Perpetua Resources Corp. press release
Orla Mining Announces Positive Results of Preliminary Economic Assessment and New Mineral Resource Estimate for Camino Rojo
NASDAQ - Nasdaq Stock Market · Gold · Antimony · Silver · United States
(All amounts in US$ unless otherwise noted)
Vancouver, British Columbia--(Newsfile Corp. - May 29, 2018) - Orla Mining Ltd. (TSXV: OLA) ("Orla" or the "Company") is pleased to provide the results of a positive Preliminary Economic Assessment ("PEA") and a mineral resource estimate on its 100% owned Camino Rojo Project located in Zacatecas State, Mexico. The mineral resource and PEA support a technically simple open-pit mine and heap-leach operation that offers low capital and operating costs, rapid payback, and strong financial performance.
The new overall mineral resource at Camino Rojo is estimated to include measured and indicated mineral resources of 9.65 million ounces of gold and 102.4 million ounces of silver (354.9 million tonnes at 0.85 g/t gold and 8.97 g/t silver) and an inferred mineral resource of 1.82 million ounces of gold and 16.21 million ounces of silver (65.2M tonnes at 0.87 g/t gold and 7.73 g/t silver).
The PEA is based on near-surface oxide and partly oxidized (transitional) material within the overall resource that can be processed by heap leaching. All mineral resources and the proposed open pit are within Orla mineral concessions. The Company has surface rights over the entire area of proposed development in the PEA.
| PEA Highlights | | | Production Rate per Day | 18,000 tonnes | | Total Material to Leach Pad | 42.5M tonnes | | Average Grade Au / Ag (g/t) | 0.71 / 13.56 | | Contained gold / silver ounces | 966,000 / 18,517,000 | | Average Recovery Au / Ag | 67% / 15% | | Average Annual gold Production | 97,500 ounces | | Strip Ratio | 0.58 | | Initial Capex | $125 million | | Avg. LOM production costs (per tonne of material processed) | $8.02 | | Total By-Product Cash Cost1($/oz Au) | $499 | | All-In Sustaining Cost1($/oz Au) | $555 | | Pre -Tax - Net Present Value (5%) / Internal Rate of Return ("IRR") | $231 million / 38.1% | | After-Tax - Net Present Value (5%) / IRR | $121 million / 24.5% | | Payback | 3.3 years |
1includes royalties payable
"The results of the mineral resource estimate and PEA clearly show that Camino Rojo is an excellent project with potential for very low cost, 100,000 ounces per year gold and significant silver production from a relatively simple open pit mine and heap leach," stated Marc Prefontaine, President and Chief Executive Officer. "There is also longer-term economic potential in the large sulphide resource along with the extensive area of prospective exploration ground that Orla controls. Only six months after acquiring the property we will be starting feasibility-level work with the aim of being in a position to make a production decision in the second quarter of 2019."
Chuck Jeannes, Chairman of Orla, added, "We expect the development of Camino Rojo to provide the foundation for achieving our vision of growing Orla into a premier emerging gold producer. The PEA supports a relatively short period to cash flow generation, the fuel for future success. Concurrent with the development of Camino Rojo, we will be advancing our Cerro Quema project in Panama, which includes another simple, low capital intensity, high margin heap leach opportunity, along with a very exciting sulphide copper-gold discovery at the Caballito zone. This foundation of multiple high-quality assets provides geographic and operational diversity, a key to creating shareholder value."
Opportunities for further improvement of the project include:
-
Entering into an agreement with the owner of the mineral concession located directly north of Orla's concession which would allow the north pit wall to extend past the Orla property line and thus go deeper and include additional leachable resources located on the property.
-
The potential to steepen the north pit wall slope angle.
-
The potential to reduce capital and operating costs by employing larger crush size, as test work to date shows only minor or no recovery decrease with larger crush size.
-
Increase in silver recoveries.
Metallurgical drilling has commenced to provide additional materials for evaluation of crush size and silver recoveries, and geotechnical analysis of the pit wall is underway.
