ThE NEw GUARd iN
SOUTh AfRicAN MiNiNG
Building a 21st century zinc and copper producer within
the footprint of a historic mining operation
ANNUAL REPORT
2018
TABLE Of
cONTENTS
ABout this report
ForwArd-looking stAtements
CorporAte proFile
orion at a glance
key Achievements
map of projects
introduction to prieska project
Values
project's philosophy
LEAdERShiP
ChAirmAn’s report
BoArd oF direCtors
senior mAnAgement
BUSiNESS REviEw
CorporAte soCiAl responsiBility
reView oF operAtions
south Africa
health & safety
prieska Zinc-Copper project (prieska project)
Feasibility studies
near mine exploration
regional exploration
Australia
CorporAte
4
5
6
6
7
8
8
9
10
12
16
18
20
22
26
27
28
34
42
46
56
62
70
72
101
fiNANciAL STATEMENTS
direCtors' report
Auditor’s independenCe deClArAtion
ConsolidAted stAtement oF proFit or
loss And other ComprehensiVe inCome
102
ConsolidAted stAtement oF FinAnCiAl position 103
ConsolidAted stAtement oF CAsh Flows
104
ConsolidAted stAtement oF ChAnges in equity 105
106
notes to the FinAnCiAl stAtements
144
direCtors’ deClArAtion
145
independent Auditor’s report
148
AdditionAl AsX inFormAtion
cORPORATE diREcTORy
152
"A project like Prieska is a strong proposition.
Plans are being advanced for a new
mine design to feed into the bankable
feasibility study that will provide the technical,
operational, social and funding blueprint
for a highly mechanised, modern zinc
and copper operation, with production ideally
timed to coincide with expected positive
developments in global metal markets."
- errol smart, managing director & Chief executive officer, orion minerals
ABOUT ThiS REPORT
this Annual report is a summary of the operations, activities and performance of orion minerals
limited ABn 76 098 939 274 and its financial position for the period ended 30 June 2018. in this
report, unless otherwise stated, references to orion minerals and ‘the Company’, ‘we’, ‘us’ and
‘our’ refer to orion minerals limited.
monetary amounts in this document are reported in Australian dollar (Aud, $), unless otherwise
stated.
4
ORION MINERALSORION MINERALSORION MINERALSORION MINERALSORION MINERALS iNTROdUcTiON
fORwARd-LOOkiNG STATEMENTS
this report may include forward-looking statements. such forward-looking statements may
include, among other things, statements regarding targets, estimates and assumptions in
respect of metal production and prices, operating costs and results, capital expenditures,
mineral reserves and mineral resources and anticipated grades and recovery rates, and
are or may be based on assumptions and estimates related to future technical, economic,
market, political, social and other conditions. these forward-looking statements are based
on management’s expectations and beliefs concerning future events. Forward-looking
statements inherently involve subjective judgement and analysis and are necessarily subject
to risks, uncertainties and other factors, many of which are outside the control of orion. Actual
results and developments may vary materially from those expressed in this report.
given these uncertainties, readers are cautioned not to place undue reliance on such forward-
looking statements. orion makes no undertaking to subsequently update or revise the forward-
looking statements made in this release to reflect events or circumstances after the date of this
report. All information in respect of exploration results and other technical information should
be read in conjunction with Competent person statements in this report (where applicable).
to the maximum extent permitted by law, orion and any of its related bodies corporate and
affiliates and their officers, employees, agents, associates and advisers, disclaim any obligations
or undertaking to release any updates or revisions to the information to reflect any change in
expectations or assumptions, do not make any representation or warranty, express or implied,
as to the accuracy, reliability or completeness of the information in this report, or likelihood of
fulfilment of any forward-looking statement or any event or results expressed or implied in any
forward-looking statement and disclaim all responsibility and liability for these forward-looking
statements (including, without limitation, liability for negligence).
5
ORION MINERALSORION MINERALSORION MINERALSORION MINERALSORION MINERALSORION MINERALS ANNuAL REpORt - 2018 cORPORATE PROfiLE
ORiON AT A GLANcE
orion minerals is
a polymetallic
minerals exploration
and development
company with
projects in south
Africa and Australia.
orion’s flagship
project is the
advanced prieska
zinc-copper project
in the Areachap
terrain, northern
Cape, south Africa.
the Company
has a primary listing on
the Australian securities
exchange (AsX: orn)
and a secondary listing
on the Johannesburg
stock exchange
(Jse: orn).
kEy AchiEvEMENTS
we have delivered on our commitments across our assets.
prieska project: on target to fast-track the project to development in 2019. maiden
JorC mineral resource delivered and mining right and environmental applications
lodged. resource drill-out program successfully advanced and near completion.
significant infrastructure confirmed to be intact, which will accelerate
development plans and shorten time frames to mine production.
prieska project bankable feasibility study progressing according to plan.
Areachap Belt: Further exploration targets identified in the broader region.
strategic partnerships: Continued support of our cornerstone shareholder tembo
Capital with leading mid-tier AsX-listed mining company independence group
(AsX: iGO) secured as a strategic partner.
Community engagement: strong engagement with the local communities and
siyathemba municipality. key driving principles are sustainability, entrepreneurship,
impact and focus.
6
MAP Of PROjEcTS
Connors Arc project
queensland, Australia
sold to evolution mining
(eVn)
(may 2018)
Fraser range
project
western Australia,
Australia
JV with igo
(march 2017)
Areachap projects
northern Cape, sA
independence group
(igo)
Becomes strategic
partner, may 2018
AUSTRALiA hEAd OfficE:
melBourne, ViCtoriA
SOUTh AfRicAN OfficES:
JohAnnesBurg, gAuteng
prieskA, northern CApe
7
ORION MINERALS ANNuAL REpORt - 2018 iNTROdUcTiON TO PRiESkA PROjEcT
the prieska zinc-copper project (Prieska Project) in the northern Cape in south Africa is orion’s
flagship project and is paving the way for a broader revival of further exploration of the
valuable, geologically rich Areachap Belt, which in common with most of south Africa has
been under-explored for over 35 years.
the area is infrastructure-rich with intact power, roads and water. Based on the world-class
orebody at prieska, the exploration results being generated and the benefits of the existing
infrastructure, orion plans to fast-track the development of the mine in 2019. the mine will
use the latest technology and use of modern mining methods and exploration technology to
identify additional mineral resources.
After the prieska mine closed in 1991, the communities and industry in the area, the closest of
which is 65km from the project site, were left isolated. orion is fully committed to a wide-ranging
community engagement program in preparation for a revitalisation of the region, with a focus
on skills and enterprise development and the environment.
vALUES
TEchNOLOGy
AdvANcEMENT
PiONEERiNG
SPiRiT
hEALTh ANd
SAfETy Of
EMPLOyEES
EdUcATiON
ANd SkiLLS
dEvELOPMENT
cOMMiTTEd TO
cOMMUNiTy
ENGAGEMENT
& cORPORATE
SOciAL
RESPONSiBiLiTy
(cSR)
8
PROjEcT’S PhiLOSOPhy
PRiESkA
(south Africa)
dEvELOPMENT
PROjEcTS
(south Africa)
fRASER RANGE
(Australia)
Vision
Fast-track to operational
readiness and mine
construction
maximise the opportunity
of the world class
Areachap minerals belt
leverage existing joint
venture partner
• Secured a strong
mid-tier miner,
independence group
(AsX: iGO) as a joint
venture partner in 2017
- Free carried to
-
completion of pre-
feasibility study
igo responsible
for all exploration
on the tenements,
providing regular
updates to orion
of its activities and
results
•
Targeting ultramafic
nickel/copper
discoveries
progress
• Over 50,000m of
drilling resulted in a
maiden JorC mineral
resource of 29.4mt @
3.8% Zinc, 1.2% Copper
• Lodged Mining Right
and environmental
Applications
• Metallurgical test work
-
Flowsheet
development
phase of
metallurgical
studies successfully
completed
- Validation and
optimisation work
underway
• Focussed ongoing
explorational program
• Secured mid-tier miner,
independence group
(igo), as a strategic
partner
-
-
igo have
preferential rights
should orion
decide to joint
venture or sell any
of its nickel projects
igo increased its
shareholding in
orn to 8% through
a $5m share
placement
• Airborne
electromagnetic
survey
(AEM) identified
several high priority
targets for follow-up
work
CorporAte
strAtegy
• Complete a bankable
• Continue the
feasibility study
• Ongoing drilling
targeting to expand
and upgrade the
prieska project mineral
resource
regional exploration
opportunity
surrounding prieska
• Masiqhame &
namaqua-disawell
provide significant
potential to operate
as satellite deposits to
prieska in the future
• Progress highly
prospective regional
nickel-Copper-Cobalt
and Zinc-Copper
projects
9
ORION MINERALS ANNuAL REpORt - 2018 LEAdERShiP
chAiRMAN’S
REPORT
12
dEAR ShAREhOLdER,
i am pleased to report on what has been an exceptionally busy and positive
year for orion, during which we made considerable progress towards our goal
of becoming a new mid-tier base metals producer based on the planned
redevelopment of the prieska zinc-copper project, located in the northern
Cape region of south Africa.
At the centre of the year’s activities was the significant progress achieved and the positive
results delivered on the multiple components of the bankable feasibility study (BFs) for the
prieska project. our managing director, errol smart, and Chief operating officer, walter
shamu, have successfully assembled a very talented team which has worked long and hard to
achieve what many would not have thought possible.
As at september 2018, an impressive 83,000 metres of drilling had been completed on the
deep sulphide target at prieska, with the balance of the resource drilling scheduled to be
completed by mid-october 2018.
An interim JorC mineral resource estimate comprising 29 million tonnes at an average grade
of 3.8% zinc and 1.2% copper was released in April 2018 – a significantly larger resource than
we anticipated when we first acquired the prieska project in early 2017. this positive result has
provided a strong foundation to progress the development of the project and advance the
BFs.
An updated and higher category mineral resource estimate, which will be incorporated in the
BFs, is scheduled to be completed by december 2018, paving the way for completion and
delivery of the BFs itself in q2 2019.
in addition to the resource drilling at prieska, which was undertaken using up to twenty diamond
drill rigs for extended periods, the prieska team successfully opened the historical underground
mine to evaluate the shaft and underground infrastructure, including multiple declines.
importantly, this work has confirmed that much of the infrastructure is in excellent condition
and, as such, can be utilised in developing the new mine with significant cost savings.
other positives for the project during the year included:
• Lodgement of the Mining Rights applications in April and September 2018;
• Very strong community engagement with a focus on progressing education and skills;
• An excellent health and safety performance, with no lost time injuries during the year;
• No environmental incidents recorded during the year;
• Excellent metallurgical test work results for the Prieska Deep Sulphide resource; and
• Excellent progress on several other fronts with plant design and process flowsheet
development; geotechnical design studies; mining methodologies and design; mine
de-watering; rock hoisting; power supply; and general infrastructure and services all
advancing well and in line with expectations.
13
ORION MINERALS ANNuAL REpORt - 2018 in addition to the flagship prieska project, the Company has secured a large ground package
in the Areachap Belt of the northern Cape, which is highly prospective for Vms zinc-copper and
intrusive nickel-copper-cobalt-pge sulphide discoveries. many advanced targets generated
from orion’s major regional airborne geophysical survey are currently being drill tested and
we are encouraged by the potential to make further significant base metal discoveries in this
under-explored region.
on behalf of the Board of directors, i would like to thank errol and his dedicated team of
employees and consultants for their significant contribution to what has been achieved during
the past year, which has well and truly positioned the Company to make the transition from
explorer-developer to mid-tier miner.
i also thank my fellow directors for their contribution and support and you, our shareholders, for
your ongoing support of the Company.
yours faithfully,
Denis WaDDell
Chairman
At the centre of the year’s activities
was the significant progress achieved
and the positive results delivered
on the multiple components of the
bankable feasibility study for the
prieska project.
14
...an exceptionally
busy and positive
year for Orion,...
15
ORION MINERALS ANNuAL REpORt - 2018 LEAdERShiP
BOARd Of diREcTORS
dENiS
wAddELL
Chairman
denis is a Chartered Accountant with over 35 years of
experience in corporate finance and management of
exploration and mining companies. he founded tanami
gold nl in 1994 where he was first managing director, then
Chairman and non-executive director until 2012. prior to this, denis was Finance director of
the metana minerals nl group.
ERROL
SMART
managing director and
Chief executive officer
errol is a geologist, registered for JorC purposes. he has over 25
years of industry experience across all aspects of exploration,
mine development and operation, with a key focus on gold
and base metals throughout Africa and in Australia. errol has held positions in African stellar,
liongold Corporation, Clarity minerals, metallon gold, Cluff mining and Anglogold.
ALExANdER
hALLER
non-executive director
Alexander is a partner of Zachary Capital management,
providing advisory services to a number of private investment
companies,
including silja
investment ltd, focusing on
principal investment activities. From 2001 to 2007 Alexander
worked in the corporate finance division at Jp morgan Chase & Co. in the usA, as an advisor
on mergers and acquisitions, and financing in both equity and debt capital markets.
16
MARk
PALMER
non-executive director
mark has 12 years of experience working with entities in Australia,
and 8 years with dominion mining. he previously worked with nm
rothschild & sons limited for the london mining project as part of
the finance team where he was responsible for assessing mining
projects globally. he later moved to the investment banking team at uBs, where his focus
was global mergers and acquisitions, and equity and debt financing. he also ran the emeA
mining team at uBs, later joining tembo Capital in 2015 as investment director.
MichAEL
hULMES
non-executive director
michael is a mining engineer with over 30 years’ experience. having
held senior management roles in Australia, papua new guinea,
portugal, spain, saudi Arabia, Africa and China, he has extensive
knowledge of zinc, copper, gold and nickel mining operations. As
managing director, michael was responsible for the large neves-Carvo Vms Copper Zinc
and Aguablanca Copper nickel mines for lundin mining in portugal and spain respectively.
prior organisations include ok tedi mine in papua new guinea, Citadel resources in saudi
Arabia and Barrick in Australia. he was most recently the general manager of the Caijiaying
Zinc/gold mine at hua Ao mining industry Company in China.
17
ORION MINERALS ANNuAL REpORt - 2018 SENiOR MANAGEMENT
wALTER
ShAMU
Chief operating officer
walter is a mining engineer with a B.eng (mining engineering)
and a masters in engineering (rock mechanics) from Curtin
university as well as an llB (law) from macquarie university in
Australia. he spent 12 years in the Australasian mining industry
with henry walker eltin, western mining and gold Fields before moving to south Africa,
where he has held technical and corporate roles with gold Fields, erg and taurus gold on
exploration projects, mine development and mining operations throughout Africa.
MARTiN
BOUwMEESTER
Chief Financial officer
and Company secretary
martin is an FCpA with over 20 years’ industry experience in
exploration, mine development and operation. he was previously
the Chief Financial officer, Business development manager and
Company secretary of perseverance Corporation limited. martin was a key member of the
team which evaluated the sulphide mineralisation at the Fosterville Gold Mine; an initiative that
led to the discovery of more than 3 million ounces of gold and the funding for the development
of the mine and processing plant to exploit these resources.
LOUw
vAN SchALkwyk
executive: exploration
louw holds a Bsc geology honours degree from the university of
stellenbosch. he started his career as a geologist with gold Fields
of south Africa, then worked as an exploration consultant for
Anglo American. he served as technical director on the boards of
two junior exploration companies before joining Vendanta Zinc international. louw specialises
in structural and exploration geology and was part of the team that discovered the 60 mt
gamsberg east Zinc deposit in 2005, which is one of the highlights of his career. other notable
achievements include the discovery and drill out of the 250,000 oz Byumba gold deposit in
rwanda in 2008.
18
NELSON
MOSiAPOA
group Corporate social
responsibility Advisor
nelson studied chemical engineering at peninsula university of
technology. As an advanced policy scholar of science and
technology, he served on the policy unit of the governing party in
the republic of south Africa prior to the first democratic elections. his professional career
started at sasol petroleum as a gasification process controller and then a learner official at
Anglo American/de Beers. he is also the founder and trustee of the mosiapoa Family trust,
a private and investment equity company in the resources sector with assets featured on
the Jse.
MichELLE
jENkiNS
executive: Finance & Administration
michelle is both a geologist and a Chartered Accountant with
over 20 years’ experience in exploration and mining. she holds an
honours degree in geology from the university of the witswaterand
and Bsc hons in Accounting science from the university of south
Africa. michelle has substantial experience working as a geologist prior to joining kpmg’s
mining group as a Chartered Accountant. she was also the Chief Financial officer at taurus
gold and held the role of Chief Financial officer with a number of exploration and mining
companies throughout Africa. she was previously a director within the Clarity Capital group
and an executive director of pangea exploration. michelle offers a wealth of knowledge
in resource risk management and mitigation as well as strategic leadership and has been
involved in operating resources ventures.
19
ORION MINERALS ANNuAL REpORt - 2018 BUSiNESS
REviEw
BUSiNESS REviEw
cORPORATE SOciAL RESPONSiBiLiTy
OUR PEOPLE ANd cOMMUNiTiES
orion minerals is committed to sustainable practices and social,
economic and environment upliftment in the environments in
which it operates. the Company is a catalyst for socio-economic
development and strives for:
SUSTAiNABiLiTy
ENTREPRENEURShiP
iMPAcT
fOcUS
the Company considers its relationships with local communities to be as important as the
technical and commercial needs of the organisation. during the 2018 financial year, the
Company continued constructive engagements with local government and communities in
preparation for mine development and revitalisation of the region.
siyAthemBA muniCipAlity
in october 2017, a memorandum of understanding (MoU) was signed with the siyathemba
municipality. the mou aims to facilitate collaboration on community and social investment
projects in the vicinity of the prieska project.
A steering Committee (Steercom) was constituted to administer the mou. the Company uses
this forum, amongst others, to act as a catalyst for local economic and social development.
the steercom has met regularly during the reporting period with focus areas including:
• Education: The Company engaged with various stakeholders to align efforts in improving
the provision of education services in the region, including the development of a plan to
introduce e-learning through the application of the eduVod satellite education content
solution into prieska schools. in may 2018, the Company facilitated a visit for representatives
of the siyathemba municipality and the northern Cape provincial department of education
to an established eduVod learning Centre in kwamashu, kwaZulu-natal province. this
enabled a shared understanding of the potential for the proposed eduVod satellite
education content initiative.
• Water infrastructure: A MoU has been signed with the Siyathemba Municipality securing
long term water supply for the prieska project in return for a commitment by the Company to
upgrade the municipal waterworks to meet the project’s requirements. this will additionally
benefit the community as a whole. A steercom water infrastructure sub-Committee has
been formed to draft a supply agreement in time for the conclusion of the Company’s BFs.
22
• Residential development: A
Steercom Residential
development sub-Committee has been established to
ensure that the Company’s accommodation requirements
are integrated with the siyathemba municipality residential
development strategy.
• Environment: The Company has also been instrumental in
reinvigorating the “prieska greening Committee”, which
aims to improve the physical environment and hence
living conditions for prieska residents. A non-profit company
has been registered (prieska greening npC) and the
Company is facilitating the provision of legal assistance in
the formulation of a memorandum of incorporation (moi)
and a service level agreement (slA) between the prieska
greening npC and the siyathemba municipality, which
together will provide the framework through which the
greening objectives are achieved. in the meantime, the
greening initiative was initiated with the Company’s active
involvement, through successful Arbor week activities
during september 2018. these included the planting of
shade and fruit trees and the establishment of backyard
vegetable gardens for indigent members of the community.
in march 2018, the Company presented the prieska project
social and labour plan (SLP) to the siyathemba municipal
Council. the slp encompasses
the commitments
the
Company will make with respect to undertaking local
economic development and the skilling of its workforce when
mining operations commence. the slp is thus an integral and
mandatory component of the mining right application. the
municipal Council passed a resolution providing unconditional
endorsement of the project slp. this endorsement was
submitted together with the slp to the department of mineral
resources as part of the mining right application in April 2018.
in April 2018, the Company hosted the siyathemba mayor,
councillors and municipal managers for an orientation site
visit of the prieska project. the visit included a tour of the
underground workings, the surface infrastructure and the drill
rigs engaged in the deep sulphide drilling program.
23
ORION MINERALS ANNuAL REpORt - 2018 Community liAison
An orion minerals community liaison office was established in prieska during october 2017. the
office is a point of contact and communication for the community and the Company and is
a base for sharing information to the surrounding community on the progress of development
operations at the prieska project.
in support of stimulation of economic growth through enterprise development, the Company
will look to source services and supplies from local community businesses. potential local
suppliers of goods and services are encouraged to register online using the electronic supplier
database, the supply Chain network (sCnet) portal. internet facilities are provided at the
community liaison office to facilitate the online registration of the local businesses. At the
time of reporting, over 80 businesses were registered, of which more than 50 are located in
the siyathemba area. the Company will utilise this portal to assess the capabilities of local
enterprises to fulfil the future requirements of the mine.
in August 2018, the Company organised an educational seminar for small, medium and micro-
sized enterprises (smmes) and non-governmental organisations (NGOs) in prieska. presenters
included the department of economic development and tourism (dedAt), south African
revenue services (sArs) and the industrial development Corporation (idC). the event was well
attended with more than 70 representatives from the prieska business and ngo communities.
the Company plans to continuously facilitate local enterprise education and development.
Community members seeking future mine employment can submit their curricula vitae and
expressions of interest at the community liaison office. At the time of reporting, the Company
has a database of over 550 curricula vitae. Analysis of the local skills base is underway as an
input into the human resource and skills development plan required for the BFs and to meet
the slp commitments.
the Company also hosted an informal function in the town of Copperton for local residents
during which Company management provided a progress update on the prieska project.
discussions with various stakeholders, seeking to secure long-term access to land on which the
prieska project will be developed, were initiated and are continuing in good faith.
24
25
ORION MINERALS ANNuAL REpORt - 2018 BUSiNESS REviEw
REviEw Of OPERATiONS
SOUTh AfRicA
iNTROdUcTiON TO ThE AREAchAP BELT PROjEcTS
the main focus of orion minerals’ (company) activities has been at the prieska project in the
northern Cape province of south Africa, situated approximately 290 km south-west of the city
of kimberley (Figure 1). the prieska Copper mine operated as an underground mine, exploiting
the prieska deposit between 1971 and 1991, producing 1.01 million tonnes of zinc and 430,000
tonnes of copper in concentrates1.
the Company is currently investigating
the feasibility of creating a new mine
in the footprint of the historic prieska
Copper mine, utilising the extensive
remaining infrastructure, with the intent
of extracting the unmined zinc-copper
mineralisation at the prieska deposit.
the prieska deposit is a volcanogenic
massive sulphide (vMS) style deposit
with significant
remaining potential.
the Company has now delineated a
JorC-compliant mineral resource of
both near-surface and underground
mineralisation. the drilling campaign
is continuing, and an updated mineral
resource is expected to be released
in q4 2018. A bankable
feasibility
study is in progress, investigating both
underground and open-pit mining
figure 1: project location within the northern Cape
province of south Africa. prieska project located
approximately 290 km sw of kimberley
methods along with the associated infrastructure, environmental and community studies and
concentrate marketing arrangements. the BFs is expected to be completed during q2 2019
and mining right Applications have been lodged for the project with approvals expected by
the end of q2 2019.
in addition to brown-fields exploration in the vicinity of the prieska project, three green-fields
exploration projects are underway to the north of the prieska deposit, in the prospective
Areachap Belt. the Company is currently exploring for Vms zinc-copper and mafic hosted
nickel-copper deposits on the masiqhame and namaqua-disawell tenements, where diamond
drilling is currently testing high potential nickel targets. on the third project, the marydale gold-
copper project, historical data is being re-interpreted and the economic potential re-assessed.
1. note: this is not a JorC compliant figure. source: prieska Copper mines ltd Annual report 1970.
26
hEALTh ANd SAfETy
health and safety performance on all Company projects was excellent, with no lost-time injuries
reported during the year. An aggregate of approximately 330,000 hours were worked for the
year.
A summary of the hours worked is shown in table 1.
Table 1: hours worked on the Company’s operations, with the lost-time injury frequency rate (ltiFr) for the 2018 Fy
being 0.
cATEGORy Of wORk
fy 2018 (hours)
exploration
mine re-entry
TOTAL
314,239
15,604
329,843
ENviRONMENTAL MANAGEMENT
no environmental incidents were recorded at any of the Company’s projects during
the year.
An excellent
health and safety
performance…
27
ORION MINERALS ANNuAL REpORt - 2018 PRiESkA ZiNc-cOPPER PROjEcT (PRiESkA PROjEcT)
OvERviEw
the prieska project, located 290 km south-west of kimberley in the
northern Cape province of south Africa, remains the focus of the
Company’s activities and is at an advanced stage of feasibility
studies (Figure 2). through two subsidiary companies, repli trading
no 27 (pty) ltd and Vardocube (pty) ltd, the Company holds a 73.3%
interest in the repli prospecting right (Repli) and a 70% interest in the
Vardocube prospecting right (vardocube).
together, these two mineral tenements cover the unmined dip and
strike extensions of the prieska deposit, a Vms body mineralised with
zinc and copper. the deposit has significant remaining potential,
having been partially exploited when prieska Copper mine limited
operated as an underground mine between 1971 and 1991. the
Company is focused on fast-tracking the prieska project to production.
figure 2: location of the
Company’s Areachap
Belt projects, south
Africa, consisting of the
masiqhame, namaqua-
disawell, marydale and
prieska projects.
28
during the year, resource drilling continued, aimed at confirming zinc and copper mineralisation
within those parts of the prieska deposit not mined or sufficiently explored by previous owners,
both at depth (deep Sulphide Target) and near-surface (+105 Level Target) (Figure 3).
figure 3: longitudinal projection of the prieska project showing the +105 open pit target and the deep sulphide
target on the repli and Vardocube prospecting right areas. the areas blocked in red are enlarged in Figures 4 and
5 and show the intersection points of the drill holes reported in this report.
drilling within Vardocube, which encompasses the south-eastern strike extension of the deep
sulphide target, commenced soon after the granting of the prospecting right on 4 April 2018
(refer AsX release 4 April 2018).
resource drilling at the +105 level target was completed in october 2017 and a maiden total
mineral resource for the prieska project was reported in February 2018 (refer AsX release 8
February 2018). resource drilling continued at a rapid pace at the deep sulphide target and
an updated Deep Sulphide Mineral Resource was reported on 9 April 2018 (Table 2; refer ASX
release 9 April 2018).
infill drilling to increase sample density in the deep sulphide mineral resource then continued
with the aim of sufficiently upgrading the mineral resource estimate categories to support a
mine feasibility study. infill drilling is scheduled for completion in q4 2018. For further information
in relation to the Company’s mineral resources, refer to the ore reserve and mineral resource
statements section of this report (below).
29
ORION MINERALS ANNuAL REpORt - 2018 Table 2: total mineral resource table for the prieska deposit
GLOBAL MiNERAL RESOURcE fOR PRiESkA PROjEcT - Repil Trading No 27 (Pty) Ltd & vardocube (Pty) Ltd
Zn
cu
Ag
Au
Classification
tonnes
metal
tonnes
grade (%)
deep sulphide
repli*
deep sulphide
Vardocube**
105 supergene
repil*
inferred
22,600,000
839,000
inferred
5,200,000
253,000
indicated
1,200,000
32,000
105 oxide repil*
inferred
300,000
2,000
total global
29,400,000
1,126,000
3.7
4.9
2.6
0.9
3.8
metal
tonnes
266,000
67,000
30,000
2,000
365,000
grade (%)
metal
ounces
grade
(g/t)
metal
ounces
grade
(g/t)
1.2
1.3
2.4
0.6
1.2
6,904,000
1,627,000
348,000
17,000
8,896,000
9.5
9.7
8.7
1.8
9.4
153,000
35,000
9,000
1,000
198,000
0.2
0.2
0.2
0.1
0.2
notes:
All mineral resources reported at Zero Cut-off.
rounding as required by reporting guidelines, may result in apparent differences between tonnes, grade
and contained metal.
*Refer ASX release 8 February 2018; ** refer ASX release 9 April 2018.
the BFs and environmental impact assessment (EiA) commenced in July 2017, with expert
consultants appointed to lead these work streams. the BFs and eiA are being conducted in
parallel with the resources drilling program and are scheduled to be completed by q2 2019. All
activities are taking advantage of the substantial database and infrastructure remaining from
historical mining operations at the prieska Copper mine.
mining right and environmental Authorisation applications over repli, based on conceptual
mine designs, were submitted in April 2018. the stipulated time for such applications to be
processed is 300 days from submission. the mining right and environmental Authorisation
applications for the Vardocube portion of the deposit were submitted in september 2018.
+105 LEvEL TARGET (OPEN PiT) RESOURcE dRiLLiNG PROGRAM
the drilling program, designed to confirm, in-fill and extend near-surface historical drilling and
targeting mineralisation expected to be amenable to open pit mining, was completed in
october 2017. supergene mineralisation, extending from near-surface to approximately 100 m
below surface, holds an indicated mineral resource of 1.2 million tonnes grading 2.6% zinc and
2.4% copper (refer AsX release 8 February 2018).
A total of 1,179 m of reverse circulation (20 holes) and 1,873 m of diamond core drilling (17
holes) was carried out by the Company (refer AsX release 12 december 2017, 17 september
2017, 6 september 2017, 25 may 2017, 16 december 2016, 7 december 2016, 2 november
2016, 14 september 2016, 22 August 2016 and 25 July 2016). results of the last two diamond
drill holes completed at the +105 target, which returned high copper values, are shown below:
• 21.69 m at 0.17% Zn, 5.05% Cu, 0.18g/t Au and 6g/t Ag (OCOU075); and
• 13.33 m at 0.23% Zn, 3.08% Cu, 0.17g/t Au and 6g/t Ag (OCOU076).
30
dEEP SULPhidE TARGET (UNdERGROUNd) RESOURcE dRiLLiNG PROGRAM
the Company continued with a major drilling program designed to evaluate the deep sulphide
target extending to 1.2 km below surface. drilling aims to systematically test and confirm the
mineralisation as interpreted from the extensive historical drilling data. results are anticipated
to provide statistical validation of this drilling, which intersected unmined mineralised zones,
and should add to infill data to meet the requirements of an Australasian Code for reporting
of exploration results, mineral resources and ore reserves (2012 edition) (jORc) compliant
mineral resource estimate. inferred mineral resources of 22 mt grading 3.7% Zn and 1.2% Cu
at repli and 5.2 mt grading 4.9% Zn and 1.3% Cu were reported (refer AsX release 9 April 2018).
As at 12 september 2018, 73,940 m of diamond drilling and 9,462 m of percussion, pre-collar
drilling have been completed on the deep sulphide target (Figures 4 and 5). to date, the
Company has announced drilling results of 33 mother drill holes and 28 deflections from the
deep sulphide target (refer AsX releases 18 september 2018, 16 July 2018, 19 February 2018,
1 February 2018, 12 december 2017, 8 november 2017, 9 october 2017, 5 october 2017, 17
september 2017, 6 september 2017, 27 July 2017 and 17 July 2017).
31
ORION MINERALS ANNuAL REpORt - 2018 figure 4: (top), plan
of the north-west
resource area of the
prieska project (repli),
showing drill hole
intersection points
in this report. (left),
longitudinal projection
of the north-west
resource area of
the deep sulphide
target, showing the
Company’s drill hole
intersection points
reported in this report.
drill holes highlighted
in red refer to those
reported in table 3.
figure 5: (left), plan of the south-east resource area of the prieska project (repli and Vardocube), showing drill hole
intersection points in this report. (right), longitudinal projection of the south-east resource area of the prieska project,
showing the Company’s drill hole intersection points reported in this report. drill holes highlighted in red refer to those
reported in table 3.
32
during the current reporting period, drilling continued to intersect massive sulphide mineralisation
with high copper and zinc tenors on both the repli and Vardocube areas.
notable results reported as at 12 september 2018 are shown in table 3. in the north-west of
the deep sulphide target, down-hole electromagnetic (EM) surveying detected two off-hole
conductors: one up-dip to the north-east, and the other parallel to the fold axis of the prieska
synform (refer AsX release 6 september 2017). Follow-up drilling of the up-dip conductor
intersected thick massive sulphides. Additional drilling successfully defined a thick, north-east
trending lobe of massive sulphide mineralisation, both to the south-west and north-east of the
intersections.
Table 3: notable drill hole intersections from deep sulphide target drilling at the prieska project (refer to AsX releases 18
september 2018, 16 July 2018, 19 February 2018, 1 February 2018, 12 december 2017, 8 november 2017, and 9 october
2017 for full list of drill results). All intersections are density and length weighted. Collar coordinates presented in this
table are recorded in lo23 wgs84 (whereby lo is coordinate reference used in south Africa and wgs is the universal
positioning reference system used by geologists).
dRiLL hOLE
EAST
(LO23 wGS84)
NORTh
(LO23 wGS84)
fROM
(m)
TO
(m)
LENGTh
(m)
oCod068
oCod074
oCod087
-68 335
-3 314 757
974.55
997.85
including
977.65
992.00
23.30
14.35
-67 196
-3 315 596
1084.10
1085.65
1.55
including
1103.63
1115.04
11.41
1103.63
1129.80
26.17
-68 641
-3 314 400
1121.20
1124.00
1184.70
1193.40
8.70
2.80
-67 148
-3 315 577
oCod120_d1
1129.90
1142.35
12.45
1084.30
1096.20
11.90
1099.00
1100.40
1.40
1115.70
1127.75
12.05
oCod123
-67 101
-3 315 689
1089.00
1095.35
1128.75
1130.90
2.15
6.35
cU
(%)
0.84
0.38
3.10
1.31
0.92
1.00
0.25
1.12
1.36
2.20
1.40
0.27
1.12
ZN
(%)
5.45
6.15
0.16
6.51
7.69
2.46
1.36
5.17
5.10
3.46
5.40
6.53
8.31
AU
(g/t)
AG
(g/t)
0.18
0.19
1.48
0.26
0.19
0.22
0.16
0.25
0.26
1.06
0.32
0.10
0.19
7
7
44
14
9
9
5
11
13
18
13
4
10
two drill holes located in the south-eastern part of the deep sulphide target on repli intersected
thick massive sulphide mineralisation, as well as a second mineralised zone within the footwall
(oCod120_d1, table 3). the full extent of this footwall mineralisation is still to be determined.
the Company’s first holes testing the south-eastern continuation of the deep sulphide target
on Vardocube intersected massive sulphides with high zinc and copper grades (refer AsX
release 18 september 2018).
drilling continues with completion of the program scheduled for mid-october 2018.
drilling continues to identify areas with likely extensions of wide high grade mineralisation that
warrant future follow up drilling.
