Wrap Text
31 December 2019 Interim Financial Report
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” or “the Company”)
31 DECEMBER 2019 INTERIM FINANCIAL REPORT
Orion Minerals Limited and its Controlled Entities
ABN: 76 098 939 274
31 December 2019 Interim Financial Report
“Figures" and “tables” 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 and at
https://senspdf.jse.co.za/documents/2020/jse/isse/orne/interim20.pdf.
This interim financial report does not include all the notes of the type normally included in
the annual financial report. Accordingly, this report is to be read in conjunction with the
annual financial report for the year ended 30 June 2019 and any public announcements
made by Orion Minerals Ltd during the interim reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
Corporate Directory
DIRECTORS SHARE REGISTER
Mr Denis Waddell (Non-Executive Chairman) Link Market Services Limited
Mr Errol Smart (Managing Director/CEO) QV1, Level 2, 250 St Georges Terrace
Mr Thomas Borman (Non-Executive Director) Perth, Western Australia 6000
Mr Godfrey Gomwe (Non-Executive Director) Telephone: +61 1300 306 089
Mr Alexander Haller (Non-Executive Director)
Mr Mark Palmer (Non-Executive Director)
AUDITOR
COMPANY SECRETARY BDO Audit Pty Ltd
Level 18
Mr Martin Bouwmeester Tower 4, 727 Collins Street
Melbourne, Victoria 3008
REGISTERED OFFICE
STOCK EXCHANGE LISTING
Suite 617
530 Little Collins Street Primary listing:
Melbourne, Victoria, 3000 Australian Securities Exchange (ASX)
ASX Code: ORN
POSTAL ADDRESS Secondary listing:
JSE Limited (JSE)
Po Box 260 JSE Code: ORN
Collins Street West
Melbourne, Victoria 8007
Telephone: +61 (0)3 8080 7170 JSE SPONSOR
Merchantec Capital
WEBSITE 13th Floor, Illovo Point
68 Melville Road
www.orionminerals.com.au Illovo, Sandton, 2196
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Directors’ Report
The directors present their report together with the consolidated interim financial report for the
half year ended 31 December 2019 and the independent auditor’s review report thereon.
DIRECTORS
The names of Orion Minerals Ltd Directors at any time during or since the end of the half year
are:
Non-executive
Mr Denis Waddell Non-executive Chairman Appointed 27 February 2009
Mr Thomas Borman Non-executive Director Appointed 17 April 2019
Mr Godfrey Gomwe Non-executive Director Appointed 17 April 2019
Mr Alexander Haller Non-executive Director Appointed 27 February 2009
Mr Mark Palmer Non-executive Director Appointed 31 January 2018
Executive
Mr Errol Smart Managing Director Appointed 26 November 2012
CORPORATE STRUCTURE
Orion Minerals Ltd (Orion or Company) is a public company limited by shares, that is
incorporated and domiciled in Australia. The Company has prepared a consolidated financial
report incorporating the entities that it controlled during the financial year, including those newly
acquired (referred to as the Group).
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The principal activity of the Group during the half year was exploration, evaluation and
development of base metal, gold and platinum-group element projects in South Africa
(Areachap Belt, Northern Cape). The Company also holds interests in the Fraser Range Nickel-
Copper and Gold Project in Western Australia and the Walhalla Polymetals Project in Victoria.
There were no significant changes in the nature of the Group’s principal activities during the half
year.
OPERATING RESULTS
The Group recorded a loss for the half year of $5.16M (31 December 2018: loss of $4.76M). The
result is driven primarily by exploration expenditure incurred of $1.06M which, under the Group’s
deferred exploration, evaluation and development policy, did not qualify to be capitalised and
was expensed and finance expenses of $0.76M, principally related to convertible loan interest
of $0.22M, Anglo American sefa Fund (AASMF) loan interest $0.10M and convertible note interest
of $0.17M.
Net cash used in investing activities for the half year totalled $3.06M (31 December 2018: $4.87M)
and included payments for exploration and evaluation investing activities of $3.10M (31
December 2018: $7.34M). Cash on hand as at 31 December 2019 was $5.22M (30 June 2019:
$1.39M). In the half year ended 31 December 2019, the Group focused strongly on exploration
within its Areachap Belt projects in South Africa. Expenditure of $3.58M in exploration activities
was incurred by the Group during the half year ended 31 December 2019 (31 December 2018:
$8.66M).
The basic loss per share for the Group for the half year was 0.20 cents and diluted loss per share
for the Group for the half year was 0.20 cents (31 December 2018: basic loss per share 0.29 cents
and diluted loss per share 0.29 cents).
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Directors’ Report (continued)
REVIEW OF OPERATIONS
During the half year, Orion continued work on its highly prospective South African projects,
including focusing on optimisation works, following the completion of the Prieska Copper-Zinc
Project (Prieska Project) Bankable Feasibility Study (BFS) in June 2019 (refer ASX release 26 June
2019) and exploration activity including soil sampling at the near-mine prospects and regional
project, Masiqhame. In the Fraser Range (Western Australia), Orion’s joint venture partner, IGO
Limited (ASX: IGO), undertook diamond drilling on nickel-copper sulphide targets identified from
geophysical surveys.
The Company strives to achieve a sustainable balance between intense operational effort and
maintaining a strong focus on safety, environment and community.
Health and Safety, Environmental Management and Community Engagement
Health and Safety
One lost-time injury was reported during the half year period. The hours worked for the half year
are shown below:
Table 1: Hours worked at the Areachap Projects during the 6 months ended 31 December 2019 (South Africa).
Category of work 6 months to December 2019 (hours)
Exploration 27,254
Mine re-entry 6,310
Contractors 1,758
Total 35,322
The lost-time injury frequency Rate (LTIFR) per 200,000 hours worked was 1.78 for the 2019
calendar year.
Environmental Management
Work continued during the reporting period, on securing the approvals required in order to
undertake mining operations within the Square Kilometre Array Radio Telescope Project (SKA)
area, where the Prieska Project is located.
The Electromagnetic Capability plan (EMC), a key requirement for the requisite approvals to be
granted, was approved by South African Astronomy Management Authority during the half
year. The EMC Committee that was formed during the half year is progressing with the licencing
workstream.
The EMC Committee is focusing its work on submitting permitting applications for the existing
electronic equipment on site, before the end of June 2020 in line with Government Gazetted
instructions. Subsequent to this, permitting of the planned equipment included in the proposed
Prieska Project layout, will be undertaken in order to have these permits in place prior to
completion of mine development and the commencement of mining operations.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Community and Stakeholder Engagement
Two meetings of the Orion Siyathemba Stakeholder Engagement Forum (OSSEF) were held at
the Prieska Project site in Copperton during the reporting period. The second meeting was
preceded by a familiarisation tour for the OSSEF members of the surface and underground
infrastructure. The OSSEF is the platform for representative community interest groups to keep
them appraised of developments at the Prieska Project.
The Spatial Planning and Land Use Management Act (SPLUMA) application process for the
proposed residential development in Prieska continued, with the engagement of an
environmental consultancy group to undertake the environmental impact assessment.
In anticipation of the upcoming construction and operational phases of the Prieska Project, the
Company collaborated with the Department of Economic Development and Tourism (DEDAT)
in Kimberley and the Northern Cape Rural TVET College, Centre for Enterprise Rapid Incubation
(CFE) on a variety of development initiatives aimed to support and promote Small Medium and
Micro Enterprises (SMMEs) in the Siyathemba Municipality.
The Company has established offices at the local and neighbouring communities Council
Offices to the Prieska Project, as a place to provide community liaison services and a central
point of information and Company news as the mine development and construction phase
progresses.
Orion, together with three other companies operating in the Siyathemba community lead a joint
CSI Forum and held the first annual community sports day. Attracting nearly 600 residents from
the Siyathemba community, the Sports Day was held at the Prieska High School Grounds, with
netball played at the Prieska Primary Netball Courts. Sixteen teams participated in soccer and
netball matches on the day.
The Company also continued to offer the free, introductory, part-time short familiarisation
courses, covering the functions of underground mining, machine operation, trade and
engineering skills, technical services, administration and finance. During the reporting period,
participation in the week long courses offered was successfully completed by 84 high school
graduates. This brings the total number of successful course completions by Siyathemba and
Vanwyksvlei school leavers in 2019 to over 350.
AREACHAP BELT PROJECTS (SOUTH AFRICA)
Prieska Copper-Zinc Project
Project Overview
The Prieska Project continues to be the focus of the Company’s activities and is now at an
advanced stage, with a maiden Ore Reserve estimate and a BFS completed (refer ASX release
26 June 2019). Post-BFS activities undertaken during the reporting period, included a focus on
optimisation studies and preparations for mine construction and securing project funding, with
the intention to have the requisite licences to operate the mine in place by end of Q1 CY2020,
so that project construction can commence during 2020, subject to project funding.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Prieska Project Bankable Feasibility Study
Value engineering and optimisation studies being undertaken since the completion of the BFS
are delivering positive results, with key studies in progress including:
• Whittle Enterprise Optimisation;
• Value Engineering on the process plant; and
• Water treatment trials.
Whittle Enterprise Optimisation
Whittle Consulting (Pty) Limited (Whittle) were engaged to undertake mine-to-market
optimisation of the business plan that was formulated as part of the BFS, (refer ASX release 30
July 2019). This process is examining the Prieska Project’s entire business case with special focus
on underground mining and the ore processing plant activities. Fundamental parameters such
as cut-off grades, mining sequence, mining rates, targeted metal recoveries, mill throughput
rates, feed blends, product specifications and variances in metal prices are all considered as
one integrated system to derive a series of optimal business scenarios.
As the optimisation workstream progresses, many options are being developed and more time
is being spent on this workstream which is expected to be completed before the end of January
2020. Thereafter, selected optimisations will be incorporated into updated operating plans to
determine a final business case, which will support the optimised BFS Report, targeted for
completion in early Q2 CY2020.
