Canada NewsWire
VANCOUVER, BC , July 28, 2021 /CNW/ - Orla Mining Ltd. (TSX: OLA) (NYSE: ORLA) ("Orla" or the "Company") is pleased to provide the results of a Pre-Feasibility Study ("PFS") and mineral resource and mineral reserve estimates on its Cerro Quema Oxide Gold Project (the "Project" or "Cerro Quema") located in the Azuero Peninsula, Los Santos Province , Panama . The PFS demonstrates the possibility of 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 US$1,600 per ounce.
"We believe that our assets in Panama represent an opportunity for organic growth in our business," stated Jason Simpson , President and Chief Executive Officer of Orla. "The results of the PFS suggest that Cerro Quema can be another low-risk, high margin oxide project for Orla. The completion of the PFS provides a pathway towards continued engineering, project advancement, and a future construction decision. We also believe there is significant opportunity for project optimization and mineral resource expansion in Panama and work is just beginning."
Key Updated Pre-Feasibility Study Highlights:
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Table 1: Pre-Feasibility Study Highlights |
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|
|
Units |
Values |
|
Throughput Rate per Day |
tonnes |
10,000 |
|
Total Ore to Leach Pad |
M tonnes |
21.7 |
|
Gold Grade (Average) |
g/t |
0.80 |
|
Silver Grade (Average) |
g/t |
2.2 |
|
Contained Gold |
ounces |
562,000 |
|
Contained Silver |
ounces |
1,526,000 |
|
Average Gold Recovery |
% |
87% |
|
Average Silver Recovery |
% |
26% |
|
Recovered Gold |
ounces |
489,000 |
|
Recovered Silver |
ounces |
399,000 |
|
Mine Life |
years |
6.0 |
|
Average Annual Gold Production |
ounces |
81,000 |
|
Strip Ratio |
waste : ore |
0.66 |
|
Initial Capex |
US$ 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 |
$176 |
|
After-Tax IRR |
% |
38% |
|
Payback |
years |
1.7 |
|
|
|
1 Total cash cost and AISC are non-GAAP measures and are net of silver credits and includes royalties payable. See reference below regarding non-GAAP measures. |
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* All dollar amounts in US dollars |
Unless otherwise indicated, all dollar amounts ($ and US$) in this press release refer to United States 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 PFS was conducted using a gold price of $1,600 per ounce and a silver price of $20 per ounce and is expressed in U.S. dollars.
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 mineral resource estimate for the La Pava and Quema deposits at Cerro Quema consists of an oxide zone and a mixed zone. The sulphide zones for these deposits and for the adjacent Caballito deposit are not included in this mineral resource estimate. The new indicated mineral resource estimate at Cerro Quema is 56.7 million tonnes at 0.70 g/t gold and 2.07 g/t silver, resulting in an estimated 1.27 million ounces of gold and 3.78 million ounces of silver. Inferred mineral resources are 6.00 million tonnes at 0.33 g/t gold and 2.84 g/t silver, resulting in an estimated additional 0.62 million ounces of gold and 5.3 million ounces of silver. Mineral resources are inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Further details on the mineral resource and mineral reserve estimates are provided below.
Cerro Quema 2021 Pre-Feasibility Study
The Project considers open pit mining of 21.7 million tonnes of ore from the La Pava and Quema-Quemita pits and will be developed in multiple phases. Ore will be crushed to 80% passing 105 mm in a single stage jaw crusher. Lime will be added to the crushed ore for pH control before being conveyor stacked and leached with a dilute cyanide solution. Pregnant leach solution will flow by gravity to a pregnant solution pond and will then be pumped to an ADR (Adsorption, Desorption, Recovery) plant for recovery of metal values. Gold and silver will be loaded onto activated carbon (Adsorption) and then periodically stripped from the carbon in a desorption circuit (Desorption), electrowon (Recovery) and smelted to produce the final doré product.
Based on an ore processing rate of 10,000 tonnes per day or 3.65 million tonnes per year, the Project has an estimated six-year mine life.
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.
The PFS was prepared by a team of independent industry experts including Kappes, Cassiday and Associates ("KCA"), Moose Mountain Technical Services ("Moose Mountain" or "MM"), Resource Geosciences Incorporated ("RGI"), Anddes Asociados ("Anddes" or "AA"), HydroGeoLogica, Inc. or ("HGL"), and Linkan Engineering ("Linkan" or "LE") with input from other consultant groups.