33
ORION MINERALS ANNuAL REpORt - 2018 fEASiBiLiTy STUdiES
the prieska project has advanced significantly since the
Company commenced activities at the project in mid-2017
after a review of previous studies and the opening-up of
the historical mine to gain access to the upper mining levels
were completed in q2 2017. Various workstreams are well
advanced in defining the mineral resource, geotechnical
design data, mining methodologies and layouts, metallurgical
testing and flow-sheet design, mine de-watering, rock
hoisting and general infrastructure and services. Concurrent
with the technical studies, a social and labour plan has
been prepared and endorsed by the local municipality, and
specialist environmental studies have been carried out and
submitted to the relevant authorities. Financial evaluation is
well advanced, which is assisting in testing various scenarios
around mining and processing capacity, cut-off grades and
capital intensity.
the feasibility study team is led by drA projects sA pty ltd
(dRA), and is augmented by pCds mining Consultants,
Fraser mcgill mining and minerals Advisory, metC process
engineering Consultants, mining engineering and technical
services at shaft sinkers pty ltd and the msA group to assist
with mining, ore processing, shaft trade-off studies and mineral
resources to ore reserves analysis.
34
underground mining
studies have progressed on both underground and open-pit designs and schedules to
determine mineable tonnes based on the current mineral resources. For underground mining,
a combination of long-hole open stoping and drift and fill mining are being considered using
paste back-fill to maximise mining extraction. mechanised mining equipment is planned to
be utilised with a limited amount of rail transport leveraging off the existing infrastructure that
remains from the historical operations. design work is now focusing on determining the optimum
mining rate to maximise project economics. Figure 6 shows the underground mine design in
conjunction with the historical workings.
North west view
figure 6:
underground
mine layout
including
targeted
zones for
mining, both
underground
and open pit.
35
ORION MINERALS ANNuAL REpORt - 2018 the existing hutchings shaft was used for rock hoisting and personnel and materials transport.
this shaft, which is 8.8 m in diameter, concrete-lined, and 1,024 m in depth, is planned to be
incorporated into the new designs. the shaft steelwork has remained in place and test-work
carried out indicates that the current condition of the steel exceeded expectations (refer AsX
release 2 February 2018). Further analysis is being conducted based on the test results, which
will determine the amount of steel that needs to be replaced.
Ventilation simulations are underway to determine the air requirements for the proposed
underground mining operation based on the planned mining machinery fleet.
After the mine closed in 1991, pumping was stopped, and the mine has subsequently filled
with water up to 330 m below surface. it is estimated that the volume of water is approximately
8.7 million cubic metres. the water is very close to neutral, with a ph of 7.4, although dissolved
metals in the water are above those recommended for long-term human consumption. several
dewatering methods are being investigated including the use of a single-lift submersible
pumping assembly or a more conventional cascading pumping arrangement.
once the water is pumped to surface, a forced evaporation system is planned to be used to
dispose of the water. this is a proven and widely used method of dealing with excess water.
36
open pit mining
Conventional open pit mining methods are planned to exploit the near-surface mineral
resource, which has a relatively short operating life of around two years. the pit would extract
supergene material, which would be treated separately at the end of the underground mining
life due to the more complex metallurgical characteristics of the material. oxide material is
also present within the pit design and this is planned to be stockpiled for potential treatment
in the future, as current metallurgical testing has not proved successful in extracting zinc and
copper from this material. the open pit is planned to be a conventional mining operation using
mining contractors.
metAllurgy And minerAl proCessing
the historical prieska Copper mine utilised a conventional crushing-milling-froth floatation
processing circuit and life-of-mine metal recoveries of 85% for copper and 84% for zinc were
achieved. Concentrate grades ranging between 28% to 30% for copper concentrates and
51% to 53% for zinc concentrates were recorded. the BFs metallurgical test program is well
advanced and is expected to demonstrate that these results can be repeated or improved
upon and where possible improve the process flowsheet and introduce more modern reagents
to improve the recovery process. the test-work commenced in late 2017 at the mintek
laboratories in Johannesburg under the guidance of the drA metallurgical team.
metallurgical studies are being conducted in three defined phases as part of the BFs:
• Phase 1: Flotation amenability scouting: to determine whether froth flotation can continue
to be used to recover and concentrate zinc and copper sulphides from the dip and strike
extensions of the prieska deep sulphide mineralisation that is targeted for future mining.
• Phase 2: Flowsheet development: to derive a froth flotation-based processing flowsheet
capable of producing separate zinc and copper concentrates, within targeted quality
ranges and achieve high metal recoveries from all metallurgical zones of the near-surface
and deeps sulphide mineralisation.
• Phase 3: optimisation and detailed design: the final stage of metallurgical design, which
aims to optimise, validate and conclude a detailed design of the processing plant, to
enable production scheduling and accurate costing.
the Phase 1 stage of the test program proved that both deposits are amenable to froth flotation
recovery techniques.
37
ORION MINERALS ANNuAL REpORt - 2018 Phase 2 testing employed
locked-cycle testing for a
blend of deep sulphide
samples. these tests resulted
in 80% to 86% recovery
of copper and 91% to
94% recovery of zinc into
marketable concentrates.
Copper concentrate grades
ranged from 21% to 24%,
whilst the zinc concentrate
grades ranged from 45%
to 54%.he recovery results
correlate well with historical
performance, represented
graphically in Figure 7.
figure 7: results from locked cycle testing on copper recovery showing
comparable test-results (red) to historical performance (black).
due to the selected flowsheet for the supergene mineralisation, only open-cycle testing could
be used. Copper recoveries of between 44% and 78% were achieved at concentrate grades
in the range of 27% to 32%. Zinc recoveries of 30% to 88% at concentrate grades of 23% to 36%
were achieved for samples with a zinc grade of greater than 2.5%. the near-surface supergene
mineralisation makes up approximately 4% of the total project mineral resource and the open-
pit mining is planned to take place at the end of the underground mining operation, reducing
the adverse impact of lower recoveries on project economics.
Based on these test results, the Company can now predict the concentrate grades likely to be
produced from the various areas of the mineral resource. this enables optimisation of the mine
to market concentrate logistical chain to maximise the net smelter return and in turn revenue.
Phase 3 of the testing program is under way. this will determine power requirements for the
primary and re-grind mills motors and product size distributions which will refine downstream
design parameters.
38
power supply
eskom, the national power supply entity, operates the Cuprum sub-station (Figure 8) at the
prieska project site, which was originally established for the prieska Copper mine. since the
mine closed, the sub-station capacity was down-rated to 10 mVA and additional power will
now be required for the planned mine. the current estimate is that approximately 35 mVA of
power may be required.
figure 8:
the Cuprum
sub-station,
located at
the prieska
project site.
the Company has commissioned the electrical engineering company ppe technologies to
carry out the design and costing of the upgrade, which will take the form of a feeder-bay
installation within the Cuprum sub-station supplying a new 132kV to 11kV mine sub-station
within the project boundary. the approval timeframe has been scheduled at six months, after
which a three-month construction and commissioning phase will follow. the supply of power
from nearby renewable energy power plants is also being investigated.
39
ORION MINERALS ANNuAL REpORt - 2018 Bulk wAter supply
water is currently piped to the prieska project site via a 60 km line from the water works at the
town of prieska on the orange river. the pipeline also serves other users in the project area.
negotiations are underway with the siyathemba municipality, who operate the water works,
and Alkantpan, who own the pipeline, and draft memorandums of understanding are being
reviewed by all parties. the water works capacity requires upgrading to accommodate the
planned water requirement for the prieska project, which the Company has committed to
fund.
ConCentrAte logistiCs And mArketing
historically the prieska concentrates were noted as being “clean”, that is, with low levels
of impurities or penalty elements such as cadmium, bismuth and mercury. it is therefore
anticipated that there is a ready market for the concentrates produced from the prieska
project. Currently smelter customers in Asia and europe are being targeted for the sale of
concentrates. Concentrate transporting options are being considered to various ports. the
complete product logistics solution is planned for completion during q4 2018.
mining right AppliCAtion
A mining right Application for the repli portion of the prieska deposit was submitted to the
department of mineral resources (dMR) on 9 April 2018, based on a conceptual project plan
(refer AsX release 9 April 2018). the Application included a mine works program, which outlines
the planned business case encompassing all technical and financial aspects of the project,
a social and labour plan and an environmental Application. work continued in the months
following the April submission and, subsequent to the financial year-end, the final environmental
impact report, waste management licence and water use licence were all submitted to the
relevant authorities within the stipulated time frames. interactions with representatives from the
various government departments have already taken place and will continue as part of the
review process.
the environmental approval is granted first and is expected during december 2018, following
which the mining right approval is anticipated to be granted by the end of q2 2019. the
mining right Application for the Vardocube portion of the prieska project was subsequently
submitted on 27 september 2018.
40
41
ORION MINERALS ANNuAL REpORt - 2018 BUSiNESS REviEw
ExPLORATiON
NEAR MiNE ExPLORATiON
ANNEx cOPPER dEPOSiT
the Bartotrax prospecting right (Bartotrax), which includes the Annex Volcanogenic massive
sulphide Copper deposit (Annex), was granted by the dmr on 4 April 2018 (Figure 9) (refer
AsX release 4 April 2018). Annex, located approximately 6 km south of the prieska project,
was discovered by Anglovaal limited in 1969. Anglovaal’s historic diamond drilling at Annex
followed up on a conductor detected by an airborne input em survey and succeeded in
delineating semi-massive to massive sulphide mineralisation underneath a 35-m-thick dwyka
tillite cap (Figure 10). mineralisation was identified over a strike length of 1,000 m and followed
down to 550 m below surface. the deposit remains open at depth.
figure 9: surface plan showing the prospecting rights over and adjacent to the prieska
project as well as the locality of the Annex deposit.
42
Anglovaal (historic drilling) significant
intersections at Annex (Figure 10) include:
• 3.87m at 1.91% Cu and 0.49% Zn in VAX 19;
• 4.28m at 2.88% Cu and 0.34% Zn in VAX 26;
• 2.65m at 1.44% Cu and 0.33% Zn in VAX 27;
• 4.08m at 1.14% Cu and 0.41% Zn in VAX 29;
• 4.11m at 2.17% Cu and 0.54% Zn in VAX 32; and
• 4.77m at 1.39% Cu and 0.68% Zn in VAX 35
figure 10: (left), Anglovaal drilling (1969–1981) and trace sub-crop of sulphide mineralisation at Annex (source:
Anglovaal exploration report). (right), longitudinal section and grade-contoured drill intersections for copper at
Annex (source: Anglovaal exploration report).
43
ORION MINERALS ANNuAL REpORt - 2018 younger stratigraphic cover and general
poor outcrop
renders geological
interpretation of the geological setting
at Annex problematic, but the current
understanding indicates repetition of the
prieska mineralised stratigraphy over a
north-west to south-east trending set of
folds (Figures 11 and 12).
the Company commenced ground
em surveying to explore for possible
strike and depth extensions of Annex in
August 2018. three loops of Fixed loop
time domain electromagnetic (fLTdEM)
surveys have now been completed by
the Company using sensitive detection
systems. An em conductor has been
detected approximately 1,000 m west
of Annex. Additional surveying to better
define the extent of this conductor, and
additional loop testing along strike and
to the east of known mineralisation, are
currently in progress. diamond drilling will
commence on the em target once the
modelling has been finalised.
figure 11: geological plan showing near-mine
prospective horizons and the location of an em
conductor to the west of the Annex deposit.
figure 12: geological section through the Annex and prieska deposits. section line indicated on Figure 11.
44
ThE MAGAZiNE ANTifORM
the magazine Antiform presents
a large, blind target area where
Anglovaal’s previous work reported
an alteration zone similar to the
alteration at the prieska deposit,
which is scheduled to be the next
priority target for em surveying (refer
AsX release18 september 2018).
45
ORION MINERALS ANNuAL REpORt - 2018 REGiONAL ExPLORATiON
jAcOMyNSPAN NickEL-cOPPER-ZiNc-cOBALT-PGE PROjEcTS (NAMAqUA-diSAwELL)
in september 2017, the Company entered into a binding earn-in agreement to acquire the
earn-in rights over the Jacomynspan project from two companies, namaqua nickel mining
(pty) ltd and disawell (pty) ltd (Namaqua disawell companies), which hold partly overlapping
prospecting rights and mining right applications (refer Figure 2). the earn-in agreement is
principally on the same terms as the binding term sheet entered into in July 2016 (refer to
Jacomynspan nickel-Copper-pge project (south Africa) - (earn-in right) in the Business review:
Corporate section).
in terms of the agreement, the Company is able to earn-in to acquire an effective 59.2% of the
namaqua mining right and disawell prospecting right (Namaqua-disawell) covering an area
of 626 km2 in the Areachap Belt. the earn-in rights have been acquired over the Jacomynspan
nickel-Copper-pge project (jacomynspan Project). the Company currently holds an effective
18.5% of these companies.
known ni-Cu mineralisation occurs on the Jacomynspan, Area 4 and rok optel projects (Figure
13). the Jacomynspan deposit, discovered in 1973, has been investigated by several mining
and exploration companies. A JorC compliant mineral resource estimate has been reported
for the Jacomynspan deposit (refer AsX release 8 march 2018), and a mining concept study
was completed historically.
46
figure 13: simplified
geological map of
namaqua-disawell showing
the Jacomynspan, Area 4
and rok optel ni-Cu deposits
the Jacomynspan Complex
is
located
within the Areachap Belt, which formed as a
complex, long-lived, multi-phase orogenic
assembly zone related to the amalgamation
of the rodinia supercontinent (Figure 14).
the event that resulted in the emplacement
of the Jacomynspan Complex is part of
a global event associated with several
world-class nickel-sulphide deposits such as
Voisey’s Bay, kabanga and nova-Bollinger.
the Company’s exploration is aimed at
higher-grade, massive and semi-massive
accumulations of nickel-bearing sulphides,
analogous to the nova-Bollinger deposit
in the Fraser range province in western
Australia.
figure 14: schematic representation of the
depositional environment of the Areachap group,
timing of the deposition of the Vms deposits and
emplacement the ni-Cu bearing ultramafic intrusions.
47
ORION MINERALS ANNuAL REpORt - 2018 using historic data, the mineral resource for Jacomynspan has been assessed by Jeremy
whitley of mike scott and Associates in compliance with the 2012 edition of the Australian
Code for reporting of exploration results, mineral resources and ore reserves (JorC Code,
refer table 4). using a 0.4% ni cut-off grade, a total resource of 6.8 mt containing 39,480 tonnes
of ni, 23,070 tonnes of Cu and 1,800 tonnes of Co were declared using data from drill holes
drilled between 1971 and 2012 (refer AsX release 8 march 2018).
Table 4: indicated and inferred mineral resource statement for the Jacomynspan project on the namaqua mining
right using a 0.4% ni cut-off.
MiNERAL RESOURcE GRAdE-TONNAGE TABLE fOR ThE jAcOMyNSPAN PROjEcT AT A 0.40% Ni cUT-Off GRAdE
Ni
cu
co
Pt
Pd
Au
Classification
Cut
off
%
ni
Volume
(m3)
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(g/t)
metal
ounces
grade
(g/t)
metal
ounces
grade
(g/t)
metal
ounces
indicated
0.40
580 000
1 780 000
inferred
0.40
1 647 000
5 056 000
0.55
0.58
10 000
29 000
0.29
0.35
5 000
18 000
0.03
0.03
1 000
1 000
0.17
0.19
10 000
31 000
0.11
0.13
6 000
21 000
0.07
0.07
4 000
11 000
during the year, the Company completed detailed studies on the Jacomynspan Complex
and its ni-Cu sulphide mineralisation that shows sulphide mineralisation to occur as primary
disseminated sulphide, as well as injected coarse net-textured and massive sulphide veins (refer
AsX release 30 April 2018). the presence of injected sulphides suggests that larger volumes
of massive sulphide mineralisation may be present. the Company’s exploration is aimed at
targeting this style of mineralisation.
48
the prospective parts of namaqua-
disawell were covered by an Airborne
electro-magnetic survey (AEM or SkyTEMTM)
(refer AsX
release 1 February 2018).
two anomalies (Rok Optel and Area 4)
have been prioritised for follow-up work
(Figure 15). on both targets, modelling
of data suggests that anomalies on these
prospects were not adequately tested by
historic diamond drilling. Fltdem surveys
and geological mapping over rok optel
and Area 4 commenced in may 2018
(refer AsX release 3 July 2018). seven grids
were surveyed using Fltdem including an
orientation survey over the Jacomynspan
ni-Cu deposit.
figure 15: plan of the namaqua-disawell prospecting
right showing the various prospects and Fltdem grid
locations
the results from the Fltdem surveys on rok optel and Area 4 are most encouraging, with
conductors having conductance that is orders of magnitude higher (350 – 3150 s) than those
measured over the known mineral resource at Jacomynspan (25 – 575 s). historic drill holes
intersected ni-Cu mineralisation on both prospects - but did not intersect the zones of highest
conductance now detected using Fltdem (Figure 16) (refer AsX release 30 July 2018). known
ni-Cu mineralisation in proximity of the modelled conductors at both Area B4 and rok optel
upgrades the potential for finding higher grade ni-Cu mineralisation associated with the
modelled conductors.
figure 16: (left), cross-section showing historic drill results and conductive Fltdem plates on the northern side of the rok
optel 2 grid. (right), section looking east through drill hole JAC007 showing the ni-Cu sulphide intersection and newly
detected Fltdem conductors at the Area 4 prospect (Area 4B).
49
ORION MINERALS ANNuAL REpORt - 2018 diamond drilling commenced on 10 July 2018 on rok optel (refer AsX release 30 July 2018).
two holes have been completed while a third hole is currently in progress (Figure 17).
figure 17: rok optel drill plan with
the Fltdem loops, Fltdem plates
(red brown) and dhtdem plates
(blue and green). the historic drill
holes (ddh and pud) and the
Company holes (orod) are shown.
the plan is overlaid on a first vertical
derivative aero magnetic image.
50
drill hole orod001 intersected 192.63 m of intrusive rocks, 104.41 m of which hosts sulphide
mineralisation, including massive sulphide veins and stringer mineralisation (table 5, Figure 18).
Table 5: drill intersections from orod001 at various cut-off grades. the ni and Cu tenors are calculated using the kerr
method. widths are intersection widths (refer AsX release 10 september 2018).
drill hole
cut Off
from m width m
Ni wt%
cu wt%
co wt%
2PGE +
Au g/t
Ni Tenor
wt%
cu Tenor
wt%
orod001
0.2% ni
orod001
0.2% ni
orod001
0.3% ni
orod001
0.5% ni
201.05
292.09
297.44
201.05
8.99
7.29
1.94
1.22
0.24
0.28
0.38
0.45
0.163
0.115
0.149
0.569
0.016
0.013
0.015
0.047
0.22
0.66
1.45
0.16
3.80
9.29
10.22
2.90
2.58
3.65
3.86
3.66
figure 18: (left), section through drill hole orod001 drilled on
rok optel grid rok2, showing mineralised zone. (right), Core
from drill hole orod001 showing type 2 sulphide mineralisation
(refer AsX release 30 April 2018).
sulphide mineralisation was intersected at several horizons in orod002, including massive,
injected stringers, coarse blebs and patchy network styles, all of which are typical of conduit-
style mineralisation. Assay results are awaited, and drilling is continuing.
preliminary studies re-assessing the previously prepared mining concepts for the exploitation of
the Jacomynspan deposit, as well as investigations into potential products and updated market
analyses for such products, were commissioned during q2 2018. results of the studies, once
complete, will help with formulating a potential development strategy for the Jacomynspan
project.
51
ORION MINERALS ANNuAL REpORt - 2018 kANTiENPAN ANd BOkSPUTS PROjEcTS (MASiqhAME)
in march 2018, the Company entered into an earn-in agreement to earn up to a 73% interest
in masiqhame trading 855 pty ltd (Masiqhame), which holds a prospecting right covering an
area of almost 980 km2, located 80 km north of the prieska project. the Company is currently
focussing on Vms style mineralisation on masiqhame and during 2018, the Company completed
a regional skytem™ survey over the prospecting right and is continuing with Fltdem surveys
and geological mapping over selected anomalies as part of prioritising Vms Zn-Cu drill targets.
two Vms deposits, kantienpan and Boksputs, as well as several other Zn-Cu occurrences, are
known to exist on masiqhame (Figure 19). A high-powered fixed loop electromagnetic survey
conducted on kantienpan by the Company in 2016 detected previously unknown conductors
below and along strike of known mineralisation. drill testing of the conductors yielded
encouraging results with massive sulphides intersected (refer AsX release 29 september 2016).
these results highlight the potential for new discoveries using modern geophysical methods in
the Areachap Belt. mineralisation at the kantienpan deposit remains open both along strike
and at depth.
figure 19: map showing the area covered
by the kantienpan and Boksputs deposits
on masiqhame and the coverage of the
skytem™ survey over masiqhame and
namaqua-disawell.
52
A 962 km2 helicopter-borne magnetic and Aem over the masiqhame and namaqua-disawell
prospecting rights was completed on the 24 January 2018 (refer AsX release 1 February 2018).
the survey succeeded in acquiring high quality data over Vms Zn-Cu targets on masiqhame.
the skytem™ system used is discussed earlier, in the namaqua-disawell section.
the airborne magnetic data obtained with the skytem™ surveys is superior to any regional
airborne magnetic data previously available over the prospecting permit right and allowed for
more detailed regional geological interpretations and targeting (Figure 20). selected skytem™
targets are currently being followed up with detailed geological mapping and Fltdem surveys.
three Fltdem surveys have been completed. two of the conductors in the Boksputs Vms
camp offer compelling drill targets (refer AsX release 24 september 2018). the Company plans
to continue with Fltdem surveys over selected skytem™ anomalies. this will be followed by
diamond drilling.
figure 20: solid geological map of the masiqhame
prospecting right showing the inferred paleo-seafloor,
known zinc-copper deposits and occurrences and
skytem™ anomalies.
53
ORION MINERALS ANNuAL REpORt - 2018 three Fltdem surveys were completed between 8 and 24 July
2018 in the Boksputs area. plate models were received for all three
grids. of the three conductors modelled, B1 and B4 offer priority
follow-up drill targets (Figure 21; refer ASX release 24 September
2018). mapping and structural interpretations over the B1 and B4
targets were completed and show the conductors to:
• Occur in a similar stratigraphic position to the VMS style
mineralisation at Boksputs.
• Have favourable stratigraphic and structural settings with
both anomalies occurring on a prospective contact between
amphibolite and meta-psammite. Anomaly B4 occurs in a fold
hinge and is orientated parallel to the plunge direction.
• Have dimensions that show the causative bodies to have
relatively large volumes.
• Be blind targets not tested before. It is doubtful whether Induced
polarity (iP) surveys used in the 1970s could have detected a
500-m-deep conductor such as B1 and no evidence has been
found that conductors B1 and B4 were drill-tested in the past.
figure 21: three-dimensional view looking southeast and showing the stratigraphic
and structural setting of the B1 and B4 conductors on Boksputs prospect.
54
MARydALE GOLd-cOPPER PROjEcT
the Company holds prospecting rights over the marydale
gold-Copper project, a deposit of possible high sulphidation
epithermal origin located 60 km from the prieska project.
historical drilling was carried out at various orientations and,
despite wide zones of mineralisation being intersected, the
majority of these are now seen to be sub-optimal (Figure 22).
drilling by the Company in 2016 confirmed historic drill results.
initial interpretations, based on data from oriented core, revealed
that the host lithology is in a structurally complex, folded and
sheared package. the Company is currently reinterpreting the
drill data and assessing the economic potential of this deposit.
figure 22: plan showing results from the Company and historical drilling at the nw quadrant of the
marydale project.
55
ORION MINERALS ANNuAL REpORt - 2018 AUSTRALiA
cONNORS ARc EPiThERMAL GOLd PROjEcT (qUEENSLANd)
during the year, no work was undertaken at the Connors Arc project due to the fast-tracking of
drilling and the BFs at the prieska project. the Company announced on 2 may 2018 a binding
sale agreement with evolution mining limited for 100% interest sale of the Connors Arc project
(refer to the Corporate section for more information).
fRASER RANGE - GOLd-NickEL-cOPPER PROjEcT (wESTERN AUSTRALiA)
the Company maintains a sizeable tenement package in the Fraser range province of western
Australia, which independence group nl (AsX: igo) is currently earning in to via a joint venture
agreement (jvA, refer AsX release 10 march 2017).
igo is completing a major regional scale interpretation of the geological framework of the
Albany-Fraser orogen based on first pass aircore drilling (principally used to improve the
understanding of the bedrock geology in the project area) and high resolution geophysical
data including a regional scale spectrem airborne em survey. the regional scale work is also
enabling areas with lower prospectivity, either due to the underlying geology or the depth of
transported cover, to be identified and relinquished so that exploration can focus on the most
prospective areas. in addition to the regional scale surveys, a ground em survey was completed
on parts of the Company’s tenements where Vtem and aircore geochemistry anomalism has
previously been identified.
under the JVA, igo is responsible for all exploration on the tenements and provides regular
updates to the Company of its activities and results arising from them.
wALhALLA GOLd & POLyMETALS PROjEcT (vicTORiA)
during the year, the Company did not carry out any exploration activity on the walhalla project.
As announced by the Company, Centennial mining limited is acquiring the Company’s walhalla
project mining licence 5487 (Licence). As at reporting date, the acquisition of the licence is
still proceeding through Victorian government department of economic development, Jobs,
transport and resources requirements.
the Company retains its mineral rights across all other licences held within the walhalla project
area, which are prospective for gold, copper-nickel and platinum group elements.
56
refer igo AmeC Convention presentation 2018 (igo AsX release 14 June 2018)
57
ORION MINERALS ANNuAL REpORt - 2018 BUSiNESS REviEw
ORE RESERvE ANd
MiNERAL RESOURcE STATEMENTS
PRiESkA PROjEcT
A maiden mineral resource for the repli trading no. 27 prospecting right (Repli) was released
on the 8 of February 2018. the global mineral resource for drilling data at the end of december
2017 consists of 24.2 mt containing 873,000 tonnes Zn and 297,000 tonnes Cu, including both
the +105 and deep sulphide resources (Figure 23). this was followed by a maiden mineral
resource estimate of 5.2 mt containing 253,000 tonnes Zn and 67,000 tonnes Cu for the
Vardocube prospecting right and was released on 9 April 2018 (refer AsX release 9 April 2018).
this increased the total combined mineral resource for the prieska project to 29.4 mt containing
1,126,000 tonnes of Zn at 3.8% Zn and 365,000 tonnes of Cu at 1.2% Cu. the mineral resource for
the prieska project is summarised in table 6.
figure 23:
longitudinal
projection of the
prieska project
showing the +105
open pit target
and the deep
sulphide target
on the repli
and Vardocube
prospecting right
areas.
…an impressive
83,000 metres of
drilling had been
completed
on the deep
sulphide target
at prieska…
58
Table 6: total mineral resource for the prieska project.
GLOBAL MiNERAL RESOURcE fOR PRiESkA PROjEcT - Repil Trading No 27 (Pty) Ltd & vardocube (Pty) Ltd
Zn
cu
Ag
Au
Classification
tonnes
metal
tonnes
grade (%)
deep sulphide
repli*
deep sulphide
Vardocube**
105 supergene
repil*
inferred
22,600,000
839,000
inferred
5,200,000
253,000
indicated
1,200,000
32,000
105 oxide repil*
inferred
300,000
2,000
total global
29,400,000
1,126,000
3.7
4.9
2.6
0.9
3.8
metal
tonnes
266,000
67,000
30,000
2,000
365,000
grade (%)
metal
ounces
grade
(g/t)
metal
ounces
grade
(g/t)
1.2
1.3
2.4
0.6
1.2
6,904,000
1,627,000
348,000
17,000
8,896,000
9.5
9.7
8.7
1.8
9.4
153,000
35,000
9,000
1,000
198,000
0.2
0.2
0.2
0.1
0.2
notes:
All mineral resources reported at Zero Cut-off.
rounding as required by reporting guidelines, may result in apparent differences between tonnes, grade
and contained metal.
*Refer ASX release 8 February 2018; ** refer ASX release 9 April 2018.
the mineral resources are estimated by a Competent person and classified and reported in
accordance with the 2012 edition of the JorC Code.
Competent person’s stAtement – repli And VArdoCuBe prospeCting rights
(prieskA proJeCt)
the information in this report that relates to the mineral resource at repli and Vardocube
prospecting rights is based on information compiled by mr sean duggan, a Competent person
who is registered with the south African Council for natural scientific professionals (registration
no. 400035/01), a ‘recognised professional organisation’ (rpo) included in a list posted on the
AsX website from time to time. mr duggan is a director and principal Analyst at Z star mineral
resource Consultants (pty) ltd and a consultant to orion. mr duggan has sufficient experience
that is relevant to the style of mineralisation and type of deposit under consideration and to
the activity being undertaken to qualify as a Competent person as defined in the 2012 edition
of the ‘Australasian Code for reporting of exploration results, mineral resources and ore
reserves’. mr duggan consents to the inclusion in the report of the matters based on his (or
her) information in the form and context in which it appears.
59
ORION MINERALS ANNuAL REpORt - 2018
jAcOMyNSPAN
A maiden mineral resource estimate, based on drilling data from 1971 to 2012 (Figure 24),
reported at a 0.4% ni cut-off grade gives 6.8 mt containing 39,000 tonnes ni at 0.5% ni, 22,000
tonnes Cu at 0.3% Cu and 1,800 tonnes Co at 0.03% Co (refer AsX release 8 march 2018). the
mineral resources for the Jacomynspan project were previously reported (refer AsX release
14 July 2016) in accordance with the sAmreC Code (2007) as a “qualifying foreign resource
estimate” as defined in the AsX listing rules. the mineral resources have subsequently been
reassessed by the msA group (pty) ltd on behalf of the Company and reported in compliance
with the 2012 edition of the JorC Code (refer AsX release 8 march 2018). the mineral resource
at a 0.4% ni cut-off grade is presented in table 7, and at various other cut-off grades in table 8.
figure 24: plan showing mafic intrusion sub-outcrop and drilling at the Jacomynspan resource area.
60
Table 7: indicated and inferred mineral resource statement for the Jacomynspan project on the namaqua mining
right using a 0.4% ni cut-off.
MiNERAL RESOURcE GRAdE-TONNAGE TABLE fOR ThE jAcOMyNSPAN PROjEcT AT A 0.40% Ni cUT-Off GRAdE
Ni
cu
co
Pt
Pd
Au
Classification
Cut
off
%
ni
Volume
(m3)
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(g/t)
metal
ounces
grade
(g/t)
metal
ounces
grade
(g/t)
metal
ounces
indicated
0.40
584 000
1 780 000
inferred
0.40
1 647 000
5 056 000
0.55
0.58
10 000
29 000
0.29
0.35
5 000
18 000
0.03
0.03
1 000
1 000
0.17
0.19
10 000
31 000
0.11
0.13
6 000
21 000
0.07
0.07
4 000
11 000
Table 8: indicated and inferred mineral resource for the Jacomynspan project at various cut-offs.
iNdicATEd MiNERAL RESOURcE fOR ThE jAcOMyNSPAN PROjEcT AT vARiOUS Ni cUT-Off GRAdES
Ni
cu
co
Pt
Pd
Au
Cut off
% ni
Volume
(m3)
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(g/t)
metal
ounces
grade
(g/t)
0.20
0.25
0.30
0.40
0.50
11 252 000
33 000 000
4 205 000
12 393 000
1 501 000
4 461 000
584 000
1 780 000
284 000
872 000
0.26
0.32
0.42
0.55
0.66
86 000
40 000
19 000
10 000
6 000
0.18
0.20
0.24
0.29
0.37
58 000
25 000
11 000
5 000
3 000
0.02
0.02
0.02
0.03
0.04
6 000
3 000
1 000
1 000
300
0.10
0.11
0.14
0.17
0.16
101 000
45 000
20 000
10 000
5 000
0.05
0.06
0.08
0.11
0.11
metal
ounces
53 000
25 000
12 000
6 000
3 000
grade
(g/t)
metal
ounces
0.04
0.05
0.05
0.07
0.07
44 000
19 000
8 000
4 000
2 000
iNfERREd MiNERAL RESOURcE fOR ThE jAcOMyNSPAN PROjEcT AT vARiOUS Ni cUT-Off GRAdES
Ni
cu
co
Pt
Pd
Au
Cut off
% ni
Volume
(m3)
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(%)
metal
tonnes
grade
(g/t)
metal
ounces
grade
(g/t)
0.20
0.25
0.30
0.40
0.50
11 022 000
32 304 000
3 974 000
11 863 000
2 303 000
7 008 000
1 647 000
5 056 000
982 000
3 041 000
0.29
0.42
0.52
0.58
0.67
94 000
49 000
36 000
29 000
20 000
0.20
0.26
0.31
0.35
0.41
63 000
31 000
22 000
18 000
13 000
0.02
0.02
0.02
0.03
0.03
6 000
2 000
2 000
1 000
1 000
0.10
0.15
0.19
0.19
0.17
108 000
55 000
42 000
31 000
16 000
0.06
0.09
0.12
0.13
0.12
metal
ounces
60 000
34 000
27 000
21 000
11 0003 000
grade
(g/t)
metal
ounces
0.04
0.05
0.06
0.07
0.07
44 000
20 000
14 000
11 000
7 000
Competent person’s stAtement – JAComynspAn proJeCt
the information in this report that relates to the mineral resource at the Jacomynspan project
is based on information compiled by mr Jeremy Charles witley (Bsc hons, msC (eng.)),
a Competent person who is registered with the south African Council for natural scientific
professionals (registration no. 400181/05), a ‘recognised professional organisation’ (rpo)
included in a list posted on the AsX website from time to time. mr witley is a principal resource
Consultant at the msA group pty ltd and a consultant to orion. mr witley has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as a Competent person as defined in the 2012
edition of the ‘Australasian Code for reporting of exploration results, mineral resources and
ore reserves’. mr witley consents to the inclusion in the report of the matters based on his (or
her) information in the form and context in which it appears.
