JOHANNESBURG (miningweekly.com) – Orion Minerals’ Prieska copper/zinc mine, in South Africa’s well-endowed Northern Cape, has received a prospective financing and offtake uplift through the signing of a non-binding term sheet with a wholly owned subsidiary of Glencore involving financing of $200-million to $250-million and concentrate offtake for the promising Prieska asset. 

Prieska is the centrepiece of Orion’s future-facing metals portfolio. Historically mined between the 1970s and 1990s, Prieska is one of the world’s volcanogenic massive sulphide base metal deposits, with a recorded past production of 430 000 t of copper and one-million tonnes of zinc from 46.8-million tonnes of sulphide ore milled.
 
The mine financing will be made available in two tranches, the first $40-million of which will be for the construction and startup of Prieska’s Uppers, and the second $160-million to $210-million for the construction and startup of Prieska’s Deeps.

Moreover, up to $50-million of the second tranche may be drawn early to commence early works on the Deeps.

The arrangement with the subsidiary of the global diversified London- and Johannesburg-listed Glencore, a miner and marketer of more than 60 commodities, was announced by the Sydney- and Johannesburg-listed Orion in a Stock Exchange News Service announcement on Wednesday, 17 September.

Conditions precedent to funding under the facilities include Glencore completing an already commenced due diligence. Drawdown will be based on milestones for each tranche to be agreed during the due diligence process, with first drawdown targeted for November.

Key offtake terms include the offtake of 100% of bulk concentrates from the Uppers for five years, 100% of copper concentrates from the Deeps for ten years, and 100% of zinc concentrates from the Deeps for ten years.

The proposed Glencore funding will enable Orion to transition to producer status with a binding agreement expected over the next four to six weeks.

The first tranche enables Orion to move swiftly into first production and first cash flow from mining of the Uppers at Prieska and the early drawdown of the second tranche allows Orion to commence early works on the Deeps in accordance with the Prieska definitive feasibility study (DFS), Orion CEO Tony Lennox explained in a media release to Mining Weekly.

“This will allow for smooth and continuous operations as we move from the Uppers towards full-scale operations from the Deeps. In parallel with the due diligence process with Glencore, we will continue discussions with our current funding partners.”

The project progress at Prieska has been followed by Glencore for some time and Glencore copper marketing’s Toby Spittle expressed commitment to completing the due diligence expeditiously “and seeing Prieska recommence production as soon as possible”.

As an early funder of the Prieska mine, South Africa’s State-owned Industrial Development Corporation (IDC), expressed excitement about the prospects of advancing the project to implementation through its acting divisional executive of industrial projects and property development Rian Coetzee.

“The early support provided by IDC in developing the project is key to our mandate and implementation of the project will bring significant job creation in the Northern Cape and add to the socioeconomic development of the region,” said Coetzee, who added that IDC would maintain its support for the project and be part of its successful implementation.

In an interview with Mining Weekly earlier this year, Lennox emphasised the closeness of Orion from transitioning to producer status. “We’ll do so in a considered and detailed manner, but rest assured, we’ll be producing concentrate by the end of next year,” he forecast.

The permitted Prieska, which last operated in 1991, has a compliant resource of 31-million tonnes at 1.2% copper and 3.6% zinc. The DFS published in March confirmed the potential to develop a long-life operation through a two-phase development strategy.

“When we have the Prieska Uppers running, we'll be looking to ensure there’s a smooth transition into the mother lode of Prieska, the Deeps, and in parallel with that, will be finalising optimisation around the Okiep region.

“At Okiep, we've pulled together a DFS, where you take orebodies that are disassociated, and you pull them all back to a single central processing complex.

“We’re finalising the detail around the respective orebodies to ensure that there's good value for Orion, good value for our shareholders, and good value for the communities,” Lennox told Mining Weekly at the time.

Orion is heading towards becoming a new generation base metals producer through the near-term Prieska mine and Okiep, and in the longer-term through Jacomynspan nickel/copper/cobalt/platinum-group-element project, all located in the Northern Cape.