Orla Mining Q1 2025 Earnings Report

Orla Mining EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.01
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Orla Mining Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $162.74 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Orla Mining Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 10:00AM ET

Orla Mining (NYSEAMERICAN:ORLA) acquires, explores, develops, and exploits mineral properties. The company explores for gold, silver, zinc, lead, and copper deposits. It owns 100% interests in the Camino Rojo project that consists of seven concessions covering an area of 138,636 hectares located in Zacatecas, Mexico; Cerro Quema project totaling an area of 15,000 hectares located in the Azuero Peninsula, Panama; and the South Railroad project consisting of an area of 21,000 hectares located in Elko, Nevada. The company was formerly known as Red Mile Minerals Corp. and changed its name to Orla Mining Ltd. in June 2015. Orla Mining Ltd. was incorporated in 2007 and is headquartered in Vancouver, Canada.

Orla Mining Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Orla Mining's Conference Call for the First Quarter twenty twenty five Results. My name is Regina, and I will be your conference operator today. Please be advised that this call is being recorded. I would like to turn the meeting over to Andrew Bradbury, Vice President, Investor Relations and Corporate Development. Please go ahead, Mr.

[Operator]

Bradbury.

[Andrew Bradbury, Vice President of Corporate Development & Investor Relations at Orla Mining]

Thank you, operator, and welcome to Orbit's first quarter twenty twenty five results conference call. We will be making forward looking statements during today's call, and I would direct you to the second and third slides of the presentation, which contains important cautionary notes regarding these forward looking statements. All dollar amounts discussed today will refer to U. S. Dollars unless otherwise indicated.

[Andrew Bradbury, Vice President of Corporate Development & Investor Relations at Orla Mining]

The Orla executive team is on the call this morning, and I'll pass the call to Jason Simpson, President and CEO.

[Jason Simpson, President & CEO at Orla Mining]

Thanks, Andrew. During the first quarter, Camino Rojo continued to perform with low costs and the continued gold price momentum drove strong cash flow. We recorded our first month of production from our newly acquired Musselwhite mine, which drove a record quarter of gold production for Orla. We continue to advance our exploration and development projects in Mexico and Nevada and now have begun our exploration program in Canada. With the integration of Musselwhite underway, we are aggressively investing in exploration and investing capital into the operation to improve mining rates and extend mine life.

[Jason Simpson, President & CEO at Orla Mining]

As we communicated about Musselwhite, we see great geologic potential which could add to mine life and the annual gold production from this asset. As such, we are updating our 2025 guidance today inclusive of the new investment at Musselwhite. We are pleased to provide updated production guidance for 2025 of 280,000 to 300,000 ounces of gold at consolidated cash costs of $850 to $10.50 dollars per ounce and all in sustaining cost of $1,300 to $1,500 per ounce of gold sold. This includes 170,000 to 180,000 ounces of gold expected from Musselwhite from March to December. Cost guidance at Musselwhite is provided for April to December with expected cash costs of $1,000 to $1,200 per ounce and all in sustaining cost of $15.50 dollars to $17.50 dollars per ounce of gold sold.

[Jason Simpson, President & CEO at Orla Mining]

Production guidance at Camino Rojo is unchanged at 110,000 to 120,000 ounces of gold. At an asset level, cash costs are expected to be between $625 to $725 and all in sustaining cost is expected to be between $700 and $800 per ounce. This cost guidance is in line with initial guidance, but reflected net of the corporate overhead. We've also updated our exploration, capital and development guidance for the year to include our investment in future production growth at Musselwhite. The consolidated total investment across our business in 2025 is approximately $175,000,000 including exploration, capital, project costs with $115,000,000 of this total related to Musselway.

[Jason Simpson, President & CEO at Orla Mining]

This investment represents an improvement from the mine it out scenario outlined in the reserve only technical report. We believe this is what the operation requires to take it to the next level in terms of productivity and mine life extension. Most of the investment relates to underground lateral development to improve ore availability and efficiency for future years as well as access for underground exploration drilling. The balance of the investment is to be spent on exploration and improving the underground mobile equipment. Total exploration spending planned for 2025 inclusive of Musselwhite is approximately $55,000,000 a testament to our commitment to growth through discovery and resource addition.

[Jason Simpson, President & CEO at Orla Mining]

Andrew Cormier, our Chief Operating Officer will now discuss our operating performance.

