Orion Minerals Ltd (ASX:ORN, JSE:ORN) has made further progress on the acquisition of the Okiep Copper Project in South Africa with acquisition agreements being signed to allow the closing of several stages when the outstanding conditions precedent are met.
The company and all relevant parties, other than the Industrial Development Corporation of South Africa Ltd (IDC), which is finalising internal approval, have signed addenda to the agreements for Orion to acquire the controlling interest in the project.
Okiep, which is about 570 kilometres north of Cape Town in the Northern Cape Province, is an important part of the company’s strategy to become a leading diversified international base metals producer.
Moving to finalise BFS
Orion’s managing director and CEO Errol Smart said: “We are extremely pleased that we have finally received confirmation that the majority of the outstanding conditions have been fulfilled for the acquisition of the Okiep mineral rights first announced on February 2, 2021.
“While we have been able to continue operating on the properties and progressing the projects, we have now moved to finalise the Flat Mines Bankable Feasibility Study (BFS) on the NOM Mining Right.
"We are now only awaiting the approval of the water use licence before the project is fully permitted, allowing us to commence mine development. The timing is therefore opportune to complete the acquisition of the Mining Right before progressing the funding of the mine.
“The conclusion of the BFS report is only awaiting the results of confirmation drilling and metallurgical test work that is currently underway and is expected to be concluded by June 2024.”
Acquisition details
In 2021 Orion exercised a restructured option to directly acquire the mineral rights, mineral data, rehabilitation guarantees, any specified contracts and any other assets identified by Orion held by Southern African Tantalum Mining (Pty) Ltd (SAFTA), Nababeep Copper Company (Pty) Ltd (NCC) and Bulletrap Copper Co (Pty) Ltd (BCC), rather than acquire the shares in the target entities themselves.
The sale assets will be acquired by two Orion subsidiary companies - New Okiep Exploration Company (Pty) Ltd (initially 100% Orion-owned) and New Okiep Mining Company (Pty) Ltd (initially 56.25% owned by Orion and 43.75% owned by the IDC).
For various reasons, including the nature and timing of certain regulatory processes and approvals required for the transfer of the sale assets to the purchasers, the parties to the transaction agreements, other than IDC in respect of the SAFTA, have signed the addenda to amend the transaction agreements.
Changes made
The nature and purpose of the addenda is to change, amongst other things, the timing and manner of implementing the Okiep transactions.
The aggregate purchase consideration remaining payable by Orion and its subsidiary, Area Metals Holdings No 6 (Pty) Ltd (AMH6), for the sale assets remains at approximately ZAR59.60 million (~A$4.88 million), which will be adjusted in certain inflation-related respects.
Whilst the consideration will still be settled partly in cash and partly by way of Orion fully paid ordinary shares, the transfer of the sale assets and the payment of the consideration will now occur in various phases over a period of time and the Orion shares comprising the consideration in respect of the first phase will be subject to certain restrictions on their disposal.
In addition, the conditional deferred payment will be adjusted in certain inflation-related respects.
Next steps
The parties anticipate implementing the first phase of the BCC and NCC transactions in the coming weeks, subject to the receipt of the final regulatory approvals in respect of that phase.
Once the IDC has obtained all of its required internal approvals and signed the addenda relating to the sale assets held by SAFTA, Orion will proceed to submit the final application for regulatory approval in respect of the first phase of the SAFTA transactions and upon receiving such regulatory approval, implement the same.
Orion will seek shareholder approval for the ratification of the agreement to issue shares in part payment of the purchase consideration at a General Meeting of shareholders, planned for this quarter.