| Wed 7 Sep 2022, 7:45 | | ORION MINERALS LIMITED - Industrial Development Corporation to fund 43.75% of pre-development costs and facilitate BEE ownership at Okiep |
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Industrial Development Corporation to fund 43.75% of pre-development costs and facilitate BEE ownership at Okiep
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
Industrial Development Corporation to fund 43.75% of pre-development costs and facilitate BEE
ownership at Okiep
IDC to sell shares, to progress HDSA ownership participation by BEE Entrepreneurs, in the
New Okiep Mining Company
- IDC to initially become a 43.75% shareholder in New Okiep Mining Company Proprietary Limited (NOM)
alongside Orion, which will hold 56.25% of the NOM ordinary shares.
- Upon becoming a shareholder, IDC will advance its pro rata share of the ZAR79.037m total budgeted
pre-development operating costs of NOM, with Orion having already advanced its entire pro rata share
of ZAR44.458m to NOM.
- NOM is acquiring the Prospecting Rights and the recently granted Mining Right from Southern African
Tantalum Mining Proprietary Limited (SAFTA), in which, the IDC is currently a 43.75% shareholder.
- Upon NOM acquiring the SAFTA assets, the IDC will sell 22.22% of its shares in NOM to a BEECo, being a
BEE Entrepreneur entity led by Lulamile Xate, in furtherance of the Historically Disadvantaged South
Africans (HDSA) ownership objectives of the Mining Charter 2018.
- Thereafter, Community and Employee Trusts will each acquire a 5% meaningful economic participation
interest in NOM resulting in a 30% meaningful economic participation interest being held by HDSAs in
furtherance of the HDSA ownership objectives of the Mining Charter 2018.
Orion’s Managing Director and CEO, Errol Smart, commented:
“Following hard on the heels of last week’s announcement regarding the grant of the SAFTA Mining Right for the
Flat Mines area at Okiep, we are delighted to have reached agreement on the key principles for both the
inclusion of Mining Charter 2018 HDSA structures and for the IDC to contribute 43.75% of the total budgeted pre-
development costs for NOM, marking a significant step towards the broader commercial development of the
Okiep Copper Project.
With Orion already having contributed ZAR44.458m, representing 56.25% pro-rata portion of the total pre-
development budget, the IDC has now agreed on the key commercial terms on which it will fund the balance
of the budget to complete feasibility studies by June 2023.
Having also received the long awaited grant of the mining right to the core area, we are finally able to complete
the required drilling and metallurgical sampling to finalise the optimisation of the feasibility studies which are
already well advanced.
The future ownership of NOM with high quality development partners, such as the IDC, Lulamile Xate and our
employees and host community, puts the Okiep Project on a very solid footing for the near-term development
of what we expect to be a very exciting, brown-fields copper mining project.”
Orion Minerals Limited (ASX/JSE: ORN) (Orion or the Company) is pleased to announce that it has entered into
non-binding term sheets with the Industrial Development Corporation of South Africa Limited (IDC) and Lulamile
Xate regarding the key principles of the funding and Historically Disadvantaged South African (HDSA)
ownership participation arrangements for New Okiep Mining Company (NOM). Orion and the IDC anticipate
finalising and executing the definitive agreements for the IDC share acquisition and pre-development funding
arrangements by 30 September 2022, with the IDC funding to flow during October 2022, subject to fulfilment of
conditions precedent standard for such arrangements.
Orion, the IDC and Lulamile anticipate finalising and executing the definitive agreements for the HDSA ownership
arrangements within the next two 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).
The IDC funding of pre-development costs in the amount of ZAR 34.579m will be advanced to NOM on the same
terms as the pre-development funding amount of ZAR 44.458m already advanced by Orion to NOM.
Figure 1: Location of the OCP mineral rights and NOM - SAFTA Mining and Prospecting Righs.
Orion has completed a positive Scoping Study (refer ASX/JSE release 3 May 2021; summary in Appendix 1) for the
Flat Mines SAFTA area, which demonstrated the economic merit of developing a foundation phase mining
operation at the SAFTA properties. The Scoping Study supported a moderate scale start-up mining operation on
known, drilled copper deposits.
