Orla Mining Ltd. [OLA-TSX] said Thursday December 19 that its board of directors has approved the start of construction spending at the company’s Camino Rojo Oxide gold project in Zacatecas, Mexico.
Orla shares rallied on the news, rising 6% or 10 cents to $1.79 on volume of 2.37 million. The shares are trading in a 52-week range of 85 cents and $1.83.
This will allow the continuation of detailed engineering and the ordering of long lead items, such as the crushing system. Commencement of project construction has also been approved, subject to receipt of all required permits.
The announcement comes after Orla said it has entered into a loan agreement with Trinity Capital Partners Corp. and certain other lenders in connection with a previously announced US$125 million project financing facility. That money will be used for the development of Camino Rojo.
The credit facility was arranged by Trinity Capital and includes a syndicate of lenders led by Agnico-Eagle Mines Ltd. [AEM-TSX, NYSE], Pierre Lassonde and Trinity Capital, creating a key alignment between debt and equity holders who will support the company’s development going forward.
Pierre Lassonde is best known for his long association with Franco Nevada Mining Corp. [FNV-TSX, NYSE]. He holds an 11.6% stake in Orla, according to company documents.
The Camino Rojo Oxide Gold Project is an advanced gold and silver open-pit heap leach project. The project is 100%-owned by Orla and covers over 200,000 hectares.
Hosting 1.03 million ounces of gold and 20.1 million ounces of silver reserves Camino Rojo will be Orla’s first mine. It is expected to produce 97,000 ounces of gold annually at an all-in-sustaining cost of US$575 an ounce
“Securing this US$125 million credit facility and one of the key permits marks two more critical milestones in the evolution of Orla, allowing us to maintain our schedule for advancing the Camino Rojo towards production in mid-2021,” said Orla President and CEO Jason Simpson.
“We have accomplished a great deal to get to this point in just two years since the acquisition of the project,” he said. “With the continued support of local communities, various levels of government, shareholders and now lenders, we can advance towards construction in the coming months once the final permit is received.”
On Thursday, Orla said it has received notification from the Mexican federal government environment department known as SEMARNAT, granting approval of the Change of Land Use Permit, one of two key permits required for the development of Camino Rojo.
The other key permit required prior to the start of construction is the Environmental Impact Statement (MIA). Review of the MIA application by SEMARNAT is ongoing, the company said in a press release.
Orla acquired the Camino Rojo from Newmont Goldcorp Corp., [NGT-TSX, NEM-NYSE] in November 2017 in return for the issuance of 32 million Orla shares, or 19.9% of the shares outstanding.
Orla also owns 100% of the Cerro Quema Project in Panama. It includes a near-term gold production scenario and various exploration targets. It will also be developed as a proposed open pit mine and heap leach gold operation.