Mining News Pro - Market researcher S2 Research on July 6 said dual-listed Orion Minerals’ current share price “represents a significant discount to the value of the Prieska copper/zinc project alone”, and that the miner’s recent announcements “represent value-accretive options that significantly underline the company’s compelling investment proposition”.
The findings follow on a busy week for Orion, which saw the miner start, among others, the eagerly anticipated SkyTEM regional aerial geophysical survey of the Okiep district, in South Africa’s Northern Cape, in partnership with the South African Council for Geosciences.
Orion also announced a drilling programme on a potentially significant copper and gold exploration target within its Areachap exploration portfolio north-west of Prieska, while simultaneously tidying up its balance sheet ahead of the expected financing programme for its flagship Prieska mine in the Northern Cape.
Starting with the Okiep copper district, the area has not, to date, been explored using the high-powered, aerial, geophysical survey techniques that have proved successful in other similar geological districts around the world.
This, S2 said, was a consequence of the short-term, low-cost extraction strategies with minimal reinvestment used 20 to 30 years ago that were motivated by “poor economics and a lack of faith in the country as a whole”.
As a result, the district has been mothballed for almost two decades.
With a new understanding of the mineralisation of the Okiep copper deposits, specifically that they tend to be open at depth, with economic concentrations related to certain known geological structures, Orion said the potential for new orebodies and related down-dip extensions of existing orebodies “is very promising”.
For the Okiep district to attain its former glory, as Orion CEO Errol Smart contends that it will, the model will likely be a multi-mine operation with centralised processing.
The results of the SkyTEM survey will allow Orion to prioritise its exploration activities and optimally bring this strategy to fruition.
The survey, expected to take five to six weeks, is being conducted in terms of the recently announced cooperation agreement with the South African Council for Geosciences.
An area of about 1 800 km2 will be surveyed of which about 850 km2 relates to Orion’s option to acquire the prospecting and mining titles. As such, this exploration initiative should be seen as part of the due diligence process on the option that expires in July this year, Orion advised.
Secondly, Orion has also announced the start of an exploration drilling programme following the results of a recent fixed-loop, electromagnetic survey, which has identified a potentially significant copper and gold volcanic massive sulphide (VMS) exploration target on the northern boundary of the Masiqhame prospecting right (MPR), about 125 km north-west of Prieska.
The electromagnetic signature of this target is an order of magnitude more conductive than the existing Boksputs target, underlining the serious potential of this discovery, Orion said in its summary statement.
This latest target trends north over the existing MPR boundary.
Concurrently, Orion has further announced the successful application for a new prospecting permit, Boksputs North Prospecting Right (BNPR), which covers the strike extension northwards.
This new prospecting right is almost 35 000 ha in extent.
The Kantienpan deposit lies within the MPR of the Boksputs prospect over which Orion has exercised its option to acquire an initial 50% interest (subject to regulatory approval) and, under the option agreement, can earn up to 73% interest on delivery of certain milestones.
The new prospecting right is owned along the more familiar default Orion ownership structure of 5% each for community and employee trusts, 20% black economic empowerment (BEE) entrepreneurs and 70% Orion.
Lastly, and in addition, Orion has also announced the issue of shares in relation to the conversion, by Tembo Capital, of the outstanding amount under an unsecured loan agreement entered into with Orion.
The unsecured loan was extended in 2019 and allowed for principal and interest to be converted to equity, at Tembo's election, at a pre-agreed price of A$0.026 a share.
In accordance with the agreement, Tembo elected to convert the loan to shares and the required shareholder approval was granted in April this year.
The original loan of A$3.6-million with capitalised interest stood at A$4.9-million and was converted into more than 191.6-million shares.
The conversion price represented a 21% discount to the closing spot price of A$0.033 a share on June 25, but must be referenced to the fact that this loan facility was put in place in 2019.
The conversion shares represent a 4.64% increase in shares in issue, taking the total to over 4.3-million.
Orion said this action removes the funding overhang and “demonstrates a long-term commitment to Orion by Tembo Capital”.
Tembo Capital is now a 23.84% shareholder in Orion Minerals.