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ORION MINERALS LIMITED - Quarterly Activities Report for Period Ended 31 December 2018

Release Date: 31/01/2019 09:09
Code(s): ORN     PDF:  
Wrap Text
Quarterly Activities Report for Period Ended 31 December 2018

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”)

QUARTERLY ACTIVITIES REPORT FOR PERIOD ENDED 31 DECEMBER 2018

Prieska Project resource definition drilling completed and Mineral Resources Estimate
updated:
o   Resource drilling of the Deep Sulphide Target on both the Repli and Vardocube
    Prospecting Rights completed.
o   Mineral Resource estimation for both the Deep Sulphide and +105m Level Targets updated
    in December 2018.
o   Total Deep Sulphide Mineral Resource of 28.73Mt at 3.8% Zn and 1.2% Cu.
o   Total +105m Level Mineral Resource of 1.76Mt at 2.0% Zn and 1.5% Cu.
o   Total global combined Mineral Resource of 30.49Mt grading at 3.7% Zn and 1.2% Cu.

Feasibility studies reach significant milestones:
o   Scoping Study completed, confirming commercial robustness of concepts being applied
    in the ongoing feasibility study.
o   Feasibility study mine planning and design progressed to detailed stage.
o   National power utility approved bulk power supply infrastructure designs. o   Expressions of Interest received for zinc and copper concentrates offtake.

Ayoba Satellite VMS discovery, and airborne electromagnetic (SkyTEM TM) survey completed
on near-mine exploration:
o   Discovery hole at Ayoba intersected 9.50m of massive sulphide mineralisation grading
    0.93% Zn and 0.63% Cu, including 1.50m at 4.98% Zn and 0.89% Cu.
o   SkyTEMTM survey completed over near-mine Prospecting Right.

Regional Ni-Cu-Co exploration program advanced:
o   Down-hole Time Domain Electro Magnetic survey at Rok Optel completed.
o   Phase 1 drilling at the Rok Optel Ni-Cu Target completed.
o   Field mapping at Rok Optel and over other SkyTEM TM anomalies continued.
o   Confirmation of Newmont mapping done over Rok Optel south.

Regional VMS exploration on the Masiqhame Prospecting Right continues:
o   Two fixed-loop electromagnetic surveys were completed, and conductors detected.
o   Mapping over the Kantienpan and Boksputs Prospects in progress.

Safety, environment and community engagement ongoing:
o   Zero lost-time injuries for 35,600 hours worked for the Quarter at the Prieska Project.
o    Career Day Expo reaches 700 school students from local communities.

Following Quarter end, Tembo Capital extends new $3.6M Loan Facility to advance the Prieska
Project and maturity date of Convertible Notes extended to 30 September 2019.

Operations Report

Orion Minerals Limited (Company or Orion) strives to achieve a sustainable balance between
intense operational effort and maintaining a strong focus on social responsibility.

Health and Safety, Environmental Management and Community Engagement
Health and Safety
No lost-time injuries were reported during the Quarter.

Table 1: Hours worked at the Areachap Projects (South Africa).

                                          Hours Worked
Category of Work
                                Quarter               Financial Year to Date
Exploration                     33,529                      162,500
Mine Re-Entry                   2,112                       4,492
Total                           35,641                      166,992


The lost-time injury frequency Rate (LTIFR) per 200,000 hours worked was 0.0 across all work areas
for both the Quarter and the financial year to date. Scheduled inspections by the Occupational
Medical Practitioner confirmed exemplary work conditions at all Company work places. Emphasis
for the period was on ensuring all work sites were well-secured and kept in a safe manner, given
the shutdowns of field operations during the December holiday period.

Environmental Management
Proactive and cooperative engagement with statutory authorities continued, with representatives
from the Department of Mineral Resources (DMR) invited and hosted on a familiarisation visit of
the Prieska Zinc-Copper Project (Prieska Project).     Advice on improving hydrocarbon
management received from the authorities on the visit was incorporated into general work
practices.

Community and Stakeholder Engagement
The Company recognises that as part of establishing the Prieska Project, early implementation of
training and mining familiarisation programs is beneficial in preparing local communities to be
able to participate in employment and business opportunities to be created by the development
of the Prieska Project. As such, the Company has kept local communities regularly informed and
has supported various social development initiatives, despite the Prieska Project still being in the
planning phases.

Progress updates, to the Siyathemba community relating to the Prieska Project, continued, with
the Company’s CEO, Errol Smart, holding a public information session in the town of Prieska in
October. The event was attended by several hundred people, representing a broad cross-section
of community interest groups.
In October, the Company, in collaboration with Sonnedix / Mulilo, who operate a renewable
energy plant adjacent to the Prieska Project, hosted a career day expo in the town of Prieska.
Approximately 700 high school students had the opportunity to interact with private businesses,
government institutions and tertiary education institutions.

The Company also initiated investigations into the provision of free, introductory, part-time short
familiarisation courses, covering the functions of underground mining, machine operation, trade
and engineering skills, technical services, administration and finance. The appointment of
appropriate training service providers, content and the identification of suitable training venues
are in progress, with courses scheduled to commence by Q2 2019.

Collaborations between the Company and the Siyathemba Municipality, formalised through a
Memorandum of Understanding, focused this Quarter, on water infrastructure upgrades and
residential development to accommodate the Prieska Project plans. Drafting of the water supply
agreement, incorporating water tariffs and specific scopes of work for water infrastructure
upgrades, continued. The Company identified a 50-hectare area of open land adjacent to an
existing suburb in Prieska, suitable for siting the proposed mine residential area. Discussions with
the Municipality and various technical services providers have been initiated to facilitate
obtaining permissions for residential development.

To bring some seasonal cheer to the most vulnerable and neglected members of the Siyathemba
Municipality, the Company identified rural schools, the elderly and the homeless to be recipients
of Christmas gifts.

Over 200 children, attending the Bloukrantz and Saamstaan Farm Schools (farm schools located
in the rural surrounds of Prieska) received Christmas gift packs and Company sponsored prizes for
various academic achievements. The elderly residents of Silver Kroon House, in Marydale, and
Huis du Toit, in Prieska, were presented with gift packs containing parasols, to afford protection
against the harsh Northern Cape summer sun. Homeless families, comprising mostly women and
children, who take shelter in an abandoned primary school (Ineatia Home for the Homeless) also
received gift packs containing essential groceries, parasols and confectionery.

