Wrap Text
December 2022 Quarterly Activities 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
December 2022 Quarterly Activities Report
HIGHLIGHTS
- Definitive agreements for US$87 million funding package signed with subsidiaries of Triple Flag Precious
Metals Corp. to advance the Prieska Copper-Zinc Mine (PCZM).
• US$80 million (~A$118 million) of Precious Metal Stream funding to be advanced against the
delivery of 84% of future gold and silver by-product production, with each stream rate reducing to
50% after certain milestones. Orion will also receive payments of 10% of the delivered precious
metal value at spot gold and silver prices at the time of delivery.
• An additional A$10 million (~US$7 million) to be advanced against calculated payments equal to
0.8% of gross revenue from future mineral sales. First draw-down of funds from the A$10 million
Funding Arrangement expected in Q1 CY2023.
- Funding terms agreed with South Africa’s Industrial Development Corporation (IDC), and recorded in
a non-binding term sheet, in terms of which the IDC will advance ZAR250 million (~A$22 million) as a
senior secured, convertible debt facility to fund early works at the Prieska Copper-Zinc Project.
Definitive agreements are progressing well, with funding expected to be available for draw-down in
Q1 CY2023.
- The A$10 million from the funding arrangement with Triple Flag, combined with the IDC Convertible
Loan, will underpin the completion of a Feasibility Study for early mining at Prieska and enable
commencement of mine dewatering.
- Pre-development funding secured for the Okiep Copper Project, with the IDC acquiring a 43.75% stake
in New Okiep Mining Company (NOM). IDC has now advanced its share of pre-development costs,
amounting to ZAR34.6 million (~A$3.0 million), and will facilitate meaningful economic participation by
Historically Disadvantaged South Africans to further the ownership objectives of the Mining Charter
2018.
- Notarial execution of the mining rights for SAFTA (Okiep Copper Project – Flat Mines) and Namaqua
Nickel Mining (Jacomynspan Project).
- Tembo Capital continued its strong support for Orion through a US$0.50 million (~A$0.72 million)
convertible loan facility.
- Highly experienced corporate finance executive, Mr Peet van Coller, appointed as Orion’s new South
African-based Chief Financial Officer, with effect from 1 April 2023, in preparation for the imminent
transition to mine development and production in South Africa.
Orion’s Managing Director and CEO, Errol Smart, said:
“While 2022 delivered a number of challenges – both for Orion and more broadly, for South Africa – I am
pleased that the Company demonstrated strong resilience and was able to quickly adapt to the evolving
operating environment.”
“Orion made significant progress in the Quarter, finishing the year with a series of important funding and
personnel announcements, and I believe Orion is now well on its way to achieving its goal of unlocking
the incredible base metals potential in the Northern Cape.
“Key achievements during the December Quarter included securing a funding package to progress pre-
development activities at the Prieska Copper-Zinc Project and the completion of permitting and early
stage funding for our second base metals hub at the Okiep Copper Project. These milestone funding
arrangements also saw the introduction of the IDC as a new development partner at Okiep.
“The combined pre-development funding being provided by Triple Flag and the IDC for Prieska now totals
over ZAR350 million (~A$32 million). This will provide funding for Orion to carry out demonstration trial
mining and allow dewatering to commence from underground mine workings. Both of these work streams
are critical to our Early Works BFS, which we expect to complete by mid-2023, and marks the official start
of development at PCZM.
“Orion is entering an exciting phase of its development and I would like to take this opportunity to thank
our partners and dedicated team for their hard work and tenacity.”
Commodity Markets
Base metals prices continued their upwards trajectory during the December 2022 Quarter on the back of
relatively bullish sentiment, although the movement was not uniformly upwards.
Copper remains volatile, having seen over US$1,000/t variation in the last three months, ranging from a
low point of US$7,420/t in mid-October to a high of US$8,537/t in early December. It started the quarter
at US$7,647/t and remained steady at US$8,381t/ in mid-December.
Zinc prices fell to a three-month low of US$2,682/t in early November and have rallied since, reaching a
quarter high of US$3,288/t in mid-December.
Nickel prices started the Quarter low at US$22,245/t and peaked at US$31,075/t in the first week of
December, before easing off to US$28,800/t in mid-December 2022.
The World Bank’s October Commodity Markets Outlook notes that copper (and aluminium) “prices will
likely remain volatile as the energy transition unfolds and as global commodity demand shifts from fossil
fuels to renewables, which are metals intensive. For metal-exporting countries, the energy transition may
bring windfalls, but it could also increase their exposure to price volatility”.
Three-month copper futures on the London Metal Exchange (LME) traded at US$8,543/t on 12 December
in Europe, after posting November as their strongest month since April 2021 on hopes for a demand boost
if China eased its zero-Covid policies. Goldman increased its 12-month forecast for copper from
US$9,000/t to US$11,000/t and upgraded its average price forecast to US$9,750/t for 2023 and US$12,000/t
for 2024.
Bank of America commodity strategists believe copper could rally to US$12,000/t in the second quarter
of 2023, given the right set of circumstances.
