With shareholders like Goldcorp (19.9%), Pierre Lassonde (11.1%) and Agnico Eagle Mines (9.9%), Orla Mining (TSXV: OLA) isn’t your typical TSX Venture Exchange-listed junior.
Management and insiders own another 7.1% of the company, and Orla’s directors, like Chuck Jeannes, Richard Hall and Jean Robitaille, among others, bring with them decades of industry experience.
Marc Prefontaine also brings a lot of experience to the company. Orla’s president and CEO was part of the team at Grayd Resource that discovered the La India gold deposit in Sonora, Mexico, before the company was sold to Agnico Eagle Mines (TSX: AEM; NYSE: AEM) in 2011 for $275 million. (Last year La India produced 101,150 oz. gold at total cash costs of US$558 per oz. gold.)
Now Prefontaine and the same technical team are hoping to duplicate their earlier success, this time at Cerro Quema in Panama, a project Orla acquired from Pershimco Resources in December 2016.
A 2014 prefeasibility study envisioned two oxide pits — La Pava and Quema — that would produce half a million ounces of gold over a five-year mine life (552,000 measured and indicated oz. gold in 23.9 million tonnes grading 0.72 gram gold per tonne).
There had not been any systematic exploration on the property since the late 1990s and Prefontaine and his team felt there was tremendous exploration upside to increase the oxide.
Last year Orla drilled 11,900 metres in 91 holes at the project.
Drilling resumed in January this year, and so far the company has released three batches of assay results from the project’s Caballito copper-gold zone.
In mid-May, the company reported that diamond drill hole 18-160 intersected 85.8 metres grading 0.39 gram gold and 1.44% copper from 39.6 metres downhole. (Two other holes did not intersect significant values).
Tara Hassan, a mining analyst at Raymond James in Vancouver, says the latest drilling supports Orla’s interpretation of the induced-polarization (IP) survey results.
“Orla’s current interpretation is that the higher-grade, copper-gold mineralization is related to areas of moderate chargeability and low resistivity due to high sulphide content of the mineralization,” the mining analyst writes in a research note. “Further IP work is underway at the Quemita zone located 1.2 km northwest of the Caballito zone, as indications of Caballito-style, copper-gold mineralization have been identified.”
In March, assays from drill hole 18-157 showed 124.5 metres grading 0.47 gram gold and 1.54% copper from 75 metres downhole. In addition to the copper-gold intersection, the hole had an upper intersection of gold that graded 0.73 gram over 30 metres from 9 metres downhole in oxide, with another 13.5 metres grading 0.59 gram in sulphide. Drill hole 18-156 — 100 metres west of 18-157 — cut 147.6 metres grading 0.21 gram gold and 0.33% copper from 46.2 metres downhole.
In January, drill hole 17-148 returned 102.5 metres grading 0.46 gram gold and 1.21% copper, while 17-141 intersected 87.9 metres grading 0.36 gram gold and 0.74% copper, and 52.8 metres averaging 0.2 gram gold and 0.52% copper.
The company has recently received a permit to drill in the Sombrero area just north of the Caballito zone, which will enable drilling to test for potential extensions to the copper-gold mineralization north of the area drilled to date.
Drilling in Sombrero will also target near-surface oxide mineralization that outcrops.
Company geologists have re-examined core from sulphide intercepts below the Quemita oxide gold reserve (1.2 km northwest of Caballito) and have found indications of Caballito-style, copper-gold mineralization with low arsenic. More work is underway, including extending the 2018 IP grid northward through the area.
Prefontaine could not be reached for comment about the drill results before press time, but said in a press release that drilling at Caballito shows a shallow, west-dipping zone of high-grade, copper-gold mineralization that has been defined for 600 metres along a northwest trend.
Hassan of Raymond James noted that the latest drill results from Cerro Quemo “continue to highlight the potential to define a copper-gold resource that could supplement the existing oxide project.”
Orla’s shares have traded between $1.04 and $1.85 over the last year and at press time were at $1.30 apiece.
The company has 179 million shares outstanding for a $233-million market capitalization.
Hassan has a $2.50-per-share target price on the stock.
“Orla is well positioned against exploration and development peers due to its advanced and lower-cost asset base, experienced and successful management team and board, and strong shareholder registry that include strategic investors and sizable insider ownership.”
As of March, the company had $31 million in cash and no debt.
Shareholders include CI Investments (4.6%), M&G Investments (3.4%), Franklin Advisers (3.3%), AGF Investments (2.5%), First Eagle Investment Management (1.3%), RBC Global Asset Management (1.3%) and Wexford Capital (1%).
Orla’s other heap-leach opportunity is its Camino Rojo gold-silver project in Zacatecas, Mexico, 50 km southeast of Goldcorp’s large Penasquito polymetallic mine.
The company acquired the oxide asset from Goldcorp in June 2017 for 31.9 million shares and a 2% net smelter return royalty, which valued the deal at $35 million.
Goldcorp bought Camino Rojo in early 2010 via a US$300-million, all-share acquisition of Canplats Resources, and spent US$150 million in technical work, including more than 250,000 metres of drilling in addition to airborne-gravity, and magnetic and transient electromagnetic surveys.