Orion Minerals Ltd (ASX:ORN, JSE:ORN) is set to deliver first copper production from its two flagship projects - the Prieska Copper-Zinc Project and Okiep Copper Project – both in Northern Cape, South Africa, within the next 24 months.
Together with the advanced feasibility studies for the Flat Mines at the Okiep Project and the Prieska Project early production scenario, the company aims to determine the optimal route for its first copper production to take advantage of strong copper market conditions.
The company is well-positioned to deliver critical metals for the global energy transformation with copper prices close to record highs and demand set to outstrip production for the foreseeable future.
Orion managing director and CEO Errol Smart said: “To capitalise on the current positive market conditions, we have fast-tracked our assessment of an early production strategy for the Prieska Copper-Zinc Project based on moving the open pit development to the start of the mine plan.
“Early open pit production at Prieska, together with the opportunity for early production from the Okiep Flat Mines, that we added to our portfolio earlier in 2021, could enable us to deliver first copper production from both the Prieska and Okiep mining operations within the next 24 months, while also significantly de-risking both projects and providing a profitable production platform with strong near-term growth from advanced expansion projects.
“Our two base metals hubs in South Africa’s Northern Cape Province position us to deliver critical metals for the global energy transformation with opportune timing. With copper prices close to record highs and demand set to outstrip production for the foreseeable future, the timing is perfect for Orion.
“Exercising the option to acquire and consolidate Okiep was a major step forward in our strategy to become a diversified, new-generation base metals producer.”
Fast-tracking Prieska Project
Investigations are now underway into an early production scenario that re-schedules production from open pit mining to occur concurrent to the 33-month development phase of the Prieska Deeps Mine, rather than at the end of the project life, as planned in the 2020 Bankable Feasibility Study (BFS-20). The report is due for completion by mid-2022.
The focus of the investigations is on bringing forward production and phasing the implementation of the BFS-20 plan.
An underground drilling campaign to upgrade the mineral resources categories supporting the BFS-20 open pit plan and to evaluate the potential to extract the pillars left unmined for structural support during previous mining operations is currently mobilising.
The program was scheduled to commence in February 2022 with completion anticipated by June 2022.
An updated mineral resource and ore reserve estimates will be available shortly thereafter.
Orion is also assessing the option to phase the implementation of the BFS-20 full-scale mine dewatering plan, so that a reduced-scale first phase can be commissioned in 2022, as part of pre-construction project preparation works.
The assessment is expected to be completed for investment decision by June 2022.
Smart added: “This alternative scenario is looking increasingly like the route we should go down.
“Importantly, this early production scenario relies on the material assumptions for the mine plan already incorporated in the 2020 Bankable Feasibility Study.”
Early production scenario plan
The early production scenario plan will evaluate whether the sulphide ore processing plant can be commissioned by month 19, about 14 months ahead of the original BFS-20 schedule.
As with the BFS-20, the processing plant would treat open pit material at a reduced throughput compared to steady-state operations for the Deeps, using one of the two mills that have already been secured in preparation for full-scale production from the Prieska Deeps.
In this scenario, the second mill, together with additional flotation concentrators, would likely be installed later, as part of a phased expansion to accommodate feed from mining of the Deeps at the increased throughput rate.
The opportunity to place almost all tailings from the ore processing plant as backfill in historic and planned mining voids, hence reducing the size of the required, lined, tailings storage facility and thereby further reducing upfront capital outlay and funding is also being assessed.
Prieska Deeps Mine funding
While funding discussions for the Prieska Project, based on the BFS-20 plan, are in progress with banks and finance institutions, investigations into further enhancing the technical and commercial aspects of the project are being advanced.
In addition, discussions have been initiated with potential financiers, who have expressed interest in funding the early dewatering and production plan.
New copper discovery
In February 2022, the company made a significant new copper discovery within the Okiep Project, intersecting mafic-intrusive-hosted copper sulphide mineralisation.
This is the first drill hole designed to test one of several SkyTEMTM geophysical anomalies identified within the Okiep Project from an extensive SkyTEMTM survey flown last year.
