By Charles Pitts
MEXICO CITY : Mexico’s regulatory landscape for the extractive industries has, for years, been described as a minefield of delays and ideological friction. On March 18, 2026, Orla Mining (TSX: OLA; NYSE American: ORLA) successfully navigated that field.
The company confirmed it has received the final Environmental Impact Assessment (EIA) permit from the Secretariat of Environment and Natural Resources (SEMARNAT). This isn't just a routine administrative update. It is the definitive green light for the Camino Rojo Underground Project and the essential expansion of the existing open-pit oxide operation in Zacatecas.
The strategic calculus here isn't subtle: Orla is transitioning from a high-margin oxide producer to a massive, long-life underground sulphide powerhouse.
For an industry that has grown weary of the "Mexico risk" narrative, this approval signals a pivot. It de-risks a production profile that many analysts feared would hit a wall by 2027. Instead, Orla is now looking at a 17-year mine life and an Internal Rate of Return (IRR) that makes most peers look sluggish.
The $1.3 Billion Thesis
The numbers behind Camino Rojo are brutal in their efficiency. At a gold price of $3,100 per ounce: a figure that looks increasingly conservative in the current macro climate: the project carries an after-tax Net Present Value (NPV) of $1.3 billion.
The IRR sits at a robust 30%.
This isn't a rounding error. It’s a complete revaluation of what Camino Rojo represents. If gold continues its upward trajectory toward the $5,000 mark, the economics shift from "impressive" to "generational." Under a $5,000 gold scenario, the NPV balloon to $3.3 billion with an IRR of 61%.
Capital expenditure for the transition is pegged at $608 million. While that’s a significant layout, the sustaining capital over the mine life is estimated at a manageable $489 million. Orla is betting that the depth of the sulphide deposit justifies the upfront cost of going underground.
Decoupling from the "Permit Trap"
The mining industry in Mexico has spent the last few years in a defensive crouch. Regulatory uncertainty under the previous administration created a backlog of permits that stifled growth. Orla’s success in securing this EIA suggests that the gears of SEMARNAT are finally turning for projects that demonstrate clear economic and environmental compliance.
The permit covers two critical fronts:
- Open-Pit Expansion: Completion of the remaining oxide open-pit mining, including necessary layback areas and east-west expansions.
- Underground Development: Authorization to begin construction on an exploration decline and the eventual full-scale underground operation.
Work on the underground access, including the exploration portal, is expected to start as early as the second half of 2026.
The reality is that Camino Rojo was facing a potential production cliff. Without this permit, the oxide reserves would have been exhausted in a few years, leaving the massive sulphide resource stranded. This permit essentially removes the "expiration date" from the asset.
The Technical Pivot: From Oxide to Flotation
The underground operation will not be a simple extension of current activities. It requires a fundamental shift in processing. While the current heap leach operation handles the near-surface oxides, the underground sulphides will require their own crushing, grinding, and flotation circuits to produce saleable concentrates.
Over the first 10 years of underground operation, Orla expects an average annual gold production of 215,000 ounces. The All-In Sustaining Cost (AISC) is projected at $1,304 per payable ounce.
In a world where the structural pivot of copper and other critical minerals is hogging the headlines, gold remains the foundational hedge for miners operating in jurisdictions with complex political overtones. Orla's ability to maintain a low AISC while scaling up is a testament to the deposit's grade and continuity.
A New Blueprint for High-Margin Operations
We’ve previously analyzed how Orla’s underground shift serves as a blueprint for the industry. The model is simple: use the cash flow from a low-CAPEX oxide starter pit to fund the transition into a massive, more complex underground sulphide project.
It’s a strategy that requires patience and, more importantly, a steady hand at the regulatory table. By securing this permit, Orla has proved it can manage both.
The move also places Orla in a prime position for further consolidation in the region. As Skillings Mining Intelligence reported recently, the "Critical Minerals Corridor" in the Americas is tightening. Companies that have cleared the permitting hurdle become targets: or predators: in a market starved for de-risked ounces.
The Timeline to 2027
The clock is already ticking. With the permit in hand, the schedule looks like this:
- H2 2026: Commencement of the underground exploration decline and portal.
- 2027: Full-scale underground construction alongside continued oxide mining.
- 2028 and Beyond: Transition to sulphide processing and concentrate production.
This timeline is aggressive but necessary. By overlapping the end of the oxide pit with the start of the underground decline, Orla avoids a "gap year" in production. They are keeping the mill fed and the cash flowing.
The Geopolitical Context: Why Zacatecas Matters
Zacatecas is a storied mining district, but it hasn't been without its challenges. Security and water rights remain the two largest non-technical risks for any operator in Central Mexico.
Orla has managed to maintain a relatively clean ESG record at Camino Rojo, which undoubtedly smoothed the path for this EIA approval. SEMARNAT’S decision wasn't made in a vacuum; it follows years of community engagement and environmental studies that proved the underground transition would have a manageable footprint.
The broader mining world is watching. If Orla can successfully execute the Camino Rojo expansion, it will serve as a powerful counter-argument to the narrative that Mexico is no longer a viable destination for major mining investment.
Final Assessment
The 30% IRR at Camino Rojo is the headline, but the permit is the story. Without federal backing, the best economics in the world are just lines on a spreadsheet.
Orla Mining has secured its future in Zacatecas. By bridging the gap between its oxide past and its sulphide future, the company has transformed from a single-asset producer into a long-term industrial player.
The permit is in. The risk is down. The drill rigs are moving.
Social Media Snippet:
Orla Mining just cleared the final hurdle at Camino Rojo. With SEMARNAT approval in hand, the path to a 30% IRR underground operation is open. In a $3,100 gold environment, this isn't just a permit; it's a $1.3 billion NPV catalyst. #Mining #Gold #Mexico #OrlaMining #MiningNews
Key Project Metrics: Camino Rojo Underground
| Metric | Projection |
|---|---|
| After-Tax NPV (5%) | $1.3 Billion (at $3,100/oz Au) |
| Internal Rate of Return (IRR) | 30% |
| Mine Life | 17 Years |
| Initial CAPEX | $608 Million |
| Avg. Annual Production (Y1-10) | 215,000 oz Au |
| AISC (per ounce) | $1,304 |
Source: Orla Mining Corporate Filings and March 2026 Project Update.
For more on the evolving mining landscape, visit the Skillings Mining Review homepage or explore our digital archives.