61
ORION MINERALS ANNuAL REpORt - 2018 BUSiNESS REviEw
cORPORATE
the Company recorded a loss of $8.8 million
after tax for the full year ended 30 June 2018.
the Company continues to focus strongly on
exploration, evaluation and development
within
its Areachap exploration projects
in south Africa. A total of $17.7 million in
exploration expenditure was incurred during
the year. Cash received from financing
activities totalled $23.5 million. Cash on hand
at the end of the year was $4.8 million.
TEMBO cAPiTAL
on 12 April 2017, the Company announced that it had taken another
important step in its base metal development strategy in south Africa after
entering into an agreement with leading mining-focused private equity
group tembo Capital mining Fund ii lp (or nominee) (Tembo capital), which
contemplated that tembo Capital would acquire a cornerstone stake in orion
and a strategic relationship would be formed between the two groups (Placement
Agreement). the placement Agreement provided for tembo Capital to subscribe
for fully paid ordinary shares (Shares) at an issue price of 2.4 cents per share up
to a maximum of $4.7 million, which would give tembo Capital a 19.9% holding in
orion, subject to the satisfaction of certain conditions including due diligence on the
Company to tembo Capital’s satisfaction and the Company’s shareholders approving
the placement. the placement formed part of a proposed placement, approved by
shareholders at a general meeting of shareholders held on 17 may 2017, of a maximum of
200.0 million shares to tembo Capital (or its nominees) and/or sophisticated and professional
investors at an issue price of 2.4 cents per share, to raise a maximum of $4.8 million no later than
17 August 2017.
in June 2017, tembo Capital confirmed completion of satisfactory due diligence and nominated
that it would subscribe for 125.0 million shares in the placement at an issue price of 2.4 cents per
share, raising $3.0 million. the 125.0 million shares were issued to tembo Capital on 9 June 2017.
the placement Agreement also set out the key terms of the strategic relationship between
orion and tembo. Following the completion of the placement:
• Orion will have access to Tembo’s strategic and financing networks within emerging markets,
which access will cease on Tembo ceasing to hold at least 12.5% of Orion’s issued Shares;
• Tembo will have access to certain information about Orion and its assets, subject to Orion’s
confidentiality and disclosure obligations, which access will cease on tembo ceasing to
hold at least 12.5% of Orion’s issued Shares;
62
BUSiNESS REviEw
• For so long as Tembo holds at least 12.5% of Orion’s issued Shares, Tembo will be granted
an anti-dilution right to maintain its percentage holding in orion if orion conducts an equity
capital raising by way of the issue of equity securities;
• Orion will use best endeavours to undertake a rights issue to raise additional equity as soon
as reasonably practicable; and
• For so long as Tembo holds at least 12.5% of the issued Shares, Orion agrees to procure that
the Board consults with tembo in respect of any proposed changes to its key management
personnel, provided that any executive director must not participate in any discussions in
relation to him or her.
As part of this, the Company announced on 17 may 2017 that the AsX had granted the Company
a waiver from AsX listing rule 6.18 to enable the Company to provide an anti-dilution right to
tembo should the placement to tembo proceed. under the terms of the waiver, for so long as
tembo holds at least 12.5% of orion’s shares on issue, tembo will be granted an anti-dilution
right to maintain its percentage holding in orion if orion conducts an equity capital raising by
way of the issue of equity securities.
on 18 August 2017, the Company announced that it had entered into an agreement with
tembo Capital whereby tembo would subscribe for a further 73.0 million shares in the placement
to raise $1.75 million at an issue price of 2.4 cents per share. in addition, a $6 million bridge loan
facility was agreed with tembo Capital as referred to in the loan Facilities section below.
63
ORION MINERALS ANNuAL REpORt - 2018 iNdEPENdENcE GROUP
on 18 may 2018, the Company announced that it had
taken another important step in its base metal development
strategy in south Africa after entering into an agreement with
independence group nl (AsX: igo) (iGO), which saw the
leading mid-tier miner and explorer become a substantial
shareholder in the Company and cemented a collaborative
working relationship between the two companies.
the Company entered into an agreement with igo for igo
to subscribe for a placement of shares in the Company at 5.0
cents per share, to raise $5.0 million (iGO Placement). on 21
may 2018, the Company announced that it had received $5.0
million from igo and had issued 100 million shares to igo at 5.0
cents per share (refer below).
the agreement also sets out the terms of an agreed collaborative
working relationship between the two parties, whereby igo
has secured matching rights to any potential joint venture or
sale of the Company’s nickel projects located in the Areachap
Belt, south Africa. if the Company wishes to assign the whole
or any part of its right, title or interest in any of its south African
nickel projects (located within a defined area of the Areachap
Belt) to a third party, it must first offer to assign such interest to
igo on the same terms and conditions as the proposed terms
and conditions of the assignment to the third party.
igo’s preferential rights include the Company’s advanced
Jacomynspan nickel-Copper-Cobalt project, where
the
Company has announced a JorC compliant mineral resource
estimate (refer AsX release 8 march 2018). the Company
intends to commit a minimum amount equivalent to 30% of the
$5 million igo placement (being $1.5 million) towards its nickel-
Copper-Cobalt exploration targets.
the igo placement and igo’s preferential rights further
strengthen the existing relationship between the Company
and igo, following the Company’s AsX announcement on 10
march 2017 that the Company and igo had entered into a
joint venture agreement on the Fraser range nickel-Copper
project, western Australia, and that igo had subscribed for a
$1.3 million share placement in the Company.
64
jOhANNESBURG STOck ExchANGE
on 18 september 2017, the secondary listing of the Company’s shares on the main board of
the Johannesburg stock exchange (jSE) commenced. the Jse listing is consistent with orion’s
strategy of engaging south African capital markets in the funding strategy of the prieska project.
the ability to access south Africa’s large parastatal banks and funds, which are captive within
south Africa due to south African exchange Control restrictions, is expected to significantly
increase funding options for orion.
the Jse listing has the additional benefits of:
• providing an accessible market in Orion Shares for South African investors, thus increasing
domestic ownership whilst aligning interests with foreign investors;
• allowing Orion to market itself and raise its profile in South Africa, thereby providing Orion
with better access to south African institutions and to capitalise on funds that are locked
within South Africa’s borders due to South African Exchange Control restrictions;
• providing opportunities for South African State Owned Entities to invest in the Prieska Project;
• focussing the attention of potential South African investors on the merits of investing in Orion,
thereby helping to enlarge the potential investor pool for the Company and over time
improve the liquidity and marketability of Orion Shares;
• allowing the possibility of Orion using its JSE-listed shares to make project acquisitions through
non-cash scrip settlements listed on the Jse that would otherwise be precluded due to south
African Exchange Control restrictions; and
• adding further momentum to Orion’s base metal development strategy in South Africa.
orion’s secondary listing of its shares is in the “gold mining” sector, under the abbreviated
name “orionmin”, Jse share code “orn” and isin “Au000000orn1”. the Company’s primary
listing remains on the AsX and the Company continues to be regulated by the Australian
securities and investments Commission.
65
ORION MINERALS ANNuAL REpORt - 2018 jAcOMyNSPAN NickEL-cOPPER-PGE PROjEcT (SOUTh AfRicA) - (EARN-iN RiGhT)
in september 2017, the Company entered into a binding earn-in agreement to acquire the
earn-in rights over the Jacomynspan project from two companies, namaqua nickel mining
(pty) ltd and disawell (pty) ltd (Namaqua disawell companies), which hold partly overlapping
prospecting rights and mining right applications (refer to Jacomynspan nickel-Copper-Zinc-
Cobalt-pge projects (namaqua-disawell) section, above). orion’s earn-in right will be via a
south African-registered special-purpose vehicle, Area metals holdings no 3 (pty) ltd (AMh3),
which was established by the Company as its vehicle for investment in the joint ventures and
of which historically disadvantaged south Africans (hdSA) shall hold a minimum of 26% of the
issued shares. Amh3 has the exclusive opportunity to earn up to an 80% interest (orion 59.2%)
in the namaqua disawell Companies. the namaqua disawell Companies are privately owned
south African companies with 26% or greater hdsA ownership.
in February 2018, Amh3 earned its initial interest of 25% (orion 18.5%) in the namaqua disawell
Companies after having spent $0.66 million on the Jacomynspan project and in march 2018,
Amh3 was issued with fully paid ordinary shares in the namaqua disawell Companies which
resulted in Amh3 being the holder of 25% (orion 18.5%) of the total shares on issue.
key terms of the transaction are set out in the directors’ report.
66
MASiqhAME (SOUTh AfRicA) - (EARN-iN RiGhT)
on 13 march 2018 (Masiqhame Signature date), the Company entered into a binding earn-in
agreement principally on the same terms as the term sheet it executed in April 2016, when the
Company announced that it had executed a binding option agreement with masiqhame for
orion to earn up to a 73% interest in masiqhame trading 855 pty ltd (Masiqhame). masiqhame
holds prospecting rights over a large, highly prospective area located approximately 80km
north of the prieska project (refer to kantienpan and Boksputs projects (masiqhame) above). in
september 2016, the Company announced that the terms of the option had been amended
to enable orion to commence exploration activities, including drilling, and have the cost of
this work program deducted from the consideration payable of ZAr1.5 million (~$0.15 million)
by orion for 50% of masiqhame shares on issue. in september 2016, the Company announced
that it had exercised the option for orion to acquire an initial 50% interest in masiqhame.
masiqhame is a privately owned south African company with 100% historically disadvantaged
south African ownership. masiqhame is thus black economic empowerment (BEE) compliant
from the outset and orion will earn in to an incorporated joint venture, partnering with a Bee
partner via masiqhame.
orion has the opportunity to earn up to a 73% interest in masiqhame through a south African-
registered special-purpose vehicle, Area metals holdings no 2 (pty) ltd (AMh2), which was
established by the Company as its vehicle for investment in the joint venture.
under the terms of the transaction, in April 2018, masiqhame issued Amh2 masiqhame shares,
which resulted in Amh2 being the holder of 49% of the total masiqhame shares on issue.
masiqhame will issue orion with a further 1% of masiqhame shares, which shall result in orion
being the holder of 50% of the total masiqhame shares upon the section 11 consent having
been granted by the dmr. orion has submitted the section 11 consent application to the
dmr. orion was appointed operator of the prospecting rights and has the right to appoint the
majority of directors to the board of masiqhame.
key terms of the transaction are set out in the directors’ report.
67
ORION MINERALS ANNuAL REpORt - 2018 SALE Of cONNORS ARc PROjEcT (qUEENSLANd)
on 2 may 2018, the Company announced to the AsX that it had entered into a binding sale
agreement with evolution mining limited (Evolution), for evolution to acquire 100% of the
Company’s Connors Arc project (Tenements) in queensland. Consideration for the sale of the
tenements consists of $2.5 million cash and a 2% royalty on net smelter returns from the sale
of gold recovered and sold by evolution from the tenements to a value of $5.0 million. the
Company received an initial payment of $2.0 million cash in July 2018.
the sale of the non-core tenements is consistent with the Company’s decision to place greater
focus on its flagship prieska project and its highly prospective regional exploration projects
within the Areachap Belt.
cAPiTAL RAiSiNGS
during the year, the Company completed capital raising initiatives of $17.3 million and in
August 2018, a further $8.1 million capital was raised to support the Company’s exploration
and development plans.
in addition, in August 2018, tembo Capital subscribed for $6.4 million in shares, following
orion’s agreement with tembo Capital that tembo Capital’s share subscription be issued in
consideration for reducing the amount re-payable to tembo Capital under the loan Facility
(refer below).
Additional information as to the Company’s capital raising activities forms part of the directors’
report.
68
LOAN fAciLiTiES
1. Bridge Loan Facility
the Company announced to the AsX on 18 August 2017 that a $6 million bridge loan
facility agreement (Loan facility) had been entered into with tembo Capital, a cornerstone
shareholder of the Company.
on 25 June 2018, the Company announced that in addtion to the $11 million placement (refer
to directors' report for additional information), that tembo Capital had confirmed its continued
support of orion through subscribing for $6.4 million in shares, at an issue price of 3.7 cents per
share, being the issue price for shares issued under the placement. orion agreed with tembo
Capital that tembo Capital’s share subscription be issued in consideration for reducing the
amount re-payable to tembo Capital under the loan Facility at a deemed issued price of 3.7
cents per share, being the same issue price as the shares being offered under the placements.
the balance of the loan Facility (including accrued interest) following this repayment was
$0.54 million.
Additional information as to the loan Facility forms part of the directors’ report.
2. Convertible Notes
on 17 march 2017, the Company issued 232.7 million convertible notes, each with a face value
of 2.6 cents, raising $6.05 million. Additional information regarding the convertible notes forms
part of the directors’ report.
3. Anglo American Sefa Mining Fund Loan
on 2 november 2015, repli trading no 27 (pty) ltd (Repli) (a subsidiary of the Company) and
Anglo American sefa mining Fund (AASMf) entered into a loan agreement for the further
exploration and development of the prieska project. under the terms of the loan, AAsmF
advanced ZAr14.25 million to repli. on 1 August 2017, repli drew down on the available
AAsmF loan in full. Additional information as to the AAsmF loan forms part of the directors’
report.
4. Redeemable Preference Shares
A subscription agreement was entered into between repli and AAsmF on 2 november 2015.
under the terms of the agreement, AAsmF subscribed for 15.75 million repli redeemable
preference shares at a subscription price of ZAr1 per redeemable preference share.
on 5 november 2015, AAsmF paid the subscription price to repli and the preference
shares were issued to AAsmF by repli.
Additional information as to the preference shares forms part of the directors’
report.
69
ORION MINERALS ANNuAL REpORt - 2018
Financial
STaTEMEnTS
DirEcTorS’ rEporT
Your directors submit their report for the Year ended 30 June 2018.
BoarD oF DirEcTorS
DirEcTor
DESignaTion
QualiFicaTionS, ExpEriEncE & ExpErTiSE
Denis
Waddell
non-executive
chairman
aca, faicd
appointed
27 february
2009
mr Waddell is a chartered accountant with
extensive experience in the management
of exploration and mining companies. mr
Waddell founded tanami Gold nL in 1994 and
was involved with the company as managing
director and then chairman and non-
executive director until 2012. prior to founding
tanami Gold nL, mr Waddell was the finance
director of the metana minerals nL group.
during the past 35 years, mr Waddell has
gained considerable experience in corporate
finance and operations management of
exploration and mining companies.
DirEcTorShipS
oF oThEr
liSTED
coMpaniES
oThEr
rolES hElD
During ThE
yEar
none
chairman
of audit
committee
chief
executive
officer
member of
the audit
committee
managing
director
Errol Smart
appointed
26
november
2012
bsc(hons) Geology (university of
Witwatersrand)
nhd economic Geology (technikon
Witwatersrand)
(prscinat)
none
mr smart is a geologist, registered with the
south african council of natural scientific
professionals, a recognised overseas
professional organisation in terms of the 2012
edition of the australasian code for reporting
of exploration results, mineral resources and
ore reserves (Jorc) purposes. mr smart has
more than 25 years of industry experience
across all aspects of exploration, mine
development and operations with experience
in precious and base metals. mr smart has
held positions in anglogold, cluff mining,
metallon Gold, clarity minerals LionGold
corporation and african stellar holdings. mr
smart’s senior executive roles have been on
several boards of companies listed on both
the tsX and asX.
alexander
haller
non-executive
director
bsc (economics)
appointed
27 february
2009
mr haller is a partner of Zachary capital
management, providing advisory services to
a number of private investment companies,
including silja investment Ltd, focusing on
the principal investment activities for these
companies. from 2001 to 2007 mr haller
worked in the corporate finance division at
Jp morgan in the u.s, advising on corporate
mergers and acquisitions as well as financing
in both the equity and debt capital markets.
ums Limited
(ongoing)
shaft sinkers
pLc (former)
member of
the audit
committee
72
DirEcTor
DESignaTion
QualiFicaTionS, ExpEriEncE & ExpErTiSE
DirEcTorShipS
oF oThEr
liSTED
coMpaniES
oThEr
rolES hElD
During ThE
yEar
Mark
palmer
non-executive
director
bsc mining Geology (cardiff university)
none
appointed
31 January
2018
mr palmer has 12 years’ experience working
with entities in australia, including 8 years with
dominion mining. in 1994 mr palmer joined nm
rothschild & sons Limited in the London mining
project finance team assessing mines and
projects globally. in 1997, mr palmer moved to
the investment banking team at ubs to focus
on global mergers and acquisitions, equity
and debt financing in the mining sector. mark
ran the emea mining team at ubs for 8 years.
mr palmer joined tembo capital as investment
director in 2015.
Michael
hulmes
non-executive
director
bsc mining engineering (royal school of
mines)
mba
transatlantic
mining
corporation
appointed
17 april 2018
mr hulmes is a mining engineer with over
30 years’ experience in the mining industry
having held senior management roles in
australia, papua new Guinea, portugal,
spain, saudi arabia, africa and china. he has
extensive experience in zinc, copper, gold
and nickel mining operations. as managing
director, mr hulmes was responsible for the
large neves-carvo – Vms copper Zinc and
aguablanca – copper nickel mines for Lundin
mining in portugal and spain respectively.
prior senior management positions include
companies such as the ok tedi mine in papua
new Guinea, citadel resources in saudi
arabia and barrick’s australian operations.
michael was most recently the General
manager of the caijiaying Zinc/Gold mine at
hua ao mining industry company in china.
William
oliver
non-executive
director
bsc (hons) Geology (uWa), Grad dip app fin
(finsia), maiG, mausimm
appointed
7 april 2014.
resigned 17
april 2018
mr oliver is a geologist with over 16 years’
experience in the international resources
industry working for both major and junior
companies. mr oliver has had wide-ranging
exploration experience with considerable
success and has expertise in project
identification and acquisition. mr oliver has
led exploration teams in europe and australia,
including senior roles with harmony Gold,
iberian resources, bc iron and bellamel
mining, and most recently was the managing
director of signature metals.
tando
resources
Ltd, Koppar
resources Ltd,
celsius
resources Ltd
minbos
resources Ltd
(all ongoing)
73
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
coMpany SEcrETary
the name and details of the company secretary in office during the financial year and until the date of this report is
as follows:
naME
ExpEriEncE anD QualiFicaTionS
Mr Martin Bouwmeester
company secretary
(appointed 1 april 2016)
mr bouwmeester is an fcpa with over 20 years’ experience in exploration, mine
development and operations and was chief financial officer, company secretary
and business development manager of perseverance corporation Limited.
mr bouwmeester was a key member of the team that evaluated the sulphide
mineralisation at the fosterville Gold mine; an initiative that led to the discovery and
definition of more than 3m ounces of gold and the funding for the development of
the mine and processing plant to exploit those resources. mr bouwmeester also holds
the position of chief financial officer with the company.
corporaTE STrucTurE
orion minerals Ltd (orion or company) is a company limited by shares that is incorporated and domiciled in australia.
the company has prepared a consolidated financial report incorporating the entities that it controlled during the
financial year, including those newly acquired (referred to as the group).
naTurE oF opEraTionS anD principal acTiViTiES
the principal activity of the Group during the year was exploration, evaluation and development of base metal,
gold and platinum-group element projects in south africa (areachap belt, northern cape). the company also holds
interests in the connors arc epithermal Gold project in central Queensland, the fraser range nickel-copper and Gold
project in Western australia and the Walhalla polymetals project in Victoria. there were no significant changes in the
nature of the Group’s principal activities during the year.
opEraTing anD Financial rEViEW
operations
in march 2017, orion acquired agama exploration and mining proprietary Limited (agama), a south african registered
company, which, through its subsidiary companies, holds an effective 73.33% interest in a portfolio of projects including
an advanced volcanic massive sulphide zinc-copper exploration project with near-term production potential at
the prieska Zinc-copper project, located near copperton in the northern cape province of south africa (prieska
project). during the financial year, at the prieska project, the company completed its maiden mineral resource drill-
out campaign and commenced a bankable feasibility study (BFS) in July 2017, which is targeted for completion in the
first quarter of 2019. the company also continued active exploration programs on its highly prospective tenements
located in the northern care, south africa.
heaLth and safetY
health and safety performance on all company projects was excellent, with no lost time injuries reported during the
year. an aggregate of approximately 330,000 man hours were worked for the year. a summary of the man hours
worked is shown in the table below:
caTEgory oF Work
yEar EnDED 30 JunE 2018
exploration
mine re-entry
ToTal
314,239
15,604
329,843
communitY and corporate sociaL responsibiLitY
the company continued constructive engagements with communities and local government in the vicinity of its south
african projects.
in october 2017, a memorandum of understanding (Mou) was signed with the siyathemba municipality, within which
the prieska project and satellites are situated. the mou aims to facilitate collaboration on local community and social
investment projects. a steering committee was constituted to administer the mou and this has met regularly, supporting
initiatives in the strategic focus areas of education, water infrastructure, residential development and environmental
protection.
74
in march 2018, the company presented the prieska project social and Labour plan (Slp) to the siyathemba municipal
council as part of the repli mining right application process. the sLp encompasses the commitments the company
will make to undertake local sustainable economic development and the skilling of its workforce as part of mining
operations. the municipal council endorsed the plan.
an orion community liaison office was established in the town of prieska, during october 2017. the office serves as a
base for community engagement in the region and to promote local enterprise development initiatives.
in august 2018 the company organised an educational seminar for small, medium and micro-sized enterprises and
non-Governmental organisations (ngo) in prieska. presenters included the department of economic development
and tourism, south african revenue services and the industrial development corporation. the event was well attended
with more than 70 representatives from a cross section of the prieska business and nGo community. the company
hosted community engagement forums updating stakeholders on progress on relevant projects.
enVironmentaL manaGement
no environmental incidents were recorded at any of the company’s projects during the financial year or up until the
date of this report.
priESka Zinc-coppEr proJEcT (priESka proJEcT)
oVerVieW
the prieska project remains the focus of the company’s activities and is at an advanced stage of feasibility studies.
orion, through two subsidiary companies, repli trading no 27 (pty) Ltd and Vardocube (pty) Ltd, holds a 73.3% interest
in the repli prospecting right (repli) and a 70% interest in the Vardocube prospecting right (Vardocube). together,
these two mineral tenements cover the un-mined dip and strike extensions of the prieska deposit, a volcanogenic
massive sulphide (VMS) body, mineralised with zinc and copper. the deposit has significant remaining potential,
having been partially-exploited when prieska copper mine Limited operated as an underground mine between 1971
and 1991. orion is focused on fast tracking the prieska project to production.
during the year, resource drilling continued, aimed at confirming zinc and copper mineralisation within those parts of
the prieska deposit extensively drilled by previous owners, at depth (Deep Sulphide Target) and near-surface (+105
level Target).
drilling within Vardocube, which encompasses the south-eastern strike extension of the deep sulphide target,
commenced soon after the granting of the prospecting right on 4 april 2018 (refer asX release 4 april 2018).
resource drilling at the +105 Level target was completed in october 2017 and a maiden total mineral resource for
the prieska project was reported in february 2018 (refer asX release 8 february 2018). resource drilling continued at
a rapid pace at the deep sulphide target and an updated deep sulphide mineral resource was reported on 9 april
2018 (refer asX release 9 april 2018). infill drilling to increase sample density in the deep sulphide mineral resource then
continued with the aim of sufficiently upgrading the mineral resource estimate categories to support a mine feasibility
study. infill drilling is scheduled for completion in Q4 2018.
a bfs and environmental impact assessment (Eia) commenced in July 2017, with expert consultants being appointed
to lead these work streams. the bfs and eia are being conducted in parallel with the resources drilling program and
are scheduled to be completed by Q1 2019. all activities are taking advantage of the substantial database and
infrastructure remaining from historical mining operations at the prieska copper mine.
mining right and environmental authorisation applications over repli, based on conceptual mine designs, were
submitted in april 2018. the stipulated time for such applications to be processed is 300 days from submission. the
mining right and environmental authorisation applications for the Vardocube portion of the deposit were submitted
late september 2018.
+105 LeVeL tarGet (open pit) resource driLLinG proGram
the drilling program, designed to confirm, in-fill and extend near-surface historical drilling and targeting mineralisation
expected to be amenable to open pit mining, was completed in october 2017. supergene mineralisation, extending
from near surface to approximately 100 metres below surface, holds an indicated mineral resource of 1.2m tonnes
grading 2.6% zinc and 2.4% copper (refer asX release 8 february 2018).
a total of 1,179m of reverse circulation (20 holes) and 1,873m of diamond core drilling (17 holes) was carried out by the
company (refer asX releases 12 december 2017, 17 september 2017, 6 september 2017, 25 may 2017, 16 december
2016, 7 december 2016, 2 november 2016, 14 september 2016, 22 august 2016 and 25 July 2016). results of the last
two diamond drill holes completed at the +105 target, which returned high copper values, are shown below (refer asX
releases 12 december 2017 and 19 september 2017):
• 21.69m at 0.17% Zn, 5.05% Cu, 0.18g/t Au and 6g/t Ag (OCOU075); and
• 13.33m at 0.23% Zn, 3.08% Cu, 0.17g/t Au and 6g/t Ag (OCOU076).
75
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
deep suLphide tarGet (underGround) resource driLLinG proGram
the company continued with a major drilling program designed to evaluate the deep sulphide target extending to
1.2km below surface. drilling aims to systematically test and confirm the mineralisation as interpreted from the extensive
historical drilling data. results are anticipated to provide statistical validation of this drilling, which intersected unmined
mineralised zones, and should add to infill data to meet the requirements of an australasian code for reporting of
exploration results, mineral resources and ore reserves (2012 edition) (Jorc) compliant mineral resource estimate.
inferred mineral resources of 22.6mt grading 3.7% Zn and 1.2% cu at repli and 5.2mt grading 4.9% Zn and 1.3% cu was
reported (refer asX release 9 april 2018).
as at 12 september 2018, 73,940m of diamond drilling and 9,462m of percussion, pre-collar drilling has been completed
on the deep sulphide target. to date, the company has announced drilling results of 33 mother drill holes and 28
deflections from the deep sulphide target (refer asX releases 18 september 2018, 16 July 2018, 19 february 2018, 1
february 2018, 12 december 2017, 8 november 2017, 9 october 2017, 5 october 2017, 17 september 2017, 6 september
2017, 27 July 2017 and 17 July 2017).
during the current reporting period, drilling continued to intersect massive sulphide mineralisation with high copper
and zinc tenors on both the repli and Vardocube areas. significant intersections made have been reported in various
asX releases.
in the north-west of the deep sulphide target, down hole electromagnetic (EM) surveying detected two off-hole
conductors: one up-dip to the north-east, and the other parallel to the fold axis of the prieska synform (refer asX
release 6 september 2017). follow-up drilling of the up-dip conductor intersected thick massive sulphides. additional
drilling successfully defined a thick, north-east trending lobe of massive sulphide mineralisation, both to the south-west
and north-east of the intersections.
two drill holes located in the south-eastern part of the deep sulphide target on repli intersected thick massive sulphide
mineralisation, as well as a second mineralised zone within the footwall.
the company’s first holes testing the south-eastern continuation of the deep sulphide target on Vardocube intersected
massive sulphides with high zinc and copper grades.
drilling continues with completion of the program scheduled for mid-october 2018.
feasibiLitY studies
the prieska project has advanced significantly since beginning in mid-2017 after a review of previous studies and
opening-up of the historical mine to gain access to the upper mining levels were completed in Q2 2017. Various
workstreams are well advanced in defining the mineral resource, geotechnical design data, mining methodologies
and layouts, metallurgical testing and flow-sheet design, mine de-watering, rock hoisting and general infrastructure
and services. concurrent to the technical studies, a social and labour plan has been prepared and endorsed by the
local municipality, specialist environmental studies have been carried out and submitted to the relevant authorities.
financial evaluation is well-advanced which is assisting in testing various scenarios around mining and processing
capacity, cut-off grades and capital intensity.
the feasibility study team is led by dra projects sa pty Ltd (Dra), and is augmented by pcds mining consultants,
fraser mcGill mining and minerals advisory, metc process engineering consultants, mining engineering and technical
services at shaft sinkers pty Ltd and the msa Group to assist with mining, ore processing, shaft trade-off studies and
mineral resources to ore reserves analysis.
underGround mininG
studies have progressed on both underground and open-pit designs and schedules to determine mineable tonnes
based on the current mineral resources. for underground mining, a combination of long-hole open stoping and
drift and fill mining are being considered using paste back-fill to maximise mining extraction. mechanised mining
equipment is planned to be utilised with a limited amount of rail transport leveraging off existing infrastructure that
remains from the historical operations. design work is now focusing on determining the optimum mining rate to improve
project economics.
the existing hutchings shaft was for rock hoisting and men and materials transport. this shaft, which is 8.8m in diameter,
concrete-lined and a depth of 1,024m is planned to be incorporated into the new designs. the shaft steelwork has
remained in place and test-work carried out indicates that the steel is generally in good condition. further analysis is
being conducted based on the test results, which will determine the amount of steel that needs to be replaced.
Ventilation simulations are underway to determine the air requirements for the proposed underground mining operation
based on the planned mining machinery fleet.
76
after the mine closed in 1991, pumping was stopped, and the mine has subsequently filled with water up to 330m
below surface. it is estimated that the volume of water is approximately 8.7m cubic metres. the water is very close
to neutral, with a ph of 7.4, although dissolved metals in the water are above those recommended for long-term
human consumption. several dewatering methods are being investigated including the use of a single-lift submersible
pumping assembly or a more conventional cascading pumping arrangement.
once the water is pumped to surface a forced evaporation system is planned to be used to dispose of the water. this
is a proven and widely used method of dealing with excess water.
open pit mininG
conventional open pit mining methods are planned to exploit the near-surface mineral resource which has a relatively
short operating life of around two years. the pit would extract supergene material which would be treated separately
at the end of the underground mining life due to the more complex metallurgical characteristics of the material. oxide
material is also present within the pit design and this is planned to be stockpiled for potential treatment in the future as
current metallurgical testing has not proved successful in extracting zinc and copper from this material. the open-pit is
planned to be a conventional mining operation using mining contractors.
metaLLurGY and mineraL processinG
the historical prieska copper mine utilised a conventional crushing-milling-froth floatation processing circuit and life-
of-mine metal recoveries of 85% for copper and 84% for zinc were achieved. concentrate grades ranging between
28% to 30% for copper concentrates and 51% to 53% for zinc concentrates were recorded. the bfs metallurgical
test program is expected to demonstrate that these results can be repeated or improved upon and where possible
improve the process flowsheet and introduce more modern reagents to improve the recovery process. the test-work
commenced in late 2017 at the mintek Laboratories in Johannesburg under the guidance of the dra metallurgical
team.
metallurgical studies are being conducted in three defined phases as part of the bfs:
• Phase 1- flotation amenability scouting: to determine whether froth flotation can continue to be used to recover
and concentrate zinc and copper sulphides from the dip and strike extensions of the prieska deep sulphide
mineralisation that is targeted for future mining;
• Phase 2 - flowsheet development: to derive a froth flotation-based processing flowsheet, able to produce
separate zinc and copper concentrates, within targeted quality ranges and achieve high metal recoveries from
all metallurgical zones of the near-surface supergene and deeps sulphide mineralisation; and
• Phase 3 – optimisation and detailed design: the final stage of metallurgical design, which aims to optimise, validate
and conclude a detailed design of the processing plant, to enable production scheduling and accurate costing.
the phase 1 stage of the test program proved that both deposits are amenable to froth flotation recovery techniques.
phase 2 testing employed locked-cycle testing for a blend of deep sulphide samples. these tests resulted in 80% to
86% recovery of copper and 91% to 94% recovery of zinc into marketable concentrates. copper concentrate grades
ranged from 21% to 24%, whilst the zinc concentrate grades ranged from 45% to 54%. the recovery results correlate
well with historical performance.
due to the selected flowsheet for the supergene mineralisation, only open-cycle testing could be used. copper
recoveries of between 44% to 78% were achieved at concentrate grades in the range of 27% to 32%. Zinc recoveries
of 30% to 88% at concentrate grades of 23% to 36% were achieved for samples with a zinc grade of greater than 2.5%.
the near-surface supergene mineralisation makes up approximately 4% of the total project mineral resource and
the open pit mining is planned to take place at the end of the underground mining operation, reducing the adverse
impact of lower recoveries on project economics.
based on these test results, the company can now predict the concentrate grades likely to be produced from the
various areas of the mineral resource. this enables optimisation of the mine to market concentrate logistical chain to
maximise the net smelter return and in turn revenue.
phase 3 of the testing program is under way. this will determine power requirements for the primary and re-grind mills
motors and product size distributions which will refine downstream design parameters.
poWer suppLY
eskom, the national power supply entity, operates the cuprum sub-station at the prieska project site that was originally
established for the prieska copper mine. since the mine closed, the sub-station capacity was down-rated to 10 mVa
and additional power will now be required for the planned mine. the current estimate is that approximately 35 mVa
of power may be required.
