South Africa-focused explorer Orion Minerals is understood to be tapping investors for $8 million in a raising that is believed to be priced at a massive 30 per cent premium to its last traded price.

WestBusiness understands South African investors will subscribe for about half the shares on offer in the 4¢ placement as part of the company’s black economic empowerment obligations, while Orion’s biggest shareholder London-based Tembo Capital will take another significant chunk of shares.

Cash raised in the placement will be used to complete a bankable feasibility study of the company’s historic Prieska zinc-copper project, which lies in the Northern Cape region of the country.

The raising is expected to lift the Independence Group-backed company’s profile on the Johannesburg Stock Exchange, where it has a secondary listing.

Sources say the raising has been well-backed and is likely to be oversubscribed, reflecting growing confidence in the South African mining industry following Rio Tinto’s announcement this week of a $500 million investment in an expansion of its Richards Bay mineral sands operation on the east coast of the country.

Petra Capital is running the book for the placement.

Orion is eying a 2.4 million tonne per annum underground operation at Prieska, producing about 80,000t of zinc and 22,000t of copper concentrates over an initial 10-year minelife.

Its shares last changed hands for 3.1¢.