Orla Mining (TSX: OLA; NYSE: ORLA) shares soared to an all-time high after the company released an initial resource for its Camino Rojo deposit in central Mexico that outlines 3.9 million contained gold oz. grading 2.45 grams gold per tonne.
The underground deposit hosts 50.1 million measured and indicated tonnes at 10.6 grams silver and 0.25% zinc for 17.05 million oz. silver and 278 million lb. zinc, Orla said Thursday. The resource is based on more than 400,000 metres of drilling under the producing oxide open pit at Camino Rojo, located in Zacatecas state about 620 km northwest of Mexico City.
"When we acquired the project, the scale of the mineralized system was clear, but the path forward was uncertain," Orla CEO Jason Simpson said in a release. "This resource crystallizes our belief in the potential for a future underground operation."
The initial resource at Camino Rojo comes just over six months after Orla bought Newmont's (NYSE: NEM) Musselwhite gold mine in northwestern Ontario for $810 million (C$1.1 billion) in cash. The purchase added a second producing operation to its portfolio after Camino Rojo.
Orla shares gained 7.3% to a new high of $16.88 apiece on Thursday morning in Toronto, for a market capitalization of $5.48 billion.
The resource also outlines 5.6 million inferred tonnes grading 2.21 grams gold, 10.9 grams silver, and 0.21% zinc for 400,000 oz. gold, 1.95 million oz. silver and 26 million lb. zinc.
The newly discovered Zone 22, under the main Sulphide Zone at Camino Rojo, accounts for 7% of the resource's indicated portion and 19% of its inferred part. Drilling in the zone this year will be included in future resource updates, Orla said.
The initial resource will help inform a preliminary economic assessment (PEA) for the deposit and "establish the foundation for potential long-term production at Camino Rojo," senior vice-president of exploration Sylvain Guerard said in the release. The PEA is expected to be released next year.
Camino Rojo hosts 43.77 million tonnes in reserves for 970,000 oz. gold grading 0.69 gram gold and 20.7 million oz. silver at 14.7 grams silver. Production at Carmino Rojo should range between 110,000 and 120,000 oz. this year, Orla has said. The mine has a projected life of about seven years.