Exploration and Mine Development
Areachap Belt Projects (South Africa)

Prieska Zinc-Copper Project

The Company completed an intensive drilling campaign at the Deep Sulphide Target of the
Prieska Project and updated both Mineral Resources of the Deep Sulphide Target and the +105m
Level Target (Open Pit). The updated Deep Sulphide Mineral Resource was used to support a
scoping study that assessed the commercial viability of an initial phase of underground mining
operations. This work, along with other key studies, will be used as the basis of a Bankable
Feasibility Study (BFS), which the Company is on track to complete in Q2 2019.

Project Overview
The Prieska Project remains the focus of the Company’s activities and is at an advanced stage of
Feasibility Studies. The Prieska Project covers un-mined dip and strike extensions from a historical
underground mining operation. Mineralisation was delineated by extensive drilling undertaken by
previous owners. The Company has digitally captured, validated and modelled all relevant
project drilling data available from hard-copy sources. This work has enabled the Company to
define targets for both near-surface and deep-seated mineralisation. The near-surface target
comprises oxide, supergene and primary sulphide material to a depth of 100m which is potentially
accessible via an initial open pit (+105m Level Target). The deeper target comprises primary
sulphide mineralisation and is potentially accessible via underground mining (Deep Sulphide
Target).

The Company’s strategy has been to initially validate and quantify the historically-identified
targets to a sufficient level of confidence to support a bankable study, using infill and verification
drilling from surface (Initial Phase). Thereafter, the Company intends to continue with extensional
exploration, to define the extents of the various targets.

Deep Sulphide Target drilling
During the Quarter, the Company completed the Deep Sulphide Target Mineral Resource drill
program with one drilling rig at the south-eastern Vardocube Prospecting Right, and another at
the north-western Repli Prospecting Right (Figure 1). A total of 85,304m has now been drilled by
the Company into the Deep Sulphide Target.

Figure 1: Longitudinal projection of the Prieska Project showing the Repli and Vardocube Resource Areas.

For the Quarter, a total of 345.34m of diamond drilling was completed, of which 125.96m was
drilled on the Vardocube Prospecting Right and 219.38m on the Repli Prospecting Right. The
Company’s drill program aimed to provide statistical validation of historical drill data available for
the Deep Sulphide Target, as well as to in-fill data points required for optimal drill spacing to allow
classification of the Mineral Resource in accordance with the JORC Code (2012). Drilling has also
tested new targets and extended the known mineralisation outside of the historical drill grid.

The Deep Sulphide Resource drilling indicated that the mineralisation is not closed off and
potential exists to increase the Resource with additional drilling (refer ASX releases 5 November
2018 and 15 October 2018). One hole, testing the up-side potential in the south-eastern part of
the Deep Sulphide Target, on the Vardocube Prospecting Right, was started during the Quarter.

Mineral Resource Estimation and Reporting
The Mineral Resource estimation of the Deep Sulphide Target prepared by Z* on both the Repli
and Vardocube Prospecting Rights, using drill data available as at 31 December 2018, was
completed during the Quarter (refer ASX release 18 December 2018) 1 (Table 2).

Table 2: Global Indicated and Inferred Mineral Resource Statement for the Deep Sulphide Target of the Prieska Project.

License         Classification         Tonnes         Zn (tonnes)      Zn (%)      Cu (tonnes)         Cu (%)

                   Indicated           15,052,000       510,000          3.38         170,000            1.15
Repli
                   Inferred            6,998,000        270,000           3.9          80,000             1.1
                               Total   22,050,000       779,000           3.5         249,000             1.1
                   Indicated           3,455,000        158,000          4.57          44,000            1.27
Vardocube          Inferred            3,221,000        147,000           4.6          41,000             1.3
                               Total   6,676,000        305,000           4.6          85,000             1.3
                   Indicated           18,507,000       667,000          3.60         217,000            1.17
Deep
Sulphide           Inferred            10,219,000       417,000           4.1         117,000             1.1
Total
                               Total   28,726,000      1,084,000          3.8         334,000             1.2

Note: Deep Sulphide Resource bottom cut-off = 4% Equivalent Zn. Mineral Resources stated at zero % cut off.
      Tonnes are rounded to thousands, which may result in rounding errors.

Since the first +105m Mineral Resource announcement (refer ASX release 8 February 2018), the
geological wireframe and resource estimate has been updated to include additional drill data
and refinements to modelling of metallurgical zonation to re-evaluate the model (refer ASX
release 15 January 2019)2 (Table 3).

Table 3: Global Indicated and Inferred Mineral Resource Statement for the +105m Level Target of the Prieska Project.

                       Mineralised                           Zn                        Cu
Classification                            Tonnes                        Zn (%)                    Cu (%)
                          Zone                            (tonnes)                  (tonnes)

Indicated              Supergene          624,000         19,000         3.05       10,000         1.54

1 Mineral Resource reported in ASX release of 18 December 2018: “Landmark Resource Upgrade Sets Strong Foundation”
available to the public on www.orionminerals.com.au/investors/market-news. Competent Person Orion’s exploration: Mr.
Errol Smart. 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 18
December 2018 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.
                               Total      624,000        19,000        3.05       10,000            1.54
                        Oxide             511,000        4,000          0.9        3,000            0.6
Inferred                Supergene         627,000        11,000         1.8       14,000            2.2
                               Total     1,138,000       16,000         1.4       17,000            1.5
+105m Grand Total                        1,762,000       35,000         2.0       27,000            1.5




Note: +105m Level Mineral Resource bottom cut-off = 0.3% Cu. Mineral Resources stated at zero % cut-off.
      Tonnes are rounded to thousands, which may result in rounding errors.

The total Mineral Resource comprising Indicated and Inferred Resources of 30.49M tonnes grading
at 3.7% Zn and 1.2% Cu (refer ASX release 15 January 2019)2 (Table 4) and the Scoping Study which
confirmed a robust Phase 1 development for the Prieska Project (refer ASX release 19 December
2018) will be incorporated in the BFS due for completion in Q2 2019.

Table 4: Global Mineral Resource for the combined +105m and Deep Sulphide Targets of the Prieska Project.

