Construction 61% Complete
VANCOUVER, BC, Aug. 5, 2021 /CNW/ - Orla Mining Ltd.
(TSX: OLA) (NYSE: ORLA) ("Orla" or the "Company") is pleased to
provide results for the second quarter ended June 30, 2021.
(All amounts are in U.S. dollars unless otherwise
stated)
SECOND QUARTER 2021 HIGHLIGHTS:
- Project to date safety and environmental performance has been
excellent and there have been no delays in construction due to
COVID-19.
- As of June 30, 2021, there were
1,045 workers at the Project as part of construction activities
with 17% from the local communities, 28% from the State of Zacatecas, and 55% from other states
within Mexico.
- Camino Rojo construction is progressing on schedule and was 49%
complete at June 30, 2021 and 61%
complete at July 31, 2021.
- Camino Rojo capital expenditures totalled $26.8 million in the second quarter and total
$82.0 million for the Project to date
(June 30, 2021), out of a total
project capital expenditure estimate of $134.1 million.
- Project capital committed totalled $115.9 million at the end of the second quarter
with expenditures and commitments to date in line with
estimates.
- Continued development of Camino Rojo with activities focused on
installations in the areas of the crushing and conveying circuit,
Merrill-Crowe plant, heap leach pad and process pond.
- Release of the Cerro Quema Oxide Project Pre-Feasibility Study
("PFS") with results confirming a low cost, high return heap leach
project. The estimated Project after-tax net present value ("NPV")
(5% discount rate) is $176 million
with an after-tax internal rate of return ("IRR") of 38% at a gold
price of $1,600 per ounce.
- Exploration and evaluation expenditures totalled $3.8 million for the quarter and included
activities across the Company's portfolio in Mexico and Panama with a focus on target generation and
project study advancement.
- Net loss of $0.9 million or
$0.00 per share for the quarter.
- Cash of $51.0 million at
June 30, 2021.
- Subsequent to quarter end, Orla completed a $35.0 million non-brokered prospectus financing
subscribed to by accredited investors including a large
institutional investor, Pierre
Lassonde, Agnico Eagle Mines Limited, and Trinity Capital
Partners Corporation.
- Third and final tranche drawdown of $50.0 million on the Project Finance Facility
("Credit Facility") during April
2021.
"We are in the heart of construction at the Camino Rojo Oxide
Project, and we remain on track for first gold pour by year end,"
said Jason Simpson, President and
Chief Executive Officer of Orla Mining. "Our entire team remains
focused on maintaining health and safety while executing our
strategic objectives and creating value for our stakeholders."
CAMINO ROJO OXIDE
CONSTRUCTION UPDATE
At June 30, 2021, project
construction was 49% complete and procurement was 99% complete
while commitments for equipment and contracts totalled $115.9 million.
Mechanical installations on the crushing circuit are largely
complete and electrical and piping installations have begun. The
pregnant solution pond has been completed while construction of the
Merrill-Crowe Plant is well advanced with completion targeted for
October 2021. The mining contractor
has begun mobilizing to site with mining activities commencing in
the third quarter. The powerline to site will be completed and
energized during the third quarter. Camp facilities are nearing
completion and move-in expected to begin in the third quarter. The
first gold production is planned for late 2021 with final
commissioning and ramp-up in production expected in the first
quarter of 2022.
The Company is planning to complete a 2,500-metre core drilling
program on layback area to integrate Orla's geological and resource
models with existing drill data. This work will enable material in
the layback area located on Fresnillo plc's concession to be included in
the measured and indicated mineral resource categories and to be
included in an updated mineral reserve estimate.
Orla completed the third and final tranche drawdown of
$50 million during April 2021. The funds will be used towards the
development of the Camino Rojo Oxide Project. A total of
$125 million has now been drawn on
the Credit Facility.
Several images highlighting construction progress at the Camino
Rojo Project are shown below and additional photographs are
available at Camino Rojo Progress Photos.
