Exhibit 99.1
Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
Presented in United States dollars
ORLA MINING LTD.
Condensed Interim Consolidated Balance Sheets
(Unaudited - thousands of United States dollars)
| | | September 30,
2024 | | | December 31,
2023 | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| Cash and cash equivalents | | $ | 180,898 | | | $ | 96,632 | |
| Trade and other receivables | | | 200 | | | | 379 | |
| Value added taxes recoverable (note 10) | | | 8,132 | | | | 15,571 | |
| Inventory (note 9) | | | 28,830 | | | | 29,451 | |
| Prepaid expenses | | | 5,428 | | | | 3,142 | |
| | | | 223,488 | | | | 145,175 | |
| Restricted cash | | | 810 | | | | 1,011 | |
| Value added taxes recoverable (note 10) | | | — | | | | 826 | |
| Long term inventory (note 9) | | | 6,517 | | | | 5,627 | |
| Property, plant and equipment (note 11) | | | 205,034 | | | | 211,719 | |
| Exploration and evaluation properties (note 12) | | | 182,168 | | | | 170,000 | |
| Other non-current assets | | | 680 | | | | 1,420 | |
| TOTAL ASSETS | | $ | 618,697 | | | $ | 535,778 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Current liabilities | | | | | | | | |
| Trade payables and accrued liabilities (note 14) | | $ | 23,797 | | | $ | 20,656 | |
| Income taxes payable | | | 25,462 | | | | 8,002 | |
| | | | 49,259 | | | | 28,658 | |
| Lease obligations (note 16) | | | 1,398 | | | | 1,993 | |
| Long term debt (note 15) | | | 58,350 | | | | 88,350 | |
| Deferred revenue | | | 8,542 | | | | 8,176 | |
| Site closure provisions (note 17) | | | 8,239 | | | | 7,424 | |
| Other long term liabilities | | | 849 | | | | 443 | |
| Deferred tax liabilities | | | 11,327 | | | | 193 | |
| TOTAL LIABILITIES | | | 137,964 | | | | 135,237 | |
| | | | | | | | | |
| SHAREHOLDERS' EQUITY | | | | | | | | |
| Share capital (note 18) | | | 492,554 | | | | 474,361 | |
| Reserves | | | 24,873 | | | | 24,387 | |
| Accumulated other comprehensive loss | | | (1,820 | ) | | | (439 | ) |
| Accumulated deficit | | | (34,874 | ) | | | (97,768 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | | | 480,733 | | | | 400,541 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 618,697 | | | $ | 535,778 | |
| /s/ Jason Simpson | | /s/ Elizabeth McGregor |
| Jason Simpson, Director | | Elizabeth McGregor, Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
ORLA MINING LTD.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited - thousands of United States dollars, except per-share amounts)
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| REVENUE (note 4) | | $ | 99,307 | | | $ | 60,294 | | | $ | 251,155 | | | $ | 170,697 | |
| | | | | | | | | | | | | | | | | |
| COST OF SALES | | | | | | | | | | | | | | | | |
| Operating costs (note 5(a)) | | | (20,509 | ) | | | (16,039 | ) | | | (57,142 | ) | | | (41,289 | ) |
| Depletion and depreciation | | | (11,597 | ) | | | (7,574 | ) | | | (29,971 | ) | | | (20,255 | ) |
| Royalties (note 5(b)) | | | (2,466 | ) | | | (1,479 | ) | | | (6,232 | ) | | | (4,233 | ) |
| | | | (34,572 | ) | | | (25,092 | ) | | | (93,345 | ) | | | (65,777 | ) |
| | | | | | | | | | | | | | | | | |
| EARNINGS FROM MINING OPERATIONS | | | 64,735 | | | | 35,202 | | | | 157,810 | | | | 104,920 | |
| | | | | | | | | | | | | | | | | |
| GENERAL AND ADMINISTRATIVE EXPENSES (note 7) | | | (4,018 | ) | | | (3,123 | ) | | | (11,765 | ) | | | (9,495 | ) |
