Our opinion on the current state of ORIONMIN(ORN)

Orion Minerals (ORN) is an Australian exploration company which is listed on the JSE (September 2017) and on the Australian Stock Exchange in Sydney. It is trying to find funding for its copper and zinc mine in Prieska. The Prieska mine was previously operated by Anglovaal, but stopped operating in 1990 after 20 years during which it extracted more than 1 million tons of zinc and 430 000 tons of copper concentrate. The main problem with the mine is flooding. Orion hopes to exploit this resource with a mechanised approach and minimum labour. Vedanta Resources, which runs the Gamsberg mine next to Orion's resource, is looking at building a smelter that could service all the mines in the area and even resources from Namibia. Once construction begins on the Prieska mine, they will need to pump out nearly 9 million cubic meters of water from the existing structure. Production is expected to begin in 2024.

Mining exploration is probably one of the riskiest investments on the JSE. In our view, this is a volatile penny stock engaged in a particularly risky venture. On 8th September 2022, the company announced that it had secured R34,5m from the Industrial Development Corporation (IDC) for a 43,75% stake in its new Okiep copper mining company. On 21st October 2022, the company announced that it had agreed to a R250m line of credit with the Industrial Development Corporation (IDC).

In its results for the six months to 30th June 2023, the company reported a loss of A$15,2m unchanged from the previous period. The headline loss per share was 31c compared with a 33c loss in the previous period. The company said, "The IDC to become a strategic funding partner at project level in both the Okiep Copper Project and Prieska Copper Zinc Mine, with pre-development funding agreements reached, providing a total of ZAR 284.58M for Orion’s two flagship projects."

In a report on the 3 months to 30th September 2023, the company reported, "Updated PCZM +105 Mineral Resource reported, increasing the resource to 2.3Mt at 1.7% Cu and 1.6% Zn including an Indicated Resource of 1.9Mt at 1.82% Cu and 1.70% Zn and increases the total PCZM Mineral Resource to 31Mt grading 1.2% Cu and 3.6% Zn." At 30th September 2023, the company had $15,74m in cash.

In a report on its acquisition of the Okiep copper project on 17th April 2024, the CEO said, "We are extremely pleased that we have finally received confirmation that the majority of the outstanding conditions have been fulfilled for the acquisition of the Okiep mineral rights first announced on 2 February 2021." On 17th April 2024, the company asked for a halt on the trading in its shares because of a "...material announcement on exploration results at Okiep copper mine." On 22nd April 2024, the company announced a "Spectacular High-Grade Copper Intercept at Okiep Copper Project, Flat Mines Area 49m at 4.89% Cu including 10.23m at 12.47% Cu." This caused the share price to jump from 19c to 24c.

Investors should be very careful of this loss-making penny stock and maintain a strict stop-loss level. On 24th June 2024, the company reported strong assay results as follows: "...at Okiep Copper Project, Flat Mine East – High-Grade Potential Confirmed 9.27m at 3.01% Cu and 15m at 4.80% Cu within 78m averaging 1.57% Cu." In an update on the 3 months to 30th June 2024, the company reported, "A$7.7 million (~ZAR92.3 million) capital raising completed in July 2024, with funds raised to be used principally to progress the development of the Prieska Copper Zinc Mine and permitting and acceleration of infrastructure development." On 25th June 2024, the company requested an immediate stop to trading in its shares pending an announcement.