CAMINO ROJO COMMUNITY
ACTIVITIES
Orla maintains an active community, social relations, and
environmental management program. During the second quarter of
2021, there were no reportable environmental incidents. The gradual
reopening in Mexico has allowed
the community activities during the second quarter of 2021 to shift
from providing COVID-19 related support to working on programs
relating to social investments, local employment, and local
procurement. The social investment consultation with the
communities resulted in several projects being proposed. These
projects included maintenance work on local infrastructure and
social programs which included the payment of scholarships and
donation of food to the local communities of El Berrendo and San
Francisco de los Quijano.
During the quarter, the Company provided community support in
the following ways:
- Provided support to the local communities during the COVID-19
pandemic, including the donation of food and protective equipment
and transportation to COVID-19 vaccination centre supplies for the
prevention of COVID-19,
- Continued funding scholarships and adult education
programs,
- Donated equipment to the local health centre,
- Completed the maintenance of the road to El Berrendo,
- Completed cattle stock ponds cleaning and rebuilding programs
for the communities of San
Tiburcio and El
Berrendo.
CAMINO ROJO SULPHIDE
PROJECT
In parallel with advancement of the Camino Rojo Oxide Gold
Project towards first production by the end of 2021, the Company is
also evaluating multiple development scenarios on the Camino Rojo
Sulphide Project. The development scenarios being considered to
potentially form the basis of a "Preliminary Economic Assessment
("PEA") currently include: (1) an underground mining option or (2)
an open pit mining option with processing at a to-be-constructed
sulphide facility at Camino Rojo, and (3) an open pit mining option
with processing at Newmont Corporation's Peñasquito plant.
The Company recently announced the results from a 6,079-metre
directional core drilling program on its Camino Rojo sulphide
deposit. The program consisted of close-spaced drilling on three
sections of the sulphide zone focusing on the extension of the
Camino Rojo deposit down plunge of the planned oxide open pit. The
objective of the program was to test the continuity of higher-grade
mineralization within the 7.3 million ounces of gold in the
sulphide measured and indicated mineral resource estimate (256
million tonnes at 0.88 g/t Au)1 lying directly below the
open pit currently being developed on the oxide mineral reserves.
The program was also intended to generate additional geological and
analytical information regarding the continuity and geometry of the
higher-grade gold mineralization (>2 g/t Au), obtain
geotechnical information required to evaluate potential underground
mining scenarios, and provide new material for metallurgical
studies. The drill program achieved all objectives, and the
information will support development scenario planning for the
large sulphide mineral resource.
The drill results confirm the presence of wide, higher-grade
gold zones within the sulphide mineral resource, and the Company
intends to further explore the potential for open pit or
underground bulk mining methods. The fourteen holes completed
across the sulphide zone yielded 27 significant2
mineralized drill intercepts with a grade-by-thickness factor
greater than 50 g/t Au per metre (g/t*m Au), including the
following 10 intercepts with a grade-by-thickness factor greater
than 100 g/t Au per metre:
- Hole CRSX20-01: 2.38 g/t Au over 108.0m (from 445.0m to 553.0m)
- Hole CRSX20-01A: 2.63 g/t Au over 111.0m (from 449.5m to 560.5m)
- Hole CRSX20-01B: 2.51 g/t Au
over 58.5m (from 428.5m to 487.0m)
- Hole CRSX20-01C: 2.11 g/t Au over 115.5m (from 438.0m to 553.5m)
- Hole CRSX20-01D: 3.04 g/t Au over 64.6m (from 515.8m to 580.4m)
- Hole CRSX21-04A: 4.47 g/t Au over 55.5m (from 606.0m to 661.5m)
- Hole CRSX21-04A: 4.95 g/t Au over 55.5m (from 676.5m to 732.0m)
- Hole CRSX21-04B: 2.10 g/t Au
over 58.5m (from 530.0m to 588.5m)
- Hole CRSX21-04B: 2.27 g/t Au
over 87.0m (from 609.5m to 696.5m)
- Hole CRSX21-04C: 3.26 g/t Au over 44.7m (from 740.3m to 785.0m)
Full drill results are available on Orla's website: Sulphide
Drill Results.
