Orla Mining has consistently impressed the market with its operational efficiency and impressive cost control at its flagship Camino Rojo mine. The company has repeatedly exceeded production guidance while maintaining industry-leading all-in sustaining costs. While much of this success can be attributed to the inherent advantages of the Camino Rojo ore body - low strip ratio, open pit, heap leach, and favorable terrain - a closer look at the Q4 2023 and Q1 2024 earnings calls reveals a potentially game-changing operational strategy quietly being implemented: a reduced crusher size.

This seemingly minor technical adjustment, reducing the screen size from 27 millimeters to 23 millimeters, has far-reaching implications. Orla's COO, Andrew Cormier, reported positive gold and silver recoveries as a direct result of this finer crusher product. Importantly, this increase in recovery has been achieved without sacrificing throughput. The mine has maintained its impressive 19,000 tonnes per day stacking rate, exceeding the designed nameplate capacity.

This begs the question: what is the "magic sauce" behind this seemingly counterintuitive outcome? Conventional wisdom suggests that reducing particle size would lead to increased processing time and subsequently lower throughput. However, Orla appears to have defied this expectation, achieving both higher recovery and maintained throughput. While the company has not yet quantified the exact impact on recoveries, they have indicated that an update, potentially including revisions to guidance, will be provided in the first half of 2024.

This lack of precise quantification allows for some intriguing hypotheses. Let's consider a scenario where the reduced crusher size leads to a modest 2% increase in gold recovery. Based on Orla's 2024 production guidance of 110,000 to 120,000 ounces, this translates to an additional 2,200 to 2,400 ounces of gold. At a conservative gold price of $2,000 per ounce, this represents an annual revenue boost of $4.4 million to $4.8 million.

Now, let's factor in the potential for even greater recovery improvements. While a 2% increase seems achievable based on initial observations, the actual impact could be significantly higher. Certain ore types within the Camino Rojo deposit might be particularly responsive to the finer crush size, unlocking a previously untapped potential for gold extraction.

The impact of this strategy extends beyond Orla Mining. If successful and replicable, this reduced crusher size approach could reshape gold mining economics across the industry. Heap leach operations, often constrained by recovery limitations, could see a significant boost in profitability. Mines previously deemed uneconomic due to low recovery rates could be brought back to life.

However, several questions remain unanswered. What are the long-term implications of this strategy on equipment wear and tear? Will the increased recovery offset any potential increase in maintenance costs? Does this approach work equally well across different ore types and geological settings?

Orla Mining is well-positioned to answer these questions. The company's commitment to transparency and detailed reporting, evidenced by its inaugural sustainability report, suggests a willingness to share its findings with the market. This transparency will be crucial in determining the broader applicability of this strategy across the industry.

Financial Performance

Here's a table showcasing Orla Mining's key financial data:

Market Cap: $1,327,052,416 [Source](https://seekingalpha.com/symbol/ORLA)

Q1 2024 Revenue: $67 Million [Source](https://seekingalpha.com/symbol/ORLA/transcripts)

Q1 2024 All-in Sustaining Costs: $909 per ounce [Source](https://seekingalpha.com/symbol/ORLA/transcripts)

2024 Production Guidance: 110,000 to 120,000 ounces of gold [Source](https://seekingalpha.com/symbol/ORLA/transcripts)

Hypothetical Impact of Increased Gold Recovery

The potential implications of Orla Mining's reduced crusher size strategy are significant. While the company continues to refine and quantify its impact, the early results suggest a potential paradigm shift in gold mining economics. If successful, this "magic sauce" could unlock hidden value in existing heap leach operations and breathe new life into previously uneconomic deposits, leaving a lasting impact on the global gold mining landscape.

"Fun Fact: The average gold content of a typical smartphone is about 0.034 grams. While seemingly minuscule, this adds up when considering the billions of smartphones in circulation globally."