Fitch Ratings however have kept their copper assumptions unchanged, reflecting “softer market
sentiment linked to the global economic slowdown in 2023, offset by supportive short- and medium-term
supply-demand drivers”. The same also remains the case for zinc, noting “smelter and refining bottlenecks
that kept the market tight in 2022 will continue in 2023, despite growing mine supply”.
Concentrates surpluses will remain until 2024, when new Chinese smelting capacity comes on stream,
alleviating refined metal scarcity. Nickel bucks this trend, with an increased price assumption for 2023 that
“reflects a price rally in a rather illiquid and volatile market, although our fundamental views on supply
and demand remain unchanged”.
In October 2022, Trafigura warned that global copper stocks were dipping perilously low, with the market
expected to end the year with inventories covering just 2.7 days of global consumption – as opposed to
the usual week of consumption that might be expected. It has been noted that these constrained
inventories represent a very real risk of sudden price spikes, should there be any sudden drawdowns.
Also, in October, Wood Mackenzie noted that: “Unrelenting negative news weighed heavily on the zinc
price in October. Rising interest rates and inflationary pressures in the US and Europe and fresh Covid
lockdowns in China offset the fact that the month of October was bookended by the closure of Budel
and Nordenham (European smelters). Consequently, the price drifted lower. The evident tightness of the
European market is making the discussions for next year's annual contract premiums difficult. The key
uncertainty is if and when the idled smelters will restart and the performance and survivability of the
remaining plants”.
On nickel, S&P Global notes: “With the primary market expected to be in surplus from 2022 to 2026, prices
are expected to decrease year over year through 2025 while remaining above 2021 levels. However,
November's 2.1% increase to the 2026 consensus price forecast indicates that prices might start a new
upward trend”.
LME COPPER PRICES OCTOBER 2022 – DECEMBER 2022
Source: London Metal Exchange
LME ZINC PRICES OCTOBER 2022 – DECEMBER 2022
Source: London Metal Exchange
LME NICKEL PRICES OCTOBER 2022 – DECEMBER 2022
Source: London Metal Exchange
Operations Report
Health and Safety, Environmental Management and Community Engagement
Health and Safety
No injuries were recorded during the Quarter. Hours worked for the Quarter and financial year to date
are shown below:
Table 1: Hours worked at the Group’s Areachap and Okiep Copper Projects (South Africa).
Hours Worked
Category of Work
Quarter FY2023 YTD Total
Exploration 336 8,375
Mine Re-entry 8,346 21,012
Contractors 7,555 18,709
Total 16,237 48,096
The Lost-Time Injury Frequency Rate (LTIFR) per 200,000 hours worked is 0 for the Quarter.
At the end of the Quarter, the team celebrated 223 shifts without a Lost Time Injury (LTI) The safety
campaign for the festive season focused on “the task at hand”.
The Company continues to manage the risks from the COVID-19 pandemic in the workplace in line with
government and industry guidelines. During the Quarter, no COVID-19 cases or hospitalisations were
reported.
Community and Stakeholder Engagement
Orion continues meaningful engagement with its host communities.
Orion held a meeting with the Siyathemba Stakeholder Engagement Forum (SEF) in November 2022 to
provide updates on the progress at the Prieska Copper-Zinc Project.
During this meeting, Orion provided an update on ongoing funding efforts, plans for the revised Bankable
Feasibility Study (BFS) as well as the early production and dewatering plans at the Prieska Copper-Zinc
Mine (PCZM). The forum also discussed the ongoing Bosberaad Task Team Process which concluded its
mandate at the end of the Quarter. A report on the roadmap developed by the Task Team for the
achievement of the aspirational host community employment and procurement targets (agreed at the
Bosberaad in October 2021) is anticipated to be concluded and circulated to stakeholders during Q1
CY2023.
Orion introduces the New Okiep Mining Company BEE partner and the Community & Employee Trusts to
the community.
The Company held its third successful meeting with the Nama Khoi SEF in November 2022, where the
Black Economic Empowerment (BEE) transaction for the New Okiep Mining Company Proprietary Limited
(NOM) was unveiled.
Orion, together with the Industrial Development Corporation of South Africa Limited (IDC), will be
facilitating the sale of shares to a black economic empowerment consortium and securing employee
and community ownership in NOM. The IDC will sell 22.22% of the shares it buys in NOM to BEECo, which
is a “BEE Entrepreneur” entity led by Mr Lulamile Xate.
At the meeting, Lulamile Xate introduced himself to the community and explained the transaction,
emphasising his commitment to economic development in the Namakwa District.
In addition, the independent founding trustee of the Orion Nama Khoi Community and Employee Trusts,
Mr Shaheem Samsodien, introduced himself and explained the objectives, structure, governance and
establishment process of the Community Trust.
Springbok community liaison office reopens.
Orion reopened its Nama Koi community liaison office in Springbok on 1 October 2022 following a
temporary closure in August. The office continues to serve as a base for community interaction and
provides development and operational updates to the community.