77
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
the company has commissioned electrical engineering company, ppe technologies to carry out the design and
costing of the upgrade which will take the form of a feeder-bay installation within the cuprum sub-station supplying a
new 132kV to 11kV mine sub-station within the project boundary. the approval timeframe has been scheduled at six
months, following which a three-month construction and commissioning phase will follow. the supply of power from
nearby renewable energy power plants is also being investigated.
buLK Water suppLY
Water is currently piped to the project site via a 60 km line from the water works at the town of prieska on the Gariep river.
the pipeline also serves other users in the project area. negotiations with the siyathemba municipality who operate
the water works and alkantpan1 who own the pipeline are underway and draft memorandums of understanding are
being reviewed by all parties. the water works capacity requires upgrading to accommodate the planned water
requirement for the prieska project which the company has committed to fund.
concentrate LoGistics and marKetinG
historically the prieska concentrates were noted as being “clean”, that is with low levels of impurities or penalty elements
such as cadmium, bismuth and mercury. it is therefore anticipated that there is a ready market for the concentrates
produced from the prieska project. currently smelter customers in asia and europe are being targeted for the sale of
concentrates. concentrate transporting options are being considered to various ports. the complete product logistics
solution is planned for completion during Q4 2018.
mininG riGht appLication
a mining right application for the repli portion of the copperton deposit was submitted to the department of mineral
resources (DMr) in april 2018, based on a conceptual project plan (refer asX release 9 april 2018). the application
included a mine Works program which outlines the planned business case encompassing all technical and financial
aspects of the project, a social and Labour plan and an environmental application. Work continued in the months
following the april submission and post the financial year-end, the final environmental impact report, Waste
management Licence and Water use Licence were all submitted to the relevant authorities within the stipulated time
frames. interactions with representatives from the various government departments have already taken place and
will continue as part of the review process. the environmental approval is granted first, and this is expected during
december 2018, following which the mining right approval is anticipated to be granted by the end of Q2 2019.
nEar-MinE ExploraTion
anneX copper deposit
the bartotrax prospecting right (Bartotrax), which includes the annex Volcanogenic massive sulphide copper deposit
(annex), was granted by the dmr on 4 april 2018 (refer asX release 4 april 2018). annex, located 6 km south of the
prieska project, was discovered by anglovaal Limited in 1969. anglovaal’s diamond drilling at annex followed up on
conductors detected by airborne input em surveys and succeeded in delineating semi-massive to massive sulphide
mineralisation. mineralisation was identified over a strike length of 1,000m and followed down to 550m below surface.
the deposit remains open in depth.
orion commenced ground em surveying to explore for possible strike and depth extensions of annex in august 2018.
three loops of fixed Loop time domain electromagnetic (FlTDEM) surveys have now been completed by orion using
sensitive detection systems. an em conductor has been detected approximately 1,000m west of annex. additional
surveying to better define the extent of this conductor, and additional loop testing along strike and to the east of
known mineralisation, are currently in progress. diamond drilling will commence on the em target once the modelling
has been finalised.
alkantpan is a division of armscor a south african Government entity involved in weapons manufacturing and
testing.
the maGaZine antiform
the magazine antiform presents a large, blind target area where legacy previous work reported an alteration zone
similar to the alteration at the prieska deposit, which is scheduled to be the next priority target for em surveying (refer
asX release 18 september 2018).
1. alkantpan is a division of armscor a south african Government entity involved in weapons manufacturing and testing.
78
rEgional ExploraTion
JacomYnspan nicKeL-copper-cobaLt-pGe proJect
in february 2018, orion entered into an earn-in agreement to acquire an effective 59.2% of the namaqua mining right
and disawell prospecting right (namaqua-Disawell) covering an area of 626km2 in the areachap belt. the earn-in rights
have been acquired over the Jacomynspan nickel-copper-pGe project (Jacomynspan project) from two companies,
namaqua nickel mining (pty) Ltd (namaqua) and disawell (pty) Ltd (Disawell), which hold partly overlapping
prospecting rights and mining right applications. orion currently holds an effective 18.5% of these companies.
Known ni–cu mineralisation occurs on the Jacomynspan, area 4 and rok optel projects. the Jacomynspan deposit,
discovered in 1973, has been investigated by several mining and exploration companies. a Jorc-compliant mineral
resource estimate has been reported (refer asX release of 8 march 2018) for the Jacomynspan deposit, and a mining
concept study was done in the past.
the Jacomynspan complex is located within the areachap belt, which formed as a complex, long-lived, multi-phase
orogenic assembly zone related to the amalgamation of the rodinia supercontinent. the event that resulted in the
emplacement of the Jacomynspan complex is part of a global event associated with several world-class nickel-
sulphide deposits such as Voisey’s bay, Kabanga and nova-bollinger. orion’s exploration is aimed at higher-grade,
massive and semi-massive accumulations of nickel-bearing sulphides, analogous to the nova-bollinger deposit in the
fraser range province of Western australia.
using historic data, the mineral resources for Jacomynspan has been assessed by mike scott and associates in
compliance with the Jorc code. using a 0.4% ni cut-off grade, a total mineral resource of 6.8 mt containing 39,480
tonnes of ni, 23,070 tonnes of cu and 1,800 tonnes of co were declared (refer asX release 8 march 2018).
during the year, the company completed detailed studies on the Jacomynspan complex and its ni-cu sulphide
mineralisation that shows sulphide mineralisation to occur as primary disseminated sulphide, as well as injected coarse
net-textured and massive sulphide veins. the presence of injected sulphides suggests that larger volumes of massive
sulphide mineralisation may be present. orion’s exploration is aimed at targeting this style of mineralisation.
namaqua-disawell was partly covered by an airborne electro-magnetic (aEM or SkyTEM™) survey over the prospective
parts of masiqhame and namaqua-disawell (refer asX release 1 february 2018).
two skytem™ anomalies (rok optel and area 4) have been prioritized for follow-up work. on both targets, modelling
of data suggests that skytem™ targets on these prospects were not adequately tested by historic diamond drilling.
fLtdem surveys and geological mapping over rok optel and area 4 commenced in may 2018 (refer asX release 3 July
2018). seven grids were surveyed using fLtdem including an orientation survey over the Jacomynspan ni-cu deposit.
the results from the fLtdem surveys on rok optel and area 4 are most encouraging with conductors having conductance
which are orders of magnitude higher than those measured over the known mineral resource at Jacomynspan. historic
drill holes intersected ni-cu mineralisation on both prospects, but did not intersect the zones of highest conductance
now detected using fLtdem. Known ni-cu mineralisation in proximity of the modelled conductors at both areab4
and rok optel upgrades the potential for finding higher grade ni-cu mineralisation associated with the modelled
conductors.
diamond drilling commenced on 10 July 2018 on rok optel (refer asX release 30 July 2018). two holes have been
completed while a third hole is currently in progress.
drill hole orod001 intersected 192.63m of intrusive rocks, 104.41m of which hosts sulphide mineralisation, including
massive sulphide veins and stringer mineralisation. significant intersections made in orod001 are included in asX
release of 10 september 2018.
sulphide mineralisation was intersected at several horizons in orod002, including massive, injected stringers, coarse
blebs and patchy network styles, all of which are typical of conduit-style mineralisation. assay results are awaited and
drilling is continuing.
masiQhame prospectinG riGht (masiQhame)
in march 2018, orion entered into an earn-in agreement to earn up to a 73% interest in masiqhame trading 855 pty Ltd
(Masiqhame), which holds a prospecting right covering an area of almost 980km2, located 80km north of the prieska
project. orion is currently focussing on Vms style mineralisation on masiqhame and during 2018 orion completed a
regional skytem™ survey over the prospecting right and is continuing with fLtdem surveys and geological mapping
over selected skytem™ anomalies as part of prioritizing Vms Zn-cu drill targets.
two Vms deposits, Kantienpan and boksputs, as well as several other Zn-cu occurrences, are known to exist on
masiqhame. a high-powered fixed loop electromagnetic survey conducted on Kantienpan by the company in 2016
detected previously unknown conductors below and along strike of known mineralisation. drill testing of the conductors
79
ORION MINERALS ANNuAL REpORt - 2018
DirEcTorS’ rEporT
(conTinuED)
yielded encouraging results with massive sulphides intersected (refer asX release 29 september 2016). these results
highlight the potential for new discoveries using modern geophysical methods in the areachap belt. mineralisation at
the Kantienpan deposit remains open both along strike and at depth.
a 962km2 helicopter-borne magnetic and aem over the masiqhame and namaqua-disawell prospecting rights was
completed on 24 January 2018 (refer asX release of 1 february 2018). the survey succeeded in acquiring high quality
data over Vms Zn-cu mineralisation on masiqhame. the skytem™ system used is discussed in the namaqua-disawell
section.
the airborne magnetic data obtained with the skytem™ surveys is superior to any regional airborne magnetic data
previously available over the prospecting right and allowed for more detailed regional geological interpretations
and targeting. selected skytem™ targets are currently being followed up with detailed geological mapping and
fLtdem surveys. three fLtdem surveys have been completed. two of the conductors in the boksputs Vms camp offer
compelling drill targets (refer asX release 24 september 2018). the company plans to continue with fLtdem surveys
over selected skytem™ anomalies. this will be followed by diamond drilling.
marYdaLe GoLd-copper proJect
orion holds prospecting rights over the marydale Gold-copper project, a deposit of possible high sulphidation
epithermal origin located 60 km from the prieska project. historical drilling was carried out at various orientations and,
despite wide zones of mineralisation being intersected, the majority of these are now seen to be sub- optimal.
drilling by the company in 2016 confirmed historic drill results. initial interpretations, based on data from oriented core,
revealed that the host lithology is in a structurally complex, folded and sheared package. the company is currently
reinterpreting the drill data and assessing the economic potential of this deposit.
connorS arc EpiThErMal golD proJEcT (QuEEnSlanD)
during the year, no work was undertaken at the connors arc project due to the fast tracking of drilling and the bfs at
the prieska project. the company announced on 2 may 2018 a binding sale agreement with evolution mining Limited
for 100% interest sale of the connors arc project, refer to the corporate section for more information.
FraSEr rangE - golD-nickEl-coppEr proJEcT (WESTErn auSTralia)
orion maintains a sizeable tenement package in the fraser range province of Western australia which independence
Group nL (asX: iGo) is currently earning in to via a Joint Venture agreement (JVa, refer asX release 10 march 2017).
iGo is completing a major regional scale interpretation of the geological framework of the albany-fraser orogen
based on first pass aircore drilling (principally used to improve the understanding of the bedrock geology in the project
area) and high resolution geophysical data including a regional scale spectrem airborne em survey. the regional scale
work is also enabling areas with lower prospectivity, either due to the underlying geology or the depth of transported
cover, to be identified and relinquished so that exploration can focus on the most prospective areas.
in addition to the regional scale surveys, a ground em survey was completed on parts of the orion tenements where
Vtem and aircore geochemistry anomalism has previously been identified. under the JVa, iGo is responsible for all
exploration on the tenements and provides regular updates to orion of its activities and results arising from them.
Walhalla golD & polyMETalS proJEcT (VicToria)
during the year, the company did not carry out any exploration activity on the Walhalla project. as announced by the
company, centennial mining Limited (centennial Mining) is acquiring the company’s Walhalla project mining licence
5487 (licence). as at reporting date, the acquisition of the Licence is still proceeding through Victorian Government
department of economic development, Jobs, transport and resources requirements.
the company retains its mineral rights across all other licences held within the Walhalla project area, which are
prospective for gold, copper – nickel and platinum group elements.
80
corporaTE
capitaL raisinGs
• On 17 August 2017, the Company issued 73.0M ordinary fully paid shares (Shares) at an issue price of 2.4 cents per
share to raise $1.75m by way of placement to tembo capital mining fund ii Lp (or nominee) (Tembo capital) (refer
below for further detail).
• On 30 October 2017, the Company announced that it was undertaking a capital raising of up to 229.17M Shares
at an issue price of 2.4 cents per share to raise up to $5.5m. the capital raising occurred in two stages, being:
-
tranche 1 – 144.6m shares to raise $3.47m were issued on 3 november 2017, using the company’s 15%
placement capacity under asX Listing rule 7.1. the issue of shares was subsequently ratified by shareholders at
the company’s general meeting held on 13 december 2017; and
tranche 2 – 84.6m shares to raise $2.03m were issued on 18 december 2017 and 19 december 2017 as approved
by shareholders at the company’s general meeting held on 13 december 2017.
-
on 18 december 2017, the company issued 10.4m shares at 2.4 cents per share to the company’s chairman,
mr denis Waddell (or nominee) to raise $0.25m. the issue of these shares was approved by shareholders at the
company’s general meeting held on 13 december 2017.
• As a result of the capital raisings in October and December 2017, totalling $5.75M, Tembo Capital’s interest in Orion
was diluted. pursuant to the top-up right (refer below for further detail), orion offered tembo capital the right to
subscribe for up to 60.0m shares at the same issue price as the shares offered under the capital raisings above,
which would allow tembo capital to maintain its 19.99% holding in orion. on 29 december 2017, the company
issued 60.0m shares at 2.4 cents per share to tembo capital (or nominee) to raise $1.44m. the issue of these shares
was approved by shareholders at the company’s general meeting held on 13 december 2017.
• On 18 May 2018, the Company announced that it had entered into an agreement with leading mid-tier miner,
independence Group nL (asX: iGo) (igo), for iGo to subscribe for a placement of shares at 5.0 cents per share,
to raise $5m. on 21 may 2018, the company issued 100.0m shares to iGo, using the company’s 15% placement
capacity under asX Listing rule 7.1. the issue of shares was subsequently ratified by shareholders at the company’s
general meeting held on 3 august 2018 (refer below for further detail).
• On 25 June 2018 the Company announced an $11M capital raising at an issue price of 3.7 cents per Share. One
member of orion’s black economic empowerment partner in south africa also subscribed for an additional $0.25m
in shares at an issue price of 3.7 cents per share, which was added to tranche 2 of the capital raising. the capital
raising occurred in two stages, being:
-
tranche 1 – 91.6m shares to raise $3.39m were issued on 29 June 2018, using the company’s 15% placement
capacity under asX Listing rule 7.1. the issue of shares was subsequently ratified by shareholders at the
company’s general meeting held on 3 august 2018; and
tranche 2 – 212.5m shares to raise $7.86m were issued on 15 august 2018 as approved by shareholders at the
company’s general meeting held on 3 august 2018.
-
in addition to the placements, the company also obtained shareholder approval at the general meeting held on
3 august 2018, to enable the company’s chairman, mr denis Waddell, to subscribe for 6.8m shares at 3.7 cents per
share to raise $0.25m and for tembo capital (or nominee) to subscribe for 172.9m shares at 3.7 cents per share. on
23 august 2018, the company issued:
-
-
6.8m shares at 3.7 cents per share to mr denis Waddell (or nominee); and
172.9m shares at a deemed issue price of 3.7 cents per share to tembo capital (or nominee).
the 172.9m shares issued to tembo capital were issued in consideration for reducing the amount repayable to
tembo capital under the loan facility between the company and tembo capital, pursuant to which tembo
capital advanced $6m in funds to orion (excluding capitalised interest and fees) (refer below for further detail).
• On 15 August 2018, the Company issued 6.8M Shares at 3.7 cents per Share to the Company’s Chairman, Mr Denis
Waddell (or nominee) to raise $0.25m. the issue of these shares was approved by shareholders at the company’s
general meeting held on 3 august 2018.
tembo capitaL
on 12 april 2017, the company announced that it had taken another important step in its base metal development
strategy in south africa after entering into an agreement with leading mining-focused private equity group, tembo
capital, which contemplated that tembo capital would acquire a cornerstone stake in orion and a strategic
relationship would be formed between the two groups (placement agreement). the placement agreement provided
for tembo capital to subscribe for shares at an issue price of 2.4 cents per share up to a maximum of $4.7m which would
give tembo capital a 19.9% holding in orion, subject to the satisfaction of certain conditions including due diligence
on the company to tembo capital’s satisfaction and the company’s shareholders approving the placement. the
placement formed part of a proposed placement, approved by shareholders at a general meeting of shareholders
held on 17 may 2017, of a maximum of 200.0m shares to tembo capital (or its nominees) and/or sophisticated and
professional investors at an issue price of 2.4 cents per share, to raise a maximum of $4.8m no later than 17 august 2017.
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ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
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in June 2017, tembo capital confirmed completion of satisfactory due diligence and nominated that it would
subscribe for 125.0m shares in the placement at an issue price of 2.4 cents per share raising $3.0m. the 125.0m shares
were issued to tembo capital on 9 June 2017.
the placement agreement also set out the key terms of the strategic relationship between orion and tembo. following
the completion of the placement:
• Orion will have access to Tembo’s strategic and financing networks within emerging markets, which access will
•
•
cease on tembo ceasing to hold at least 12.5% of orion’s issued shares;
Tembo will have access to certain information about Orion and its assets, subject to Orion’s confidentiality and
disclosure obligations, which access will cease on tembo ceasing to hold at least 12.5% of orion’s issued shares;
for so long as Tembo holds at least 12.5% of Orion’s issued Shares, Tembo will be granted an anti-dilution right to
maintain its percentage holding in orion if orion conducts an equity capital raising by way of the issue of equity
securities;
• Orion will use best endeavours to undertake a rights issue to raise additional equity as soon as reasonably practicable
•
(see above); and
for so long as Tembo holds at least 12.5% of the issued Shares, Orion agrees to procure that the Board consults
with tembo in respect of any proposed changes to its key management personnel, provided that any executive
director must not participate in any discussions in relation to him or her.
as part of this, the company announced on 17 may 2017 that the asX had granted the company a waiver from asX
Listing rule 6.18 to enable the company to provide an anti-dilution right to tembo should the placement to tembo
proceed. under the terms of the waiver, for so long as tembo holds at least 12.5% of orion’s shares on issue, tembo will
be granted an anti-dilution right to maintain its percentage holding in orion if orion conducts an equity capital raising
by way of the issue of equity securities (Top-up right).
on 18 august 2017, the company announced that it had entered into an agreement with tembo capital whereby
tembo would subscribe for a further 73.0m shares in the placement to raise $1.75m at an issue price of 2.4 cents per
share. in addition, a $6m bridge loan facility was agreed with tembo capital as referred to in the Loan facilities section
below.
Loan faciLities
1. Bridge Loan Facility
the company announced to the asX on 18 august 2017 that a $6m bridge loan facility agreement (loan Facility)
had been entered into with tembo capital, a cornerstone shareholder of the company. the key terms of the bridge
Loan agreement are:
• Bridge Loan Amount - Up to $6M, available in two tranches;
•
• Repayment - repayable on the earlier of 15 December 2017 and the completion of a capital raising(s) whether
by way of a pro rata issue and/ or security purchase plan of shares and/or a placement or placements of shares
undertaken by the company to raise such amount as is required, in tembo’s reasonable opinion, to progress
the prieska project bfs, continue exploration programs at the company’s south african projects and for working
capital (Equity capital raising);
Interest - capitalised at 12% per annum accrued daily on the amount drawn down;
• Equity Capital Raising - the Company will use its best endeavours to undertake an Equity Capital Raising before 15
december 2017. orion shall procure that tembo (or its affiliate) is offered the right to underwrite or sub-underwrite
any pro rata issue and/or security purchase plan which form part of an equity capital raising, on standard market
terms and conditions;
• Set-off under Entitlement Offer - repayment of the Bridge Loan will be set off against the amount to be paid by
tembo for the issue and allotment of shares to tembo under the equity capital raising and/or at tembo’s election
against the underwriting amount payable by tembo in respect of any shortfall under any ‘pro rata issue’ which
form part of an equity capital raising in its capacity as underwriter or sub-underwriter. any surplus amount owing by
tembo after the set-off will be paid by tembo in accordance with the terms of the relevant equity capital raising
and the underwriting arrangements (as applicable);
• Establishment fee - capitalised at 5% of the Bridge Loan facility amount; and
• Security - the Bridge Loan is unsecured.
on 15 november 2017, an extension to the term of the Loan facility from 15 december 2017 to 31 may 2018, was
agreed between the parties. as part of the terms of amendment, the company agreed to increase the establishment
fee from 5% to 6.67% of the Loan facility amount (capitalised). on 31 may 2018, an extension to the term of the Loan
facility from 31 may 2018 to 30 september 2018 was agreed between the parties.
on 25 June 2018, the company announced in addition to the $11m placement (refer above for further detail), that
tembo capital had confirmed its continued support of orion through subscribing for $6.3m in shares, at an issue price
of 3.7 cents per share, being the issue price for shares issued under the placement. orion agreed with tembo capital,
that tembo capital’s share subscription be issued in consideration for reducing the amount re-payable to tembo
82
capital under the Loan facility at a deemed issued price of 3.7 cents per share, being the same issue price as the
shares being offered under the placements. the balance of the Loan facility (including accrued interest) following this
repayment was $0.54m.
at the end of the reporting period, $6m had been drawn down against the Loan facility (excluding capitalised interest
and fees).
Interest: 12% per annum calculated and payable quarterly in arrears.
2. Convertible Notes
on 17 march 2017, the company issued 232.69m convertible notes each with a face value of 2.6 cents, raising $6.05m
(notes). Key terms of the notes are as follows:
• Security: secured over certain assets of the Company and its subsidiaries.
• Maturity Date: 17 March 2019.
•
• Conversion: Noteholders may elect to convert part or all of their Notes at any time prior to the maturity date.
• Conversion Price: 2.6 cents per Share.
• Early redemption by the Company: Company may elect to redeem all or some of the Notes by notice to the
noteholder, however the noteholder shall have the right, within 14 days of receipt of an early redemption notice
from the company, to convert the notes the subject of the early redemption notice into shares at the conversion
price.
• Early redemption by the noteholder: noteholders may require the Company to redeem the Notes if an event of
default occurs and the noteholders by special resolution approve the redemption. at any time before the maturity
date, a noteholder may elect to redeem and set off some or all of the notes held by it for the redemption amount
as part of an equity capital raising by the company permitted by the note deed and in which the noteholder
may have a right to participate in (Equity raising), such that the redemption amount is set off against the amount
payable by the noteholder to subscribe for securities under the equity raising.
• Redemption amount: the redemption amount is the outstanding facility amount with respect to each Note. If any
notes are redeemed by the company within 12 months after their issue, an additional early repayment fee of 5%
of the facility amount of the notes being redeemed is payable by the company.
interest accrued at the end of the reporting period was $0.2m.
3. Anglo American Sefa Mining Fund Loan
on 2 november 2015, repli trading no 27 (pty) Ltd (repli) (a subsidiary of the company) and anglo american sefa
mining fund (aaSMF) entered into a loan agreement for the further exploration and development of the prieska
project. under the terms of the loan, aasmf advanced Zar14.25m to repli. the key terms of the agreement are as
follows:
• Loan amount ZAR14.25M;
•
•
Interest rate will be the prime lending rate in South Africa;
The disbursement of the loan will be subject to AASMF notifying Repli that it is satisfied with the results of the updated
scoping study;
• Repayment date will be the earlier of 3 years from the date of the advance or on the date which Repli raises any
additional finance for the further development of the prieska project; and
• On the advancement of the loan, 29.17% of the shares held in Repli by the Agama group (a wholly owned subsidiary
of orion), will be pledged as security to aasmf for the performance of repli’s obligations in terms of the loan.
on 1 august 2017, repli drew down on the available aasmf loan in full (~$1. 40m (Zar14.25m)). interest accrued at the
end of the reporting period was $0.14m.
4. Redeemable Preference Shares
a subscription agreement was entered into between repli and aasmf on 2 november 2015. under the terms of the
agreement, aasmf subscribed for 15.75m repli redeemable preference shares at a subscription price of Zar1 per
redeemable preference share. the key terms of the agreement are as follows:
• 15.75M cumulative redeemable non-participating preference shares;
• Subscription price ZAR15.75M;
• Dividend rate – prime lending rate in South Africa;
• Dividend payment – dividends accrue annually based on the subscription price. Fifty percent of the dividends
which have accrued and accumulated from the date of issue until 2 years after the copperton project mining right
(mining right) has been issued shall become due and payable on the scheduled dividend date (approximately
4 years after the issue date). balance of the accrued and accumulated dividends to be paid at the relevant
redemption date;
• Redemption date is the earlier of 7 years after the issue date or 4 years after the Mining Right has been issued;
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ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
• Redemption amount consists of:
Zar15.75m;
-
- any unpaid and accumulated dividends; and
-
settlement premium based on internal rate of return (irr) of 13.5%, taking into account all cash flows from the
preference shares in order to get an overall irr of 13.5% (irr is fixed for the duration that the preference shares
are outstanding).
• Preference shares are unsecured, but AASMF will hold 26% voting rights in Repli in the event that there is a default
on the part of repli;
• Funding to principally used for a 12 month exploration program on the NW Oxide Zone and the use the results to
update the scoping study.
on 5 november 2015, aasmf paid the subscription price of Zar15.75m (~$1.6m) to repli and the preference shares
were issued to aasmf by repli. as at 30 June 2018, the provision for dividends and settlement premium totalled $0.6m
(Zar6.3m) (effective rate 13.5%).
independence Group
on 18 may 2018, the company announced that it had taken another important step in its base metal development
strategy in south africa after entering into an agreement with iGo, that saw the leading mid-tier miner and explorer
become a substantial shareholder in the company and cementing a collaborative working relationship between the
two companies.
the company entered into an agreement with iGo, for iGo to subscribe for a placement of shares in the company at
5.0 cents per share, to raise $5.0m (igo placement). on 21 may 2018, the company announced that it had received
$5.0m from iGo and had issued 100m shares to iGo at 5.0 cents per share (refer above).
the agreement also sets out the terms of an agreed collaborative working relationship between the two parties,
whereby iGo has secured matching rights to any potential joint venture or sale of the company’s nickel projects
located in the areachap belt, south africa. if the company wishes to assign the whole or any part of its right, title or
interest in any of its south african nickel projects (located within a defined area of the areachap belt) to a third party,
it must first offer to assign such interest to iGo on the same terms and conditions as the proposed terms and conditions
of the assignment to the third party.
iGo’s preferential rights include the company’s advanced Jacomynspan nickel-copper-cobalt project, where
the company has announced a Jorc compliant mineral resource estimate (refer asX release 8 march 2018 and
operations report). the collaborative working relationship formed between the company and iGo will also enhance
the company’s planned regional exploration programs within the highly prospective yet very much under explored
areachap belt.
due to the lack of favourable environments world-wide which have the potential to host major new nickel-copper-
cobalt and Vms discoveries, the company’s large ground holdings in the northern cape of south africa provides both
the company and iGo significant exposure to exploration success.
based on regional exploration programs already completed, the company has identified the potential for discovery
of nickel hosting massive sulphide bodies similar to iGo’s nova bollinger mine in the fraser range, Western australia in
the areachap belt (refer asX releases 14 July 2016 and 8 march 2018). the company intends to commit a minimum
amount equivalent to 30% of the $5m iGo placement (being $1.5m) towards its nickel-copper-cobalt exploration
targets.
the iGo placement and iGo’s preferential rights further strengthen the existing relationship between the company and
iGo, following the company’s asX announcement on 10 march 2017, that the company and iGo had entered into a
joint venture agreement on the fraser range nickel-copper project, Western australia and that iGo had subscribed
for a $1.3m share placement in the company.
84
JacomYnspan nicKeL-copper-pGe proJect (south africa) - (earn-in riGht)
in september 2017, the company entered into a binding earn-in agreement to acquire the earn-in rights over the
Jacomynspan project from two companies, namaqua nickel mining (pty) Ltd and disawell (pty) Ltd (namaqua Disawell
companies), which hold partly overlapping prospecting rights and mining right applications. the earn-in agreement is
principally on the same terms as the binding term sheet entered into in July 2016.
orion’s earn-in right will be via a south african-registered special-purpose vehicle, area metals holdings no 3 (pty)
Ltd (aMh3), which was established by the company as its vehicle for investment in the joint ventures and of which,
historically-disadvantaged south african (hDSa) shall hold a minimum of 26% of the issued shares.
Key terms of the transaction are set out below:
• AMH3 has the exclusive opportunity to earn up to an 80% interest (Orion 59.2%) in the Namaqua Disawell
companies. the namaqua disawell companies are privately owned south african companies with 26% or greater
hdsa ownership;
• All the conditions to the commencement of earn-in rights were fulfilled in February 2018 (Earn-in commencement);
In February 2018, AMH3 earned its initial interest of 25% (Orion 18.5%) in the Namaqua Disawell Companies after
•
having spent $0.66m on the Jacomynspan project and in march 2018, amh3 was issued with fully paid ordinary
shares in the namaqua disawell companies which resulted in amh3 being the holder of 25% (orion 18.5%) of the
total shares on issue (First Earn-in right);
• Once AMH3 earned the initial 25% interest:
-
the namaqua disawell companies will record a shareholder loan account in favour of amh3 to the value of
the first earn-in right expenditure incurred by orion and shall continue to record further expenditure by amh3
as an increase in the shareholder loan account (orion loan);
- orion can elect to increase its interest via further expenditure, as detailed below, or maintain its 25% (orion
18.5%) interest by contributing pro-rata to exploration; and
- Within 30 days, the parties will negotiate the terms of a shareholders agreement to govern the terms of
relationship between the shareholders.
• Following the First Earn-in Right, should Orion elect to increase its interest via further expenditure, AMH3 can earn a
further 25% interest (making its total interest 50% (orion 37%)) by expending a further $1.32m on the Jacomynspan
project ($1.98m total expenditure) over a further 12 months (2 years from earn-in commencement) (Second Earn in
right).
• Once AMH3 has earned a 50% interest:
-
the namaqua disawell companies will issue orion with shares which shall result in amh3 being the holder of 50%
of the total shares on issue immediately following such issue of shares; and
- orion can elect to increase its interest via further expenditure, as detailed below, or maintain its 50% interest by
contributing pro-rata to exploration.
• Following the Second Earn-In Right, should Orion elect to increase its interest via further expenditure, AMH3 can
earn a further 30% interest (making its total interest 80% (orion 59.2%)) by:
-
expending a further $0.66m on the Jacomynspan project ($2.64m total expenditure) over a further 12 months (3
years from earn in commencement);
- completing a bankable feasibility study, which has been reviewed and signed off by an independent external
expert; and
- providing or securing project finance terms to develop a mining operation within the project area as per the
bankable feasibility study and which shall not result in any shareholder dilution.
• On the Earn-In Commencement, Orion was appointed as the operator and manager of the joint ventures and has
•
the right to appoint a minimum of one director to the boards of the namaqua disawell companies.
The Namaqua Disawell Companies shareholders on the date of execution of the term sheet (Signature Date)
are entitled to a 2% royalty in proportion to their beneficial interest in the namaqua disawell companies at the
signature date, on net smelter returns arising from the production and sale of metals from the Jacomynspan
project’s samrec resource as at the signature date (royalty). at any time following the earn-in commencement,
orion shall have the right at its sole discretion to buy out the royalty for an aggregate value of $2.65m.
• As noted above, all expenditure by Orion shall be advanced to the Namaqua Disawell Companies as an Orion
Loan. in addition to the orion Loan, the namaqua disawell companies have existing shareholder loans of Zar78.5m
(~$7.85m) as at the signature date (together Shareholder loans). following the completion of the first stage earn
in, the parties will negotiate the terms of a shareholders Loan to govern the terms of the shareholder Loans. the
shareholder Loan agreement will contain clauses normally contemplated by a formal agreement negotiated in
good faith between the parties.
should orion fail to meet its earn-in right commitments, then either parties will re-negotiate the terms of the term sheet
or, if the parties are unable to agree those new terms, then orion will relinquish its rights to earn any further interest in
the companies and the term sheet will be at an end.
85
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
masiQhame (south africa) - (earn-in riGht)
on 13 march 2018 (Masiqhame Signature Date), the company entered into a binding earn-in agreement principally
on the same terms as the term sheet it executed in april 2016, when the company announced that it had executed
a binding option agreement with masiqhame for orion to earn up to a 73% interest in masiqhame. masiqhame holds
prospecting rights over a large, highly prospective area located approximately 80km north of the prieska project.
in september 2016, the company announced that the terms of the option had been amended to enable orion
to commence exploration activities, including drilling and have the cost of this work program deducted from the
consideration payable of Zar1.5m (~$0.15m) by orion for 50% of masiqhame shares on issue. in september 2016, the
company announced that it had exercised the option for orion to acquire an initial 50% interest in masiqhame.
masiqhame is a privately owned south african company with 100% historically disadvantaged south african
ownership. masiqhame is thus black economic empowerment (BEE) compliant from the outset and orion will earn in
to an incorporated joint venture, partnering with a bee partner via masiqhame.
orion has the opportunity to earn up to a 73% interest in masiqhame through a south african-registered special-
purpose vehicle, area metals holdings no 2 (pty) Ltd (aMh2), which was established by the company as its vehicle for
investment in the joint venture.
Key terms of the transaction are set out below:
• Orion will pay Masiqhame ZAR1.5M less all expenditure by Orion on the exploration program currently underway,
to invest in new fully paid masiqhame shares (Masiqhame Shares). as a result of exploration activities undertaken
by the company, orion was not be required to make any cash payment to masiqhame;
• Masiqhame will issue Orion with Masiqhame Shares which shall result in Orion being the holder of 49% (First Earn-in
right) of the total masiqhame shares on issue immediately following such issue of masiqhame shares. in april 2018,
the first earn-in right masiqhame shares were issued to amh2;
• Masiqhame will issue Orion with a further 1% of Masiqhame Shares, which shall result in Orion being the holder of
50% of the total masiqhame shares (Second Earn-in right) upon the section 11 consent having been granted by
the dmr. orion has submitted the section 11 consent application to the dmr and masiqhame is required to issue
the second earn-in right masiqhame shares to amh2 within 30 days following the grant of the section 11 consent
by the dmr;
• Under the terms of the agreement, Orion was appointed operator of the prospecting rights and has the right to
appoint the majority of directors to the board of masiqhame.
