Orla Mining reaches agreement with Fresnillo plc on Camino Rojo
Orla Mining completed the Displacement Agreement with Fresnillo Plc following the previously announced Letter of Agreement.
The closing of the Agreement is subject to the approval of the Federal Commission for Economic Competition (Cofece).
The Agreement will allow Orla to expand the Camino Rojo oxide pit in part of the Fresnillo concession located immediately north of the Orla property.
Orla will have access to the leachable oxide mineral resources and transition piles on the Orla property below the open pit described in the June 2019 Feasibility Study.
In addition, the Agreement will grant Orla the right to extract from the Fresnillo mineral concession and recover for the Orla account, all oxide and heap-leachable transitional material found within an expanded open pit.
Completion of the Agreement is expected to result in a material increase in mineral reserves at the Camino Rojo project.
Orla Mining expects to provide details of an updated feasibility study along with a technical update in early 2021.
«We are pleased to have reached this important milestone with Fresnillo that will unlock more value at Camino Rojo. The project achieved through this agreement will allow Orla to optimize the oxide deposit to its full potential for the benefits of all stakeholders,» he stated Jason Simpson, President and CEO of Orla Mining.
An expanded operation would not require moving any part of the infrastructure in the current project design and construction.
Orla Mining
Under the terms of the Disposal Agreement, Orla will pay Fresnillo a total cash consideration of $ 62.8 million through a staggered payment schedule: $ 25 million payable upon receipt of Cofece approval; 15 million payable no later than (i) 12 months after the start of commercial production at Camino Rojo or (ii) on December 1, 2022, whichever occurs first; and 22.8 million no later than (i) 24 months after the start of commercial production at Camino Rojo or (ii) on December 1, 2023, whichever occurs first.
The amounts of the remaining payments will accrue an interest of 5% per year until the date of payment.