_______________
|
1 The
Camino Rojo Mineral Resource estimate has an effective date of June
7, 2019, and was prepared using the CIM Definition Standards.
Additional information can be found in the Camino Rojo Technical
Report entitled "Unconstrained Feasibility Study NI 43-101
Technical Report on the Camino Rojo Gold Project – Municipality of
Mazapil, Zacatecas, Mexico" and dated January 11, 2021.
|
2 Those intervals deemed significant
and listed were defined and calculated using a cut-off grade of 1
g/t Au, a minimum composite of 10 g/t * m Au, and a maximum 6
metres of consecutive internal waste (<1 g/t Au). Individual
assay results or composite results of >10g/t Au (calculated with
no internal dilution) are available in the August 3, 2021 Press
Release.
|
Orla's geological team is integrating geological and
geotechnical data from the 2020-2021 drill program, including
downhole televiewer data, into an updated geological model. Mine
Development Associates of Reno,
Nevada will then update the sulphide mineral resource
estimate, using the updated geological model and all drilling data
for the Sulphide Project, including the recent Sulphide Project
drillhole data.
The first batch of samples obtained from the drilling has
arrived at Blue Coast Research Ltd. of Parksville, British Columbia for metallurgical
testing. Investigations will build on the previous metallurgical
work completed on the project and will include process methods and
updated recovery predictions as well as exploring the potential for
ore sorting.
Activities for the sulphide project in the second half of the
year will focus on updating the mineral resource estimate,
evaluating economic opportunities, and metallurgical studies. While
Orla remains focused on the completion of the Camino Rojo sulphide
PEA by year end, the higher grades indicated in the recent drill
program may necessitate additional drilling and to ensure the
resource appropriately reflects the grade and tonnage of the
higher-grade zones. The timing of the study may therefore be
adjusted.
Please see the Company's August 3,
2021 press release for more detail: "Orla
Mining Confirms Higher Grade Gold Zones Within Camino Rojo Sulphide
Resource and Provides Project Update".
CERRO QUEMA OXIDE PROJECT UPDATE
The Company announced the results of PFS for the Cerro Quema
Oxide Project in Panama in
July 2021. The 2021 PFS highlights a
low cost, high return heap leach project with a 6-year mine life.
The estimated Project after-tax NPV (5% discount rate) is
$176 million with an after-tax IRR of
38% at a gold price of $1,600 per
ounce and a silver price of $20 per
ounce.
Pre-Feasibility Study Highlights:
|
Units
|
Values
|
Throughput Rate per
Day
|
tonnes
|
10,000
|
Total Ore to Leach
Pad
|
M tonnes
|
21.7
|
Gold Grade
(Average)
|
g/t
|
0.80
|
Silver Grade
(Average)
|
g/t
|
2.2
|
Contained
Gold
|
ounces
|
562,000
|
Contained
Silver
|
ounces
|
1,526,000
|
Average Gold
Recovery
|
%
|
87%
|
Average Silver
Recovery
|
%
|
26%
|
Recovered
Gold
|
ounces
|
489,000
|
Recovered
Silver
|
ounces
|
399,000
|
Mine Life
|
years
|
6.0
|
Average Annual Gold
Production
|
ounces
|
81,000
|
Strip
Ratio
|
waste :
ore
|
0.66
|
Initial
Capex
|
US$
million
|
$164
|
Avg. Life of Mine
Operating costs
|
$/t ore
processed
|
$10.34
|
Total Cash Cost (net
of by-product credits)1
|
$/oz Au
|
$511
|
All-In Sustaining
Cost ("AISC")1
|
$/oz Au
|
$626
|
Pre -Tax - NPV (5%
discount rate)
|
US$
million
|
$233
|
Pre-Tax
IRR
|
%
|
48%
|
After-Tax - NPV (5%
discount rate)
|
US$
million
|
$176
|
After-Tax
IRR
|
%
|
38%
|
Payback
|
years
|
1.7
|
1 Total
cash cost and AISC are non-GAAP measures and are net of silver
credits and includes royalties payable. See recent MD&A
regarding non-GAAP measures.
|
* All
dollar amounts in US dollars
|
The PFS continues to support an open pit mine and heap leach
operation. Since the 2014 Pre-Feasibility Study ("2014 PFS"),
significant additional drillhole data has been added, rendering the
2014 mineral resource and mineral reserve estimates non-current.