                                                       Zn                        Cu
Resource       Classification        Tonnes        (tonnes)       Zn (%)     (tonnes)        Cu (%)

Deep Sulphide    Indicated        18,507,000        667,000         3.60      217,000         1.17
Resource         Inferred         10,219,000        417,000         4.1       117,000         1.1

+ 105m           Indicated        624,000           19,000          3.05      10,000          1.54
Resource         Inferred         1,138,000         16,000          1.4       17,000          1.4

Total            Indicated        19,131,000        686,000         3.59      227,000         1.18

Total            Inferred         11,357,000        433,000         3.8       134,000         1.2

                Grand Total       30,488,000        1,119,000       3.7       361,000         1.2

2Mineral Resource reported in ASX release of 15 January 2019: “Prieska Total Mineral 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 exploration: Mr. Errol Smart. 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 16 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.
Note: Deep Sulphide Resource bottom cut-off = 4% Equivalent Zn; +105m Level Mineral Resource bottom cut-
      off = 0.3% Cu. Mineral Resources stated at zero % cut-off. Tonnes are rounded to thousands, which
      may result in rounding errors.

Down-hole Time Domain Electro Magnetic surveys
Down-hole Time Domain Electro Magnetic (DHTDEM) surveys were undertaken in drill-holes
OCOD059_D3, OCOD118_D1, OCOD123_D2 and OCOD137_D2 at the Deep Sulphide Target to
assess whether there are any off-hole conductors indicating the extension off the known
mineralisation (Figures 2 and 3).

Modelling of the DHTDEM data is to be finalised.

Figure 2: Plan-view of the North-West Resource Area of the Prieska Project, showing drill-holes surveyed by DTHEM.
Figure 3: Plan-view of the South-East Resource Area of the Prieska Project, showing drill-holes surveyed by DTHEM.

Barite Potential Studies
Mineralogical work, as part of the metallurgical study of the BFS of the Prieska Project, indicates
6% - 8% contained barite in the mineralisation, which if recovered as a by-product could add to
the revenue of the mine. As a result of the analytical method (ICP-OES with Aqua-Regia digest)
used at the Prieska Project, which does not dissolve all the Ba in barite (BaSO4), Ba analyses in the
geological database are underestimated values. A study to accurately determine the Ba content
and to identify and quantify the minerals that hosts the Ba was therefore undertaken during the
Quarter. Thirty pulp samples of the Deep Sulphides were sent to UIS Analytical Services for fused
disk XRF analyses and SJT MetMin carried out mineralogical work using Quantitative X-ray
diffraction (XRD) analysis on 15 of those samples. The study is expected to be completed during
Q1 of 2019.

Feasibility Studies and Mining Right Applications
Scoping Study
A scoping study investigating the economic viability of an initial ten-year phase (Phase 1) of
exploitation of the Prieska deposit was completed during the Quarter, (refer ASX release 19
December 2018). Notable results were:
Initial 10-year mining scenario supported by 64% of Indicated Mineral Resources, extracting
75% of a combined underground Mineral Resource of 28.73Mt at 3.77% zinc and 1.16%
copper.
2.4Mtpa run-of-mine material processed, producing about 70kt to 80kt of zinc and 22kt of
copper in concentrates per annum.
43% all-in-sustaining margin, with all-in-unit costs of AUD 1,701/t (USD 1,215/t) zinc
equivalent metal sold.
Estimated AUD 130M annual free cash flow after-tax at steady-state.
AUD 400M to AUD 440M pre-tax NPV at 12.5% discount rate and approximately 38% pre-
tax IRR.
Payback period of less than 3 years from first production.
Approximately AUD 300M to AUD 330M peak funding to setup the infrastructural
foundation for future expansion.

The initial phase contemplated in the scoping study involves underground mining to extract
portions of the updated Mineral Resources (refer ASX release 18 December 2018). No open pit
mining or extraction of remnant pillars was considered for Phase 1. The scoping study results
confirm the commercial robustness of the concepts being advanced in the BFS which is on track
for completion by Q2 2019, Table 5.

Table 5: Key Scoping Study Results for Phase 1 of the Prieska Zinc-Copper Project. Note that the overall Study accuracy level
is ±35%.
                                                           Estimated                                                                   Estimated
Price and FX Assumptions                       Unit                          Financial Performance                              Unit
                                                             Value                                                                       Value
Metal price – Cu         (USD3.00/lb)         USD/t          6,6143          NPV (pre-tax) @12.5% discount rate              AUD m     400 – 440
Metal price – Zn          (USD1.30/lb)        USD/t          2,8663          IRR (pre-tax)                                     %         38%
Exchange rate                               ZAR:USD          14 : 1          Payback from first production                   years        3
Exchange rate                               ZAR:AUD          10 : 1          Undiscounted free cash flow (pre-tax)          AUD bn     1.2 – 1.3
Exchange rate                               AUD:USD          1.4 : 1         Peak funding                                    AUD m     300 – 330

                                                             Estimated                                                                   Estimated
Production Metrics                               Unit                        Project Cost Metrics                             Unit
                                                               Value                                                                     Value
Life of Mine (Phase 1)                        years             10           Average cash operating unit cost (C1)           AUD/t       83
Treatment plant capacity                      ktpa            2,400          All-in-sustaining cost per unit ROM t           AUD/t       100
Phase 1 tonnage - ROM                          mt               22           All-in-sustaining cost per unit Zn eq t sold    AUD/t Zn    1,701
Phase 1 tonnage - processed                    mt               22           All-in-sustaining cost per unit Cu eq t sold    AUD/t Cu    4,949
Concentrate tonnage - Zn                       mt              1.4           Price received (net of NSR) - Zn                AUD/t Zn    2,982
Concentrate tonnage - Cu                       mt              0.9           Price received (net of NSR) - Cu                AUD/t Cu    8,677
Concentrate grade - Zn                          %             50.0%          All-in-sustaining margin                          %         43%
Concentrate grade - Cu                          %             24.0%          Operating breakeven grade (Zn eq)                 %         4.1%
NSR as % of metal price - Zn                    %             74.3%
                                                                                                                                        Estimated
NSR as % of metal price - Cu                    %             93.7%        Project Cash Flows                                 Unit
                                                                                                                                         Value
Metal sold (in concentrates) - Zn               kt             686           LoM net revenue                                 AUD m       3,457
Metal sold (in concentrates) - Cu               kt             206           LoM operating costs                             AUD m       1,740
Total sales as Zn equivalent                    kt            1,285          Project start-up capital expenditure            AUD m       360 - 390
Total sales as Cu equivalent                    kt             442           Sustaining capital expenditure                  AUD m        65 - 75


3   Guided by Afriforesight (Pty) Ltd long-term consensus forecast as of August 2018.
BFS Mine Design
Following the release of the updated Deeps Resource estimate and scoping study in late
December 2018, preliminary mine designs are now being updated and finalised. Tunnel layouts,
level spacings and the mix of long hole stoping (LHS) and drift-and-fill underground mining
methods are being adjusted and improved, in line with the new Mineral Resource. Mining
strategies have been revisited and some production areas are being redesigned to eliminate the
need for trucking (ore-pass infrastructure will be installed). This will reduce the overall trucking fleet
as well as the associated ventilation requirements and so is expected to improve operating costs.