[Andrew Cormier, COO at Orla Mining]

Thank you, Jason. Our operating team in Mexico delivered another strong quarter while remaining committed to the health and safety of our employees. During the quarter, Camino Rojo mined nearly 1,900,000 tonnes of ore at a strip ratio of 1.48. The strip ratio is a result of a mine pit redesign in 2024 to ensure consistent access to ore to maintain balanced production. The average gold grade stacked during the first quarter was 0.78 grams per tonne, in line with our plan.

[Andrew Cormier, COO at Orla Mining]

We also achieved an average stacking rate of 18,600 tonnes of ore per day. We produced nearly 3,000 ounces of gold in the quarter, which is on track to achieve our annual production guidance of 110,000 to 120,000 ounces. Production is expected to be higher in the first half of the year and lower in the second half as we begin to stack more transition material with lower recoveries. Permitting of our expansion in Mexico continues, and we have maintained regular engagement with federal and state level stakeholders regarding our application. In Canada, we recorded our first month of production for Musselwhite following closing of the transaction on February 28.

[Andrew Cormier, COO at Orla Mining]

In March, Musselwhite mined 108,000 tonnes of ore and milled 104,000 tonnes at a mill head grade of 5.55 grams per tonne gold. Gold recovery rates of 95.7% resulted in gold production of nearly 18,000 ounces of gold. Mill throughput in March was 3,360 tonnes per day, a 10% improvement from the average mill throughput in February. Our investment in the Musselwhite Mine has already begun with new underground mobile equipment purchased and already arriving on-site. The equipment purchased and fleet rebuilding plan will continue throughout the year.

[Andrew Cormier, COO at Orla Mining]

As Jason mentioned, our 10 production guidance for Musselite in 2025 is 170,000 to 180,000 ounces of gold at $1,000 to $1,200 cash cost and $15.50 dollars to $17.50 dollars per ounce gold, all in sustaining costs. Muscle weight's production guidance is for March to December, while cost guidance is for April onwards. On to our project pipeline and upcoming milestones. We have had constructive meetings with the Department of Interior and the Acting Director of the BLM on the progress of our South Railroad project permitting. We continue to target the notice of intent being published mid-twenty twenty five with a record of decision by mid-twenty twenty six, which would position us to begin earth movement next year.

[Andrew Cormier, COO at Orla Mining]

We are encouraged by the momentum being seen in advancing American mineral production by the current U. S. Administration. This was most recently displayed by the executive order supporting development of critical minerals, which has been expanded to include gold. We have also purchased a portion of the water rates required for the operation.

[Andrew Cormier, COO at Orla Mining]

Our project team continues to work with M3 on the engineering for the project, potentially leading to procurement in the second half of twenty twenty five to be prepared for on-site construction starting after the record of decision. Sylvain will discuss the Camino Rovosulfides later in the call, and we are progressing towards an upcoming milestone. Etienne Morin, our Chief Financial Officer, will now discuss financial results for the quarter.

[Etienne Morin, Chief Financial Officer at Orla Mining]

Thanks, Andrew. It's worth addressing from the top that because of the mid quarter closing of the Musselwhite acquisition in February, we acknowledge that this is a transitional and complex reporting period, and that is reflected in our financial results. During the quarter, we sold 46,000 ounces of gold at realized price of $2,915 per ounce, resulting in approximately $141,000,000 in revenue for the quarter. This include one month of Musselwhite gold sales. Cash costs and all in sustaining costs for the first quarter totaled $597 and $845 per ounce of gold sold respectively.

[Etienne Morin, Chief Financial Officer at Orla Mining]

And it's important to note that cash costs and all in sustaining costs for the quarter do not include the impact of Musselwhite as the closing of the transaction during the quarter resulted in onetime noncash accounting treatments impacting cost of sales. So as a result, we felt that the calculation of cash costs and all in sustaining costs at Musselwhite would not be representative of the performance of the mine for that period. But starting in the second quarter, Musselwhite costs will be included in the computation of both cash costs and all in sustaining costs. We recorded a net loss for the quarter of $70,000,000 or $0.22 per share, mainly driven by the impact of financial instruments issued in connection with the acquisition of Muscle White. So after adjusting for the impact of these financial instruments and a few other small items, our adjusted net earnings were $38,600,000 or $0.12 per share.

