Orla Mining (TSX: OLA) has formally assessed the merits of an underground operation at their currently operating Camino Rojo mine in Mexico. The company on Thursday evening released the results of a preliminary economic assessment that would see an underground component added to the current open pit mine.
The study is said to have examined the potential for a stand alone underground project that extends below the current open pit operation. The proposed operation would be larger in scale than the current mine, with a standalone processing facility constructed to match the size of the long life underground mine.
Orla is proposing an operation that would run for a total mine life of 17 years, producing on average 215,000 ounces of gold over the first ten years of mine life. Total gold production over the life of mine is expected to hit 2.80 million ounces, while gold equivalent ounces – which include silver and zinc that will be produced as a byproduct – is expected to hit 2.97 million ounces.
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The processing facility is expected to consist of crushing, grinding, and floatation to produce saleable concentrates. The standalone facility is a necessity due to the current open pit operation being oxide based, with extraction occurring via heap leach, whereas the underground mineralization is sulphide based.
Total capital costs for the project are estimated at $608.1 million, with all in sustaining costs expected to come in at just $1,339 an ounce.
The project is estimated to have a net present value of $1.3 billion, alongside an IRR of 30% and a payback period of 3.2 years at $3,100 an ounce gold. At spot pricing, which uses $5,000 an ounce gold, that NPV climbs to $3.3 billion, while the IRR jumps to 61% and the payback period drops to 1.5 years.
A pre-feasibility study is expected to be completed in 2027 for the project.
Orla Mining last traded at $24.20 on the TSX.
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