Prieska Copper-Zinc Project

Overview

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 an updated Bankable Feasibility Study (BFS) for the Prieska Project development in May 2020, based on a 12-year “Foundation Phase” 2.4Mtpa underground and open pit mining operation, delivering total payable metal production of 226kt of Copper and 680kt 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

Resources

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.

Development Strategy

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 updated Bankable Feasibility Study (BFS) completed in May 2020.

The BFS is based on modern 2.4Mtpa underground and open pit mining operation, with a 12-year ‘Foundation Phase’ delivering payable metal production of 226kt of Copper and 680kt of Zinc in differentiated concentrates. Read the full updated BFS Announcement.

The updated BFS delivered numerous improvements on the previous study completed in June 2019, including:

  • 43% increase in undiscounted free cash flows to AUD1.6 billion, pre-tax (AUD1.2 billion post-tax);
  • 36% increase in NPV (at an 8% discount rate) to AUD779 million, pre-tax (AUD552 million post-tax);
  • 5-month reduction in the capital payback period to 2.4 years;
  • 6% decrease in all-in-sustaining costs to USD3,531/t (USD1.60/lb) of copper equivalent metal sold;
  • 3% increase in all-in-sustaining margin to 47%;
  • 5% increase in pre-tax IRR to 39%;
  • 9% increase in peak funding requirements to AUD413 million to cater for the operational improvements; and
  • Peak annual production of 23kt of copper and 88kt of zinc in concentrates.

The updated BFS was based on an Ore Reserve of 14.5Mt at 1.1% Cu and 3.2% Zn for 153kt of contained copper and 462kt of contained zinc, with the mine schedule comprising 57% Probable Ore Reserves, 10% Indicated Mineral Resources and 33% Inferred Mineral Resources.

In addition, the updated BFS identified outstanding mine plan optimisation and extensional opportunities including:

  • Improvements to the plant and concentrate grade recovery above the conservative estimates applied in the BFS, to match historical plant performance;
  • Extensions and additions to the Mineral Resources and mine life via:
    • Conversion of delineated Inferred Mineral Resources into the mining plan;
    • Extensional exploration and ‘out of resource’ mineralisation;
    • Near-mine and satellite exploration potential; and
    • Remnant pillar extraction.
  • Partially completed mine-to-market optimisation studies present the potential for refinements to be applied during the mine development and early production period.

Following completion of the updated BFS, the next steps for Orion are:

  • Secure grant of the Integrated Water Use Licence and second mining right (imminent);
  • Progress project financing discussions;
  • Project implementation planning; and
  • Progress agreements with service providers for key early works activities.

The Environmental Authorisation for mining the northern portion (Repli area) of the Prieska deposit was awarded in July 2019 and the Mining Right, for an initial 24 year term, in September 2019.  The Environmental Authorisation for the southern extent (Vardocube area) of the Prieska deposit was awarded in March 2020, with the Mining Right grant imminent.

Near-Mine Exploration

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.