Value Engineering on the process plant
During the reporting period, value engineering of the ore processing design has been in progress,
(refer ASX release 30 July 2019). The value engineering exercise is:
• assessing semi-autogenous grinding (SAG) in the milling section as an alternative to ball
milling;
• investigating improved plant layouts;
• rationalising the sizes, placement and uses of various plant buildings; and
• re-estimating efficient surge capacity allowances in line with the proposed refinements.
The use of SAG milling, rather than conventional ball milling as presently incorporated into the
BFS, will simplify plant operability and significantly reduce upfront capital expenditure. The use
of SAG milling removes the need for multi-stage crushing and screening of the rock ahead of
milling (refer to Figure 1).
Figure 1: Current feasibility study ore processing design showing multi-stage crushing and screening section, removable if
using SAG milling.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
The plant and equipment comprising the current multi-stage crushing section of the plant
contributes approximately $11M to the total plant capital cost of $109M (refer ASX release 26
June 2019). This represents a significant target for reducing capital expenditure without
compromising overall plant recovery performance while the streamlined layout increases the
plant’s mechanical availability and reduces maintenance effort.
Approximately 400kg of samples suitable for SAG milling test work were collected from
underground, (Table 2).
Table 2: Summary of samples collected.
Description Ore type Quantity Source
Sample 1A Massive 100 kg 178m and 259m Levels
Sample 1B Massive 100 kg 178m and 259m Levels
Sample 2A Disseminated 100 kg 178m and 259m Levels
Sample 2B Disseminated 100 kg 178m and 259m Levels
JKTech Drop-Weight (JKDW) test and the SMC tests were used to provide the ore specific
parameters for use in the SAG mill simulations and evaluation. GeMet Geo-Metallurgical Services
in Johannesburg, South Africa conducted the test work during September 2019. Results were
then sent to JKTech in Queensland, Australia for the JKDW test analyses and to SMCT for SMC
test analyses.
The results confirmed that the Prieska Project ore can be classified as soft and is amenable to
milling via SAG milling.
This workstream was completed during the reporting period and a semi-autogenous grinding
SAG milling option has been selected to replace the previous ball mill design. As expected, this
has reduced both capital expenditure and forecast operating costs. A number of changes have
been made to the plant layout which has reduced the plant footprint area, also contributing to
a lower capital cost. The overall capital saving is estimated to be approximately $15M
(ZAR150M), while the operating cost saving is in the region of $0.80 (ZAR8.00) per tonne treated.
Water Treatment Trials
Trials are nearing completion on water treatment which is expected to supplement forced
evaporation from the shaft de-watering process. Based on the trials completed to date, one last
stage of review is being tested that is expected to further improve the overall reverse osmosis
process. This work is expected to be completed in early Q1 CY2020. The results will contribute to
an optimised water handling strategy to deal with the water pumped from the underground
workings.
Underground Mining Contract
In September 2019, Orion and Byrnecut Offshore (Proprietary) Limited (BOPL) concluded a
Memorandum of Agreement envisaging an alliancing agreement for underground mine
development and production at the Prieska Project. BOPL is involved in mining contracting work
internationally and has previously operated in South Africa.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Progress is being made with BOPL towards finalising this alliance agreement. With the expected
successful completion of the alliance agreement negotiations, the related metrics will be
incorporated into the revised Prieska Project business case and optimised BFS Report, as referred
to above.
It is also envisaged that BOPL will supply and maintain the mining fleet and bring its experience
in mining training and upskilling of local employees as part of its operating model.
Process Plant Operations
During the reporting period, a Memorandum of Understanding was concluded with Minerals
Operations Executive (Pty) Ltd (Minopex), a process plant contracting company based in South
Africa, that has operated 46 plants globally. Orion is aiming to appoint Minopex as the process
plant contractor. If appointed, Minopex will bring trained labour and management with the
associated operating experience and procedures to the Prieska Project, enabling a rapid
production ramp-up.
Minopex will then continue running the plant, leveraging off its group level technical skills and
utilising its bulk purchasing power to source the most competitive pricing for the plant’s operating
consumables. The details of the engagement agreement are currently being negotiated, with
the Company aiming to include the financial terms of the engagement agreement into the
optimised BFS Report.
Mining Right Applications
The Mining Right was granted on 23 August 2019 to Repli, for an initial term of 24 years, with
notarial execution completed on 11 December 2019. The Repli Water Use Licence approval is
being processed by the Department of Water and Sanitation and is expected to be granted
before the end of Q1 CY2020.
The granting of the Vardocube (Pty) Ltd (Vardocube) Environmental Authorisation was received
in March 2020 (refer ASX release 9 March 2020), while the Mining Right is anticipated to be
granted during Q2 CY2020. No Water Use Licence is required for the Vardocube applications.
Infrastructure
Power Supply – The Eskom approval letter for the 15MVA temporary power from the Cuprum sub-
station was received by the Company during the December Quarter. This level of power supply
will cover the construction phase of the Prieska Project which will now proceed into detailed
electrical design. As previously reported, at the last Eskom Technical Evaluation meeting, the
self-build upgrade to the Cuprum sub-station was approved for the 40MVA power required for
the operational phase of the Prieska Project. Orion is waiting on the formal approval letter from
Eskom.
Water Supply – The water use agreement was previously submitted to the Siyathemba
Municipality and approved in principle. Orion is awaiting the final agreed water tariff from the
Municipality which is expected during Q1 CY2020.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Deep Sulphide Target drilling
During the half year period, a re-assessment of the Inferred Mineral Resources, estimated to be
10.2Mt at 1.14% Cu and 4.08% Zn, (and thus making up 36% of the estimated combined Indicated
and Inferred Deep Sulphide Resource of 28.7Mt at 1.16%Cu and 3.77%Zn)1, was undertaken to
determine the most efficient way to upgrade these resources to an Indicated Mineral Resource
level of confidence and a drilling program was formulated.
The Company’s focus remains to determine the most efficient way to upgrade these resources
to an Indicated Mineral Resource level of confidence. The Indicated Mineral Resource (18.5Mt
at 1.17%Cu and 3.60% Zn) makes up 64% of the total resource in the current mine plan (Figure 2).
Figure 2: Plan of the Deep Sulphide Mineral Resource showing planned mine outlined in blue and the Inferred Resources in
pink.
A drill plan, designed to convert the Inferred Deep Sulphide Mineral Resources included in the
mine plan to Indicated Mineral Resources was formulated in late October 2019. The drill plan
includes limited drilling on strike extensions on the south eastern limits of the current Mineral
Resource. Drilling both from surface and from underground platforms was considered, with the
following were taken into consideration:
1. the cost of drilling from surface compared with the cost of drilling from underground;
2. the Company’s intention to undertake all underground drilling from existing drives or
drives that are in the current mine plan;
1Mineral Resource reported in ASX release of 15 January 2019: “Prieska Total Resource Exceeds 30Mt @ 3.7% Zn and 1.2%
Cu.
Following Updated Open Pit Resource” available to the public on www.orionminerals.com.au/investors/market-news.
Competent Person: Orion’s Mineral Resource: Mr. Sean Duggan. Orion confirms it is not aware of any new information
or data that materially affects the information included above. For the Mineral Resources, the company confirms that
all material assumptions and technical parameters underpinning the estimates in the ASX release of 15 January 2019
continue to apply and have not materially changed. Orion confirms that the form and context in which the Competent
Person’s findings are presented here have not materially changed.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
3. areas enclosed by stopes planned in Indicated Resource areas will be covered by
grade control drilling once mining starts. These areas were excluded from the drill plan;
and
4. areas adding the lowest cost per tonne to upgrade from Inferred to Indicated Mineral
Resource were given priority.
The results show that drilling from surface (aiming to convert 2.6Mt from an Inferred to Indicated
Mineral Resource level) would cost three times that of drilling from underground, therefore
rendering the cost of a surface program impractical. The underground drill program will consist
of 14,200m to be drilled in 41 diamond drill holes. The estimated cost (including drilling and
assays) will be in the order of $2.2M (ZAR22M). Exploration drilling will focus in the south eastern
section of the mine while the north western section will be covered entirely in the grade control
drill program (Figure 3).
Figure 3: Plan-view showing planned drill holes and Orion drill results around the edges of the Indicated Resource in the
south-eastern section of the Deep Sulphide Resource.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Near Mine Projects
The near-mine projects are those projects within prospecting rights held by Repli, Repli (Doonies
Pan), Vardocube and Bartotrax (Pty) Limited (Bartotrax).
Volcanic Massive Sulphide (VMS) deposits worldwide tend to occur in clusters and, apart from
the giant Prieska Deposit, five smaller deposits occur on the near-mine project areas. These
include Annex, explored by Anglovaal between 1969 and 1981; three deposits on Doonies Pan
(Kielder) explored by Newmont South Africa between 1976 and 1979 and referred to as the PK1,
PK3 and PK6 Deposits and the recently discovered Ayoba mineralisation.
Figure 4: Surface plan showing the prospecting rights over and adjacent to the Prieska Project, and the location of the Annex
Deposit, Kielder (PK1, PK3 and PK6) and Ayoba Prospect.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
During the reporting period, soil sampling and geological mapping was completed over the
airborne electro magnetic or SkyTEMTM (AEM) anomalies identified for follow up work (refer ASX
release 25 February 2019).
Soil Sampling
During the period, 6,064 soil samples were collected (Figure 5). The samples were screened to
80 micron and analysed using a handheld XRF analyser. Sample results will be reported once
received from the lab and reviewed by the Company. The results will be incorporated in the
prioritisation of the AEM anomalies prior to ground time domain electromagnetic surveys and
diamond drilling. All of the AEM anomalies identified for follow-up have now been covered by
soil sampling and geological mapping.
In addition, regional sampling, designed to cover the entire Prospecting Rights areas, is in
progress.
Figure 5: Aeromagnetic maps covering the Near Mine Prospecting Rights with soil sample surveys completed.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Regional Exploration
Overview of Regional Activity
The Company maintains a substantial and prospective land holding in the Areachap Belt (Figure
6). The Areachap Belt is analogous to other Proterozoic mobile belts hosting major VMS and
magmatic Ni-Cu-Co-PGE deposits.