Labour numbers for the mining production teams and fleet maintenance crews have been
refined and will be finalised once accurate fleet numbers are determined at the conclusion of the
mine planning process.

Investigations into automation and the use of data intelligence systems also took place during the
Quarter. Various products are available in the market that are designed to increase machine
utilisation and productivity via automatic drilling and autonomous operating modes. At this stage,
the Company’s strategy is to investigate all available options and consider the appropriate levels
of automation and telemetry which will enhance the Project’s business case without placing
undue risk on the operation. It is likely that a phased approach to the installation of automation
will be carried out as production ramps up during the early years of the Project.

Ore processing investigations
Test work undertaken during the quarter focused on replacing the Sodium Cyanide (NaCN)
reagent with Sodium Meta-Bisulphite (SMBS). NaCN is used to depress zinc in the copper flotation
stream, hence allowing for better copper recoveries into a concentrate. The use of SMBS instead
of NaCN can potentially eliminate the need for a NaCN detoxification plant. Preliminary
indications are that SMBS is effective in the copper stream and further optimisation is required in
the zinc stream. Final results of the test work are due during Q1 2019.

Outstanding metallurgical test results include the results from test work conducted on samples
obtained from the last cores to become available from the drilling campaign in the Vardocube
resource area. These results are expected to confirm that the south-eastern extent of the deposit
has the same metallurgical characteristics as the rest of the deposit. To date, metal recovery test
results have ranged from 80% to 94% for zinc and between 80% to 86% for copper. The
concentrates produced from the test work have assayed metal concentrate grades ranging from
45% to 54% zinc and between 20% to 26% copper. The final set of numbers for these metrics are
expected to be within these ranges.

Infrastructure Studies
Power Supply – The design and construction methodology for the 132kV feeder bay at the Cuprum
Sub-station was presented to the Eskom Technical Evaluation Forum (TEF) in early December 2018.
Verbal approval was given to proceed with final detailed design and construction, with formal
written approval expected during Q1 2019. The Company has pre-emptively commissioned
detailed engineering design work for the mine substation which will step down the 132kV from the
Cuprum sub-station to 11kV for the mine electrical reticulation. This detailed design, along with
the approval from the Eskom TEF, means that, when appropriate, the Company is in a position to
proceeding with ordering long-lead items (primarily transformers) to meet the planned
construction schedule for bulk power delivery to the Project site.

Water Supply – As reported last Quarter, a Memorandum of Understanding was signed with the
Siyathemba Municipality regarding the Company’s access to long-term water supply from the
Prieska Water Works. Discussions are continuing towards finalising the detailed arrangements
however, sufficient information is available at this stage to include pricing and capital costs in the
BFS.

Product Logistics and Marketing
The option to truck zinc and copper concentrates in side tippers to the Kimberley rail siding (300km
from site) was used as the base case Scoping Study option due to this rail hub’s readily available
facilities and firm rail timetable. The alternative option of trucking concentrate to the nearby
Groveput rail siding (48km from site) will continue to be studied as an improvement on the base
case. From Kimberley or Groveput, concentrates will be loaded into shipping containers and
railed to Coega (near Port Elizabeth), with Richards’ Bay and Durban remaining as alternative
ports if required.

Transportable Moisture Content (TML) tests have been completed indicating that the Prieska
concentrates specifications are well within TML levels suitable for safe transportation.

Expressions of interest for concentrate sales were sent out to potential concentrate customers
during the Quarter and assessment of proposals is in progress.

Mining Right Applications
All applicable documents for the Repli Mining Right have been submitted and the environmental
authorisation is anticipated to be granted during Q1 2019, following which the Mining Right
approval is expected during Q2 2019.

The Mining Right for the Vardocube section of the Prieska Project is progressing and public
comments from the draft (environmental) Scoping Report that was issued during the Quarter have
been received. Where necessary, relevant responses from the Company have been included in
the final Environmental Impact Report (EIR) along with updated specialist studies for the
Vardocube section of the Project. The final EIR, including the Environmental Management
Program, will be submitted to the DMR this coming Quarter, with approvals expected during Q3
2019.

Near Mine Projects

The near-mine projects are those projects within prospecting rights held by Repli, Repli (Doonies
Pan), Vardocube and Bartotrax (Figure 4). 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, as well as three deposits on Kielder (Doonies Pan) referred to as the PK1,
PK3 and PK6 deposits, explored by Newmont SA between 1976 and 1979. Exploration targets
currently defined on the near-mine project area include the north-western and south-eastern
strike extent of the Prieska Deposit, the western and eastern strike extent of the Annex Deposit and
the Magazine Antiform (Figure 5). A SkyTEM TM and magnetic survey over the Near Mine Project
area was completed in December 2018.
Figure 4: Surface plan showing the prospecting rights over and adjacent to the Prieska Project, and the location of the Annex
and Kielder (PK1, PK3 and PK6) Deposits.
Figure 5: Geological plan showing Near Mine prospective horizons, the location of the Annex Deposit and the EM conductor
to the west of Annex where the Ayoba discovery was made.

Annex – Exploration Program
Drill hole OAXD001, planned to intersect the Annex Deposit to verify historical drill data and to
obtain samples of the host rock and mineralisation (refer ASX release 18 September 2018), was
completed at 349.45m, having been drilled 178.90m during the Quarter (Figures 6 and 7).

The hole was planned to intersect the mineralised horizon in an area where a historic longitudinal
projection of the mineralisation indicates relative thick and high-grade copper mineralisation
(refer ASX release 18 September 2018) (Figure 6). OAXD001 intersected 0.90m of coarse
disseminated mineralisation grading 1.50% Cu, 0.19% Zn, 0.07g/t Au and 3g/t Ag from a down-
hole depth of 253m. Although the mineralisation was narrower and lower grade than expected,
the hole provides information on the stratigraphy of an area where there are hardly any outcrops
and where little historic geological information and no historic core is available to the Company.
Figure 6: Plan showing the Company’s and historic (Anglovaal) drill hole collars and trace of the sub-outcrop of sulphide
mineralisation at Annex (Source: Anglovaal Exploration report).

Figure 7: Longitudinal section and grade-contoured drill intersections (Anglovaal) for copper at Annex, showing the
Company’s drill hole OAXD001 intersection point (Source: Anglovaal Exploration report).

