VANCOUVER, March 23, 2020 /CNW/ - Orla Mining Ltd. (TSX:
OLA) ("Orla" or the "Company") is pleased to announce that the
Company has entered into a non-binding letter agreement with
Fresnillo Plc ("Fresnillo") as to the commercial terms on which
Orla would obtain the right to expand the Camino Rojo oxide pit
onto part of Fresnillo's mineral
concession located immediately to the north of Orla's property
under a definitive layback agreement (the "Layback Agreement"). On
completion, the Layback Agreement will allow access to oxide and
transitional heap leachable Mineral Resources on Orla's property
below the open pit outlined in the June
2019 Feasibility Study. In addition, the Layback Agreement
will provide Orla with the right to mine from Fresnillo's mineral concession, and recover
for Orla's account, all oxide and transitional material amenable to
heap leaching that are within an expanded open pit. The completion
of the Layback Agreement is expected to result in a material
increase in Mineral Reserves at the Camino Rojo project. Orla
expects to publish an updated Mineral Reserve estimate for material
on Orla's concession following the completion of the Layback
Agreement.
Under the terms of the Layback Agreement, Orla would pay
Fresnillo a total cash
consideration of US$62.8 million
based on the following schedule:
- US$10 million due upon the
execution of the definitive Layback Agreement;
- US$15 million due upon Orla
having received all funding and permits required for construction
and development; or July 1, 2020,
whichever is sooner;
- US$15 million due no later than
(i) twelve (12) months following the commencement of commercial
production at Camino Rojo or (ii) December
1, 2022, whichever is earlier; and
- US$22.8 million due no later than
(i) twenty-four (24) months following the commencement of
commercial production at Camino Rojo or (ii) December 1, 2023, whichever is earlier.
- The amounts for the third and fourth payments shall bear an
interest of 5% per annum from July 1,
2020 until the date of payment.
"We are excited to have reached this agreement with Fresnillo which will benefit both parties and
our stakeholders, such as the local communities, through an
expanded resource and an enhanced mine profile at Camino Rojo,"
stated Jason Simpson, President and
Chief Executive Officer of Orla. "Through collaboration with
Fresnillo, we will be in a
position to optimize the oxide deposit to its full potential by
including the mineralization that would not otherwise be accessible
without laying back our open pit onto Fresnillo's concession, as well as
mineralization located on the Fresnillo property. We are very pleased to
have reached this important value creating milestone in the
development of Camino Rojo."
The Feasibility Study on the Camino Rojo Oxide Gold Project
dated June 25, 2019 titled
"Feasibility Study, NI 43-101 Technical Report on the Camino Rojo
Gold Project — Municipality of Mazapil,
Zacatecas, Mexico" is constrained by the north boundary of
Orla's mineral concessions with Fresnillo's mineral concession. The
Feasibility Study supports a Mineral Reserve estimate of 44.0
million tonnes grading 0.73 g/t gold and 14.2 g/t silver out of a
total Measured and Indicated Mineral Resource of 94.6 million
tonnes grading 0.71 g/t gold and 12.7 g/t silver that is amenable
to heap leaching (see table 1). A portion of the Mineral Resources
amenable to heap leaching that are not in the current Mineral
Reserves are located just below the bottom of the pit outlined in
the Feasibility Study and at relatively shallow depths on the north
side of the pit. The Layback Agreement is expected to allow much of
this material to be included in a revised mine plan using the same
metallurgical recoveries for each rock type and similar operating
costs as the Feasibility Study. Not all of the Mineral Resources
amenable to heap leaching below the Feasibility Study pit are
expected to be included in an updated mining study due to their
depth, and would likely only be included in future mine plans that
consider mining and processing the surrounding sulphides.
As part of the Layback Agreement, Orla would also obtain the
right to mine and recover all heap leachable material located on
the Fresnillo concession in a pit
mined for oxide and transitional material that is covered by the
Layback Agreement. This material would result in additional gold
and silver production to Orla's account. Fresnillo drilled approximately 63 core holes
totaling 33,253 metres targeting both near surface oxide
mineralization and deep sulphide mineralization in the area covered
by the Layback Agreement. Orla has received the drill data from
Fresnillo but has not yet
independently verified the results or undertaken any QA/QC
analysis. However, results from Fresnillo holes drilled in close proximity to
the most northern holes on the Orla property appear to be
consistent with projections of the geological and oxidation models
created from Orla's data and assay results appear to be consistent
with projections of Orla's Mineral Resource model. Additional
work, including an estimated 2,500 metres of drilling and detailed
QA/QC on the Fresnillo data, and
integration of Orla's geological and resource models with
Fresnillo's drill data will be
required to bring material on the Fresnillo concession to the Measured and
Indicated Mineral Resource category.
