Orion Minerals’ counter-cyclical gamble on the abandoned Prieska zinc-copper mine in South Africa’s remote Northern Cape province back in 2015 has come up trumps on three fronts – a new resource confirmation, bumper metal prices, and dare we say it, the rise to power of a more mining friendly president in Cyril Ramaphosa.
Prieska successfully mined more than 47m tonnes of zinc-copper mineralisation from 1971 to 1991 when it was owned by the long-gone AngloVaal. It could have gone on with things if conditions were right to push beyond the original 45 million-tonne mine plan.
But metal prices weren’t conducive at the time and apartheid was just starting to come to an end. Prieska was essentially abandoned, even if it had a first-class supporting infrastructure base which pretty much remains intact today in a part of Africa that is well away from population centres.
Fast forward to 2015 and Orion, a hopeful Victorian and Queensland gold explorer at the time, secured an option over the then without-a-resource base Prieska when neither metal prices or SA African mining politics seemed to make it a smart thing to do.
Prieska was picked up at a low point for zinc – it averaged US87c/lb in 2015 – while copper was not all that great at its 2015 average of $US2.50/lb. It was also the early days of an amended SA Mining Charter which is still being nutted out.
That Orion elected to exercise the option in March last year tells us that it wasn’t such a dumb move after all. Metal prices have swung Orion’s way, with zinc improving from that 2015 average of US87c to $US1.45, and copper moving up from to $US2.50 to $US3.15.
Just as important has been the recent detente between the SA mining industry and the government on the more contentious aspects of the black empowerment Mining Charter. President Ramaphosa, who has worked as both a union rep and owner in the industry, has called in the warring parties for negotiations on a peaceful settlement for which, it seems, there is some real hope.
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