Orion’s aspiration, with project partners the IDC and BEE partners led by Lulamile Xate, is the early re-
establishment of mining operations on the brownfields SAFTA site, while conducting the required work and
engineering studies to support the long-term aspiration of achieving production from the Okiep Copper Project
(OCP) at a similar scale to past owners Newmont and later Goldfields under the Okiep Copper Company.
Orion announced on 16 September 2021, that the IDC had signalled its intention to remain a key strategic partner
in the SAFTA project and to work with Orion in the development of NOM, which will acquire the assets owned by
SAFTA, which is currently 43.75% owned by the IDC. The shareholding in NOM will, in the future, include Orion as
the majority owner with 56.25% holding of the ordinary shares, the IDC as a key strategic partner, and with
historically disadvantaged empowerment partners holding shares in furtherance of the ownership objectives of
the Mining Charter 2018.
The OCP is a significant growth opportunity for Orion, with the potential to become a second base metal
production hub for the Company in the Northern Cape, alongside its flagship Prieska Copper-Zinc Project,
located 450km east of the OCP.
Employee Community
Trust Trust BEECo IDC AMH6
100% of 100% of 22.22% 21.53% 56.25%
Class E Class C of Ords of Ords of Ords
5% 5% 20% 19.38% 50.63%
% economic participation
NOM
% of respective share class
Figure 2: Future Ownership Structure for NOM
Next Steps
The development partners have agreed on a timetable to complete definitive agreements allowing draw down
on the IDC funding, by 31 October 2022.
Feasibility studies upgrading the 2021 scoping feasibility study (refer ASX/JSE release 2 August 2021) for the OCP
are well advanced, with targeted completion in Q2 2023.
About Lulamile Xate
Lulamile Xate has a wide range of business experience. He is an ex-political prisoner and read for his B Com
through UNISA while being incarcerated on Robben Island. Lulamile also has qualifications from the University of
Murdoch, Perth in Australia, where he studied energy management and renewable energy systems at post
graduate level. Having completed articles at Pricewaterhouse Coopers, he has developed a number of
successful businesses in the fishing, gas, eco-tourism, agriculture, bioenergy and forestry industries and was and
is a director and chairman of a number of unlisted and listed companies. He also has interests in gold and copper
mining.
About the IDC
The Industrial Development Corporation (IDC) was established in 1940 through an Act of Parliament and is fully
owned by the South African Government. The Corporation pursues development impact through job-rich
industrialisation and contributes to an inclusive economy by, among others, funding black-owned and black-
empowered companies, black industrialists, women and youth-owned enterprises. For more information visit
www.idc.co.za.
For and on behalf of the Board.
Errol Smart
Managing Director and CEO
7 September 2022
ENQUIRIES
Investors Media JSE Sponsor
Errol Smart – Managing Director & CEO Nicholas Read Monique Martinez
Denis Waddell – Chairman Read Corporate, Australia Merchantec Capital
T: +61 (0) 3 8080 7170 T: +61 (0) 419 929 046 T: +27 (0) 11 325 6363
E: info@orionminerals.com.au E: nicholas@readcorporate.com.au E: monique@merchantec.co.za
Disclaimer
This release may include forward-looking statements. Such forward-looking statements may include, among other things,
statements regarding targets, estimates and assumptions in respect of metal production and prices, operating costs and
results, capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates, and are or
may be based on assumptions and estimates related to future technical, economic, market, political, social and other
conditions. These forward-looking statements are based on management’s expectations and beliefs concerning future
events. Forward-looking statements inherently involve subjective judgement and analysis and are necessarily subject to risks,
uncertainties and other factors, many of which are outside the control of Orion. Actual results and developments may vary
materially from those expressed in this release. Given these uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. Orion makes no undertaking to subsequently update or revise the forward-looking
statements made in this release to reflect events or circumstances after the date of this release. All information in respect of
Exploration Results and other technical information should be read in conjunction with Competent Person Statements in this
release (where applicable). To the maximum extent permitted by law, Orion and any of its related bodies corporate and
affiliates and their officers, employees, agents, associates and advisers:
• disclaim any obligations or undertaking to release any updates or revisions to the information to reflect any change in
expectations or assumptions;
• do not make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the
information in this release, or likelihood of fulfilment of any forward-looking statement or any event or results expressed or
implied in any forward-looking statement; and
• disclaim all responsibility and liability for these forward-looking statements (including, without limitation, liability for
negligence).