VMS deposits almost always occur in clusters or “districts” associated with volcanic spreading
centres, with four such centres having been identified in the Areachap Belt. In addition to the
Near Mine Project, the Company is also prospecting for VMS deposits on the Masiqhame
Prospecting Right (Figure 6). The Kantienpan and Boksputs Zinc-Copper Deposits are the two
most prominent known VMS deposits on the Masiqhame Prospecting Right.
Similarly, world-class nickel deposits tend to also occur in clusters both on prospect and regional
scale. Within these intrusive centres, a small number of the intrusions tend to host the best
mineralisation depending upon the intrusion magma-flow dynamics and timing of magmatic
sulphide immiscibility and transport. Several mafic intrusive bodies with nickel and associated
metals are known on the Namaqua Disawell Prospecting Rights (Figure 6).
Figure 6: Regional geology map of the Areachap Belt showing prospecting rights held by, or currently under option to, the
Company, and noted mineral occurrences as per published data from South African Council for Geoscience.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Namaqua Disawell Project Area
Soil sampling covering the area between Rok Optel and Area 4 was completed during the
Quarter bringing the total number of soil samples collected to date on the Disawell Prospecting
Right to 1670 samples (Figure 7).
Figure 7: Simplified geology map of the Namaqua – Disawell Prospecting Rights showing the localities of known Ni-Cu
prospects and soil sampling conducted during the reporting period.
Masiqhame Project
Contiguous to the north of the Namaqua-Disawell Project, this project is defined in terms of the
Masiqhame tenement holding and includes the Kantienpan and Boksputs Zn-Cu VMS deposits
(Figure 6).
With its known VMS deposits, numerous Cu-Zn mineral occurrences and regional geological
setting, the area offers potential for new VMS Cu-Zn and magmatic Ni-sulphide discoveries. It is
common for VMS districts to have small Cu-Zn deposits clustering close to a large deposit where
on the Masiqhame Prospecting Right, the larger deposit is still to be discovered.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Soil sampling and mapping were undertaken during the reporting period. A total of 4,659 soil
samples were collected over magnetic anomalies underlying the Koegrabe Cu-prospect (Figure
8). Results from the samples taken will be reported on once received from the lab and reviewed
by the Company.
Figure 8: Aeromagnetic map of the Masiqhame Prospecting Right showing detailed soil sample grids completed.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Marydale Gold-Copper Project
In addition to the Prieska Project, the Company has exploration rights over the Marydale Gold-
Copper Project located 60km north of the Prieska Project.
Work has commenced on evaluation potential for small scale or exploratory gold mining on the
Witkop gold project. The work is being undertaken in collaboration with Orion’s BEE Partner Black
Star Pty Ltd and Gariep Mining (Gariep), their subsidiary, who have extensive small scale mining
experience and own an extensive surface and underground mining fleet of equipment. Orion
is evaluating a potential joint venture mining opportunity with Gariep for the project.
Work during the half year focussed on geological modelling of mineralisation in the area
historically drilled by Anglo American and subsequently followed up with trenching and drilling
by Orion (refer ASX release 17 August 2016).
Samples of drill core were also selected and submitted for metallurgical test work.
FRASER RANGE - GOLD-NICKEL-COPPER PROJECT (WESTERN AUSTRALIA)
Orion maintains a sizeable tenement package in the Fraser Range Province of Western Australia
which IGO Limited (ASX: IGO) is currently earning into via a Joint Venture Agreement (refer ASX
release 10 March 2017).
Drilling completed towards the end of 2019 tested several moving-loop electromagnetic (MLEM)
conductors, anomalous basement geochemical anomalies and magnetic features on
magmatic nickel-copper targets, as well as a Volcanogenic Massive Sulphide (VMS) copper-
zinc target at Pike (refer ASX release 31 October 2019).
Orion is very encouraged by the results received from this drilling, with all five diamond holes
completed intersecting mafic-ultramafic intrusive bodies (refer ASX release 3 February 2020).
Orion considers the presence of anastomosing sulphide veins, sulphide-bearing graphite-rich
horizons and meta-carbonates as intersected in the host rocks to the mafic-ultramafic bodies
to be the ideal setting for the discovery of magmatic massive nickel-copper sulphide deposits.
IGO plans to drill a further 2,560m in six holes, including extending hole 19AFDD1008 to test a
strong off-hole conductor detected below the current end-of-hole depth.
Holes are also planned to test further EM targets at the North West Passage, Hook, Pike Eye and
Pike (Figure 9). At Garfish, a gravity anomaly will be drilled to test for a mafic – ultramafic
intrusive.
During the reporting period, Legend Mining (ASX:LEG) reported the discovery of a zone of
massive sulphide nickel-copper mineralisation, named Area D, which is located 16km south west
of the Pike Prospect (Figure 9). The Area D intrusive is reported to be hosted by graphitic
sediments similar to those reported at Pike & Hook.
Under the JVA, IGO is responsible for all exploration on the tenements and provides regular
updates to Orion of its activities and results arising from them.
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Directors’ Report (continued)
REVIEW OF OPERATIONS (continued)
Figure 9: Aeromagnetic map showing the location of the Pike and Hook Prospects in the Frazer Range 16km northeast of
Legend Mining’s Area D nickel discovery.
WALHALLA GOLD & POLYMETALS PROJECT (VICTORIA)
No field or exploration work was carried out on the Walhalla Project during the during the half
year.
The Company continued to progress its two exploration licence applications over prospective
areas of Walhalla and expects these applications to be granted in Q1 CY2020.
The Company relinquished mining licence 5487 during the half year and following a moratorium
period, Earth Resources Regulation granted an exemption over the area which remains in place
at period end. The Company is well advanced in re-applying for a mineral licence over the
area of the previous mining licence and aims to maintain tenure over this area and to protect
the Company’s gold mineral resources.
CORPORATE
Capital Raising
Placement - $7.7M
On 24 October 2019, the Company announced that it received commitments from investors to
raise approximately $5.5M by way of placement of fully paid ordinary shares (Shares) at $0.025
per Share. Following the announcement, the Company received additional commitments from
investors, increasing the amount raised by the Company to $7.7M, by way of the placement of
308.7M Shares at $0.025 per Share (Placement).
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Directors’ Report (continued)
As part of the Placement Tembo Capital Mining Fund II LP (Tembo Capital) confirmed its
continued support of Orion, through subscribing for $2.5M in the Placement.
On 1 November 2019 and 5 November 2019, the Company issued a total of 254.8M Shares in the
Company at $0.025 per Share, to raise $6.4M, following the receipt of funds from investors for
Placement commitments and on 22 November 2019, the Company issued 53.9M Shares in the
Company at $0.025 per Share, to raise $1.3M, finalising the Placement.
Share Purchase Plan
In addition to the Placement announced on 24 October 2019, the Company also announced a
share purchase plan (SPP) providing shareholders an opportunity to increase their shareholding
in the Company as it continues to advance its Prieska Project development opportunity. The
SPP offered eligible shareholders the opportunity to participate in the Company's capital raising
on substantially the same terms as the Company's Placement (issue price was $0.025 per Share)
(refer above).
The SPP opened on 30 October 2019 and closed on 6 December 2019 and attracted strong
support from eligible shareholders, with applications totalling $1.75M received. On 12 December
2019, the Company issued 70.05M Shares subscribed for under the SPP.
BEE ownership re-structure and share issue
In April 2019, Orion entered into an Memorandum of Understanding (MoU) with each of the
existing BEE participants (being the Mosiapoa Family Trust (Mosiapoa), Power Matla (Pty) Ltd
(Power Matla) and African Exploration and Mining Finance Corporation (SOC) Ltd (AEMFC) in its
South African subsidiaries (being Repli, Vardocube, Bartotrax and Rich Rewards Trading 437 (Pty)
Limited (Rich Rewards). In terms of those MoU, the existing BEE participants agreed to exchange
their shares in Orion’s South African subsidiaries for approximately 134M JSE-listed Orion Shares.
At the same time, Orion entered into a Memorandum of Agreement with two BEE entrepreneurs,
Black Star Minerals (Pty) Ltd (Black Star) and Kolobe Nala Investment Company (Pty) Ltd (KNI),
in terms of which they agreed to acquire a 20% interest in Repli, as well as a 20% interest in Orion’s
ownership interest in its Jacomynspan Project.
In July 2019, Orion concluded a Revised Memorandum of Agreement with Black Star, KNI and
Safika Resources (Pty) Ltd (Safika) in terms of which Safika joined Black Star and KNI as part of
the BEE consortium which would acquire the 20% interest in Repli and the 20% interest in Orion’s
ownership interest in its Jacomynspan Project. The BEE restructure was finalised in November
2019 following the issue of shares in September 2019 and November 2019.
In a simultaneous transaction, Prieska Resources, acquired an effective 20% interest in Repli for
a purchase consideration of ZAR142.78M (~$14.45M), with this acquisition being vendor financed
by Orion. Prieska Resources is a BEE company whose shares are held by Black Star (17.31%), KNI
(37.97%) and Safika (44.72%).
The vendor finance advanced by Orion to Prieska Resources comprises two parts, namely:
• a secured loan for ZAR10.14M plus interest at South African Prime Interest Rate, repayable
within 12 months after the project finance for the Prieska Project is closed; and
18
Directors’ Report (continued)
• preference shares in Prieska Resources issued to Orion to the value of ZAR132.64M which
are redeemable by Prieska Resources at any time after the expiry of a period of 3 years
and 1 day after the date of issue of the Preference Shares, and prior to the 8th
anniversary of their date of issue at a rate of return of 12%, failing which any of the
preference shares held by Orion (through its subsidiary, Agama Exploration & Mining (Pty)
Ltd (Agama)) remaining after the 8th anniversary, will be automatically converted pro
rata into ordinary shares in Prieska Resources up to a maximum of 49% of the shares in
Prieska Resources or, subject to compliance with South African laws, an equivalent
number of shares directly in Repli.
Simultaneously with the acquisition by Prieska Resources, the Orion Siyathemba Community Trust
(Prieska Community Trust) and the Orion Siyathemba Employees Trust (Prieska Employees Trust)
each acquired an effective 5% interest in Repli. While this acquisition was for nominal
consideration, in terms of prevailing Mining Charter III legislation, Orion and Prieska Resources will
be entitled to recover the costs incurred on behalf of the two trusts in developing the Prieska
Project from future project cash flows.
