The Camino Rojo oxide project, in Zacatecas, Mexico, is a “fantastic opportunity to develop a quality mine”, TSX-listed Orla CEO Jason Simpson said on Tuesday, announcing the results of the feasibility study for the project that once belonged to Goldcorp.
The study, prepared by a team of experts led by Kappes Cassiday and Associates, considers near-surface openpit mining of 44-million tonnes of oxide and traditional ore at a throughput rate of 18 000 t/d.
Ore from the pit will be crushed to 80%, passing 28 mm, conveyor stacked onto a heap leach pad and leached using a low concentration sodium cyanide solution. Pregnant solution from the heap leach will be processed in a Merrill-Crowe recovery plant, where gold and silver will be precipitated and doré will be produced.
Orla said that the site’s proximity to infrastructure, low stripping ratio, compact footprint and flat pad location all contribute to project simplicity and relatively low estimated all-in sustaining costs of $576/oz of gold.
The feasibility study estimates that Camino Rojo will produce an average of 97 000 oz/y of gold and 511 000 oz/y of silver, over 6.8 years. As the required permit applications are substantially complete and set to be submitted in the third quarter, construction could start in the first half of next year, paving the way for first gold production in mid-2021.
Initial capital of $123-million is required, but the project has a payback period of less than half the mine’s operating life.
Orla said it was working with its advisers to develop an optimum financing structure to finance the development of the project. Discussions were under way with various lenders and financiers.
The study calculated a pretax internal rate of return of 38.6% and a pretax net present value of $227-million, at a 5% discount.
“With the continued support of local communities and stakeholders, we have a fantastic opportunity to develop a quality mine. We are also considering ways to unlock value from a much larger sulphide mineral resource and have initiated exploration on other priority targets on our extensive concession area,” said Simpson.
The project’s mineral resource estimate includes proven and probable mineral reserves of 44-million tonnes at a gold grade of 0.73 g/t and a silver grade of 14.2 g/t, for total mineral reserves of 1.03-million ounces of gold and 20.1-million ounces of silver.
Orla bought the project from Goldcorp in 2017.