Orla Mining’s exploration results from near-pit drilling at the Camino Rojo gold mine in Mexico suggest the potential for expanding resources and extending the current 10-year mine life, according to the company’s announcement on Thursday.
The successful drill program in the proposed layback area near the open-pit mine indicates the possibility of replenishing some of the mine’s depleted gold by integrating additional surface oxide gold found nearby, stated Sylvain Guerard, Orla’s senior vice president.
Drilling in the layback area, north of the Camino Rojo mine, has confirmed historical results, revealing consistent grades along the property boundary. Notable highlights include 1.09 grams of gold per tonne over 21 meters to the west and 0.85 grams of gold over 76 meters to the east.
Beneath the current open pit, drilling has unveiled structurally controlled oxide mineralization approximately 50 meters below and 15 meters southeast of the current pit boundaries. Significant results in this area include 1.16 grams of gold per tonne over 67.1 meters and 0.86 grams of gold over 35.1 meters.
Earlier in the week, Orla reported a record production of 121,877 ounces of gold from the mine in 2023, slightly surpassing the guidance of 110,000-120,000 ounces. The company anticipates producing 110,000-120,000 ounces from the mine in the current year with an all-in sustaining cost of $875-$975 per ounce.
The drill results are part of a 6,500-meter program that Orla completed at Camino Rojo last year to explore additional oxide mineralization, including 2,500 meters in the adjacent Fresnillo property or ‘Layback Area’ and 4,000 meters targeting deeper oxide gold mineralization extensions beyond the current open pit.
Orla has secured a layback agreement with Fresnillo, allowing expansion of the Camino Rojo oxide pit into Fresnillo’s adjoining concession. This agreement not only permits Orla to mine additional oxide and transitional heap leachable resources but also preserves Fresnillo’s rights to the future development of the sulphide resource.
The positive results set the stage for the 2024 near-mine drill program, which is still in the finalization stage.
BMO Capital Market mining analyst Andrew Mikitchook has assigned an ‘outperform’ rating to Orla with a target price of C$7.50. Orla’s shares closed 5.7% higher at C$4.47 on Thursday. Mikitchook expects Orla to publish an updated resource before the end of June, incorporating drilling from the layback area for the first time. He remains cautiously optimistic about the high-grade intercepts and the potential to extend the mine life.
Camino Rojo currently has measured and indicated oxide resources of 84.4 million tonnes grading 0.72 grams of gold per tonne for 1.9 million ounces of metal. Additionally, it has a significant sulphide component of 258.8 million tonnes grading 0.88 grams of gold per tonne for 7.3 million ounces of metal. Proven and probable reserves total 58.5 million tonnes at 0.74 grams of gold per tonne for 1.4 million ounces.
In December, Panama’s government rejected Orla’s request for permit extensions for the Cerro Quema gold project and canceled mining concessions in the area. Orla has halted further investment in Panama, where the government recently shut down First Quantum Minerals’ Cobre Panama mine.