In September 2019, a major component of the BEE restructure was implemented. In terms of
these transactions, Mosiapoa and Power Matla exchanged their shares in Repli, Rich Rewards
and Bartotrax (as applicable) for 48.48M and 37.58M Orion Shares, respectively, at a deemed
issue price of $0.0314 per Share.
On 29 November 2019, Orion issued 47.83M Shares in the Company at a deemed issue price of
$0.0314 per Share to AEMFC and Mosiapoa (together, Residual BEE Investors). The Shares were
issued to the Residual BEE Investors as consideration for the repurchase by Vardocube, of shares
held by the Residual BEE Investors in that company, finalising the BEE restructure.
The following organisation chart summarises the Group’s structure, at the completion of the
transactions as set out above and detailed in Note 6.
19
Directors’ Report (continued)
Debt Facilities
Anglo American sefa Mining Fund – Preference Share Redemption
On 4 March 2019, the Company announced it had reached agreement with the value-adding
South African institutional investor, AASMF to redeem Preference Shares held by AASMF in one
of Orion’s key project subsidiaries for shares in Orion. Under the agreement, AASMF agreed to
the redemption of the Preference Shares, in exchange for Orion Shares, the ASX and JSE listed
parent company of Repli (Share Exchange Agreement).
AASMF subscribed for 15.75M redeemable preference shares in Repli in November 2015 at a
subscription price of ZAR1 per redeemable preference share (ZAR15.75M (~$1.58M)) (Preference
Shares) as part of a seed capital investment with the previous owners of the Prieska Project.
Under the terms of the Share Exchange Agreement and following the receipt of Orion
shareholder approval at a general meeting held on 7 June 2019, on 7 July 2019, Repli voluntarily
redeemed the Preference Shares in consideration for Orion issuing the Shares to AASMF.
In satisfaction of the redemption amount payable by Repli to AASMF of ZAR25.05M (~$2.05M), in
connection with the voluntary redemption of the Preference Shares by Repli, on 5 July 2019,
Orion issued 77.57M Shares to AASMF at a deemed issue price of $0.0323 per Share.
Convertible Notes - Conversion
On 24 September 2019, the Company announced that it had received conversion notices from
all Convertible Noteholders, requesting the conversion of the Convertible Notes held by them
into Shares. A total of 232.69M Convertible Notes to the value of $6.05M (each with a face value
of $0.026) were issued on 17 March 2017 to various sophisticated and professional investors
(Convertible Notes). The Company obtained Shareholder approval for the issue of the
Convertible Notes on 13 March 2017. Key terms of the Convertible Notes are set out in the
Company’s ASX release dated 8 March 2017 and 25 January 2019.
On 24 September 2019, the Company issued 222.31M Shares to the Noteholders on conversion
of the Convertible Notes, thereby reducing the Company’s current liabilities by $5.8M (as 10.38M
Convertible Notes were converted into Shares in April 2019).
Tembo Capital Convertible Loan Facility - Extension of term
In January 2019, Orion announced that a $3.6M unsecured convertible loan facility had been
agreed with Tembo Capital (Loan Facility). Under the terms of the Loan Facility, Tembo Capital
may elect for repayment of the balance of the Loan Facility (including capitalised interest and
fees) (Outstanding Amount) to be satisfied by the issue of Shares by the Company to Tembo
Capital at a deemed issue price of $0.026 per Share (subject to receipt of Shareholder approval
if applicable). The Outstanding Amount must be repaid by 25 June 2020 (previously 25 January
2020), or if Tembo Capital elects to receive Shares in repayment of the Outstanding Amount in
lieu of payment in cash, the date on which the Shares are to be issued to Tembo Capital (or
such later date as may be agreed between Tembo Capital and Orion) (refer ASX release 25
January 2019).
Subsequent to period end, on 24 January 2020, Orion announced that Tembo Capital continued
its support of Orion through an extension to the term of the Loan Facility from 25 January 2020 to
25 June 2020.
20
Directors’ Report (continued)
The key terms of the Loan Facility are:
• Loan Facility Amount: Up to $3.6M, available in two tranches. The first tranche is to be in
one instalment of $0.6M to repay all amounts owing under the current Bridge Loan, with
further tranches to be in minimum instalments of $1M each;
• Interest: Capitalised at 12% per annum accrued daily on the amount drawn down;
• Repayment: Tembo Capital may elect for repayment of the Outstanding Amount to be
satisfied by the issue of Shares by the Company to Tembo Capital at a deemed issue
price of 2.6 cents per Share, subject to receipt of Shareholder approval. The Outstanding
Amount must be repaid by 25 June 2020, or if Tembo Capital elects to receive Shares in
repayment of the Outstanding Amount in lieu of payment in cash, the date on which the
Shares are to be issued to Tembo Capital (or such later date as may be agreed between
Tembo Capital and Orion);
• Establishment fee:
o Cash - capitalised 5% of the Loan Facility Amount and capitalised 4% of the
Outstanding Amount as of 24 January 2020, payable on the Repayment date;
and
o Options - 11M unlisted Orion options, exercisable at a price of 3.0 cents per option,
expiring on 17 June 2024.
• Security: Loan Facility is unsecured.
EVENTS SUBSEQUENT TO BALANCE DATE
No significant events occurred after the balance sheet date of the Company and the Group
except for those matters referred to below:
• On 23 January 2020, the Company announced the appointment of Macquarie Capital
as the Company’s financial advisor in relation to a formal partnering process. The
engagement of Macquarie Capital followed the Company having received expressions
of interest from third parties in relation to the potential acquisition of, or subscription for,
a significant project-level ownership interest in the Prieska Project, prompting it to
commence a formal process to consider a range of potential transactions.
• On 24 January 2020, the Company announced an extension to the repayment date of
the Tembo Capital Convertible Loan Facility from 25 January 2020 to 25 June 2020.
• On 28 January 2020, the Company implemented the next stage of the BEE restructure.
Refer to Note 6 of the Notes to the Consolidated Interim Financial Report for detail on this
stage of the BEE restructure.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 22 and forms part of the directors’
report for the half year ended 31 December 2019.
Signed in accordance with a resolution of the directors
Denis Waddell
Chairman
Dated at Perth this 11th day of March 2020.
21
DECLARATION OF INDEPENDENCE BY JAMES MOONEY TO THE DIRECTORS OF ORION MINERALS
LIMITED
As lead auditor for the review of Orion Minerals Limited for the half-year ended 31 December
2019, I declare that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the review; and
2. No contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Orion Minerals Limited and the entities it controlled during the
period.
James Mooney
Director
BDO Audit Pty Ltd
Melbourne, 11 March 2020
22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
December 2019 December 2018
CONTINUING OPERATIONS Notes
$’000 $’000
Other income 3 36 27
Exploration and evaluation costs expensed 9 (1,059) (1,415)
Employee expenses (620) (671)
Other operational expenses 3 (2,782) (1,805)
Results from operating activities (4,425) (3,864)
Non-operating expenses 3 (610) (230)
Finance income 633 125
Finance expense (757) (790)
Net finance expenses (124) (665)
Loss before income tax (5,159) (4,759)
Income tax (expense)/benefit --- ---
Loss from continuing operations attributable to equity holders of
(5,159) (4,759)
the Group
Other comprehensive income/(loss)
Foreign currency reserve 204 (7)
Total comprehensive income/(loss) for the period (4,955) (4,766)
Loss for the period is attributed to:
Non-controlling interest 15 (639) (457)
Owners of Orion Minerals Limited (4,520) (4,302)
(5,159) (4,759)
Total comprehensive income/(loss) for the period is attributable to:
Non-controlling interest 15 (639) (457)
Owners of Orion Minerals Limited (4,316) (4,309)
(4,955) (4,766)
LOSS PER SHARE (CENTS PER SHARE)
Basic loss per share 17 (0.20) (0.29)
Diluted loss per share 17 (0.20) (0.29)
Headline loss per share 17 (0.20) (0.29)
Diluted headline loss per share 17 (0.20) (0.29)
The Consolidated Interim Statement of Profit or Loss & Other Comprehensive Income is to be read in
conjunction with the notes to the consolidated interim financial report.
23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
December 2019 June 2019
ASSETS Notes
$’000 $’000
Current assets
Cash and cash equivalents 5,220 1,395
Other receivables 4 377 407
Rehabilitation bonds 5 278 276
Prepayments 84 68
Total current assets 5,959 2,146
Non-current assets
Other receivables 4 93 152
Rehabilitation bonds 5 2,461 2,372
Loan to joint venture partners 7 2,248 2,042
Loan to Prieska Resources 7 1,057 ---
Plant and equipment 77 95
Investment – preference shares 8 13,921 ---
Deferred exploration, evaluation and development 9 43,510 40,991
Total non-current assets 63,367 45,652
Total assets 69,326 47,798
December 2019 June 2019
LIABILITIES Notes
$’000 $’000
Current liabilities
Trade and other payables 930 1,999
Loans 10 6,005 3,947
Convertible notes 12 --- 5,724
Provisions 170 170
Total current liabilities 7,105 11,840
Non-current liabilities
Provisions 2,000 2,363
Preference shares 11 --- 2,529
Loans 10 --- 1,748
Total non-current liabilities 2,000 6,640
Total liabilities 9,105 18,480
NET ASSETS 60,221 29,318
December 2019 June 2019
EQUITY Notes
$’000 $’000
Equity attributable to equity holders of the Company
Issued capital 13 146,648 121,530
Accumulated losses (101,316) (96,063)
Non-controlling interest 15 (1,321) 1,244
Foreign currency translation reserve (106) (310)
Other reserve 16 13,203 ---
Convertible notes reserve 230 230
Share based payments reserve 14 2,883 2,687
TOTAL EQUITY 60,221 29,318
The Consolidated Interim Statement of Financial Position is to be read in conjunction with the notes to the
consolidated interim financial report.
