29 Jul - 32 min read

June 2021 Quarterly Activities Report

June 2021 Quarterly Activities Report

Orion Minerals Limited
Incorporated in the Commonwealth of Australia
Australian Company Number 098 939 274
ASX share code: ORN
JSE share code: ORN
ISIN: AU000000ORN1

June 2021 Quarterly Activities Report


Negotiations with potential project financiers for the Company’s flagship Prieska Copper-Zinc Project
are progressing well, with term sheets expected in the coming months.

Project execution preparatory work streams for the Prieska Project are advanced including:
o    Preparation and negotiation of key supply contracts (including EPCM candidate contractors, bulk
     power supply and mine operating contractors);
o    Ongoing preparation of project management systems (including compilation of the Project
     Charter and defining the Owner’s team requirements); and
o    Formulating plans to commence mine dewatering, a critical path item, ahead of full-scale project
     construction approval.

Due diligence investigations were progressed to support Orion’s proposed acquisition of controlling
ownership of the Okiep Copper Project (OCP), an extensive historical copper mining complex located
570km north of Cape Town. This transaction will complement the development-ready Prieska Copper-
Zinc Project and marks a major step towards Orion realising its ambition of becoming a major new
long-term supplier of ‘green’ metals to fuel the global energy transformation.

Positive Scoping Study for the OCP completed, confirming the potential for early cash-flow and ‘proof-
of-concept’ copper production, with results from the study confirming:
o    Okiep-style deposits have the potential to be mined at low cost by both open pit and underground
     mining methods;
o    Potential exists to rapidly advance the project to production, with critical permitting processes
     already underway;
o    A ‘proof-of-concept’-scale operation requiring low upfront capital investment can provide
     commercially attractive returns and early cash flows; and
o    Potential exists for significant operational synergies with the fully-permitted Prieska Copper-Zinc
     Project, also located in the Northern Cape Province, which now awaits funding before mine
     construction commences.

Memorandum of Understanding (MOU) signed with South Africa’s Council for Geoscience (CGS) to
collaborate on exploration initiatives to advance the geological understanding of South Africa’s
Northern Cape.

First collaboration under Orion/CGS agreement is a 1,827km2 regional SkyTEMTM Survey targeting
copper sulphide mineralisation hosted in mafic intrusive bodies, with a high-priority focus on the OCP
area. This survey commenced in June 2021.

Orion secured the grant of the Boksputs North Prospecting Right, with drilling now underway to test a
highly-conductive EM anomaly that straddles the boundary between Orion’s Masiqhame Prospecting
Right and the newly-granted Boksputs North Prospecting Right.

IGO progresses exploration in the Fraser Range, WA with the completion of a high temperature Squid
moving loop EM survey to assist with prioritising targets for diamond drilling in the September Quarter.
Four targets are scheduled to be drilled.

Orion’s Managing Director and CEO, Errol Smart, said:

“The June Quarter has been an extremely busy and productive period for Orion Minerals. During the
Quarter, our management team remained focused on negotiating funding arrangements for our flagship
Prieska Copper-Zinc Mine (Prieska) while at the same time advancing due diligence investigations into
the acquisition of the Okiep Copper Project (OCP).

“The Minerals Corporation (TMC) has been appointed as the proposed lenders’ Independent Technical
Expert for the Prieska Project and they have been working closely with our technical team to complete
their technical due diligence on the Bankable Feasibility Study that we completed in May 2020. This review
is now nearing completion and will represent an important milestone to allow the funding process to be

“While work on Prieska has been focused on the funding arrangements, planning studies are also being
undertaken for the possible early commencement of dewatering ahead of the completion of overall
project funding. This early dewatering strategy has the potential to significantly accelerate the project
restart, given that it is a critical path item in the overall project delivery schedule.
“Our due diligence programs at the OCP are also providing plenty of early encouragement for its
potential to emerge as a second major base metals production hub for Orion alongside our flagship
Prieska Copper-Zinc Project.

“During the Quarter, we completed a successful Scoping Study for a foundation-phase mining operation
at the OCP, based on the development of the Flat Mines and Jan Coetzee copper deposits.

“This Study confirmed the economic merits of developing a ‘proof-of-concept’ mining operation while
Orion undertakes the necessary work programs to support our primary aim – which is to re-establish mining
operations at a similar level to those sustained by previous owners such as Newmont and Goldfields, who
produced 30,000-40,000 tonnes per annum of copper metal over many decades.

“The Study indicated the potential to deliver 102kt of copper in saleable concentrates over an initial 12-
year mine life, with the potential for first production within 16 months of the start of construction.

“Importantly, exploration programs outside of the known Resource areas at the OCP, where Orion has
made additional applications for Prospecting Rights and for extensions to the rights under option to Orion,
are also ramping up, supported by our recent collaboration agreement with South Africa’s Council for
Geoscience (CGS).

“Our first collaboration with CGS is a district-scale SkyTEMTM airborne electromagnetic survey over the
Okiep Copper District, aimed at detecting massive sulphide ore bodies. This survey commenced in June
and represents the first airborne electromagnetic survey ever to be conducted in this world-class copper
district. Importantly, the survey will provide intensive coverage of Orion’s tenure at the OCP, as well as
broader regional coverage, to identify the district-scale structural controls on emplacement of the mafic
intrusive bodies.

“We expect that the data from the survey will be invaluable in identifying and prioritising targets for our
drilling and exploration programs throughout FY2022.

“On other fronts, we are also excited to have drilling underway to test a high-priority electromagnetic
conductor that straddles the boundary of our Masiqhame Prospecting Right and our newly-granted
Boksputs North Prospecting Right, 100km north-west of Prieska. This compelling target has been modelled
at 3,000 to 6,000 Siemens – nearly ten times higher conductance than the FLEM target drilled in this area
earlier this year, which returned encouraging results. We are looking forward to seeing what this drill
program can deliver.”

