Share price re-rating on the cards for Orion Minerals, says Petra Capital
17th May 2019
Resources Rising Stars
Following a string of positive news in its March quarterly and the recent positive election results in South Africa with the re-election of the ANC, base metals developer Orion Minerals (ASX: ORN) is set for a “number of positive” catalysts at its flagship Prieska zinc-copper project in South Africa – according to Sydney-based institution broker Petra Capital.
In a new research note, Petra Capital analyst Craig Brown says upcoming milestones include the finalisation of the Bankable Feasibility Study as well as Mining Right and Environmental Authorisation approvals, which are expected in the June quarter.
“This should have a significantly positive outcome for Orion and, as a result, we expect the share price to re-rate as we move forward to a Final Investment Decision in the second half of calendar year 2019,” Brown wrote.
“We maintain our BUY recommendation and update our target price to 13c per share, from 11c previously, as we roll forward our valuation.”
Petra says that preliminary drafts of capital and operating cost estimates for Prieska were compiled during the March quarter, with a review of these estimates underway and a number of cost savings identified.
“This work is ongoing and planned to be completed in May 2019, following which BFS results will be released,” Brown says.
“As a reminder, the recent scoping study results outlined a 2.4Mtpa project, which produces 70kt to 80kt of zinc and 22kt of copper in concentrates per annum over an initial 10-year mine life with CAPEX cost of A$300-360 million.”
Petra says the recent South African general election, which saw the ruling ANC win 57.5% of the vote, is a “win for South Africa and a win for the mining industry with President Cyril Ramaphosa and Minister of Mineral Resources Gwede Mantashe working towards a more stable and predictable fiscal regime and investment landscape going forward”.
To read the Petra Capital note, click here.
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