Orla Mining reports strong economics in Camino Rojo underground PEA

[Ben Graham]

Orla Mining (TSX: OLA) (NYSE: ORLA) announced Thursday positive results of a Preliminary Economic Assessment (PEA) for the underground project at its Camino Rojo mine in Zacatecas, Mexico.  

The mine, which currently has a 10-year life, produced 43,788 ounces of gold and sold 38,265 ounces during the third quarter of 2024. 

The PEA evaluates the technical and economic potential of a stand-alone, underground development project beneath the existing Camino Rojo open pit operation and outlines a potential pathway toward development of a larger-scale and long-life underground mining operation and processing facility. 

Robust economics across gold price scenarios

The PEA outlines a pathway to develop an additional, standalone operation at Camino Rojo beyond the current open pit heap leach operation through development of an underground mining operation supported by its own crushing, grinding, and flotation circuits producing saleable concentrates. 

It demonstrates robust economics across gold price scenarios, with a net present value (NPV) of $1.3 billion and 30% internal rate of return (IRR) at $3,100/oz gold price (after-tax) or NPV of $3.3 billion and 61%, IRR at $5,000/oz gold price (after-tax). 

The project demonstrates strong capital efficiency with an after-tax NPV to initial capital ratio of 5.5:1 at $5,000/oz gold, highlighting the leverage of the underground expansion to gold prices. 

Average annual gold production over the first 10 years is projected to be 215,000 ounces, with an expected average all-in sustaining cost (AISC) of $1,304 per payable ounce of gold. 

A phased de-risking program through 2026 will advance optimization studies, exploration decline development, and staged underground drilling to build technical and resource confidence ahead of a construction decision.  

The company said it intends to complete a pre-feasibility study for the project in 2027. 

Since 2020, 110,000 metres of drilling have advanced Camino Rojo into a de-risked underground project with over 4 Moz gold equivalent in measured and indicated Mineral Resources, defining higher-grade zones, extending mineralization at depth with Zone 22, and reinforcing strong district-scale growth potential. 

“A multi-year program of drilling and test work underpins this initial underground expansion study, highlighting the potential opportunity beyond the current oxide heap leach operation,” Orla’s CEO Jason Simpson said in a news release. 

“The work represents an important milestone as the project advances towards a future construction decision,” Simpson said. “Supported by a solid base case PEA and with the deposit remaining open in Zone 22, the project offers continued growth potential and the basis for a multi-decade mining complex in Mexico.” 

By market close in Toronto, Orla’s stock was up 3.6%. The company has a C$8.2 billion ($6 billion) market capitalization.