Commodity Markets

Copper prices continued to climb during the June Quarter, reaching a new record high of USD10,720 per
tonne on the London Metals Exchange on 10 May 2021. While prices did soften late in the Quarter, the
copper price increased by 7% overall during the reporting period to end the Quarter at USD9,385/t. Zinc
also moved higher, increasing by 5% over the reporting period to close the Quarter at USD2,945/t.

During the Quarter, US President Joe Biden declared copper to be a “critical mineral” to the United States
due to its important role in the production of green energy batteries and commenced a 100-day strategic
review to ensure the US can secure reliable and sustainable supply. The White House Supply Chain Review
Report stated that: “Demand for many of these (critical) metals is projected to surge over the next two
decades, particularly as the world moves to achieve net zero carbon emissions by 2050.”

Operations Report

Health and Safety, Environmental Management and Community Engagement

Health and Safety

No injuries were recorded during the Quarter. The hours worked for the Quarter and the total for FY2021
are shown below:

Table 1: Hours worked at the Areachap Projects (South Africa).

                                        Hours Worked
Category of Work
                                Quarter              FY21 Total
Exploration                      18,163                  22,959
Mine Re-Entry                     3,328                   4,672
Contractors                       1,427                   4,887
Total                            22,918                  32,518

The Lost-Time Injury Frequency Rate (LTIFR) per 200,000 hours worked is 0 for the 2021 calendar year.

The Company continues to manage the risks from the COVID-19 pandemic in the workplace in line with
mandatory and industry guidelines. During the Quarter, the South African Government moved the
country from Alert Level 1 to Alert Level 4 by the end of June 2021. Two cases of infection with the SARS-
Coronavirus 2 have been reported amongst Company employees or contractors to date. Working from
home, social distancing, periodic screening and testing for possible infection are the measures being
used to reduce the risks of workplace transmission of the virus.

Community and Stakeholder Engagement

COVID-19 Vaccination Program in Siyathemba

Together with other members of the Siyathemba CSI Collaboration Forum, Orion is playing a leading role
in ensuring that the local Siyathemba community benefits from South Africa’s national COVID-19 vaccine
rollout. As outlined last Quarter, Orion has worked closely with the District Department of Health and the
Local Municipality to establish the Bill Pickard Hospital Pharmacy in Prieska as a COVID-19 vaccination

During the Quarter, the Company formally handed over a specialised fridge for vaccine storage to the
Bill Pickard Hospital (Figure 1). This has allowed the hospital pharmacy to apply, and achieve, COVID-19
vaccination centre accreditation and, after consultation with the District Department of Health, the
pharmacy commenced the roll-out of vaccines to the over-60 age cohort, with a total of 682 doses
delivered by 30 June 2021.

Before the pharmacy’s accreditation, the closest accredited vaccination centre within the Pixley Ka
Seme District was in De Aar, 180km from Prieska. Accredited COVID-19 vaccination centres are eligible
to be part of the Government’s national vaccination program to administer vaccines to health workers
and community members as part of a phased rollout.

The Bill Pickard hospital required refrigeration capacity, shelving and digital infrastructure before it could
receive the required accreditation, and Orion played an instrumental role in achieving this positive
outcome. Given the logistical challenges in rolling out a mass vaccination program in the remote
Northern Cape region, this initiative represents an important community program that will deliver tangible
benefits to the entire community, particularly given the significant escalation in COVID-19 infections in
South Africa in recent months.

This COVID-19 initiative reflects Orion’s commitment to working with the Siyathemba and surrounding
communities to improve the welfare of all of those living in the vicinity of the proposed Prieska Copper-
Zinc Mine (PCZM).

Figure 1: Vaccine refrigeration – donated by Orion (CEO Errol Smart pictured right) to the Bill Pickard Hospital.

Occupational Assessments in Siyathemba

As part of its ongoing commitment to community training and development, Orion recently undertook
occupational assessments for potential artisans and operators in the local community. This program had
been delayed as a result of disruptions in the Siyathemba community (see below).

The process was open to individuals who had previously completed Orion’s “Introduction to Mining”
course, and who had expressed an interest in artisan and operator roles. An initial group of 60 individuals
from the Siyathemba communities of Prieska, Marydale and Niekerkshoop were invited to participate in
the current phase, with 44 individuals eventually taking up the opportunity.

Based on the results of these assessments, training programs will be offered to high-potential participants
to prepare them for possible future employment opportunities at the Prieska Copper-Zinc Mine or within
the broader South African mining industry.

Additional occupational assessments will be undertaken, and Orion encourages all community members
who receive an invitation to participate to do so, as this process will play a critical role in ensuring that
local residents are eligible to be considered for employment once work begins on site. Orion is conscious
of the urgent need for skills development and employment opportunities in the Siyathemba area and is
committed to playing a role in delivering these wherever possible.

Bicycles for Humanity Update

Orion has partnered with Bicycles for Humanity Western Australia (B4H), which donated 420 pre-loved
bicycles to Orion’s host communities in Siyathemba and Vanwyksvlei. Studies have shown that bicycles
transform lives and by extension, communities and economies. With a bicycle, young people can get to
school, health care workers get to their clinics and entrepreneurs can kick-start their businesses through
improved mobility, thereby creating employment.
With import and shipping costs covered by Orion, a container of 420 donated bicycles arrived in Prieska
in April. Following pro-bono container offloading assistance provided by Partzone Prieska and NR
Engineering, the bicycles are now being stored in a Department of Roads and Public Works warehouse,
from where they will be assembled and distributed.

