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Orion Minerals Prieska base metals BFS delivers strong economics

Payback is planned to occur five years from the start of construction or 2.9 years from the start of production.
Layout of project site
Proposed layout of the Prieska project site in South Africa’s Northern Cape Province

Orion Minerals Ltd’s (ASX:ORN) (JSE:ORN) bankable feasibility study (BFS) for the initial stage of the Prieska Copper-Zinc Project has put the company on track to become a major new South African base metals producer.

The BFS confirms the potential of the Foundation Stage of the project to underpin a “significant” near-term, low-cost development project, with “exceptional” opportunities for future growth.

Based on study assumptions, Prieska will provide strong financial returns for a relatively modest capital investment, given the scale of operations envisaged and the fact that it is in a highly endowed but underexplored volcanic massive sulphide district.

Orion’s managing director and CEO Errol Smart said: “We are delighted with the results of the BFS, which confirm the quality and scale of the Prieska project.

“The BFS suggests Prieska will be a high-margin, long-life asset, delivering $1.1 billion of pre-tax free-cashflow, a pre-tax NPV of $574 million at an 8% discount rate and an all-in-sustaining margin of 44% during the 10-year Foundation Phase.

“Importantly, the capital payback period is short - at just under three years from first production, with a low unit operating cost base to take advantage of most metal price environments.”

Location of the Prieska Copper-Zinc Project in South Africa's Northern Cape Province.

READ: Orion Minerals raises $8 million through BEE ownership restructure ahead of completed Prieska BFS

The BFS investigated the commercial viability of a plan for the initial phase aimed at establishing mine infrastructure and operational capacity intended to establish the platform for further mining of extensions and the exploration and development of neighbouring prospects.

This phase runs for 10 years at an annual design ore processing rate of 2.4 million tonnes.

It targets the exploitation of those portions of the deposit that were upgraded to indicated and inferred mineral resources from the first surface-based drilling campaign conducted between 2017 and 2018.

Views showing the remnant pillars and the accumulated water level.

The production target comprises 65% probable ore reserves and 35% inferred mineral resources, with ore reserves predominating during the early stages of the mining plan.

READ: Orion Minerals registers community and employee trust for Prieska project in South Africa

Smart said: "There is also ample scope to significantly extend the mine life through further mining studies, drilling and exploration programs to extend the deposit, which remains open at depth and along strike.

"The huge potential for additional satellite discoveries both within the immediate near-mine environment and within the broader region provides us with a very strong project pipeline which we believe will see us operating in this district for many decades to come.”

Some 9.7 million tonnes of indicated and inferred mineral resources at grades of 1.1% copper and 3.6% zinc remain outside the immediate mining plan.

Project net cashflow post-tax profile.

The MD and CEO said: "We have long believed Prieska represents a highly valuable strategic asset with the potential to become a significant source of high-quality copper and zinc concentrates that we believe are highly sought-after in global markets.

“The favourable results from the BFS strongly support that belief and provide us with the framework to progress this high-quality asset towards financing and production, with an initial focus on harvesting the high-quality resources delineated by our extensive drilling programs undertaken over the past two years.

READ: Orion Minerals restructures equity stakes ahead of BFS and financing milestones

“With the Prieska BFS now complete and granting of the Mining Right imminent, we intend to fully focus on progressing discussions with project financiers, concentrate offtake partners and key suppliers.

“We expect to be in a position to make a Final Investment Decision for the Prieska project development in the second half of this year, putting us on-track to commence construction in late 2019 or early 2020,” he added.

Project execution schedule.

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