Our opinion on the current state of ORN

Orion Minerals (ORN) is an Australian exploration company which is listed on the JSE (September 2017) and on the Australian Stock Exchange in Sydney. It is trying to find funding for its copper and zinc mine in Prieska. The Prieska mine was previously operated by Anglovaal, but stopped operating in 1990 after 20 years during which it extracted more than 1 million tons of zinc and 430 000 tons of copper concentrate. The main problem with the mine is flooding. Orion hopes to exploit this resource with a mechanised approach and minimum labour. Vedanta Resources which runs the Gamsberg mine next to Orion's resource is looking at building a smelter that could service all the mines in the area and even resources from Namibia. Once construction begins on the Prieska mine, they will need to pump out nearly 9 million cubic meters of water from the existing structure. Production is expected to begin in 2024. Mining exploration is probably one of the riskiest investments on the JSE. In our view, this is a volatile penny stock engaged in a particularly risky venture. On 8th September 2022 the company announced that it had secured R34,5m from the Industrial Development Corporation (IDC) for a 43,75% stake in its new Okiep copper mining company. On 21st October 2022 the company announced that it had agreed a R250m line of credit with the Industrial Development Corporation (IDC). In its results for the six months to 30th June 2023 the company reported a loss of A$15,2m unchanged from the previous period. The headline loss per share was 31c compared with a 33c loss in the previous period. The company said, "The IDC to become a strategic funding partner at project level in both the Okiep Copper Project and Prieska Copper Zinc Mine, with pre-development funding agreements reached, providing a total of ZAR 284.58M for Orion’s two flagship projects". The share gave an on-balance-volume (OBV) buy signal on 8th May 2023 at 28c but it has drifted sideways sinc ehtne and currently trades at 24c. Investors should be very careful of this loss-making penny stock and maintain a strict stop-loss level.