Orion Minerals Ltd (ASX:ORN, JSE:ORN) will maintain momentum towards the start of trial mining and dewatering of the Prieska Copper-Zinc Mine in South Africa later this month through the provision of a US$500,000 (~A$730,000) convertible loan facility from Tembo Capital.
This is an indication of the ongoing strong support of substantial holder Tembo Capital Mining Fund II LP for the company. Tembo holds approximately 22% of the company.
Under the terms of the loan facility, in certain instances, amounts outstanding under this facility (including capitalised interest and fees) may be repaid by the issue of ordinary shares in Orion to Tembo, subject to receipt of shareholder and regulatory approvals.
“Valuable bridging finance”
Orion’s managing director and CEO Errol Smart said: “This funding provides valuable bridging finance to Orion in order to maintain momentum for commencement of the trial mining and dewatering operations at the Prieska Copper-Zinc Mine in January 2023, while the IDC and Triple Flag funding facilities are finalised and draw down on that funding is achieved.
“It has been exactly six years since Orion exercised its option to acquire the Prieska Copper-Zinc Project and Tembo provided its first funding to Orion, in the form of a convertible note to fund the acquisition of the project and undertake the first drilling in 2017.
“Fully supported by Tembo”
“The project has since lived up to our technical expectations and with Tembo’s support, Orion has taken the project from a prospecting right application to a fully permitted mining right, supported by a bankable feasibility study (BFS), demonstrating the potential for attractive financial returns.
“This is a relatively short time to take a base metal project of this scale from closure over 30 years ago, to a fully permitted project with a long mine life.
“Our revised strategy announced in 2022, to accelerate the start-up of production with mining from near surface ore sources, while dewatering the mine to access the Prieska Deeps Ore and ramp up to the BFS design of 2.4 million tonnes per annum run-of-mine operation, is fully supported by Tembo, who continue to provide financial support to unlock the investment.”
Proceeds from the loan facility will be used principally for working capital purposes and any other purposes as agreed by Tembo in writing.
Facility terms
Key terms of the unsecured loan facility agreement with Tembo are:
- Loan amount: US$0.50 million.
- Interest: Capitalised at 12% per annum.
In regard to conversion or repayment:
- The outstanding amount must be repaid in cash by April 30, 2024, or, if Tembo elects (or is required) to receive shares in repayment of the outstanding amount in lieu of payment in cash (as set out below), the date on which those shares are issued (or such later date as agreed between Orion and Tembo);
- If Orion undertakes a placement raising a minimum of US$2 million from investors other than Tembo prior to May 31, 2023, subject to receipt of necessary shareholder and regulatory approvals, Tembo must participate in any such placement, with shares being issued by Orion to Tembo in repayment of the outstanding amount (in lieu of payment in cash by Orion).
- Tembo may also elect, subject to receipt of shareholder and regulatory approvals, for repayment of the outstanding amount to be satisfied by the issue of shares by Orion to Tembo between the placement end date and the repayment date.
- Where Tembo elects to participate in a placement conducted by Orion during that period, the subscription price payable by investors under any placement conducted during that period; or
- Otherwise, the 10-day volume weighted average price of Orion's shares prior to an election by Tembo to convert the outstanding amount to shares.