Projects - South Africa

Prieska Project

Zinc, Copper

Prieska Project - Underground

Advanced Zn-Cu project being fast tracked to feasibility

  • Major infrastructure in place (power, water, road/rail access, accommodation)
  • World class orebody, well understood
  • Recorded as one of world’s top 30 VMS deposits
  • Historic production of over 430,000 tonnes of copper and more than 1 million tonnes of zinc
  • Proven metallurgical process to produce premium product
Prieska Project - Surface - Drill Rigs
Prieska Project - Underground

The Prieska Project is located 270 kilometres south-west of Kimberley (the regional capital) in the Northern Cape province. Importantly, the project has access to significant local and regional infrastructure, with mine infrastructure including a regional power grid feed, bitumen access roads, access to a bulk, treated water supply and a 1,900 metre landing strip. Several large commercial wind and solar generation projects are operational in the surrounding area and the mine is located just 48 kilometres from a railway siding at Groveput with an open-access railway line connecting the site to the world-class export port of Saldanha Bay.

The current focus is on fast tracking the Prieska Project to production. A Bankable Feasibility Study (BFS) was commenced in July 2017, with lead consultants appointed for these studies, along with the Environmental Impact Assessment (EIA) studies. The BFS and EIA work programs will be undertaken in parallel with the current activities (resource drilling, underground inspections and establishment of activities), taking advantage of the substantial historical database from mining and processing at the project.

Underground access has been re-established, allowing assessment of geotechnical conditions and the substantial remaining underground infrastructure. Ground conditions and infrastructure in the underground mine to date have been found to generally be in a better state than was expected. Orion is confident that mine refurbishment will not require substantial engineering effort. Power and vehicle access has now been gained to the +105 Level.

The Company is undertaking two major phases of drilling at the Prieska Project targeting near surface mineralisation expected to be amenable to open pit mining (105 Level Target) and the Deep Sulphide Target below the historical mine, which is expected to form the cornerstone of the Company’s development strategy.

In February and April 2018, the Company released its Mineral Resource estimates for the Prieska Zinc-Copper Project.

The Mineral Resources stated in Tables 1, 2 and 3 are for drilling data available as at 31 December 2017. The Mineral Resources are quoted in compliance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012) and should be read in conjunction with ASX releases 8 February 2018 and 9 April 2018.

Further drilling is being carried out to upgrade the confidence classification of a substantial portion of the Mineral Resources.

Total Mineral Resource Table for the Prieska Project – Repli and Vardocube
Zn Cu Ag Au
Classification Tonnes Metal
Tonnes
Grade
(%)
Metal
Tonnes
Grade
(%)
Metal
Tonnes
Grade
(g/t)
Metal
Ounces
Grade
(g/t)
Deep Sulphide Repli* Inferred 22,600,000 839,000 3.7 266,000 1.2 6,904,000 9.5 153,000 0.2
Deep Sulphide Vardocube** Inferred 5,200,000 253,000 4.9 67,000 1.3 1,627,000 9.7 35,000 0.2
+105 Supergene Repli* Indicated 1,200,000 32,000 2.6 30,000 2.4 348,000 8.7 9,000 0.2
+105 Oxide Repli* Inferred 300,000 2,000 0.9 2,000 0.6 17,000 1.8 1,000 0.1
Total 29,400,000 1,126,000 3.8 365,000 1.2 8,896,000 9.4 198,000 0.2

Notes:

* Refer ASX release 8 February 2018
** Refer ASX release 9 April 2018
All Resources stated at Zero Cut-off
Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content

Table 1: Total Indicated and Inferred Mineral Resource estimates for the Prieska Project – Repli and Vardocube (refer ASX release 9 April 2018) [1]