24
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
December 2019 December 2018
Notes
$’000 $’000
Cash flows from operating activities
Payment for exploration and evaluation (2,786) (2,983)
Payments to suppliers and employees (2,371) (2,287)
Interest received 22 75
Interest expense (371) (1,318)
Other receipts 129 ---
Net cash used in operating activities (5,377) (6,513)
Cash flows from investing activities
Payments for exploration and evaluation (3,095) (7,340)
Term deposit funds released 33 ---
Guarantees on deposit --- (30)
Proceeds from sale of tenements --- 2,500
Net cash used in investing activities (3,062) (4,870)
Cash flows from financing activities
Proceeds from issue of shares 12,800 14,509
Share issue expenses (324) (394)
Borrowings provided to joint venture operations (199) ---
Proceeds from borrowings --- ---
Repayment of borrowings --- (5,496)
Net cash from financing activities 12,277 8,619
Net increase in cash and cash equivalents 3,838 (2,764)
Cash and cash equivalents at the beginning of the financial year 1,395 4,811
Effects of exchange rate on cash at end of reporting period (13) (13)
CASH AND CASH EQUIVALENTS AT PERIOD END 5,220 2,034
The Consolidated Interim Statement of Cash Flows is to be read in conjunction with the notes to the
consolidated interim financial report.
25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
31 December 2019
Foreign Share
Accumul Non- Convertib
Issued currency Other based Total
ated controlling le note
capital translation reserve payments equity
losses interest reserve
reserve reserve
($’000) ($’000) ($’000) ($’000) ($’000) ($’000) ($’000) ($’000)
Balance at 1 July 2019 121,530 (96,063) 1,244 (310) --- 230 2,687 29,318
Loss for the period --- (4,520) (639) --- --- --- --- (5,159)
Other comprehensive loss --- --- --- 204 --- --- --- 204
Total comprehensive loss for the
--- (4,520) (639) 204 --- --- --- (4,955)
period
Transactions with owners in their capacity as owners:
Contributions of equity, net costs 25,118 --- --- --- --- --- --- 25,118
Convertible notes reserve --- --- --- --- --- --- --- ---
Transfer of share options expired --- 562 --- --- --- --- (562) ---
Share-based payments expense --- --- --- --- --- --- 758 758
Transactions between owners --- (1,295) (1,926) --- 13,203 --- --- 9,982
Total transactions with owners 25,118 (733) (1,926) --- 13,203 --- 196 35,858
Balance at 31 December 2019 146,648 (101,316) (1,321) (106) 13,203 230 2,883 60,221
31 December 2018
Foreign Share
Non- Convertible
Issued Accumulated currency based Total
controlling note
capital losses translation payments equity
interest reserve
reserve reserve
($’000) ($’000) ($’000) ($’000) ($’000) ($’000) ($’000)
Balance at 1 July 2018 102,460 (87,367) 2,233 127 230 2,103 19,786
Loss for the period --- (4,302) (457) --- --- --- (4,759)
Other comprehensive loss --- --- --- (7) --- --- (7)
Total comprehensive loss for the
--- (4,302) (457) (7) --- --- (4,766)
period
Transactions with owners in their capacity as owners:
Contributions of equity, net costs 14,116 --- --- --- --- --- 14,116
Convertible notes --- --- --- --- --- --- ---
Foreign translation reserve --- --- --- --- --- --- ---
Transfer of share options expired --- --- --- --- --- --- ---
Share-based payments expense --- --- --- --- --- 215 215
Total transactions with owners 14,116 --- --- --- --- 215 14,330
Balance at 31 December 2018 116,575 (91,669) 1,776 120 230 2,318 29,350
The Consolidated Interim Statement of Changes in Equity is to be read in conjunction with the notes to
the consolidated interim financial report.
26
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
1. REPORTING ENTITY
Orion Minerals Limited (Company) is a company domiciled in Australia. The consolidated
interim financial report of the Company as at and for the six months ended 31 December 2019
comprises the Company and its subsidiaries (together referred to as the Group).
The consolidated annual financial report of the Group as at and for the year ended 30 June
2019 is available upon request from the Company’s registered office or at
www.orionminerals.com.au.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in these consolidated interim financial statements are
consistent with those applied in the Group’s consolidated financial statements as at and for
the year ended 30 June 2019. Mandatory accounting standards were adopted by the Group
during the period. The adoption of the new accounting standards has had no material impact
on the measurements of the Group’s assets and liabilities.
a) Statement of compliance
The consolidated interim financial report has been prepared in accordance with AASB 134
Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures
compliance with IFRS IAS 34 Interim Financial Reporting.
The consolidated interim financial report does not include all of the information required for a
full annual financial report and should be read in conjunction with the consolidated annual
financial report of the consolidated entity as at and for the year ended 30 June 2019.
This consolidated interim financial report was approved by the Board of Directors on 10 March
2020.
b) Basis of measurement
The preparation of interim financial reports requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual results may differ from these
estimates.
In preparing this consolidated interim financial report, the significant judgements made by
management in applying the Group’s accounting policies and the key sources of estimation
uncertainty were the same as those that were applied to the consolidated financial report as
at and for the year ended 30 June 2019.
27
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
c) Going concern
The financial statements have been prepared on the going concern basis, which
contemplates continuity of normal business activities and the realisation of assets and
discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the Group recorded a net loss of $5.16M for the half
year ended 31 December 2019, and the Group’s position as at 31 December 2019 was as
follows:
• The Group had cash reserves of $5.22M and had negative operating cash flows of $5.37M
for the half year ended 31 December 2019;
• The Group had negative working capital at 31 December 2019 of $1.14M; and
• The Group’s main activity is exploration, evaluation and development of base metal,
gold and platinum-group element projects in South Africa (Areachap Belt, Northern
Cape) and as such it does not have a source of income, rather it is reliant on debt and /
or equity raisings to fund its activities.
These factors indicate a material uncertainty that may cast significant doubt as to whether the
Group will continue as a going concern and therefore whether it will realise its assets and
extinguish its liabilities in the normal course of business and at the amounts state in the financial
report.
Current forecasts indicate that cash on hand as at 31 December 2019 will not be sufficient to
fund planned exploration and operational activities during the next twelve months and to
maintain the Group’s tenements in good standing. Accordingly, the Group will be required to
raise additional equity, consider alternate funding options or a combination of the foregoing.
The Directors believe that there are reasonable grounds to believe that the Group will be able
to continue as a going concern, after consideration of the following factors:
• The Company has previously been successful in raising capital as and when required as
evidenced by capital raising initiatives of $12.8M (before costs) during the half year
ended 31 December 2019, which follows the completion of capital raising initiatives of
$19.5M during the year ended 30 June 2019.
• The Company received convertible note conversion notices from all noteholders,
requesting conversion of the convertible notes into Shares in the Company at an issue
price of 2.6 cents per Share and during the half year ended 31 December 2019, the
Company finalised the issue of Shares to the noteholders, thereby reducing the Group’s
current liabilities by $5.7M (refer Note 12).
• The Company reached agreement with Anglo American sefa Mining Fund (AASMF),
whereby AASMF agreed to the redemption of the preference shares issued by Repli that
it held, in exchange for Orion Shares. In satisfaction of the redemption amount payable
by Repli to AASMF of ZAR25.05M (~A$2.50M), on 5 July 2019, the Company issued 77.57M
Shares to AASMF at a deemed issue price of $0.0323 per Share, thereby reducing the
Group’s current liabilities by $2.5M (refer Note 11).
• In January 2020, the Company announced that Tembo Capital Mining Fund II LP (Tembo
Capital) has continued its strong support of the Company through an extension to the
repayment date of the Convertible Loan Facility to 25 June 2020 (refer Note 10).
28
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
• Based on the high-margin bankable feasibility study (BFS) released June 2019, with an
initial 10 year Foundation Phase (refer ASX release 26 June 2019), the positive results
delivered by the value engineering and optimisation works undertaken since the
completion of the BFS, the commencement of a partnering process which contemplates
the introduction of a strategic project-level equity partner/ investor in the Prieska Copper-
Zinc Project (Prieska Project) and the Company’s ability to successfully raise capital in
the past, the Directors are confident of obtaining the continued support of the
Company’s shareholders and a number of brokers that have supported the Company’s
previous capital raisings.
Accordingly, the financial statements for the half year ended 31 December 2019 have been
prepared on a going concern basis as, in the opinion of the Directors, the Group will be in a
position to continue to meet its operating costs and exploration expenditure commitments and
pay its debts as and when they fall due for at least twelve months from the date of this report.
However, the Directors recognise that if sufficient additional funding is not raised from the issue
of capital or through alternative funding sources, there is a material uncertainty as to whether
the going concern basis is appropriate with the result that the Group may relinquish title to
certain tenements and may have to realise its assets and extinguish its liabilities other than in
the ordinary course of business and at amounts different from those stated in the financial
report.
d) Rounding of amounts
The Company is of a kind referred to in the Corporations Instrument 2016/191, issued by the
Australian Securities and Investment Commission, relation to ‘rounding off’. Amounts in this
report have been rounded off in accordance with that Corporations Instrument to the nearest
thousand dollars or in certain cases, to the nearest dollar.
e) New or amended Accounting Standards and Interpretations adopted
In the period ended 31 December 2019, the Directors have reviewed all of the new and revised
Standards and Interpretations issued by the AASB that are relevant to the Group and effective
for the current reporting periods beginning on or after 1 July 2019.
As a result, the Group has applied AASB 16. The Directors have determined that there is no
material impact from the adoption of this Standard on the financial performance or position of
the Group.
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and
for lessees eliminates the classifications of operating leases and finance leases. Except for short-
term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position. Straight-line operating lease expense
recognition is replaced with a depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease liabilities (included in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB
16 will be higher when compared to lease expenses under AASB 117. However, EBITDA
(Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating
expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and
the principal portion of the lease payments are separately disclosed in financing activities.
29
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
AASB 16 was adopted using the modified retrospective approach and as such the
comparatives have not been restated. The impact of adoption on opening retained profits as
at 1 July 2019 was nil as based on management assessment all operating leases held within the
Group were of low value or for a period of less than 12 months. As such, the group has elected
to apply the lease practical expedients whereby leases with periods less than 12 months or low
value are not capitalised on the balance sheet and are instead recognised as operating
expenses within the profit or loss statement.
