Orion Minerals Ltd’s (ASX:ORN) (JSE:ORN) scoping study has confirmed the potential for the Prieska Project in South Africa to become a significant near-term, low-cost, zinc and copper concentrate producer.
The scoping study investigated the economic viability of an initial ten-year phase of exploitation of the Prieska deposit.
Based on the study assumptions, the project would provide excellent financial returns, for modest capital investment given the scale of operations envisaged.
Key scoping study results for phase 1 of the Prieska Zinc-Copper Project
Orion managing director and chief executive officer Errol Smart said: “We are very pleased to have completed our resource upgrade that has confirmed what an exceptional deposit we have at Prieska.
“With nearly two-thirds of the resource now in the Indicated category, we can present the case for the first ten years of a very attractive mining operation.
Prieska mineral resource estimate
“The study indicates solid operating margins, with the peak funding of $320 million inclusive of 20% contingency, recovered within the first third of mine life all supported by current indicated resources yielding an NPV (net present value) of $420 million.
“The study identifies important opportunities for further financial upside, both from extending the life of mine, and from optimising the grade of extraction following further drilling to be conducted from underground.
Profile of the Prieska Project phase 1 conceptual cash flow post-tax. The right axis shows the cumulative cashflow; the left axis shows the annual net cash flow.
“The current phase 1 study has examined extracting only 75% of the total mineral resource at the mean mineral resource grade.
“The application of further modernisation, making optimised use of low-cost available renewable energy, also provides an important cost saving opportunity being investigated in depth by the bankable feasibility study (BFS) which is well advanced.”
A BFS is in progress and due for completion in the second quarter of 2019.
Based on a positive project outcome and assuming funding is available, construction could begin in the second half of 2019.
Underground mining would then begin 24 months thereafter, with the plant being commissioned from month 28.
Open-pit mining of shallow targets is being considered as a potential opportunity once phase 1 is underway and is the subject of a separate feasibility study.