Orion Minerals, should I Invest?

This is a junior company that produces Copper and Zink. The company will benefit from the high copper prices and that is why they are pressuring to finalise the building of the mine as soon as possible.

They already have a open pit mine. They will be mining from this mine to generate cash in the meantime from the Iron Ore. Their main focus will be copper, this will be used in all green energy products like solar and wind energy, at this stage there is a shortage of copper and there will be for the next 5 – 10 years. They plan to be up and running within the next 2 years.

The big question is

"Should I invest?"

On the positive side:

  • When you want to invest in a company you usually want to invest as soon as possible before operations start so that you can get the value in the price per share.

  • The program to start on the open pit mine is scheduled for February 2022 with completion anticipated by June 2022.

  • The drilling analysis from the maiden drilling program at the Okiep Copper Project in the Northern Cape have delivered very positive results, confirming the presence of shallow high-grade copper and the potential for additional high-grade minerals.

  • It will be mining a mineral in high demand, in shortage off and with a high price tag.

  • You can buy at a low price.

Things to consider:

  • Things to take into consideration is the fact that usually you would buy shares if you can see the proof in the production figures and income of a company. At this stage the income is not good and there is no physical proof of any production volumes that will determine income and future prospects.

  • The copper price can also come down within the next 2 years.

  • It has a high price volatility.

  • It has no P/E ratio to compare with the markets because it is unprofitable at this stage.

  • They do not pay a dividend

In short, if I want to invest in this company, it will be due to the fact that there is a shortage of copper at high prices and this will be the only mining company that will give you an investment mainly in Copper. You will have to be patient and go thru the volatility periods.

This is a difficult call, go with your gut if you want to dive in now or wait for end of this year to see how things progress. Another option is to gradually invest into this company as it performs.

Happy Investing !

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