Ayoba Discovery
During the Quarter, a new copper-zinc bearing massive sulphide body at the Ayoba Target,
located 5.3km south-southwest of the Company’s Hutchings Shaft at the Prieska Project and 1.6km
west and along strike of known copper mineralisation at Annex (Figure 5)(refer ASX release 28
November 2018). The discovery hole OAXD002 testing a Fixed Loop Transient Electro Magnetic
plate (FLTEM) (refer ASX releases 28 November 2018 and 18 September 2018) intersected 9.50m of
massive sulphide mineralisation at 0.93% Zn, 0.63% Cu, 0.22g/t Au and 2g/t Ag from a down-hole
depth of 654.50m (Figure 8) (refer ASX release 16 January 2019). This mineralisation includes a 1.5m
high grade Zn zone of 4.98% Zn, 0.89% Cu, 0.26% Au and 3g/t Ag from a down-hole depth of
654.50m. Drill-hole OAXD002_D1, a deflection drilled from OAXD002, confirmed the massive
sulphide mineralisation up-dip of OAXD002. The hole intersected 7.13m of massive sulphide
mineralisation at 1.44% Zn, 0.66% Cu, 0.34g/t Au and 2g/t Ag from a down-hole depth of 654.87m
(Figure 8) (refer ASX release 16 January 2019). A 0.88m intersection with high Zn grading at 11.20%
Zn, 0.89% Cu, 0.35g/t Au and 4g/t Ag, which correlates with the high Zn in OAXD002, was
intersected from a down-hole depth of 654.87m.

Figure 8: Section through holes OAXD002 and OAXD002-D1 showing the mineralisation intersected at the Ayoba Target.

The modelled FLTEM conductor at Ayoba, tested by holes OAXD002 and OAXD002-D1, has a strike
length of 1.1km and extends down-dip to at least 800m below surface and vertical depth to the
top of the conductor is 500m (Figure 8) (refer ASX release 28 November 2018). Beyond this
conductor the key stratigraphic horizon remains untested by geophysics or drilling for another
1,000m along strike to the western tenement boundary (Figure 9). Approximately 1km west-
northwest of the Ayoba FLTEM anomaly, the newly acquired magnetic data from the SkyTEM TM
survey identified a fold closure in the target stratigraphy (refer ASX 16 January 2019). Duplication
of the target stratigraphy in the fold closure offers an excellent target for follow-up work and the
ground EM survey should be extended to cover this fold closure (Figure 9).

Additional FLTEM surveys and drilling is planned to explore the lateral and depth extensions of the
mineralisation.

Figure 9: Section through holes OAXD002 and OAXD002_D1 showing the mineralisation intersected at the Ayoba Target.

SkyTEMTM Survey
A SkyTEMTM survey over the Repli, Repli (Doonies Pan), Vardocube and Bartotrax Prospecting
permits, covering 148km2, was completed on 9 December 2018 (Figures 9 and 10) (refer ASX
release 16 January 2019). The survey was flown with the highly innovative SkyTEM TM 312 high power
technology for deep target imaging. This high-power system, with a peak moment up to 1,000,000
NIA, is optimised to provide an exceptional depth of investigation, due to the high moment mode
with high current and low base frequency of 12.5Hz.
Several AEM anomalies were identified during a preliminary review of the data by the Company’s
Perth-based geophysical consultants, Southern Geoscience Consultants (Figure 11). Due to the
high-level of noise from the Prieska Mine infrastructure, tailings dam, pipelines, Eskom sub-station,
solar power plant and power lines, the data requires extensive processing to mask the cultural
feature noise in order to detect the subtle geological source conductors being targeted.

The preliminary results of the AEM data show subdued AEM response over both the main Prieska
Deposit, where cultural features provide a high noise effect, and the Ayoba Target. Modelling of
the FLTEM data at Ayoba showed a conductor with a low conductance of 100S to 150S (Siemens)
correlating well with the intersected mineralisation, that is pyrite dominated, with minor pyrrhotite
that is unlikely to yield strong conductance (refer ASX release 28 November 2018).              Final
processing of the data is in progress and is expected by end January 2019.

Figure 10: Plan showing the flight lines of the SkyTEMTM survey over the Repli, Repli (Doonies Pan), Vardocube and Bartotrax
Prospecting Right areas.
Figure 11: Preliminary results of SkyTEMTM survey showing CH30Z response and location of known deposits at Prieska,
Annex, Doonies Pan (PK1, PK3 and PK6) and the Ayoba discovery.

Regional Exploration (South Africa)

Overview of Regional Activity
The Company maintains a substantial and prospective land-holding in the Areachap Belt (Figure
12), and exploration programs on regional VMS and Ni-Cu-Co-PGE projects have been
accelerated during the Quarter. 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 as “clusters” associated with volcanic spreading centres, with
four such centres having been identified in the Areachap Belt. The Company is currently
prospecting for VMS deposits on its near-mine projects and on the Masiqhame Prospecting Rights
(Figure 12). The Kantienpan and Boksputs Zinc-Copper Deposits are currently the two most
prominent deposits on the Masiqhame Prospecting Right.

Similarly, world-class nickel deposits tend to also occur in clusters both on prospect and regional
scales. 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 other
associated mineral occurrences are known to exist on the Namaqua-Disawell Prospecting Rights
(Figure 12). The setting of mineralisation has been confirmed to be analogous to other orogenic-
hosted, deep-seated magma conduit complexes such as Kabanga (Tanzania), Nova (Australia),
Ntaka Hill (Tanzania), Akelikongo (Uganda), and Limoeiro (Brazil). Conduit style mineralisation is
currently the top priority global target for magmatic Ni-Cu-PGE sulphide exploration.
Figure 12: 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.

Electro Magnetic (EM) geophysical methods are the primary tool for discovery of massive
magmatic Ni-Cu-Co-PGE deposits. Due to the complexity of these intrusions, an innovative
approach to exploration is required to resolve the locations of economic mineralisation. This entails
usage of airborne, ground, and down-hole surveying systems. Regional exploration on the
Masiqhame and Namaqua-Disawell Prospecting Rights continued. Field mapping and
interpretation of drill information and geochemical data is currently underway. Modern EM
methods have advanced a great deal since the last systematic exploration took place in the
Areachap Belt, and the Company stands to benefit from its approach in using the latest EM
techniques in its regional exploration program.