3. REVENUE, INCOME AND EXPENSES
December 2019 December 2018
Other income
$’000 $000
Services rendered to associate companies 36 27
Total other income 36 27
December 2019 December 2018
Other operational expenses
$’000 $’000
Contractor, consultants and advisory expense 1,825 959
Investor and public relations 283 210
Communications and information technology 69 38
Depreciation 18 23
Loss on disposal of plant and equipment 1 10
Occupancy 63 57
Travel and accommodation 165 270
Directors fees and employment expenses 237 198
Other corporate and administrative expenses 121 40
Total other operational expenses 2,782 1,805
December 2019 December 2018
Non-operating (income) / expenses
$’000 $’000
Net foreign exchange (gain)/loss (148) ---
Other items written-off --- 16
Share based payment expense 758 214
Total non-operating (income) / expenses 610 230
30
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
4. OTHER RECEIVABLES
December 2019 June 2019
Other expenses
$’000 $’000
Current receivables:
Security deposits 42 14
Other receivables 40 31
Interest receivables --- 2
Taxes receivables 295 360
377 407
Non-current receivables:
Security deposits 3 29
Term deposits 90 123
93 152
5. REHABILITATION BONDS
December 2019 June 2019
Other expenses
$’000 $’000
Current
Environmental bonds (a) 278 276
Non-current
Environmental bonds (a) 2,461 2,372
Total 2,739 2,648
(a) Environmental bonds are cash placed on deposit to secure bank guarantees in respect of
obligations entered into for environmental performance bonds issued in favour of the relevant
government body for projects located in South Africa and Victoria, Australia. The guarantees are
held as both current and non-current receivables.
The Group also has environmental obligations for the Prieska Project. This amount is held on deposit
via a call account with the bank and by bank guarantee issued to the government body. These
funds can be applied by the government body for rehabilitation works should the Group fail to
meet regulatory standards for environmental rehabilitation. This deposit (included as a non-current
asset) offsets the provisional non-current liability held in the Group’s accounts.
6. RESTRUCTURE OF BLACK ECONOMIC EMPOWERMENT OWNERSHIP
In order to comply with the requirements of the South African Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2018 and its associated
Implementation Guidelines (Mining Charter III), the Company began implementing necessary
changes to its group structure within South Africa.
In April 2019, Orion entered into an Memorandum of Understanding (MoU) with each of the
existing Black Economic Empowerment (BEE) participants (being the trustees for the time being
of the Mosiapoa Family Trust (Mosiapoa), Power Matla (Pty) Ltd (Power Matla) and African
Exploration and Mining Finance Corporation (SOC) Ltd (AEMFC)) in its South African subsidiaries
(being Repli, Vardocube, Bartotrax and Rich Rewards Trading 437 (Pty) Limited (Rich Rewards)).
In terms of those MoU’s (as amended from time to time), the existing BEE participants agreed
to exchange their shares in Orion’s South African subsidiaries for approximately 134M JSE-listed
Orion Shares.
31
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
6. RESTRUCTURE OF BLACK ECONOMIC EMPOWERMENT OWNERSHIP (continued)
At the same time, Orion entered into a Memorandum of Agreement with two BEE
entrepreneurs, Black Star Minerals (Pty) Ltd (Black Star) and Kolobe Nala Investment Company
(Pty) Ltd (KNI), in terms of which they agreed to acquire a 20% interest in Repli, as well as a 20%
interest in Orion’s ownership interest in its Jacomynspan Project (consisting of Namaqua Nickel
Mining (Pty) Ltd and Disawell (Pty) Ltd).
In July 2019, Orion concluded a Revised Memorandum of Agreement with Black Star, KNI and
Safika Resources (Pty) Ltd (Safika) in terms of which Safika joined Black Star and KNI as part of
the BEE consortium outlined above.
Various components of the BEE restructure were implemented during the reporting period in
two phases. The first phase was implemented in September 2019 and the second in November
2019.
In September 2019, a major component of the BEE restructure was implemented. In terms of
these transactions, Mosiapoa and Power Matla exchanged their shares in Repli, Rich Rewards
and Bartotrax (as applicable) for approximately 48.48M and 37.58M JSE listed Orion Shares,
respectively, at a deemed issue price of $0.0314 per Share. Simultaneously, Prieska Resources
acquired a 20% effective interest in the Company’s subsidiary, Repli, for a purchase
consideration of approximately ZAR142.78M (~$14.45M) and the trustees for the time being of
the Orion Siyathemba Community Trust (Prieska Community Trust) and the trustees for the time
being of the Orion Siyathemba Employees Trust (Prieska Employees Trust) each acquired an
effective 5% interest in Repli.
While the acquisition by the Prieska Community Trust and the Prieska Employee Trust was for
nominal consideration, in terms of the prevailing Mining Charter III legislation, Orion and Prieska
Resources will be entitled to recover the costs incurred on behalf of the two trusts in developing
the Prieska Project from future project cash-flows.
Prieska Resources is a BEE company whose shares are held by Black Star (17.31%), KNI (37.97%)
and Safika (44.72%). To fund the acquisition of the 20% interest in Repli, the Company has
provided vendor financing to Prieska Resources comprising two parts:
• A secured loan (repayable 12 months from closing date of securing Prieska Project
financing) of ZAR10.14M (~$1.03M) plus interest at the publicly quoted prime overdraft
rate from time to time of Investec Bank Limited, which arises as a result of Repli delegating
a portion of a loan owing to Agama Exploration & Mining (Pty) Ltd (Agama) to Prieska
Resources, in exchange for which Repli issues ordinary shares to Prieska Resources; and
• Preference shares issued by Prieska Resources to Nabustax (Pty) Ltd (Nabustax) and
Itakane Trading 217 (Pty) Ltd (Itakane) (both subsidiaries of Orion) to the value of
ZAR132.64M (~$13.4M), the respective purchase consideration being 10.21%
shareholding in Repli held by Nabustax and Itakane being transferred to Prieska
Resources (refer Note 7). Key terms of the Prieska Resources preference shares issued to
Nabustax and Itakane (refer Note 8) are:
o The preference shares rank in priority to the rights of all other shares of Prieska
Resources with respect to the distribution of Prieska Resource’s assets, in an amount
up to the redemption amount in the event of the liquidation, dissolution or winding
up of Prieska Resources, whether voluntary or involuntary, or any other distribution
of Prieska Resources, whether for the purpose of winding up its affairs or otherwise;
32
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
6. RESTRUCTURE OF BLACK ECONOMIC EMPOWERMENT OWNERSHIP (continued)
o The preference shares are redeemable by Prieska Resources at any time after the
expiry of a period of 3 years and 1 day after the date of issue of the Preference
Shares, and prior to the 8th anniversary of their date of issue at an internal rate of
return of 12%; and
o Any preference shares held by Orion (through its subsidiary Agama) after the 8th
anniversary of their date of issue will be automatically converted pro rata into
ordinary shares in Prieska Resources, up to 49% of the shares in Prieska Resources or,
subject to compliance with South African laws, an equivalent number of shares in
Repli.
For the purposes of enabling Prieska Resources to acquire a 20% shareholding in Repli,
Nabustax and Itakane entered into an asset-for-share transaction with Prieska Resources
whereby Nabustax and Itakane sold a collective 10.21% shareholding in Repli, in consideration
for which Prieska Resources issued preference shares (refer above) to the Sellers in proportion
to their percentage of ordinary shares held in Repli prior to the transaction. This transaction
resulted in a one-off profit for the Orion subsidiaries from the sale of their 20% holding in Repli to
Prieska Resources of ZAR132.6M ($13.2M). The profit comprises:
• Nabustax ZAR52.8M ($5.3M) for 4.06% shareholding sold in Repli; and
• Itakane ZAR79.9M ($8.0M) for 6.15% shareholding sold in Repli.
At consolidation of the financial results of Nabustax and Itakane within the Orion Group, the
profit of ZAR132.6M ($13.2M) is recognised directly in equity as a transaction between owners,
without a loss of control, in accordance IFRS 10.23, Consolidated Financial Statements (refer
Note 16).
In November 2019, Orion issued approximately 47.83M JSE listed Orion Shares at a deemed
issue price of $0.0314 per Share to AEMFC and Mosiapoa (together, Residual BEE Investors).
The Shares were issued to the Residual BEE Investors as consideration for the repurchase by
Vardocube, of shares held by the Residual BEE Investors in that company, finalising the BEE
restructure. This component of the BEE restructure was effected by way of a scheme of
arrangement in terms of section 114(1)(e) of the South African Companies Act, 2008.
As part of the BEE restructure, several of the loans held by Repli, Bartotrax, Vardocube and Rich
Rewards were delegated to other Orion Group companies, which had no impact on the
consolidated Group.
Subsequent to reporting period end, the Company implemented the next phase of the BEE
restructure in January 2020, whereby:
• Repli acquired the entire issued ordinary share capital of Orion subsidiary, Vardocube
from Nabustax (Orion subsidiary), the purchase consideration for which was the issue of
4,282 Repli shares to Nabustax, resulting in:
o Vardocube becoming a wholly-owned subsidiary of Repli; and
o Prieska Resources and Itakane’s (Orion subsidiary) shareholding in Repli being
momentarily diluted.
• Orion subsidiaries, Nabustax and Itakane (Distributing Companies) each declared a
distribution in specie constituting a liquidation distribution as contemplated in section 47
of the South African Income Tax Act, 1962 pursuant to which the assets of the Distributing
Companies are transferred to Agama (Orion subsidiary), such that:
33
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
6. RESTRUCTURE OF BLACK ECONOMIC EMPOWERMENT OWNERSHIP (continued)
o Agama, resultantly being the new direct shareholder in Repli and accepts the
eventual transferral of any encumbrances and pledges on some of the Repli
shares; and
o the security provided in relation to the Distributing Companies’ preference shares
held in Prieska Resources is re-issued to Agama.
