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Orion Minerals secures option on new copper project outside Springbok

CEO Errol Smart says 65 000 tonnes of copper a year previously came out of the O’Kiep district, and Orion’s relooking the area.

SIMON BROWN: I’m chatting now with Errol Smart, the CEO of Orion Minerals. I’ve got to say I’ve got a weak spot for junior miners, for exploration miners. It’s what our exchange was built on – and that’s a risky space. But when it works, we get some great projects out of it. Errol, good morning. I appreciate your early morning time. You made an announcement earlier in the week. You had a presentation, which I sat in on – a new copper project just outside Springbok, which is not so much a greenfields – it actually has been mined before. I mean, Newmont was there, Gold Fields was there, Metorex was mining there. It just hasn’t been mined since about the mid-nineties, and you’ve now secured an option to see if it can be viable.

ERROL SMART: Good morning, Simon. This is just an absolutely fantastic opportunity that we couldn’t pass up. We’ve had such success with Prieska, where we took an old brownfields mine, realised that Anglovaal hadn’t mined out that ore body and, in fact, had walked away from the lion’s share of the ore body [which] remains. And we very rapidly fast-tracked Prieska and turned that into a great value proposition that’s actually ready to build now. 

Then we looked around ourselves and said, are there other opportunities like this. And when we went and looked at O’Kiep again, we were just blown away. The passage of history in South Africa has created the outlook for junior mining and exploration and created a lot of opportunities. That district used to produce 40 000 tonnes a year of copper.

Prieska used to produce 25 000 tonnes a year of copper. So there were 65 000 tonnes a year of copper coming out of that district, and there’s been none since 2003.

We’ve got all of that consolidated now, and the ability to turn it back into production. In the next two to three years, it will all be coming on stream. So that’s a hugely exciting opportunity just at the time in the world’s history that’s desperate for copper.

SIMON BROWN: Whenever I check with Peter Major, he’ll always tell me that there are thousands of mines dotted around South Africa which are not mined out, but are closed up and not working. This is what this new project you’re looking for at Springbok is. In a sense, this is an easier process. You know there’s copper there. You’ll go and do some geological work to get the details and the like, but there was mining happening and those all bodies in many cases are giants and that makes it easier for you. This is not just starting from scratch. You’ve kind of got a roadmap. And, in fact, you’re saying you’ve got the geological reports from when the mine was actually mining back in the 1980s and the 1990s.

ERROL SMART: Yes. Peter is the one who has been running around for ages telling everybody that there are 29 million tonnes that were in Gold Fields as resource statements that haven’t been mined. Metorex just extracted what Gold Fields handed over. They didn’t really add to resources or reserves at all. And there are 29 million tonnes that remain there. I thought Peter was smoking a pipe or something, but we went to have a look at it, and I think he might be right. In fact, I think he may well be underestimating, because over and above what was already discovered by Gold Fields – they weren’t using the modern techniques that we use for exploration now – and we’ve proved huge success within the area around Prieska and to the north of Prieska.

We think if we bring that technology, this is the only significant copper sulphide mining district in the world that has never had an airborne electromagnetic survey. With every other copper district in the world, that’s the first thing you do, an airborne survey.

SIMON BROWN: And that will be exactly what you’ve essentially done. You’ve secured an option which runs until the end of July that gives you, let’s call it, five months to go and do those airborne surveys to get a sense of whether you will or won’t commit. Certainly, the geological reports are positive. This will sort of give you that confirmation of what is in the ground out there around Springbok.

ERROL SMART: Look, we work on two fronts –  or three fronts, actually. We’re already 99% ready to go on this thing, but there are a bunch of companies, there are three companies that we are buying. They’ve been privately owned and operated, and to get those ready to be assimilated into a listed company takes work. We’ve got to get the financials and legals and tenement management and everything to stock exchange standards. That is a couple of months’ worth of work to do. 

During that time we are going to mine this huge database of information and try to show as much of that 29 million tonnes as possible to our investors in advance of our actually executing the option. But yes, we certainly would like to fly airborne surveys. And, in fact, do some ground surveys – and there may even be drilling in the next month. We might be moving drilling rigs onto some of the properties. So there are three separate streams of work that are going to be done, and there’s going to be a lot of news flow as early as next week. My geologists are saying that they might be able to sign off on the first JORC (Joint Ore Reserves Committee) resources and make them available in public. 

SIMON BROWN:  I’m imagining you get, using a terribly overused word, synergies from your Prieska. Your Prieska’s further down the line. It’s at the bankable feasibility study. You’ve learned lessons in that process. You’ve got skills and teams who’ve helped you get to that. Do you essentially take some of those teams, some of those skills, and just say Prieska’s done, let’s head over to Springbok?

ERROL SMART: That’s exactly it. We’ve had an absolutely superb team at Prieska. And that’s why in only four years we managed to drill out a world-class copper-zinc resource, do a full bankable feasibility study on it, do an optimisation on the bankable study and get it fully permitted, complete with water rights, municipal rights and everything. That team is a study team. That’s their strength. They’re not the guys that build the mine. Those are the guys that study and take you very quickly up the value curve. That team has got a current set of database and information that we’ve just used for Prieska. O’Kiep is exactly this sort of the same style of mining. It’s big mechanised mining. The same metallurgy will produce very similar copper concentrates at O’Kiep that we will do at Prieska.

So now we can speak to off-takers about bigger volumes, earlier production that changes off-track discussions with the DFIs (development finance institutions). That is a big wish; we’ve seen the state president talk about it, and we’ve seen the minister talk about it.

We’ve got all this renewable energy in the Northern Cape – from solar and wind – and Prieska, in particular, has huge solar and wind capacity. Well, why aren’t we using that to beneficiate the concentrates? Why aren’t we looking at producing copper metal in South Africa, other than at Phalaborwa?

And there’s a strong possibility that if you’ve got sufficient economy of scale, and the sort of arm-wave rule of thumb is you need at least 40 000 tonnes per annum of copper in concentrate to justify looking at going to producing copper metal. Well, this gives us that critical mass. So there’s a really exciting path ahead of us. 

But it’s a rapid study because there’s data that we can very quickly model up to JORC standards. We’ve got a feasibility study team with all the models and the plans and everything ready to go, which we can just put onto O’Kiep and take it up the value curve very quickly.

SIMON BROWN: We’ll leave that there. JORC is the Joint Ore Reserves Committee. If you’re interested in junior mining, “JORC” kind of is the lingo. So when, Errol would say, for example, “bankable feasibility studies or reserves” of something, it means certain things. In South Africa we got Samrec. JORC is the Australian version. But if you’re digging your own junior miners, it’s important that you understand those distinctions and what they mean. 

Errol Smart, CEO of Orion Minerals. I really appreciate your early morning, sir. 

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This is indeed good news. I completed my school career in Springbok and paid for my studies by working in the Prieska (Copperton) mine. Both these areas can benefit a lot from renewed mining activities. I happened to see the results of the exploration drilling at Copperton in 1979 and know that there is still a massive ore body left. I sincerely hope the copper price remains good enough to make this venture a success.

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