Errol Smart, CEO, Orion Minerals
ORION Minerals will undertake a six month feasibility study to assess whether it can begin early production from its Prieksa Copper-Zinc Project in South Africa’s Northern Cape.
Discussions with lenders to finance the plan are underway.
The study will also weigh up the extraction of remnant underground pillars in the previously mined orebody as well as the dewatering of the Prieska Deeps section of the mine in preparation for its eventual mining.
The Johannesburg- and Sydney-listed company said in an announcement today the feasibility study would look into mining the project’s open-pit section which is estimated to have a two-year life.
In terms of a feasibility study on the Prieksa Copper-Zinc Project in 2020, in which an estimated capital cost of A$432m was concluded, the open pit was to be mined last. But the aim now is to take advantage of current high base metal prices.
“Investors visiting the site said we were crazy for mining the open pit last when it could be mined sooner. The one certainty is the copper price is going to be flying,” said Errol Smart, MD and CEO of Orion Minerals in an interview.
These investors hold equity finance which would be pumped into the project first in any event. Senior debt finance would come later and perhaps less than scoped as Orion would be generating cash flow by the time it was needed.
Today’s announcement therefore could be viewed as a re-phasing of the project’s finance schedule, said Smart.
The expectation is that the open pit will deliver 100,000 tons a month in ore to a plant yielding 200,000 tons of metal concentrate a year of which about 60,000 to 70,000 tons is copper concentrate annually. For production from the open pit, one of the two sulphide processing plants envisaged in the project’s feasibility study would be commissioned.
Additionally, tailings material from mining of the Prieksa Copper Zinc Project open pit will be used as backfill for the ‘voids’ in the underground workings of the Prieska orebody enabling the removal of the remnant pillars left by previous miners as support.
A drilling programme aimed at confirming the historical records would begin shortly, said Orion. Using tailings from the open pit mine as support once the pillars are removed – which are 300 metres below ground – would result in a re-assessment of the size of the tailings facility that Orion Minerals would be required to build.
“That would also be a real capital saving,” said Smart.
“Our strategy is to capitalise on the positive near-term base metals market and focus on investigating opportunities that have the potential to bring forward the start of production and revenue generation, potentially reducing the upfront external peak funding requirements of the project,” he said.
Including the Okiep Copper Mine (OCM) that Orion Minerals is developing separately on a site 450 kilometres from the Prieska Copper Zinc Project (but also in the Northern Cape province), Orion Minerals could produce up to 110,000 tons of copper concentrate in the next two to three years.
The open pit would take about about 19 months from investment decision. OCM is forecasting production of about 40,000 tons a year. It would take 16 months to build but the project has not been permitted as yet.