Orion Minerals : December 2020 - Quarterly Activities Report

ASX/JSE RELEASE: 27 January 2021

December 2020 Quarterly Activities Report

HIGHLIGHTS

Continued positive progress with funding discussions for the Prieska Copper-Zinc Project, Northern Cape, South Africa as prices for both copper and zinc move to multi-year highs.

Early Works activities advance with EPCM contract bids short-listed.

Significant zones of copper, zinc and nickel-copper-PGE mineralisation intersected across all key prospects tested as part of high-impactnear-mine and regional drilling program.

Results confirm the under-explored nature of the Areachap Province and the substantial opportunity for a major discovery (refer ASX release 25 January 2021). A key focus will be an emerging VMS copper system at Boksputs, 125km north-west of Prieska.

Orion Minerals received the inaugural Emerging ESG Leader Award at the AAMEG Africa Awards, a prestigious industry award recognising its pioneering ESG work at Prieska.

Preparations continued for drilling on key nickel-copper targets at the IGO JV in the Fraser Range.

Orion's Managing Director and CEO, Errol Smart, said:

"Our flagship Prieska Copper-Zinc Project is one of the few large-scale,fully-permitted, advanced base metal assets globally with a realistic chance of coming on stream in the next 2-3 years and capitalising on the buoyant conditions in base metal markets. Both copper and zinc recently hit multi-year highs amid a generally positive investment outlook for the commodities sector. Copper recently passed through US$8,000/t driven by supply side tightness and growing demand fuelled by economic stimulus and soaring investment in green energy infrastructure.

"Against this backdrop, we continued to make excellent progress with Early Works activities at Prieska and funding discussions with numerous Tier-1 groups, financiers and institutions - both in South Africa and globally. Given the current environment, we are optimistic about achieving a positive outcome which will see Prieska fully-funded and construction and development commencing this year.

"On the exploration front, we commenced high-impact drilling to test a series of compelling targets across our Areachap tenements. Earlier this week, we reported exciting results from all of the key prospects drilled, which has reinforced the under-explored nature of the Areachap Province. These include both 'near-mine' opportunities such as Kielder and others that sit further afield - such as Boksputs, which has really caught our attention as a potentially large greenfields VMS discovery opportunity. Meanwhile, at Jacomynspan we intersected multiple zones of shallow higher-gradeNi-Cu-Co-PGE-Au mineralisation that could emerge as a significant, large open pit mining opportunity.

"And, perhaps most pleasingly, we were delighted to be the inaugural recipient of the Emerging ESG Leader Award at the AAMEG Africa Awards held in November. Environmental, social and governance (ESG) work has always been at the heart of Orion's operating strategy, and we have worked hard over many years to ensure we deliver genuine, positive, long-term benefits for the regions in which we operate.

"We are incredibly proud to have received this award and will continue to strive to play a leading role in ESG in the junior mining sector, particularly given the potential of the Prieska Project to play a trailblazing role in the post-COVID economic recovery of the Northern Cape region of South Africa."

Orion Minerals Limited	www.orionminerals.com.au
Incorporated in the Commonwealth of Australia
Suite 617, 530 Little Collins Street, Melbourne, Victoria 3000	ASX Code: ORN
ACN: 098 939 274	JSE Code: ORN
Ordinary shares on issue: 3,414m I Options on issue: 234m	ISIN: AU000000ORN1

Commodity Markets

Source: London Metal Exchange

Both copper and zinc prices continued to perform strongly during the December Quarter, with the LME cash copper price hitting its highest level since March 2013, closing at US$7,742/t on 4 December 2020. Since the start of 2021, the copper price moved to a new 8-year high of over US$8,000/t.

Respected commodities forecaster, Roskill, notes that copper has charted an unlikely trajectory through 2020, dropping to a low of US$4,617/t in late March as the global impact of COVID-19 became apparent, before stabilising and then completing a full recovery - reaching its January starting point by the end of July. Aided by the depreciation of the dollar after the US election, copper prices surged from October onwards rallying 68% in the eight months from its March low, making it the most resilient of the LME base metals.

Similarly, following a brief pullback in prices in the September Quarter, zinc also climbed in the December Quarter, with tightening short-term supply paired with strong demand from China pushing prices higher. Zinc prices started the quarter trading at US$2,365/t and hit their highest point year-to-date on December 16 at US$2,818/t.

Operations Report

Health and Safety, Environmental Management and Community Engagement

Health and Safety

No injuries were recorded during the Quarter. The hours worked for the Quarter and financial year to date are shown below:

Table 1: Hours worked at the Areachap Projects (South Africa).

Category of Work		Hours Worked
	Quarter		Financial Year to Date
Exploration	1,972		3,212
Mine Re-Entry	576		960
Contractors	1,552		1,844
Total	4,100		6,016

The Lost-Time Injury Frequency Rate (LTIFR) per 200,000 hours worked is 0 for the 2020 calendar year.

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The Company continues to manage the risks from the COVID-19 pandemic in the workplace in line with mandatory and industry guidelines. As of December 2020, the South African Government moved the country to raised Alert Level 3 in line with increased rates of infection being observed countrywide. No cases of infection with the SARS-Coronavirus 2 have been reported amongst any Company employees or contractors to date. Working from home, social distancing, periodic screening and testing for possible infection are the measures being used to reduce the risk for workplace transmission of the virus.