Expressions of interest solicited from the community in late 2020 resulted in eight individuals undergoing
bicycle mechanic training in June 2021 (having been delayed by a month due to disruptions in the
Siyathemba community in May 2021). During the training – which was provided by Bicycle Empowerment
Network (BEN) from Cape Town – approximately 100 of the bicycles were assembled and serviced, ready
for distribution (Figure 2).

Figure 2: Local community members with BEN representatives – learning to assemble and repair bicycles.

Sponsorship of Olympic Athlete

Orion sponsored Prieska sprinter Chederick van Wyk, as he worked towards selection for South Africa’s
4x100m men’s relay team – and other possible sprint entries – at the Tokyo Olympic Games, which
commenced on 23 July. Orion’s sponsorship allowed Chederick to travel to Italy in June 2021 for a critical
pre-Olympics camp.

This sponsorship forms the first phase of what Orion hopes will be a long relationship between the
Company and Chederick, who will become a sports ambassador for the Siyathemba community,
especially for the young people of Siyathemba.

Chederick’s message to the Siyathemba community is that: “It is important to work hard and use your
talents when you follow your dreams. I am inspired by all those in the community who talk to me about
what my running means to them, and the impact that I can have on their lives. If I make it to the Olympic
relay team in Tokyo, I will be running for all of them, for all of Prieska and Siyathemba – as well as for all of
South Africa. All my training, and all the hard work – the results will be for them.”

Community Disruptions

During the Quarter, community protests and unrest were experienced at a number of mining operations
and various communities across parts of South Africa. In a statement issued during the Quarter, Orion
supported the strong stance adopted by the Minerals Council South Africa condemning the unrest. In
almost all cases, the protests were led by a small group of individuals who are seeking to disrupt legitimate
business operations by subverting procurement and tendering practices.
The Minerals Council issued a statement condemning the unlawful protests and called on the authorities
to act swiftly and impartially to protect the safety of communities, employees and private property.
The Minerals Council has, in particular, expressed its support for and solidarity with members like Orion,
who have taken a firm public stance against corruption and illegitimate demands at the PCZM.

In response to unrest in the town of Prieska, located 68km from the Prieska mine site, Orion obtained an
interdict in the Northern Cape High Court in Kimberley, to prevent any interference in its business at PCZM
by protesters operating outside the law. While Orion respects the constitutional right of lawful public
protest, its support does not extend to intimidatory threats and the possibility of behaviour that will put
lives as well as livelihoods at risk.

The High Court also specifically directed the South African Police Service to enforce the terms of its order.
The protest action has had minimal impact on progress on the PCZM Project, with most work-streams
currently focused off-site.

Orion will continue to engage with all stakeholders, including community representative groups, the
Siyathemba Municipality, Northern Cape Provincial Government and the Department of Mineral
Resources to ensure that the PCZM project is progressed in a peaceful and sustainable environment
benefitting all stakeholders.

Subsequent to the end of the Quarter, the unrest experienced elsewhere within South Africa did not affect
the mine or the local community area of Siyathemba and has since subsided. Orion notes the return of
order to affected areas and the Government’s interventions to ensure that the unlawful events are not

Prieska Mine Development and Exploration

Prieska Copper-Zinc Project Overview

The Prieska Copper-Zinc Project (Prieska Project) continues to be the primary focus of the Company’s
activities and is now in the financing and pre-development stage following the completion of an
updated Bankable Feasibility Study (BFS) in the June 2020 Quarter (refer ASX release 26 May 2020).
Updates to Environmental Permitting are being finalised and progress continues on selection of the EPCM
contractor. Preliminary site works have taken place in readiness for construction.

Following the positive outcomes of the updated BFS, Orion is progressing financing negotiations with a
number of Tier-1 institutions. Orion intends to fund the development of the Prieska Project through a
combination of debt and equity, with the potential for streaming financing to reduce the equity
contribution also being evaluated.

As part of advanced ongoing funding discussions, the proposed financing consortium has appointed The
Minerals Corporation (TMC) to undertake an Independent Technical Review of the BFS. This intensive
review is now nearing completion and will be an important milestone in progressing financing

Discussions with a precious metal streaming company in regard to a stream on the precious metal by-
products are also progressing well, with a second due diligence team also reaching an advanced stage
on behalf of the streamer.

Prieska Operation Activities Subsequent to the Updated Bankable Feasibility Study

Environmental Management

Water Use Licence (WUL) – while a WUL has already been granted for the Project, further amendments to
the licence are being sought, to better align the grant conditions to an improved execution strategy for
mine dewatering. After consultation with the Department of Human Settlements, Health & Sanitation
(DHSHS), which defined the process to be followed on the WUL Amendment, Orion is continuing with work                                                                                                           
on updating the water balance during the de-watering phase and revising the historical Tailings Storage
Facility (TSF) Environmental Management Plan. The Amendment pack is expected to be ready for
submission during the September2021 Quarter.

Square Kilometre Array – The Prieska Project is located within the Square Kilometre Array Radio Telescope
Project (SKA) area, in which special licencing is required to undertake mining operations. For existing on-
site equipment, PCZM is exempt from requiring a permit as the Project site falls outside the 30km declared
area to the nearest SKA infrastructure. For the new mine’s planned equipment, Orion only needs to show
that there will be no radio interference from the planned equipment. This study will start once the detailed
design stage commences and suppliers for the relevant equipment are selected.

EPCM Contract

A site visit for the four short-listed companies, which had been delayed due to COVID-19 travel restrictions,
took place during the Quarter. The four companies that were short-listed have since been reduced to
three after further consideration of their proposals. Legal and technical clarifications have taken place
with the three companies and work is proceeding on the final selection, which is expected to be made
during the September 2021 Quarter.