• Once Orion has earned the initial 50% interest in Masiqhame through the issue of Masiqhame Shares to AMH2, Orion
can elect to increase its interest by a further 23% (to 73% in total) via:
- provision of a shareholder loan to masiqhame (loan) on the following terms:
The principal amount of the Loan shall be the ZAR equivalent of $0.1M in each 12 month period commencing from
the 12th month following completion (principal);
•
• Proceeds from the Loan shall be used to progress exploration programs and feasibility study works;
•
•
•
The Loan interest rate shall be nil;
The Loan shall only be repaid from operating surplus from future operations of Masiqhame;
In addition to the Principal, Orion may elect at its sole discretion to provide additional finance by means of the
Loan in order to progress exploration works and complete feasibility study works and if applicable, apply for a
mining right;
• Masiqhame shareholders as at the date of execution of the term sheet will be free carried until such time that a
•
mining right is granted; and
If Orion fails to advance the Principal in any 12 month period, Masiqhame may subject to notice periods demand
that all of the masiqhame shares held by orion be transferred back to the masiqhame shareholders (excluding
orion) for nil consideration and remove orion as manager.
-
-
finalisation of a feasibility study; and
lodgement of an application for the grant of a mining right over some or all of the area of the prospecting
rights.
following the above terms being satisfied, masiqhame shall immediately issue further new masiqhame shares to amh2
which shall result in orion being the holder of 73% of the total masiqhame shares on issue immediately following such
issue.
86
saLe of connors arc proJect (QueensLand)
on 2 may 2018, the company announced that it had entered into a binding sale agreement with evolution mining
Limited (Evolution), for evolution to acquire 100% of the company’s connors arc project (Tenements) in Queensland.
consideration for the sale of the tenements consists of $2.5m cash and a 2% royalty on net smelter returns (nSr) from
the sale of gold recovered and sold by evolution from the tenements to a value of $5.0m.
Key terms of the agreement are:
• Stage 1 Payment - an initial $1.5M cash payment, payable upon conditions typical for agreements of this nature
being:
-
the company obtaining indicative approval from the Queensland Government department of natural
resources, mines and energy (Department), for the transfer of the tenements to evolution; and
the assignment to evolution of the tenements’ native title agreements.
-
• Stage 2 Payment - a further $0.5M cash payment, payable to the Company upon approval by the Department
for retention of the total area of three of the tenements included in the agreement until the renewal of the existing
term of those tenements;
• Stage 3 Payment - a further $0.5M cash payment, payable to the Company upon approval by the Department for
renewal of two tenements included in the agreement and for retention of the total area of those tenements for a
period 12 months from the date of such renewal; and
• a 2% royalty on NSR from the sale of gold recovered and sold by Evolution from the Tenements to a value of $5.0M.
the company received payment for stages 1 and 2, totalling $2.0m cash in July 2018.
the sale of the non-core tenements is consistent with the company’s decision to place greater focus on its flagship
project, the prieska project and its highly prospective regional exploration projects within the areachap belt.
chanGe of status, name and repLacement constitution
at the general meeting held on 13 december 2017, shareholders approved the change of status from a no liability
company, “orion minerals nL”, to public company limited by shares, “orion minerals Limited”. importantly at the general
meeting, shareholders also approved the cancellation of partly paid shares which will allow the change in status to
be affected. the 58,775 partly paid shares were cancelled in december 2017. australian securities and investment
commission (aSic) were notified of the passing of the resolution for the change of status and under subsection 164(3)
of the corporations act. asic published a notice in the commonwealth Gazette that states the intention to alter the
details of the company’s registration.
the change to the status and name of the company came into effect on 2 february 2018. the asX code for the
company, being orn, remains unchanged. also, at the general meeting, a new constitution of orion was adopted
by shareholders by special resolution and came into effect on 2 february 2018.
JohannesburG stocK eXchanGe
on 18 september 2017, the secondary listing of the company’s shares on the main board of the Johannesburg
stock exchange (JSE) commenced. orion’s secondary listing of its shares is in the “Gold mining” sector, under the
abbreviated name “orionmin”, Jse share code “orn” and isin “au000000orn1”. the company’s primary listing
remains on the asX and the company continues to be regulated by asic.
smaLL sharehoLdinG saLe faciLitY
on 21 november 2017 the company announced that it had established a small shareholding sale facility (Sale Facility)
for shareholders who held a small parcel of shares (i.e. less than a marketable parcel of shares as defined in the
asX Listing rules (that is a parcel of shares with a value of less than $500, based on the share price of 3.1 cents
on the record date) (Small holding) and whose registered address was in australia. the sale facility allowed those
shareholders to sell their shares cost effectively, while also assisting the company to reduce the costs associated with
servicing smaller shareholdings.
shareholders who, on 20 november 2017 (record Date), held a small holding received a letter and share retention
slip from the company. the letter explained that, unless those shareholders notified the company that they wished to
retain their shares by submitting the share retention slip or they hold more than $500 worth of shares on the sale facility
closing date, those shares would be sold, and the proceeds remitted to them free from brokerage and handling fees.
the sale facility closed on 19 January 2018.
in line with the terms of the sale facility, a total of 1.46m shares (representing approximately 0.1% of shares on issue)
were sold at the sale price of 3.2 cents per share which was higher than the authorised price as required by the
company’s constitution. following the sale facility, the total number of shareholders was reduced by 1,020.
shareholders who were the holder of a less than a marketable parcel of shares on 19 January 2018, who had not taken
steps to retain their holding under the sale facility, received payment of their respective proceeds in february 2018.
87
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
resuLts of operations – the Group
the Group recorded a loss of $8.83m (2017: $7.93m) after tax for the year. the result is driven primarily by exploration
expenditure incurred of $2.37m which, under the Group’s deferred exploration, evaluation and development policy,
did not qualify to be capitalised and was expensed and finance expenses of $2.00m, principally related to bridge loan
fees and interest of $0.9m and convertible note interest of $0.8m.
net cash used in operating activities and investing activities totalled $22.01m (2017: $10.67m) and included payments
for exploration and evaluation of $17.65m (2017: $5.12m). the Group continues to focus strongly on exploration within
its areachap projects (south africa). net cash from financing activities totalled $23.49m (2017: $13.42m).
cash on hand at the end of the year was $4.8m (2017: $3.4m).
the basic loss per share for the Group for the year was 0.76 cents and diluted loss per share for the Group for the year
was 0.76 cents (2017: loss per share 1.28 cents and diluted loss per share 1.28 cents). no dividend has been paid during
or is recommended for the financial year ended 30 June 2018.
BuSinESS STraTEgiES
the company will continue to focus on exploration, evaluation and development of base metal, gold and platinum-
group element projects in south africa (areachap belt, northern cape).
riSkS To ThE BuSinESS
risks to the business are rated on the basis of their potential impact on the Group as a whole after taking into account
current mitigating actions. investors should be aware that the below list is not an exhaustive list and that there are a
number of other risks associated with an investment in the company. the Group regularly reviews the possible impact
of these risks and seeks to minimise their impact through its internal controls, risk management policy, and corporate
governance. the following describes the principal risks and uncertainties that could materially impact the Group:
• Capital - Each of the Group’s key exploration targets remain in the exploration and evaluation phase. Future
exploration programs require substantial levels of expenditure to ensure that Group’s tenements are held in good
standing. the Group is currently reliant on the capital and debt markets to fund its ongoing operations and therefore
any unforeseeable events in these markets may impact the Group’s ability to finance its future exploration projects;
• Sovereign risk – The Group’s exploration, evaluation and development activities are carried out in South Africa and
australia. as a result, the Group is subject to political, social, economic and other uncertainties including, but not
limited to, changes in policies or the personnel administering them, foreign exchange restrictions, changes of law
affecting foreign ownership, currency fluctuations, royalties and tax increases in that country. other potential issues
contributing to uncertainty such as repatriation of income, exploration licensing, environmental protection and
government control over mineral properties should also be considered. potential risk to the Group’s activities may
occur if there are changes to the political, legal and fiscal systems which might affect the ownership and operation
of the Group’s interests in south africa. this may also include changes in exchange control systems, expropriation
of mining rights, changes in government and in legislative and regulatory regimes.
Title risk and Native Title – One of the Group’s key projects, the Areachap Zinc-Copper and Gold Project, is
located in south africa. interests in tenements in south africa are governed by legislation and are evidenced by
the granting of mining or prospecting rights. the company also has an interest in several australian exploration
tenements. interests in australian tenements held by the Group are governed by federal and state legislation and
are evidenced by the granting of mining or exploration licences. these tenements are subject to periodic review
and compliance, including the relinquishment of certain areas. as a result, there is no guarantee that these areas
of interest will be renewed in the future or if there will be sufficient funds available to meet the attaching minimum
expenditure commitments when they arise.
Title risk and Native Title - It is also possible that in relation to the Australian tenements which the Group has an
interest in or will in the future acquire such an interest, there may be areas over which legitimate common law
native title rights of aboriginal australians exist. if native title rights do exist, the ability of the Group to gain access
to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to
the development and mining phases of operations may be adversely affected;
•
•
• Resources and Reserve estimates - There are inherent uncertainties in estimating reserve and resource estimates as
it requires significant subjective judgements and determinations based on the available geological, technical, and
economic information. estimates and assumptions that were previously valid may change significantly when new
information or techniques become available and therefore may require restatement; and
• Rehabilitation – The Group is required to close its operations and rehabilitate the lands that it disturbs during the
exploration and operating phases in accordance with applicable mining and environmental laws and regulations.
at the prieska project, a closure plan and estimate of closure and rehabilitation liabilities for prospecting activity
has been prepared. these estimates of closure and rehabilitation liabilities are based on current knowledge and
assumptions, however actual costs at the time of closure and rehabilitation may vary materially. in addition, adverse
or deteriorating external economic conditions may bring forward closure and rehabilitation costs. the Group’s
intention is to conduct its exploration and operating activities to the highest level of environmental obligations,
however there are certain risks inherent in the Group’s activities which could subject the Group to future liabilities.
88
SuBESQuEnT EVEnTS aFTEr ThE BalancE DaTE
there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the directors of the company, to affect
the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial
years except for those matters referred to below:
• On 21 September 2018, the Company announced an issue of 15.3M unlisted options to employees under the
company’s option and performance rights plan.
• A general meeting of shareholders was held on 3 August 2018 and approved the following:
-
IGO Share issue - the issue of 100.0m shares, at an issue price of 5.0 cents each, to iGo on 21 may 2018. the
company announced on 18 may 2018 that it had entered into a placement agreement with iGo pursuant
to which iGo agreed to subscribe for a placement of shares in the company at 5.0 cents per share to raise
$5m. further details of the placement agreement (including preferential rights granted to iGo in respect of
any potential joint venture or sale of the company’s nickel projects in the areachap belt, south africa), are
included in the company’s asX announcement dated 18 may 2018.
- General placement 1 and 2 Shares - the issue of 297.3m shares at an issue price of 3.7 cents per share as
follows:
•
•
•
•
Tranche 1: On 29 June 2018, the Company completed the first stage of a capital raising by issuing 91.6M
shares at 3.7 cents per share to raise $3.39m to sophisticated and professional investors.
Tranche 2: The second stage of a capital raising involved a further placement of 212.45M Shares at an issue
price of 3.7 cents per share, to professional and sophisticated investors to raise approximately $7.86m. these
shares were issued on 15 august 2018.
Issue to Mr Denis Waddell (or his nominee): The third stage of a capital raising involved a further placement
of 6.76m shares to mr denis Waddell (or his nominee) at an issue price of 3.7 cents per share, to raise a total
of $0.25m. these shares were issued on 23 august 2018.
Issue to Tembo Capital: A further placement of 102.70M Shares to Tembo Capital, at a deemed issue price
of 3.7 cents per share. the shares issued to tembo capital were issued in consideration for reducing the
amount re-payable to tembo capital under the Loan facility between the company and tembo, pursuant
to which tembo capital has advanced $6m in funds to orion (refer note 12). these shares were issued on
23 august 2018.
-
Tembo Bridge Loan Conversion Shares – the issue of 70.22m shares to tembo capital (or its nominee) at a
deemed issue price of 3.7 cents per share in consideration for a further reduction in amounts re-payable under
the Loan facility.
DirEcTorS’ MEETingS
the number of meetings attended by each director of the company during the financial year was:
BoarD MEETingS
auDiT coMMiTTEE MEETingS
nuMBEr hElD anD
EnTiTlED To aTTEnD
nuMBEr
aTTEnDED
nuMBEr
hElD anD EnTiTlED
To aTTEnD
nuMBEr
aTTEnDED
mr denis Waddell
mr errol smart
mr alexander haller
mr mark palmer
mr michael hulmes
mr William oliver
34
34
34
10
6
28
34
34
34
10
6
28
2
2
2
---
---
---
2
2
2
---
---
---
89
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
DirEcTorS’ inTErESTS
the relevant interest of each director in the ordinary shares, or options over such instruments issued by the company,
as notified by the directors to the australian securities exchange in accordance with s205G(1) of the corporations act
2001, at the date of this report is as follows:
mr denis Waddell
mr errol smart
mr
alexander
haller
mr mark palmer
mr michael hulmes
mr William oliver
orDinary SharES
unliSTED opTionS oVEr
orDinary SharES
109,714,746
19,542,666
69,119,937
---
200,000
---
12,000,000
30,000,000
---
---
---
6,000,000
(i)
mr haller holds relevant interests as follows: silja investment Ltd 56,706,578 ordinary shares, mr haller 12,412,039
ordinary shares and pershing securities 1,320 ordinary shares.
SharE opTionS
options Granted to directors and eXecutiVes of the companY
during or since the end of the financial year, the company has not granted any options for no consideration over
unissued ordinary shares in the company to key management personnel as part of their remuneration.
rEMunEraTion rEporT - auDiTED
unissued shares under options and performance riGhts
at the date of this report unissued ordinary shares of the company under option are:
Expiry DaTE
29 march 2019
15 august 2019
15 august 2019
30 november 2019
30 november 2019
30 June 2020
30 June 2020
30 november 2020
30 november 2020
30 november 2020
31 may 2022
31 may 2022
31 may 2022
31 march 2023
31 march 2023
31 march 2023
ExErciSE pricE
nuMBEr oF orDinary SharES
$0.046
$0.037
$0.037
$0.045
$0.06
$0.05
$0.035
$0.02
$0.035
$0.05
$0.03
$0.045
$0.06
$0.05
$0.06
$0.07
94,321,464
1,520,270
1,520,270
250,000
250,000
2,200,000
1,900,000
18,333,333
18,333,333
18,333,334
12,100,000
12,100,000
12,100,000
5,100,000
5,100,000
5,100,000
208,562,004
shares issued on eXercise of options
there were no options exercised during or since the end of the financial year.
the remuneration report sets out remuneration information for orion minerals Ltd for the year ended 30 June 2018. the
following were key management personnel of the Group at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period.
90
kEy ManagEMEnT pErSonnEl
DESignaTion
poSiTion hElD During yEar
mr denis Waddell
chairman – non-executive
chairman
mr errol smart
director – executive
managing director & chief executive officer
mr alexander haller
director – non-executive
director
mr mark palmer
(from 31 January 2018)
mr michael hulmes
(from 17 april 2018)
mr William oliver
(ceased 18 april 2018)
mr Walter shamu
mr martin bouwmeester
mr Louw van schalkwyk
ms michelle Jenkins
director – non-executive
director – non-executive
---
---
director – non-executive
technical director
---
---
---
---
chief operating officer (from 1 april 2018)
executive: mining & development (south africa)
chief financial officer & company secretary
executive: exploration (south africa)
executive: finance & administration (south africa)
remuneration poLicY
Key management personnel have authority and responsibility for planning, directing and controlling the activities of
the Group. Key management personnel comprise the directors and executives of the company and the Group, which
comprise executives that report directly to the managing director and ceo of the company and the Group.
it is the Group’s objective to provide maximum stakeholder benefit from the retention of a high quality board
and management by remunerating directors and executives fairly and appropriately with reference to relevant
employment and market conditions. to assist in achieving the objective the board links the nature and amount of
executive directors’ remuneration to the Group’s financial and operational performance.
the expected outcome of the Group’s remuneration structure is:
• Retention and motivation of directors and executives;
• Attraction of quality management to the Group; and
• Performance rewards to allow directors and executives to participate in the future success of the Group.
remuneration may include base salary and fees, short term incentives, superannuation contributions and long term
incentives. any equity based remuneration for directors will only be made with the prior approval of shareholders
at a general meeting. all base salary and fees, short term incentives, superannuation contributions granted to key
management personnel during the year was fixed under service agreements between the company and key
management personnel and was not impacted by performance related measures. in relation to the payment of
bonuses, options and other incentive payments, discretion is exercised by the board, having regard to the overall
performance of the Group and the performance of the individual during the period.
the board of directors is responsible for determining and reviewing compensation arrangements for the executive and
non-executive directors. the maximum remuneration of non-executive directors is the subject of shareholder resolution
in accordance with the company’s constitution, and the corporations act 2001 as applicable.
the total level of remuneration for the financial year for all non-executive directors of $124,189 is maintained within the
maximum limit of $350,000 approved by shareholders. When setting fees and other compensation for non-executive
directors, the board may seek independent advice and apply australian benchmarks. the board may recommend
additional remuneration to non-executive directors called upon to perform extra services or make special exertions
on behalf of the Group.
there is no scheme to provide retirement benefits, other than statutory superannuation when applicable, to non-
executive directors.
the chairman will undertake an annual assessment of the performance of the individual directors and meet privately
with each director to discuss this assessment. basis for evaluation for assessing performance is by reference to company
charters and current best practice.
conseQuences of performance on sharehoLders WeaLth
in considering the Group’s performance and benefits for shareholders wealth, the board of directors has regard to the
following indices in respect of the current financial year and the previous five financial years.
91
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
rEMunEraTion rEporT - auDiTED (continued)
net loss attributable to equity holders
of the company
dividends paid
actual share price
2018
$’000
2017
$’000
2016
$’000
2015
$’000
2014
$’000
$(8,833)
$(7,930)
$(2,528)
$(3,363)
$(12,866)
---
$0.04
---
---
---
$0.025
$0.016
$0.023
---
$0.04
LonG term incentiVe based remuneration
the company has an option and performance rights based remuneration scheme for executives. in accordance with
the provisions of the orion minerals option and performance rights plan, as approved by shareholders at a general
meeting, executives may be granted options or performance rights to purchase ordinary shares. the number and terms
of options or performance rights granted is at the absolute discretion of the board, provided that the total number of
options on issue under the scheme at the time of the grant does not exceed 5% of the number of ordinary shares on issue.
no options were granted during the year ended 30 June 2018 under the terms of the orion minerals option and
performance rights plan to employees.
the issue of options to directors and employees encourages the alignment of personal and shareholder interests.
serVice contracts
Key terms of the existing service contracts for key management personnel are as follows:
Managing Director and CEO
unlimited in term but capable of termination on 3 months’ notice. the Group retains the right to terminate the contract
immediately, by making a payment of 3 months’ remuneration in lieu of notice.
Chief Financial Officer and Company Secretary
unlimited in term but capable of termination on 3 months’ notice. the Group retains the right to terminate the contract
immediately, by making a payment of 3 months’ remuneration in lieu of notice.
Chief Operating Officer / Executive: Mining & Development (South Africa)
unlimited in term but capable of termination on 1 month’s notice. the Group retains the right to terminate the contract
immediately, by making a payment of 1 month’s remuneration in lieu of notice.
Executive: Exploration (South Africa)
unlimited in term but capable of termination on 3 months’ notice. the Group retains the right to terminate the contract
immediately, by making a payment of 3 months’ remuneration in lieu of notice.
Executive: Finance & Administration (South Africa)
unlimited in term but capable of termination on 1 month’s notice. the Group retains the right to terminate the contract
immediately, by making a payment of 1 month’s remuneration in lieu of notice.
Key management personnel are also entitled to receive on termination of employment, redundancy benefits.
the service contract outlines the components of compensation paid to the key management personnel but does not
prescribe how compensation levels are modified year to year. compensation levels are reviewed each year to take
into account cost-of-living changes, any change in the scope of the role performed by the senior executive and any
changes required to meet the principles of the compensation policy
directors
total compensation for all non-executive directors, last voted upon by shareholders at the 2007 annual General meeting,
is not to exceed $350,000 per annum and is set based on advice from external advisors with reference to fees paid
to other directors of comparable companies. from 1 January 2017, the chairman receives $75,000 per annum. non-
executive directors do not receive performance related compensation. directors’ fees cover all main board activities
and membership of one committee. directors may be paid additional amounts for consulting services provided in
addition to normal director duties. such additional amounts are paid on commercial terms.
remuneration report approVaL at the 2017 annuaL GeneraL meetinG
the 30 June 2017 remuneration report received positive shareholder support at the company’s annual General meeting
with a positive vote of 96% in favour.
92
directors and eXecutiVe officers’ remuneration – 2018
priMary Salary, incEnTiVES, SupErannuaTion anD
conSulTancy payMEnTS
SharE
BaSED
payMEnTS
(xi)
ToTal
rEMunEraTion
% oF
rEMunEraTion
in opTionS
Salary
anD FEES
$
ShorT TErM
incEnTiVES
$
SupEr-
annuaTion
$
TErMinaTion
BEnEFiTS
$
opTionS
$
$
%
naMES
yEar
directors
executive directors
mr e smart(i)
mr W oliver
(ii)
sub-total
2018
2017
2018
2017
2018
2017
non-executive directors
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
mr d Waddell
(iii)
mr a haller
(iv)
mr m palmer
(v)
mr m hulmes
(vi)
total
directors
remuneration
executives
mr W shamu
(vii)
mr m
bouwmeester
(viii)
mr L van
schalkwyk
(ix)
ms m Jenkins
(x)
total
executives’
remuneration
total
directors and
executive
remuneration
300,000
250,000
64,800
128,000
364,800
378,000
182,400
124,650
---
---
20,833
---
9,386
---
577,419
502,650
270,000
114,229
240,000
193,000
270,000
32,111
270,000
132,668
1,050,008
472,008
2018
1,627,419
2017
974,658
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
892
---
892
---
---
---
---
---
---
---
---
---
---
---
892
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
19,648
89,280
3,975
17,946
23,623
107,226
7,875
35,744
---
---
---
---
---
---
31,498
142,970
56,967
5,002
3,878
17,644
56,967
5,002
56,967
5,002
319,648
339,280
68,775
145,946
388,423
485,226
190,275
160,394
---
---
20,833
---
10,278
---
609,809
645,620
326,967
119,231
243,878
210,644
326,967
37,113
326,967
137,670
174,779
1,224,779
32,650
504,658
206,277
1,834,588
175,620
1,150,728
(i)
(ii)
effective from 1 may 2017, mr smart’s fixed component of remuneration was revised to $300,000 per annum
(previous $120,000 per annum).
effective from 17 april 2018, mr oliver resigned from the board of directors. mr oliver’s remuneration is disclosed
as at resignation date.
6
26
6
12
6
22
4
22
---
---
---
---
---
---
5
22
17
4
2
8
17
13
17
4
14
6
11
15
93
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
rEMunEraTion rEporT - auDiTED (continued)
(iii)
effective from 1 January 2017, mr Waddell’s fixed component of remuneration was revised to $75,000 per
annum (previous $37,500 per annum). during the financial year, mr Waddell also received additional amounts
for consulting services provided to the company, in addition to normal director duties.
(iv) mr haller has waived his entitlement to receive fees for his position as non-executive director from 1 october
2013. fees may be reinstated at a later date by resolution of the board.
mr palmer has held the position of non-executive director from 1 february 2018.
(v)
(vi) mr hulmes has held the position of non-executive director from 18 april 2018.
(vii) mr shamu has held the position of chief operating officer from 1 april 2018. prior to 1 april 2018, mr shamu held
the positions of exploration: mining & development (south africa) from 1 June 2017 and from 6 february 2017
until 31 may 2017, a consultant to the Group.
(viii) mr bouwmeester has held the position of chief financial officer since 9 february 2017 and has held the position
(ix)
(x)
(xi)
of company secretary since 1 april 2016.
mr van schalkwyk has held the position of executive: exploration (south africa) from 1 June 2017. prior to 1 June
2017, from 1 may 2017 until 31 may 2017, mr van schalkwyk was engaged as a consultant to the Group.
ms Jenkins has held the position of executive: finance & administration (south africa) from 1 June 2017. prior to
1 June 2017, from 19 January 2017 until 31 may 2017, ms Jenkins was engaged as a consultant to the Group.
share based payments represent the fair values of options estimated at the date of grant using the black
scholes option pricing model. these amounts are not paid in cash.
insurance premiums paid on behalf of directors and officers are not allocated to or included in total remuneration.
options and riGhts oVer eQuitY instruments Granted as compensation
as at the date of this report, there were 72,000,000 unissued ordinary shares under option issued to directors and
executives (2017: 99,000,000 unissued ordinary shares under option).
details on options over ordinary shares in the company that were granted as compensation to each key management
personnel during the reporting period and details on options that were vested during the reporting period are as
follows:
nuMBEr oF
opTionS
granTED
During
2018 (i)
granT DaTE
Fair ValuE
pEr opTion aT
granT DaTE
ExErciSE
pricE pEr
opTion
(ii)
Expiry DaTE
nuMBEr oF
opTionS
VESTED
During 2018
directors
mr d Waddell
mr e smart
executives
mr W shamu
mr m
bouwmeester
mr L van
schalkwyk
ms m Jenkins
former
mr W oliver
---
---
---
---
---
---
---
26 november
2015
26 november
2015
31 may 2017
26 november
2015
31 may 2017
31 may 2017
26 november
2015
$0.01
$0.01
$0.01
$0.01
$0.01
$0.01
$0.050
$0.035
30 november
2020
30 november
2020
4,000,000
10,000,000
$0.035
31 may 2022
2,000,000
$0.050
30 november
2020
2,000,000
$0.045
31 may 2022
2,000,000
$0.035
31 may 2022
2,000,000
$0.01
$0.050
30 november
2020
2,000,000
(i)
(ii)
the options were provided at no cost to the recipient. each option gives the option holder the right to subscribe
for one ordinary share in the capital of the company upon exercise of the option in accordance with the
attaching terms and conditions.
the options are exercisable between 1 and 5 years from grant date.
94
anaLYsis of options and riGhts oVer eQuitY instruments Granted as compensation
details of the vesting profile of the options granted as remuneration to each key management personnel of the Group
as at the end of the reporting period are detailed below.
opTionS granTED
DirEcTorS
nuMBEr
DaTE
% VESTED in
currEnT yEar
% lapSED in
currEnT yEar (i)
DaTE granT VESTS
(ii)
mr d Waddell
mr e smart
mr a haller
mr m palmer
mr m hulmes
mr W oliver
mr W shamu
mr m
bouwmeester
mr L van
schalkwyk
ms m Jenkins
2,000,000
2,000,000
2,000,000
4,000,000
4,000,000
4,000,000
5,000,000
5,000,000
5,000,000
10,000,000
10,000,000
10,000,000
---
---
---
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
8 July 2013
8 July 2013
8 July 2013
26 november 2015
26 november 2015
26 november 2015
8 July 2013
8 July 2013
8 July 2013
26 november 2015
26 november 2015
26 november 2015
---
---
---
3 october 2013
3 october 2013
3 october 2013
26 november 2015
26 november 2015
26 november 2015
31 may 2017
31 may 2017
31 may 2017
8 July 2013
8 July 2013
8 July 2013
26 november 2015
26 november 2015
26 november 2015
31 may 2017
31 may 2017
31 may 2017
31 may 2017
31 may 2017
31 may 2017
---%
---%
---%
---%
---%
100%
---%
---%
---%
---%
---%
100%
---%
---%
---%
---%
---%
---%
---%
---%
100%
100%
---%
---%
---%
---%
---%
---%
---%
100%
100%
---%
---%
100%
---%
---%
100%
100%
100%
---%
---%
---%
100%
100%
100%
---%
---%
---%
---%
---%
---%
100%
100%
100%
---%
---%
---%
---%
---%
---%
100%
100%
100%
---%
---%
---%
---%
---%
---%
---%
---%
---%
26 november 2013
26 november 2014
26 november 2015
30 november 2015
30 november 2016
30 november 2017
26 november 2013
26 november 2014
26 november 2015
30 november 2015
30 november 2016
30 november 2017
---
---
---
30 november 2013
30 november 2014
30 november 2015
30 november 2015
30 november 2016
30 november 2017
31 may 2018
31 may 2019
31 may 2020
30 september 2013
31 march 2014
31 march 2015
30 november 2015
30 november 2016
30 november 2017
31 may 2018
31 may 2019
31 may 2020
31 may 2018
31 may 2019
31 may 2020
(i)
(ii)
the % lapsed in the year represents the reduction from the maximum number of options available to be
exercised.
the vesting conditions attached to each option granted require the key management personnel to remain in
employment with the company until the vesting date, unless the board of directors elects to waive the expiry
terms attached to the grant.
95
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
rEMunEraTion rEporT - auDiTED (continued)
anaLYsis of moVements in options
changes during the reporting period, by value, of options over ordinary shares in the company held by each current
key management person, and each of the named current company executives is detailed below.
granTED in yEar $’000
ExErciSED in yEar $’000
lapSED in yEar $’000
ValuE oF opTionS
mr d Waddell
mr e smart
mr a haller
mr W oliver
mr m bouwmeester
mr L van schalkwyk
mr W shamu
ms m Jenkins
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
(114)
(285)
---
(185)
(56)
---
---
---
options and riGhts oVer eQuitY instruments
the movement during the reporting period, by number of options over ordinary shares in the company held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
Balance at
beginning
of period
1-Jul-17
granted as
remuneration
purchased
or
acquired
Expired
Balance
at end of
period
30-Jun-18
not vested
and not
exercisable
Vested and
exercisable
specified directors
mr denis Waddell
18,000,000
mr errol smart
45,000,000
mr alexander
haller
mr mark palmer
mr michael
hulmes
---
---
---
mr William oliver
9,000,000
specified executives
mr Walter shamu
6,000,000
mr martin
bouwmeester
mr Louw van
schalkwyk
ms michelle
Jenkins
9,000,000
6,000,000
6,000,000
ToTal
99,000,000
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
(6,000,000)
12,000,000
(15,000,000)
30,000,000
---
---
---
---
---
---
(3,000,000)
6,000,000
---
---
---
---
---
---
12,000,000
30,000,000
---
---
---
6,000,000
---
6,000,000
4,000,000
2,000,000
(3,000,000)
6,000,000
---
6,000,000
---
6,000,000
4,000,000
2,000,000
---
6,000,000
4,000,000
2,000,000
---
(27,000,000)
72,000,000
12,000,000
60,000,000
96
Balance at
beginning
of period
1-Jul-16
granted as
remuneration
purchased
or
acquired
Expired
Balance
at end of
period
30-Jun-17
not vested
and not
exercisable
Vested and
exercisable
specified directors
mr denis Waddell
18,000,000
mr errol smart
45,000,000
mr alexander
haller
---
mr William oliver
9,000,000
specified executives
---
---
---
---
mr Walter shamu
---
6,000,000
mr martin
bouwmeester
mr Louw van
schalkwyk
ms michelle
Jenkins
9,000,000
---
---
---
6,000,000
6,000,000
ToTal
81,000,000
18,000,000
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
18,000,000
4,000,000
14,000,000
45,000,000
10,000,000
35,000,000
---
---
---
9,000,000
2,000,000
7,000,000
6,000,000
6,000,000
---
9,000,000
2,000,000
7,000,000
---
6,000,000
6,000,000
---
6,000,000
6,000,000
---
---
---
99,000,000
36,000,000
63,000,000
KeY
With
manaGement personneL
number of key management personnel, or their related parties, hold positions in other entities that result in them
other transactions
a
having control, joint control or a relevant interest over the financial or operating policies of those entities. a
number
with key
which
related entities
were
reasonably be expected to be available, on similar transactions to non-key management personnel
of these entities transacted with the Group during the year.
no
management
the terms and conditions of the transactions
more
on an arm’s length basis.
available,
personnel
favorable
related
parties
those
might
than
their
and
or
moVement in shares
the movement during the reporting period in the number of ordinary shares in the
beneficially, by each key management person, including their related parties, is as follows:
company held, directly, indirectly or
Balance at
beginning of
period
1-Jul-17
purchased
or acquired
during the
year
on options
exercised
Disposals of
shares
other
transfers of
shares
Balance at
end of period
30-Jun-18
specified directors
mr denis Waddell
92,541,324
10,416,666
mr errol smart
19,542,666
mr alexander haller (i)
69,119,937
mr William oliver
6,582,199
specified executives
---
---
---
mr Walter shamu (ii)
---
2,083,333
mr martin
bouwmeester
mr Louw van
schalkwyk
ms michelle Jenkins (ii)
2,784,027
2,083,333
---
---
---
2,916,666
ToTal
190,570,153
17,499,998
---
---
---
---
---
---
---
---
---
---
---
---
(6,582,199)
---
---
---
---
(6,582,199)
---
---
---
---
---
---
---
---
---
102,957,990
19,542,666
69,119,937
---
2,083,333
4,867,360
---
2,916,666
201,487,952
(i)
(ii)
mr haller holds relevant interests as follows: silja investment Ltd 56,706,578 shares and pershing securities 1,320
shares. mr haller personally holds interests of 12,412,039 shares.
mr shamu and ms Jenkins hold relevant interests as follows: Wmp mining services inc 2,083,333 shares (held
equally) and ms Jenkins holds additional interests of 833,333 shares.
