Copper developer Orion Minerals has inked definitive agreements for an $87-milion funding package with TSX- and NYSE-listed Triple Flag Precious Metals Corp to advance its Prieska copper/zinc mine, in South Africa.
The funding package comprises an $80-million precious metals stream, which will be drawn down in tranches alongside other bank or third-party funding during the mine development. Orion will also receive payments of 10% of the value of delivered precious metal paid at spot pricing at the time of delivery.
The proposed stream rates for gold and silver to be delivered under the stream agreements are 84% of payable gold, until 94 300 oz of gold is delivered, and 84% of payable silver, until 5.71-million ounces of silver is delivered, with each stream rate reducing to 50% after the respective milestone.
The precious metal stream is conditional on the mine development being fully funded, finalisation of an executable mine plan to Triple Flag’s satisfaction, South African regulatory approvals and fulfilment of conditions precedent standard for such arrangements.
The agreement also included a $7-million funding arrangement, the draw-down of which was conditional on Orion securing an additional A$20-million in funding to execute the agreed work focused on dewatering the project and on the early mining works bankable feasibility study, as well as South African regulatory approvals and fulfilment of other standard conditions precedent.
Triple Flag has confirmed that draw-down of the Industrial Development Corporation of South Africa (IDC) convertible loan will be sufficient for this A$20-million funding condition to be satisfied. Draw-down of the $7-million funding arrangement will be in tranches and will pro rata match the draw down requests that Orion will make under the R250-million IDC convertible loan.
“This funding, provided by Triple Flag together with the IDC, is pivotal for Orion as we transition from being an exploration company to a mine developer. Our new operations team at Prieska mine, under the experienced leadership of recently appointed executive for eastern operations, Johan Stolz, has already made huge progress in preparing Prieska for development. This includes establishing underground dams and pump stations and preparing development at the +105 trial mining area to allow for the safe commencement of drilling and blasting,” said Orion MD and CEO Errol Smart.
“The trial mining of high-grade remnant ore in the upper levels of the mine is key to us completing a revised feasibility study by mid-2023, paving the way for an early start-up of production and cash-flow while the mine is dewatered over a three-year period. This will provide us with a staged pathway to steadily ramp-up producti onto eventually reach 2.4-million tonnes per annum milled, with ore sourced from the dewatered Prieska Deeps area.
“It is particularly comforting to be working with knowledgeable mine financiers such as Triple Flag, who have demonstrated a strong technical and commercial understanding of our intended mining operations during the many months of their incisive due diligence and most importantly share Orion’s high values in regard to ESG standards. Triple flag has been rated by Sustainalytics, and ranked as the fourth best precious metals company in the world out of 121 global issuers and a mere 0.3 points behind the leaders. We look forward to a long and rewarding relationship with Triple Flag,” said Smart.