Orion Minerals Ltd (ASX:ORN, JSE:ORN) is raising $13 million in a two-tranche share placement to sophisticated and professional investors to accelerate the development of its key base metal production hubs in South Africa’s Northern Cape Province.
The raise is part of the company’s broader strategic funding package that will result in the introduction of a new cornerstone investor group.
Orion will issue approximately 882 million shares under the placement, at an issue price of A$0.015 per share (ZAR18 cents).
Clover Alloys to participate
There are some heavy hitters subscribing to the placement, with privately owned South African mining group Clover Alloys (SA) in for 440 million shares. This investment alone will raise around A$6.7 million (ZAR80 million).
Other long-term shareholders and sophisticated investors, including Delphi Group, Tembo Capital (to be issued in repayment of the outstanding balance of its loan facility) and Orion directors and management will subscribe for the balance of the shares subject to receipt of shareholder and regulatory approvals.
“Securing the involvement of Clover Alloys as part of a broad strategic funding package represents a game-changer for Orion," Orion’s managing director and CEO Errol Smart said.
"The combination of a strongly supported A$13 million placement plus an options package that provides a clear pathway to securing a total equity funding injection of A$73 million, puts us in a strong position to realise our growth vision as a major new South African base metals producer.
“Clover Alloys is a highly-regarded privately owned mining group with an enviable track record of value-creation and success in rapidly constructing and operating highly efficient processing plants. Clover Alloys’r expertise will be invaluable to Orion as we complete the feasibility studies at Prieska and Okiep and execute our rapid development plan.
“This investment brings huge momentum to our company and, together with the support of our other cornerstone shareholders, puts us in an outstanding position to become a near-term producer.
"We are delighted to have Clover on board and we look forward to developing a long-term strategic partnership with Clover that will deliver significant benefits to all our shareholders.”
Where the money goes
The money raised will be used towards a number of operational milestones including:
- Settle the outstanding amount of the Anglo American (LON:AAL) sefa Mining Fund loan facility, thereby satisfying one of the key conditions precedent to draw-down of the A$10 million Triple Flag early funding arrangement and the ZAR250 million IDC convertible loan facility.
- Progress the development of Orion’s Prieska Copper-Zinc Mine, including starting trial mining and processing of ore, mine dewatering and the completion of feasibility studies for the Prieska Copper-Zinc Mine Early Production Scenario.
- Progress the feasibility study, permitting and acceleration of early production at the Okiep Copper Project (OCP), Orion’s second advanced near-term production asset in the Northern Cape
- Advance metallurgical processing and refining test work and feasibility studies for the Jacomynspan nickel-copper-cobalt PGE project, Orion’s third key asset in the Northern Cape.
- Maintain all of Orion’s prospecting rights, to ensure timely applications for mining rights are submitted for projects in the Northern Cape of South Africa and related activities.
- For general working capital purposes.
Clover Alloys will become a cornerstone investor in Orion, a boon for the company given Clover’s status and significant mine development and operational expertise.
Clover has a strong track record in the successful development and operation of modular, capital-efficient metal processing plants at its chrome mines in South Africa.
Orion will be able to draw on this expertise to advance the development of its Prieska Copper-Zinc Project and Okiep Copper Project towards production.
Clover began life in 2004 with a single wash plant in the Benoni area washing approximately 24,000 tonnes/annum of foundry waste.
It was purchased by its current owners in 2013 and since then has constructed a processing plant at their Rietfontein site, which was built and commissioned within four months. The plant had a crushing, screening and processing capacity of 240,000 tonnes/annum.
By 2016, Clover Alloys had signed a toll-treating agreement with Lanxess Mine to produce a high-quality chemical and foundry concentrate and continued toll-treating for the mine as its preferred processing contractor.
In November 2019, Clover acquired the Lanxess Chrome Mine, a transaction which took two years to secure all the required regulatory approvals to allow the operation to commence.
In 2022 Clover started open pit mining at the Rustenburg Chrome Mine, with an existing gravity plant to process ore from the open pit operation. It then constructed an additional processing plant which was dedicated to the processing of ore from the tailings dam.
Clover has a long history of reviving decommissioned assets.
In January 2023, the company decided to build a third chrome recovery plant on-site to be dedicated to low-grade ore. This plant will be commissioned during August 2023.
Clover has increased production and processing capacities from an initial 24,000 tonnes/year to 1.5 million tonnes over the last two years with a Life of Mine (LOM) in excess of 20 years.
This expertise will be extremely valuable to Orion as it progresses with its development and production strategy at Prieska and Okiep.
“Our strategy at Clover Alloys is to invest in outstanding growth opportunities,” Clover Alloys CEO Philip Kotze said.
“We believe that the Orion team has accumulated a valuable basket of future-facing metal assets that presents a great diversification and growth opportunity to Clover Alloys.
"We are excited about our investment in this premium portfolio of advanced-stage base metal projects, and we are looking forward to working with the Orion team to bring these opportunities to book.”
Placement details
The placement will be done in two tranches and once finalised the $13 million raised will bring the total value of the equity funding package, assuming all placement options are ultimately exercised, to approximately A$73 million, putting Orion in a strong position to execute its accelerated development strategy in the Northern Cape.
Tranche 1: Orion has received commitments from investors to raise A$10.7 million through the issue of 710 million shares at an issue price of 1.5 cents (ZAR18 cents).
Tranche 2: Orion has received commitments from investors to raise A$2.6 million through the issue of 171 million shares at an issue price of 1.5 cents (ZAR20 cents) per share, including A$500,000 from Orion non-executive director Tom Borman, A$250,000 from Orion’s Chairman Denis Waddell and A$30,000 from Orion’s managing director & CEO Errol Smart and A$770,000 from Tembo Capital.
For every share issued under the placement, each investor shall receive four free attaching options. The issue of 3.5 billion options to investors is also subject to shareholder approval, to be sought at a general meeting.
The placement options have an exercise price of A$0.017 (ZAR20 cents) and an expiry date of November 30, 2023.
Orion has been supported in South Africa by a local advisor and has agreed to pay a fee of 5% of the proceeds raised from certain South African resident investors, importantly including Clover Alloys, who were introduced by the advisor.