in right commitments, then either the parties will re-negotiate the terms of
the Term Sheet or, if the parties are unable to agree those new terms, then Orion will relinquish its rights to
earn any further interest in the Companies and the Term Sheet will be at an end.
In September 2017, the Company entered into a binding earn in agreement principally on the same terms as
the binding term sheet.
Board Change
With the Company’s focus being on its South African Projects and Tembo now able to appoint a member to the
Orion Board, on 1 August 2017 Mr Bill Oliver changed his role within the Company and became a Non-Executive
Director. Mr Oliver will continue to consult to the Company on technical matters in his new role, including
supervision of the Fraser Range JVA and the Connors Arc Project.
Chamber of Mines, South Africa
During the Quarter, the Company applied for membership to the Chamber of Mines, South Africa. In August
2017 the application was successful and admission, through full membership, commenced in September 2017.
Fivemark Capital
During the Quarter, the Company appointed Fivemark Capital as its corporate advisor. As part of the fee
payable to Fivemark, the Company issued the 2,200,000 unlisted options to Fivemark on 8 September 2017.
The Options have an exercise price of 5 cents, an expiry date of 30 June 2020 and will not be quoted on the
ASX.
Annual Financial Report
The Company recorded a loss of $7.93 million after tax for the year ended 30 June 2017. The result was
affected considerably by impairment of exploration assets of $1.62 million and exploration expenditure incurred
of $3.54 million which, under the Company’s deferred exploration, evaluation and development policy, did not
qualify to be capitalised and was expensed. Net cash used in operating activities totalled $6.54 million and
net cash used in investing activities totaled $4.13 million. Net cash used in exploration and evaluation activities
was $5.12 million.
Annual General Meeting
The Annual General Meeting of shareholders of the Company will be held at RSM Australia Pty Ltd, Level 32,
2 The Esplanade, Perth, Western Australia on Wednesday, 29 November 2017 commencing at 4:00 p. m.
(Perth time).
30 October 2017
ENQUIRIES
Investors JSE Sponsor
Errol Smart – Managing Director & CEO Rick Irving
Denis Waddell – Chairman Merchantec Capital
T: +61 (0) 3 8080 7170 T: +27 (0) 11 325 6363
E: info@orionminerals.com.au E: rick@merchantec.co.za
Media
Michael Vaughan Emily Fenton
Fivemark Partners, Australia Tavistock, UK
T: +61 (0) 422 602 720 T: +44 (0) 207 920 3150
E: michael.vaughan@fivemark.com.au E: orion@tavistock.co.uk
Suite 617, 530 Little Collins Street
Melbourne, VIC, 3000
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. 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).
Date: 30/10/2017 12:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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