Orion Minerals Ltd (ASX:ORN, JSE:ORN) has taken a further key step towards the development of its flagship Prieska Copper-Zinc Mine in South Africa’s Northern Cape Province after securing a US$87 million secured funding package from Toronto-based Triple Flag Precious Metals (TSX:TFPM) Corp.
The first part of the funding package is a precious metal stream of US$80 million to be advanced against the delivery of 84% of future gold and silver by-product production, with each stream rate reducing to 50% after certain milestones.
Orion will also receive payments of 10% of the delivered precious metal value at spot gold and silver prices at the time of delivery.
The second part is an additional A$10 million (about US$7 million) funding arrangement to complete a bankable feasibility study (BFS) for the mining of the crown and remnant pillars down to the 385 metres level of the mine and the simultaneous commissioning of water treatment facilities to allow dewatering of the mine.
This is to be advanced against calculated payments equal to 0.8% of gross revenue from future mineral sales, with the first draw-down expected next month.
Pivotal funding for transition
“This funding, provided by Triple Flag together with the IDC (Industrial Development Corp of South Africa Ltd), is pivotal for Orion as we transition from being an exploration company to a mine developer,” Orion’s managing director and chief executive officer Errol Smart said.
“Our new operations team at Prieska Mine, under the experienced leadership of recently appointed executive, Eastern Operations, Johan Stolz, has already made huge progress in preparing Prieska for development.
"This includes establishing underground dams and pump stations and preparing development at the 105 trial mining area to allow for the safe commencement of drilling and blasting. We look forward to seeing the first ore on surface and water out of the mine early in the New Year.
“The trial mining of high-grade remnant ore in the upper levels of the mine is key to us completing a revised feasibility study by mid-2023, paving the way for an early start-up of production and cash flow while the mine is dewatered over a three-year period.
"This will provide us with a staged pathway to steadily ramp up production to eventually reach 2.4 million tonnes per annum milled, with ore sourced from the dewatered Prieska Deeps area.”
Pre-development works well advanced
The Triple Flag A$10 million funding arrangement, together with the IDC convertible loan, will enable Orion to complete the early mining works BFS and carry out the dewatering project.
Orion and the IDC anticipate finalising and executing the definitive agreements for the ZAR250 million (about A$21 million) convertible loan in the coming weeks, and be available for draw-down in early 2023.
Work on both are well advanced, with the BFS targeted for completion in mid-2023, while the underground storage dams and pump site construction have been completed and the shaft platform installed to facilitate pump installation.
Preferred funding partner
Triple Flag chief executive officer Shaun Usmar said: “The execution of definitive agreements with Orion marks an important milestone towards returning the Prieska Mine to production in a historically prolific copper mining district.
"This agreement demonstrates a commitment to our mission to be a preferred funding partner to mining companies throughout the commodity cycle by providing customised streaming and royalty financing solutions.
“The A$10 million provided under the funding arrangement in exchange for payments equal to 0.8% of gross revenue provides Triple Flag with immediate exposure to Prieska while the early mining feasibility study is being finalised and dewatering is commenced.
“Upon delivering an executable mine plan, the US$80 million precious metals stream will form a key part of a fully funded financing package that will enable the development of Prieska, benefiting the South African economy and local stakeholders through investment and much-needed job creation.
"The low-carbon footprint of the planned operations, as well as the resource potential in a highly prospective district, provides Triple Flag with long-term, sustainable optionality.”
Toronto-listed Triple Flag is a pure play, gold-focused, emerging senior streaming and royalty company offering bespoke financing solutions to the metals and mining industry. It has exposure primarily to gold and silver in the Americas and Australia, with a total of 80 assets, comprising nine streams and 71 royalties at various stages of the mine life cycle.