[Etienne Morin, Chief Financial Officer at Orla Mining]

Cash flow from operating activities before changes in noncash working capital was four zero one million dollars or $1.24 per share for the quarter. This was impacted by the proceeds received from the gold prepay, and I'll expand on that on the next slide. Our total capital expenditures for the quarter, including capitalized exploration, were $17,700,000 of which $9,200,000 was non sustaining and related to capitalized exploration in Mexico and also related to the purchase of water rights in Nevada. And also GBP 8,500,000.0 was sustaining, which the majority was relating to the mine development and equipment purchases at Musselwhite. On the next slide, we're showing the reconciliation of net income to adjusted earnings.

[Etienne Morin, Chief Financial Officer at Orla Mining]

The point here is to highlight some of the significant items specifically related to the Musselwhite acquisition, which impacted our net earnings this quarter. Items such as transaction costs and the fair value adjustment of the metal inventory are onetime items, but there are certain financial instruments that will be fluctuating each quarter, and we're providing a breakdown of those on the next two slides. So as a result of the closing of the Musselwhite transaction, we recorded charges of $81,000,000 related to changes in the fair value of financial instruments issued in connection with the acquisition. This includes the closing out of the gold forward contracts, which we have now replaced by the gold prepay, the warrants and the redemption right issued in conjunction with the convertible notes and a contingent payment portion of the Musselwhite purchase price. So although the gold prepay is considered more of a financing item because it's treated as deferred revenue and not a financial instrument, it will now flow through cash flow from operating activities.

[Etienne Morin, Chief Financial Officer at Orla Mining]

Therefore, as we continue to deliver gold ounces against the prepay obligation, we'll draw down deferred revenue on the balance sheet and we'll recognize that revenue on the income statement. But since we won't be receiving cash for those ounces delivered, it will reduce our cash flow from operating activities accordingly. The contingent consideration associated with the purchase price of Musselwhite is recorded as a liability that is re estimated every quarter. And since the contingent consideration is linked to gold price, as the gold price increases, the probability of payment also increases and therefore our financial liability increases as well. This is mark to market each quarter based mainly on gold price performance.

[Etienne Morin, Chief Financial Officer at Orla Mining]

Also note that this liability is capped at $40,000,000 of which we have recognized $28,000,000 to date. And the last item to mention is the impact of the warrants we issued in conjunction with convertible notes. As the warrants are denominated in Canadian dollars and Order Canada is a U. S. Functional currency entity, the warrants are treated as a financial instrument and therefore mark to market each quarter.

[Etienne Morin, Chief Financial Officer at Orla Mining]

And with the recent share price performance, this has created an increase in the liability of that financial instrument. That treatment will remain in place until the earlier of the exercise of those warrants or their expiry. So we've added some more details on each item in the table on the next slide for added clarity, but we are available to discuss the accounting mechanics of these adjustments in more detail at any time, so please do not hesitate to reach out to us. Following the closing of the acquisition of Musselwhite, the company's current outstanding debt balance is $450,000,000 with net debt of approximately $266,000,000 Our cash balance at the end of the first quarter was $184,000,000 We intend to use our strong cash generation from our two operations now to delever in the near term, while we also prepare to fund the construction of our South Railroad project and a robust exploration program, which our Senior Vice President, Exploration Sylvain Guerrero, will now provide you with an update.

[Sylvain Guerard, Senior Vice President, Exploration at Orla Mining]

Thanks, Jason. During the first quarter in Mexico, the company began to the infill drill program at Point Limited, the extension of the Canojo Opelsau 5. The 15,000 meter drill program is progressing well and is on track for completion in the third quarter of twenty twenty five. The results from the current drill program will build on the initial 122 resource estimate, which is expected to be included as part of the upcoming Kenil Morocco underground aerial resource schedule in the second quarter of twenty twenty five. The drilling campaign, statistically, will work with regional targets begin mid April.

[Sylvain Guerard, Senior Vice President, Exploration at Orla Mining]

In Nevada, Olaf's twenty twenty five exploration program for South Carlin Complex is focused on increasing near deposit oxide resources at Pinon and Dark Star, advancing its satellite deposit and discovering

[Sylvain Guerard, Senior Vice President, Exploration at Orla Mining]

new zones of oxide mineralization. Drilling initiated in the first quarter was paused due to weather condition, but is expected to resume in May. A reserve and resource update for the South Garden project is underway with completion planned for mid-twenty twenty five. In Canada, we have committed $25,000,000 towards exploration at Musselgard. The goal is to define a critical mass of additional mineralization to support future expansion of the operation and significantly extend the mine life well beyond 02/1930.