The PFS incorporates geological, assay, engineering, metallurgical, hydrology, geotechnical, environmental, water management, and hydrogeological information collected by Orla and previous owners. Historical drilling up to the date of Orla's acquisition of the Project in late 2016 total 50,571 metres in 577 RC drillholes and 31,432 metres in 154 diamond core drillholes. Since acquiring the Project, Orla has completed a total of 8,117 metres in 64 diamond core drillholes at the Quema deposit.
Historical metallurgical test work programs on the Cerro Quema property were commissioned by the prior operators of the Project. A metallurgical test program was then commissioned by Orla in 2018 to confirm the results and conclusions from the previous campaigns. In total, 43 column leach tests, 67 bottle roll tests, and 30 vat leach tests have been completed to date on the Cerro Quema ore body. Metallurgical testing on the deposit determined a constant field gold recovery of 88% for all La Pava oxide material and 86% for all Quema-Quemita oxide material. Overall, oxide material from La Pava and Quema-Quemita responds very well to cyanide bottle roll and column leaching yielding high gold extractions and low reagent consumptions. However, recoveries on mixed materials are less amenable to heap leaching and are discounted to recoveries of 57% for La Pava and 62% for Quema-Quemita. Mixed ore material only represents 1.5% of total crusher feed during the life of the Project. Metallurgical test work shows minimal additional gold recovery improvement through finer crushing. Cement agglomeration is also not required.
Table 2 presents a summary of the key assumptions and results of the PFS:
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Table 2: Summary of Key Assumptions and Economics of the Cerro Quema Pre-Feasibility Study |
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|
Production Data |
Units |
Values |
|
Life of Mine |
years |
6.0 |
|
Mine Throughput |
tonnes/day |
10,000 |
|
Mine Throughput |
tonnes/year |
3,650,000 |
|
Total Tonnes to Crusher |
tonnes |
21,738,052 |
|
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% |
|
Average Annual Gold Production |
ounces |
81,000 |
|
Average Annual Silver Production |
ounces |
66,000 |
|
Total Gold Produced |
ounces |
489,000 |
|
Total Silver Produced |
ounces |
399,000 |
|
Life of Mine Strip Ratio |
waste : ore |
0.66 |
|
Operating Costs (Average LOM) |
|
|
|
Mining (mined) |
/tonne mined |
$2.15 |
|
Mining (processed) |
/tonne processed |
$3.50 |
|
Processing & Support |
/tonne processed |
$4.44 |
|
General & Administrative |
/tonne processed |
$2.40 |
|
Total Operating Cost |
/tonne processed |
$10.34 |
|
Total Cash Cost (net of by-product credits) 1 |
/ounce Au |
$511 |
|
AISC 1 |
/ounce Au |
$626 |
|
Capital Costs (Excluding value added tax) |
|
|
|
Initial Capital |
US$ million |
$164 |
|
Life of Mine Sustaining Capital |
US$ million |
$41 |
|
Life of Mine Capital |
US$ million |
$204 |
|
Working Capital & Initial Fills |
US$ million |
$7 |
|
Closure Costs |
US$ million |
$15 |
|
Financial Evaluation |
|
|
|
Gold Price Assumption |
US$/ounce |
$1,600 |
|
Silver Price Assumption |
US$/ounce |
$20 |
|
Average Annual Cashflow (Pre-Tax) |
US$ million |
$72 |
|
Average Annual Cashflow (After-Tax) |
US$ million |
$62 |
|
IRR, Pre-Tax |
% |
48% |
|
IRR, After-Tax |
% |
38% |
|
NPV @ 5% (Pre-Tax) |
US$ million |
$233 |
|
NPV @ 5% (After-Tax) |
US$ million |
$176 |
|
Pay-Back Period (After-Tax) |
years |
1.7 |
|
|
|
1 Total cash cost and AISC are non-GAAP measures and are net of silver credits and includes royalties payable. See reference below regarding non-GAAP measures. |
The Cerro Quema property is located in the Azuero Peninsula, Los Santos Province , Panama , 193 straight-line kilometres southwest of Panama City and 45 kilometres south-southwest of the town of Chitré. Driving distance from Panama City is 255 kilometres.
Mineral concessions are comprised of three contracts between the Republic of Panama and Minera Cerro Quema SA, a wholly owned subsidiary of Orla. The original 20-year term for these concessions expired on February 26, 2017 (Contracts 19 and 20) and March 3, 2017 (Contract 21). The Company has applied for the prescribed 10-year extension to these contracts as it is entitled to under Panamanian mineral law. Formal approval of the extension of these concessions has not yet been received. On March 6, 2017 , the Ministry of Commerce and Industry provided written confirmation to the Company that it had received the extension applications, and that exploration work could continue while the Company waits for the renewal. Orla has received verbal assurances from government officials that the renewal applications are complete with no outstanding legal issues. Since the expiry of the concessions, Orla has continued to receive ongoing exploration permits and the Ministry of Commerce has continued to accept Orla's annual reports and concession fees.