Feasibility work has already started, including environmental assessment studies and work towards permit submittals. The Company expects to complete the feasibility analysis during the first half of 2019. Contingent upon positive feasibility results, commencement of construction is expected to follow the receipt of necessary permits and first gold would be expected during the first half of 2021.
The PEA is based on an open pit mine using conventional trucks and loaders transporting heap leach material to a crushing plant and waste material to a waste rock pile both located within 500 metres of the pit. Material will then be conveyed and stacked onto an adjacent heap leach pad. The site's proximity to infrastructure, low stripping ratio, compact footprint and flat pad location all contribute to the relatively low estimated production costs and project simplicity.
The PEA is preliminary in nature and includes the use of inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
PropertyDescription:
Camino Rojo is located in Zacatecas State Mexico. The current mineral resource is located 3 km off a paved 4-lane highway. The area is flat and there are no known social or environmental impediments to mining. Orla has water rights and a surface agreement over the mineral resource and area of proposed infrastructure. The Company has all surface and mineral rights to develop the project modelled in the PEA scenario. Pursuant to the agreement whereby Orla acquired the property, there is 2% net smelter return ("NSR") royalty in favour of Goldcorp Inc. for any material processed by heap leaching.
There is no one living directly over the proposed development area. The town of San Tiburcio is located 4 km to the east of the proposed development. Orla has a Collaboration and Social Responsibility agreement with the San Tiburcio ejido which includes a 30-year temporary occupation right and an expropriation right over the 2,487 hectares covering the proposed pit and infrastructure area. The Company has an active community and social program in San Tiburcio and the other nearby communities of El Berrendo and San Francisco.
Camino Rojo comprises intrusive related, sedimentary strata hosted, polymetallic Au, Ag, As, Zn, and Pb mineralization. The mineralized zones correspond to zones of sheeted sulfidic veins and veinlet networks, creating a bulk-mineable style of gold mineralization. Mineralization is almost completely oxidized to a depth of approximately 120 meters and then variably oxidized below (Transitional to Sulphide). The mineral resource was divided into oxide, high and low transitional and sulphide. Only the oxide and transitional material were considered in the PEA study for heap leach extraction.
PEA Project Description
The project modelled in the PEA, in which all development is on mineral concessions currently controlled by Orla, is described below. The PEA was overseen by Kappes Cassiday & Associates ("KCA") of Reno, NV.
The Camino Rojo mine will be a conventional open pit mine. Mine operations will consist of drilling holes, blasting and loading into off-road trucks with loaders. Mineralized material will be delivered to the primary crusher and waste to the waste storage facility located southeast of the pit. Pit angles are based on previous geotechnical studies and range from -45 to -53 degrees. Mineral resource within the designed pit is broken into pervasive mineralized oxide (Kp), incipiently mineralized oxide (Ki), high transitional (60 to 90% oxidized) and low transitional (30 to 60% oxidized) material. Any material with less than 30% oxidation is categorized as waste. Of the total of 42.5 million tonnes of material going to the crusher, 5 million tonnes are low grade mineral resources that will be stockpiled and then processed at the end of the mine life. Approximately 385,000 tonnes of the material going to the crusher, or 1%, is categorized as inferred mineral resources. The remainder is categorized as measured and indicated mineral resources. In addition to the mineral resource, 24.5 million tonnes of waste will be mined, resulting in a strip ratio of 0.58:1.
Run of mine resource material will be crushed at a rate of 18,000 tonnes per day to 80% passing 38 mm using a two-stage closed crushing circuit with a primary jaw crusher and secondary cone crusher. After crushing, material will be conveyor stacked on the leach pad in 10-meter lifts. Lime will be added to the material for pH control before being stacked and leached with a dilute cyanide solution. Pregnant solution will flow by gravity to a pregnant solution pond before being pumped to a Merrill-Crowe plant for metal recovery. Gold and silver will be precipitated from the pregnant solution via zinc cementation. The precious metal precipitate will be dewatered using filters, dried in a mercury retort to remove mercury values, and smelted to produce the final doré product.
