Orion Minerals has been one of the top ASX performers of the week after an absolute stonker of a copper hit reminded the market of its potential.
On Monday, Orion emerged from a trading halt to report a drill hit of 49m at 4.89% copper from 231m, including 10.2m at 12.47% copper, at Flat Mine East, part of the Okiep project in South Africa’s Northern Cape province.
Unsurprisingly, the hit got the Orion team, including managing director Errol Smart, “real excited”.
“We can’t find a drill hit like this anywhere in South Africa in the last 40 years,” he said.
In fact, opaxe keeps a database of every copper project globally (1170 deposits), listing the single best drill hole per project.
The hit from Okiep ranks as the 35th best drill hole globally in the last nine years.
The intercept is likely to top opaxe’s weekly index of ASX drill intersections.
“Drilling intersections like this show the market what is possible,” Smart said.
And the market certainly took notice, with Orion shares surging by as much as 50% on Monday and largely hanging on to those gains since then.
“It’s good to feel the sun on your back again instead of in your eyes,” Smart said of the market reaction.
The hit confirms historical high-grade intersections reported by Gold Fields in 1995.
The Okiep mine is reported to have produced 907,000 tonnes grading 21% copper from hand-sorted ore.
“This isn’t a fluke, it isn’t a one-off,” Smart said.
Orion has planned 11 drill holes for 5800m at the Flat Mines area to confirm historical results as well as providing geotechnical and metallurgical data, as requested by the company’s debt finance advisor as part of a bankable feasibility study.
A 2021 scoping study for a “pilot” phase mine returned capital costs of A$58 million for 102,000 tonnes of copper produced over 12 years at all-in sustaining costs of US$4478 per tonne.
The BFS is largely complete and due out by mid-year.
The only remaining outstanding permit for Okiep is the water use licence.
Prieska advancing
Orion also owns the advanced Prieska copper-zinc project, another historical producer 450km from Okiep.
Prieska has a resource of 31 million tonnes at 1.2% copper and 3.6% zinc with high-grade sulphide mineralisation at +105m Block of 1.3Mt at 2.4% copper and 2.1% zinc for 30,000t of copper and 27,000t of zinc identified as an early mining opportunity that can be accessed from existing underground development.
The 2020 BFS identified a 12-year operation targeting 22,000t per annum of copper and 70,000tpa of zinc, generating a post-tax net present value of A$552 million.
Smart pointed out that the economics were based on a copper price of US$6680/t and a zinc price of US$2337/t.
“Today we’re looking at zinc prices of US$2850 and the copper price touched US$10,000 on Friday,” he said.
“So things have changed dramatically.”
A A$30 million trial mining program at the fully permitted project is underway, which will feed into an updated BFS.
Orion has already secured A$30 million in debt financing from Industrial Development Corporation of South Africa (which is also a partner at Okiep) and Triple Flag Precious Metals Corp and a US$80 million stream agreement with Triple Flag.
The updated BFS is due out in the next three months.
“I think the market is going to be very pleasantly surprised in a couple of months’ time when we put out that updated and optimised feasibility study,” Smart said.
Near-term copper production
“Investors are really looking for near-term copper development projects and there are very few of them,” Smart said.
Orion hopes to be in production at Prieska in 2025. Once approved and financed, Okiep would take around 12 months to build, meaning Orion could have two operating copper mines in the next couple of years.
“We’re getting approached by a lot of the big boys who would like to partner with us on this,” Smart said.
“It’s amazing – everyone has suddenly woken up and realised the opportunity, so we are speaking to a number of people.
“Maybe on the right terms something can be done but we’d like to see a lot more value added before we bring in anybody else.”
In the “glory days” of both Prieska and Okiep, the mines produced a combined 50,000-60,000tpa of copper.
“There’s no reason we can’t get back to that within a five to six-year period and that is what we’ve set out to do,” Smart said.
