“By 1969 they’d realised that they had something exceptional. They drilled 47 holes, built a mill and operated it for 20 years. The mine took its last blast in 1989 and the mill finally stopped in 1991.”
At that point, though, a change in the inclination of the orebody, a weakening in the commodities market and the general economic isolation of South Africa as apartheid dragged on to its inevitable conclusion all added up to a decision by Anglovaal to walk away.
They left a project that was somewhat in limbo and with an estimated 23mln tonnes of copper ore still to be mined.
South Africa’s economic troubles continued into the 1990s as apartheid ended and the new era began, and because Prieska had been formally closed and rehabilitated, there was little immediate interest in a restart.
But it was only a matter of time before that 23mln tonnes of historically estimated ore attracted renewed interest and, in a rising zinc market, Orion stepped up to the plate.
At one stage Orion had been involved in Australian nickel, but come 2014 the thinking inside the company was that the mining cycle had bottomed out and there were likely bargains to be had in other base metals.
Errol Smart, a South African himself, was initially reluctant to venture back to the country of his birth. But the quality of the asset, and its relatively remote location changed his mind.
In October of 2015 Orion took out an option on 73.33% of Prieska and it hasn’t looked back since.
The initial objective during due diligence was to verify that historic 23mln tonne figure.
“We took the old mine plans and we started digitising,” says Smart.
“We found two blocks with ore amounting to around 16mln tonnes. We then modelled a further seven million tonnes in the remaining pillars. That accounted for the 23mln tonnes, and showed that the data provenance was very good.”
But there was more.
Because the orientation of the orebody had changed at depth, Anglovaal hadn’t completely drilled out the remaining resource. That opened up the possibility that there could be more than the established 23mln tonnes there, and sure enough, when Orion put the drill rigs to work on the southern extension of the resource last year, a further 10mln tonnes-plus was identified.
Thus, the total resource excluding pillars at Prieska now rings in at a chunky 29.4mln tonnes, which is substantially higher than the initial 16mln tonnes expected. Total contained metal comes to 1.126mln tonnes of zinc and 365,000 tonnes of copper, with nearly nine million ounces of silver and 198,000 ounces of gold.
And even now the project remains open on dip and strike.
Not surprising then that Orion’s shares have moved upwards by around 30% since the beginning of the year, in a market that hasn’t generally favoured smaller mining companies.
The plan now is to complete the resource drill out and a bankable feasibility study, which should be ready by the fourth quarter of this year, at a cost of around A$15mln.
All the key elements are in place. There’s power, a water pipeline tar roads and a nearby rail siding. The company has established the integrity of the existing shaft, and the ramp decline roadways are in what Smart calls “fantastic” condition.
The metallurgical work too, has been favourable, which is perhaps not surprising given the previous 20 years of operation.
It all points towards first production in 2020, as a small open pit orebody gets mined, before the company then moves underground the following year.
“In that year we will de-water the mine and re-equip the shaft,” says Smart.
“With the additional ore we’ve identified we’re now starting to look at mining at a rate of two million tonnes per year, instead of the original 1.2mln tonnes that was planned.”
And while all that work is underway, Orion will also get busy exploring the plethora of other volcanic massive sulphide deposits around Prieska, and also press on with work at another project, Jacomynspan, which is highly prospective for nickel, copper and cobalt and platinum group elements.
If that seems like a hectic work programme, then it is. But Orion is supported by London-based private equity group Tembo, which likes what it sees in the South African portfolio and has been willing to put up debt as well as equity to allow Orion to get moving at quite a pace.
“We had 19 rigs drilling last year,” says Smart.
“It was the most intensive drilling programme anywhere in Africa. We’d like to continue spending around A$1mln per month on exploration.”
With the current cash balance standing at A$3.5mln, more will clearly be needed. But a bigger funding round is likely anyway towards the end of the year, when the bankable study is complete, and Orion turns its thoughts towards the capital required for a build.
At that stage a London listing is likely, perhaps just before the bankable study is complete.