Recovery predictions and key process design parameters are based on the results of 88 column tests completed by previous operators. Most test work was done at sizes ranging from -9.5 to -25.0 mm, with 6 tests at -38.0 mm. Test work does not show a significant decrease in gold recovery with larger crush sizes. The test work conducted to date is considered to be representative and is sufficient for these purposes. Confirmatory metallurgical test work will be completed on representative samples of each mineral type, specifically column leach tests on coarse crushed material.
Key design parameters from the metallurgical test work are summarized below:
Crush size of 80% passing 38 mm. Estimated gold recoveries (including 2% field deduction) of 70%, 58%, 60% and 49% for Kp Oxide, Ki Oxide, Transition-hi and Transition-lo materials, respectively, average of 67%. Estimated silver recoveries (including 3% field deduction) of 13%, 20%, 17% and 20% for Kp Oxide, Ki Oxide, Transition-hi and Transition-lo materials, respectively, average of 15%. Design leach cycle of 80 days. Average cyanide consumption of 0.35 kg/t material. Average lime consumption of 1.25 kg/t material.
Approximately 260 process and general administrative people will be employed directly by the project and approximately 140 people will be employed by the contract miner. The PEA includes costs for a 250-person camp, but it is anticipated that a significant portion of the employees will be hired from the local area. The Company is initiating programs intended to facilitate local employment.
Environmental Assessment studies are underway with no significant issues noted to date. Initial mine waste rock studies indicate that acid rock drainage and metal leaching will not be a problem. The Camino Rojo heap leach system is designed as a zero-discharge facility.
PEAEconomics
Mine operating costs were estimated by Independent Mining Consultants ("IMC") and are based on contract mining at $1.81 per tonne of material moved. The relatively low cost reflects the very short hauls to both the crusher and waste facility.
Process operating costs were estimated from first principles. Labor costs were estimated using project specific staffing, salary and wage and benefit requirements. Unit consumptions of materials, supplies, power, water and delivered supply costs were also estimated.
Life of Mine Operating Cost Summary (per tonne material processed)
| Description | LOM Cost (US$/t) | | Mine | $3.05 | | Process & Support Services | $3.20 | | Site General & Administration | $1.77 | | Total | $8.02 |
The capital costs are based upon the ownership of all process production equipment and site facilities. Costs include surface support equipment, but mining equipment will be supplied by the mine contractor. Estimated capital costs include a 28% contingency on process and infrastructure direct costs.
Capital Cost Summary
| Description | Cost (US$) | | Pre-Production Capital | $120.2M | | Mining Contractor Mobilization & Preproduction | $4.9M | | Total Initial Capital | $125.1M | | Sustaining Capital — Mine & Process | $14.9M | | Working Capital & Initial Fills (recovered) | $ 13.8M |
The economic evaluation incorporates the following inputs:
-
Period of Analysis of 9 years (includes one year of pre-production, 7 years of production and one year for reclamation and closure).
-
3-year trailing average gold price of $1,250/oz and silver price of $17/oz.
-
Gold and silver recoveries based on metallurgical domain — average of 67% and 15% respectively.
-
Electric power will be provided by line power to all elements of the process.
-
2% NSR royalty to Goldcorp Inc.
-
0.5% NSR Extraordinary Mining duty to Mexican Government.
-
7.5% Special Mining Tax to Mexican Government.
-
30% Income Tax to Mexican Government.
