PRIESKA COPPER-ZINC PROJECT
The Prieska Copper-Zinc Project (Prieska Project) is the centrepiece of Orion’s asset portfolio. Historically mined between the 1970s and 1990s, Prieska is one of the world’s Top-30 volcanogenic massive sulphide (VMS) base metal deposits, with a recorded historical production of over 430k tonnes of copper and 1Mt of zinc from 46.8Mt of sulphide ore milled.
Orion completed a Bankable Feasibility Study (BFS) for the Prieska Project development in June 2019, based on a 10-year “Foundation Phase” 2.4Mtpa underground and open pit mining operation, delivering total payable metal production of 189kt of Copper and 580kt of Zinc in differentiated concentrates.
Location and Infrastructure
The Prieska Project is located in the Northern Cape Province of South Africa, 270km south-west of the regional capital Kimberley. Importantly, the project has access to significant local and regional infrastructure, with key infrastructure including:
- Sealed access roads to project site
- 50km via bitumen road to existing rail siding
- Four high-voltage regional lines linked to the national electricity grid
- 175MW operational solar power plants in the area – with an additional 675MW approved and a further 300MW pending authorisation
- 800km rail link to a major, bulk commodity and deep-water ports at Coega and Saldanha Bay
- Bulk water pipeline supplies site from Orange River with all year pumping capacity
- Good contractor accommodation available in the private village of Copperton, ~3km from project site
- Low environmental sensitivity – existing disturbed/rehabilitated mine footprint
The Prieska Project contains a globally significant VMS resource totalling 30.49Mt at 1.2% Cu and 3.7% Zn including Indicated Mineral Resources of 19.13Mt @ 1.18% Cu and 3.59% Zn (refer ASX release 15 January 2019). The Resources remain open with both strike extensions and up-folded limb extensions identified by downhole geophysics.
Orion is focusing on the development of the Deep Sulphide Resource, currently comprising 28.73Mt at 1.2% Cu and 3.8% Zn, which underpinned a highly successful Bankable Feasibility Study (BFS) completed in June 2019.
The BFS is based on modern 2.4Mtpa underground and open pit mining operation, with a 10-year ‘Foundation Phase’ delivering payable metal production of 189kt of Copper and 580kt of Zinc in differentiated concentrates. Read the full BFS Announcement.
The BFS delivered strong project economics including:
- Undiscounted free cash-flows of AUD1.1 billion pre-tax (AUD819M post-tax).
- NPV of AUD574M pre-Tax (AUD408M post-tax) at an 8% discount rate.
- IRR of 38% pre-Tax (33% post-tax).
- Peak funding requirement of AUD378M.
- Payback period from first production of 2.9 years.
- All-in-sustaining margin of 44%.
- All-in-sustaining unit costs of AUD5,470/t (USD3,773/t) of copper equivalent metal sold.
The BFS included a maiden Ore Reserve of 13.62Mt at 1.1% Cu and 3.2% Zn for 143kt of contained copper and 433kt of contained zinc, with the mine schedule comprising 65% Probable Ore Reserves and 35% Inferred Minerals Resources.
In addition, the BFS identified outstanding mine plan optimisation and extensional opportunities including:
- Over 9Mt at 1.1% Cu and 3.6% Zn of Mineral Resources not included in the current mine plan.
- Existing mineralised pillars being assessed for future extraction.
- Potential additional cashflows from barite and pyrite by-products.
- High grade drilling intersections on the periphery of the deposit.
- Significant identified satellite deposit potential within an emerging VMS camp.
Since the completion of the Prieska BFS, Orion has been progressing value engineering and optimisation work with the aim of delivering an improved and simple-to-execute project plan with enhanced CAPEX and OPEX outcomes.
Key studies currently in progress include:
- Water treatment trials investigating supplementary means of dealing with the water to be pumped out from the underground workings so that the dewatering timeline and costs can be reduced;
- Value engineering of the ore processing plant designs and layouts to improve operational factors and reduce both capital and operating costs; and
- Mine-to-market enterprise optimisation of the Foundation Phase mining plan, in order to holistically assess the key value drivers of the project and ensure that the best business scenario is selected for project execution.
Positive results have been received from water treatment trials for the shaft water to be purified for off-site discharge. This would enable increased pumping rates which would accelerate planned project development timelines.
In addition, test work has also indicated the potential to utilise semi-autogenous (SAG) milling, rather than conventional ball milling, to reduce processing plant capital and operating costs.
In parallel with the BFS optimisation, Orion is continuing to fast-track the Prieska development, with other key steps including:
- Progressing project financing discussions;
- Progressing project implementation planning; and
- Negotiating agreements with concentrate off-take partners and key suppliers
Orion Minerals is also progressing other key commercial work streams including concentrate marketing, project financing as well as the completion of project permitting.
The Environmental Authorisation for Prieska was awarded in July 2019 and the Mining Right, for an initial 24 year term, September 2019.
Orion sees the potential to define a major new VMS camp in the region surrounding the Prieska deposit, with near-mine exploration programs delivering a series of compelling new targets.
These include the emerging Ayoba VMS discovery, 5.3km south west of Prieska, where the discovery drill hole intersected 9.5m of massive sulphides grading 0.63% Cu and 0.93% Zn, including 1.50m at 0.89% Cu and 4.98% Zn. (refer ASX release 28 November 2018).
Ayoba represents the first new VMS discovery in the Areachap Belt in over 36 years and highlights the enormous upside over and above the large, high-quality Mineral Resource already defined at Prieska.
Geophysical surveys have also identified numerous compelling targets for both VMS style copper-zinc mineralisation and nickel-copper sulphide mineralisation within a 15km radius of Prieska.
VMS deposits generally occur in clusters in close proximity to one large or giant deposit, and often comprise two or three medium-sized deposits and five or six smaller deposits.
Despite Prieska being one of the single largest VMS exhalite bodies known in the world, the area around the deposit has had virtually no exploration in over 36 years. Now, with the application of advanced, modern geophysics and the latest geological thinking, Orion can vector into targets which offer outstanding opportunities for new VMS discoveries.