Orla secures final permit to advance underground mining at Camino Rojo

Unlocking Subterranean Gold Potential

A pivotal moment has arrived for Orla Mining as the company announced on Wednesday the successful acquisition of the environmental impact assessment (EIA) from Mexico's Secretariat of Environment and Natural Resources (SEMARNAT). This green light pertains to its flagship Camino Rojo operation located in Zacatecas, Mexico.

With this latest approval, Orla now possesses all the requisite permits. This includes the essential Change of Land Use approval, granting the company the authority to proceed with mining the remaining oxide open-pit reserves. Crucially, it also allows for the commencement of construction on an underground exploration decline, a key step in advancing the highly anticipated Camino Rojo underground project.

The strategic vision for an underground operation beneath the existing open pit is compelling. Preliminary assessments conducted in February indicated a potential 30% internal rate of return (IRR), assuming a gold price of $3,100 per ounce over a 17-year mine life. This projection highlights the substantial economic upside envisioned for the subterranean expansion.

Further underscoring the project's potential, analysis using a higher gold price assumption of $5,000 per ounce forecasts a significant surge in projected net present value (NPV) to $3.3 billion, with the IRR climbing to an impressive 61%. The initial capital outlay for this ambitious undertaking is estimated at $608 million, with sustaining capital expenditures anticipated to reach $489 million throughout the project's lifespan.

Expansive Operational Authority Granted

Orla Mining also confirmed the filing of an updated technical report for the Camino Rojo property. The newly acquired EIA provides comprehensive authorization to finalize the oxide open-pit operations as detailed in this report. This encompasses planned expansions, including the 'layback' – an adjustment to the pit wall – to the north and the east-west expansion. Furthermore, the permit covers the necessary extensions for waste rock and low-grade stockpiles, along with associated infrastructure critical for efficient operations.

A particularly exciting facet of the EIA is the authorization for underground access development. This includes the creation of an exploration portal and decline, with construction activities slated to commence as early as the second half of 2026. This proactive development is designed to facilitate more in-depth resource definition and rigorous technical evaluation of the sulphide mineralization lying beneath the current open pit.

This phase is considered a vital precursor to a potential full transition to underground mining at Camino Rojo, signaling a long-term strategic shift for the asset. The company's stock experienced a notable dip, closing down 10.4% on the Toronto market, reflecting broader market dynamics or investor reactions to the company's overall valuation, which stands at C$6.82 billion (approximately $4.9 billion).

Reading Between the Lines

The successful acquisition of the final EIA for Orla Mining's Camino Rojo underground project is a significant de-risking event. It shifts the narrative from exploration potential to tangible development plans. For investors, this means the latent value within the sulphide mineralization is now closer to being unlocked. The projected 30% IRR at a $3,100 gold price, while based on future assumptions, provides a strong benchmark for the project's economic viability and suggests considerable upside if market conditions remain favorable or improve.

This development directly impacts the valuation of Orla Mining (TSX: OLA) (NYSE: ORLA). Traders will likely monitor the company's progress in commencing underground development, particularly the exploration decline construction slated for 2026. Key focus areas will include capital expenditure management and any updates on resource definition for the deeper sulphide zones.

The implications extend beyond Orla itself. This success story in Mexico could bolster investor confidence in junior to mid-tier gold miners pursuing underground expansions. It may also draw attention to other projects with similar geological profiles and permitting challenges. In terms of market connections, this news could subtly influence sentiment around the VanEck Gold Miners ETF (GDX), as it represents a positive development within the sector. Additionally, the US Dollar Index (DXY) and broader risk appetite could see indirect impacts, as successful mining developments often correlate with improved investor sentiment towards commodities and resource-based equities.

Key risks to watch include potential construction delays, cost overruns, and fluctuations in the gold price, which can significantly alter the project's economics. Opportunities lie in the potential for resource upgrades as further drilling is conducted and the possibility of a faster-than-expected transition to full underground production if early exploration results are exceptionally strong. The company's ability to manage the significant upfront capital requirement of $608 million will be critical.