Superb Earnings Driven by Very Low AISC
Orla Mining earns $45.8-million (U.S.) in 2022
2023-03-16 19:38 ET - News Release
Mr. Jason Simpson reports
ORLA MINING REPORTS FOURTH QUARTER AND YEAR END 2022 RESULTS
Orla Mining Ltd. has released the results for the fourth quarter and year ended Dec. 31, 2022.
(All amounts are in U.S. dollars unless otherwise stated.)
Fourth quarter and full-year 2022 highlights:
- Gold production during the fourth quarter was 32,017 ounces, and total gold production for 2022 was 109,596 ounces, achieving high end of the increased annual production guidance range of 100,000 to 110,000 ounces (prereleased, please see the news release dated Jan. 16, 2023, "Orla Mining Achieves High End of Increased 2022 Production Guidance and Provides 2023 Guidance").
- All-in sustaining costs (AISC) of $634 per ounce of gold sold during the fourth quarter 2022 resulted in a full-year 2022 AISC of $611 per ounce at the low end of the guidance range of $600 to $700 per ounce.
- Adjusted earnings for the fourth quarter were $20.7-million or seven cents per share and for full-year 2022 were $57.1-million or 21 cents per share.
- Net income for the fourth quarter was $18.7-million or six cents per share, which included $5.6-million in expensed exploration and development costs across the portfolio. Net income for full-year 2022 was $45.8-million or 17 cents per share, which included $18.9-million in expensed exploration and development costs.
- Cash flow from operating activities before changes in non-cash working capital during the fourth quarter and for full-year 2022 was $55.1-million and $111.1-million, respectively. Free cash flow during the fourth quarter and for full-year 2022 totalled $11.6-million and $82.0-million, respectively.
- Cash balance was $96.3-million, and net debt was $49.5-million at Dec. 31, 2022.
- The company completed the commissioning and ramp-up of the Camino Rojo oxide mine on time and under budget with declaration of commercial production on April 1, 2022.
- The company completed refinancing of project facility in April, 2022, with a $150-million secured credit facility.
- The company strengthened its growth pipeline with the acquisition of Gold Standard Ventures Corp., the owner of the South Railroad project, a permitting-stage, open-pit, heap leach project located on the Carlin trend in Nevada. Exploration at South Railroad was immediately reactivated upon completion of the transaction.
"Two thousand twenty-two was a monumental year for Orla as we transitioned to a cash-flowing gold producer," said Jason Simpson, president and chief executive officer of Orla Mining. "The strong cash flows from Camino Rojo will provide a foundation to build upon. Our rich pipeline of exploration and development assets, which we are aggressively advancing, will be critical in growing the company and increasing value for shareholders. We thank our stakeholders and partners for their continued support."
Financial and operations summary
The company declared commercial production at Camino Rojo on April 1, 2022, following 16 months of construction, which began in December, 2020. Camino Rojo achieved record quarterly gold production of 32,017 ounces of gold in fourth quarter 2022, primarily as a result of an increased ore stacking rate during the quarter, which achieved a record 19,591 tonnes per day, 9 per cent above nameplate capacity of 18,000 tonnes per day. The average mining rate during the fourth quarter was 41,128 tonnes per day, which resulted in a strip ratio of 0.70 during the quarter and 0.67 for full-year 2022. The average grade of ore processed during the fourth quarter was 0.78 gram per tonne gold, in line with plan, and the average grade of processed for full-year 2022 was 0.82 g/t gold, approximately 5 per cent higher than plan.
Gold sold during the fourth quarter and for the first full year of operations totalled 32,438 ounces and 107,502 ounces, respectively.
Fourth quarter cash costs and AISC totalled $453 and $634 per ounce of gold sold, respectively. The key contributors to the AISC being at the lower end of the guidance range is attributable to mining softer ore than anticipated in the upper benches of the mine during the first year of operation. As a result of the softer ore, maintenance required on the crushing, conveying and stacking systems was less than anticipated due to low wear. Lower consumption rates on key inputs such as electricity and reagents also contributed to the low AISC. The company's AISC guidance for 2023 is a range of $750 to $850 per ounce of gold sold. The increase in AISC from 2022 to 2023 is primarily related to increased maintenance costs as the operations begin to encounter more competent ore conditions and moderate price inflation on key costs inputs, including reagents, consumables and labour. Sustaining capital in 2023 will be primarily the construction of a dome at the ore stockpile for dust control management. Infill drilling on the layback area at the Camino Rojo oxide mine will be capitalized as sustaining capital is expected to total $2-million.
During the first quarter of 2023, the company will make its first income tax payment (including the special mining duty) in Mexico of approximately $34-million related to the 2022 fiscal year. In 2023, the company will continue to strengthen its balance sheet through the repayment of $45.0-million toward debt and other obligations. The company will also make increasing investments into its prospective exploration and development growth portfolio, enabled by the company's strong financial position and continued high-margin gold production.
Exploration update
Additional exploration details related to 2022 results and 2023 plans on individual country exploration programs was provided in press releases dated Jan. 31, 2023, Feb. 8, 2023, and Feb. 16, 2023. In 2023, the exploration spending will be increased to $35-million, with the project spend breakdown in the guidance summary outlined below.