Project Execution Preparations

Work is progressing on formulating an early water pumping plan, to be commissioned sometime before
the main project construction is approved to start. This early pumping would serve to test feasibility study
concepts and commence mine dewatering, albeit at a lower pumping rate, ahead of the full-scale
pumping being commissioned. A plan has been prepared that will be presented to the DHSHS for
approval before proceeding with the implementation of the pumping plan.

A three-day, multi-disciplinary Project Execution workshop was conducted during the Quarter which
outlined the various work-streams that are now continuing and will provide input for a Project Charter
document. The Project Charter will provide a high-level description of the Project execution including the
strategies that will be adopted around the key Project areas such as stakeholder engagement,
contracting and procurement, HR, SHEQ (Safety, Health, Environment and Quality) and risk management
as examples.

Process Plant Operations

Discussions are continuing with Minerals Operations Executive (Pty) Ltd (Minopex) with respect to contract
operations of the processing plant. Discussions are also continuing regarding the plant’s Operational
Readiness plan which has been proposed by Minopex, including a detailed program for plant
commissioning. A full agreement is expected to be signed later in CY2021.

Underground Mining Contract

A set of pre-selection criteria is being formulated in order for Orion to determine which potential
contractors will be taken forward into a Request for Proposal process. Work is progressing on the Project-
wide automation strategy as outlined in the previous Quarterly Report, and this is expected to be
completed by the September 2021 Quarter. The agreed mining automation strategy will feed into the
contracting discussions and scope. Selection of a preferred underground contractor is expected to be
made during Q2 2022.


Power Supply – following 15 MVA Feeder Bay design approval from Eskom, the Self-build agreement has
been signed. Final review of the Electricity Supply Agreement is almost concluded, and this document
will be signed during the September 2021 Quarter. Eskom granted Orion a six-month extension for
payment of the Connection Charge fee for the 40 MVA power to July 2021. The step-up to 40MVA is
required at the end of year two in the construction phase.
Water Supply – The Siyathemba Municipality has given formal approval for the Water Supply Agreement
for the Project and the agreement document was signed during the Quarter. The Alkantpan Water
Pipeline Agreement has been reviewed and approved by all parties and execution is imminent.

Extension of juwi Renewable Energy Collaboration

The Memorandum of Understanding entered into by the Company with juwi Renewable Energies Pty Ltd
(juwi) was further extended to October 2021.

Orion intends to collaborate with juwi on establishing a hybrid wind and solar renewable energy facility
that will supply 52% of the Prieska Project’s power requirements. The extension provides the parties the
opportunity to explore additional project development options currently under consideration.

Prieska Copper-Zinc Mine Permitting

The PCZM is fully-permitted as a result of the following key milestones:
   •   Mining Right granted to PCZM in September 2019;
   •   Mining Right granted to Vardocube in August 2020;
   •   Environmental Financial Provision in place fully capitalised;
   •   Environmental approval notices received for both PCZM and Vardocube; and
   •   Water Use Licence granted in August 2020.

Potential for Early Commencement of Dewatering

An investigation is underway into the potential to initiate work on the dewatering program, ahead of the
expected draw-down on debt facilities. The dewatering of the historical mine working is on the critical
path for the project development and any early commencement could have a positive impact on the
project timeline.

Near-Mine Exploration

The near-mine projects are those projects within prospecting rights held by PCZM (Dooniespan),
Vardocube and Bartotrax (Pty) Limited (Bartotrax). Volcanogenic Massive Sulphide (VMS) deposits
worldwide tend to occur in clusters and, apart from the giant Prieska Deposit, five smaller deposits have
previously been discovered on the near-mine project areas.

These deposits include Annex, explored by Anglovaal between 1969 and 1981; the PK1, PK3 and PK6
deposits on Dooniespan (Kielder Prospects), explored by Newmont South Africa (Newmont) between
1976 and 1979; and the Ayoba mineralisation discovered by Orion in 2018 (Figure 3).

During the Quarter, the Company continued its drilling campaigns across the Near-mine and Regional
projects to assist in prioritising the pipeline projects supporting the potential to expand or extend the
Prieska Project.

For the Near-Mine areas, drilling was completed at the K3 and K6 prospects within the Kielder Project,
located 15km north-west of the planned PCZM (Figure 3). The drilling program was designed to test
outcropping VMS-style mineralisation, where historical shallow drilling by Newmont SA in the 1970s
returned results of up to 4.8m @ 0.46% Cu, 6.18% Zn and 15g/t Ag. A total of 105 samples were submitted
to ALS laboratory.

Mineralisation similar to that at the Prieska Project was intersected at less than 200m from surface at both
K3 and K6. Finalisation of the results and interpretation is pending.

Figure 3: Surface plan showing the prospecting rights over and adjacent to the Prieska Project and the location of the Annex, Kielder
(PK1, PK3 and PK6) deposits and Ayoba Prospect.

Regional Exploration

Surrounding the Near-Mine Exploration Project, the Company holds a substantial and prospective land
holding in the Areachap Belt (Figure 4). The Areachap Belt is analogous to other Proterozoic mobile belts
hosting major VMS and magmatic Ni-Cu-Co-PGE deposits.

In addition to the Near Mine VMS Project, the Company is also prospecting for VMS deposits on the
Masiqhame Prospecting Right (Figure 4). The Kantienpan (Zinc-Copper-Silver-Gold) and Boksputs
(Copper-Gold) Deposits are the two most prominent known VMS deposits on the Masiqhame Prospecting

Similarly, world-class intrusive nickel deposits also tend to occur in clusters both on prospect and regional
scale in orogenic belts along geological plate margins similar to the Areachap setting. Several mafic
intrusive bodies with nickel and associated metals are located on the Namaqua-Disawell Prospecting
Rights. The setting of mineralisation has been confirmed to be analogous to other orogenic-hosted, deep-
seated magma conduit complexes such as Kabanga (Tanzania), Nova (Australia), Akelikongo (Uganda),                                                                                                                                   
and Limoeiro (Brazil). Conduit-style mineralisation is currently the top priority global target for magmatic
Ni-Cu-PGE sulphide exploration.