The main notable physical changes from the 2014 PFS include
improved water management infrastructure including active and
passive water treatment plants for the waste rock facilities and
heap leach facilities, a more detailed design for a larger heap
leach pad with increased capacity, a three-phase heap leach
facility, redesign of the two-phase waste rock facilities, and an
update of all costs. The new mineral reserve estimate at Cerro
Quema includes proven and probable mineral reserves of 21.7 million
tonnes at a gold grade of 0.80 grams per tonne ("g/t") and a silver
grade of 2.18 g/t, for total mineral reserves of 0.56 million
ounces of gold and 1.53 million ounces of silver. This compares to
19.7 million tonnes at a gold grade of 0.77 g/t for a mineral
reserve estimate of 0.49 million ounces in the 2014 PFS,
representing an increase of approximately 15% in contained
ounces.
The Project's low stripping ratio, high gold recoveries, and low
operating costs all contribute to a low estimated AISC of
$626 per ounce of gold.
Permitting
The permitting process has been ongoing and as of May 2021, the extension of the exploitation
contracts was signed by the Ministry of Commerce & Industry,
and Orla, and the documents are now with the Comptroller General
for final review and approval.
In February 2021, the Ministry of
Environment conducted their final site inspection of the project.
As a result of the positive site inspection review, the Category 3
Environmental & Social Impact Assessment ("ESIA") is in the
final stage of approval.
Opportunities
Infill drilling at La Pava, Quemita, and Caballito if successful
could expand and increase the confidence and classification of the
mineral resource. There is some potential to increase the oxide
resource as well as to explore further the sulphide mineral
resource at La Pava and Quemita for gold-copper mineralization. The
current design will allow the heap leach pad and the waste rock
dump to accommodate additional tonnage in the upstream site of
those facilities if required.
At this time, the property is considered under-explored
especially for the sulphide potential with gold-copper mineralized
zones similar to Caballito. Any discoveries could positively impact
the economic value of the Project.
The next steps in Panama will
be to advance the Cerro Quema Oxide Project to a construction
decision concurrent with continued exploration for additional
copper and gold discoveries.
Please see the Company's July 28,
2021 press release for more detail: "Orla Mining
Delivers Robust Pre-Feasibility Study at the Cerro Quema Oxide Gold
Project with 38% Rate of Return".
2021 OUTLOOK AND UPCOMING MILESTONES
- Maintain robust health and safety protocols, including COVID-19
prevention measures, to support the health of employees and local
communities.
- Continue construction activities at the Camino Rojo Oxide Gold
Project towards a targeted first pour in the fourth quarter of
2021.
- Continue to advance the Cerro Quema Oxide Project engineering
once the environmental permit and concession renewals are received
which would provide the basis for a construction decision.
- Further the PEA study on the Camino Rojo Sulphide Project.
- Continue exploration programs with activities focused on
supporting study work and new targets identification.
COVID-19 RISK MANAGEMENT
The Company maintains robust organization-wide COVID-19
protocols to support the health of employees and local
communities. Orla is closely monitoring the potential impacts from
the pandemic on areas including on-site construction, equipment
delivery and logistics, construction costs and schedule, as well as
community and government relations.
CONSOLIDATED FINANCIAL STATEMENTS
Orla's audited consolidated financial statements and
management's discussion and analysis for the three and six months
ended June 30, 2021 are available on
the Company's website at www.orlamining.com, and on SEDAR and EDGAR
under the Company's profile at www.sedar.com and at
www.sec.gov, respectively.