[Sylvain Guerard, Senior Vice President, Exploration at Orla Mining]

Historical drilling, located one kilometer from the current resource area along the mine trend, intersected strong mineralization, supporting the down plant continuity and highlighting the potential for a one to two kilometer extension. Underground

[Sylvain Guerard, Senior Vice President, Exploration at Orla Mining]

drilling at Mosserwort began in

[Sylvain Guerard, Senior Vice President, Exploration at Orla Mining]

early March immediately following completion of the acquisition. Surface drill programs targeting the downplot extension of the mine trend and key near mine target areas are scheduled to commence in Q2 and continue through year end. Sylvain Alonso, our Chief Sustainability Officer, will now provide an update.

[Silvana Costa, Chief Sustainability Officer at Orla Mining]

Thank you, Sylvain. In regards to ESG disclosures in this quarter, we have completed Orner's second modern slavery report in alignment with the fighting against forced labor and child labor in Supply Chain Act, which came into force in Canada last year. The act requires companies to report on their efforts to combat forced and child laborers in their operations and supply chains. Our 2024 report will be mailed to shareholders on May 16 and provides updates on our work to enhance modern slavery training across the company and strengthening the process of access to assess risk of modern slavery in our supply chain. We are also actively working on the 2024 Orla Sustainability Report and are on track to publish the report by the end of summer.

[Silvana Costa, Chief Sustainability Officer at Orla Mining]

During the first quarter, we continued our community engagement and strategic investment initiatives at Camino Rocco and South Railroad, while maintaining a focus on environmental performance and fulfilling our social commitments. With the closing of the acquisition of Massawaite, we hosted our first community event in Thunder Bay to introduce Borla to community and indigenous partners and continue to build relationships that are critical to our collective success. For context, the Massawaite mine is located on the traditional territory of North Cariboo Lake First Nation, and it was one of the first mines in Canada to enter into comprehensive agreements with First Nations community. These agreements focus on respectful and trust based relationships for mutual benefit and include areas such as employment and training, environmental and cultural heritage protection and business opportunities. On the people front, in the first quarter, we continue to prioritize as most transition for the Masawite mine in welcoming new team members.

[Silvana Costa, Chief Sustainability Officer at Orla Mining]

With that, I'll turn the call back to Dave.

[Jason Simpson, President & CEO at Orla Mining]

Thanks, Silvana. To recap, in the first quarter, Orla closed the acquisition of Muscle White and integration of the operation into our business is progressing well. We are pleased to show a record quarter with only one month of Musselwhite production contribution. The updated guidance to date reiterates how Musselwhite will more than double our production. We see further mine life potential at this operation, which is why we have launched an aggressive exploration program at the property to define additional reserves and resources to support mine life extension and potential expansion of the operation.

[Jason Simpson, President & CEO at Orla Mining]

Looking forward, we have several upcoming catalysts for Orla including the initial underground resource for Camino Rojo this quarter, which will form the basis for future studies. Integration updates for Musselwhite with initial exploration results expected in the back half of the year. Permitting milestones in both Mexico and Nevada. A resource update for the South Carlin complex as well as construction planning information for our South Railroad project. We continue to execute on our proven strategy to generate value to benefit to the benefit of all of our stakeholders.

[Jason Simpson, President & CEO at Orla Mining]

Thank you to our teams in the countries where we operate, now including our Northern Canadian team, whose commitment and delivery are driving this business forward. Here is a recent photo with the Muscle White team with one of the new scoops delivered immediately upon closing. And at this point, I'd like to open the call to questions and pass it back to the operator.

[Operator]

We will now begin the question and answer session. Our first question will come from the line of Andrew Mikichuk with BMO Capital Markets. Please go ahead.

[Andrew Mikitchook, Director, Equity Research & Mining at BMO Capital Markets]

Thanks for taking us through the detail of the closing and all the adjustments in there. I did have a question about the CapEx sorry, the sustaining and non sustaining CapEx guided here for Mussel Lake at 90,000,000 and $18,000,000 What portion of that is comparable to the forty three-one hundred one minutee plan capital costs that were published, which I believe were $57,000,000 for 2025, if I'm correct?

[Jason Simpson, President & CEO at Orla Mining]

Yes. Thanks, Andrew. I'll start and then certainly Andrew Cormier and Etienne can build on my response. The context I'd like to set is the technical report reflected reserves only minuted out scenario. And the guidance that we provided today includes increased investment above that technical report, specifically in areas of lateral development and enhanced mobile fleet, the exploration which we previously communicated as well as some transaction costs.

