Picture: ISTOCK
Picture: ISTOCK

Potential investors are keen for Orion Minerals to list in London, giving Europeans exposure to a large zinc and copper project in the Northern Cape that was last mined in the 1980s. But a degree of scepticism remains about SA as an investment destination despite the quality of the project, says CEO Errol Smart.

However, he says, metal traders are clamouring for the project to get started in 2020 to provide quality zinc concentrate free of contaminants for offshore refineries to blend with lower quality concentrates and produce metal for the galvanised steel-making segment, of which the fundamentals are positive.

The Prieska mine operated for a decade and was considered one of the top six deposits of its kind. But when the ore body flattened out from its steep dip and ballooned to a 35m width the mining company at the time was flummoxed about the best way to mine such a massive ore body — needing a new fleet, mine plan and a way of working at enormous cost.

Orion, an Australian company, is pouring money into drilling, and has deployed 18 drill rigs in arguably the busiest exploration project in SA. It is targeting a code-compliant resource before the end of March 2018, the submission of its mining rights applications – a process it has given 400 days in its plans – and finalisation of a bankable feasibility study before the end of 2018.

The project will start with the processing of material from a small open-cast mine at its new concentrator that will process either 100,000 or 150,000 tonnes a month as the underground workings are dewatered and prepared for mining.

Orion management’s base case in its aspirational thinking is for the mine to generate up to 25,000 tonnes a year of zinc in concentrate based on the grades and recoveries AngloVaal achieved in the 1970s, and up to 15,000 tonnes a year of copper.

The zinc market was primed for a boost from China where its zinc content of galvanised steel would be lifted from about 5% to international levels of around 20% as supply struggles to keep up with demand.

Smart noted that Vedanta Zinc was close to generating zinc from its Gamsberg mine in the Northern Cape. It was also considering its options around its zinc refinery in Namibia to treat concentrate from its Skorpion mine or make it a plant that could treat regional concentrate, avoiding the need to build such a refinery at Gamsberg.

The Prieska project in its current form would be too small to justify its own smelter.

seccombea@bdfm.co.za

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