Orla Mining Expands into Canada with Musselwhite Acquisition

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Orla Mining (TSX: OLA; NYSE: ORLA)

Announced it has entered into a definitive agreement to acquire the Musselwhite Gold Mine in Ontario from Newmont Corporation for upfront cash consideration of $810 million and gold-price linked contingent consideration of $40 million.

 

 

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Orla Mining TSX : OLA
Stage Development
Metals Gold
Market cap C$1.9 billion   @ C$5.93
Location Zacatecas, Mexico + Nevada + Panama
Website www.orlamining.com

 

 

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More than Doubles Orla’s Annual Gold Production to Over 300 koz with Near-Term Growth to 500 koz; Orla to Become a Premier, North America-Focused, Multi-Asset, Low Cost, Producing Gold Company.

 

 

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Vancouver, BC – November 18, 2024 – Orla Mining Ltd. (TSX: OLA; NYSE: ORLA) (“Orla” or the “Company”) is pleased to announce it has entered into a definitive agreement (the “Agreement”) to acquire the Musselwhite Gold Mine (“Musselwhite”) in Ontario from Newmont Corporation (“Newmont”) for upfront cash consideration of $810 million and gold-price linked contingent consideration of $40 million (the “Transaction”)1

The cash consideration will be financed through a combination of cash, existing undrawn debt capacity, new indebtedness, a gold pre-pay facility, and convertible notes led by Orla’s existing cornerstone investors. There is no upfront equity dilution associated with the Transaction.

The Transaction adds a second high quality, high margin producing asset to Orla’s portfolio. The combination of the proven Musselwhite mine and Orla’s low-cost Camino Rojo oxide operation more than doubles the Company’s annual gold production to over 300 koz, with expected near-term growth to over 500 koz of annual gold production as the South Railroad Project is expected to commence production in 2027.

The Transaction will also significantly enhance the free cash flow of the Company, providing additional cash for the execution of Orla’s organic growth plans.

 

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Transaction Highlights:

  • Strategic acquisition of a proven Canadian operating gold mine with a skilled underground workforce located in a tier-one mining jurisdiction.
  • Transforms Orla from a single asset producer to a multi asset intermediate producer.
  • Immediately more than doubles gold production with a clear path to 500 koz of annual gold production.
  • Musselwhite has robust reserves and resources as well as significant exploration potential.
  • Well suited to the technical capabilities of Orla’s executive and operating teams.
  • Transaction funded through a mix of debt facilities, with significant support from cornerstone shareholders and no upfront equity dilution.
  • Materially accretive on all key operating and financial per-share metrics benefiting all existing shareholders.
  • Builds on Orla’s established track record of development and operating success and is aligned with Orla’s strategy for growth and value creation.

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Musselwhite Overview:

  • Musselwhite is a producing, underground gold mine located on the shore of Opapimiskan Lake in Northwestern Ontario. It has been in operation for over 25 years, having produced close to 6 million ounces of gold to date, with a long history of resource growth and conversion.
  • At December 31, 2023, proven and probable gold reserves contained 1.5 million ounces (7.4 million tonnes at grade of 6.23 g/t Au) within a measured and indicated resource2 of 1.8 million ounces (9.52 million tonnes at 5.78 g/t Au) and an inferred resource of 0.19 million ounces (1.2 million tonnes at 4.96 g/t Au).
  • Orla commissioned an independent NI 43-101 technical report for Musselwhite in connection with the Transaction. Based only on the current reserves, Musselwhite has a seven year mine life (2024-2030) with average annual gold production of 202 koz at $1,269/oz all-in sustaining cost (“AISC”)3
  • The NPV5% at January 1, 2025, of Musselwhite is estimated at $760 million using a flat $2,150 gold price and increases to approximately $1 billion using a flat $2,500 flat gold price. Significant opportunities exist to optimize the operation and extend mine life though known extensions of the ore body.
  • The Company intends to aggressively explore the 65,000-hectare concession, including following up on historical drilling that suggests 2 to 3 kilometers of mineralized strike potential beyond the current reserves.
  • Additionally, the CIP processing facility has a nameplate capacity of 1.5 Mtpa with only 1.0 Mtpa currently being utilized, which allows Orla the opportunity to fill excess mill capacity through new discoveries and increased mining rates.

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Jason Simpson, President & Chief Executive Officer of Orla stated,

“This acquisition is a significant milestone for Orla Mining. It more than doubles our annual production, while providing us with a presence in Ontario, Canada, one of the premier mining jurisdictions in the world and where I began my career.

 

“We intend to not only continue to operate Musselwhite, but to seek optimization opportunities and to invest in its future, grow its reserves and resources, and extend its mine life. The mine has a proven history of successful production, cash generation, and reserve replacement, having consistently added to mine life.

 

“We have been impressed with the operating team at Musselwhite, which runs an exceptional mine and has developed positive and strong ties with First Nations, local partners, and community members. We are fully committed to respecting and growing these relationships.

 

“Thanks to our shareholders, notably Pierre Lassonde and Prem Watsa of Fairfax, and our banking and financial partners, for their continued support as we strive to elevate Orla into an even stronger and more robust mining company.

 

“We are also grateful to Newmont for their trust in our vision and commitment to sustainability. We intend to be responsible stewards of Musselwhite, creating a legacy of excellence, respect, and value for all stakeholders.”  

 

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The live gold price can be found HERE

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Disclosure

At the time of writing the author holds shares in Orla Mining.

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