Funding under way for revival of old Prieska zinc-copper potential

JOHANNESBURG (miningweekly.com) – Funding efforts aimed at reviving the old Northern Cape mining area endowed with significant zinc and copper potential are gaining momentum.

Acknowledged as the host of one of world’s most noteworthy volcanogenic massive sulphide (VMS) base metal deposits, the Prieska area has a well-recorded history of zinc and copper production.

Anglovaal, once one of South Africa’s big-four mining houses, employed 4 000 people there and produced more than 430 000 t of copper and a million tons of zinc at Prieska Copper Mines from 1971 to 1991, when the uncertain economic outlook and the high cost of capital influenced its closure.

Now, wanting to rework the well-understood deposit is the Australia-listed Orion Gold NL, which on Wednesday announced that Tembo Capital, a UK-based private equity investment adviser on junior and midtier mining investment opportunities in emerging markets, is to acquire a cornerstone 19.9% of its company, with the aim of advancing the South African zinc-copper endowment.

Orion, through its subsidiary companies, already owns 73.33% of the Agama Exploration & Mining company, the holder of the prospecting rights over the historical Prieska Copper Mines, as well as the Marydale gold and copper project, a volcanogenic gold-copper discovery located 60 km from the Prieska mine.
 
Of the R53-million purchase price, R31.5-million was paid in cash and R21.5-million in shares. In addition, Orion provided finance for Agama to enable it to settle all historical shareholder loans of R33.3-million.

FORWARD PLAN

A South African investment fund has reportedly granted Orion a R30-million project loan facility for the Prieska Copper Mines project.

Remarkably, the old asset still has a cash-backed environmental fund of R18.2-million, which has not been needed since the mine closed in 1991. 

Exploration results already completed are being fed into an openpit mineral resource calculation to form part of a prefeasibility study and South Africa’s Department of Mineral Resources has reportedly granted permission for the Prieska mine’s underground workings to be accessed through its decline roadway.

This will allow the company, headed by CEO Errol Smart, to conduct a detailed assessment of the state of the underground workings, as well as the mine’s 8.8-m-diameter concrete-lined vertical shaft that descends 1 024 m below surface.
 
Planned are an underground infill drilling programme as well as a drilling programme from surface to test the depth extensions of the mineralisation mined in the past.

NAME CHANGE

Owing to Orion embarking on a base metal development strategy after completing the acquisition of the VMS zinc-copper project in South Africa, its board has recommended that the company change its name to Orion Minerals NL and a shareholders meeting to do that is expected to take place May 17.

In addition to the Prieska and Marydale projects, Orion has entered into options and earn-in rights agreements over a combined area of 1 606 km² in the Northern Cape’s Areachap belt, which is regarded as being highly prospective. (Also see map).

Orion reports that Tembo has technical and financial experience with in-house expertise in the fields of geology, mine engineering, metallurgy, mining finance and private equity.

This experience, coupled with a strong network of relationships in the mining industry, enables Tembo to add long-term value to its investments through technical input, strategic guidance, financial structuring advice and industry introductions, Orion said in a release to Creamer Media’s Mining Weekly Online.