Figure 4: Regional geology map of the Areachap Belt showing prospecting rights held and under application by the Company and
noted mineral occurrences as per published data from South African Council for Geoscience.

Orion secured the grant of the Boksputs North Prospecting Right late in the Quarter and immediately
commenced diamond drilling on a high-priority target detected by a fixed loop electromagnetic (FLEM)
survey on the boundary of Orion’s existing Masiqhame Prospecting Right and the newly-granted Boksputs
North Prospecting Right.

The Boksputs Prospect, which is located on the northern boundary of the Company’s Masiqhame
Prospecting Right, has recently delivered very encouraging copper-gold intersections on the 600s B4 FLEM
conductor, including a best section of 5m at 1.09% Cu and 0.13g/t Au, including 1.00m at 2.38% Cu and
0.29g/t Au (refer ASX release 25 January 2021).

A follow-up FLEM survey of the B1 conductors previously detected with two small survey loops located
2,500m to the north of B4 – on the boundary of the prospecting right (PR) and continuing north of the
Prospecting Right – has now confirmed a very strong (3,000s – 6,000s) continuous conductor, DP1, that
presents a compelling drill target (Figures 5 and 6).
The strike extension of this target is also now accessible to Orion after receipt of the grant notice for
prospecting right NC12197PR, covering the northern extension of the target (Figure 7).

Figure 5: FLEM targets at Boksputs Prospect.

Figure 6: Planned diamond drill hole to target new high priority FLEM target.

Figure 7: New Prospecting Right, NC12197PR, covering the Boksputs North target area.

Marydale Gold-Copper Project (Witkop)

No exploration was carried out on the Marydale Gold-Copper Project during the Quarter.

Regional Collaboration Potential

The base metals’ prospectivity of the Northern Cape Province, in general, continues to be of strategic
importance to the Company’s activities.

The activities of other explorers and mine developers in the region may offer the potential for
collaboration in many areas, such as, sharing of support infrastructure, logistics, labour sending areas,
community and social responsibility initiatives, technical data and operational experiences to mutual
benefit. The Company has continued to actively investigate the progress of various mineral development
projects in the region and is assessing the potential areas for collaboration.

Okiep Copper Project

Option Agreement

During the March 2021 Quarter, Orion entered into an agreement giving it exclusive rights and a clear
pathway to acquire and consolidate a significant interest in an extensive copper mining complex, the
Okiep Copper Project (OCP), located approximately 570km north of Cape Town in the Northern Cape
Province of South Africa (Figure 9).

Under the agreement, Orion has an exclusive option to undertake due diligence and acquire a 56.25%
interest in Southern African Tantalum Mining (Pty) Ltd (SAFTA) – alongside Industrial Development
Corporation of South Africa Limited (IDC) with 43.75%, 100% of Nababeep Copper Company (Pty) Ltd
(NCC) and 100% of Bulletrap Copper Company (Pty) Ltd (BCC).
These entities hold the mineral rights to the majority of the large historical mines of the Okiep Copper
Company, which historically produced more than 2Mt of copper metal from a significant copper-
producing district in the Northern Cape Province, ~570km north of Cape Town.

Scoping Study

Orion completed a foundation phase Scoping Study for the development of the Flat Mines and Jan
Coetzee copper deposits at the OCP during the Quarter, as part of its due diligence programs.

The Scoping Study indicated the potential to establish a financially robust foundation-phase copper
mining project with:
   •   First production possible within 16 months of the start of construction;
   •   Average annual undiscounted free cash flows of $32 million post-tax;
   •   All-in-sustaining costs of USD4,478/t (USD2.03/lb) of copper sold;
   •   All-in-sustaining margin of 40%;
   •   Break-even grade of 0.8% Cu for both un-optimised open pit and underground mining operations.
       This is well below the Mineral Resource grades of the deposits considered in the Scoping Study
       and the historical head grades typical of the Okiep Copper District;
   •   Peak funding requirements of $58 million (including 15% contingency); and
   •   Peak annual production of 9kt of copper-in-concentrate, potentially supplementing the 22kt a
       year of copper production planned from Orion’s flagship project, the Prieska Copper-Zinc Project.

The Study evaluated the commercial merits of a foundation phase mining operation, with a production
level in line with the pending Mining Right Application applied for by the project vendors (760ktpa plant
throughput). Orion’s primary interest in the district is in the long-term potential to re-establish mining
operations at a level similar to that delivered by Newmont and later Goldfields, who produced 30,000 -
40,000 tonnes of copper metal per annum over several decades.

The foundation-phase Scoping Study investigated the commercial viability of establishing mining and
mineral processing operations that would produce saleable copper concentrates from the exploitation
of Mineral Resources delineated within a sub-area of the Okiep Project, referred to herein as the Flat
Mines Project area. The concept-level Study was prepared to a capital cost estimation accuracy of ±25%
and targets a production scale that is manageable to test mine operating practices best suited to
exploiting the numerous copper deposits identified within the region and are being considered in future
production expansion scenarios (hence ‘proof-of-concept’ scale).