PEA Economics
| Economic Analysis(US$) | | | | IRR (Pre-Tax) | 38.1 | % | | IRR (After-Tax) | 24.5 | % | | Average Annual Free Cashflow (Pre-Tax) | $60 | Million | | NPV @ 5% (Pre-Tax) | $231 | Million | | Average Annual Free Cashflow (After-Tax) | $43 | Million | | NPV @ 5% (After-Tax) | $121 | Million | | Gold Price Assumption | $1,250 | /Ounce | | Silver Price Assumption | $17 | /Ounce | | Pay-Back Period (Years based on After-Tax) | 3.3 | Years | | | | | | Capital Costs (Excluding VAT) | | | | Initial Capital | $125 | Million | | Working Capital & Initial Fills | $14 | Million | | LOM Sustaining Capital | $15 | Million | | | | | | Operating Costs (Average LOM) | | | | Mining | $3.05 | /Tonne processed | | Processing & Support | $3.20 | /Tonne processed | | General & Administration | $1.77 | /Tonne processed | | Total Operating Cost | $8.02 | /Tonne processed | | Total By-Product Cash Cost1 | $499 | /Ounce Au | | All-in Sustaining Cost1 | $555 | /Ounce Au | | | | | | Production Data | | | | Life of Mine | 6.6 | Years | | Total Tonnes to Crusher | 42,477,000 | Tonnes | | Grade Au | 0.71 | g/t | | Grade Ag | 13.56 | g/t | | Contained Au oz | 966,000 | Ounces | | Contained Ag oz | 18,517,000 | Ounces | | Mine Throughput per day | 18,000 | Tonne/day | | Mine throughput per year | 6,570,000 | Tonne/year | | Metallurgical Recovery Au (Overall) | 67 | % | | Metallurgical Recovery Ag (Overall) | 15 | % | | Average Annual Gold Production | 97,472 | Ounces | | Average Annual Silver Production | 415,981 | Ounces | | Total Gold Produced | 642,382 | Ounces | | Total Silver Produced | 2,741,485 | Ounces | | LOM Strip Ratio | 0.58 | |
1includes royalties payable
The following tables illustrate the after-tax sensitivity of the project economics to changes in operating and capital costs and to changes in gold price:
| | | | NPV | | | | Variation | IRR | 0% | 5% | | Gold Price | | | | | | | | | | | | 75% | $938 | 8.9% | $58,516,467 | $21,406,028 | | 90% | $1,125 | 18.6% | $134,018,397 | $81,065,797 | | 100% | $1,250 | 24.5% | $184,353,016 | $120,834,790 | | 110% | $1,375 | 29.9% | $233,731,543 | $159,927,785 | | 125% | $1,563 | 37.5% | $306,847,950 | $217,846,352 | | | | | | | | Capital Costs | | | | | | | | | | | | 75% | $126,305,947 | 33.4% | $206,009,548 | $143,923,225 | | 90% | $145,237,065 | 27.6% | $193,262,389 | $130,237,181 | | 100% | $157,857,811 | 24.5% | $184,353,016 | $120,834,790 | | 110% | $170,478,556 | 21.8% | $175,244,883 | $111,297,870 | | 125% | $189,409,674 | 18.3% | $161,582,683 | $96,992,490 | | | | | | | | Operating Costs | | | | | | | | | | | | 75% | $255,687,582 | 30.6% | $239,000,813 | $164,121,828 | | 90% | $306,825,099 | 27.0% | $206,592,687 | $138,437,976 | | 100% | $340,916,776 | 24.5% | $184,353,016 | $120,834,790 | | 110% | $375,008,454 | 21.9% | $161,675,682 | $102,899,076 | | 125% | $426,145,971 | 17.8% | $127,659,682 | $75,995,504 |
Project Opportunities
Opportunities for further improvement of the project include:
Successfully negotiating an agreement with the owner of the concession north of Orla's property.
>
The PEA open pit is constrained by the north boundary of Orla's concessions. A pit model based on the mineral resource disclosed herein and unconstrained by the property boundary was assessed using the same recoveries and similar operating costs as the PEA. The objective was to understand the benefit of getting an agreement with the owner of the mineral concession located directly north of the Orla concession. This exercise indicated that approximately 32 million additional tonnes of the existing measured and indicated mineral resource at 0.70 g/t Au and 14.7 g/t Ag could be included in the pit model in a case where there was no boundary restriction. By definition, all resources are located on Orla's claim. The additional resources included as part of the unconstrained pit model are because the pit wall continues onto the adjoining claim, allowing deeper access to resources below the PEA mine model.
-
The potential to steepen the north pit wall slope angle. This would increase the amount of resource at depth that would be included in the pit.
