Name of the Project
Prieska copper/zinc project.

Location
Northern Cape, South Africa.

Project Owner/s
Diversified metal explorer and developer Orion Minerals.

Project Description
An updated bankable feasibility study (BFS) has confirmed the potential of Prieska to underpin a significant near-term, low-cost, copper/zinc development project, with exceptional opportunities for future growth.

The updated BFS on the foundation phase of the project proposes the development of a new 2.4-million-tonne-a-year copper/zinc mining operation at the brownfield project.

Underground and surface mining methods are planned to be used in conjunction with conventional froth-flotation concentration to produce differentiated copper and zinc concentrates for export.

Peak production is estimated at 23 000 t/y of copper and 88 000 t/y of zinc.

The life-of-mine (LoM) has been extended by two years, from 9.7 years to 11.5 years.

Material changes in the updated BFS, compared with the 2019 BFS plan, include:

• reducing the mine dewatering timeline and supplementing the treatment of that water,
• incorporating additional mineral resources into the mining plan that will increase the mine life by two years,
• a more conservative timeline to ramp up to steady-state production,
• prioritising the early mining of high-grade zones in the mining sequencing,
• adopting semiautogenous grinding mills in the processing flowsheet,
• an owner-miner operating philosophy for underground mining,
• using an experienced contractor to operate the processing plan, and
• a change in the key operational infrastructure being supplied by third-party financing and in the supply of select key operational infrastructure.

The mining methods for the project remain unchanged, compared with those stated in the 2019 BFS. Tunnel development remaining from the previous mining operations allows for early access to underground production mining areas. A combination of longhole open stoping with fill and drift-and-fill mining methods are planned to be used, supported with paste backfill.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a net present value, at an 8% discount rate, of A$779-million, compared with A$574-million in the 2019 BFS, and an internal rate of return of 39%, compared with 38% in the 2019 BFS. Payback from first production is estimated at 2.4 years, a decrease of five months.

Capital Expenditure
Market intelligence firm S2 Research noted in May 2022 that the peak funding requirement of Orion Minerals’ Prieska project had fallen from R2.4-billion to R2.25-billion. This has reduced the funding risk of the project.

In a prior note, S2 anticipated that Orion would need R2.7-billion to develop and optimise the Prieska mine.

Planned Start/End Date
Orion Minerals is targeting production startup in 2024, market conditions permitting.

Latest Developments
Orion Minerals has achieved a vital funding milestone in very difficult market circumstances, S2 Research’s Simon Hudson-Peacock has stated in an analysis of the convertible loan of the Industrial Development Corporation (IDC) and a valuation update.

Orion’s Prieska copper/zinc mine is now on its way towards commercial production following the R250-million IDC start in exchange for what S2 Research has estimated is an effective 16.5% economic interest in the mine.

Facilities are now in place for the advancement of the Prieska and Okiep projects.

The Prieska mine is funded beyond the early works BFS and dewatering programme.

Orion’s ambition is to have more than 70% of employees of the near-term operation being from the Northern Cape and as many as possible from the local Prieska community.

The host community, being an agricultural community, needs to be reskilled and retrained, which takes time.

Orion will run many training programmes over the next five to six years because the company wants to employ good, dependable local people as not only core employees but also effective development partners, the company has said.

As a 5% shareholder of the Prieska copper/zinc mine, the community will benefit from the IDC funding paying for that 5% participation.

Orion has stopped drilling because it has enough ore for 12 years. It has completed the geophysics, which show that there is 50% more than that, and that it remains open.

Orion has said the biggest challenge with Prieska has been the concern of investors about dewatering. The company needs funding to address that risk, which has been provided for by Triple Flag, with A$10-million, and the IDC, with R250-million.

This is sufficient funding to get the pumps in and the water out.

Some of the water that is pumped out of the mine will be treated for use as agricultural water, some will be used as mine water, some for dust settling and the final volume into a brine, in which all the metals and minerals are progressively concentrated.

A new technology can extract all the salts and the metals out of the brine to produce a product that is useable in agriculture.

The blasting of ore as part of a trial mining exercise is expected to begin in January while dewatering is under way, with the mined product stockpiled on surface.

“We needed to demonstrate that we can mine the underground pillars . . . While we are dewatering, which will take three years, we are going to start mining the ore that is above the water level and treat that,” Orion CEO Errol Smart has told Mining Weekly.

“For the next six months . . . we’re just going to mine a little bit of ore and demonstrate the methodology, which will prove the costs of mining the ore.

“Then, based on that, we will bring out a definitive study in mid-2023, and then do the final bit of financing to go alongside the $80-million of stream funding . . . from Triple Flag.

“Between the stream funding and having IDC as a major funding partner, this project is just materially derisked. We’ve got a group . . . like the IDC, and I think it says a lot about Orion that, for our two big projects, we’ve got the IDC as a key partner in each one of them now.

"So, we’ve got Okiep fully funded for the next year, we’ve got Prieska fully funded for the next 18 months,” he adds.

Ultimately, Orion wants to be at a milling rate of 200 000 t and producing about 22 t of copper a year and about 60 000 t to 70 000 t of zinc concentrate a year.

“That’s where we’ll probably be in four to five years from now. But the most important thing is that it’s not taking three years before we produce out first ore,” Smart has said.

First production could be in 18 to 24 months, with early revenue helping to pay for some of the development costs.

“There are no processing facilities in place currently. We have to re-establish everything, which we are quite pleased about.

“We want a fully modern, best practice of a very well-proven and -tested process to produce a very good quality concentrate, and that’s always the advantage of Prieska. It’s had a 20-year history of producing top-quality concentrates.

Orion has said that the offtake is also a potential source of finance.

“There is such a desperation at the moment to get . . . copper concentrates, but also zinc concentrates, of the quality that we can produce in the world, that the offtakers are prepared to pay you in advance or provide financing facilities and it becomes an important part of your financing consideration.

“But you really want to do your offtake agreement as late as possible and it ultimately fills the hole that remains once you’ve got your Triple Flag and banks in place, and now we’ve got the IDC funding . . . you can read who is going to be the debt financier for the project, then you use your offtaker to give you that last bit of money to get going,” Smart has said.

Key Contracts, Suppliers and Consultants
Companies involved in the BFS included A&B Global Mining; ABS Africa; BPDT & Co; Bluhm Burton Engineering & Ventilation Consultants; Beulah Africa; Cart Investments; DRA Projects South Africa; Earth Science Solutions; Endeavour Financial Limited; Falcon and Hume Attorneys Inc; Fraser McGill Mining & Minerals Advisory; Knight Piésold; METC Engineering; Gariep Mining and Exploration Services; Mets Consulting South Africa; Patterson and Cooke; PCDS Consultants; Power Plant Electrical Technologies; Professional Cost Consultants; Promethium Carbon; Shift Innovations; SRK Consulting; Strategy4Good; The MSA Group; Turnkey Civil (International) Group; VBKom Engineering Consultants; Whittle Consulting; and Z Star Mineral Resource Consultants.

Contact Details for Project Information
Orion Minerals, tel +27 11 880 3159 or email info@orionminerals.com.au.