The Scoping Study demonstrated that potential exists to establish foundation-scale mining operations as
per the scale of processing included in the Mining Right Application. These foundation scale operations
could be in production within 16 months of the commencement of construction, requiring a low upfront
capital expenditure commitment of $53 million (including a 15% contingency allowance), whilst providing
substantial early cash flows averaging $32 million annually, high operating margins (40% all-in-sustaining
margin, 37% IRR, post-tax) and attractive overall commercial returns, with a project Net Present Value
(NPV) of approximately $114 million (post-tax) at a 10% discount rate, using a copper price of @

The proposed foundation scale mining operations could run for 12 years at a design processing plant
throughput of 760,000 tonnes per year, resulting in 9,000 tonnes per year of copper sold in marketable
concentrates. Both underground and surface mining methods would be used in conjunction with mineral
processing by conventional froth-flotation concentration to produce the copper concentrates for export.

This ‘proof-of-concept’ phase of the planned operation targets the mining of only those Okiep Project
copper deposits for which Orion has verified and reported Mineral Resources during the early phase of
the due diligence period.
The resulting Production Target is therefore supported by 33% Measured Mineral Resources, 46% Indicated
Mineral Resources and 21% Inferred Mineral Resources. In compliance with disclosure requirements, note
that there is a low level of geological confidence associated with Inferred Mineral Resources and there
is no certainty that further exploration work will result in the determination of Indicated Mineral Resources
or that the Production Target or financial forecast information outlined in this document will be realised.

Key assumptions and project performance parameters resulting from the Scoping Study are presented in
Table 2 below:

Table 2: Key assumptions and project performance parameters for the Okiep Copper Project (Flat Mines Project area) (numbers may
contain apparent rounding errors).

The modelled scenario returns undiscounted free cash flows of approximately $413 million pre-tax ($291
million post-tax), with an NPV of approximately $170 million pre-tax and post-royalties ($114 million post-
tax, post royalties), using non-inflation-adjusted estimates and a discount rate of 10%. The Project
achieves an Internal Rate of Return (IRR) of approximately 44% pre-tax (37% post-tax). The financial
modelling assumes long-term forecast metal prices of USD7,593/tonne for copper1.

1   Metal price assumptions based on S&P Global Capital commodity long-term real forecast (May 2021).
Peak funding requirements total $58 million, including a 15% contingency allowance. This is forecast to
occur in the second year of the capital expenditure (Capex) program. Payback is planned to occur 4.5
years from the start of construction or 3.25 years from the start of production, shown in the figure below.

Figure 8: Cash flow profile over the life of mine.

The unit all-in-sustaining costs (AiSC) over the proposed mine life (LoM) are estimated to be $6,904/t
(USD4,478/t) (USD2.03/lb) copper metal sold. The realised price (net of smelter charges) over the LoM is
forecast to be $11,344/t (USD7,358t) (USD3.34/lb) copper metal sold, yielding in the order of a 40% all-in-
sustaining margin. The operating breakeven grade is estimated at 0.8% copper, well below the Run of
Mine (RoM) feed grade of 1.3% copper applied in the production schedule. The break-even grade using
direct production costs (C1) is estimated at 0.7% copper, in line with the cut-off grade used for stating the
supporting estimated Mineral Resources.

Full details of the OCP Foundation Phase Scoping Study were provided in the Company’s ASX release
dated 3 May 2021. The objective of the ongoing studies and exploration programs is to increase the OCP
Foundation Phase Scoping Study production rate of 9,000 tonnes of copper per annum to targeting future
mineral resources and production levels similar to that delivered by Newmont and later Goldfields, who
produced 30,000 - 40,000 tonnes of copper metal per annum over several decades.

Due Diligence Program

In addition to underpinning the completion of the OCP Scoping Study outlined above, due diligence
work undertaken during the Quarter also defined a series of new high-priority drill targets on the
Carolusberg – Koperberg complex that forms part of the OCP. The Carolusberg – Koperberg Complex is
situated 20km southeast of the Flat Mine Complex that hosts the current OCP Mineral Resources base of
11.5Mt at 1.4% Cu for 159,000 tonnes of contained copper (refer ASX release 29 March 2021) (Figure 9).

The targets were identified during ongoing due diligence investigations being undertaken by Orion on
the extensive database recently secured (refer ASX release 15 February 2021).

Figure 9: Locality map showing the Carolusberg – Koperberg and Flat Mine Complexes.

The following targets are currently being prioritised for exploration follow-up:

Koperberg – Carolusberg (Bulletrap PR)
     •   Shallow, potentially open pit targets (1, 2 and 3 on Figures 11 and 12) defined by:
           o   Basic rock type outcrops with visible copper oxide mineralisation (Figure 10); and
           o   Targets above historical mined areas not tested by historic drill holes.
     •   Deeper underground targets (4, 5 and 6 on Figures 11 and 12) defined by:
           o   The upper and lower contacts of the favourable Springbok Quartzite / Schist horizon along
               the Koperberg – Carolusberg line of mafic intrusions (refer ASX release 2 February 2021).
               This is the same geology as Okiep, Nababeeb South and Carolusberg Deeps;
           o   A large undrilled area above drill intercepts (refer ASX release 21 May 2021) located
               immediately west of Carolusberg Deep; and
           o   A large untested area adjacent to drill intercepts (refer ASX release 21 May 2021) located
               east of Carolusberg Deep and below Carolusberg East.

In addition, the line of mafic bodies extending west – south-west and east – north-east from the Koperberg
East Deposit, warrants follow-up drilling. Two preliminary targets, 7 and 8 on Figure 11, have been

Figure 10: Photo showing green malachite staining on mafic rocks outcropping at Koperberg West.

Figure 11: Surface plan of the Carolusberg – Koperberg Complex showing targets 1 to 8.

Figure 12: Longitudinal projection of deposits along the Carolusberg – Koperberg Line of historic copper mines.

