On this page
Gold Miners Eye $5,000 - Underground Economics Look Compelling
Orla Mining’s underground expansion at Camino Rojo delivers robust project economics that underscore why gold miners are racing to unlock new ounces with the metal trading above $5,000.
What to know
-
Orla Mining’s Camino Rojo underground preliminary economic assessment shows strong returns, with the project benefiting from gold prices that have surged over 6% in the past month alone.
-
The underground expansion in Zacatecas, Mexico would add significant production to an already-operating open-pit oxide mine, extending the asset’s life and boosting output.
-
Gold is currently trading at $5,052.90/oz, up 3.48% on the week, creating a highly favorable environment for new mine development decisions.
What happened
Orla Mining has completed a preliminary economic assessment (PEA) for the underground sulphide expansion at its Camino Rojo project in Zacatecas, Mexico. The study outlines a high-return development opportunity beneath an already-producing open-pit heap leach operation, with net present value and internal rate of return figures that reflect current gold pricing.
Gold at $5,052.90/oz - up over 6% in the past month and more than 3.4% this week - has changed the economics of underground gold projects that looked marginal five years ago. Orla’s underground PEA arrives as the gold mining sector reassesses which deposits deserve capital allocation.
Who’s involved
Orla Mining is a mid-tier producer that has built its reputation on the successful ramp-up of Camino Rojo’s open-pit oxide operation. The company has been advancing the underground sulphide resource as a next-phase growth catalyst, and this PEA represents the first formal look at the economics.
Mexico remains a critical jurisdiction for precious metals production despite periodic regulatory uncertainty. Zacatecas state, where Camino Rojo sits, has a deep mining heritage and established infrastructure - factors that reduce development risk compared to greenfield sites.
Mid-tier producers with expansion optionality - names like Orla, Lundin Gold, and Calibre Mining - have attracted investor interest because they offer organic growth leverage to rising gold prices without the dilution risk of M&A. Orla’s stock has reflected this, and the PEA gives investors a framework for valuing the underground upside.
Why it matters
Global mine production has plateaued near 3,600 tonnes annually, and the pipeline of new large-scale projects remains thin. Every expansion study that demonstrates strong economics matters for the sector’s ability to meet demand over the next decade.
The Camino Rojo underground story offers brownfield advantages. Building beneath an operating mine reduces infrastructure costs, compresses permitting timelines, and lowers execution risk. The ore is sulphide rather than oxide, meaning it requires conventional milling rather than heap leaching, but the grade profile of underground deposits typically compensates for higher processing costs.
At $5,000+ gold, the margin cushion for underground operations is substantial. All-in sustaining costs for underground gold mines globally average roughly $1,400–$1,700/oz. Even accounting for development capital and ramp-up risk, the spread between cost and current spot price exceeds $3,300/oz in many cases.
The timing also intersects with today’s US GDP and Core PCE data releases, which could move gold in either direction. A softer-than-expected GDP print or cooling inflation would reinforce the rate-cut narrative that has helped propel gold above $5,000.
What to watch
Whether Orla advances to a pre-feasibility study on the underground - the step-up from PEA to PFS typically triggers re-ratings for mid-cap miners. The gold-to-silver ratio at 62.8 suggests silver is catching a bid relative to gold, which could signal broadening precious metals momentum.
Mexican regulatory developments remain a variable. Any changes to mining concession rules or tax policy in Mexico would directly impact Camino Rojo’s risk profile. Gold’s response to this week’s macro data will determine whether the case for new mine development strengthens or stalls.
This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
