Orla Mining Ltd. [OLA-TSX] on Wednesday 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.
“We believe that our assets in Panama represent an opportunity for organic growth in our business,’’ said Orla President and CEO Jason Simpson. “The results of the PFS suggest that Cerro Quema can be another low-risk, high margin oxide project for Orla,’’ he said.
“The completion of the PFS provides a pathway towards continued engineering, project advancement, and a future construction decision.’’
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 new mineral reserve estimate at Cerro Quema includes proven and probable reserves of 21.7 million tonnes at a gold grade of 0.80 g/t, and a silver grade of 2.18 g/t. That amounts to total reserves of 560,000 ounces of gold and 1.53 million ounces of silver.
The project considers open pit mining of 21.7 million tonnes of ore from the La Pava and Quema-Quemita pits and will be delivered in multiple phases.
Orla shares advanced on the news, rising 1.3% or $0.06 to $4.68 and now trade in a 52-week range of $7.51 and $3.48.
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.
Orla is also developing the Camino Rojo oxide gold project, an advanced gold and silver open-pit and heap leach project located in Zacatecas, Mexico.
According to an updated feasibility study released in January, 2021 press release,
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.
The life of mine capital requirement is forecast at US$158 million.
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 company has already received a key environmental permit it needs to begin development. First production is planned for late 2021.