In addition to the drill targets identified on the Carolusberg – Koperberg line, Orion is currently evaluating
the potential of drill targets described in Table 3 below and shown on Figure 9:

 Target                                                                    Description
                                           Potential exists for additional mineralisation within the mine and near mine
 Okiep East           Bulletrap            area along strike and down dip. Numerous untested strong magnetic
                                           anomalies remain to be investigated.
                                           Potential exists for additional mineralisation in the near mine area along strike
 Narrap               Bulletrap            and down dip. Some magnetic anomalies in the area have not been fully
                                           Potential exists for additional mineralisation in the near mine area along strike
 Eagles Nest          Bulletrap
                                           and down dip. Limited historical surface drilling was done at this prospect.
 Nababeep                                  Potential exists for additional mineralisation in the near mine area along strike
 West Mine                                 and down dip.
                                           Potential still exists for additional copper mineralisation on the westward
 North Mine           Bulletrap
                                           extension of the high-grade Nababeep (North) Mine.
 Extension West
                                           Potential for higher grade mineralisation exists at the untested mafic rock –
 Lura                 Bulletrap            Springbok Quartzite intersection. This target was not tested by historic
                                           exploration and limited drilling was carried out on the prospect.

Table 3: Potential drill targets (as shown on Figure 9).

Airborne Electromagnetic Survey

During the Quarter, Orion signed a Memorandum of Understanding (MOU) with the Council for
Geoscience, Republic of South Africa (CGS) to collaborate on joint initiatives in the Northern Cape
Province aimed at stimulating exploration activity and enhancing regional exploration targeting across
this highly prospective region (see Corporate Section below).

One of the first joint projects undertaken under the MOU is a SkyTEMTM helicopter electromagnetic (EM)
survey over Orion’s Okiep District properties.

The regional survey commenced in late June 2021 and will cover an area of 1,827km2, with 1,073 line kms
flown at 1km line spacing. Orion’s focused exploration area of 857km 2 will have a total of 6,157 line kms
flown at 150m line spacing (Figure 14).

The average height of the helicopter borne survey is planned to range between 35m – 45m above ground
level, collecting high quality data, including EM data, total magnetic intensity and residual magnetic
intensity data. Various processed outputs and derivatives will be available to assist in target generation
and prioritisation.

The instruments being used are the deep penetrating SkyTEM312HP with the 12.5 Hz, low frequency system
and the Geometrics Caesium Vapour type 822A total intensity magnetometer.

The survey was expected to take approximately 5-6 weeks to complete, however, this timing has been
extended by a number of weeks due to inclement weather.

The geophysical data collected will be used to map out structure and potential mineralised mafic

Given the significant historic copper production and identified resources in the district, Orion is confident
this first-time employment of high powered airborne EM tools will assist in identifying high priority drill targets
aimed at the discovery of new high-grade copper deposits.

Figure 13: SkyTEMTM fly-over at Carolusberg Mine (defunct shaft in foreground).

Figure 14: Okiep Copper Project – SkyTEMTM geophysical survey (also showing known historical mines and Cu prospects).

Australian Projects

Fraser Range – Nickel-Copper Projects (Western Australia)

Orion maintains a sizeable tenement package in the Fraser Range Province of Western Australia in joint
venture with IGO Limited (ASX: IGO) (refer ASX release 10 March 2017). Under the terms of the joint
venture, IGO is responsible for all exploration on the tenements and provides regular updates to Orion
on activities and results.

Importantly, Orion maintains an exposure to the ongoing exploration and development of the Fraser
Range Project without additional financial commitment, given that Orion is free-carried through to the
first pre-feasibility study on any of the tenements.

During the Quarter, IGO completed work within eight of the joint venture tenements. The work included
a high temperature Squid moving loop EM survey and review of results from drill core submitted to
Canadian University for thin section and minerology mapping. The report and mineral mapping scan
results were still awaited at Quarter end.

Planned work programs for the first half of FY22 field season consist of MLEM survey, air-core and diamond
drilling along with heritage and environmental approvals. Ranking and review of all 13 targets is being
undertaken, with four targets scheduled to be tested with diamond drilling commencing in the
September 2021 Quarter (Figure 15).

Figure 15: ORN-IGO JV prospects outlining proposed programs of work for first half of FY22.

Walhalla Gold and Polymetals Project (Victoria)

While the Walhalla-Woods Point District is best known for gold mining, high-grade copper-nickel and PGE
mineralisation also occurs within the belt. Both the gold and copper-nickel-PGE mineralisation within this
district are hosted within dykes from the Woods Point Dyke Swarm (WPDS), a series of ultramafic to felsic
dykes occurring over a 75km long north-south belt.

No field or exploration work was carried out on the Victoria Project during the Quarter. During the Quarter,
the Company continued to progress its licence applications over prospective areas of Walhalla.

Cash and Finance

Cash on hand at the end of the Quarter was $20.5 million. Payments made to related parties and their
associates during the Quarter was $181k and relates to Director fees and consulting fees, as listed in
Section 6 of the Company’s Quarterly Cash Flow Report (Appendix 5B).

MOU with South Africa’s Council for Geoscience

During the Quarter, Orion signed a Memorandum of Understanding (MOU) with the Council for
Geoscience, Republic of South Africa (CGS) to collaborate on joint initiatives in the Northern Cape
Province, aimed at stimulating exploration activity and enhancing regional exploration targeting across
this highly prospective region.

Under the MOU, Orion and the CGS will co-operate on matters of common interest, particularly in respect
of national priorities, research, geoscientific advice and development.

The parties will benefit by cooperating on joint exploration initiatives and the exchange of information,
scientific and technical personnel and research into subjects of mutual interest. The main purpose is to
enable a two-way flow of knowledge, information and collaborative research aimed at stimulating
exploration activity and potentially unlocking a new generation of mineral discoveries in the Northern
Cape Province.

