Australian mining company Orion Minerals has revealed that its subsidiary, Prieska Copper Zinc Mine (PCZM), has entered into a non-binding term sheet agreement with a subsidiary of Glencore.
This agreement is for financing ranging from A$200m ($132.5m) to A$250m and concentrate offtake for the Prieska project in South Africa.
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The funding for PCZM will be structured into two separate tranches.
Tranche A, amounting to A$40m, will be allocated for the construction and start-up of the Uppers at Prieska.
Tranche B, ranging from A$160m to A$210m, is earmarked for construction and start-up at the Deeps (Early Drawdown) at Prieska. Up to A$50m from Tranche B may be drawn early, contingent on certain conditions being met.
Before funding can proceed, several conditions must be met, such as Glencore completing its due diligence, an intercreditor agreement being reached by Glencore with the current secured lenders to PCZM, and finalisation of binding legal documentation for both the facilities and the offtake.
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By GlobalDataThe initial drawdown for Tranche A is scheduled for November 2025.
Interest is due on a quarterly basis, and PCZM has the option to capitalise interest for up to 18 months following initial production from the Uppers.
Additionally, PCZM is allowed to repay the facilities ahead of schedule without incurring any penalties.
Glencore is entitled to offset any amounts it owes to PCZM under the offtake agreement against any amounts that PCZM owes to Glencore under the facilities agreement.
The offtake agreement encompasses several key terms designed to ensure favourable conditions for both parties involved. It stipulates competitive market pricing and payables terms, guaranteeing that 100% of bulk concentrates from the Uppers will be supplied for a duration of five years, contingent upon the total production capacity of the Uppers.
Additionally, the agreement secures 100% of the copper and zinc concentrates from the Deeps for a period of ten years.
Orion managing director and CEO Tony Lennox said: “This is a watershed moment for Orion with the proposed Glencore funding enabling the company to transition into a producer. I am pleased that an industry major such as Glencore will be working with us to move to a binding agreement over the next four to six weeks.
“Tranche A enables the company to move swiftly into first production and first cash flow from mining of the Uppers at Prieska. Crucially, the early drawdown of Tranche B allows Orion to commence early works on the Deeps in accordance with the Prieska definitive feasibility study. This will allow for smooth and continuous operations as we move from the Uppers towards full-scale operations from the Deeps.
“In parallel with the due diligence process with Glencore, we will continue discussions with our current funding partners.”
Glencore Copper Marketing’s Toby Spittle commented: “We have been following Orion and PCZM’s progress at the Prieska project for some time and look forward to playing our part in financing the mine’s development and subsequent marketing of the concentrates. We are committed to completing our due diligence expeditiously and seeing Prieska recommence production as soon as possible.”
Glencore, based in Switzerland, is a global leader in natural resources, involved in the production and marketing of more than 60 different commodities.
