Shares spike as Orion ramps up resource confidence
Orion Minerals’ shares bolt higher as the company pushes two-thirds of its resources into higher confidence category
Orion Minerals shares closed more than 14% higher on Tuesday on news that it has converted about two-thirds of its Prieska zinc and copper resources to a higher-confidence category after a drilling campaign, pushing it closer to its bankable feasibility study.
Orion, which plans to build a new mine and processing plant at the Prieska mine operated by Anglovaal Mining for two decades up to 1991, plans to release the study during the second quarter of 2019 and the latest report highlighting an improved confidence level in its resources spurred its shares higher.
Anglovaal generated 1-million tons of zinc and 430,000 tons of copper in concentrate from Prieska during a 20-year spell ending in 1991, leaving behind shaft infrastructure and a headgear that Orion plans to use to extract resources left unmined.
Orion said it has converted 18.5-million tons of its 28.7-million tons of resources into the higher confidence level known as “indicated resources”.
“This pivotal resource upgrade provides a strong foundation for our strategy to fast-track the development of a state-of-the-art base metals operation at Prieska next year,” said Orion CEO Errol Smart.
Orion has said the Prieska deposit ranked in the top 30 of global volcanogenic massive sulphides, the name given to these types of vast base metal deposits generated by ancient volcanic activity, and in this case, one laid down under a relatively calm sea that meant the volcanic plume was not dispersed but remained concentrated.
Orion has to pump out up to 10-million cubic metres of water from the mine, a process that could take 18 months, so it can reach the lowest parts of the mine and start development.
Orion has spent A$34m ($24.39m) on an 85,000m drilling campaign over the past 18 months, confirming Anglovaal’s resource definition work and solidifying its own understanding of the ore body that remains 1km below surface.
The rate of resource conversion from the lowest-confidence inferred category to indicated underpinned Orion’s thinking around the deposit and the potential for a mine, Smart said.
“This very high conversion rate is testament to the exceptional quality and consistency of this deposit, and the indicated resource will now form the cornerstone of our bankable feasibility study due for completion in Q2 next year,” he said.
Walter Shamu, Orion’s chief operating officer, said last week the group’s strategy was to bring Prieska into production two years after it had secured a mining right and then advance its work on regional exploration in the area around the mine in the Northern Cape.
Orion lodged its mining right application and all associated permits in April 2017, hoping to secure its mining licence in April 2017.