Under the terms of the MOU, exchange and cooperation is intended to be conducted in the following
   •   Skills development;
   •   Capability and capacity augmentation;
   •   Joint project development and implementation;
   •   Implementation of high-resolution in-fill surveys;
   •   Data, information and knowledge sharing;
   •   Technology development and implementation; and
   •   Other forms of cooperation as may be mutually agreed upon by both Parties.

The parties intend to enter into formal written agreements on specific cooperative projects, with the
scope for cooperation expected to include activities such as:
   •   Geoscientific professional services and/or advice;
   •   Geophysical surveys; and
   •   Projects of mutual benefit, as agreed to by both parties in writing.

Subject to mutual agreement, other areas of cooperation may be identified subject to the resources and
capacity of the parties.

Convertible Loan Facility
In January 2019, Orion announced that a $3.6 million unsecured convertible loan facility had been
agreed with Tembo Capital Mining Fund II LP (Tembo Capital) (Convertible Loan Facility).

Under the terms of the Convertible Loan Facility, Tembo Capital may elect for repayment of the balance
of the Convertible Loan Facility (including capitalised interest and fees) (Outstanding Amount) to be
satisfied by the issue of fully paid ordinary shares (Shares) by the Company to Tembo Capital at a deemed
issue price of $0.026 per Share (subject to shareholder and Foreign Investment Review Board (FIRB)
In accordance with the terms of the Convertible Loan, Tembo Capital elected to receive repayment of
the Outstanding Amount by the issue of Shares (subject to shareholder approval and FIRB approval).

Following the receipt of both shareholder approval and FIRB approval, on 28 June 2021 Orion issued 191.6
million Shares at a deemed issue price of $0.026 per Share in consideration for repayment of amounts
owing to Tembo Capital under the Loan Facility.

Anglo American sefa Mining Fund – Loan
During the Quarter, Orion reached agreement with Anglo American sefa Mining Fund (AASMF) to extend
the term of the ZAR14.25 million Loan Facility from 30 April 2021 to 31 October 2021.

In November 2015, PCZM, (a 70% owned subsidiary of Orion) and AASMF, entered into a ZAR14.25 million
loan agreement for the further exploration and development of the Prieska Project (Loan Facility). Under
the terms of the Loan Facility, on 1 August 2017, AASMF advanced ZAR14.25 million to PCZM. The key
terms of the Loan Facility are:
   •   Loan amount: ZAR14.25 million (~$1.32 million);
   •   Interest: Prime lending rate in South Africa;
   •   Repayment date: 31 October 2021 (previously 30 April 2021); and
   •   Security: 29.17% of the shares held in PCZM by Agama Exploration and Mining (Pty) Ltd (a wholly
       owned subsidiary of Orion), have been pledged as security to AASMF for the performance of
       PCZM's obligations in terms of the Loan Facility.

As at 30 June 2021, the balance of the Loan Facility was ZAR20.36 million (~$1.89 million) (including
capitalised interest).

  Tenement Table
                                                             Ownership        Change in
Tenement                    Project                                                       Joint Venture Partner
                                                              Interest         Quarter
South Africa

NC30/5/1/1/2/11850PR        Bartotrax                          100%              ---      ---

NC30/5/1/2/2/10138MR        Prieska Copper-Zinc Mine           70%               ---      ---

NC30/5/1/2/2/10146MR        Prieska Copper-Zinc Mine           70%               ---      ---

NC30/5/1/1/2/11840PR        Doonies Pan                        70%               ---      ---

NC30/5/1/2/2/10032MR        Namaqua-Disawell                   25%               ---      Namaqua Nickel Mining (Pty) Ltd

NC30/5/1/1/2/12216PR        Namaqua-Disawell                   25%               ---      Namaqua Nickel Mining (Pty) Ltd

NC30/5/1/1/2/10938PR        Namaqua-Disawell                   25%               ---      Disawell (Pty) Ltd

NC30/5/1/1/2/11010PR        Namaqua-Disawell                   25%               ---      Disawell (Pty) Ltd

NC30/5/1/1/2/00816PR        Masiqhame                          50%               ---      Masiqhame 855 (Pty) Ltd

NC30/5/1/1/2/12197PR        Orion Exploration No.1             70%            Granted     ---

Western Australia

E28/2367                    Fraser Range                       30%               ---      IGO Limited

E28/2378                    Fraser Range                       30%               ---      IGO Limited

E28/2462                    Fraser Range                       30%               ---      IGO Limited

E28/2596                    Fraser Range                       30%               ---      IGO Limited

E39/1653                    Fraser Range                       35%               ---      IGO Limited & Geological Resources Pty Ltd

E39/1654                    Fraser Range                       10%               ---      IGO Limited & NBX Pty Ltd

E69/2379                    Fraser Range                       10%               ---      IGO Limited & Ponton Minerals Pty Ltd

E69/2380                    Fraser Range                       10%               ---      IGO Limited & Ponton Minerals Pty Ltd

E69/2707                    Fraser Range                       10%               ---      IGO Limited & Ponton Minerals Pty Ltd

This Quarterly Report is authorised by the Board.

29 July 2021


Investors                                         Media                                       JSE Sponsor
Errol Smart – Managing Director & CEO             Nicholas Read                               Monique Martinez
Denis Waddell – Chairman                          Read Corporate, Australia                   Merchantec Capital
T: +61 (0) 3 8080 7170                            T: +61 (0) 419 929 046                      T: +27 (0) 11 325 6363
E: info@orionminerals.com.au                      E: nicholas@readcorporate.com.au            E: monique@merchantec.co.za

Date: 29-07-2021 09:10:00
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