A revised feasibility study on a project unconstrained by Orla's
current property boundary is underway to determine the economic
impact of the additional Mineral Resources from Orla's concession
available for processing as a result of the Layback
Agreement. Importantly, an expanded operation would not
require moving any of the infrastructure in the current design for
the project and timelines for the permitting process, engineering,
procurement and construction for the development of Camino Rojo
will remain unchanged.
The letter agreement with Fresnillo is non-binding, has a term of 12
months and remains subject to completion of the definitive Layback
Agreement between the parties which is currently underway and
expected during the first half of 2020. The definitive Layback
Agreement will not preclude or restrict Fresnillo from participating in any future
development of the sulphide mineral resource at the Camino Rojo
project.
The Camino Rojo project continues to advance as planned with
over 35% of the detailed engineering completed to date. Orla has
begun purchasing long-lead items and construction is expected to
start during the first half of 2020, upon receipt of all required
permits. Orla is regularly assessing any potential impact or delays
to the development schedule which could arise from the COVID-19
situation.
Qualified Persons and Data Verification
Hans Smit, P.Geo., has reviewed
and verified all technical and scientific information contained in
this news release and is a Qualified Person within the meaning of
NI 43-101. Data verification of Fresnillo's drill information that is subject
to the Layback Agreement is in its early stages by Orla technical
staff. To date, Fresnillo has
provided electronic data files with drill data including hole
location, downhole surveys, assay data and alteration and oxidation
information. Orla will undertake QA/QC on available drill core and
assay certificates and has planned 2,500 metres of drilling in the
area subject to the Layback Agreement as part of the data
verification procedures and to provide greater drill density in
areas with mineralized material.
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. Estimated Mineral Reserves as of June 24, 2019 are 44.0 million tonnes at a gold
grade of 0.73 grams per tonne ("g/t") and a silver grade of 14.2
g/t, for total Mineral Reserves of 1.03 million ounces of gold and
20.1 million ounces of silver (Comprised of Proven Mineral Reserves
of 14.6 million tonnes at 0.79 g/t gold and 15.1 g/t silver and
Probable Mineral Reserves of 29.4 million tonnes at 0.70 g/t gold
and 13.7 g/t silver). The estimated leachable Measured Mineral
Resources include 19.4 million tonnes at 0.77 g/t gold and 14.9 g/t
silver and Indicated Mineral Resources of 75.3 million tonnes at
0.70 g/t gold and 12.2 g/t silver for total Measured and Indicated
Mineral Resource of 2.16 million ounces of gold and 38.78 million
ounces of silver. The technical report entitled "Feasibility Study,
NI 43-101 Technical Report on the Camino Rojo Gold Project —
Municipality of Mazapil, Zacatecas,
Mexico" dated June 25, 2019 is
available on SEDAR under the Company's profile as well as 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. Please refer to the "Cerro
Quema Project - Pre-feasibility Study on the La Pava and Quemita
Oxide Gold Deposits" dated August 15,
2014, which is available on SEDAR.
Table 1: MINERAL
RESOURCE ESTIMATE
|
|
Gold &
Silver
|
Tonnes
|
Gold
|
Silver
|
Gold
|
Silver
|
000's
|
(g/t)
|
(g/t)
|
(koz)
|
(koz)
|
LEACH
|
Measured
|
19,391
|
0.77
|
14.9
|
482
|
9,305
|
Indicated
|
75,249
|
0.70
|
12.2
|
1,681
|
29,471
|
M&I
Total
|
94,640
|
0.71
|
12.7
|
2,163
|
38,776
|
Inferred
|
4,355
|
0.86
|
5.6
|
120
|
805
|
MILL
|
Measured
|
3,358
|
0.69
|
9.2
|
74
|
997
|
Indicated
|
255,445
|
0.88
|
7.4
|
7,221
|
60,606
|
M&I
Total
|
258,803
|
0.88
|
7.4
|
7,296
|
61,603
|
Inferred
|
56,564
|
0.87
|
7.5
|
1,577
|
13,713
|
|
|
|
|
|
|
|
Lead &
Zinc
|
Tonnes
|
Lead
|
Zinc
|
Lead
|
Zinc
|
000's
|
(%)
|
(%)
|
(M lbs)
|
(M lbs)
|
MILL
|
Measured
|
3,358
|
0.13
|
0.38
|
9
|
28
|
Indicated
|
255,445
|
0.07
|
0.26
|
404
|
1,468
|
M&I
Total
|
258,803
|
0.07
|
0.26
|
414
|
1,496
|
Inferred
|
56,564
|
0.05
|
0.23
|
63
|
290
|
|
Mineral Resources
Notes:
|
1.