Environmental Management
Orion recognises that its environmental performance is a critical component of its success.
The Company strives to deliver the highest level of environmental compliance, with a commitment to
monitoring and managing the environmental impacts of its activities during and beyond the life of its
operations.
There were no environmental incidents recorded during the December 2022 Quarter.
Prieska Mine Development and Exploration
Prieska Copper-Zinc Project Development
A number of key workstreams progressed during the Quarter as part of formulating the Early Production
Plan for the Prieska Copper-Zinc Project (Prieska Project). The new plan brings forward revenue
generation and potentially reduces the upfront external peak funding requirements by phasing the mine
build while retaining the option to scale up to the full-scale BFS-20 project as sufficient funding becomes
available.
Leveraging off the information gathered, and material assumptions made in Orion’s 2020 Bankable
Feasibility Study (BFS-20), and supplemented by additional information obtained from recent drilling
campaigns and the planned trial mining exercise, the Early Production Plan will comprise:
• A revised mine sequence to extract the mine’s crown pillar (+105 Level Crown Pillar), which is
above the accumulated water level, using underground mining methods. Extraction of the +105
Level Crown Pillar was originally planned to occur at the end of the mine life using open pit mining.
Mining the crown pillar upfront offers the potential advantage of earlier concentrate production
and allows for dewatering to be undertaken at lower pumping rates and concurrent with early
revenue generation;
• The potential opportunistic extraction of the mineralised pillars left behind from previous mining
and located above the accumulated water level. Production from the remnant pillars could
supplement the early mining;
• Commencing with dewatering of the underground workings using a modular configuration, with
the first modules being commissioned in Q2 CY2023 at one-third of the full-scale pumping rate
proposed in the BFS-20 Plan and ahead of the project being fully-funded for full-scale
construction; and
• Extraction of the Deeps Sulphide deposit, below the previously mined area, as a future expansion
phase.
Orion is planning to proceed with trial mining as early as Q2 2023, first targeting the +105-level Crown Pillar
and then developing into the remnant pillars.
While preparations for early dewatering are already underway, the whole pumping and water discharge
system is planned to be commissioned by March 2023, subject to funding being in place. The Early
Production Plan BFS could then be ready during 2023, paving the way for securing project development
funding and a Final Investment Decision (FID).
Operational Readiness
During the Quarter, the Company finalised access and usage rights for the explosive magazines from the
Armaments Corporation of South Africa (Armscor) and commenced the process to licence the
magazines. This entails maintenance of the magazines and submitting an application to the relevant
authority. Feedback is expected early in 2023 on the transfer of the current licence to PCZM. Additionally,
the Company has secured all permitting required to receive and use explosives on site.
Discussions with the national power utility company, Electricity Supply Commission (Escom or Eskom),
progressed during the Quarter to secure a 3MVA supply as early as February 2023 and the 15MVA supply
required for expanded mining activities by mid-year 2023. Once the power supply upgrades are
completed, operations can commence at the project with uninterrupted power supply.
Drilling and blasting of the +105 level drive, which will provide access to the ore zone for trial mining,
commenced and the installation of ventilation required for increased underground rehabilitation and
trial mining activities was completed.
The decline portal area, which is excavated in the weathered horizon, was re-supported in preparation
for increased underground traffic. This work was undertaken by PCZM personnel with assistance from the
appointed rock engineer. The works on the portal have been inspected and declared safe.
The last underground water retention dam was constructed on 178 level during the Quarter, concluding
the critical work to set up the underground infrastructure for the dewatering campaign. The focus of
activity will now move to surface infrastructure setup, which includes the receiver dam design and
construction, as well as the evaporation paddocks and the surface electrical reticulation. Once
dewatering has started, construction of the reservoir dam at the 210 level, designed to store around
30,000m3 of water for future use, will begin.
Early Dewatering
The Early Dewatering Setup, referred to as Project Metsi-ka-Pela (‘Water in-front’), consists of a mine
dewatering and water treatment network, with a pumping rate that will build up from 120m 3/hr to
500m3/hr over time compared to full-scale dewatering in BFS-20 planned at 1,500m3/hr. The Early
Dewatering Setup will be established in a modular form that allows the system to be scaled up should the
need arise and sufficient funding becomes available. Preparations are on schedule to allow dewatering
to commence during Q1 CY2023.
Figure 1: Planned dewatering at Prieska Copper-Zinc Mine for the next three years.
Prieska Project Funding Arrangements
Triple Flag Funding Package.
In December 2022, Orion signed definitive agreements with certain subsidiaries of Triple Flag Precious
Metals Corp. (TSX/NYSE: TFPM) (with its subsidiaries, Triple Flag) for an US$87 million1 secured funding
package for PCZM made up of a precious metals stream and additional early funding arrangement.
The precious metal stream, which comprises US$80 million (~A$118 million) of funding to be drawn down
in tranches, alongside other bank and/or third-party funding during mine development, is conditional on
the mine development being fully funded, finalisation of an executable mine plan to Triple Flag’s
satisfaction, South African regulatory approvals, and fulfilment of conditions precedent standard for such
arrangements.