Appendix 1
OCP – Flat Mines Pilot Project Scoping Study
Executive Dashboard
Price and Forex Assumptions Unit Value Financial Performance Unit Value Unit Value
Metal price - Cu USD/t 7,593 NPV (pre-tax) approximated @10% discount rate ZAR (M) 1,896 AUD (M) 170
Metal price – Au USD/oz 1,889 NPV (post-tax) approximated @10% discount rate ZAR (M) 1,267 AUD (M) 114
Metal price – Ag USD/oz 24 IRR (pre-tax) % 44%
Exchange rate ZAR : USD 17.2 :1 IRR (post-tax) % 37%
Exchange rate ZAR : AUD 11 .1: 1 Payback from first production years 3.25 years
Production Metrics Unit Value Undiscounted free cash flow (pre-tax) ZAR (M) 4,607 AUD (M) 413
Life of Mine (Proof-of-Concept Phase) Years 11.8 Peak funding ZAR (M) 643 AUD (M) 58
Treatment plant capacity ktpa 780 Project Cost Metrics Unit Value Unit Value
Proof-of-Concept Phase tonnage - RoM kt 9,011 Average cash operating unit cost (C1) ZAR/t 781 AUD/t 70
Proof-of-Concept Phase tonnage – RoM U/G kt 7,479 All-in-sustaining cost per unit RoM t ZAR/t 873 AUD/t 78
Proof-of-Concept Phase tonnage – RoM O-Pit kt 1,531 All-in-sustaining cost per unit Cu t sold USD/t Cu 4,478 AUD/t Cu 6,904
RoM Plant Feed Grade - Cu - U/G % 1.29% Price received (net of NSR) - Cu USD/t Cu 7,441 AUD/t Cu 11,473
RoM Plant Feed Grade - Cu – O-Pit % 1.28% All-in-sustaining margin % 40%
RoM Plant Feed Grade – Au g/t conc 2.2 Operating breakeven grade - Cu % 0.83%
RoM Plant Feed Grade – Ag g/t conc 34 Project Cash Flows Unit Value Unit Value
Overall Plant Recovery - Cu % 87.4% LoM net revenue ZAR (M) 12,712 AUD (M) 1,142
Concentrate tonnage - Cu kt 386 LoM operating costs (plus State Royalty) ZAR (M) 7,320 AUD (M) 657
Concentrate grade - Cu % 25.8% Project Start-up Capital Expenditure ZAR (M) 595 AUD (M) 53
NSR as % of metal price - Cu % 96.9% Sustaining Capital Expenditure ZAR (M) 188 AUD (M) 17
Metal sold (in concentrates) - Cu Tonnes 102,329 Income Tax ZAR (M) 1,368 AUD (M) 123
Total Cu Sales Tonnes 386,787 Cash Flow After Tax ZAR (M) 3,241 AUD (M) 291
Level of Accuracy of Financial Model ± 25%, LoM = Life of Mine, NSR = Net Smelter Return, NPV = Net Present Value, IRR = Internal Rate of Return
There is a low level of geological confidence associated with Inferred Mineral Resources and therefore there is no certainty that further exploration work will result in the
determination of Indicated Mineral Resources or that the Production Target or financial forecast information referred to in this Study will be realised. Source: ORN Okiep
Financial Model revision 4.0
Table: Key assumptions and project performance parameters for the Okiep Copper Project (Flat Mines Project area)
(numbers may contain apparent rounding errors).
Refer ASX/JSE release 3 May 2021
5
Date: 07-09-2022 07:45:00
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