Orla Mining is reaping the benefits of having the Musselwhite Mine firmly in the fold.
The two-mine Vancouver gold company posted record gold production of almost 78,000 ounces in its second quarter results released this week, showing a profit of US$48.2 million.
Orla formally acquired Musselwhite, a fly-in underground mine, 500 kilometres north of Thunder Bay, from Newmont last Feb. 28.
For its part, Musselwhite produced 52,666 ounces of gold during the quarter and 70,452 ounces so far this year. The head grade stands at 5.52 grams per tonne of gold and gold recovery rates are very strong at 96.5 per cent.
This is the first full quarter of production from Musselwhite.
The gold production target this year for Musselwhite is set at between 170,000 and 180,000 ounces.
The all-in-sustaining cost (AISC) to produce an ounce of gold at the site is pegged at between US$1,550 and $1,750.
Orla president-CEO Jason Simpson said an Aug. 12 conference call with analysts that steady improvements are being made to run Musselwhite like an “Orla-organized mine.” He’s confident cost-saving measures can bring down the AISC to between $1,300 and $1,500 an ounce, “which is where we want to be.”
He voiced no concerns over the gold grades at Musselwhite over the long term, saying he was comfortable with his team and their projections for the future at the mine.
Musselwhite’s mine life only stands at six years. Orla acquired it with the knowledge that there’s huge exploration upside on the 65,000-hectare property.
Exploration in recent years, under previous ownership, had been largely neglected.
Earlier this year, Orla announced it was spending $25 million on exploration in and around the mine to grow its gold reserves and resources. To date, almost 11,000 metres of drilling has been done with four rigs turning underground and another four on surface to keep drilling for the rest of the year.
One identified sweet spot is a promising, plunging extension of the mine called the PQ Deep area that historical drilling showed a gold system extending down at least a kilometre beyond the current gold reserves.
With $19 million in sustaining capital earmarked for Musselwhite, most of it is being spent on equipment purchases and underground development. Orla has pushed out with more than 2,700 metres of underground lateral development, during the quarter, to access new mining horizons and create drill programs to grow the gold inventory.
Musselwhite has been running for 28 years, producing in excess of 6 million ounces in that span.
Besides Musselwhite, Orla operates its Camino Rojo gold-silver open-pit mine in Mexico, and has another project under development in Nevada, a proposed open-pit gold mine on that state’s Carlin trend.