The mineralisation intersected occurs as blebs, veins and massive sulphide (80-100%) lenses of pyrrhotite-chalcopyrite over widths of 1-25 centimetres in drill core within the magnetite rich, mafic intrusive host.
Noting that the early exploration success underscores the huge potential upside in the Okiep region, Smart said: “Remarkably, this is the first discovery in the district in more than 40 years – and it is directly attributable to the use of modern geophysics, followed by mapping and detailed ground surveys.
“What is really exciting, however, is that a further eight selected high priority SkyTEMTM targets are currently being followed up with systematic ground surveys at the Okiep Copper Project and will be drilled over the next 12-24 months.
“The potential for new discoveries and significant additions to what is already an area with enormous copper endowment, is huge.”
Surging demand for green metals
Base metals performed strongly in 2021 with copper ending the year 25.7% higher and zinc gaining 31.5% during the year.
Demand for base and battery metals continues to be driven by the global transition towards greener and cleaner technologies, while ongoing supply-side constraints helped support significant price increases.
The metal last set a record in 2011 around the peak of the commodities supercycle, sparked by China’s economic growth and internal infrastructure investment.
The renewed interest in copper has been fuelled by global efforts to cut carbon emissions. This surging demand for green metals has put a strain on supply while new mine production has been slow to arrive.
Copper the “new oil”
Goldman Sachs (NYSE:GS) has described copper as 'the new oil’ because electric cars need several times more copper than their internal combustion engine-powered counterparts.
CRU has noted that demand from green energy applications is expected to account for 40% of the growth in refined copper demand in 2022 and that this will remain the key demand driver in the coming years.
Copper prices are forecast to moderate slightly in 2022, yet remain supported over the long-term, as demand outpaces supply.
Zinc prices to remain elevated
The surge in zinc prices came on the back of news that Belgium-based Nyrstar was cutting production by up to 50% at its three European zinc smelters and Glencore PLC (LSE:GLEN), which also has three zinc smelters in Europe, planned to adjust production to save energy costs.
Supply concerns are expected to continue to support zinc prices into 2022.
S&P Global believes zinc prices will remain elevated throughout the year with fewer mines expected to start up in 2022-2025 — especially in China, where mined zinc is estimated to decline to 3.8 million tonnes in 2022.
Green metals and green energy
In line with its commitment to play a key role in the green metals revolution, Orion has commenced consultations with juwi Renewable Energies Pty Ltd and the Central Energy Corporation (CENEC) to ensure that the Prieska Project is powered entirely by renewable energy and green hydrogen sources.
CENEC plans to construct a mega-scale renewable energy hub for the Prieska district.
in the Northern Cape Province of South Africa. The Prieska PowerTM Reserve is a large-scale initiative aimed at generating electrical energy from renewable sources and storing this energy as green hydrogen and ammonia on a long-term basis.
The project is targeting energy independence from the national electricity grid.
Having access to this hub would help achieve carbon net-zero at the Prieska Project and could establish Prieska as one of the world’s lowest carbon emission sources of copper and zinc.
Orion already has an agreement with the renewable energy company juwi to investigate the construction of its own renewable energy generation plant at the mine and the CENEC collaboration is advancing as an extension of the work already done to establish a bespoke solar and wind power generation project for the Prieska Mine.
Fraser Range – nickel-copper projects
Orion maintains a sizeable tenement package in the Fraser Range Province of Western Australia in a joint venture with IGO Ltd.
Under the terms of the joint venture, IGO is responsible for all exploration on the tenements.
Orion’s exposure to the ongoing exploration and development of the Fraser Range Project is without additional financial commitment, given that Orion is free-carried through to the first pre-feasibility study on any of the tenements.
A drilling program aimed at testing a number of high-priority magmatic nickel-copper targets within the joint venture tenement E28/2367 has commenced in the current quarter.
Other planned works include planning and logistics preparation for the 2022 field season, rehabilitation of the drill pads and access around Kanandah and Boonderoo stations and detailed geological logging and sample selection for geochemical assay for the Hook 1, Hook 2 and Bilby drill holes.
This will then lead to geological and structural interpretation of core logging, geophysical surveys (such as DHEM) and geophysics data from Hook 1, Hook 2 and Bilby and subsequent conclusions and recommendations.