[Jason Simpson, President & CEO at Orla Mining]

So this really does represent an improvement to that reserve only technical report and investment over the next two years we'll be making towards extending mine life and potentially expanding the production profile of that asset.

[Jason Simpson, President & CEO at Orla Mining]

Anything further?

[Andrew Mikitchook, Director, Equity Research & Mining at BMO Capital Markets]

Sorry,

[Andrew Mikitchook, Director, Equity Research & Mining at BMO Capital Markets]

is there are there additional comments from Etienne or is that what we should work Maybe we'll

[Jason Simpson, President & CEO at Orla Mining]

pass it back to you, Andrew, if there's specifics that we want to get into, please ask a follow-up question. And otherwise, we're happy to walk you through the breakdown between capital and expense amounts indicated in the material and presentation today at your availability.

[Andrew Mikitchook, Director, Equity Research & Mining at BMO Capital Markets]

Okay. I think that's it on the Musselwhite. I think I'll sign up there and if there's any follow-up questions I will reach out. Thank you for letting me speak.

[Jason Simpson, President & CEO at Orla Mining]

Perfect. Thanks Andrew.

[Operator]

Our next question will come from the line of Allison Carson with Desjardins. Please go ahead.

[Allison Carson, Director - Equity Research at Desjardins Capital Markets]

Good morning and thanks so much for taking my questions today. I was wondering in terms of exploration, obviously mine life extension is a priority at Musselwhite and I was wondering if we can expect sort of a similar sized program next year or if this one was larger just sort of to kick things off?

[Jason Simpson, President & CEO at Orla Mining]

Thanks Allison. Obviously we're not providing guidance for next year but the signal I can give is we should expect a similar sized exploration program next year. Our exploration teams will need to use the information collected this year to define our program for next year. But holistically, I can offer the objective of the team is a twenty four month objective. And so we've directed the team over the next twenty four months to do sufficient drilling underground to extend mine life and sufficient drilling from surface to give us a broad understanding of the overall geologic complex.

[Jason Simpson, President & CEO at Orla Mining]

So that twenty four month program can set up conversations in year three of our ownership, not only with clarity on mine life extension, but then potential capital investment in expanding the operation. So to answer your question quite directly, at this point, I would expect spending on exploration Canada to be similar next year to this year. But clearly, we'll need to let the results of this year define the program next year.

[Allison Carson, Director - Equity Research at Desjardins Capital Markets]

Great. Thanks. And then just one on Camino Rojo. So I was wondering if you could give us sort of any color on what you're hearing about permitting in Mexico. You know, it's been fairly quiet lately.

[Allison Carson, Director - Equity Research at Desjardins Capital Markets]

And have you heard about any new recent permits being given out? And is there any concern that you don't see your permit come through this year?

[Jason Simpson, President & CEO at Orla Mining]

Yeah. We we don't have concern because we are hearing things and that's based upon active conversations at both the state and federal level. So at a variety of levels of our organization, we are communicating with the regulators and bureaucrats in Mexico, and everything indicates that we should expect our permits on schedule. Just a reminder to all the listeners, I know you're aware, Allison, we submitted on November eleven of last year. And so our expectations on the schedule are about in the next couple of months, we should hear a resolution on our application for expansion and all of the conversations at various levels would indicate that we're on schedule to deliver that.

[Allison Carson, Director - Equity Research at Desjardins Capital Markets]

That's great. Thank you so much for the color. And that's all for me today.

[Operator]

And that will conclude our question and answer session. I will now turn the call back over to Jason Simpson for any closing remarks.

[Jason Simpson, President & CEO at Orla Mining]

Since there are no further questions, I would like to thank all of you for your time. Never hesitate to reach out to Orla should you have follow-up questions. Thank you.

[Operator]

That will conclude today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Andrew Bradbury, Vice President of Corporate Development & Investor Relations
• Jason Simpson, President & CEO
• Andrew Cormier, COO
• Etienne Morin, Chief Financial Officer
• Sylvain Guerard, Senior Vice President, Exploration
• Silvana Costa, Chief Sustainability Officer

Analysts

• Andrew Mikitchook, Director, Equity Research & Mining at BMO Capital Markets
• Allison Carson, Director - Equity Research at Desjardins Capital Markets