Orla owns the surface rights for 2,274.5 hectares of the land required to mine the Cerro Quema mineral reserves and to construct and operate a heap leach facility and most of the land required for proposed upgrades to the project access road.
Although Panamanian regulations do not require mining projects to present a detailed social assessment, Orla is committed to preparing a comprehensive Social Impact Assessment in compliance with international guidelines. Orla currently has an active community and social program.
Sensitivity to Gold Price
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Table 3: Project Economics - Sensitivities to Gold Price |
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|
Gold Price ($/oz) |
$1,250 |
$1,425 |
$1,600 |
$1,775 |
$1,950 |
|
After-tax NPV 5% ($M) |
$79 |
$127 |
$176 |
$224 |
$272 |
|
After-tax IRR (%) |
21% |
30% |
38% |
45% |
52% |
|
Payback (years) |
2.4 |
1.9 |
1.7 |
1.4 |
1.3 |
Capital and Operating Costs
Capital and operating costs for the process and general and administration components of the Cerro Quema Project were estimated by KCA with information from Anddes and Linkan. Costs for the mining components were provided by Moose Mountain . The estimated costs are considered to have an overall accuracy of +/-25%.
Initial capital expenditures or pre-production capital for the Cerro Quema Project is estimated at $164 million . Total capital for the life of the Project, including sustaining and working capital, is estimated at $212 million . This excludes reclamation and closure costs which are estimated at $15 million .
Table 4 provides a breakdown of the capital costs for the Project.
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Table 4: Capital Cost Summary (excl. value added tax) |
|
|
Description |
Cost (US$ M) |
|
Pre-Production Capital Costs |
$98 |
|
Indirect Costs |
$6 |
|
Other Owner's Costs |
$12 |
|
EPCM |
$11 |
|
Contingency |
$21 |
|
Mining Capital & Preproduction |
$16 |
|
Total Initial Capital |
$164 |
|
Working Capital & Initial Fills |
$7 |
|
Sustaining Capital – Mine & Process |
$41 |
|
Total LOM Capital (incl. working capital) |
$212 |
|
Closure Costs |
$15 |
The average life of mine operating cost for the Project is estimated to be $10.34 per tonne of ore processed. Table 5 presents the LOM operating cost requirements for the Cerro Quema Project.
Mining costs were estimated at $2.15 per tonne mined for the life of the project and $3.50 per tonne of ore processed and are based on quotes for mining equipment and estimated owner's mining costs. Mine operations are planned to be typical of similar small scale open pit operations, consisting of conventional drill, blast, load, haul, and stockpile operations. Direct mining and mine maintenance are planned as owner-operated mining operations. The owner will be responsible for all equipment mobilization/demobilization, operating, and labour costs as well as maintenance of the mining equipment. Blasting unit operations will be performed by a specific blasting company contractor. Supervision, geology, and mine planning will be done by the owner.
Process operating costs were estimated by KCA from first principles. Labour costs were estimated using project specific staffing, salary and wage and benefit requirements. Unit consumptions of materials, supplies, power, water and delivered supply costs were also estimated. Life of mine average processing costs are estimated at $4.44 per tonne of ore processed. The operating costs presented are based upon the ownership of all process production equipment and site facilities, with the exception of the onsite power generation set which will be leased. The owner will employ and direct all process operations, maintenance, and support personnel for all site activities.
General administrative costs (G&A) were estimated by KCA with input from Orla. G&A costs include project specific labour and salary requirements and operating expenses, including social contributions. G&A costs are estimated at $2.40 per tonne ore.
Operating costs were estimated based on US dollars during the first quarter of 2021 and are presented with no added contingency based upon the design and operating criteria present in the PFS.
Table 5 summarizes the different components of the operating costs:
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Table 5: Life of Mine Operating Cost Summary |
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Description |
LOM Costs |
LOM Costs |
|
$/t |
$/oz |
|
|
Mining |
$3.50 |
$156 |
|
Process |
$4.44 |
$197 |
|
G&A |
$2.40 |
$107 |
|
Total Operating Costs |
$10.34 |
$460 |
|
Refining & Transport |
— |
$2 |
|
Royalties |
— |
$64 |
|
By-product Credits |
| |
