The raising is underpinned by a group of high-profile South African investors and has achieved accelerated compliance with the ownership aspects of the South African Mining Charter 3 (MC3).
Milestone for company
Representing a milestone for Orion, the raising precedes the company obtaining a mining right for its flagship Prieska Zinc-Copper Project in South Africa’s Northern Cape province and the delivery of the project’s bankable feasibility study (BFS) later this quarter.
Funds will be used to finalise the Prieska BFS and go towards continued exploration at Orion’s prospective tenements in the Northern Cape.
Orion chairman Denis Waddell said the company was delighted with the outcome of the interrelated transactions which had taken months of negotiation and preparation.
He said: “The proposed BEE restructuring ahead of the imminent mining right grant and the completion of the bankable feasibility study for the development of a world-class base metal mine at Prieska, shows that the South African MC3 ownership objectives can be achieved while enhancing value for all shareholders.
“As a result of this restructuring, all Orion BEE partners will be aligned as shareholders at the ASX-JSE listed level, sharing the equity risk and reward on equal terms with all Orion shareholders.”
The proposed share placement will be made at an issue price of 4 cents per ordinary share and will include one free-attaching option for every two shares issued.
Occurring in two stages, the first tranche will result in the issue of about 117 million shares using the company’s 15% placement capacity under the relevant ASX listing rule to raise A$4.685 million.
The second tranche will comprise 83.5 million shares and raise A$3.34 million, subject to shareholder approval to be sought at a general meeting planned for early June 2019.
Free-attaching options will not be quoted on the ASX or the JSE and will have an exercise price of 5 cents, expiring on October 31, 2019.
Prieska's total mineral resource
The proposed BEE restructuring entails existing BEE shareholders in Orion subsidiary Repli Trading No 27 Pty Ltd, which owns the Prieska project, exchanging their 26.7% holding in Repli for JSE-listed Orion shares.
A new BEE company will then acquire a 20% shareholding in Repli, facilitated by way of Orion vendor funding.
The established of the new BEE company is expected to be finalised before June 11 this year and its members have demonstrated their commitment and financial capacity by subscribing for A$2 million in the share placement.
Along with the milestone transactions, Orion will also appoint two highly-experienced South African-based mining executives who have specific knowledge and skill in the South African mining industry.
These are Godfrey Gomwe, former chief executive officer of Anglo American’s thermal coal business, and Tom Borman, who has worked for BHP Billiton Group in various senior managerial roles.
Non-executive director Michael Hulmes has stepped down from his board role due to increased commitments in another role.
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Waddell added: “We have also secured the equity participation in terms of MC3 with the engagement of highly-experienced BEE entrepreneurs, including Prieska-born, female executives with successful mining, banking and commercial backgrounds.
“Our key shareholders have recognised the potential value uplift brought by our new BEE partners and have participated in the placement at a significant premium to market, matching the terms which our incoming BEE partners are investing.
“As part of this milestone, we are also very pleased to have attracted highly-respected and experienced South African mining executives Godfrey Gomwe and Tom Borman as non-executive directors.
“Michael Hulmes has stepped down as a non-executive director due to his increased commitments as an executive in a new role elsewhere.
“We thank Michael for his significant contribution during the feasibility study period and wish him well in his new role.”