Triple Flag will also provide an additional A$10 million (~US$7 million) to complete the Early Works BFS.
Draw down on the A$10 million funding agreement is conditional on the completion of due diligence,
entering into definitive agreements and Orion securing an additional A$20 million funding to execute the
agreed work focused on the early mining works and the dewatering.
Triple Flag has confirmed to Orion that draw-down of the Industrial Development Corporation of South
Africa Limited (IDC) Convertible Loan (refer below) will be sufficient for this A$20 million funding condition
to be satisfied. Draw-down of the A$10 million Funding Arrangement will be in tranches and will pro rata
match the draw down requests that Orion will make under the ZAR250 million IDC Convertible Loan (refer
below). The first draw-down of funds from the funding agreement is expected in early Q1 CY2023.
Refer to the Corporate Section for further detail.
IDC Convertible Loan.
In October 2022, Orion entered a non-binding term sheet with the IDC for a ZAR250 million (~A$22 million)
senior secured loan facility (IDC Convertible Loan) to fund early mining works and key pre-development
activities at PCZM.
1 FX Source: Oanda.com. Values are converted at period end date or funding date.
The proceeds of the IDC Convertible Loan will support the completion of the BFS on the Early Production
Plan, while also allowing the Company to commence dewatering of the existing underground mine.
The BFS for the mining of the crown and remnant pillars down to the 385m level at PCZM and the
commissioning of pumping and water treatment facilities to dewater the mine at a rate ramping up to
500m3 per hour are key pre-development workstreams.
Orion expects a definitive agreement on the IDC Convertible Loan to be signed with the IDC in Q1
CY2023.
Refer to the Corporate Section for further detail.
Prieska Copper-Zinc Project Exploration
105 Level Mineral Resource In-fill Drilling.
Orion has established a program to first proceed with trial mining targeting the +105-level Crown Pillar
and then moving into the remnant pillars starting in Q1 CY2023. In-fill drilling of the +105-level Crown Pillar
Mineral Resource, required to support the Early Mining Scenario, commenced in the March 2022 Quarter,
and was completed in July 2022 with results confirming the presence of enriched copper mineralisation
in the previously drilled supergene sulphide mineralisation (refer ASX/JSE release 11 July 2022).
The orebody model interpretation has been updated and the Mineral Resource will be re-estimated and
re-classified where appropriate with an anticipated updated JORC Mineral Resource in Q1 CY2023.
Okiep Copper Project Development and Exploration
Environmental Management
Water Use Licence Application (WULA).
The Water Use Licence Application process commenced in November 2022, with the initiation of a public
participation process (PPP) where comment on the draft Water and Waste Management Plan (WWMP)
was sought from Interested and Affected Parties (IAP’s). The Draft WWMP has been posted on the
consultant’s (ABS-Africa) website and distributed to registered IAP’s in accordance with the applicable
legislation. The PPP will remain open until mid-February 2023, after which submission of the WULA to the
Department of Water and Sanitation can proceed.
Results from the Radiological Risk Classification of flotation tailings and development waste rock are
imminent. The laboratories of the Nuclear Energy Corporation of South Africa (NECSA) were used for this
analysis to ensure best possible accuracy. All indications received thus far indicate no significant
radiological risks exist, but confirmation by NECSA laboratories is awaited.
Waste classification of the flotation tailings, development waste rock, ore sorting discard material and
the in-situ evaporation paddy material has been completed and will form the basis of the Tailings Storage
Facility (TSF) design. Test work confirms that leachable concentrations of all metals and compounds in
the waste materials are below the thresholds for Class 3 waste classification and only the small mass of
existing evaporation paddy residue material generates a leachate which could potentially impact on
groundwater quality.
All planned aquifer drilling and testing in and downstream of the TSF basin has been completed and
water analysis results received. The hydrological report including the groundwater and pollution-plume
modelling around the planned TSF is complete.
The conclusion from all this work is that groundwater migration in aquifers in and around the TSF is very
slow as indicated by elevated levels of sulphides being confined within a small distance from the source
(existing evaporation paddies).
Tailings Storage Facility (TSF).
The designed TSF facility is located on an area previously impacted by prior mining operations and
comprises an embankment mechanically constructed using mine development waste and ore-sorter
discard material.
The design of the TSF embankment is for construction in four phases of downstream embankment raises.
This process ensures adequate storage capacity for tailings deposition throughout the Project life, while
creating a single deposition site for all waste and tailings from the mining operation.
Collection of data to support the use of an unlined TSF has been comprehensive. The existing paddy
material, identified as the source of existing elevated sulphate levels in the groundwater in the proposed
TSF basin, will be relocated to an impoundment facility of less than 1.5 Ha with a Class B liner system
located within the proposed TSF basin, resulting in an overall positive long-term impact on groundwater.
