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Orion Minerals outlines up to A$440M value for Prieska zinc-copper project

Orion Minerals Ltd.'s scoping study for its Prieska zinc-copper project in South Africa outlined a net present value, discounted at 12.5%, of between A$400 million and A$440 million, a 38% internal rate of return and a three-year payback period.

The company recently updated the indicated resource estimate for Prieska to 18.5 million tonnes grading 3.6% zinc and 1.17% copper for 667,000 tonnes of zinc and 217,000 tonnes of copper.

Based on the updated resource, the project is estimated to produce 70,000 to 80,000 tonnes of zinc and 22,000 tonnes of copper in concentrates per annum during an initial 10-year mine life at a processing capacity of 2.4 million tonnes per annum.

Capital expenditures for the project would be A$360 million to A$390 million, while sustaining capex is estimated at A$65 million to A$75 million.

The peak funding requirements would be between A$300 million to A$330 million, including a 20% contingency allowance.

The scoping study expects the project to generate a pretax, undiscounted free cash flow of A$1.2 billion to A$1.3 billion and life-of-mine net revenue of US$3.46 billion.

An ongoing bankable feasibility study at Prieska is scheduled to complete in the second quarter of 2019, and construction can start in the second half.

The construction period to first mining underground is estimated at about 24 months, with plant commissioning from the 28th month.

The company is conducting a separate feasibility study on the potential for open pit mining of shallow targets once the first phase is underway.