Qualified Persons Statement
The scientific and technical information related to Cerro Quema
and Camino Rojo in this presentation has been reviewed and approved
by Mr. J. Andrew Cormier, P. Eng.,
and Mr. Sylvain Guerard, P. Geo.,
who are the Qualified Persons as defined under NI 43-101
standards.
CONFERENCE CALL
Orla will host a conference call on August 6, 2021, at 10:00
AM, Eastern Time, to provide a corporate update:
Dial-In Numbers:
Conference ID: 4275284
Toll Free: (833)
499-1157
International: (236) 712-2875
Webcast:
https://event.on24.com/wcc/r/3335136/B6BC90FD079E5BC5BA92D351C0DAA610
About Orla Mining Ltd.
Orla is developing the Camino Rojo Oxide Gold Project, an
advanced gold and silver open-pit and heap leach project, located
in Zacatecas State, Central
Mexico. The project is 100% owned by Orla and covers over
160,000 hectares. The technical report for the 2021 Feasibility
Study entitled "Unconstrained Feasibility Study NI 43-101 Technical
Report on the Camino Rojo Gold Project – Municipality of
Mazapil, Zacatecas, Mexico" dated
January 11, 2021, is available on
SEDAR and EDGAR under the Company's profile at
www.sedar.com and www.sec.gov, respectively. The technical
report is also available on Orla's website at www.orlamining.com.
Orla also owns 100% of the Cerro Quema Project located in
Panama which includes a near-term
gold production scenario and various exploration targets. The Cerro
Quema Project is a proposed open pit mine and gold heap leach
operation. An updated independent technical report for the updated
Pre-Feasibility Study on the Cerro Quema Oxide Gold Project
prepared in accordance with the requirements of National Instrument
("NI") 43-101 will be available under Orla's profile on SEDAR,
EDGAR, and on the Company's website on or before September 11, 2021.
Forward-looking Statements
This news release contains certain "forward-looking
information" and "forward-looking statements" within the meaning of
Canadian securities legislation and within the meaning of Section
27A of the United States Securities Act of 1933, as amended,
Section 21E of the United States Exchange Act of 1934, as amended,
the United States Private Securities Litigation Reform Act of 1995,
or in releases made by the United States Securities and Exchange
Commission, all as may be amended from time to time, including,
without limitation, statements regarding the results of the Cerro
Quema pre-feasibility study and future development and permitting
activities, statements with respect to the Company's construction,
operation, and exploration of projects, as well as its objectives
and strategies, including the timing of the PEA on the Camino Rojo
Sulphide Project, the results of the drill program and future
exploration work at the Sulphide Project, and the timing and
construction and estimates of future production at the Company's
Camino Rojo Oxide Project. Forward-looking statements are
statements that are not historical facts which address events,
results, outcomes or developments that the Company expects to
occur. Forward-looking statements are based on the beliefs,
estimates and opinions of the Company's management on the date the
statements are made and they involve a number of risks and
uncertainties. Certain material assumptions regarding such
forward-looking statements were made, including without limitation,
that there will be no material adverse change affecting the Company
or its properties; that all required approvals will be obtained;
that political and legal developments will be consistent with
current expectations; that currency and exchange rates will be
consistent with current levels; and that there will be no
significant disruptions affecting the Company or its properties.
Consequently, there can be no assurances that such statements will
prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements.
Forward-looking statements involve significant known and unknown
risks and uncertainties, which could cause actual results to differ
materially from those anticipated. These risks include, but are not
limited to: risks related to uncertainties inherent in the
preparation of feasibility and pre-feasibility studies, including
but not limited to, assumptions underlying the production estimates
not being realized, changes to the cost assumptions, variations in
quantity of mineralized material, grade or recovery rates, changes
to geotechnical or hydrogeological considerations, failure of
plant, equipment or processes, changes to availability of power or
the power rates, ability to maintain social license, changes to
interest or tax rates, changes in project parameters, delays and
costs inherent to consulting and accommodating rights of local
communities, environmental risks, title risks, commodity price and
exchange rate fluctuations, risks relating to COVID-19, delays in
or failure to receive access agreements or amended permits, risks
inherent in the estimation of mineral reserves and mineral
resources; and risks associated with executing the Company's
objectives and strategies, including costs and expenses, as well as
those risk factors discussed in the Company's most recently filed
Management's Discussion and Analysis, as well as its annual
information form dated March 29,
2021, available on www.sedar.com and www.sec.gov. Except as
required by the securities disclosure laws and regulations
applicable to the Company, the Company undertakes no obligation to
update these forward-looking statements if management's beliefs,
estimates or opinions, or other factors, should change.