Camino Rojo sulphide project and regional exploration update (Mexico)
During the 2022 directional drill program into the Camino Rojo sulphide, drilling continued to intercept wide zones of higher-grade gold mineralization. These results in conjunction with metallurgical results from the 2021 drilling support the potential for underground development and a stand-alone processing option for the Camino Rojo sulphides. A large component of 2022 program included infilling the sulphide deposit and improving the geological model to support potential underground mine development scenario. A total of 9,174 metres were completed in 15 holes in 2022, returning 32 significant mineralized drill intercepts with grade-by-thickness factor greater than 50 grams per tonne by metre gold, including 16 intercepts with grade-by-thickness factor greater than 100 g/t by metre Au.
Drill results have also shown that gold mineralization extends deeper than the limit of the current mineral resource. These deeper intercepts suggest gold mineralization remains open at depth along and adjacent to interpreted feeder-like structures for the currently defined Camino Rojo deposit.
A 34,000-metre, 57-hole follow-up drill program will continue to infill the Camino Rojo sulphides in 2023 (20 per cent of the holes will extend to test the deep potential of the deposit). In addition, 6,500 metres will be drilled on the extensions of the Camino Rojo oxide deposit to update and expand resources and reserves. The 2023 drilling is expected to strengthen the confidence for the development of a preliminary economic assessment that contemplates underground mining by infilling the higher-grade (greater than two g/t) portions of the deposit with 50-metre spacing of south-oriented drill holes. Overall drill spacing at the end of this next phase, including historical north-oriented drill holes, will be 25 to 30 metres.
On the regional exploration program, Orla Mining completed its first diamond drill core hole outside of Camino Rojo in 2022. The Guanamero target is approximately seven kilometres northeast of Camino Rojo, and the initial drill results were encouraging. The team is targeting new discoveries on the large regional land package testing targets on the northeast-southwest mine trend and the northwest-southeast regional trend.
For additional detail, please see the news release dated Jan. 31, 2023, "Orla Mining Continues to Intersect Wide, Higher-Grade Sulphide Zones and Expose Deeper Potential at Camino Rojo, Mexico."
South Railroad project and exploration update (Nevada, United States)
In August, 2022, Orla Mining completed the acquisition of Gold Standard, the owner of South Railroad, a permitting-stage, open-pit, heap leach project located on the Carlin trend in Nevada, United States. A feasibility study on South Railroad was completed in February, 2022, under the previous owner, and South Railroad has been integrated into the company's growth plans with key priorities to include project permitting, review of project schedule including critical path activities and assessment of current exploration supporting resource expansion.
Upon completion of the transaction, Orla Mining accelerated exploration activities on the large, prospective land package. South Railroad is on the Carlin trend and is a target-rich environment with multiple styles and zones of mineralization. The immediate exploration objectives have been to upgrade current resources and define new potential resources through infill and stepout drilling. Drill results thus far have been significant, and resource updates are expected in 2023.
For additional detail, please see the news release dated Feb. 8, 2023, "Orla Mining Drills Significant Gold Intersections at Multiple Oxide Targets upon Reactivation of Exploration at South Railroad Project, Nevada."
Cerro Quema exploration update (Panama)
In 2022, exploration drilling at Cerro Quema began with regional exploration at La Prieta and La Pelona targets before moving to metallurgical, infill and expansion drilling at Caballito and La Pava mineralized zones and early-stage follow-up drilling at the Quemita Norte target. In total, 9,044 metres were drilled in Panama during the year.
Exploration at the Caballito and La Pava deposits and the Quemita Norte target in the second half of 2022 continued to generate significant drill intersections. These new drill results build on the previously reported 2022 positive drill results generated at the early-stage La Pelona and La Prieta regional targets, and further highlight the presence of significant copper and gold mineralization at the Cerro Quema project.
The 2023 exploration program will follow up on the encouraging results generated at La Pelona and La Prieta regional targets in 2022. Upon completion of the exploration and drilling campaign during the dry season in the first half of 2023, exploration and operational activities will be reduced in Panama. Data interpretation of the results will take place primarily in the second half of 2023 while on-the-ground activities will be minimal.
2023 guidance summary
On Jan. 16, 2023, the company announced its 2023 annual guidance, which contained the outlook for production, operating and capital costs, and exploration spending across the company's portfolio, as set forth below. In addition, Orla Mining expects to repay $45.0-million in debt and other obligations during the course of 2023. This includes $22.2-million related to principal repayments on the credit facility and $22.8-million as a final payment on the layback agreement.
Financial statements
Orla Mining's audited financial statements and management's discussion and analysis for the year ended Dec. 31, 2022, will be available on the company's website and under the company's profiles on SEDAR and EDGAR.
Qualified person statement
The scientific and technical information in this news release was reviewed and approved by J. Andrew Cormier, PEng, chief operating officer of the company, and Sylvain Guerard, PGeo, senior vice-president, exploration, of the company, who are the qualified persons as defined under National Instrument 43-101 (Standards of Disclosure for Mineral Projects).
Fourth quarter and year-end 2022 conference call
Orla Mining will host a conference call on Friday, March 17, 2023, at 10 a.m. Eastern Time, to provide a corporate update following the release of its financial and operating results for the fourth quarter and year ended 2022.