97
ORION MINERALS ANNuAL REpORt - 2018
DirEcTorS’ rEporT
(conTinuED)
rEMunEraTion rEporT - auDiTED (continued)
Balance at
beginning of
period
1-Jul-16
purchased
or acquired
during the
year
on options
exercised
Disposals of
shares
other
transfers of
shares
Balance at
end of period
30-Jun-17
specified directors
mr denis Waddell
66,546,104
25,995,220
mr errol smart
16,209,333
3,333,333
mr alexander haller
(i)
68,008,826
1,111,111
mr William oliver
5,471,088
1,111,111
specified executives
mr Walter shamu
---
---
mr martin
bouwmeester
mr Louw van
schalkwyk
ms michelle Jenkins
1,117,361
1,666,666
---
---
---
---
ToTal
157,352,712
33,217,441
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
92,541,324
19,542,666
69,119,937
6,582,199
---
2,784,027
---
---
190,570,153
(i)
mr haller holds relevant interests as follows: silja investment Ltd 56,706,578 shares and pershing securities 1,320
shares. mr haller personally holds interests of 12,412,039 shares.
enGaGement of remuneration consuLtants
the board of directors from time to time, seek and consider advice from independent remuneration consultants to
ensure that the company has at its disposal information relevant to the determination of all aspect of remuneration
relating to key management personnel.
the board follows a set of protocols when engaging remuneration consultants to satisfy themselves, that the
remuneration consultants engaged are free from any undue influence by the members of the key management
personnel to whom advice and recommendations relate and that the requirements of the corporations act 2001 are
complied with. the set of protocols followed by the board include:
• Remuneration consultants are engaged by and report directly to the Board; and
• Communication between remuneration consultants and the Company is limited to those KMPs whose remuneration
is not under consideration.
no remuneration consultants were engaged during the year.
98
EnVironMEnTal iSSuES
the Group is required to close its operations and rehabilitate the lands that it disturbs during the exploration and
operating phases in accordance with applicable mining and environmental laws and regulations. Where necessary,
provision for rehabilitation liabilities is made based on the net present value of the estimated cost of restoring the
environmental disturbance that has occurred up to the reporting date.
as part of the Group’s environmental policy exploration and access sites are regenerated to match or exceed
government expectations.
based on the results of enquires made, the board is not aware of any significant breaches during the period covered
by this report.
DiViDEnDS
there were no dividends paid or declared during the financial year (2017: $nil).
inDEMniFicaTion oF DirEcTorS, oFFicErS anD auDiTorS
during the financial year, the company paid a premium in respect of a contract insuring the directors of the company
and all office bearers of the company and of any body corporate against any liability incurred whilst acting in the
capacity of director, secretary or executive officer to the extent permitted by the corporations act 2001. the contract
of insurance prohibits disclosure of the nature of the liability and the amount of the premium. orion minerals Ltd, to the
extent permitted by law, indemnifies each director or secretary against any liability incurred in the service of the Group
provided such liability does not arise out of conduct involving a lack of good faith and for costs incurred in defending
proceedings in which judgement is given in favour of the person in which the person is acquitted. the company has
not provided any insurance or indemnity for the auditor of the company.
procEEDingS on BEhalF oF coMpany
no person has applied for leave of court to bring proceedings on behalf of the company or intervene in any
proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all
or any part of those proceedings.
non-auDiT SErVicES
rsm australia partners, the company’s auditor, has performed other non-audit services in addition to their statutory
duties during the year ended 30 June 2018.
the board considered the non-audit services provided in the prior year by the auditor and was satisfied that the
provision of those non-audit services in the prior year by the auditor is compatible with, and did not compromise, the
auditor independence requirements of the corporations act 2001 for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Company and have
been reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor;
and
•
the non-audit services provided do not undermine the general principles relating to auditor independence as
set out in apes 110 code of ethics for professional accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision making capacity for the company, acting as an
advocate for the company or jointly sharing risks and rewards.
details of the amounts paid to the auditor, rsm australia partners, and its related practices for non-audit services
provided during the year are set out below.
services other than statutory audit:
taxation compliance services (rsm australia partners)
conSoliDaTED
2017
$’000
7
7
2018
$’000
14
14
99
ORION MINERALS ANNuAL REpORt - 2018 DirEcTorS’ rEporT
(conTinuED)
auDiTor’S inDEpEnDEncE DEclaraTion
the lead auditor’s independence declaration is set out on page 101 and forms part of the directors’ report for the
financial year ended 30 June 2018.
corporaTE goVErnancE
the board of directors recognises the recommendations of the australian securities exchange corporate Governance
council for corporate Governance principles and recommendations (3rd edition) and considers that the company
substantially complies with those guidelines, which are of critical importance to the commercial operation of a junior
listed resources company. the company’s corporate Governance statement and disclosures can be viewed on our
website, www.orionminerals.com.au.
this report is made in accordance with a resolution of the directors.
Denis WaDDell
chairman
perth, Western australia
date: 27 september 2018
100
auDiTor’S inDEpEnDEncE
DEclaraTion
as lead auditor for the audit of the financial report of orion minerals Ltd for the year ended 30 June 2018 i declare that,
to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the corporations act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RsM aUsTRalia PaRTneRs
J s CROall
partner
dated: 27 september 2018
melbourne, Victoria
101
ORION MINERALS ANNuAL REpORt - 2018 conSoliDaTED STaTEMEnT oF proFiT or
loSS anD oThEr coMprEhEnSiVE incoME
for the Year ended 30 June 2018
conTinuing opEraTionS
other income
exploration and evaluation costs expensed
employee expenses
provision for doubtful debt expense
other expenses
(Loss) fair value of securities in other entities
fair value (loss) on net smelter royalty receivable
impairment of assets
plant and equipment written-off
results from operating activities
finance income
finance expenses
net finance expenses
Loss before income tax
income tax (expense) / benefit
noTES
2018
$’000
2017
$’000
3
9
3
6
8
7
16
1,282
(2,371)
(1,422)
(500)
(3,653)
(378)
---
---
---
(6,614)
214
(2,005)
(1,791)
(8,833)
---
88
(3,541)
---
---
(2,510)
(87)
(62)
(1,617)
(20)
(7,749)
92
(273)
(181)
(7,930)
---
Loss from continuing operations attributable to equity holders of the Group
(8,833)
(7,930)
other comprehensive income
foreign currency reserve
other comprehensive income for the year, net of income tax
total comprehensive loss for the year
Loss for the year is attributable to:
non-controlling interest
owners of orion minerals Ltd
total comprehensive loss for the year is attributable to:
non-controlling interest
owners of orion minerals Ltd
loSS pEr SharE (cEnTS pEr SharE)
basic loss per share
diluted loss per share
headline loss per share
diluted headline loss per share
228
---
99
---
(8,605)
(7,831)
(437)
(8,396)
(8,833)
(437)
(8,168)
(8,605)
(0.76)
(0.76)
(0.76)
(0.76)
---
(7,930)
(7,930)
---
(7,930)
(7,930)
(1.28)
(1.28)
(1.02)
(1.02)
22
22
17
17
17
17
the notes on pages 106 to 143 are an integral part of these consolidated financial statements.
102
conSoliDaTED STaTEMEnT
oF Financial poSiTion
as at 30 June 2018
aSSETS
current assets
cash and cash equivalents
other receivables
prepayments
securities held in other entities
total current assets
non-current assets
other receivables
Loan to joint venture partners
plant and equipment
deferred exploration, evaluation and development
total non-current assets
totaL assets
liaBiliTiES
current liabilities
trade and other payables
Loans
convertible notes
provisions
total current liabilities
non-current liabilities
provisions
preference shares
convertible notes
Loans
total non-current liabilities
totaL LiabiLities
nET aSSETS
EQuiTy
equity attributable to equity holders of the company
issued capital
accumulated losses
non-controlling interest - subsidiaries
other reserves
totaL eQuitY
noTES
2018
$’000
2017
$’000
4
5
6
5
9
7
8
10
12
14
11
11
13
14
12
15
22
15
4,811
3,344
65
15
3,406
338
79
455
8,235
4,278
2,305
1,030
147
29,119
32,601
40,836
2,363
6,875
6,001
138
2,644
---
91
15,075
17,810
22,088
1,130
---
---
48
15,377
1,178
1,965
2,169
---
1,539
5,673
21,050
19,786
102,460
(87,367)
2,233
2,460
19,786
1,836
1,955
5,824
---
9,615
10,793
11,294
85,499
(79,883)
2,670
3,008
11,294
the notes on pages 106 to 143 are an integral part of these consolidated financial statements.
103
ORION MINERALS ANNuAL REpORt - 2018 conSoliDaTED STaTEMEnT
oF caSh FloWS
for the Year ended 30 June 2018
cash flows from operating activities
payments for exploration and evaluation
payments to suppliers and employees
interest received
interest expense
convertible note – interest expense
other receipts
noTES
2018
$’000
2017
$’000
(2,372)
(3,051)
212
(627)
(732)
3
(5,120)
(1,439)
12
---
(30)
34
net cash used in operating activities
4
(6,567)
(6,543)
cash flows from investing activities
purchase of plant and equipment
proceeds from sale of plant and equipment
payments for exploration and evaluation
Guarantees on deposit
purchase of exploration and evaluation assets
r&d tax offset received in relation to exploration assets
proceeds from sale of available for sale financial assets
proceeds from sale of tenements
net cash used in investing activities
cash flows from financing activities
proceeds from issue of shares
share issue expenses
borrowings provided to joint venture operations
proceeds from borrowings
repayment of borrowings
net cash from financing activities
net increase in cash and cash equivalents
cash and cash equivalents at beginning of year
effects of exchange rate on cash at end of financial year
caSh on hanD anD aT Bank aT EnD oF yEar
(101)
---
(15,275)
(134)
---
---
---
---
(77)
---
---
---
(5,343)
387
205
700
(15,510)
(4,128)
17,331
(371)
(1,030)
9,001
(1,440)
23,491
1,414
3,412
(15)
4,811
7,454
(80)
---
6,500
(450)
13,424
2,753
652
---
3,405
9
12
12
4
the notes on pages 106 to 143 are an integral part of these consolidated financial statements.
104
conSoliDaTED STaTEMEnT
oF changES in EQuiTy
for the Year ended 30 June 2018
30 June 2018
iSSuED
capiTal
($’000)
accuMulaTED
loSSES
($’000)
oThEr
rESErVES
non-
conTrolling
inTErEST
3,008
2,670
balance at 1 July 2017
85,499
Loss for the year
other comprehensive loss
total comprehensive loss for the year
---
---
---
transactions with owners in their capacity as owners:
contributions of equity, net of costs
16,961
non-controlling interest
convertible notes
foreign translation reserve
transfer of share options expired
share-based payments expense
---
---
---
---
---
(79,883)
(8,833)
---
(8,833)
---
524
---
---
825
---
total transactions with owners
16,961
1,349
---
---
---
---
---
(177)
28
(825)
426
(548)
ToTal
EQuiTy
11,294
(8,833)
---
(8,833)
16,961
87
(177)
28
---
426
---
---
---
---
(437)
---
---
---
---
(437)
17,436
BalancE aT 30 JunE 2018
102,460
(87,367)
2,460
2,233
19,786
30 June 2017 - restated
iSSuED
capiTal
($’000)
accuMulaTED
loSSES
($’000)
oThEr
rESErVES
non-
conTrolling
inTErEST
balance at 1 July 2016
75,966
Loss for the year
other comprehensive loss
total comprehensive loss for the year
---
---
---
transactions with owners in their capacity as owners:
contributions of equity, net of costs
9,533
non-controlling interest
convertible notes
foreign translation reserve
transfer of share options expired
share-based payments expense
---
---
---
---
---
total transactions with owners
9,533
(72,066)
(7,930)
---
(7,930)
---
---
---
---
112
---
112
1,386
---
---
---
---
---
407
99
(112)
1,228
1,622
---
---
---
---
---
2,670
---
---
---
---
2,670
ToTal
EQuiTy
5,286
(7,930)
---
(7,930)
9,533
2,670
407
99
---
1,228
13,967
BalancE aT 30 JunE 2017
85,499
(79,883)
3,008
2,670
11,294
the notes on pages 106 to 143 are an integral part of these consolidated financial statements.
105
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
1. corporaTE inForMaTion
orion minerals Limited (company) is a company domiciled in australia. the address of the company’s registered office
is suite 617, 530 Little collins street, melbourne, Victoria, 3000. the consolidated financial statements as at and for the
year ended 2018 comprised the company and its subsidiaries, (together referred to as the group). the Group is a
for-profit group and is primarily involved in zinc, copper, nickel, gold and platinum group elements (pgE) exploration,
evaluation and development.
2. SuMMary oF SigniFicanT accounTing policiES
(a) basis of preparation
(i) Statement of compliance
the consolidated financial statements are general purpose financial statement which have been prepared in
accordance with australian accounting standards (aaSBs) adopted by the australian accounting standards
board (aaSB) and the corporations act 2001. the consolidated financial statements comply with international
financial reporting standards (iFrSs) adopted by the international accounting standards board (iaSB). the
consolidated financial statements were authorised for issue by the board of directors on 26 september 2018.
(ii) Basis of measurement
the consolidated financial statements have been prepared on the historical cost basis except where otherwise
stated.
the accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently by the Group except as required by
the new accounting standards and interpretations adopted as disclosed in note 2(b).
certain comparative amounts have been reclassified to conform with the current year’s presentation.
(iii) Going concern
financial
statements
the
continuity
of normal business activities and the realisation of assets and discharge of liabilities in the normal course of
business.
contemplates
prepared
concern
which
going
basis,
been
have
the
on
had
Group
as disclosed in the financial statements, the Group recorded a net loss of $8.83m
2018 and the Group’s position as at 30 June 2018 was as follows:
negative
•
The
cash
ended 30 June 2018;
at
June
30
The
negative
evaluation
activity
The
group element projects in
africa (areachap
source of income, rather it is reliant on debt and / or equity raisings to fund its activities.
of
$7.14M;
development
northern
capital
exploration,
Group
Group’s
2018
and
belt,
is
south
and
of
operating
reserves
working
$4.81M
main
flows
cash
•
•
had
and
had
of
of
for the year ended 30 June
$6.69M
for
the
year
base
platinum-
cape) and as such it does not have a
metal,
gold
and
these factors indicate a material uncertainty which may cast significant doubt as to whether the Group will
continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report.
operational
current forecasts indicate that cash on hand as at 30 June 2018 will not be sufficient to fund planned exploration
good
months
and
standing.
accordingly, the Group will be required to raise additional equity, consider alternate funding options
or a combination of the foregoing.
tenements
maintain
activities
Group’s
twelve
during
next
and
the
the
to
in
directors believe that there are reasonable grounds to believe that the Group will be able to continue as
the
a going concern, after consideration of the following factors:
cash
•
confident
sufficient
to
will
the
are
that
raise
Group
ensure
They
minimum
exploration and operational expenditure commitments for at least the next twelve months and maintain
the Group’s tenements in good standing and pay its debts, as and when they fall due.
company has
previously been successful in raising capital as and when required as evidenced by capital raising initiatives
to
30
$17.33m
of
capital subscribed for
support the
$6.40m
share subscription
be issued in consideration for reducing the amount re-payable to
capital under the bridge loan
facility (refer
during
(before
company’s exploration and plans.
in addition, in
tembo
orion’s agreement with
shares, following
august 2018,
capital, that
note 12).
capital’s
august
ended
$8.11m
further
tembo
tembo
tembo
Group
costs)
2018,
June
meet
2018
year
and
that
can
the
the
the
a
its
in
in
106
2. SuMMary oF SigniFicanT accounTing policiES (continued)
•
In March 2017, the Company issued 232.7M convertible notes, each with a face value of 2.6 cents. The
convertible notes mature in march 2019. the directors expect that the holders of the convertible notes will
convert the convertible notes to shares in the company at an issue price of 2.6 cents per share. should the
convertible notes be converted to shares, the Group’s current liabilities will reduce by $6.05m. however, the
directors recognise that at maturity, some or all of the holders of the convertible notes may elect to redeem
the convertible notes for cash (refer note 14).
• Based on results to date from exploration programs, the progress of the BFS underway at the Prieska Project
and the company’s ability to successfully raise capital in the past, the directors are confident of obtaining
the continued support of the company’s shareholders and a number of brokers that have supported the
company’s previous capital raisings.
the amount and timing of any funding for operational and exploration plans, is the subject of ongoing review.
accordingly, the financial statements for the year ended 30 June 2018 have been prepared on a going
concern basis as, in the opinion of the directors, the Group will be in a position to continue to meet its operating
costs and exploration expenditure commitments and pay its debts as and when they fall due for at least twelve
months from the date of this report.
however, the directors recognise that if sufficient additional funding is not raised from the issue of capital or
through alternative funding sources, there is a material uncertainty as to whether the going concern basis is
appropriate with the result that the Group may relinquish title to certain tenements and may have to realise
its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different
from those stated in the financial report. in this case, the holders of the convertible notes and anglo american
sefa mining fund (aaSMF), as the holders of security over certain assets of the Group, under existing funding
agreements, would take priority in relation to the assets of the Group. no allowance for such circumstances
has been made in the financial report. further details on these funding arrangements are given in note 14
(convertible notes) and note 12 (Loans with other entities and related parties).
(b) neW accountinG standards and interpretations
(i) New accounting standards
a number of new standards, amendments to standards and interpretations issued by the aasb which are not
yet mandatorily applicable to the Group have not been applied in preparing these consolidated financial
statements. those which may be relevant to the Group are set out below. the Group does not plan to adopt
these standards early.
aasb 9 financial instruments
this standard is applicable to annual reporting periods beginning on or after 1 January 2018. the standard
replaces all previous versions of aasb 9 and completes the project to replace ias 39 ‘financial instruments:
recognition and measurement’. aasb 9 introduces new classification and measurement models for financial
assets. a financial asset shall be measured at amortised cost, if it is held within a business model whose
objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely
principal and interest. all other financial instrument assets are to be classified and measured at fair value
through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and
losses on equity instruments (that are not held-for-trading) in other comprehensive income (‘oci’). for financial
liabilities, the standard requires the portion of the change in fair value that relates to the entity’s own credit
risk to be presented in oci (unless it would create an accounting mismatch). new simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk management activities
of the entity. new impairment requirements will use an ‘expected credit loss’ (‘ecL’) model to recognise an
allowance. impairment will be measured under a 12-month ecL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime ecL method is adopted.
the standard introduces additional new disclosures. the Group will adopt this standard from 1 July 2018 with the
impact of its adoption assessed as minimal.
aasb 15 revenue from contracts with customers
this standard is applicable to annual reporting periods beginning on or after 1 January 2018. the standard
provides a single standard for revenue recognition. the core principle of the standard is that an entity will
recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. the
standard will require: contracts (either written, verbal or implied) to be identified, together with the separate
performance obligations within the contract; determine the transaction price, adjusted for the time value of
money excluding credit risk; allocation of the transaction price to the separate performance obligations on a
107
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when each performance obligation is satisfied. credit
risk will be presented separately as an expense rather than adjusted to revenue. for goods, the performance
obligation would be satisfied when the customer obtains control of the goods. for services, the performance
obligation is satisfied when the service has been provided, typically for promises to transfer services to
customers. for performance obligations satisfied over time, an entity would select an appropriate measure
of progress to determine how much revenue should be recognised as the performance obligation is satisfied.
contracts with customers will be presented in an entity’s statement of financial position as a contract liability,
a contract asset, or a receivable, depending on the relationship between the entity’s performance and the
customer’s payment. sufficient quantitative and qualitative disclosure is required to enable users to understand
the contracts with customers; the significant judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. the Group will adopt this
standard from 1 July 2018 with the impact of its adoption assessed by the Group as being minimal to no impact
based on no operating revenues currently being generated by the Group.
aasb 16 Leases
this standard is applicable to annual reporting periods beginning on or after 1 January 2019. the standard
replaces aasb 117 ‘Leases’ and for lessees will eliminate the classifications of operating leases and finance
leases. subject to exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial position,
measured at the present value of the unavoidable future lease payments to be made over the lease term.
the exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists whereby either a ‘right-of-
use’ asset is recognised or lease payments are expensed to profit or loss as incurred. a liability corresponding
to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received,
initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. straight-
line operating lease expense recognition will be replaced with a depreciation charge for the leased asset
(included in operating costs) and an interest expense on the recognised lease liability (included in finance
costs).
in the earlier periods of the lease, the expenses associated with the lease under aasb 16 will be higher when
compared to lease expenses under aasb 117. however, ebitda (earnings before interest, tax, depreciation and
amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation
in profit or loss under aasb 16. for classification within the statement of cash flows, the lease payments will
be separated into both a principal (financing activities) and interest (either operating or financing activities)
component. for lessor accounting, the standard does not substantially change how a lessor accounts for
leases. the Group will adopt this standard from 1 July 2019 and the impact of its adoption is assessed as minimal
due to the minimal operating leases as at 30 June 2018.
• Other standards not yet applicable
there are no other standards that are not yet effective and that would be expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future transactions.
(c) basis of consoLidation
the consolidated financial statements incorporate the assets and liabilities of all entities controlled by orion
minerals Limited (parent company) from time to time during the year and at 30 June 2018 and the results of
its controlled entities for the year then ended. the effects of all transactions between entities in the economic
entity are eliminated in full.
the financial statements of the subsidiary are prepared for the same reporting period as the parent entity, using
consistent accounting policies. adjustments are made to bring into line any dissimilar accounting policies that
may exist.
(i) Subsidiaries
subsidiaries are entities controlled by the Group. the Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. the financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
(ii) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and
any related nci and other components of equity. any resulting gain or loss is recognised in profit or loss. any
interest retained in the former subsidiary is measured at fair value when control is lost.
108
2. SuMMary oF SigniFicanT accounTing policiES (continued)
(iii) Transactions eliminated on consolidation
intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. unrealised gains arising from transactions with equity-accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(d) foreiGn currencY transLation
the functional and presentation currency of the company and its australian subsidiary’s is australian dollars.
for comparative purposes, the consolidated financial statements may make reference to south african rand
(Zar).
transactions in foreign currencies are translated to the respective functional currency of Group at exchange
rates at the dates of the transactions.
monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at
the exchange rate at the reporting date. non-monetary assets and liabilities that are measured at fair value
in a foreign currency are translated to the functional currency at the exchange rate when the fair value was
determined. foreign currency differences are generally recognised in profit or loss. non-monetary items that
are measured based on historical cost in a foreign currency are not translated.
(e) inVestment and other financiaL assets
the company classifies its financials assets in the following categories: financial assets at fair value through
profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. the
classification depends on the purpose for which the investments were acquired. management determines the
classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-
evaluates this designation at the end of each reporting period.
(i) Available-for-sale financial assets
available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that
are either designated in this category or not classified in any of the other categories. they are included in non-
current assets unless the investment matures or management intends to dispose of the investment within 12
months of the end of the reporting period. investments are designated as available-for-sale if they do not have
fixed maturities and fixed or determinable payments and management intends to hold them for the medium
to long-term.
(ii) Recognition and derecognition
purchases and sales of financial assets are recognised on trade-date - the date on which the company
commits to purchase or sell the asset. financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the company has transferred substantially
all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in
other comprehensive income are reclassified to profit or loss as gains and losses from investment securities.
(iii) Measurement
at initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of
the financial asset. transaction costs of financial assets carried at fair value through profit or loss are expensed
in profit or loss.
available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried
at fair value.
(iv) Impairment
if there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any impairment loss
on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit
or loss. impairment losses on equity instruments that were recognised in profit or loss are not reversed through
profit or loss in a subsequent period.
109
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
(f) pLant and eQuipment
plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
depreciation is calculated on a reducing balance basis using estimated remaining useful life of the asset. the
estimated useful lives for the current and comparative period are as follows:
plant and equipment - over 3 to 15 years. depreciation methods, useful lives and residual values are reviewed
at each reporting date and adjusted if appropriate.
subsequent expenditure is capitalised only when it is probable that the future economic benefits associated
with the expenditure will flow to the Group.
non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are
presented separately from the other assets in the balance sheet. the liabilities of a disposal group classified as
held for sale are presented separately from other liabilities in the balance sheet.
(G) impairment
(i) Non-financial assets
at each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where
the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written
down to its recoverable amount.
recoverable amount is the greater of fair value less costs to dispose and value in use. it is determined for an
individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to
dispose and it does not generate cash inflows that are largely independent of those from other assets or groups
of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
an impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. impairment losses are recognised in profit and loss. impairment losses recognised in
respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated
to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata
basis.
impairment losses recognised in prior periods are assessed at each reporting date for any indications that
the loss has decreased or no longer exists. an impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. an impairment loss is reversed only to the extent that
the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
(ii) Non-derivative financial assets
financial assets not classified as at fair value through profit or loss, including an interest in an equity-accounted
investee, are assessed at each reporting date to determine whether there is objective evidence of impairment.
financial assets measured at amortised cost.
the Group considers evidence of impairment for these assets measured at both an individual asset and a
collective level. all individually significant assets are individually assessed for specific impairment. those
found not to be impaired are then collectively assessed for any impairment that has been incurred but not
yet individually identified. assets that are not individually significant are collectively assessed for impairment.
collective assessment is carried out by grouping together assets with similar risk characteristics.
in assessing collective impairment, the Group uses historical information on the timing of recoveries and the
amount of loss incurred and makes an adjustment if current economic and credit conditions are such that the
actual losses are likely to be greater or lesser than suggested by historical trends.
an impairment loss is calculated as the difference between an asset’s carrying amount and the present
value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are
recognised in profit or loss and reflected in an allowance account. When the Group considers that there are
no realistic prospects of recovery of the asset, the relevant amounts are written off. if the amount of impairment
loss subsequently decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
110
2. SuMMary oF SigniFicanT accounTing policiES (continued)
(h) trade and other receiVabLes
trade receivables, which generally have 30 - 60 day terms, are recognised and carried at original invoice amount
less an allowance for any uncollectible amounts.
an estimate for doubtful debts is made when collection of the full amount is no longer probable. bad debts are
written off when identified.
(i) cash and cash eQuiVaLents
cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-
term deposits with an original maturity of three months or less.
for the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
funds placed on deposit with financial institutions to secure performance bonds are classified as non-current other
receivables and not included in cash and cash equivalents.
(J) trade and other paYabLes
these amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. due to their short-term nature they are measured at amortised cost and are not
discounted. the amounts are unsecured and are usually paid within 30 days of recognition.
(K) borroWinGs and finance costs
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. they are subsequently measured at amortised cost using the effective interest method.
the component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
on the issue of the convertible notes the fair value of the liability component is determined using a market rate for
an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis
until extinguished on conversion or redemption. the increase in the liability due to the passage of time is recognised
as a finance cost. the remainder of the proceeds are allocated to the conversion option that is recognised and
included in shareholders equity as a convertible note reserve, net of transaction costs. the carrying amount of the
conversion option is not remeasured in the subsequent years. the corresponding interest on convertible notes is
expensed to profit or loss.
finance costs attributable to qualifying assets are capitalised as part of the asset. all other finance costs are
expensed in the period in which they are incurred.
(L) proVisions
provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
if the effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(m) empLoYee benefits
(i) Share based payments
the cost of equity-settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. the fair value is determined using the black scholes model. further details are given in
note 15.
the cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (Vesting Date).
111
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
the cumulative expense recognised for equity-settled transactions at each reporting date until Vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion
of the directors of the Group, will ultimately vest. this opinion is formed based on the best available information
at balance date. no adjustment is made for the likelihood of market performance conditions being met as the
effect of these conditions is included in the determination of fair value at grant date. no expense is recognised
for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms
had not been modified. in addition, an expense is recognised for any increase in the value of the transaction
as a result of the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. however, if a new award is substituted for
the cancelled award and designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award, as described in the previous
paragraph.
(ii) Employee benefits
annual leave liabilities are measured at the amounts expected to be paid when the liabilities are settled. Long
service leave liabilities are measured at the present value of the estimated future cash outflows for the services
provided by employees up to the reporting date.
Liabilities not expected to be settled within twelve months are discounted using market yields at the reporting
date on high quality corporate bonds with terms to maturity that match, as closely as possible to the related
liability.
(n) reVenue
revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured.
(i) Interest
revenue is recognised as the interest accrues (using the effective interest method, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the
net carrying amount of the financial asset.
(ii) Government grants
Grants that compensate the Group for expenditures incurred are recognised in profit or loss on a systematic
basis in the periods in which the expenditures are recognised. r&d tax offsets received are offset against the
carrying value of the assets and consequent reduction in the value of impairments recognised.
(o) income taX
(i) Tax consolidation
the company and its wholly-owned australian resident entity are part of a tax-consolidated group. as a
consequence, all members of the tax-consolidated group are taxed as a single entity from that date. the head
entity within the tax-consolidated group is orion minerals Ltd.
(p) other taXes
revenues, expenses and assets are recognised net of the amount of goods and services tax (gST) or value added
tax (VaT) except where the Gst or Vat incurred on a purchase of goods and services is not recoverable from
the taxation authority, in which case the Gst or Vat is recognised as part of the cost of acquisition of the asset or
as part of the expense item as applicable. receivables and payables are stated with the amount of Gst or Vat
included. the net amount of Gst or Vat recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the statement of financial position.
cash flows are included in the cash flow statement on a gross basis and the Gst or Vat component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
112
2. SuMMary oF SigniFicanT accounTing policiES (continued)
(Q) eXpLoration and eVaLuation eXpenditure
exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each
area of interest. such expenditure comprises net direct costs and an appropriate portion of related overhead
expenditure which can be directly attributed to operational activities in the area of interest, but does not include
general overheads or administrative expenditure not having a specific nexus with a particular area of interest.
each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a
mining operation.
expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all
expenditure incurred prior to securing legal rights to explore an area, is expensed as incurred. for each area of
interest the expenditure is recognised as an exploration and evaluation asset where the following conditions are
satisfied:
•
such costs are expected to be recouped through successful development and exploitation of the area of
interest or, alternatively, by its sale; or
• exploration activities in the area of interest have not, at balance date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves.
exploration and evaluation assets include:
• acquisition of rights to explore;
•
• exploration drilling, trenching and sampling; and
• activities in relation to evaluating the technical feasibility and commercial viability of extracting the mineral
topographical, geological and geophysical studies;
resources.
General and administrative costs are not recognised as an exploration and evaluation asset. these costs are
expensed as incurred.
exploration and evaluation assets are classified as tangible or intangible according to the nature of the assets. as
the assets are not yet ready for use, they are not depreciated. assets that are classified as tangible assets include:
• piping and pumps;
•
• exploration vehicles and drilling equipment.
tanks; and
assets that are classified as intangible assets include:
• drilling rights;
• acquired rights to explore;
• exploratory drilling costs; and
trenching and sampling costs.
•
exploration expenditure which no longer satisfies the above policy is written off. in addition, a provision is raised
against exploration expenditure where the directors are of the opinion that the carried forward net cost may not
be recoverable under the above policy. the increase in the provision is charged against the profit or loss for the
year.
When an area of interest is abandoned, any expenditure carried forward in respect of that area is written off in the
year in which the decision to abandon is made, firstly against any existing provision for that expenditure, with any
remaining balance being charged to profit or loss.
expenditure is not carried forward in respect of any area of interest/mineral resource unless the economic entity’s
rights of tenure to that area of interest are current. amortisation is not charged on areas under development,
pending commencement of production.
exploration and evaluation assets are assessed for impairment if:
•
•
sufficient data exists to determine technical feasibility and commercial viability: and
the term of exploration license in the specific area of interest has expired during the reporting period or will
expire in the near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of mineral resources in the specific area are
not budgeted nor planned;
•
113
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
• exploration for and evaluation of mineral resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and a decision has been made to discontinue such
activities in the specified area; or
sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
•
the value of r&d tax incentives received in relation to exploration assets is recognised by deducting the grant
when arriving at the carrying value of the asset.
for the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units
to which the exploration activity relates. the cash generating unit shall not be larger than the area of interest. each
area of interest is reviewed at the end of each accounting period and accumulated costs are written off to the
extent that they are not expected to be recoverable in the future.
(r) rehabiLitation proVision
a provision has been made for the present value of anticipated costs for future rehabilitation of land explored or
mined. the Group’s mining and exploration activities are subject to various laws and regulations governing the
protection of the environment. the Group recognises management’s best estimate for assets retirement obligations
and site rehabilitations in the period in which they are incurred. actual costs incurred in the future periods could
differ materially from the estimates. additionally, future changes to environmental laws and regulations, life of mine
estimates and discount rates could affect the carrying amount of this provision.
(s) criticaL accountinG JudGements and KeY sources of estimation uncertaintY
in the application of aasb’s management is required to make judgments, estimates and assumptions about
carrying values of assets and liabilities that are not readily apparent from other sources. the estimates and
associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstance, the results of which form the basis of making the judgments. actual results
may differ from these estimates. the estimates and underlying assumptions are reviewed on an ongoing basis.
revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects
only that year, or in the year of the revision and future years if the revision affects both current and future years.
Judgments made by management that have significant effects on the financial statements and estimates with a
significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the
financial statements and include:
• Note 8 - Deferred exploration, evaluation and development
exploration and evaluation costs have been capitalised on the basis that mineral resource drilling is ongoing
and that the Group may commence commercial production in the future, from which time the costs will be
amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering
costs to be capitalised which includes determining expenditures directly related to these activities and
allocating overheads between those that are expensed and capitalised. in addition, costs are only capitalised
that are expected to be recovered either through successful development or sale of the relevant mining
interest.
• Note 11 – Provisions
a provision has been made for the present value of anticipated costs for future rehabilitation of land explored or
mined. the Group’s exploration activities are subject to various laws and regulations governing the protection
of the environment. the Group recognises management’s best estimate for assets site rehabilitations in the
period in which they are incurred. actual costs incurred in the future periods could differ materially from the
estimates.
• Note 15 - Measurement of share based payments
the Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. the fair value is determined by using black-scholes
model taking into account the terms and conditions upon which the instruments were granted. the accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss
and equity.