Cautionary Note to U.S. Readers
We prepare our financial statements, which are incorporated
by reference herein, in United
States dollars and in accordance with International
Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board, which differs from US
generally accepted accounting principles ("US GAAP") in certain
material respects, and thus are not directly comparable to
financial statements prepared in accordance with US GAAP.
The disclosure contained or referenced herein uses mineral
reserve and mineral resource classification terms that comply with
reporting standards in Canada, and
mineral reserve and mineral resource estimates are made in
accordance with Canadian NI 43-101 and the Canadian Institute of
Mining, Metallurgy and Petroleum — CIM Definition Standards on
Mineral Resources and Mineral Reserves, adopted by the CIM Council,
as amended (the "CIM Definition Standards"). Canadian NI 43-101
establishes standards for all public disclosure an issuer makes of
scientific and technical information concerning mineral
projects. These standards differ significantly from the
mineral reserve disclosure requirements of the United States
Securities Exchange Commission (the "SEC") set forth in Industry
Guide 7. Consequently, information regarding mineralization
contained or referenced herein is not comparable to similar
information that would generally be disclosed by U.S. companies
under Industry Guide 7 in accordance with the rules of the SEC
which applied to U.S. filings prior to the current SEC
Modernization Rules (as defined herein). Further, the SEC has
adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the Securities Exchange Act of 1934
("Exchange Act"). These amendments became effective February 25, 2019 (the "SEC Modernization Rules")
and, commencing for registrants with their first fiscal year
beginning on or after January 1,
2021, the SEC Modernization Rules replace the historical
property disclosure requirements included in SEC Industry Guide
7. As a foreign private issuer that files its annual report
on Form 40-F with the SEC pursuant to the multi-jurisdictional
disclosure system, the Company is not required to provide
disclosure on its mineral properties under the SEC Modernization
Rules and will continue to provide disclosure under NI 43-101 and
the CIM Definition Standards. The SEC Modernization Rules include
the adoption of terms describing mineral reserves and mineral
resources that are "substantially similar" to the corresponding
terms under the CIM Definition, but there are differences in the
definitions under the SEC Modernization Rules and the CIM
Definition Standards. Accordingly, there is no assurance any
mineral reserves or mineral resources that the Company may report
as "proven mineral reserves", "probable mineral reserves",
"measured mineral resources", "indicated mineral resources" and
"inferred mineral resources" under NI 43-101 would be the same had
the Company prepared the mineral reserve or mineral resource
estimates under the standards adopted under the SEC Modernization
Rules. U.S. investors are also cautioned that while the SEC
recognizes "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under the Modernization
Rules, investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to its existence and feasibility than mineralization
that has been characterized as reserves. Accordingly, investors are
cautioned not to assume that any measured mineral resources,
indicated mineral resources, or inferred mineral resources that the
Company reports are or will be economically or legally mineable.
Further, "inferred mineral resources" have a greater amount of
uncertainty as to their existence and as to whether they can be
mined legally or economically. Therefore, U.S. investors are also
cautioned not to assume that all or any part of the "inferred
mineral resources" exist. Under Canadian securities laws, estimates
of "inferred mineral resources" may not form the basis of
feasibility or pre-feasibility studies, except in rare cases.
For the above reasons, information contained or referenced herein
regarding descriptions of our mineral reserve and mineral resource
estimates is not comparable to similar information made public by
U.S. companies subject to reporting and disclosure requirements of
the SEC under either Industry Guide 7 or SEC Modernization
Rules.
SOURCE Orla Mining Ltd.