Mine Planning
The layouts of the underground mining areas were completed in the September 2022 Quarter. In the
December 2022 Quarter, various iterations of the mining schedule were investigated, aimed at improving
early availability and grade of ore.
A site visit to the existing Flat Mine North underground workings was conducted by a geotechnical
engineer to confirm local rock conditions. Final recommendations for stope and pillar layouts are
included in the resultant geotechnical report based on observations of drill core and underground
conditions, as well as rock strength tests.
Drafting of the mine planning report is in progress.
Infrastructure.
The design and costing of refurbishing and upgrading the Nama Khoi Municipal (NKM) electrical
infrastructure to accommodate the 10 MVA supply to the mine site has been completed and approved
by the Orion-NKM Power Supply Steering Committee. A mechanism for determination of an applicable
electricity tariff based on Eskom tariffs and a cost of supply study has been agreed. This will be submitted
to the National Energy Regulator (NERSA)for approval as required by municipal legislation.
A decision has been taken to limit the main incoming power supply to the distribution substation at the
process plant site to 11 kV to avoid stringent environmental requirements for 66 kV overhead lines and
provision of early construction power from the grid. The surface 11 kV reticulation design for all the remote
decline portals and ventilation exhaust fans has been finalised.
Planned surface infrastructure servicing the operations includes prefabricated and containerised offices,
change-houses and workshops for low cost and speedy construction. Layouts and specifications for these
have been concluded and costed.
Potable water and process water sources, distribution and storage facilities have been finalised for
inclusion in the WULA. Potable water for the mine site will be drawn from a drill hole with good quality
water close to the process plant. It has been decided to source process make-up grey-water from the
Nababeep Municipality Wastewater Works (Water Works) effluent. Orion is advising NKM on the
appointment of consultants for the Water Works upgrade which is planned to use budget allocated from
the South African National Government for this purpose.
Land Access.
As reported previously, a lease agreement with the NKM for the use of municipal land for the construction
of surface infrastructure required for the proposed mining operation has been concluded. The process
for the rezoning of land use from agriculture to industrial (mining) has been initiated and will run
concurrently with the WULA. Landowner support for this has been given and no impediments to this
process are foreseen.
Negotiations between Orion’s Commercial and Legal team and other landowners are ongoing.
New Okiep Mining Company Tenements
The status of the tenement holdings, the Mining Right and prospecting right applications pertinent to
the NOM operations are as follows:
• The SAFTA mining right (Flat Mines area), which was granted by the Department of Mineral
Resources and Energy (DMRE) in July 2022, was brought into effect through the notarial execution
of the right with the DMRE in December 2022. The right is being lodged for registration with the
Mineral and Petroleum Titles Registration Office (MPTRO);
• Land access negotiations with the landowners on the Mining Right and adjacent prospecting
right areas are continuing; and
• SAFTA prospecting right applications over the areas contiguous to the mining area are in process
with the authorities.
Figure 2: Location of the OCP tenements, the NOM - SAFTA Mining Right and prospecting right applications.
Okiep Copper Project Exploration
Exploration activities continued with ongoing target generation over the Okiep Copper Project (OCP)
area using SKYTEM™ magnetic and electro-magnetic (EM) data together with geological and structural
interpretive work.
Digital compilation of historical drilling information over various old mines and prospects has continued,
together with remodelling of the mineralisation aimed at re-estimating the Mineral Resources. The current
focus of this work has been on the NOM-SAFTA Mining Right and contiguous prospecting right application
areas, with the objective of including additional prospects as JORC Mineral Resources in Q1 CY2023.
Areachap Near-Mine Exploration
Areachap is an under-explored belt with multiple Cu-Zn and Ni-Cu-Co-PGE-Au intrusive targets within
Orion’s tenements; chief among these are:
• The Prieska Cu-Zn near mine, open pit and underground targets with high-grade intersections;
• The Jacomynspan Project with potential for sulphide Ni-Cu-PGE-Au open pit and shallow
underground mining. The Namaqua Nickel Mining Right, which was granted by the DMRE in
September 2016, was brought into effect through the notarial execution of the right with the DMRE
in December 2022. The right is being lodged for registration with MPTRO;
• Several high-grade Cu-Au targets with historical and recent drill hole intersections; and
• Several Li, Be, Rare Earth Element (REE) occurrences and old diggings to be investigated.
No exploration work was undertaken during the Quarter.
Australian Projects
Fraser Range – Nickel-Copper Projects (Western Australia)
The Fraser Range Project in Western Australia extends over a total strike distance of some 430km. The
Project area is highly prospective for high-value magmatic nickel-copper-cobalt sulphide discoveries.
Orion maintains a sizeable tenement package in the Fraser Range Province of Western Australia in a joint
venture with IGO Limited (ASX: IGO). Under the terms of the joint venture, IGO is responsible for all
exploration of the tenements and provides regular updates to Orion on activities and results.
Importantly, Orion maintains exposure to the ongoing exploration and development of the Fraser Range
Project without the additional financial commitment, given that Orion is free-carried by IGO through to
the first pre-feasibility study on any of the tenements.