Namaqua Disawell Project Area
Overview
The Jacomynspan Deposit (Figure 13) was discovered by Anglo American Prospecting Services
(AAPS) with drilling carried out along a 4km strike length. Resource drilling was carried out to a
depth of 900m over 1.3km of the strike by AAPS. Disseminated nickel-sulphide mineralisation was
intersected with widths varying between 30m to 70m (refer ASX release 14 July 2016). Two other
Ni-Cu deposits, Area 4 and Rok Optel, were investigated during the 1970s by AAPS, Newmont,
Phelps Dodge and Hoch Metals.
The Company believes a substantial exploration opportunity exists within the project area to
search for higher-grade, massive and semi-massive accumulations of nickel-bearing sulphides,
analogous to the Kabanga Deposit (Tanzania) and the Nova-Bollinger Deposit (Fraser Range
Province of Western Australia).

Work during this Quarter within the project area focused on the Rok Optel Prospect (Figure 13),
with the following work being completed:
Two diamond drill-holes (OROD003 and OROD004) at the Rok Optel Prospect were
completed. A total of 789m was drilled during the Quarter. Assay results were received
and accepted for drill hole OROD003. Although assay results of OROD004 were received,
quality assurance issues are still being verified with the laboratory.
A down-hole EM survey was completed in drill hole OROD002, indicating an off-hole
conductor, which was tested with hole OROD004.
A focused field mapping program at Rok Optel to assess the validity of the Newmont
mapping data and to characterise, contextualise and understand the geology has been
undertaken. This has better contextualised the intrusions and provided control for
interpretation of the drill results.
Ongoing work includes:
Mapping over SkyTEMTM anomalies.
Mapping of the area between Jacomynspan and Rok Optel to further define the geology
of that area.

Figure 13: Locality Map showing SkyTEMTM anomalies followed up on the Disawell Prospecting Right.

Rok Optel Prospect
The Rok Optel Prospect was discovered during the early 1970s and was initially explored by Phelps
Dodge and Hochmetals SWA. Mapping, Induced Polarisation (IP) geophysics, and drilling were
carried out. The intrusion was interpreted to be a mafic dyke emplaced parallel to the gneiss
foliation, striking north to north-north-east and dipping 65° - 75° to the west. Magmatic
mineralisation is located at several horizons, as disseminated, coarse patches, and massive
stringers associated with coarse-grained feldspathic amphibolite.

Fixed Loop Time Domain Electro Magnetic (FLTDEM) surveys
The FLTDEM conductors on Rok Optel have conductivities greater than 3000S. The position of these
conductors relative to historical drill-holes are shown in Figure 14, and the details of the modelled
plates in Table 6. The historical drilling intersected zones of lower conductance on the edges of
the newly modelled plates (Figures 15 and 16).

Figure 14: Plan showing FLTDEM grids, conductors and all drill holes on the Rok Optel Prospect.
Figure 15: Cross Section through historic holes PUD002 and PUD003 showing the drill hole traces and mineralisation relative
to the Company’s modelled FLTDEM conductive plates.

Table 6: FLTDEM plate parameters for the Rok Optel Prospect.

Target       Loop        Plate             Plate          Approximate
                       Dimensions       Conductance         Plate Depth
                         (m)           (Siemens)              (m)

                      475 x 90            2050                230
Rok Optel    ROK1     475 x 90            2500                250
                      475 x 85            3600                280
                      475 x 100           1250                200
             ROK2     500 x 95            1700                225
                      475 x 85            2900                275
                      130 x 300            850                275
             ROK3     135 x 250            950                300
                      120 x 275           1250                300
                      100 x 330           5250                295
             ROK4     90 x 300            7200                310
                      80 x 300            9400                320

Diamond Drilling
The drill-hole status at 31 December 2018 is summarised in Table 7. Holes OROD003 and OROD004
were completed during Q4 2018.

Table 7: Rok Optel diamond drill status at 31 December 2018.
                                                                                   Dip         Azimuth
Drill Hole   X UTM34S     Y UTM34S      Elevation (m)     Final Depth (m)
                                                                                    (degrees)     (degrees)

OROD001       580,215      6,746,005          1059             412.06              -60           120
OROD002       580,360      6,749,760          1059             491.95              -65            90
OROD003       580,142      6,745,874         1,057             532.73              -70           102
OROD004       580,352      6,746,760         1,050             531.52              -80            47

Drill-hole OROD003, testing an off-hole conductor in hole OROD001, intersected several sills of
sulphide-bearing mafic to ultramafic intrusive rocks from 89.99m to 530.40m depths. The hole was
completed at 532.73m. The intersected mineralisation comprises multiple injected massive
sulphide veinlets as well as patchy and net textured sulphide mineralisation varying from 1 to 21cm
in width. The highest-grade intersection was over an interval of 0.84m from 397.27m down-hole.

Drill-hole OROD004 aimed to test an off-hole conductor indicated by a DHTDEM survey in drill-hole
OROD002, intersecting mafic to ultramafic intrusive rocks over a down-hole width of 164m. A 19m-
thick zone of mineralisation, including injected massive sulphide veins and an injected sulphide-
host rock breccia, was intersected from 419.00m down-hole. The hole was completed at 531.52m.

Down-hole Time Domain Electro Magnetic surveys
A DHTDEM survey was undertaken in drill-hole OROD003 to assess whether there is any off-hole
conductance related to intersected mineralisation. Three off-hole conductors with
conductance’s of 7,500S, 16,000S - 18,000S and 16,000S - 17,000S were identified. The results are
shown in Table 8.

Table 8: Summary of a DHTDEM survey conducted in drill-hole OROD003 at Rok Optel.

Target     VMS/NiS     Loop      Conductor Model          Plate            Plate      Approximate
                                                         Dimensions      Conductance   Plate Depth (m)
                                                           (m)          (Siemens)

                                  OROD003_1_2426         80 x 120        1500          ~245 DH
DHTDEM     OROD003      ROK2      OROD003_2A_3739        100 x 60        13000+        ~380-390 DH
                                  OROD003_2A_4042        125 x 55        18000+        ~380-390 DH
                                  OROD003_2B_3739        90 x 50         18000+        ~380-390 DH
                                  OROD003_2B_4042        100 x 50        18000+        ~380-390 DH
                                  OROD003_3_3739         110 x 100       13000+        ~500 DH
                                  OROD002_3_4042         150 x 75        16000+        ~500 DH


The results of the DHTDEM are consistent with other sulphide mineralised intrusions at which multiple
mineralised zones result in complex electromagnetic responses that are challenging to resolve
until drill-hole control is achieved.