Inferred Mineral Resource for Repli Deep Sulphides at Various Cut-off Grades
Zn Cu Au Ag
Cutoff % calc * Volume (m3) Tonnes Tonnes Grade
(%)
Tonnes Grade
(%)
Ounces Grade
(g/t)
Ounces Grade
(g/t)
0.0 6,560,000 22,649,000 839,000 3.71% 266,000 1.17% 153,000 0.21 6,904,000 9.48
2.0 6,511,000 22,485,000 838,000 3.73% 265,000 1.18% 152,000 0.21 6,854,000 9.48
4.0 5,919,000 20,554,000 801,000 3.90% 251,000 1.22% 139,000 0.21 6,246,000 9.45
6.0 3,214,000 11,269,000 509,000 4.51% 158,000 1.40% 77,000 0.21 3,449,000 9.52

 

Inferred Mineral Resource at Various Cut-off Grades with Zinc Equivalent Value for Repli Deep Sulphides
Zn Cu Total
Zn_eq%
Cutoff % calc * Volume (m3) Tonnes Metal
Tonnes
Grade
(%)
Metal
Tonnes
Grade
(%)
Cu=Zn_eq
0.0 6,560,000 22,649,000 839,000 3.71% 266,000 1.17% 2.61% 6.32%
2.0 6,511,000 22,485,000 838,000 3.73% 265,000 1.18% 2.62% 6.35%
4.0 5,919,000 20,554,000 801,000 3.90% 251,000 1.22% 2.72% 6.62%
6.0 3,214,000 11,269,000 509,000 4.51% 158,000 1.40% 3.12% 7.63%

Notes:

* Cutoff % calc = (Zn% + (2 X Cu%)) [3]

Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content

Table 2: Inferred Mineral Resource for the Repli Deep Sulphides at various cut-off grades and indicated zinc equivalent metal content, excluding value of by-product credits for gold or silver (refer ASX release 8 February 2018) [2]

Inferred Mineral Resource for Vardocube Deep Sulphides at Various Cut-off Grades
Zn Cu Ag Au
Cut off
(Zn%+(2 x Cu%))
(%)
Tonnes Metal
Tonnes
Grade
(%)
Metal
Tonnes
Grade
(%)
Metal
Tonnes
Grade
(g/t)
Metal
Ounces
Grade
(g/t)
0 5,200,000 253,000 4.9 67,000 1.3 1,627,000 9.7 35,000 0.2
2 5,200,000 253,000 4.9 67,000 1.3 1,626,000 9.7 35,000 0.2
4 5,000,000 248,000 5.0 65,000 1.3 1,554,000 9.7 34,000 0.2
6 3,800,000 211,000 5.5 54,000 1.4 1,205,000 9.8 26,000 0.2

 

Inferred Mineral Resource at Various Cut-off Grades with Zinc Equivalent Values for Vardocube Deep Sulphides
Zn Cu Total Zn (equivalent)
Cut off
(Calc %)*
Tonnes Metal
Tonnes
Grade
(%)
Metal
Tonnes
Grade
(%)
Cu = Zn(eq)
(%)
Metal
Tonnes
Grade
(g/t)
0 5,200,000 253,000 4.9 67,000 1.3 3.0 408,000 7.9
2 5,200,000 253,000 4.9 67,000 1.3 3.0 408,000 7.9
4 5,000,000 248,000 5.0 65,000 1.3 3.0 400,000 8.0
6 3,800,000 211,000 5.5 54,000 1.4 3.2 336,000 8.8

Notes:

* Cutoff % calc = (Zn% + (2 X Cu%)) [4]

Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content

Table 3: Inferred Mineral Resource for the Vardocube Deep Sulphides at various cut-off grades and indicated zinc equivalent metal content, excluding value of by-product credits for gold or silver (refer ASX release 9 April 2018) [1]

Prieska – South African mining success story

The Prieska Copper Mine operated from 1971 to 1991, employing approximately 4,000 people. The mine milled 46.8mt, producing >430kt copper and >1mt zinc in concentrate. Post May 1987, no more than 2mt of ore was blasted and milling of surface stockpiles was from 1989. In 1991, the mine was closed and the site rehabilitated.

Historic resource estimation practices conformed to ‘Industry Best Practice’ of the time, where mine surveys and geology plans show un-mined extensions and support the last mine planning reports.