During the Quarter, IGO completed five aircore holes at the Artemis Target, geological logging of core
and down hole EM data from diamond drilling on E28/2367 and moving loop EM (MLEM) surveys were
conducted at CE, Pennor North and Porpoise target areas.
In Q1 CY2023, IGO plans to undertake the following work (Figure 3):
• Geochemical review of assay results from Artemis aircore program;
• Geochemical review of assay results from Pike North diamond hole 22AFDD207;
• Structural review of data collected for Pike North diamond hole 22AFDD207;
• Geological review of CE MLEM target; and
• Data review of tenements, from programs undertaken and results received in prior Quarters.
Figure 3: Location of work on Orion JV tenure in Q2 and Q3 FY2023.
Walhalla – Gold and Polymetals Project (Victoria)
No field or exploration work was carried out on the Walhalla Project during the Quarter. During the
Quarter, the Company continued to progress its licence applications over prospective areas of Walhalla.
Corporate
Cash and Finance
Cash on hand at the end of the Quarter was $2.73 million. Payments made to related parties and their
associates during the Quarter was $90k and relates to Director fees and consulting fees, as listed in Section
6 of the Company’s Quarterly Cash Flow Report (Appendix 5B).
Following Quarter end, on 3 January 2023, Orion announced that Tembo Capital Mining Fund II LP
(Tembo) has continued its strong support of Orion, through a US$0.50 million (~A$0.72 million) unsecured
Convertible Loan Facility (see Convertible Loan Facility details below).
Prieska Project Funding
Triple Flag Funding Arrangements.
In May 2022, Orion took a pivotal step towards the development of its flagship Prieska Project in South
Africa’s Northern Cape Province after signing non-binding term sheets with TF R&S Canada Ltd. and Triple
Flag International Ltd. (together Triple Flag), for a US$87 million secured funding package.
In December 2022, definitive agreements were signed with Triple Flag for the US$87 million secured
funding package.
The funding package comprises two components, being a precious metals stream (Precious Metal
Stream) and additional early funding arrangement (Funding Arrangement).
The Precious Metal Stream comprises US$80 million (~A$118 million) of funding to be drawn down in
tranches, alongside other bank and/or third-party funding during mine development. Orion will also
receive payments of 10% of the value of delivered precious metal paid at spot London Bullion Market
Authority (LBMA) pricing at the time of delivery.
The proposed stream rates for gold and silver to be delivered under the stream agreement are 84% of
"Payable Gold" until 94.3k ounces of gold are delivered and 84% of "Payable Silver" until 5,710k ounces of
silver are delivered, with each stream rate reducing to 50% after the respective milestones.
The Precious Metal Stream is conditional on the mine development being fully funded, finalisation of an
executable mine plan to Triple Flag's satisfaction, South African regulatory approvals and fulfilment of
conditions precedent standard for such arrangements.
Orion and Triple Flag have also entered into a definitive agreement for an additional A$10 million TF
Funding Arrangement, with this funding to be made available to Orion to complete the Feasibility Study
for the mining of the +105 crown pillar and remnant pillars down to the 385m level at PCZM (Early Mining
Works BFS) and the simultaneous commissioning and operation of pumping and water treatment facilities,
to allow dewatering of the PCZM mine at a rate ramping up to 500m 3 per hour (Dewatering Project).
The Early Mining Works BFS and the Dewatering Project are both key pre-development workstreams that
are already well advanced. The Dewatering Project is a critical long-lead item for the development of
the Prieska Project, given that total dewatering of the mine to facilitate access to the main sulphide VMS
orebody (the Deeps Sulphide deposit) will take approximately three years at the slower rate.
The A$10 million Funding Arrangement draw-down is conditional on Orion securing an additional A$20
million funding to execute the agreed work focused on the Dewatering Project and the Early Mining
Works BFS, as well as South African regulatory approvals and fulfilment of conditions precedent standard
for such agreements. Triple Flag has confirmed to Orion that draw-down of the IDC Convertible Loan
(refer below) will be sufficient for this A$20 million funding condition to be satisfied. Draw-down of the
A$10 million Funding Arrangement will be in tranches and will pro rata match the draw down requests
that Orion will make under the ZAR250 million IDC Convertible Loan (refer below).
Under each of the Precious Metal Stream and Funding Arrangement, PCZM (a majority-owned subsidiary
of Orion) and other obligors will agree to grant a first ranking security in favour of Triple Flag over certain
assets and claims, with the security in respect of the Precious Metal Stream to be subordinated to Prieska
Project financiers.
The Triple Flag Funding Arrangement is expected to be available for draw-down in Q1 CY2023.
A summary of the material terms of the Precious Metal Stream and Funding Arrangement is provided in
Appendix 1 and 2 of the 13 December 2022 ASX/JSE release.
A key approval for the cross-border transaction was obtained from the South African Reserve Bank on 22
December 2022.
IDC Convertible Loan.