Environmental Management

A baseline of the environmental condition and surface disturbances on the Mining Right areas for the Prieska Copper-Zinc Project (Prieska Project) was documented and submitted to the mining authorities in October 2020. This was done to formally record the environmental state of the tenements prior to the Company taking physical control of them. The baseline assessment recorded land disturbances resulting from prior quarrying and more recent construction activities undertaken by renewable energy facilities in the vicinity.

As the Prieska Project is located within the Square Kilometre Array Radio Telescope Project (SKA) area - in which special licencing is required to undertake mining operations - engagements with the South African Astronomy Management Authority (AMA) continues to ensure that their approval of the proposed mining operations is granted.

Community and Stakeholder Engagement

During the Quarter, regular Orion Siyathemba Stakeholder Engagement Forum (OSSEF) meetings and interactions continued. Continuing its commitment to catalyse community leadership, during October the Company provided "Community Development and Business Ethics" training for members of the Stakeholder Engagement Forum (SEF). The training is designed to improve participants' knowledge of the expected standards of conduct when charged with the responsibility of undertaking community development initiatives. The SEF members, representing the various social group interests of the community, have a heavy responsibility to ensure that their conduct is above reproach and that their actions serve the best interests of society. The program will be followed up with other supplementary training to ensure the SEF members continue to improve their skills base in community development matters.

The first half-day follow up session of the previously reported 'Emerging Leaders' training program for community leaders was also held during the Quarter.

In November, the Company was pleased to receive the inaugural Emerging ESG Leader Award at the AAMEG (Australia-Africa Minerals & Energy Group) Africa Awards for its innovative and pioneering environmental, social and governance (ESG) work at the Prieska Copper-Zinc Project. The Awards, which were announced as part of the 2020 Africa Down Under Conference in Perth, celebrate visionary approaches to ESG which deliver long term benefits for communities - vastly improving their outcomes across employment, health, education and environmental conservation. The awards set the benchmark for Australian mining companies delivering projects that have sustainable and tangible benefits to the communities and countries in which they operate. The Emerging ESG Leadership Award acknowledges Orion's exemplary work as a junior mining company in developing innovative ESG strategies, forging meaningful relationships with its host communities and, importantly, making a significant contribution to the socio-economic development of South Africa's Northern Cape Province.

The Company, in collaboration with other CSI Forum member organisations (Mulilo Prieska Solar Community Trust, Copperton Wind Farm, Enel Green Power (Garob Wind Farm), and GWK) organised and sponsored the Siyathemba Community Clean Up Drive - a year-end community event held in each of the towns of Prieska, Marydale and Niekerkshoop in mid-December. The event was arranged as a fun day for the community youth with the objective of waste collection and recycling in the form of eco- bricks. Prizes for best fancy dress, most waste collected and more were awarded to the youth teams who participated. The event was very well supported and a significant volume of waste was collected.

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With the execution of the Vardocube mining right in October, which completed the permitting requirements for PCZM, the Company has continued to facilitate regular meetings of the Copperton Land Use Forum and engaged with local landowners to ensure cooperation on safety, environmental, operational and access issues relating to the mine site.

Prieska Mine Development and Exploration

Prieska Copper-Zinc Project Overview

The Prieska Project continues to be the primary focus of the Company's activities and is now in the financing and pre-development stage following the completion of an updated Bankable Feasibility Study (BFS) in the June 2020 Quarter (refer ASX release 26 May 2020). Post-BFS activities undertaken during the Quarter included continuing with the mine-to-market enterprise optimisation investigations being undertaken in collaboration with Whittle Consulting, advancing licencing processes and continuing with project execution planning activities.

Following the positive outcomes of the updated BFS, Orion is targeting a Final Investment Decision for the Prieska Project as soon as financing negotiations have been concluded. Orion intends to fund the development of the Prieska Project through a combination of debt and equity. The Company is progressing discussions with both potential debt and equity providers and potential strategic partners.

Prieska Activities Post Updated Bankable Feasibility Study

EPCM Contract

The Company intends to use an engineering, procurement, and construction management (EPCM) contracting arrangement to manage the construction phase of the PCZM, with oversight from an Orion Owner's Team. During the Quarter, the EPCM tender enquiry process was advanced with a short-list of contractors being selected. The short-listed candidates will be further evaluated, with a preferred contractor to be selected during 2021.

Project Execution Preparations

Work continues on planning and preparation for the Prieska Project site in readiness for initial work activities once funding is in place. Contract documents have been prepared for some of the early work packages such as site clearance, power reticulation, a pioneer accommodation camp and site offices. Detailed planning is ongoing for the preliminary shaft pumping. Negotiations are ongoing to formalise agreements for third-party funded services, these being mainly the supply and operation of water treatment infrastructure.

Mine-to-Market Enterprise Optimisation

The Whittle Optimisation exercise, which aims to improve on the Feasibility Study outcomes by improving production scheduling, is ongoing. The resulting potential refinements will be considered for incorporation during the execution stages of the project.

Process Plant Operations

Discussions are continuing with Minerals Operations Executive (Pty) Ltd (Minopex), which the Company is considering appointing to operate the ore processing plant on a contract basis. Negotiations are expected to conclude in an Operating Agreement during CY2021.

Underground Mining Contract

The Company continues to evaluate the potential use of contractors for underground mining, in conjunction with the project fund raising options being considered. Discussions with Byrnecut Offshore, with whom a collaboration agreement had been signed, were halted during the June 2020 Quarter to allow completion of the Feasibility Study and formulate the project funding strategy.

Internal enquiries are ongoing regarding the level and timing of automation for the mining fleet, which is expected to have a bearing on the discussions with potential contractors. With the assistance of external experts, a decision on an automation strategy is expected during 2021.

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