JSE- and ASX-listed Orion Minerals says it is firmly on track to become a near-term base metals producer with the release of the definitive feasibility studies (DFSs) for its flagship project, the Prieska copper/zinc mine (PCZM), and the Flat Mines project (FMP), which is part of the Okiep copper project (OCP), in the Northern Cape.

MD and CEO Errol Smart tells Mining Weekly that the projects will help to establish the Northern Cape as a credible copper production region globally with world class capital and operating costs.

“We have the skills in this country . . . and there's a wonderful opportunity to really accelerate development in the Northern Cape,” he says.

The company expresses that the PCZM DFS has delivered robust financial and technical results, with exploration potential and life-of-mine (LoM) extension.

The PCZM DFS outlines an optimised two-phase development strategy aimed at derisking the development pathway and fast-tracking value-creation from a safe, modern, long-life, mechanised, underground base metals mine.

This includes the initial Upper-Level Phase, which is based on mining near-surface supergene sulphide ore that is accessible from an existing decline, with first production expected 13 months after the start of construction and continuing for 4.3 years.

Capital expenditure (capex) to achieve first concentrate production, within 13 months, is R560-million.

During the Upper-Level mining, pumping in the main shaft will take place to de-water the mine, which is currently flooded to 265 m below surface. Following the de-watering, refurbishment of the main shaft and construction of the mining infrastructure will take place.

Secondly, the Deeps Phase will commence following completion of mine de-watering, refurbishment of the main shaft and construction of the mining infrastructure.

Mining of the Deeps has a LoM of 11 years and will overlap with the last 2.2 years of the Upper-Level mining.

The combined operation is planned over 13.2 years of production at an ore processing rate of 240 000 t/y for the Upper levels and 2.4-million tonnes a year for the Deeps phase.

The post-tax net present value (NPV) of the combined operation is R7.1-billion, using non-inflation-adjusted estimates and a discount rate of 8%. The project is expected to deliver a post-tax internal rate of return (IRR) of 26%.

Orion notes that the project has an undiscounted post-tax LoM cash flow of R16.6-billion.

The total estimated capital cost for PCZM is R7.59-billion. Peak funding requirements amount to R7.23-billion including an 11% contingency allowance.

Payback is expected to occur 5.8 years from the start of construction and only 2.4 years after peak funding.

For the combined operation, all-in sustaining unit costs (AISC) over the duration of the LoM will be about $4 550/t or $2.06/lb copper equivalent metal sold.

The operating break-even grade is estimated at 0.99% copper equivalent.

This operating break-even grade is well below the average combined Uppers and Deeps Ore Reserve grade of 1.6% copper equivalent, applied in the production schedule. Sixtry-three percent of the revenue is from copper and 37% from zinc.

“Orion's Prieska project presents a unique value proposition with significant upside potential, perfectly aligning with the Industrial Development Corporation’s (IDC’s) Critical Minerals Plan.

“By leveraging existing infrastructure, the project is set to commence mining operations ahead of the previous bankable feasibility study schedule, accelerating value creation and delivering economic benefits. We remain committed to supporting this project and unlocking its full growth potential,” IDC divisional executive industry planning and project development Rian Coetzee says in the DFS.

“It's an incredibly strong project,” Smart tells Mining Weekly.

He also notes that the company will be training people, ensuring that they are “empowered to deliver”.

“Working with our stakeholders and our community, with the programmes that we already set up and are starting, we will be on a very exciting path,” he comments, adding that the IDC's support has been greatly appreciated.

“They've been fantastically supportive,” he states.

FLAT MINES

Meanwhile, Orion is also implementing a phased development strategy at the OCP, with the FMP as the first step.

The initial phase focuses on developing Flat Mines North and building a processing plant which will operate at 50% capacity. This will be followed by the expansion of Flat Mines East and the ramp-up of the plant to full capacity of 65 000 t a month over 24 months.

This approach enables Orion to unlock value in a scalable and manageable way.

In a media release, Smart has expressed that the completion of the FMP DFS marks an important step towards the company’s objective of unlocking the long-term potential of the OCP.

“We see immense prospectivity in the Okiep district and strongly believe the FMP will be the first of several mines that Orion will develop in the region. Our aspirational goal is to restore production from the OCP to historical levels, and believe this is an important first step towards achieving that ambition.

“We remain committed to rapid resource and reserve growth and will have a targeted and disciplined approach to exploration with the aim of delivering additional value from the Okiep region to all stakeholders,” Smart added in the media release.

The FMP DFS indicates an NPV, at an 8% discount rate, of R935-million post-tax and an IRR of 19% post-tax.

Payback is planned for a period of 5.3 years with peak funding requirements of R1.29-billion.

Total project capex, including contingency, is R1.6-billion.

The DFS also indicates an AISC of $5 270/t, or 2.39/lb, of copper metal sold and an all-in-sustaining margin of 41%.

Orion says it expects average yearly production of 6 500 t of copper – peak production of 9 500 t of copper – with a mine life of 12 years.

“If we take what we've done over the last 12 months, from the time that we started drilling at Okiep and on Flat Mine north, south and east and Flat Mine Nababeep, in that time, we have progressed resources and reserves and proved them up at cost efficiencies that you can't get anywhere else in the world,” Smart tells Mining Weekly.

Simultaneously, while moving to the next phase of development, implementation planning is under way to facilitate a seamless transition from study to construction. This includes finalising agreements with service providers for key early works activities and securing long-lead time items essential to the project’s timeline.

Orion says it is also advancing concentrate offtake negotiations, and engaging with strategic partners to secure agreements that will optimise commercial terms and enhance long-term revenue streams.

It notes that these initiatives will position the company for a timely and efficient project execution, ensuring maximum value delivery for investors and stakeholders.

The completion of these studies marks a key milestone, allowing Orion to advance its project financing strategy, which will likely be a combination of debt, equity and offtake-related funding.

While employment opportunities and skills development remain key priorities, these will be realised once project funding is secured.