Orion Gold: Bringing Prieska back to life
An Australian company believes it can revive a historical Northern Cape copper and zinc mine at current prices
The recovery in zinc prices in the past five years has encouraged Australian-listed Orion Gold to acquire an interest in the former Anglovaal-owned Prieska mine in the Northern Cape to exploit its known remaining copper and zinc.
Robert Friedland, CEO of Ivanhoe Mines, says there is a forecast deficit of 360,000t in the zinc market. It has arisen mainly because of the closure of two large mines, Lisheen in Ireland and Century in Australia, and the discovery of new uses for zinc as a soil additive to improve crop yields.
Zinc prices have risen to about US$2,825/t at present from below $2,000/t five years ago.
Orion CEO Errol Smart is an SA geologist who worked for Anglo American and later in the Barberton gold mines. He has spent 10 years working in various countries, including Australia. He has returned to SA to develop Orion’s interests in Prieska.
This month Orion announced an A$8m issue of convertible notes to exercise its option to buy Agama Exploration & Mining, the owners of a 73.33% interest in Prieska copper mine and the Marydale gold-copper project 60km away.
During Anglovaal’s 20 years of mining, Prieska delivered average grades of 1.4% for copper and 3.4% for zinc and also extracted lead, silver and gold. It was one of the biggest high-grade zinc and copper mines in the world, employing about 4,000 people.
Prieska’s original resource estimation was carried out by the eminent geostatistician Prof Danie Krige, who pioneered the technique of kriging or interpolation to predict intermediate values between borehole data in geological modelling.
Unfortunately, after Anglovaal closed the Prieska mine in 1992 because it was not prepared to sink more capital into development during the sanctions era, a lot of geological data was lost.
Smart says Orion has a lot of confidence in the size of the resource at Prieska, based on the records it has managed to find.
But these do not meet the mineral reserves and resources reporting requirements of the Australian Stock Exchange (the JORC Code), so more drilling and testing has to be done.
Orion expects to be able to release a JORC-compliant resources statement in the next few months. At the same time it is doing some of the groundwork towards scoping and pre-feasibility studies, which would enable it to approach financiers for funding to start production.
Last week Orion received permission from the department of mineral resources to access the old underground workings and it will be able to begin exploration of the underground resources in the near future. But in the short term, the plan is to mine the remaining resource close to surface from an open pit.
Smart says Anglovaal’s underground mine, the largest mechanised mine in SA at that time, began 100m below surface. Orion’s plan is to fill the sinkholes that subsequently developed with waste, which will establish a stable floor and sidewalls for the open pit, where initial assays showed high-grade intersections of zinc, copper and gold.
Nothing is left of the processing complex, so Orion would need to build a concentrator. The nearest smelter that can turn concentrate into zinc metal is at Vedanta Zinc’s Skorpion complex in southern Namibia.
Smart says there is a lot of interest in Prieska’s product because it is free of contaminants like arsenic and mercury found with many other deposits, so it could be shipped as a concentrate for blending. Orion would need to truck the concentrate about 43km by road to the nearest rail siding to take it to the export bulk terminal at Saldanha Bay.
Prieska is well served with water, Eskom power and tarred roads. It is also in the midst of an area where about 600MW of solar and wind farms are being built or planned, so it does not expect to have any shortage of power.
To date Orion’s funding has come from its major shareholders: Tarney Holdings, with 14%, the Haller family and the Creasy Group. The shares, at A$0.020, have fallen from A$0.026 last July, but volumes are thin.