Orla mulls processing options for sulphide deposit

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Orla Mining Ltd. [OLA-TSX] has announced Phase one metallurgical test results at its Camino Rojo sulphide deposit in Zacatecas, Mexico with findings that support the potential for a standalone processing option.

Camino Rojo consists of a near-surface oxide gold-silver deposit with a large deeper gold-silver-zinc-lead- sulphide zone.

Camino Rojo reached the commercial production stage in April, 2022, and produced 23,031 ounces of gold in the first quarter of 2022 from an open-pit heap leach operation. The mine is expected to produce between 90,000 and 100,000 ounces of gold this year.

According to an updated feasibility study released in January, 2021, proven and probable mineral reserves stand at 1.59 million ounces of gold and 31.5 million ounces of silver.

Key assumptions include a 10.4-year mine life and average annual production of 94,000 ounces of gold and 597,000 ounces of silver. The all-in-sustaining cost is expected to be US$543 an ounce.

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.

The latest metallurgical test results for the sulphide deposit distinguish five geometallurgical zones, two of which (those where organic carbon and arsenic concentrations are lower) appear suitable for CIL processing.

The company said an additional flotation circuit (with associated subsequent pressure oxidation circuit, too) could potentially be suitable for processing the remaining zones.

Orla said the geometallurgical model recognized five, spatially distinct, physically continuous geometallurgical zones within the 7.3 million ounce-sulphide gold deposit (0.88 g/t gold).

The Phase 1.0 results will be used to determine new cut-off grades for mine designs, and also to support an updated mineral resource estimate and preliminary economic assessment (PEA) expected by the fourth quarter of 2022.

Meanwhile, Phase 2.0 metallurgical testing has commenced (results expected in the second half of 2022). Although the results are not expected to be included in the PEA, they will be used to reinforce the geological model and continuity of mineralization.

Orla shares declined on the news, falling 5.9% or $0.33 to $5.28 on volume of 254,530. The shares now trade in a 52-week range of $6.59 and $3.71.

Orla recently released the results of a prefeasibility study (PFS) as well as a mineral resource and reserve estimate for its 100%-owned Cerro Quema Project in Panama.

The company said the PFS demonstrates the possibility of a low cost, high return heap leach gold project. It said the estimated after-tax net present value (5% discount rate) is $176 million with an after-tax internal rate of return of 38% at a gold price of US$1,600 an ounce.

Life of mine capital costs are estimated at US$204 million, including US$164 million in initial capital.

The PFS envisages an average production rate of 81,000 ounces of gold over a 6.0-year mine life at an all-in-sustaining cost of US$626 an ounce.

The Cerro Quema property is located in the Azuero Peninsula, Los Santos Province, Panama, 193 kilometres southwest of Panama City. Orla will continue to advance the project towards feasibility level, providing the basis for a construction decision.

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