On 21 October 2022, Orion announced a pivotal non-binding term sheet with the IDC for a ZAR250 million
(~A$22 million) senior secured loan facility (IDC Convertible Loan) to fund early mining works and key pre-
development activities at the Prieska Project. Orion, Agama Exploration and Mining Proprietary Limited
(a wholly-owned subsidiary of Orion) (Agama) and PCZM (a majority-owned subsidiary of Orion) have
reached agreement with the IDC on the key terms of the IDC Convertible Loan, which have been
recorded in a non-binding term sheet (Term Sheet), with IDC Executive Committee approval.
Under this Term Sheet, the IDC will provide the ZAR250 million (~A$22 million) IDC Convertible Loan to
Agama, or its wholly-owned subsidiary, which will be on-lent to PCZM on similar terms to fund the
completion of the BFS for the previously articulated Early Production Plan at Prieska (refer ASX/JSE release
20 January 2022), while also allowing the Company to commence dewatering of the existing
underground mine – a critical path activity required for the broader long-term development of the
project. The Early Mining Works BFS and the Dewatering Project are key pre-development workstreams
that are already well advanced.
Orion expects a definitive agreement on the IDC Convertible Loan to be signed with the IDC in Q1
CY2023.
A summary of the material terms of the Term Sheet is provided in Appendix 1 of the 21 October 2022
ASX/JSE release.
Next Steps.
The Triple Flag A$10 million early Funding Arrangement, together with the IDC Convertible Loan, will
enable Orion to complete the Early Mining Works BFS and commission and carry out the Dewatering
Project.
The Early Mining Works BFS for the Prieska Project is well advanced, with targeted completion in mid-2023.
The Dewatering Project is also well advanced, with underground storage dams and pump site
construction completed and the shaft platform installed to facilitate pump installation.
Refer to the Prieska Mine Development and Exploration (Prieska Project Funding Arrangements) section
for further detail.
Okiep Copper Project Funding
IDC Share Acquisition and Pre-development Funding.
During the Quarter, Orion and the IDC entered into definitive agreements in terms of which the IDC
acquired 43.75% of the issued ordinary shares in New Okiep Mining Company Proprietary Limited (NOM)
and triggered pre-development funding arrangements for the Flat Mines SAFTA area (Flat Mines Project),
as announced on 7 September 2022.
The IDC funding of pre-development costs in the aggregate amount of ZAR35 million (~A$3.0 million) will
be advanced to NOM on the same terms as the pre-development funding amount of ZAR44 million
(~A$3.84 million) that Orion had already advanced to NOM, including that the loan is unsecured, interest
free until such time as the Flat Mines Project commences commercial production and will be repaid when
NOM is in a financial position to make repayment. Pursuant to the definitive agreements having been
implemented during the Quarter, and the IDC becoming a shareholder in NOM, during the Quarter, the
IDC advanced ZAR21.91 million (~A$1.89 million) of its pre-development funding commitment.
The execution of definitive agreements, and acquisition of shares in NOM by the IDC, follows Orion’s 7
September 2022 announcement that it had entered into non-binding term sheets with the IDC and
Lulamile Xate regarding the key principles of the funding and Historically Disadvantaged South African
(HDSA) ownership participation arrangements for NOM.
Orion, the IDC and Lulamile Xate anticipate finalising and executing the definitive agreements for the
HDSA ownership arrangements within the coming months, with the implementation of the HDSA
ownership arrangements being conditional on the transfer of the assets from SAFTA to NOM, per the terms
and conditions of the SAFTA Asset Acquisition Agreement (refer ASX/JSE releases 2 February 2021 and 2
August 2021).
Loans
Tembo Capital – Convertible Loan Facility.
On 3 January 2023, Orion announced that Tembo continues its strong support of Orion, through an
unsecured convertible loan facility of US$0.50 million (~A$0.72 million) (Tembo Convertible Loan Facility).
Under the terms of the Loan Facility, in certain instances, amounts outstanding under the Convertible
Loan Facility (including capitalised interest and fees) (Outstanding Amount) may be repaid by the issue
of ordinary shares in Orion (Shares) to Tembo (subject to receipt of shareholder and regulatory approvals).
Proceeds from the Tembo Convertible Loan Facility will be used principally for working capital purposes,
and any other purposes as agreed by Tembo in writing. The key terms of the Tembo Convertible Loan
Facility agreement are:
• Loan Amount: US$0.50 million.
• Interest: Capitalised at 12% per annum.