• To ensure that the BEE consortium’s interest in its vehicle (Prieska Resources) is not diluted
upon Prieska Resources issuing preference shares to the Orion group in exchange for
ordinary shares in Repli, the shareholders of Prieska Resources received an additional
5,078 ordinary shares in Prieska Resources by way of a pro rata capitalisation issue to:
o Black Star receiving an additional 2,271 shares;
o KNI receiving an additional 1,928 shares; and
o Safika receiving an additional 879 shares.
• Prieska Resources maintains its minimum 20% shareholding in the issued ordinary share
capital of Repli by way of:
o a subscription of an additional 613 shares in Repli; and
o issuing additional preference shares to Agama to the value of ZAR67.36M (~$6.8M)
in exchange for Agama transferring to Prieska Resources, 475 shares in Repli held
by Agama.
7. LOAN TO RELATED PARTIES
December 2019 June 2019
Other expenses
$’000 $’000
Non-current
Loan to Prieska Resources – principal 1,026 ---
Loan to Prieska Resources – interest receivable 31 ---
Loan to joint venture partners 2,248 2,042
Total 3,305 2,042
Prieska Resources
The BEE restructure implemented in September 2019 involved the acquisition by Prieska
Resources of a 20% interest in the Company’s subsidiary, Repli, for a purchase consideration of
ZAR142.78M (~$14.45M). To fund the acquisition, the Company has provided vendor financing
comprised of two components, being a loan and preference shares (refer Notes 6, 8 and 16).
Joint Venture Partners
In September 2017, the Company entered into a binding earn-in agreement to acquire the
earn-in rights over the Jacomynspan Nickel-Copper-PGE Project (South Africa) (Jacomynspan
Project) from two companies, Namaqua Nickel Mining (Pty) Ltd and Disawell (Pty) Ltd
(Namaqua Disawell Companies), which hold partly overlapping prospecting rights and mining
right applications.
During the reporting period, the Group continued to advance exploration programs on the
Jacomynspan Project, expending an additional $0.2M. This expenditure, under the terms of
the agreement, is held in the shareholder loan account and Area Metals Holdings 3 (AMH3)
reached the next stage earn-in right, which will see its shareholding increase by a further 25%
interest (making its total interest 50% (Orion 37%)). Following notification to Namaqua Disawell
Companies of the earn-in right milestone reached, an application for the relevant regulatory
approval is being progressed, and following receipt of such regulatory approval, AMH3 will be
issued with the additional shares earned.
34
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
8. INVESTMENT – PREFERENCE SHARES
December 2019 June 2019
Other expenses
$’000 $’000
Non-current
Prieska Resources preference shares – principal 13,421 ---
Prieska Resources preference shares – interest 500 ---
receivable
Total 13,921 ---
Further to the BEE restructure implemented in September 2019, Prieska Resources issued
preference shares to Nabustax and Itakane (refer Note 6) with the following terms:
• The preference shares rank in priority to the rights of all other shares of Prieska Resources
with respect to the distribution of Prieska Resource’s assets, in an amount up to the
redemption amount in the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, or any other distribution of Prieska Resources,
whether for the purpose of winding up its affairs or otherwise;
• The preference shares are redeemable by Prieska Resources at any time after the expiry
of a period of 3 years and 1 day after the date of issue of the Preference Shares, and
prior to the 8th anniversary of their date of issue at an internal rate of return of 12%; and
• Any preference shares held by Orion (through its subsidiary Agama) after the 8th
anniversary of their date of issue will be automatically converted pro rata into ordinary
shares in Prieska Resources, up to 49% of the shares in Prieska Resources or, subject to
compliance with South African laws, an equivalent number of shares in Repli.
Subsequent to reporting period end, the Company implemented the next phase of the BEE
restructure in January 2020 whereby, amongst other things, the above preference shares
were transferred by Nabustax and Itakane to Agama, and Prieska Resources issued further
preference shares to Agama.
9. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
December 2019 June 2019
Other expenses
$’000 $’000
Acquired mineral rights
Opening cost 14,161 14,161
Exploration and evaluation acquired --- ---
Exploration, evaluation and development 14,161 14,161
Deferred exploration and evaluation expenditure
Opening cost 26,830 14,958
Expenditure incurred 3,578 14,925
Exploration expensed (1,059) (3,053)
Impairment --- ---
Deferred exploration and evaluation expenditure 29,349 26,830
Net carrying amount at end of period 43,510 40,991
35
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
10. LOANS
December 2019 June 2019
Other expenses
$’000 $’000
Current
Convertible loan 4,165 3,947
AASMF loan 1,840 ---
6,005 3,947
Non-current
AASMF loan --- 1,748
--- 1,748
Total 6,005 5,695
Convertible Loan
On 25 January 2019, the Company announced a $3.6M loan facility with Tembo Capital (Loan
Facility). The key terms of the Loan Facility are:
• Loan Facility Amount: Up to $3.6M;
• Interest: Capitalised at 12% per annum accrued daily on the amount drawn down;
• Repayment: Tembo Capital may elect for repayment of the balance of the Loan Facility
(including capitalised interest and fees) (Outstanding Amount) to be satisfied by the issue
of fully paid ordinary shares (Shares) by the Company to Tembo Capital at a deemed
issue price of 2.6 cents per Share, subject to receipt of Shareholder approval (if
applicable). The Outstanding Amount must be repaid by 25 January 2020 (on 24 January
2020, Tembo Capital and the Company agreed to extend the Repayment date to 25
June 2020, or if Tembo Capital elects to receive Shares in repayment of the Outstanding
Amount in lieu of payment in cash, the date on which the Shares are to be issued to
Tembo Capital (or such later date as may be agreed between Tembo Capital and
Orion);
• Establishment fee:
o Cash - capitalised 5% of the Loan Facility Amount and capitalised 4% of the
Outstanding Amount as of 24 January 2020, payable on the Repayment date; and
o Options - 11M unlisted Orion options, exercisable at a price of $0.03 per option,
expiring on the 17 June 2024.
• Security: Loan Facility is unsecured.
36
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
10. LOANS (continued)
AASMF Loan
On 2 November 2015, Repli (a subsidiary of Agama) and 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 ZAR14.25M to Repli. The key terms of the agreement are as follows:
• Loan amount ZAR14.25M;
• 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 (31 July 2020)
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, 30% of the shares held in Repli by the Agama group
(a wholly owned subsidiary of the Company), 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 (~$1.44M (ZAR14.25M)).
At 31 December 2019, the balance of the loan was $1.84M (including capitalised interest).
11. PREFERENCE SHARES
December 2019 June 2019
Other expenses
$’000 $’000
AASMF preference shares – principal --- 1,593
AASMF preference shares – provision for dividends and --- 936
settlement premium
Total --- 2,529
Preference shares are classified as financial liabilities and therefore the accrued dividends and
settlement premium are recorded as an interest expense in the consolidated statement of
profit and loss and other comprehensive income.
Repli applied for a funding facility from AASMF for the further exploration and development of
the Prieska Project. On 14 November 2014, AASMF approved the funding facility for an amount
of ZAR30.00M, subject to certain terms and conditions. The funding was provided in two
tranches, the first tranche for ZAR15.75M by way of the issue of Repli preference shares and the
second tranche for ZAR14.25M by way of a loan from AASMF (refer Note 10).
On 2 November 2015, a subscription agreement was entered into between Repli and AASMF,
on 5 November 2015 the subscription price was paid to Repli and on the same day the
preference shares were issued to AASMF. Under the terms of the agreement, AASMF
subscribed for 15,750,000 Repli redeemable preference shares at a subscription price of ZAR1
per redeemable preference share. The key terms of the agreement are as follows:
• 15,750,000 cumulative redeemable non-participating preference shares;
• Subscription price ZAR15.75M (~$1.59M);
• Dividend rate – prime lending rate in South Africa;
37
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
11. PREFERENCE SHARES (continued)
• Dividend payment – dividends accrue annually based on the subscription price. Fifty
percent of the dividends which have accrued and accumulated from the date of issue
until 2 years after the Prieska Project mining right (Mining Right) has been issued shall
become due and payable on the scheduled dividend date (approximately 4 years after
the issue date). Balance of the accrued and accumulated dividends to be paid at the
relevant redemption date;
• Redemption date is the earlier of 7 years after the issue date or 4 years after the Mining
Right has been issued;
• Redemption amount consists of:
o ZAR15.75M;
o any unpaid and accumulated dividends; and
o Settlement premium based on internal rate of return (IRR) of 13.5%, taking into
account all cash flows from the preference shares in order to get an overall IRR
of 13.5% (IRR is fixed for the duration that the preference shares are outstanding).
• Preference shares are unsecured, but AASMF will hold 26% voting rights in Repli in the
event that there is a default on the part of Repli;
• Funding to be principally used for a 12 month exploration program on the NW Oxide Zone
at the Prieska Project and the results used to update the scoping study.
On 4 March 2019, the Company announced that it had reached agreement with AASMF for
Repli to redeem the preference shares held by AASMF for Shares and on 5 July 2019, Repli
voluntarily redeemed the preference shares, in consideration for which the Company issued
77.57M Shares to AASMF (redemption amount payable ZAR25.05M (~$2.50M)).
12. CONVERTIBLE NOTES
December 2019 June 2019
Other expenses
$’000 $’000
Convertible note liability
Opening balance 5,724 6,001
Convertible note liability – movement 56 (7)
Convertible notes – converted (5,780) (270)
Closing balance --- 5,724
On 7 February 2017, the Company announced that it was proposing to conduct a capital
raising through the issue of convertible notes to various sophisticated and professional investors,
each with a face value of 2.6 cents (Convertible Notes).
The Company obtained shareholder approval for the Convertible Notes issue at a meeting of
shareholders held on 13 March 2017. Following obtaining approval, on 17 March 2017 the
Company issued 232,692,294 Convertible Notes each with a face value of 2.6 cents, raising
$6.05M.
On 24 September 2019, the Company announced that it had received conversion notices from
all Convertible Noteholders, requesting the conversion of the Convertible Notes held by them
into Shares. On 24 September 2019, the Company issued 222.31M Shares to the Noteholders
on conversion of the Convertible Notes, thereby reducing the Company’s current liabilities by
$5.8M (as 10.38M Convertible Notes were converted into Shares in April 2019).