Significant infrastructure footprint

  • Sealed access roads to project site
  • 48km via bitumen road to existing rail siding
  • 75MW operational solar power plant
    • 4 High Voltage regional lines linked to national electricity grid
  • 800km rail link to major, bulk commodity and deep water port at Saldanha Bay
  • Bulk water pipeline supplies site
    • Sourced from Orange River with all year pumping capacity
  • Good contractors accommodation available in the private village of Copperton, ~ 3km from project site
  • Low regional environmental sensitivity
    • Existing disturbed/rehabilitated mine footprint
  • Primary shafts and decline roadways in place to reach deepest remaining targets

In 1987, a mine manager’s proposal to then owners, Anglovaal, showed:

** After this report, no more than 2mt of ore was blasted from underground (milling of surface stockpiles from 1989). This is only for ore below 105m level. This is an historical estimate & is not reported in accordance with the 2012 Edition of the JORC Code, nor is it certain whether Ore Reserves or Resources will be defined until the Company’s current exploration programs are completed.

Extensive historic drill hole data was also compiled by the Company from records obtained and were captured into digital models and plans.

Summary of historic (pre 1982) drill hole intersections in un-mined deep extensions
Area Item Arithmetic Mean Value Weighted Mean Max Value Count
NW Trough Cu% 1.59 1.49 4.29 42
Zn% 4.19 4.12 6.52 42
SG 3.54 3.65 N/A 17
Thickness 7.71 N/A N/A 75
NW Hinge Cu% 1.52 1.27 3.13 4
Zn% 3.73 3.81 4.27 4
SG 3.41 3.41 N/A 4
Thickness 5.76 N/A N/A 39
SE Trough Cu% 1.34 1.38 2.76 28
Zn% 5.58 5.54 7.68 28
SG 3.64 3.62 N/A 24
Thickness 4.97 N/A N/A 36
SE Hinge Cu% 1.63 1.75 2.69 12
Zn% 6.94 7.04 12.62 12
SG 3.77 3.77 N/A 2
Thickness 10.12 N/A N/A 14
Central Trough Area Cu% 0.40 0.40 0.41 2
Zn% 5.91 5.39 8.29 2
SG 3.18 3.19 N/A 2
Thickness 5.77 N/A N/A 18
Whole Area Cu% 1.48 1.5 4.29 88
Zn% 5.03 4.90 12.62 88
SG 5.37 3.62 N/A 49
Thickness 6.74 N/A N/A 182

Notes:

Cu%, Zn%, SG “arithmetic mean values” are arithmetic mean of stretch values
“Weighted means” are individual intersections (stretch values) weighted by true thickness
Cu% and Zn% “max values” are maximum of stretch values
Thickness mean values are arithmetic mean of true thickness values

Prieska Project - Surface - Drill Rigs
Prieska Project - Surface - Drill Rigs

Prieska – Extended history of metallurgical success

With Orion’s progress and exploration programs currently underway, the Prieska Project is moving forward from its historical success. Historical production demonstrated consistent concentrate grades and recoveries despite variable ore feed over the life of the mine.

The diagrams below show mill feed grades (declined post 1987, reflecting the cessation of underground development) and the proven metallurgical process flowsheet at operation scale to handle variable ore feed.

Historic Milling and Flotation Circuit

A 1 rodmill 2,9 x 3,8m
B 2 pebble mills 4,3 x 7,3m
C 28 copper roughers 3,2m3
D 28 copper scavengers 3,2m3

E 8 copper cleaners 1,4m3
F 8 copper recleaners 1,4m3
G 8 copper final cleaners 1,4m3
H 40 zinc roughers 32m3

J 44 zinc scavengers 32m3
K 16 zinc cleaners 1,4m3
L 8 zinc second-stage cleaners 1,4m3
M 8 zinc third-stage cleaners 1,4m3

N 4 zinc final cleaners OK3
P 4 tailings thickeners 18,3m diam.
Q 8 pyrite flotation cells 32m3

Note: All the flotation cells are Sala BFP except the final zinc cleaners

The BFS will optimise plant design and match the proposed Orion mining sequence, being an initial open pit with a mixed oxide/transitional feed from the +105 Level Target transitioning to sulphide feed from underground operations. The Company has sent 3.5t of samples for metallurgical test work to confirm previous results for the +105 level Target (open pit) material.