Regional Mapping and Geochemistry
Field mapping continued over the SkyTEMTM anomalies, which confirmed historical Newmont
mapping as well as revealed several new intrusions (Figure 16). The mapped geology together
with drill results, whole rock geochemistry and petrography show the Jacomynspan Suite to be a
much bigger, and more complex, intrusive body than previously reported by explorers.

Figure 16: Plan showing current and newly discovered intrusions which have been recently mapped.

Area 4 Prospect
The Area 4 Prospect (Area 4) was surveyed using two FLTDEM grids. Seven plate models of
conductance ranging from 350S to 2000S, with smaller dimensions characteristic of semi-massive
to massive sulphide mineralisation within or on margins of disseminated sulphide mineralisation,
have been modelled (Figures 17 and 18).
Figure 17: Plan showing EM conductors (black) and historic drill results on Area 4 overlain on an airborne magnetic image.

Figure 18: Section looking east through drill hole JAC007 showing the Ni-Cu sulphide intersection and newly detected
FLTDEM conductors at Area 4.

Masiqhame Project Area
Overview
This project is defined in terms of the Masiqhame tenement holding and includes the Kantienpan
and Boksputs zinc-copper deposits and shows regional potential for hosting VMS zinc-copper and
nickel sulphide mineralisation.
SkyTEMTM anomalies associated with a paleo-sea floor setting
The airborne magnetic data obtained with the SkyTEM TM surveys is superior to any regional
airborne magnetic data previously available over the prospecting right and allowed for detailed
regional geological interpretations (Figure 19). These interpretations were based on published
data and field mapping in conjunction with aeromagnetic data. Using the Kantienpan and
Boksputs areas as type localities, a paleo–seafloor setting was identified, and mapped out, using
the magnetic data. VMS deposits form on, or close to, the seafloor and as such, the paleo-seafloor
became a target horizon for discovering VMS deposits.

Figure 19: Interpretive geological map of the Masiqhame Prospecting Right showing the inferred paleo-seafloor, known zinc-
copper deposits/occurrences and SkyTEMTM anomalies.

The Boksputs Area and K2 Anomaly
Geological setting, conductivity, coherency and size of SkyTEM TM anomalies were used as criteria
to select VMS targets at Masiqhame and Disawell. Five of the anomalies have now been covered
with FLTEM surveys including B1, B2, B4, K2 and BS1, with variances in the anomaly’s conductivities
varying from weak to strong (Figures 19 and 20, Table 10). The K2 and K3 surveys were completed
during October 2018.
Figure 20: Geological map of the Boksputs-Kantienpan area showing the B2 and K2 FLTEM grids and conductors relative to
the Boksputs and Kantienpan Zn-Cu deposits and conductors outlined during Q3 2018.

Table 10: Summary off the modelled conductors in the Boksputs area.


ID         Size         Depth    Conductance         Dip                                  Geology

B1        1000 X 1000m      500m     3000S            SW        Meta psammite / pellite and amphibolite. Minor exhalites present
B2        400 X 1000m       350      1500 - 2500S     W         Meta psammite / pellite and amphibolite. Minor exhalites present
          300 X 1000m
B4                          350m     400S             60SW      Sand cover. Mag interpretation show associated fold closure
          plunge NW
BS1       800 X 700m        <100m    40S              W         Meta volcano sedimentary package. Thin exhalite horizon present.
K2        Narrow confined conductor plunging N-NNW from shallow depth. Low conductance.

Three of the FLTEM conductors, B1, B2 and B4 offer priority follow-up targets (Figure 20) (refer ASX
release 24 September 2018). Mapping and structural interpretations over the B1 target were
completed and show the conductor to:
?    occur in similar stratigraphic positions to the VMS style mineralisation at Boksputs;
?    have a favourable stratigraphic and structural setting, occurring on a prospective contact
     between amphibolite and meta-psammite sequences (Figure 21); and
?    have dimensions that show the causative body to be of relatively large volumes.
It is doubtful whether IP surveys used in the 1970s could have detected a 500m deep conductor
like B1, and no evidence could be found that conductors B1 and B2 were drill tested in the past.

The B2 conductor is offset from the B1 conductor, at shallower depth and of lower conductance.

Figure 21: Three-dimensional view looking south-east and showing the stratigraphic and structural setting of the B1 and B4
conductors at the Boksputs Prospect.

Conductor B4 occurs in a fold hinge and is orientated parallel to the plunge direction of a tightly
overturned syn-formal structure. The structural stratigraphic setting and spatial association with
known mineralisation makes the B4 conductor a highly-prospective VMS target (Figures 20 and
21). Recent mapping shows seven diamond drill holes drilled along strike of the conductor (Figure
22). It is known that copper mineralisation was intersected in these holes, but due to the plunge of
the conductor, it is doubtful whether these holes fully tested the anomaly. Holes A to D would have
intersected the mineralisation at roughly the same depth, with holes A to C being too shallow and
D to F missing the conductor (Figure 22). Only drill-hole G would have intersected the conductor
if drilled deep enough i.e. in excess of 500m. Currently only the collar positions, azimuth and
inclination of these holes are known. Data compilations and field mapping is ongoing.
Figure 22: Map showing drill hole collars following the strike of the B4 conductor at the Boksputs Prospect.

The K2 conductor is a near surface feature and appears to plunge shallowly to moderately north
- northwest with a steep dip and narrow width but elongated down-dip/down-plunge and is
moderately conductive (Figure 23). Reconnaissance field mapping failed to explain the anomaly
and more work is required.
Figure 23: Maps showing the K2 conductor on channels 12 and 18. The hot colours show high conductivity.

Kantienpan
As part of characterising the Zn - Cu mineralisation on the Masiqhame Prospecting Right, and to
gain a better understanding of controls on mineralisation at Kantienpan, field mapping was
undertaken over the deposit during Q4 2018 (Figure 24). Mapping in the area is ongoing. At this
stage the following is concluded from the mapping:
?    Mineralisation occurs close to the contact between a kinzigite (meta-pelitic rocks) and
     mixed unit of quartz-feldspar-amphibole gneiss, calc-silicate rocks and kinzigite.
?    It should be possible to map out the stratigraphic position of the Zn-Cu mineralisation, as
     defined on Kantienpan, on a regional scale.
?    The northern limit to the sulphide mineralisation coincides with a fault displacement.
Figure 24: Geological map of the Kantienpan Deposit showing drill-holes, EM conductors and the fault off-set on the northern
limit of the mineralisation.