• Conversion or Repayment:
o The Outstanding Amount must be repaid in cash by 30 April 2024, or, if Tembo elects (or is
required) to receive Shares in repayment of the Outstanding Amount in lieu of payment in
cash (as set out below), the date on which those Shares are issued (or such later date as
agreed between Orion and Tembo) (Repayment Date);
o If Orion undertakes a placement raising a minimum of US$2.0 million from investors other than
Tembo (Placement) prior to 31 May 2023 (Placement End Date), subject to receipt of
necessary shareholder and regulatory approvals, Tembo must participate in any such
Placement, with Shares being issued by Orion to Tembo in repayment of the Outstanding
Amount (in lieu of payment in cash by Orion).
o Tembo may also elect, subject to receipt of shareholder and regulatory approvals, for
repayment of the Outstanding Amount to be satisfied by the issue of Shares by Orion to
Tembo between the Placement End Date and the Repayment Date. The deemed issue price
of those Shares shall be:
? where Tembo elects to participate in a Placement conducted by Orion during that
period, the subscription price payable by investors under any Placement conducted
during that period; or
? otherwise, the 10 day volume weighted average price of Orion's Shares prior to an
election by Tembo to convert the Outstanding Amount to Shares.
o Where necessary shareholder or regulatory approvals are not obtained for issues of Shares,
Orion must repay the Outstanding Amount in cash.
• Security: The Convertible Loan Facility is unsecured.
• Conditions: The availability of funding is subject to certain customary conditions.
Anglo American sefa Mining Fund.
In November 2015, PCZM (a 70% owned subsidiary of Orion) and Anglo American sefa Mining Fund
(AASMF) entered into a ZAR14.25 million loan agreement for the further exploration and development of
the Prieska Project (Loan Facility). Under the terms of the Loan Facility, on 1 August 2017, AASMF
advanced ZAR14.25 million to PCZM. The key terms of the Loan Facility are:
• Loan amount: ZAR14.25 million (~$1.23 million);
• Interest rate: Prime lending rate in South Africa; and
• Security: 29.17% of the shares held in PCZM by Agama (a wholly owned subsidiary of Orion), have
been pledged as security to AASMF for the performance by PCZM of its obligations in terms of the
Loan Facility.
As at 31 December 2022, the balance of the Loan Facility was ZAR22.99 million (~A$1.98 million) (including
capitalised interest). PCZM and AASMF are engaged in negotiations to agree a repayment plan in
relation to the Loan Facility.
Appointment of Chief Financial Officer
On 15 December 2022, Orion announced the appointment of highly experienced corporate finance
executive, Mr Peet van Coller, as the Company’s new South African-based Chief Financial Officer (CFO),
with effect from 1 April 2023. The appointment forms part of a series of recent and planned appointments
to Orion’s leadership team in South Africa, as it gears up for operational readiness at its flagship Prieska
Copper-Zinc Project and Okiep Copper Project, in South Africa’s Northern Cape Province.
Mr van Coller will succeed Orion’s long-serving CFO, Mr Martin Bouwmeester, who will remain as Orion’s
Company Secretary and as a corporate consultant on a part-time basis, ensuring that Orion will continue
to benefit from Martin’s valuable corporate experience, financial and strategic capabilities.
Mr van Coller’s appointment follows a comprehensive executive search process which was aimed at
recruiting a South African-based CFO to support Orion’s near-term transition to mine development and
production in South Africa.
Annual General Meeting
The Annual General Meeting of shareholders of Orion was held at the offices of Clayton Utz,
Level 27, QV1 Building, 250 St Georges Terrace, Perth, Western Australia on Thursday 24 November 2022.
All resolutions were passed by poll.
Tenement Table
Ownership Change in
Tenement Project Joint Venture Partner
Interest Quarter
South Africa
NC30/5/1/1/2/11850PR Bartotrax 100% --- ---
NC30/5/1/2/2/10138MR Prieska Copper-Zinc Mine 70% --- ---
NC30/5/1/2/2/10146MR Prieska Copper-Zinc Mine 70% --- ---
NC30/5/1/1/2/11840PR Doonies Pan 70% --- ---
NC30/5/1/2/2/10032MR Namaqua-Disawell 25% --- Namaqua Nickel Mining (Pty) Ltd
NC30/5/1/1/2/12216PR Namaqua-Disawell 25% --- Namaqua Nickel Mining (Pty) Ltd
NC30/5/1/1/2/10938PR Namaqua-Disawell 25% --- Disawell (Pty) Ltd
NC30/5/1/1/2/11010PR Namaqua-Disawell 25% --- Disawell (Pty) Ltd
NC30/5/1/1/2/12292PR Masiqhame 50% --- Masiqhame 855 (Pty) Ltd
NC30/5/1/1/2/12197PR Boksputs North 70% --- ---
NC30/5/1/1/2/11125PR Okiep 100% --- ---
NC30/5/1/1/2/12357PR Okiep 100% --- ---
Industrial Development
NC30/5/1/2/2/10150MR Okiep 56.25% --- Corporation of South Africa
Limited (IDC)
Western Australia
E28/2367 Fraser Range 30% --- IGO Limited
E28/2378 Fraser Range 30% --- IGO Limited
E28/2462 Fraser Range 30% --- IGO Limited
E28/2596 Fraser Range 30% --- IGO Limited
IGO Limited & Geological
E39/1653 Fraser Range 35% ---
Resources Pty Ltd
E39/1654 Fraser Range 10% --- IGO Limited & NBX Pty Ltd
This Quarterly Report is authorised by the Board.
31 January 2023
JSE Sponsor
Merchantec Capital
Date: 31-01-2023 09:10:00
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