38
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
13. ISSUED CAPITAL
December 2019 June 2019
Other expenses
$’000 $’000
Ordinary fully paid shares 146,648 121,530
146,648 121,530
The following movements in issued capital occurred during the period:
Number of shares Issue price $’000
Ordinary fully paid shares
Opening balance at 1 July 2019 2,003,344,917 121,530
Share Issues:
Placement (5 July 2019) 77,567,412 $0.032 2,505
Placement (22 July 2019) 30,000,000 $0.040 1,200
Placement (9 August 2019) 33,706,695 $0.040 1,348
Placement (6 September 2019) 20,000,000 $0.040 800
Placement (12 September 2019) 86,056,022 $0.031 2,702
Convertible Notes conversion (24 September 2019) 222,307,679 $0.026 5,780
Placement (1 November 2019) 235,399,983 $0.025 5,885
Placement (5 November 2019) 19,400,000 $0.025 485
Placement (22 November 2019) 53,904,167 $0.025 1,348
Placement (29 November 2019) 47,825,602 $0.031 1,502
Share Purchase Plan (12 December 2019) 70,047,920 $0.025 1,752
Less: Issue costs --- --- (189)
Total 2,899,560,397 146,648
14. SHARE BASED PAYMENTS RESERVE
The employee share option and share plan reserve is used to record the value of equity benefits
provided to employees, consultants and directors as part of their remuneration.
The following movements in the share based payments reserve occurred during the period:
Other expenses $’000
Opening balance at 1 July 2018 2,103
Share based payments expense 1,649
Unlisted share options expired and transferred to accumulated losses (i) (1,065)
Closing balance at 30 June 2019 2,687
Share based payments expense 758
Unlisted share options expired and transferred to accumulated losses (i) (562)
Closing balance at 31 December 2019 2,883
(i) During the period, previously recognised share based payment transactions for options which had
vested but subsequently expired were transferred to accumulated losses.
39
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
14. SHARE BASE PAYMENTS RESERVE (continued)
The following options to subscribe for ordinary fully paid shares expired during the half year:
Number of options Expiry date Exercise price
Class
Unlisted options 3,040,050 15/08/2019 $0.037
Unlisted options 100,466,749 31/10/2019 $0.05
Unlisted options 250,000 30/11/2019 $0.045
Unlisted options 250,000 30/11/2019 $0.06
Total 104,006,799
There were 209,267 options granted with an exercise price of $0.05, which also expired, and no
options were exercised during the half year ended 31 December 2019.
15. NON-CONTROLLING INTEREST
December 2019 June 2019
Other expenses
$’000 $’000
Opening balance 1,244 2,233
Movement
Accumulated losses (639) (989)
BEE restructure adjustment (1,926) ---
Closing balance (1,321) 1,244
The non-controlling interest parties have the following interest in the Group South African
subsidiaries:
Repli Trading No 27 (Pty) Ltd 30% (2018: 26.67%), Rich Rewards Trading 437 (Pty) Ltd 0% (2018:
26.67%), Vardocube (Pty) Ltd 0% (2018: 30%), Bartotrax (Pty) Ltd 0% (2018: 26.67%), Masiqhame
855 (Pty) Ltd 50% (2018: 49%) and Prieska Copper Mines Ltd 2.54% (2018: 2.54%).
Refer Note 6 for information on the BEE Restructure implemented during the reporting period.
16. OTHER RESERVES
December 2019 June 2019
Other expenses
$’000 $’000
Opening balance --- ---
Movement
Transactions between owners 13,203 ---
Closing balance 13,203 ---
In accordance with IFRS10.23, the profit realised by Nabustax and Itakane on the sale of 20%
of the shares in Repli to Prieska Resources, is recognised directly in equity as transactions
between owners without a loss of control (refer Note 6 for additional information).
40
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
17. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing the net loss or earnings for the
year attributable to ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net loss or earnings
attributable to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year (adjusted for the effects of potentially dilutive options and dilutive
partly paid contributing shares).
The following reflects the income and share data used to calculate basic and diluted earnings
per share:
a) Basic and diluted loss per share
December 2019 December 2018
Other expenses
Cents Cents
Loss attributable to owners of the Company (0.20) (0.29)
Diluted loss attributable to owners of the Company (0.20) (0.29)
b) Reconciliation of loss used in calculating earnings per share
December 2019 December 2018
Other expenses
$’000 $’000
Loss from continuing operations attributable to equity holders of the (5,159) (4,759)
Group
Loss attributable non-controlling interest 639 ---
Loss attributable to owners of the Company (4,520) (4,759)
c) Weighted average number of shares
December 2019 December 2018
Other expenses
Number Number
Weighted average number of ordinary shares used as the 2,221,005,394 1,625,922,939
denominator in calculating basic earnings per share.
Weighted average number of ordinary shares and potential ordinary 2,221,005,394 1,625,922,939
shares used as the denominator in calculating diluted earnings per
share.
d) Headline profit / (loss) per share
December 2019 December 2018
Other expenses
$’000 $’000
Loss before income tax (4,520) (4,759)
Impairment of non-current assets reversal --- ---
Plant and equipment written off --- ---
Adjusted earnings (4,520) (4,759)
Weighted average number of shares 2,221,005,394 1,625,922,939
Loss per share (cents per share) (0.20) (0.29)
Loss per share (cents per share) (0.20) (0.29)
41
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
18. SEGMENT REPORTING
The Group’s operating segments are identified and information disclosed, where appropriate,
on the basis of internal reports reviewed by the Company’s Board of Directors, being the
Group’s Chief Operating Decision Maker, as defined by AASB 8. Reportable segments
disclosed are based on aggregating operating segments where the segments have similar
characteristics.
The Group’s core activity is mineral exploration, evaluation and development within South
Africa and Australia. During the half year to 31 December 2019, the Group has actively
undertaken exploration, evaluation and development in South Africa.
Reportable segments are represented as follows:
Australia South Africa Total
31 December 2019
$’000 $’000 $’000
Segment net operating profit / (loss) after tax (3,366) (1,793) (5,159)
Depreciation (5) (13) (18)
Finance income 16 617 633
Finance expense (664) (93) (757)
Exploration expenditure written off and expensed (176) (883) (1,059)
Segment non-current assets 56,752 6,615 63,367
Australia South Africa Total
30 June 2019
$’000 $’000 $’000
Segment net operating loss after tax (7,098) (3,472) (10,750)
Depreciation (22) (25) (47)
Finance income 45 183 228
Finance expense (1,304) (457) (1,761)
Exploration expenditure written off and expensed (613) (2,440) (3,053)
Segment non-current assets 11,182 34,470 45,652
42
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
For the half year ended 31 December 2019
19. EVENTS SUBSEQUENT TO BALANCE DATE
No significant events occurred after the balance sheet date of the Company and the Group
except for those matters referred to below:
• On 23 January 2020, the Company announced the appointment of Macquarie Capital
as the Company’s financial advisor in relation to a formal partnering process. The
engagement of Macquarie Capital followed the Company having received
expressions of interest from third parties in relation to the potential acquisition of, or
subscription for, a significant project-level ownership interest in the Prieska Project,
prompting it to commence a formal process to consider a range of potential
transactions.
• On 24 January 2020, the Company announced an extension to the repayment date of
the Tembo Capital Convertible Loan Facility from 25 January 2020 to 25 June 2020.
• On 28 January 2020, the Company implemented the next stage of the BEE restructure.
Refer to Note 6 of the Notes to the Consolidated Interim Financial Report for detail on
this stage of the BEE restructure.
43
DIRECTORS’ DECLARATION
In the opinion of the directors of Orion Minerals Limited (the Company):
1. the interim consolidated financial statements and notes set out on pages 23 to 43, are in
accordance with the Corporations Act 2001 including:
(a) giving a true and fair view of the financial position of the Group as at 31
December 2019 and of its performance, as represented by the results of its
operations and cash flows for the six month period ended on that date; and
(b) complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001; and
2. there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
Signed in accordance with a resolution of the directors:
Denis Waddell
Chairman
Dated at Perth this 11th day of March 2020.
44
INDEPENDENT AUDITOR’S REVIEW REPORT
To the members of Orion Minerals Limited
Report on the Half-Year Financial Report
Conclusion
We have reviewed the half-year financial report of Orion Minerals Limited (the Company) and
its subsidiaries (the Group), which comprises the consolidated statement of financial position
as at 31 December 2019, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the half-year then ended, notes comprising a statement of accounting policies
and other explanatory information, and the directors’ declaration.
Based on our review, which is not an audit, we have not become aware of any matter that
makes us believe that the half-year financial report of the Group is not in accordance with the
Corporations Act 2001 including:
(i) Giving a true and fair view of the Group’s financial position as at 31 December 2019
and of its financial performance for the half-year ended on that date; and
(ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and
Corporations Regulations 2001.
Emphasis of matter – Material uncertainty relating to going concern
We draw attention to Note 2(c) in the financial report which describes the events and/or
conditions which give rise to the existence of a material uncertainty that may cast significant
doubt about the Group’s ability to continue as a going concern and therefore the Group may
be unable to realise its assets and discharge its liabilities in the normal course of business. Our
conclusion is not modified in respect of this matter.
Directors’ responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation of the half-year financial
report that gives a true and fair view in accordance with Australian Accounting Standards and
the Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the half-year financial report that is free from material
misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our
review. We conducted our review in accordance with Auditing Standard on Review
Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor
of the Entity, in order to state whether, on the basis of the procedures described, we have
become aware of any matter that makes us believe that the half-year financial report is not in
accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s
financial position as at 31 December 2019 and its financial performance for the half-year
ended on that date and complying with Accounting Standard AASB 134
Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of the Group,
ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the
annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
45
procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the
Corporations Act 2001, which has been given to the directors of the Group, would be in the
same terms if given to the directors as at the time of this auditor’s review report.
BDO Audit Pty Ltd
James Mooney
Director
Melbourne, 11 March 2020
46
Date: 11-03-2020 10:58:00
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