The mineral resource has an effective
date of June 7, 2019. The mineral resources are classified in
accordance with the CIM Definition Standards in accordance with the
disclosure requirement of NI 43-101.
|
2.
Columns may not sum exactly due to
rounding.
|
3.
Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
|
4.
Mineral resources for leach material are
based on prices of $1,400/oz gold and $20/oz silver.
|
5.
Mineral resources for mill material are
based on prices of $1,400/oz gold, $20/oz silver, $1.05/lb lead,
and $1.20/lb zinc.
|
6.
Mineral resources are based on net
smelter return cut-off of $4.73/t for leach material and $13.71/t
for mill material.
|
7.
Includes 2% royalty and an USD:MXN
exchange rate of 19.3.
|
8.
Operating costs for Leach resource -
mining $1.65/t mined; process $3.41/t processed; G&A $1.32/t
processed; Operating costs for Mill resource - mining $1.65/t
mined; process $12.50/t processed; G&A $1.20/t
processed.
|
9.
Leach resource payable – Au 100%; Ag
100%; Mill resource payable – Au 95%, Ag 95%, Pb 95%, Zn
85%
|
10.
Leach resource refining costs - Au
$5.00/oz; Ag $0.50/oz; Mill resource refining costs - Au $1.00/oz;
Ag $1.50/oz; Pb $0.194/lb; Zn $0.219/lb.
|
11.
The mineral resource estimate assumes
that the floating pit cone used to demonstrate reasonable prospects
for eventual economic extraction extends onto land held by the
adjacent owner. Any potential development of the Camino Rojo
Project that includes an open pit encompassing the entire mineral
resource estimate would be dependent on obtaining a final Layback
Agreement with the adjacent concession owner.
|
12.
Mineral resources are inclusive of
mineral reserves.
|
13.
An Inferred Mineral Resource has a lower
level of confidence than that applying to an indicated mineral
resource and must not be converted to a mineral reserve. It is
reasonably expected that the majority of inferred mineral resources
could be upgraded to indicated mineral resources with continued
exploration.
|
Forward-looking and Cautionary Statements
This news release contains certain "forward-looking statements"
within the meaning of Canadian and United
States securities legislation, including, without
limitation, statements with respect to the terms of the agreement
in principle and the Layback Agreement, the expected additional
material to be included in a future mine plan; timeline for
completing a definitive Layback Agreement; results of a feasibility
study, including but not limited to the mineral resource and
mineral reserve estimation, mine plan and operations, potential
economic impact, internal rate of return, sensitivities, taxes, net
present value, potential recoveries, design parameters, operating
costs, capital costs, production data and economic potential; the
timing and costs for production decisions; financing timelines and
requirements; permitting timelines and requirements; requirements
for additional land; exploration and planned exploration programs,
the potential for discovery of additional mineral resources; upside
opportunities including land agreements, the development of the
sulphide mineral resource and exploration potential; timing for
start of engineering work, construction, and receipt of permits;
timing for first gold production; and the Company's objectives and
strategies. 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 are discussed
in this news release, including without limitation, assumptions
regarding price of gold and silver; the accuracy of mineral
resource and mineral reserve estimations; that there will be no
material adverse change affecting the Company or its properties;
that all required permits and approvals will be obtained; that
social or environmental issues might exist, are well understood and
will be properly managed; 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: failing to enter into a definitive agreement with
respect to Engineering, Procurement and Construction Management and
with respect to the Layback Agreement with Fresnillo; failing to receive the balance of
the credit facility; risks related to uncertainties inherent in the
preparation of feasibility studies, drill results and the
estimation of mineral resources and mineral reserves, including
changes in the economic parameters; risks relating to not securing
agreements with third parties or not receiving required permits;
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 28, 2019, available
on www.sedar.com. 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.
SOURCE Orla Mining Ltd.