People

Surface – General

Surface Drilling Program

Surface – Diamond Drilling Core

Underground

Surface Infrastructure

Mineral Resource Notes

The information below is provided in compliance with listing guidelines.

[1] Mineral Resource reported in ASX release of 9 April 2018: “Prieska Project total Mineral Resource increases to 29.4 million tonnes containing 1.13 million tonnes Zn and 0.36 million tonnes Cu” available to the public on www.orion.rckt.co.za/investors/market-news. Competent Person Orion’s exploration: Mr. Errol Smart. Competent Person: Orion’s Mineral Resource: Mr. Sean Duggan. Orion is not aware of any new information or data that materially affects the information included above. For the Mineral Resource, the company confirms that all material assumptions and technical parameters underpinning the estimates in the ASX release of 9 April 2018 continue to apply and have not materially changed. Orion confirms that the form and context in which the Competent Person’s findings are presented here have not materially changed.

[2] Mineral Resource reported in ASX release of 8 February 2018: “Clarification Announcement Prieska Zinc – Copper Project Maiden JORC Resource Exceeds Expectations” available to the public on www.orion.rckt.co.za/investors/market-news. Competent Person Orion’s exploration: Mr. Errol Smart. Competent Person: Orion’s Mineral Resource: Mr. Sean Duggan. Orion is not aware of any new information or data that materially affects the information included above. For the Mineral Resource, the company confirms that all material assumptions and technical parameters underpinning the estimates in the ASX release of 8 February 2018 continue to apply and have not materially changed. Orion confirms that the form and context in which the Competent Person’s findings are presented here have not materially changed.

[3] Summary table for zinc equivalent calculation for ASX release 8 February 2018

Parameter Units Zinc Copper Comments
Copper selling price USD/t 3,549 7,011 Kitco.com 31 Jan 2018 NYSE 20h00
Exchange rate USD:ZAR USD:ZAR 11.9 11.9 Exchange rate obtained from XE.com 31 Jan 2018
Metal selling price ZAR/t 42,225 83,400 Calculated
Metal recovery – Hypogene material % 85% 85% Historical performance and recent testwork
Metal in conc sales costs* % 18% 8% Concentrate traders’ estimate
State Royalty % 0.50% 0.50% Calculated
Effective Revenue per Tonne of metal ZAR/t 29,108 64,881 Calculated
Copper Equivalent % 1.00% 0.45%
Zinc Equivalent % 2.23% 1.00%

Notes:

* Copper and Zinc Sales Costs include all concentrate transport, metal treatment and refining charges, and the benchmark discount to spot prices paid by smelters, all expressed as an aggregate percentage of the contained metal value at prevailing spot prices
Possible by-product credits for Au, Ag and Pb are uncertain, subject to negotiation and are excluded from this metal equivalent estimate

[4] Summary table for zinc equivalent calculation for ASX release 9 April 2018

Parameter Units Zinc Copper Comments
Copper selling price USD/t 3,238 6,725 Kitco.com Spot 6 April 2018
Exchange rate USD:ZAR USD:ZAR 12.0 12.0 Kitco.com Spot 6 April 2018
Metal selling price ZAR/t 38,520 80,002 Calculated
Metal recovery – Hypogene material % 85% 85% Historical performance and recent testwork
Metal in conc sales costs* % 18% 8% Concentrate traders’ estimate
State Royalty % 0.49% 0.49% Calculated
Effective Revenue per Tonne of metal ZAR/t 26,558 62,241 Calculated
Copper Equivalent % 1.00% 0.43%
Zinc Equivalent % 2.34% 1.00%

Notes

* Copper and Zinc Sales Costs include all concentrate transport, metal treatment and refining charges, and the benchmark discount to spot prices paid by smelters, all expressed as an aggregate percentage of the contained metal value at prevailing spot prices
Possible by-product credits for Au, Ag and Pb are uncertain, subject to negotiation and are excluded from this metal equivalent estimate