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Orion’s shares slump as it announces capital raise

The copper developer said the capital raised would be in a three-tranche share placement with firm commitments received for the two phases. REUTERS/Neil Chatterjee

The copper developer said the capital raised would be in a three-tranche share placement with firm commitments received for the two phases. REUTERS/Neil Chatterjee

Published Jun 23, 2022

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Orion Minerals’ share price plummeted by almost 12 percent yesterday after the company announced that it was raising A$20 million (R220m) in capital to fund its early production strategy in the Northern Cape’s base metal projects.

The shares traded at 23 cents in early morning trade after the copper developer said the capital raised would be in a three-tranche share placement with firm commitments received for the two phases.

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Sydney and Johannesburg-listed Orion said the two phases would raise about A$6m combined.

Orion’s managing director and chief executive, Errol Smart, said: “We have decided to undertake the placement in three tranches to allow the many investors with whom we have had a positive engagement in recent weeks some additional time to finalise their participation.”

Priced at 2 Australian cents a share, the first tranche of the placement would have 156 million shares, raising an initial A$3.1m under the company’s existing 15 percent placement capacity, while phase two will issue 145m shares to raise $2.9m.

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The company said subject to shareholder approval, phase two would have non-executive director Tom Borman apply for A$2m and chairperson Denis Waddell apply for A$200 000.

According to Orion, contributors in both tranches would receive one free attaching option for every two shares issued, with an exercise price of 2.5 Australian cents and an expiry date of June 30, 2023.

In phase three, the company said it might issue up to an additional 699 million shares at an issue price of 2 Australian cents (being R0.22), subject to shareholder approval.

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Orion would also be undertaking a share purchase plan to raise a further $3m.

“In addition, we intend to offer a share purchase plan to allow our loyal existing shareholders to participate at the same offer price as the shares issued under the placement,” Smart said.

Qualifying shareholders would be able to apply for up to A$30 000 worth of shares, which would be priced the same as the placement of 2 Australian cents.

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The group said the capital raising, combined with other funding arrangements, would allow Orion to progress the development of the company’s Prieska Copper-Zinc Mine, including the commencement of mine dewatering and the completion of feasibility studies for the Prieska Copper-Zinc Mine early production scenario.

Smart said while financial markets had been in turmoil recently, Orion shared the view of many experienced commentators that the broader battery metals thematic had not gone away.

"The prices of copper, zinc, nickel and other future-facing metals are still very strong – and underlying demand from the renewable energy and EV (electric vehicle) sectors continues to increase, and will do so for many years to come.

“With advanced, near-term production assets in one of the world’s best mining jurisdictions, the Northern Cape, Orion stands ready to play a key role as a supplier of these metals. The funds raised through this raising will see us take major steps towards realising this vision,” Smart said.

Last week, Orion Minerals requested an immediate halt to the trading of its shares as it anticipated the announcement of the plans for the capital raise.

“Considering the events that have unfolded in global financial markets since we entered a trading halt on June 10, 2022, we are very pleased with the support we have received from existing and new investors who have supported this capital raising,” Smart said.

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