JSE- and ASX-listed Orion Minerals has established community and employee trusts for its Prieska project, in the Northern Cape, to meet the ownership structure requirements set out in Mining Charter III.
The Master of the High Court confirmed the registration of both a community and an employee trust, respectively, on May 29.
“While the 2018 Mining Charter allows Orion five years to establish community and employee ownership structures, our wish is to forge a strong relationship with our community and employees right at the outset and engage meaningfully with these key stakeholders as equity partners with full voting rights.
“This has motivated the establishment of fully compliant ownership structures well in advance of the legal requirements,” MD Errol Smart commented on Monday.
He assured stakeholders that the trusts would follow a transparent governance framework, ensuring that no faction of the community is able to misappropriate and misdirect the share in future mine profits.
The shares issued to these trusts will be nontransferable, protecting the beneficiaries from any risk of being disowned.
The trusts will each become 5% equity owners in the mine and, therefore, be eligible for 5% of future dividends.
Smart explained that the equity ownership costs and contributions on behalf of these trusts would be recovered from the future cash flow of the mine.
Additionally, the community and employees will have full proportionate shareholder voting rights in the affairs of the company that owns the mine.
The trusts will complement the 20% full contributing equity ownership in the Prieska project that is held by black economic empowerment entrepreneurs.
Orion further committed to the establishment and maintenance of a stakeholder engagement forum, which would ensure that the interests of the community and other stakeholders were tabled and considered in the business affairs of the company and the mine.
The forum will also provide a structured channel for continued communication of project progress by management.
The forum will consist of ten community members, four representatives of local authorities (such as the municipality, police and the Department of Social Development), two shareholder representatives, two employees and two representatives of Orion management.
Meanwhile, Smart anticipated completion of the project’s bankable feasibility study by the end of this month.
A scoping study in December last year confirmed the potential for the Prieska project to become a significant near-term, low-cost zinc and copper concentrate producer.
The study envisaged a 2.4-million-tonne-a-year operation, producing about 70 000 t/y to 80 000 t/y of zinc and 22 000 t/y of copper concentrates.
The project is estimated to have an initial mine life of ten years, with production earmarked to start in 2021.