114
2. SuMMary oF SigniFicanT accounTing policiES (continued)
(t) earninGs per share
the Group presents basic and diluted earnings per share (EpS) data for its ordinary shares. basic eps is calculated
by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average
number of ordinary shares outstanding during the period. diluted eps is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding which
have been issued for no consideration in relation to the dilutive potential ordinary shares, which comprise share
options granted to employees, contract personnel, shareholders and corporate entities engaged by the Group,
that are expected to be exercised.
(u) seGment reportinG
(i) Determination and presentation of operating segments
an operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components. all operating segments’ operating results are regularly reviewed by the Group’s
managing director and chief executive officer to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial information is available.
segment results that are reported to the managing director and chief executive officer include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis. unallocated items
comprise mainly corporate assets (primarily the company’s headquarters), head office expenses, and income
tax assets and liabilities. segment capital expenditure is the total cost incurred during the period to acquire
plant and equipment, and intangible assets other than goodwill.
(V) share capitaL
ordinary shares are classified as equity. incremental costs directly attributable to the issue of ordinary shares and
share options are recognised as a deduction from equity, net of any tax effects. dividends on ordinary shares are
recognised as a liability in the period in which they are declared.
(W) determination of fair VaLues
a number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. fair values have been determined for measurement and / or
disclosure purposes based on the following methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
(i) Share-based payment transactions
the fair value of the employee share options and the share appreciation rights is measured using the black-
scholes formula. measurement inputs include share price on measurement date, exercise price of the
instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected
due to publicly available information), weighted average expected life of the instruments (based on historical
experience and general option holder behavior), expected dividends, and the risk-free interest rate (based
on government bonds). service and non-market performance conditions attached to the transactions are not
taken into account in determining fair value.
(X) fair VaLue measurement hierarchY
the Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based
on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices
(unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly; and Level 3: unobservable inputs for the asset or liability. considerable judgement is required
to determine what is significant to fair value and therefore which category the asset or liability is placed in can be
subjective.
the fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. these
include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on
unobservable inputs.
(Y) roundinG of amounts
the company is of a kind referred to in the corporations instrument 2016/191, issued by the australian securities and
investment commission, relation to ‘rounding off’. amounts in this report have been rounded off in accordance
with that corporations instrument to the nearest thousand dollars or in certain cases, to the nearest dollar.
115
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
3. rEVEnuES anD ExpEnSES
other income
sundry revenue
profit on sale of plant, equipment and tenement data
total other income
Finance expenses
interest and finance charges paid/payable
total finance expenses
other expenses
directors fees and employment expenses
contractor, consultants and advisory expenses
employee expenses
share based payment expense
travel and accommodation
depreciation
net foreign exchange loss
other corporate and administrative expenses
total other expenses
2018
$’000
6
1,276
1,282
2,005
2,005
195
2,192
---
426
475
45
283
37
3,653
2017
$’000
88
---
88
273
273
125
474
765
195
182
22
99
648
2,510
116
4. caSh anD caSh EQuiValEnTS
cash and cash equivalents (a)
short term deposits (b)
2018
$’000
4,782
29
4,811
(a)
(b)
cash and cash equivalents earn interest at floating rates based on daily bank rates.
short term deposits are made for varying periods, between one day and one month.
reconciliation from the net loss after tax to the net cash flows used in operations
2018
$’000
2017
$’000
3,331
75
3,406
2017
$’000
net loss
adjustments for:
depreciation
movement in securities in other entities
share based payments expense
trade payables paid via shares
interest on preference shares
deferred exploration, evaluation and development impairment
Gain on disposal of plant and equipment
Gain on foreign exchange
changes in assets and liabilities:
decrease in trade and other payables
(increase) other current assets
(increase) in prepayments
increase in other non-current liabilities
(decrease)/increase in provisions
net cash used in operating activities
(8,833)
(7,930)
45
440
426
---
---
---
(1,276)
283
1,122
(7,798)
---
8,805
219
(6,567)
22
312
195
219
369
1,617
20
---
---
(2,141)
(52)
858
(32)
(6,543)
the settlement of outstanding directors’ and creditors’ fees through the issue of shares to the value of $nil (2017: $0.2m),
constitutes a non-cash operating activity and is not included in the consolidated statement of cash flows.
117
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
5. TraDE anD oThEr rEcEiVaBlES
current receivables:
security deposits and environmental bonds (a)
other receivables
sale of connors arc project – Queensland
net smelter royalty receivable from centennial mining Limited
interest receivable
non-current receivables:
net smelter royalty receivable from centennial mining Limited
security deposits and environmental bonds (a)
2018
$’000
215
626
2,500
---
3
3,344
---
2,305
2,305
2017
$’000
180
157
---
---
1
338
438
2,206
2,644
other receivables are non-interest bearing and are generally on 30-day terms.
(a)
security deposits and environmental bonds comprise cash placed on deposit to secure bank guarantees in
respect of obligations entered into for office rental obligations and environmental performance bonds in south
africa and australia. these deposits are not available to finance the Group’s day to day operations.
during the financial year ending 30 June 2017, the company acquired agama exploration and mining
proprietary Limited (agama), a south african registered company, which, through its subsidiary companies,
holds an effective 73.33% interest in a portfolio of projects including an advanced volcanic massive sulphide
zinc-copper exploration project with near-term production potential at the prieska Zinc-copper project,
located near copperton in the northern cape province of south africa (prieska project). the Group also has
environmental obligations for the prieska project. this amount is held on deposit via a call account with the bank
and by bank guarantee issued to the government body. these funds can be applied by the government body
for rehabilitation works should the Group fail to meet regulatory standards for environmental rehabilitation. this
deposit offsets the provisional non-current liability held in the Groups accounts (refer note 11).
6. SEcuriTiES in oThEr EnTiTiES
opening balance – 1 July
revaluation movement
unlisted securities in other entities at fair value (a)
Listed securities in other entities at fair value
closing balance – 30 June
2018
$’000
455
(455)
15
15
2017
$’000
548
(93)
---
455
securities held in other entities as an investment of unlisted options in a listed company on the asX. the fair value of
these securities is measured using an appropriate financial model, including the value of the entities share price, as
published, in the relevant market domain. securities held in other entities as an investment of shares are those listed on
the asX. Valuation as at period end is calculated using closing share price at that time.
(a)
as at 30 June 2018, there was an indication that the company’s carrying amount of unlisted securities held in
other entities may not be fully recoverable. as the carrying amount exceeded the recoverable amount, the
asset was impaired and written down to its recoverable amount.
118
7. planT anD EQuipMEnT
opening cost - 1 July
accumulated depreciation
opening written down value
additions
disposals or write offs
depreciation expense for the year
Written down value at 30 June
8. DEFErrED ExploraTion, EValuaTion anD DEVElopMEnT
acquired mineral rights
opening cost
exploration and evaluation acquired - restated (a)
exploration, evaluation and development
Deferred exploration and evaluation expenditure
opening cost
expenditure incurred
r&d tax offset received in relation to exploration assets
exploration expensed
impairment
asset derecognised – sale of tenements (b)
deferred exploration and evaluation expenditure
nET carrying aMounT aT 30 JunE
2018
$’000
1,069
(978)
91
101
---
(45)
147
2018
$’000
14,161
---
14,161
915
17,638
---
(2,371)
---
(1,224)
14,958
29,119
2017
$’000
1,011
(955)
56
77
(20)
(22)
91
2017
$’000
2,229
11,932
14,161
1,002
5,070
(343)
(3,198)
(1,617)
---
914
15,075
(a)
on 29 march 2017, the company completed the acquisition of agama, an unlisted south african registered
company. following the acquisition, through its subsidiary companies, the company holds an effective 73.33%
interest in the prieska project. the purchase consideration paid on settlement of the acquisition was $6.53m, of
which $3.32m was paid in cash and $2.18m was paid by the issue of 94.32m orion shares. each share has an
attached unlisted orion option, exercisable at $0.0462 and expiring 29 march 2019 ($1.03m) in addition, the
company provided finance for agama to enable it to settle all historical shareholder loans to an aggregate
amount of approximately $3.33m. at initial recognition, the company measured the agama acquisition at its
fair value, being $9.23m and non-controlling interest at $2.70m for a total investment of $11.93m.
(b)
on 2 may 2018, the company signed a binding sale agreement with evolution mining Limited for 100% interest
in connors arc project tenements. under the terms of the sale agreement, completion was achieved as at 30
June 2018 and as a result, the project was derecognised at its carrying value of $1.224m.
119
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
9. loan - JoinT VEnTurE parTnErS
in september 2017, the company entered into a binding earn-in agreement to acquire the earn-in rights over the
Jacomynspan nickel-copper-pGe project (south africa) (Jacomynspan project) from two companies, namaqua nickel
mining (pty) Ltd and disawell (pty) Ltd (namaqua Disawell companies), which hold partly overlapping prospecting
rights and mining right applications. the earn-in agreement is principally on the same terms as the binding term sheet
entered into in July 2016.
orion’s earn-in right will be via a south african-registered special-purpose vehicle and subsidiary of the company,
area metals holdings no 3 (pty) Ltd (aMh3), which was established by the company as its vehicle for investment in
the joint ventures and of which, historically-disadvantaged south african (hDSa) shall hold a minimum of 26% of the
issued shares.
Key terms of the transaction are set out below:
• AMH3 has the exclusive opportunity to earn up to an 80% interest (Orion 59.2%) in the Namaqua Disawell
companies. the namaqua disawell companies are privately owned south african companies with 26% or greater
hdsa ownership;
• All the conditions to the commencement of earn-in rights were fulfilled in February 2018 (Earn-in commencement);
In February 2018, AMH3 earned its initial interest of 25% (Orion 18.5%) in the Namaqua Disawell Companies after
•
having spent $0.66m on the Jacomynspan project and in march 2018, namaqua disawell companies issued amh3
with fully paid ordinary shares in the namaqua disawell companies which resulted in amh3 being the holder of 25%
(orion 18.5%) of the total shares on issue (First Earn-in right);
• Once AMH3 earned the initial 25% interest:
-
the namaqua disawell companies will record a shareholder loan account in favour of amh3 to the value of
the first earn-in right expenditure incurred by orion and shall continue to record further expenditure by amh3
as an increase in the shareholder loan account (orion loan);
- orion can elect to increase its interest via further expenditure, as detailed below, or maintain its 25% (orion
18.5%) interest by contributing pro-rata to exploration; and
- Within 30 days, the parties will negotiate the terms of a shareholders agreement to govern the terms of
relationship between the shareholders.
• Following the First Earn-in Right, should Orion elect to increase its interest via further expenditure, AMH3 can earn a
further 25% interest (making its total interest 50% (orion 37%)) by expending a further $1.32m on the Jacomynspan
project ($1.98m total expenditure) over a further 12 months (2 years from earn-in commencement) (Second Earn in
right).
• Once AMH3 has earned a 50% interest:
-
the namaqua disawell companies will issue orion with shares which shall result in amh3 being the holder of 50%
of the total shares on issue immediately following such issue of shares; and
- orion can elect to increase its interest via further expenditure, as detailed below, or maintain its 50% interest by
contributing pro-rata to exploration.
• Following the Second Earn-In Right, should Orion elect to increase its interest via further expenditure, AMH3 can
earn a further 30% interest (making its total interest 80% (orion 59.2%)) by:
-
expending a further $0.66m on the Jacomynspan project ($2.64m total expenditure) over a further 12 months (3
years from earn in commencement);
- completing a bankable feasibility study, which has been reviewed and signed off by an independent external
expert; and
- providing or securing project finance terms to develop a mining operation within the project area as per the
bankable feasibility study and which shall not result in any shareholder dilution.
• On the Earn-In Commencement, Orion was appointed as the operator and manager of the joint ventures and has
•
the right to appoint a minimum of one director to the boards of the namaqua disawell companies.
The Namaqua Disawell Companies shareholders on the date of execution of the term sheet (Signature Date)
are entitled to a 2% royalty in proportion to their beneficial interest in the namaqua disawell companies at the
signature date, on net smelter returns arising from the production and sale of metals from the Jacomynspan
project’s samrec resource as at the signature date (royalty). at any time following the earn-in commencement,
orion shall have the right at its sole discretion to buy out the royalty for an aggregate value of $2.65m.
• As noted above, all expenditure by Orion shall be advanced to the Namaqua Disawell Companies as an Orion
Loan. in addition to the orion Loan, the namaqua disawell companies have existing shareholder loans of Zar78.5m
(~$7.85m) as at the signature date (together Shareholder loans). following the completion of the first stage earn
in, the parties will negotiate the terms of a shareholders Loan to govern the terms of the shareholder Loans. the
shareholder Loan agreement will contain clauses normally contemplated by a formal agreement negotiated in
good faith between the parties.
120
orion fail to meet its earn-in right commitments, then either parties will re-negotiate the terms of the
sheet
orion will relinquish its rights to earn any further interest in
term
should
or, if the parties are unable to agree those new terms, then
the companies and the term sheet will be at an end.
as at 30 June 2018, the
orion Loan totalled $1.03m.
10. TRADE & OTHER PAYABLES
current
trade payables
other payables
11. proViSionS
current
employee benefits - annual leave
rehabilitation
non-current
rehabilitation (a)
employee benefits - long service leave
ToTal
(a)
2018
$’000
1,499
864
2,363
2018
$’000
138
---
138
1,963
2
1,965
2,103
2017
$’000
726
404
1,130
2017
$’000
48
---
48
1,832
4
1,836
1,884
in south africa, long term environmental obligations are based on the Group’s environmental plans, in
compliance with current environmental and regulatory requirements. full provision is made based on the
net present value of the estimated cost of restoring the environmental disturbance that has occurred up to
the reporting date. the estimated cost of rehabilitation is reviewed annually and adjusted as appropriate for
changes in legislation. the rehabilitation provision for the Group’s south african project is offset by a guarantee
held on deposit (refer note 5).
in australia, the state government regulations in the various states in which the Group operates require
rehabilitation of drill sites including any other sites where the Group has caused surface and ground disturbance.
the costs are not of a material nature and vary across disturbance sites. to date rehabilitation has taken place
on drill sites as drill rigs are moved as part of the exploration program when drilling in a particular area of interest
is complete or not active for an extended period of time due to other drilling project priorities.
121
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
12. loanS WiTh oThEr EnTiTiES anD rElaTED parTiES
current
bridge loan (a)
non-current
aasmf loan (b)
ToTal
(a)
bridge Loan
2018
$’000
6,875
6,875
1,539
1,539
8,414
2017
$’000
---
---
---
---
---
the company announced to the asX on 18 august 2017 that a $6.0m bridge loan facility agreement (loan
Facility) had been entered into with tembo capital mining fund ii Lp and its affiliates (Tembo capital), a
cornerstone shareholder of the company.
the key terms of the bridge Loan agreement are:
• Bridge Loan Amount - Up to $6.0M, available in two tranches. The first tranche is to be in one instalment of
$3.0m and the second tranche is to be in minimum instalments of $1.0m each;
Interest - capitalised at 12% per annum accrued daily on the amount drawn down;
•
• Repayment - repayable on the earlier of 15 December 2017 and the completion of a capital raising(s)
whether by way of a pro rata issue and/ or security purchase plan of shares and/or a placement
or placements of shares undertaken by the company to raise such amount as is required, in tembo’s
reasonable opinion, to progress the prieska project bfs, continue exploration programs at the company’s
south african projects and for working capital (equity capital raising);
• Equity Capital Raising - the Company will use its best endeavours to undertake an Equity Capital Raising
before 15 december 2017. orion shall procure that tembo (or its affiliate) is offered the right to underwrite
or sub-underwrite any pro rata issue and/or security purchase plan which form part of an equity capital
raising, on standard market terms and conditions;
• Set-off under Entitlement Offer - repayment of the Bridge Loan will be set off against the amount to be
paid by tembo for the issue and allotment of shares to tembo under the equity capital raising and/or at
tembo’s election against the underwriting amount payable by tembo in respect of any shortfall under any
‘pro rata issue’ which form part of an equity capital raising in its capacity as underwriter or sub-underwriter.
any surplus amount owing by tembo after the set-off will be paid by tembo in accordance with the terms
of the relevant equity capital raising and the underwriting arrangements (as applicable);
• Establishment fee - capitalised at 5% of the Bridge Loan facility amount; and
• Security - the Bridge Loan is unsecured.
on 15 november 2017, an extension to the term of the Loan facility from 15 december 2017 to 31 may 2018,
was agreed between the parties. the extension to the term of the Loan facility ensured that proceeds from the
recent capital raisings and Loan facility can be used to progress the company’s prieska Zinc-copper project
in south africa.
as part of the terms of amendment, the company agreed to increase the establishment fee from 5% to 6.67%
of the Loan facility amount (capitalised).
on 31 may 2018, an extension to the term of the Loan facility from 31 may to 30 september 2018 was agreed
between the parties. the extension to the term of the bridge Loan relieved orion of its requirements to repay
the loan by 31 may 2018 ensuring that proceeds from the iGo placement (as outlined in placements above)
could be used principally to progress the redevelopment of orion’s flagship prieska Zinc-copper project in
south africa and progress its highly prospective regional nickel-copper-cobalt and Zinc-copper exploration
projects within the areachap belt.
at the end of the reporting period, the company had drawn the bridge Loan in full, $6.0m. capitalised interest
and fees owed totalled $0.88m.
122
12. loanS WiTh oThEr EnTiTiES anD rElaTED parTiES (continued)
on 25 June 2018, the company announced that tembo capital had subscribed for $6.3m in shares, at an
issue price of 3.7 cents per share. orion agreed with tembo capital, that tembo capital’s share subscription
be issued in consideration for reducing the amount re-payable to tembo capital under the Loan facility at
a deemed issued price of 3.7 cents per share. the shares were issued to tembo capital on 23 august 2018,
reducing the balance of the Loan facility (including accrued interest) to $0.58m.
(b)
aasmf Loan
on 2 november 2015, repli trading no 27 (pty) Ltd (repli) (a 73.33% owned subsidiary of agama exploration
& mining (pty) Ltd (agama)) and anglo american sefa mining fund (aaSMF) entered into a loan agreement
for the further exploration and development of the prieska project. under the terms of the loan, aasmf shall
advance Zar14.25m to repli. the key terms of the agreement are as follows:
• Loan amount ZAR14.25M;
•
•
Interest rate will be the prime lending rate in South Africa;
The disbursement of the loan will be subject to AASMF notifying Repli that it is satisfied with the results of the
updated scoping study;
• Repayment date will be the earlier of 3 years from the date of the advance or on the date which Repli
raises any additional finance for the further development of the prieska project; and
• On the advancement of the loan, 29.17% of the shares held in Repli by the Agama group (a wholly owned
subsidiary of orion), will be pledged as security to aasmf for the performance of repli’s obligations in terms
of the loan.
on 1 august 2017, repli drew down on the available aasmf loan in full (~$1.539m (Zar14.25m) principal and
accrued interest as at 30 June 2018).
123
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
13. prEFErEncE SharES
aasmf preference shares - principal
aasmf preference shares - provision for dividends and
settlement premium
ToTal
2018
$’000
1,550
619
2,169
2017
$’000
1,586
369
1,955
preference shares are classified as financial liabilities and therefore the accrued dividends and settlement premium
are recorded as an interest expense in the consolidated statement of profit and loss and other comprehensive
income.
14
november
repli, applied for a funding facility from the
on
approved
2014,
and conditions.
preference shares and the second tranche for Zar14.25m
funding
the funding is provided in two tranches, the first tranche for Zar15.75m
aasmf
for the further exploration and development of the
subject
certain
by way of the issue of
(refer
by way of a loan from
aasmf
the
Zar30.0m,
note 12).
amount
facility
aasmf
prieska
an
for
to
of
project.
terms
repli
aasmf
subscription
on 2
the
terms of the agreement,
Zar1 per redeemable preference share.
•
•
•
•
ZAR15.75M
lending
dividends
november 2015, a subscription agreement was entered into between
preference
repli and on the same day the
price was paid to
november 2015
under the
repli redeemable preference shares at a subscription price of
repli and
shares were issued to
aasmf, on 5
aasmf.
subscribed for 15.75m
the key terms of the agreement are as follows:
South
shares;
cumulative
preference
redeemable
prime
–
non-participating
price
rate
–
payment
(~$1.59M);
in
rate
accrue
15.75M
Subscription
Dividend
Dividend
which have accrued and accumulated from the date of issue until 2 years after the
(mining
4
the
years
redemption date;
date
Redemption
amount
Redemption
dividends
project mining right
right) has been issued shall become due and payable on the scheduled dividend date (approximately
relevant
after
Africa;
annually
Right
has
been
issued;
accumulated
subscription
dividends
accrued
balance
of
of:
percent
consists
prieska
Mining
based
date).
earlier
price.
years
years
paid
issue
date
after
after
and
issue
the
the
Fifty
be
the
the
the
the
the
at
to
on
of
of
or
is
4
7
•
•
Zar15.75m;
-
- any unpaid and accumulated dividends; and
-
settlement premium based on internal rate of return (irr) of 13.5%, taking into account all cash flows from the
preference shares in order to get an overall irr of 13.5% (irr is fixed for the duration that the preference shares
are outstanding).
• Preference shares are unsecured, but AASMF will hold 26% voting rights in Repli in the event that there is a default
on the part of repli; and
• Funding to principally used for a 12 month exploration program on the NW Oxide Zone at the Prieska Project and
the use the results to update the scoping study.
124
14. conVErTiBlE noTES
convertible notes – liability
opening balance
convertible note liability - movement
cloSing BalancE
2018
$’000
5,824
177
6,001
2017
$’000
---
5,824
5,824
refer to
note 15 for details in relation to the convertible note equity reserve.
february 2017, the
on 7
company announced that it was proposing to conduct a capital raising through the issue of
convertible notes to various sophisticated and professional investors, each with a face value of $0.026 (convertible
notes).
march 2017 the
convertible
notes issue at a meeting of shareholders held on 13
notes each
company issued 232,692,294
convertible
notes are summarised as follows:
convertible
company obtained shareholder approval for the
the
march 2017.
following obtaining approval, on 17
with a face value of $0.026, raising $6.05m. Key terms of the
•
•
•
•
Date:
12%
payable
elect
may
and
the
in
or
or
to
to
at
all
by
by
to
the
the
the
any
part
time
their
may
some
Notes
notice
arrears;
convert
redeem
convert
quarterly
Company
Company:
company,
Convertible
redemption
redemption
the
conversion
noteholder:
from
shares at the
the
17
per
Price:
holders
maturity
2019;
calculated
Share;
per
Convertible
of
notes is not less than $0.25m;
all
March
annum
$0.026
of
Notes
date, provided the total face value of the
elect
Maturity
Interest:
Conversion
Conversion:
prior to the
Early
Notes
by notice to the noteholder, however the noteholder shall have the right, within 14 days of receipt of an early
redemption
redemption
notice into
Early
if an event of default occurs and the noteholders by special resolution approve the redemption;
Convertible
or
noteholder
At
company permitted by
notes held by it for the redemption amount as part of an equity capital raising by the
the
the
such
redemption amount is set off against the amount payable by the noteholder to subscribe for securities under the
equity
Redemption
note.
if any
early repayment fee of 5% of the facility amount of the
company;
Transferrability:
Security:
Convertible
company within 12 months after their issue, an additional
notes being redeemed is payable by the
redemption
notes are redeemed by the
transferrable
and
the
amount:
convertible
to
an
subsidiaries.
except
its
price;
the
outstanding
noteholders
participate
Convertible
Convertible
convertible
convertible
Convertible
noteholder
noteholder;
Company
Company
raising),
secured
Maturity
redeem
redeem
amount
amount
subject
respect
raising,
affiliate
certain
require
(equity
before
which
facility
notes
deed
assets
have
Notes
Notes
Date,
early
some
each
note
elect
may
right
and
that
over
may
may
time
with
and
and
the
the
the
any
The
are
not
the
the
the
the
the
the
the
set
off
to
of
in
in
all
to
to
to
of
of
of
of
a
a
a
is
•
•
•
•
•
•
further details as to the key terms of the convertible notes are set out in the company’s 8 march 2017 asX release.
125
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
15. iSSuED capiTal anD rESErVES
ordinary fully paid shares
contributing shares
2018
$’000
102,460
---
102,460
2017
$’000
85,497
2
85,499
the following movements in issued capital occurred during the reporting period:
nuMBEr oF SharES
iSSuE pricE
$’000
ordinary fully paid shares
opening balance at 1 July 2017
917,420,440
share issues:
placement (17 august 2017)
placement (3 november 2017)
placement (18 december 2017)
placement (19 december 2017)
placement (29 december 2017)
placement (21 may 2018)
placement (29 June 2018)
Less: issue costs
73,000,000
144,583,329
84,583,333
10,416,666
60,000,000
100,000,000
91,600,000
---
$0.024
$0.024
$0.024
$0.024
$0.024
$0.050
$0.037
---
closing balance at 30 June 2018
1,481,603,768
ordinary fully paid shares
opening balance at 1 July 2017
contributing shares cancelled
closing balance at 30 June 2018
58,775
(58,775)
---
85,497
1,752
3,470
2,030
250
1,440
5,000
3,389
(368)
102,460
2
(2)
---
126
15. iSSuED capiTal anD rESErVES (continued)
the following movements in issued capital occurred during the prior period:
nuMBEr oF SharES
iSSuE pricE
$’000
ordinary fully paid shares
opening balance at 1 July 2016
475,037,870
share issues:
placement (19 september 2016)
placement (14 november 2016)
placement (23 december 2016)
placement (30 december 2016)
placement (30 december 2016)
placement (23 december 2016)
placement (8 march 2017)
issue – agama acquisition (29 march 2017)
placement (8 June 2017)
Less: issue costs
closing balance at 30 June 2017
contributing shares
opening balance at 1 July 2016
closing balance at 30 June 2017
other reserVes
share based payments
convertible note equity
foreign currency
9,100,000
72,222,221
55,555,553
25,000,000
5,555,555
1,461,111
54,166,666
94,321,464
125,000,000
---
917,420,440
58,775
58,775
$0.025
$0.018
$0.018
$0.020
$0.018
$0.018
$0.024
$0.023
$0.024
---
2018
$’000
2,103
230
127
2,460
75,963
228
1,300
1,000
500
100
26
1,300
2,169
3,000
(90)
85,497
2
2
2017
$’000
2,502
407
99
3,008
127
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
share based paYments reserVe - moVement
the employee share option and share plan reserve is used to record the value of equity benefits provided to employees
and directors as part of their remuneration.
the following movements in the share based payments reserve occurred during the period:
opening balance at 1 July 2016
share based payments expense
unlisted share options expired and transferred to accumulated losses (i)
agama acquisition
closing balance at 30 June 2017
share based payments expense
unlisted share options expired and transferred to accumulated losses (i)
closing balance at 30 June 2018
$’000
1,386
195
(112)
1,033
2,502
426
(825)
2,103
(i)
during the year, previously recognised share based payment transactions for options which had vested but
subsequently expired were transferred to accumulated losses.
the following options to subscribe for ordinary fully paid shares expired during the year:
claSS
unlisted options
unlisted options
unlisted options
unlisted options
unlisted options
unlisted options
total
nuMBEr oF opTionS
Expiry DaTE
ExErciSE pricE
1,000,000
1,000,000
1,000,000
9,000,000
9,000,000
9,000,000
30,000,000
30/04/2018
30/04/2018
30/04/2018
31/05/2018
31/05/2018
31/05/2018
$0.15
$0.25
$0.35
$0.15
$0.25
$0.35
128
16. incoME Tax
income taX eXpense
(Loss) before tax
income tax using the corporation rate of 27.5% (2017: 27.5%)
movements in income tax expense due to:
non deductible expenses
non assessable income
employee share based payments expensed
(under) / over provided in prior years
tax effect of tax losses not recognised
income tax expense/(benefit)
2018
$’000
(8,833)
(8,833)
(2,429)
---
---
117
(2,312)
2,312
---
2017
$’000
(7,930)
(7,930)
(2,181)
1
(12)
54
(2,138)
2,138
---
no income tax is payable by the Group. the directors have considered it prudent not to bring to account the future
income tax benefit of income tax losses and exploration deductions until it is probable that future taxable profits will be
available against which the unused tax losses can be utilised.
the Group has estimated un-recouped gross australian income tax losses of approximately $17.07m (2017: $74.32m)
which may be available to offset against taxable income in future years, subject to continuing to meet relevant
statutory tests.
the Group also has carry forward tax losses in south africa of approximately Zar3.85m (~$0.37m) (2017: ~$7.49m) and
unredeemed capital expenditure carried forward, which can be offset against future mining income, of Zar217.15m
(~$21.05m) (2017: nil). during the reporting period, the south african entities undertook a review of their taxation
requirements, as per applicable statutory legislation, resulting in a reclassification of reporting.
during the financial year, the Group began a review of the australian entities estimated un-recouped gross australian
income tax losses. initial results of this review, has identified approximately $15.0m which may be available to the
Group to offset against future taxable income. as at the date of this report, the review is on-going. such benefits have
not been recognised and will only be obtained if:
•
the Group derives future assessable income of a nature and an amount sufficient to enable the benefit from the
deductions for the loss to be realised;
the Group continues to comply with the conditions for deductibility imposed by tax legislation; and
•
• no changes in taxation legislation adversely affect the economic entity in realising the benefit from the deductions
for the losses.
to the extent that it does not offset a net deferred tax liability, a deferred tax asset has not been recognised in the
accounts for these unused losses because it is not probable that future taxable profit will be available to use against
such losses.
taX consoLidation
for the purposes of australian income taxation, the company and its 100% controlled australian subsidiaries have
formed a tax consolidation group. the parent entity, orion minerals Ltd, reports to the australian taxation office on
behalf of all the australian entities.
129
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
17. loSS pEr SharE
basic loss per share amounts are calculated by dividing the net loss for the year attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year.
diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of potentially
dilutive options and dilutive partly paid contributing shares).
the following reflects the income and share data used to calculate basic and diluted earnings per share:
a) Basic and diluted loss per share
Loss attributable to ordinary equity holders of the company
diluted loss attributable to ordinary equity holders of the company
b) reconciliation of loss used in calculating earnings per share
Loss attributable to ordinary shares
c) Weighted average number of shares
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share.
Weighted average number of ordinary shares and potential
ordinary shares used as the denominator in calculating diluted
earnings per share.
d) headline loss per share
Loss before income tax
impairment of non-current assets reversal
plant and equipment written off
adjusted earnings
Weighted average number of shares
earnings / (loss) per share (cents per share)
diluted earnings / (loss) per share (cents per share)
2018
cEnTS
(0.76)
(0.76)
2018
$’000
(8,833)
2017
cEnTS
(1.28)
(1.28)
2017
$’000
(7,930)
2018
nuMBEr
2017
nuMBEr
1,167,249,479
619,377,528
1,167,249,479
619,377,528
2018
$’000
(8,833)
---
---
(8,833)
2017
$’000
(7,930)
1,617
20
(6,293)
1,167,249,479
619,377,528
(0.76)
(0.76)
(1.02)
(1.02)
130
inSTruMEnTS
manaGement
18. Financial
financiaL
risK
Overview
the Group has exposure to the following risks from its use of financial instruments:
•
•
•
Market
Credit
Liquidity
risk.
risk.
risk.
note
this
the
processes for measuring and managing risk, and the management of capital.
information
exposure
presents
Group’s
about
each
the
to
of
above
risks,
its
objectives,
policies
and
the
board of
directors has overall responsibility for the establishment and oversight of the risk management framework.
risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits.
risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities.
audit
the Group’s
committee oversees how management monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced
by the Group.
the Group’s principal financial instruments are cash, short-term deposits, receivables, loan and payables.
marKet risK
market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income and expenses or the value of its holdings of financial instruments.
the objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
Equity price risk
the Group is currently not subject to equity price risk movement.
risk
rate
Interest rate risk
interest
risk
fluctuate due to changes in market interest rates.
assets
considered to be short-term liquid assets and investment decisions are governed by the monetary policy.
will
interest rate risk arises from fluctuations in interest bearing financial
are
equivalents
associated
instrument
instrument
comprise
financial
liabilities
bearing
interest
Group
which
assets
value
flows
cash
cash
cash
uses.
with
and
and
that
that
the
the
the
the
of
or
a
is
during the year, the Group had no variable rate interest bearing liability.
it is the Group’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on
overdue balances.
the Group is not materially exposed to changes in market interest rates.
1% variation in interest rates would result
in interest revenue changing by up to $10,000 (2017: $1,000) based on year-end cash balances, and $nil (2017: $nil)
based on year-end security bonds and deposits balances, assuming all other variables remain unchanged.
a
the Group does not account for any fixed rate financial assets and liabilities at fair value through profit and loss.
credit risK
credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.
the
Group
receivables.
south
impaired.
african
does
not
presently
receivables
outstanding
consequently
customers
the
from
from
Gst
trade and other receivables are neither past due nor
office and security bonds and deposits.
does
not
australian
have
represent
exposure
Vat
have
taxation
refundable
refundable
office,
credit
and
to
other
revenue
131
ORION MINERALS ANNuAL REpORt - 2018
noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
LiQuiditY risK
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. the Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation. refer to note 2(a) for a summary of the Group’s current plans for managing its
liquidity risk.
the Group’s objective is to maintain a balance between continuity of funding and flexibility. the Group’s exposure
to financial obligations relating to corporate administration and projects expenditure, are subject to budgeting and
reporting controls, to ensure that such obligations do not exceed cash held and known cash inflows for a period of at
least 1 year.
Fair value of financial assets and liabilities
the fair value of cash and cash equivalents and non-interest bearing financial assets and financial liabilities of the
Group is equal to their carrying value.
Foreign currency risk
the Group is exposed to fluctuations in foreign currencies arising from expenditure in currencies other than the Group’s
measurement currency. the Group has foreign operations with functional currencies in south african rand. the Group
has not formalised a foreign currency risk management policy, however it monitors its foreign currency expenditure in
light of exchange rate movements.
the Group has significant exposure to foreign currency risk, particularly between aud/Zar, at the end of the reporting
period. foreign exposure risk arises from future commercial transactions and recognised financial assets and financial
liabilities which are denominated in a currency other than the Group’s functional currency.