Marydale Gold-Copper Project (Witkop)
This project includes the known Marydale Gold-Copper Deposit. In addition to the Prieska Project,
the Agama transaction gives the Company exploration rights over the Marydale Gold-Copper
Project located 60km north of the Prieska Project. No field work was undertaken during the
Quarter.

Australian Projects

Connors Arc Epithermal Gold Project (Queensland)

During the Quarter, the sale of the Company’s Connors Arc Project to Evolution Mining Limited
(Evolution) completed, with government approvals obtained and the final payment of $0.5M
received by the Company.
The Company retains a 2% royalty on net smelter returns from the sale of gold recovered and sold
by Evolution from the tenements acquired as part of the sale, up to a value of $5M.

Fraser Range – Nickel-Copper Projects (Western Australia)

Orion maintains a sizeable tenement package in the Fraser Range Province of Western Australia
which Independence Group NL (ASX: IGO) is currently earning in to via a Joint Venture Agreement
(JVA, refer ASX release 10 March 2017).

As stated in previous Quarterly Reports, IGO has conducted Spectrum Airborne EM surveys and
rehabilitated tracks and pads from previous aircore drilling programs.   During the Quarter,
rehabilitation on E39/1653 was completed and sections E39/1654 and E69/2707 were also
rehabilitated.

A desktop review of all EM, magnetic, gravity, aircore and petrographic data, has produced
several targets which IGO plan to test in 2019. Drilling on the Company’s Fraser Range Joint
Venture ground is expected to begin in March 2019, with results due before the end of June 2019.

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.

Walhalla Gold and Polymetals Project (Victoria)

During the Quarter, the Company did not carry out any exploration activity on the Walhalla
Project.

Tenement Schedule

                                              Ownership   Change in
Tenement                 Project                                      Joint Venture Partner
                                              Interest    Quarter
South Africa
NC30/5/1/1/2/10445PR      PCM                 73.33%                 ---
NC30/5/1/1/2/10138MR      PCM                 73.33%        ---
NC30/5/1/2/2/10244PR      Marydale            73.33%        ---      ---
NC30/5/1/1/2/11841PR(1)   Vardocube           70.00%        ---      ---
NC30/5/1/1/2/11850PR(1)   Bartotrax           74.00%        ---      ---
NC30/5/1/1/2/10032MR(1)   Namaqua-Disawell    18.50%        ---      Namaqua Nickel Mining (Pty) Ltd
NC30/5/1/1/2/10938PR      Namaqua-Disawell    18.50%        ---      Disawell (Pty) Ltd
NC30/5/1/1/2/11010PR      Namaqua-Disawell    18.50%        ---      Namaqua Nickel Mining (Pty) Ltd
NC30/5/1/1/2/816PR        Masiqhame           49.00%        ---      Masiqhame 855 (Pty) Ltd
Western Australia
E28/2367                  Fraser Range         30%          ---      Independence Group NL
E28/2378                  Fraser Range         30%          ---      Independence Group NL
E28/2462                  Fraser Range         30%          ---      Independence Group NL
E28/2596                  Fraser Range         30%          ---      Independence Group NL
E39/1653                  Fraser Range         35%          ---      Independence Group NL & Geological Resources
                                                                      Pty Ltd 
                                               Ownership   Change in
Tenement                          Project                            Joint Venture Partner
                                               Interest    Quarter
E39/1654                  Fraser Range             10%      ---      Independence Group NL & NBX Pty Ltd
E69/2379                  Fraser Range             10%      ---      Independence Group NL & Ponton Minerals Pty Ltd
E69/2380                  Fraser Range             10%      ---      Independence Group NL & Ponton Minerals Pty Ltd
E69/2707                  Fraser Range             10%      ---      Independence Group NL & Ponton Minerals Pty Ltd

Victoria
MIN5487(2)                            Walhalla                 100%         ---      ---
EL5340                                Walhalla                 100%         ---      ---
EL5348                                Walhalla                 100%         ---      ---
(1)       Execution of Mining Right pending.
(2)       MIN 5487 has been sold to Centennial Mining Ltd.

Corporate
Cash and Finance
Cash on hand at the end of the Quarter was $2.0M.

Tembo Loan Agreement
Following Quarter end, on 25 January 2019, the Company announced that Tembo Capital Mining
Fund II LP (Tembo) has continued its strong support of Orion through providing a new unsecured
$3.6M Bridge Loan Facility (Loan Facility).

Under the terms of the Loan Facility, Tembo may at its election, have the balance of the Loan
Facility (including capitalised interest and fees) (Outstanding Amount) repaid by the issue of
ordinary shares in Orion (Shares) to Tembo at a deemed issue price of 2.6 cents per Share (subject
to receipt of Shareholder approval), being the same conversion price as the 2017 Convertible
Notes.

Proceeds from the Loan Facility will be used principally to progress the bankable feasibility study,
which is on track for completion in Q2 2019 and to repay the current Bridge Loan ($0.6M).

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 may elect for repayment of the Outstanding Amount to be satisfied
       by the issue of Shares by the Company to Tembo 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 January 2020, or if Tembo 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 (or such later date as may be agreed between Tembo and Orion);
?      Establishment fee:
            o Cash - capitalised 5% of the Loan Facility Amount, payable on the Repayment
              date; and
            o Options - 11M unlisted Orion options, exercisable at a price of 3.0 cents per option,
              expiring on the date which is 5 years after the date of issue of the options, provided
              that Orion's obligation to issue Shares on exercise of the options is subject to receipt
              of shareholder approval.
?   Security: Loan Facility is unsecured.

Extension of Maturity Date of Convertible Notes
On 7 February 2017 Orion announced a proposed 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 issue of the Convertible
Notes on 13 March 2017 and on 17 March 2017, the Company announced the issue of 232.69M
Convertible Notes to the value of $6.05M (each with a face value of 2.6 cents). Key terms of the
Convertible Notes are set out in the Company’s ASX release dated 8 March 2017.

In accordance with the Convertible Note terms, the Maturity Date of each Convertible Note was
17 March 2019. In support of the ongoing capital requirements of the Company, in January 2019,
the Noteholders approved extension of the Maturity Date from 17 March 2019 to 30 September
2019.

Annual General Meeting
The Annual General Meeting of shareholders of the Company was held at Clayton Utz, Level 27,
QV. 1 Building, 250 St Georges Terrace, Perth, Western Australia on Thursday, 29 November 2018.
All resolutions put to shareholders at the meeting were carried on a show of hands.


31 January 2019

JSE Sponsor
Merchantec Capital

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