Orion Minerals has commenced a partnering process, which contemplates the introduction of a strategic project-level equity partner or investor in its flagship Prieska copper-zinc project in South Africa.
Orion Minerals has received expressions of interest from third parties in relation to the potential acquisition of, or subscription for, a significant project-level ownership interest at Prieska, prompting it to commence a formal process to consider a range of potential transactions.
“Prieska is a high-quality base metal asset of global significance, and we believe there are a number of significant benefits from evaluating alternative funding and development pathways that could include the sale of a project-level strategic equity interest,”says Orion Minerals MD and CEO Errol Smart.
Given the size of the deposit, the scale of the development opportunity and the quality of the metal concentrates, Prieska is already attracting significant interest from a number of parties.
“We believe that identifying and engaging with the right partner could help us to unlock the full potential of this world-class deposit and ultimately deliver an integrated funding and development package that will minimise dilution for Orion shareholders while retaining significant exposure to the substantial cash-flows that will be generated by a long-life base metal operation.
“We have already held discussions with a number of parties that could bring technical, financial, corporate and strategic expertise to the table. We are looking forward to engaging formally with these and other parties over the coming months to see if we can crystallise a transaction that would generate a positive outcome for all stakeholders, and help to fast-track the development of a substantial new-generation African base metals mine,” says Smart.
While progressing the banakable feasibility study (BFS) optimisation studies, the Orion Minerals management team has been progressing debt and equity funding discussions with a number of parties.
The company has also received unsolicited approaches from interested parties, which could potentially enhance project value through the provision of technical and/or financial support.
In light of the potential of some of these approaches to increase overall project returns and limit Orion’s requirement to provide equity financing, Orion has decided that it will run a formal process to engage with these interested parties.
Should the process be successful, Orion will participate in the joint development of the Prieska project – providing the foundations for its transformation into a significant new mid-tier base metals mining company while at the same time continuing to pursue exploration of the many exploration opportunities identified in the Areachap region in the Northern Cape province of South Africa, which is highly prospective for copper, zinc and nickel.
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Orion Minerals is however not reliant on completing a transaction through the partnering process in order to secure project funding to proceed with the development of the Prieska project, and there is no certainty that any transaction(s) will be completed.
The company is targeting to complete the partnering process during Q3 2020, following completion of the value engineering and optimisation process and the delivery of an updated BFS.
Orion Minerals has engaged Macquarie Capital to act as the company’s financial adviser in relation to the transaction. Macquarie Capital is the advisory, capital markets and principal investment arm of Macquarie Group, a leading global financial institution. Macquarie Capital has a strong presence in South Africa, Australia, Europe and Asia.