Commodity price risk
the Group’s exposure to price risk is minimal at this stage of the operations.
capitaL manaGement
the Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders. the management of the Group’s capital
is performed by the board.
the board manages the Group’s liquidity ratio to ensure that it meets its financial obligations as they fall due and
specifically allowing for the expenditure commitments for its mining tenements to ensure that the Group’s main assets
are not at risk.
refer to note 2(a) for a summary of the Group’s current plan for managing its going concern.
none of the Group’s entities are subject to externally imposed capital requirements.
the following table sets out the carrying amount, by maturity, of the financial instruments that are exposed to interest
rate risk:
132
18. Financial inSTruMEnTS (continued)
Weighted
average
interest rate
Floating
interest
rate
$’000
Fixed interest
rate maturing
in 1 year or
less $’000
Fixed interest
rate maturing
2 to 5 years
$’000
non-interest
bearing
$’000
0.10%
2.40%
12.00%
12.00%
13.50%
2.15%
4,811
---
4,811
---
---
---
---
---
---
3,023
3,023
6,001
6,875
---
---
12,876
---
---
---
---
1,539
2,169
---
3,708
---
2,626
2,626
---
---
---
2,363
2,363
Weighted
average
interest rate
Floating
interest
rate
$’000
Fixed interest
rate maturing
in 1 year or
less $’000
Fixed interest
rate maturing
2 to 5 years
$’000
non-interest
bearing
$’000
consolidated - 30 June 2018
Financial assets:
cash on hand and at bank
other receivables
total
Financial liabilities:
convertible note liability
Loans
preference shares
trade and other payables
total
consolidated - 30 June 2017
Financial assets:
cash on hand and at bank
other receivables
total
Financial liabilities:
0.92%
2.15%
3,386
---
3,386
---
---
---
---
2,386
2,386
---
---
---
---
438
438
5,824
---
5,824
19
158
177
---
1,130
1,130
convertible note liability
trade and other payables
12.00%
2.15%
total
Total
$’000
4,811
5,649
10,460
6,001
8,414
2,169
2,363
18,947
Total
$’000
3,405
2,982
6,387
5,824
1,130
6,953
133
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
19. coMMiTMEnTS anD conTingEnciES
tenement commitments – south africa and austraLia
the Group has a portfolio of tenements located in south africa and Victoria, which all have a requirement for a certain
level of expenditure each and every year in addition to annual rental payments for the tenements. future minimum
expenditure commitments as at 30 June for the australian tenements held, are as follows:
Within one year
after one year but not more than five years
more than five years
2018
$’000
26
---
---
26
2017
$’000
1,306
6,769
---
8,075
Guarantees
the company has the following contingent liabilities at 30 June 2018:
•
•
•
The Group has bank guarantees in favour of the South African Government for rehabilitation obligations. The total
of these guarantees at 30 June 2018 was $2.30m (2017: $1.99m).
The Group also has negotiated bank guarantees in favour of the Victorian Government for rehabilitation obligations
of mining and exploration tenements. the total of these guarantees at 30 June 2018 was $0.25m (2017: $0.25m). the
Group has sufficient term deposits to cover the outstanding guarantees.
It has guaranteed to cover the directors and officers in the event of legal claim against the individual or as a group
for conduct which is within the company guidelines, operations and procedures.
as part of the Group’s environmental policy exploration and access sites are regenerated to match or exceed local
government and state government expectations. the costs are not considered to be material by the group however
this policy will be reviewed as exploration and development activities increase as the company moves closer towards
commercial production.
rentaL propertY commitments
the Group has entered into a commercial lease for office space in melbourne, Victoria, for one year (expiring august
2018) and an office in Kimberley, south africa for three years (expiring 31 may 2020).
there are no restrictions placed upon the lessee by entering into these leases apart from the 12 month commitment
from the agreement dates.
future minimum rentals payable under non-cancellable commercial leases as at 30 June are as follows:
Within one year
after one year but not more than five years
more than five years
2018
$’000
53
36
---
89
2017
$’000
53
72
---
125
Guarantees
the company has the following bonds at 30 June 2018:
•
The Group has negotiated guarantees in favour of rental agreements. The total of these guarantees at 30 June
2018 was $3,117 (2017: $3,117).
134
20. rESTaTEMEnT oF prior pErioD BalancES
on 29 march 2017, the company completed the acquisition of agama, an unlisted south african registered company.
following the acquisition, through its subsidiary companies, the company holds an effective 73.33% interest in the
prieska project. the purchase consideration paid on settlement of the acquisition was $6.53m, of which $3.32m was
paid in cash and $2.18m was paid by the issue of 94.32m orion shares. each share has an attached unlisted orion
option, exercisable at $0.0462 and expiring 29 march 2019 ($1.03m). in addition, the company provided finance for
agama to enable it to settle all historical shareholder loans to an aggregate amount of approximately $3.33m. at initial
recognition, the company measured the agama acquisition (73.33%) at its fair value, being $9.23m.
following year end, consideration was given to aasb 10 regarding recognition of minority interest in a subsidiary entity
upon acquisition. the acquisition of between 73.33% to 100% interest in the subsidiaries of agama by orion resulted in
orion’s black economic empowerment partners retaining up to 26.67% of certain subsidiaries of agama (refer to note
21 for subsidiary list). it is this minority interest that is required to be recognised and has resulted in a restatement of the
Group’s consolidated statement of financial position as at 30 June 2017, including movement in the period from the
date of acquisition of agama (29 march 2017) to the end of the reporting period.
in accordance with aasb 101 presentation of financial statements, the consolidated statement of financial position
balances have been corrected as follows:
• Non-controlling Interest reserve – increased by $2.70M to recognise the non-controlling interest; and
• Deferred exploration, evaluation and development – increased by $2.70M to record the non-controlling interest
share of the additional investment valuation of the asset acquisition.
135
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
21. conTrollED EnTiTiES
the consolidated financial statements include the financial statements of the company and the subsidiary’s listed in
the following table.
parEnT oWnErShip
inTErEST
non-conTrolling
inTErEST
counTry oF
incorporaTion
2018
%
2017
%
2018
%
2017
%
EnTiTy
parent entity
orion minerals Ltd
subsidiaries
Goldstar resources (Wa) pty Ltd
Kamax resources Limited
areachap holdings no1 pty Ltd
areachap holdings no 2 pty Ltd
areachap holdings no 3 pty Ltd
rsa services Ltd
areachap holdings no1 (mauritius) Ltd
areachap holdings no 2 (mauritius) Ltd
areachap holdings no 3 (mauritius) Ltd
australia
australia
australia
australia
australia
australia
australia
mauritius
mauritius
mauritius
orion Group services international Ltd
seychelles
agama exploration & mining (pty) Ltd
south africa
area metals holdings no 1 (pty) Ltd
area metals holdings no 2 (pty) Ltd
area metals holdings no 3 (pty) Ltd
area metals holdings no 4 (pty) Ltd
area metals holdings no 5 (pty) Ltd
orion exploration no 1 (pty) Ltd
orion exploration no 4 (pty) Ltd
orion exploration no 5 (pty) Ltd
south africa
south africa
south africa
south africa
south africa
south africa
south africa
south africa
orion services south africa (pty) Ltd
south africa
nabustax (pty) Ltd
itakane trading 217 (pty) Ltd
repli trading no 27 (pty) Ltd
rich rewards trading 437 (pty) Ltd
Vardocube (pty) Ltd
bartotrax (pty) Ltd
prieska copper mines Ltd
south africa
south africa
south africa
south africa
south africa
south africa
south africa
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
73.33
73.33
70.00
73.33
97.46
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
---
---
---
100
100
100
73.33
73.33
70.00
73.33
97.46
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
26.67
26.67
30.00
26.67
2.54
26.67
26.67
30.00
26.67
2.54
terms and conditions of transactions With reLated parties
sales to and purchases from related parties are made at both market prices and normal commercial terms.
136
21. conTrollED EnTiTiES (continued)
summarised financial information of the subsidiary, agama exploration & mining (pty) Ltd, that is material to the con-
solidated entity is set out below:
agaMa ExploraTion & Mining (pTy) lTD
Summarised state of financial position
current assets
non-current assets
total assets
current liabilities
non-current liabilities
total liabilities
ToTal nET aSSETS
Summarised statement of profit or loss and other comprehensive income
revenue
expenses
Loss before income tax expense
income tax expense
Loss after income tax expense
other comprehensive income
total comprehensive income
22. non-conTrolling inTErEST
opening balance – 1 July
Movement
issued capital
reserves
retained (losses)
closing balance – 30 June
2018
$’000
1,117
32,349
33,466
1,489
31,252
32,741
725
---
(1,938)
(1,938)
---
(1,938)
---
(1,938)
2018
$’000
2,670
---
---
(437)
2,233
2017
$’000
480
16,749
17,320
362
14,314
14,676
2,553
18
(153)
(135)
---
(135)
---
(135)
2017
$’000
---
---
---
2,670
2,670
the non-controlling interest parties have the following interest in the Group south african subsidiaries:
repli trading no 27 (pty) Ltd 26.67% (2017: 26.67%), rich rewards trading 437 (pty) Ltd 26.67% (2017: 26.67%), Vardocube
(pty) Ltd 30% (2017: 30%), bartotrax (pty) Ltd 26.67% (2017: 26.67%) and prieska copper mines Ltd 2.54% (2017: 2.54%).
137
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
23. rElaTED parTiES DiScloSurE
KeY manaGement personneL compensation
the key management personnel compensation included in administration expenses and exploration and evaluation
expenses (refer note 3) and deferred exploration, evaluation and development (refer note 8) is as follows:
short-term employee benefits
share-based payments
conSoliDaTED
2018
$’000
1,628
206
1,834
2017
$’000
975
176
1,151
Individual directors and executives compensation disclosures
information regarding individual directors and executives’ compensation and some equity instruments disclosures as
required by corporations regulations 2m.3.03 is provided in the remuneration report section of the directors’ report.
KeY manaGement personneL and director transactions
a number of key management personnel, or their related parties, hold positions in other entities that result in them
having control, joint control or a relevant interest over the financial or operating policies of those entities.
a number of these entities transacted with the Group during the year. the terms and conditions of the transactions with
key management personnel and their related parties were no more favourable than those available, or which might
reasonably be expected to be available, on similar transactions to non-key management personnel related entities
on an arm’s length basis.
from time to time, directors of the Group, or their related entities, may provide services to the Group. these services are
provided on terms that might be reasonably expected for other parties and are trivial or domestic in nature.
on 21 december 2017, the company issued 10,416,666 shares at $0.024 per share to the company’s chairman, mr
denis Waddell (or nominee) to raise $0.25m. the issue of these shares was approved by the company’s shareholders
at the company’s General meeting held on 13 december 2017.
24. auDiTor rEMunEraTion
amounts received or due and receivable by rSM australia partners for:
an audit or review of the financial report of the company and
any other entity in the Group
tax compliance - australia
total amounts for rsm auditors
amounts received or due and receivable by BDo South africa for:
an audit or review of the financial report of the company and
any other entity in the Group
tax compliance
total amounts for bdo south africa auditors
Total amounts for auditors
2018
$’000
81
14
95
60
---
60
155
2017
$’000
47
7
54
54
---
54
108
138
25. SEgMEnT rEporTing
the Group’s operating segments are identified and information disclosed, where appropriate, on the basis of internal
reports reviewed by the company’s board of directors, being the Group’s chief operating decision maker, as de-
fined by aasb 8. reportable segments disclosed are based on aggregating operating segments where the segments
have similar characteristics.
the Group’s core activity is mineral exploration within south africa and australia. during the 2018 financial year, the
Group has actively undertaken exploration in south africa, with segment recording from 29 march 2017. no asset or
liability, or income in relation to the south african project has been recognised prior to acquisition in this reporting
period.
reportable segments are represented as follows:
30 June 2018
segment net operating loss after tax
other revenue – unallocated
depreciation
exploration expenditure written off and expensed
SEgMEnT non-currEnT aSSETS
30 June 2017
segment net operating loss after tax
other revenue – unallocated
depreciation
exploration expenditure written off and expensed
SEgMEnT non-currEnT aSSETS – rESTaTED
australia
$’000
(5,115)
---
(26)
(267)
5,594
South africa
$’000
(3,718)
---
(19)
(2,104)
27,007
australia
$’000
(5,683)
South africa
$’000
(2,247)
---
(22)
(434)
5,632
---
---
(3,147)
12,159
Total
$’000
(8,833)
---
(45)
(2,371)
32,601
Total
$’000
(7,930)
---
(22)
(3,581)
17,791
139
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
26. parEnT EnTiTy DiScloSurES
as at, and throughout, the financial year ending 30 June 2018 the parent company of the Group was orion minerals
Ltd.
result of parent entity
Loss for the period
other comprehensive income
total comprehensive loss for the period
Financial position of parent entity at year end
current assets
total assets
current liabilities
total liabilities
total net assets
Total equity of the parent entity comprising of:
issued capital
accumulated losses
other reserves
total equity
coMpany
2018
$’000
(5,113)
---
(5,113)
4,276
38,041
13,747
13,749
24,292
102,460
(80,272)
2,104
24,292
2017
$’000
(5,683)
---
(5,683)
3,043
19,307
621
6,446
12,861
85,499
(75,547)
2,909
12,861
parent entitY continGencies
the directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a
future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Parent entity commitments in relation to minimum expenditure on tenements:
Tenements
minimum expenditure requirement:
Within one year
one year later and no later than five years
Later than five years
total
Parent entity commitments in relation to rental property:
commitments
rental property commitments
2018
$’000
26
---
---
26
2018
$’000
89
2017
$’000
1,306
6,769
---
8,075
2017
$’000
2
continGent LiabiLities
the company has issued bank guarantees in respect of its rental agreements and mining tenements. under the terms
of the financial guarantee contracts, the company will make payments to reimburse the guarantors upon failure of
the company to make payments when due. refer to note 19 for further detail.
140
27. SharE BaSED payMEnTS
the Group has an option and performance rights plan (oprp) for the granting of options or performance rights to
employees. there were no options granted to employees and consultants during the financial year (2017: 36,900,000
options) under the company’s oprp.
outlined below is a summary of option movements during the financial year ended 30 June 2018 to employees under
the oprp:
granT DaTE
Expiry
DaTE
ExErciSE
pricE
BalancE
aT STarT
oF ThE
yEar
granTED
During
ThE yEar
(1)
ExErciSED
During
ThE yEar
ExpirED
During
ThE yEar
ForFEiTED
During
ThE yEar
BalancE
aT EnD oF
ThE yEar
consolidated as at 30 June 2018
31-may-17
31-may-22
$0.030 12,300,000
31-may-17
31-may-22
$0.045 12,300,000
31-may-17
31-may-22
$0.060 12,300,000
24-sep-13
31-may-18
$0.15
1,000,000
24-sep-13
31-may-18
$0.25
1,000,000
24-sep-13
31-may-18
$0.35
1,000,000
12-dec-14
30-nov-19
$0.045
250,000
12-dec-14
30-nov-19
$0.06
250,000
total
Weighted
average
exercise price
40,400,000
0.060
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
(1,000,000)
(1,000,000)
(1,000,000)
---
---
--- 12,300,000
--- 12,300,000
--- 12,300,000
---
---
---
---
---
---
---
---
250,000
250,000
---
(3,000,000)
---
37,400,000
---
---
---
0.044
141
ORION MINERALS ANNuAL REpORt - 2018 noTES To ThE conSoliDaTED
Financial STaTEMEnTS
for the Year ended 30 June 2018
outlined below is a summary of option movements during the financial year ended 30 June 2017 to employees
under the oprp:
BalancE
aT STarT
oF ThE
yEar
granTED
During
ThE yEar
(1)
ExErciSED
During
ThE yEar
ExpirED
During
ThE yEar
ForFEiTED
During
ThE yEar
BalancE
aT EnD oF
ThE yEar
granT DaTE
Expiry
DaTE
ExErciSE
pricE
consolidated as at 30 June 2018
31-may-17
31-may-22
31-may-17
31-may-22
31-may-17
31-may-22
$0.030
$0.045
$0.060
---
---
---
12,300,000
12,300,000
12,300,000
24-sep-13
31-may-18
$0.15
1,000,000
24-sep-13
31-may-18
$0.25
1,000,000
24-sep-13
31-may-18
$0.35
1,000,000
12-dec-14
30-nov-19
$0.045
250,000
12-dec-14
30-nov-19
$0.06
250,000
---
---
---
---
---
total
3,500,000
36,900,000
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
--- 12,300,000
--- 12,300,000
--- 12,300,000
---
---
---
---
---
1,000,000
1,000,000
1,000,000
250,000
250,000
--- 40,400,000
Weighted average exercise price
0.222
0.045
---
---
---
0.060
set out below are the unlisted options exercisable at the end of the financial year:
granT DaTE
31 may 2017
26 nov 2015
5 Jul 2013
5 Jul 2013
24 sep 2013
ToTal
Expiry DaTE
31 may 2022
30 nov 2020
30 apr 2018
31 may 2018
31 may 2018
2018
12,300,000
18,333,333
---
---
---
30,633,333
2017
---
18,333,333
2,000,000
14,000,000
4,000,000
38,333,333
2016
---
18,333,333
2,000,000
14,000,000
4,000,000
38,333,333
the fair values of the options are estimated at the date of grant using the black scholes option pricing model. total
expenses arising from share-based payment transactions recognised during the year as part of employee benefit
expense was $0.43m (2017: $0.20m). options which expired during the financial year were written back to accumu-
lated losses, $824,000.
the weighted average contractual life for the share options outstanding as at 30 June 2018 is between 1 and 4 years
(2017: 1 and 4 years).
142
28 SuBSEQuEnT EVEnTS aFTEr ThE BalancE DaTE
there has not arisen in the interval between the end of the financial year and the date of this report any item, trans-
action or event of a material and unusual nature likely, in the opinion of the directors of the company, to affect the
operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial
years except for those matters referred to below:
• On 21 September 2018, the Company announced an issue of 15.3M unlisted options to employees under the
company’s option and performance rights plan.
• A general meeting of shareholders was held on 3 August 2018 and approved the following:
-
IGO Share issue - the issue of 100.0m shares, at an issue price of 5.0 cents each, to iGo on 21 may 2018. the
company announced on 18 may 2018 that it had entered into a placement agreement with iGo pursuant
to which iGo agreed to subscribe for a placement of shares in the company at 5.0 cents per share to raise
$5m. further details of the placement agreement (including preferential rights granted to iGo in respect of
any potential joint venture or sale of the company’s nickel projects in the areachap belt, south africa), are
included in the company’s asX announcement dated 18 may 2018.
- General placement 1 and 2 Shares - the issue of 297.3m shares at an issue price of 3.7 cents per share as
1:
of
On
the
Tranche
Company
2:
price
these
Mr
2018,
share to raise $3.39m
a
stage
June
29
at3.7 cents per
The
second
of 3.7 cents per
follows:
• Tranche
Shares
•
issue
$7.86m.
to
•
Issue
of
6.76M
of $0.25m.
•
Issue
cents per
price
reducing the amount re-payable to
tembo, pursuant to which
shares were issued on 23
theseshares were issued on 23
A
share.
shares were issued on 15
(or
Denis
shares to
Tembo
3.7
further
the
august 2018.
Waddell
Capital:
tembo
to
of
mr
august 2018.
august 2018.
completed
raising
stage
to sophisticated and professional investors.
capital
the
first
of
a
by issuing
91.6M
capital
at
further
share, to professional and sophisticated investors to raise approximately
212.45M Shares
placement
involved
raising
of
a
an
his
involved
stage
denis Waddell (or his nominee) at an issue price of 3.7 cents per
nominee):
capital
raising
third
The
of
a
a
further placement
share, to raise a total
placement
shares issued to
of
102.70M
tembo
to
Shares
Tembo
issue
capital were issued in consideration for
a deemed
Capital,
at
tembocapital has advanced $6m
capital under the Loan facility between the
in funds to
orion (refer
company and
these
note 12).
-
Tembo Bridge Loan Conversion Shares – the issue of 70.22m shares to tembo capital (or its nominee) at a
deemed issue price of 3.7 cents per share in consideration for a further reduction in amounts re-payable under
the Loan facility.
143
ORION MINERALS ANNuAL REpORt - 2018
DirEcTorS’ DEclaraTion
1
2
3
4
in the opinion of the directors of orion minerals Ltd (the company):
(a) the consolidated financial statements and notes that are set out on pages 102 to 143 and the remuneration
report set out on pages 90 to 98, identified within in the directors’ report, are in accordance with the corporations
act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the
financial year ended on that date; and
(ii) complying with australian accounting standards (including the australian accounting interpretations) and
the corporations regulations 2001; and
the directors draw attention to note 2(a) to the consolidated financial statements which the directors have
considered in forming their view that there are reasonable grounds to believe that the company will be able to
pay its debts as and when they become due and payable.
the directors have been given the declarations required by section 295a of the corporations act 2001 from the
chief executive officer and chief financial officer for the financial year ended 30 June 2018.
the directors draw attention to note 2 to the consolidated financial statements, which includes a statement of
compliance with international financial reporting standards.
signed in accordance with a resolution of the directors:
Denis WaDDell
chairman
perth, Western australia
27 september 2018
144
inDEpEnDEnT
auDiTor’S rEporT
to the members of orion mineraLs Ltd
opinion
We have audited the financial report of orion minerals Ltd. (the company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
in our opinion the accompanying financial report of the Group is in accordance with the corporations act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance
for the year then ended; and
complying with australian accounting standards and the corporations regulations 2001.
(ii)
BaSiS For opinion
We conducted our audit in accordance with australian auditing standards. our responsibilities under those standards
are further described in the auditor’s responsibilities for the audit of the financial report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the corporations act 2001
and the ethical requirements of the accounting professional and ethical standards board’s apes 110 code of ethics
for professional accountants (the code) that are relevant to our audit of the financial report in australia. We have also
fulfilled our other ethical responsibilities in accordance with the code.
We confirm that the independence declaration required by the corporations act 2001, which has been given to the
directors of the company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
MaTErial uncErTainTy rElaTED To going concErn
We draw attention to note 2(a) (iii) to the financial report which indicates that the consolidated entity incurred a loss
of $8.833m for the financial year ended 30 June 2018. Group reported operating net cash outflows for the financial
year ended 30 June 2018 of $6.567m. these conditions, along with other matters as set forth in note 2(a) (iii), indicate
the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to
continue as a going concern. our opinion is not modified in respect of this matter.
kEy auDiT MaTTErS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. these matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. in
addition to the matter described in the material uncertainty related to Going concern section, we have determined
145
ORION MINERALS ANNuAL REpORt - 2018 inDEpEnDEnT
auDiTor’S rEporT (conTinuED)
to the members of orion mineraLs Ltd
the matter described below to be a key audit matter to be communicated in our report.
kEy auDiT MaTTEr
hoW our auDiT aDDrESSED ThiS MaTTEr
impairment of exploration assets
refer to note 8 in the consolidated financial statements
the Group has capitalised exploration and
evaluation expenditure, with a carrying value
of $17.639m as at 30 June 2018.
our audit procedures in relation to the carrying value of exploration
and evaluation expenditure included:
• obtaining evidence that the Group has valid rights to explore in
under aasb 6 exploration for and evaluation
of mineral resources, the Group is required to
test the exploration and evaluation asset for
impairment when facts and circumstances
suggest
the carrying amount may
exceed the recoverable amount.
that
We determined this to be a key audit matter
due to the significant management judgment
involved in assessing the carrying value of the
asset.
the specific areas of interest;
• enquiring with management and reviewing the basis on which
they have determined that the exploration and evaluation of
mineral resources has not yet reached the stage where it can
be concluded that no commercially viable quantities of mineral
resources exists;
•
• enquiring with management and reviewing budgets and plans
to determine that the Group will incur substantive expenditure
on further exploration for and evaluation of mineral resources in
the specific areas of interest;
reviewing whether management has received sufficient data to
conclude that the exploration and evaluation asset is unlikely to
be recovered in full from successful development or by sale; and
reviewing previous valuations performed by experts to further
support the carry value of the asset.
•
oThEr inForMaTion
the directors are responsible for the other information. the other information comprises the information included in the
Group’s annual report for the year ended 30 June 2018, but does not include the financial report and the auditor’s
report thereon.
our opinion on the financial report does not cover the other information and accordingly we do not express any form
of assurance conclusion thereon.
in connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in
the audit or otherwise appears to be materially misstated.
if, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
rESponSiBiliTiES oF ThE DirEcTorS For ThE Financial rEporT
the directors of the company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with australian accounting standards and the corporations act 2001 and for such internal control as
the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error.
in preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
146
inDEpEnDEnT
auDiTor’S rEporT (conTinuED)
to the members of orion mineraLs Ltd
auDiTor’S rESponSiBiliTiES For ThE auDiT oF ThE Financial rEporT
our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
australian auditing standards will always detect a material misstatement when it exists. misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
a further description of our responsibilities for the audit of the financial report is located at the auditing and assurance
standards board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
this description forms part of our auditor’s report.
rEporT on ThE rEMunEraTion rEporT
opinion on the remuneration report
We have audited the remuneration report included the directors’ report for the year ended 30 June 2018.
in our opinion, the remuneration report of orion minerals Ltd for the year ended 30 June 2018, complies with section
300a of the corporations act 2001.
responsibiLities
the directors of the company are responsible for the preparation and presentation of the remuneration report
in accordance with section 300a of the corporations act 2001. our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with australian auditing standards.
RsM aUsTRalia PaRTneRs
J s CROall
partner
dated: 27 september 2018
melbourne, Victoria
147
ORION MINERALS ANNuAL REpORt - 2018 BuSinESS rEViEW
aDDiTional aSx inForMaTion
SharEholDEr inForMaTion
for the Year ended 30 June 2018
Shareholdings
at 30 september 2018, the issued share capital of the company was held as follows:
100,001 and over
10,001 – 100,000
5,001 – 10,000
1,001 – 5,000
1 – 1,000
DiSTriBuTion oF orDinary SharES anD opTion holDErS
Fully paiD orDinary SharES
opTionS
no. of holders
no. of shares
no. of holders
no. of options
560
519
61
140
314
1,848,155,239
26,634,160
485,813
383,051
75,234
1,594
1,873,733,497
36
-
-
-
-
36
208,562,004
-
-
-
-
208,562,004
Holders of non-marketable parcels
number of fully paid ordinary shareholders with holdings of less than a marketable parcel on the asX register was 269.
148
ThE naMES oF ThE TWEnTy largEST holDErS
oF orDinary Fully paiD SharES arE:
1 ndouv capital X bV
2
3
independence Group nL
tarney holdings / dp Waddell super fund
4 Wyllie Group pty Ltd
5
6
7
8
silja investment Ltd
hsbc custody nominees (australia) Ltd
ilwella pty Ltd
power matla mining pty Ltd
9 delta resources management pty Ltd
10
11
12
botsis holdings pty Ltd
Jemaya pty Ltd
perth select seafoods pty Ltd
13 dr Leon eugene pretorius
14 delphi unternehmensberatung aktiengesellchaft
15
16
17
18
Johannes nicolaas hamman
berend van deventer
Kinsella holdings Ltd
baramakama investments holdings pty
19 mr mark William daniel & mrs suzanne daniel
20
belair australia pty Ltd
orDinary
SharES
%
430,918,918
23.00%
154,166,666
111,714,746
69,460,360
56,706,576
54,445,348
54,054,054
33,970,838
33,226,269
29,816,666
27,200,000
24,000,000
24,000,000
23,413,514
21,519,636
20,149,462
19,366,666
19,256,757
17,633,334
15,405,758
8.23%
5.96%
3.71%
3.03%
2.91%
2.88%
1.81%
1.77%
1.59%
1.45%
1.28%
1.28%
1.25%
1.15%
1.08%
1.03%
1.03%
0.94%
0.82%
1,240,425,568
66.20%
Total issued ordinary share capital
1,873,733,497
substantiaL sharehoLders
the following shareholders are recorded in the company’s register of substantial shareholders
holDErS giVing noTicE
DaTE oF noTicE
orDinary SharES aS
aT DaTE oF noTicE
% holDing aS aT
DaTE oF noTicE
ndovu capital X bV
denis Waddell
independence Group nL
27-08-2018
27-08-2018
27-08-2018
430,918,918
109,714,746
154,166,666
22.99
5.86
8.23
this information is based on substantial holder notifications provided to the company.
VotinG riGhts
Ordinary shares
carry a voting right of one vote per share.
franKinG credits
the company has nil franking credits.
149
ORION MINERALS ANNuAL REpORt - 2018 TEnEMEnT SchEDulE
proJEcT
south africa
prieska
marydale
prieska
prieska
righT / TEnEMEnT
STaTuS
granT DaTE
Expiry DaTE
holDEr (1) coMMEnTS
nc30/5/1/1/2/10445pr
Granted
08/09/2010
02/11/2019
nc30/5/1/2/2/10244pr
Granted
10/02/2010
29/02/2020
nc30/5/1/1/2/11841pr
Granted
09/03/2018
24/04/2023
nc30/5/1/1/2/11850pr
Granted
09/03/2018
08/03/2023
rep
rrt
Var
bar
orn 73.33%
orn 73.33%
orn 70.00%
orn 73.33%
Jacomynspan
nc30/5/1/1/2/10032mr
Granted
19/09/2016 not executed
nam
orn 18.50%
Jacomynspan
nc30/5/1/1/2/10938pr
Granted
09/11/2017
08/11/2022
Jacomynspan
nc30/5/1/1/2/11010pr
Granted
09/11/2017
08/11/2022
dis
dis
orn 18.50%
orn 18.50%
masiqhame
nc30/5/1/1/2/816pr
Granted
27/03/2014
11/03/2019
mas
orn 49.00%
nc30/5/1/1/2/11840pr Granted
29/08/2018
execution
pending
rep
orn 73.33%
prieska
prieska
prieska
prieska
nc30/5/1/1/2/10138mr application application
application
nc30/5/1/1/2/12197pr application application
application
nc30/5/1/1/2/12196pr application application
application
Vardocube
nc30/5/1/2/2/10146mr application application
application
Jacomynspan
nc30/5/1/1/2/12216pr application application
application
-
-
-
-
-
iGo
iGo
iGo
iGo
-
-
-
-
-
KmX 30%
KmX 30%
KmX 30%
KmX 30%
Granted
07/05/2015
06/05/2020
Granted
22/07/2015
21/07/2020
Granted
27/07/2015
26/07/2020
Granted
06/09/2016
05/09/2021
Granted
20/04/2012
19/04/2018 GrpL / iGo
KmX 35%
Granted
23/04/2012
22/04/2018
nbX / iGo
orn 10%
Granted
21/05/2013
20/05/2018
pon / iGo
orn 10%
Granted
19/06/2015
18/06/2020
pon / iGo
orn 10%
application application
application
application application
application
application application
application
-
-
-
-
-
-
Western australia
fraser range
fraser range
fraser range
fraser range
fraser range
fraser range
fraser range
fraser range
fraser range
fraser range
fraser range
e28/2367
e28/2378
e28/2462
e28/2596
e39/1653
e39/1654
e69/2379
e69/2707
e39/1658
e39/1818
e69/2706
150
proJEcT
Victoria
Walhalla
Walhalla
Walhalla
Walhalla
Walhalla
righT / TEnEMEnT
STaTuS
granT DaTE
Expiry DaTE
holDEr (1) coMMEnTS
min54872
Granted
20/08/2008
19/08/2018
eL53403
eL5348
eLa5042
eLa6069
Granted
6/06/2013
5/06/2016
Granted
6/06/2013
5/06/2018
application application
application
application application
application
orn
orn
orn
-
orn 100%
orn 100%
orn 100%
-
(1)
(2)
(3)
holder abbreviations – orn (orion minerals Ltd); Gdr (Goldstar resources (Wa) pty Ltd); GrpL (Geological
resources pty Ltd); iGo (independence Group nL); KmX (Kamax resources Limited); nbX (nbX pty Ltd); pon
(ponton minerals pty Ltd); nam (namaqua nickel mining (pty) Ltd); dis (disawell (pty) Ltd); mas (masiqhame
855 (pty) Ltd); rep (repli trading no 27 (pty) Ltd); Var (Vardocube (pty) Ltd); bar (bartotrax (pty) Ltd); rrt (rich
rewards trading 437 (pty) Ltd; oe1 (orion exploration no 1 (pty) Ltd); oe4 (orion exploration no 4 (pty) Ltd).
on 11 august 2015 the company announced to the asX that it had entered into a sale agreement with
centennial mining Ltd (formerly a1 Gold) for centennial mining Ltd to acquire min 5487.
renewal of licence application is with relevant government department.
151
ORION MINERALS ANNuAL REpORt - 2018 noTES
152
153
ORION MINERALS ANNuAL REpORt - 2018 corporaTE DirEcTory
coMpany SEcrETary
mr martin bouwmeester
rEgiSTErED oFFicE anD principal placE oF BuSinESS
suite 617
530 Little collins street
melbourne, Victoria, 3000
conTacT DETailS
telephone: +61 (0)3 8080 7170
Website: www.orionminerals.com.au
SharE rEgiSTry
Link market services Limited
QV1, Level 2, 250 st Georges terrace
perth, Western australia 6000
telephone: +61 1300 306 089
auDiTor
rsm australia partners
55 collins street
melbourne Victoria 3000
STock ExchangE
primarY ListinG:
australian securities exchange (asX) asX code: orn
secondarY ListinG:
Jse Limited (Jse) Jse code: orn
JSE SponSor
merchantec capital
2nd floor, north block
corner 6th road & Jan smuts avenue hyde park
Johannesburg 2196
154
155
ORION MINERALS ANNuAL REpORt - 2018