Our opinion on the current state of ORIONMIN(ORN)

Orion Minerals (ORN) is an Australian-based exploration company, also listed on the Johannesburg Stock Exchange and the Australian Stock Exchange in Sydney. It focuses on the development of its copper and zinc assets in Prieska, South Africa. This mine, formerly operated by Anglovaal, ceased operations in 1990 after two decades of extracting significant quantities of zinc and copper concentrate. One of the critical challenges Orion faces at this site is managing the flooding that has occurred since the mine's closure.

Orion is planning a revival of the Prieska mine with a mechanized and minimal labor strategy. Additionally, the potential development of a smelter by Vedanta Resources, which operates the nearby Gamsberg mine, could provide essential support to the entire mining region, including potential inputs from Namibia. This smelter would be instrumental once Orion commences the substantial task of pumping out nearly 9 million cubic meters of water from the mine to begin production, anticipated to start in 2024.

Exploration and mining carry inherent risks, making them some of the most volatile investments on the JSE. Orion's venture into this field is particularly precarious, as evidenced by its fluctuating financial performance and the nature of penny stocks. On the funding front, Orion has taken significant steps, securing R34.5 million from the Industrial Development Corporation (IDC) for a 43.75% stake in its new Okiep copper mining operation and a R250 million line of credit for further project development.

For the six months ending 30th June 2023, Orion reported a consistent loss of A$15.2 million, with a slight improvement in its headline loss per share. The company has emphasized the role of the IDC as a strategic funding partner, underlining the critical support it receives for its flagship projects in Okiep and Prieska.

Recently, Orion announced a major discovery in its Okiep Copper Project, reporting a "Spectacular High-Grade Copper Intercept" that significantly impacted its share price, propelling it from 19c to 24c. This news highlights the potential upsides of investing in mining explorations, despite their inherent risks.

Investors considering Orion should be cautious, given the company's history of losses and the overall volatility associated with mining stocks. While the recent discovery could offer considerable upside, the general advice would be to maintain a strict stop-loss level to manage potential risks effectively. This strategy is crucial in navigating the highs and lows typical of the mining sector, especially for companies like Orion, which operate on the frontier of resource extraction.