-
The potential to reduce capital and operating costs by employing larger crush size as test work to date shows only minor or no recovery decrease with larger crush size.
-
Potential increase in silver recoveries.
Additional Project UpsideOpportunities
Studies to investigate opportunities within the existing 7.3 million gold ounces of sulphide (mill) measured and indicated resources will be conducted over the coming months. In addition, a C$2 million regional exploration program including mapping and ground geophysics is ongoing.
Mineral Resources
Mineral resources were estimated by IMC based on a geological and oxidation model developed by Orla geologists. The model has domains based on stratigraphic units; Caracol and Indidura. The Caracol is the uppermost unit throughout the deposit and the primary host rock. It was further divided by alteration intensity (Kp for pervasive alteration and Ki for incipient alteration) and between an upper zone (NE) with more flat lying mineralization and a lower zone (SW) with steeper mineralization. Lithological and alteration contacts were put as hard boundaries in estimation. The NE/SW boundary was not.
Oxidation levels were superimposed onto the block model after resource estimation. Oxidation is divided by levels; oxide (+90% oxidized), Transition high (60 to 90% oxidized), transition low (30 to 60% oxidized). Any material less than 30% oxidized was considered sulphide. Oxidized and transition material is reported as leach mineral resources and sulphide material is reported as mill mineral resources.
The resource estimate was completed by IMC of Tucson, AZ. The mineral resource estimate was prepared as of April 27, 2018.
| | | | Gold | Silver | Lead | Zinc | Gold | Silver | Lead | Zinc | | Resource Type | Kt | (g/t) | (g/t) | (%) | (%) | (koz) | (koz) | (mlb) | (mlb) | | | Leach Resource: | | | | | | | | | | | | | Measured Mineral Resource | 16,147 | 0.794 | 15.44 | 0.26 | 0.39 | 412.1 | 8,014 | 92.1 | 140.6 | | | Indicated Mineral Resource | 84,692 | 0.723 | 12.15 | 0.19 | 0.36 | 1,969.3 | 33,076 | 363.7 | 674.3 | | | Meas./Ind.Mineral Resource | 100,839 | 0.734 | 12.67 | 0.21 | 0.37 | 2,381.3 | 41,091 | 455.8 | 814.8 | | | Inferred Mineral Resource | 4,858 | 0.772 | 5.60 | 0.07 | 0.24 | 120.6 | 874 | 7.0 | 25.9 | | | | | | | | | | | | | | Mill Resource: | | | | | | | | | | | | | Measured Mineral Resource | 9,818 | 0.864 | 7.45 | 0.08 | 0.28 | 272.6 | 2,352 | 16.4 | 60.1 | | | Indicated Mineral Resource | 244,251 | 0.890 | 7.50 | 0.07 | 0.26 | 6,992.2 | 58,934 | 385.6 | 1,398.2 | | | Meas./Ind.Mineral Resource | 254,069 | 0.889 | 7.50 | 0.07 | 0.26 | 7,264.8 | 61,286 | 402.0 | 1,458.3 | | | Inferred Mineral Resource | 60,342 | 0.875 | 7.90 | 0.05 | 0.23 | 1,696.9 | 15,334 | 68.1 | 310.8 | | | | | | | | | | | | | | Total Mineral Resource | | | | | | | | | | | | | Measured Mineral Resource | 25,965 | 0.820 | 12.42 | 0.19 | 0.35 | 684.6 | 10,367 | 108.5 | 200.7 | | | Indicated Mineral Resource | 328,943 | 0.847 | 8.70 | 0.10 | 0.29 | 8,961.5 | 92,010 | 749.3 | 2,072.5 | | | Meas./Ind.Mineral Resource | 354,908 | 0.845 | 8.97 | 0.11 | 0.29 | 9,646.1 | 102,377 | 857.8 | 2,273.2 | | | Inferred Mineral Resource | 65,200 | 0.867 | 7.73 | 0.05 | 0.23 | 1,817.5 | 16,208 | 75.2 | 336.8 | | | | | | | | | | | | |