| | | | | | | | | | | | | | | | | |
| EXPLORATION AND EVALUATION (note 6) | | | (13,653 | ) | | | (11,233 | ) | | | (25,046 | ) | | | (25,300 | ) |
| | | | | | | | | | | | | | | | | |
| OTHER | | | | | | | | | | | | | | | | |
| Interest income | | | 1,916 | | | | 1,484 | | | | 9,036 | | | | 3,804 | |
| Depreciation | | | (121 | ) | | | (117 | ) | | | (374 | ) | | | (355 | ) |
| Share based payments (note 20) | | | (712 | ) | | | (656 | ) | | | (2,966 | ) | | | (2,569 | ) |
| Interest and accretion expense (note 8) | | | (1,746 | ) | | | (3,483 | ) | | | (5,888 | ) | | | (9,385 | ) |
| Loss on extinguishment of credit facility | | | — | | | | (1,547 | ) | | | — | | | | (1,547 | ) |
| Foreign exchange and other gains (losses) | | | 2,276 | | | | 1,207 | | | | 5,300 | | | | (835 | ) |
| | | | 1,613 | | | | (3,112 | ) | | | 5,108 | | | | (10,887 | ) |
| | | | | | | | | | | | | | | | | |
| INCOME BEFORE TAXES | | | 48,677 | | | | 17,734 | | | | 126,107 | | | | 59,238 | |
| Income taxes (note 27) | | | (27,533 | ) | | | (12,364 | ) | | | (63,213 | ) | | | (27,806 | ) |
| | | | | | | | | | | | | | | | | |
| INCOME FOR THE PERIOD | | $ | 21,144 | | | $ | 5,370 | | | $ | 62,894 | | | $ | 31,432 | |
| | | | | | | | | | | | | | | | | |
| OTHER COMPREHENSIVE INCOME (LOSS) | | | | | | | | | | | | | | | | |
| Items that may in future periods be reclassified to profit or loss: | | | | | | | | | | | | | | | | |
| Foreign currency differences arising on translation | | | 500 | | | | 76 | | | | (1,381 | ) | | | 137 | |
| TOTAL COMPREHENSIVE INCOME | | $ | 21,644 | | | $ | 5,446 | | | $ | 61,513 | | | $ | 31,569 | |
| | | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (note 19) | | | | | | | | | | | | | | | | |
| Basic (millions) | | | 320.3 | | | | 313.8 | | | | 317.8 | | | | 310.5 | |
| Diluted (millions) | | | 334.6 | | | | 331.5 | | | | 332.0 | | | | 328.9 | |
| | | | | | | | | | | | | | | | | |
| EARNINGS PER SHARE (note 19) | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.07 | | | $ | 0.02 | | | $ | 0.20 | | | $ | 0.10 | |
| Diluted | | $ | 0.06 | | | $ | 0.02 | | | $ | 0.19 | | | $ | 0.10 | |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
ORLA MINING LTD.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited - thousands of United States dollars)
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| OPERATING ACTIVITIES | | | | | | | | | | | | | | | | |
| Income for the period | | $ | 21,144 | | | $ | 5,370 | | | $ | 62,894 | | | $ | 31,432 | |
| Adjustments for: | | | | | | | | | | | | | | | | |
| Interest and accretion expense (note 8) | | | 1,746 | | | | 3,483 | | | | 5,888 | | | | 9,385 | |
| Income tax expense | | | 27,533 | | | | 12,364 | | | | 63,213 | | | | 27,806 | |
| Income taxes paid | | | (217 | ) | | | (440 | ) | | | (14,492 | ) | | | (27,392 | ) |
| Income tax instalments paid | | | (8,809 | ) | | | (7,654 | ) | | | (15,534 | ) | | | (19,811 | ) |
| Payment of cash settled RSUs and DSUs | | | — | | | | — | | | | — | | | | (466 | ) |
| Interest income not related to operating activities | | | — | | | | — | | | | (4,136 | ) | | | — | |
| Adjustments for items not affecting cash: | | | | | | | | | | | | | | | | |
| Depreciation and depletion | | | 11,718 | | | | 7,691 | | | | 30,345 | | | | 20,610 | |
| Share based payments expense (note 20) | | | 712 | | | | 656 | | | | 2,966 | | | | 2,569 | |
| Unrealized foreign exchange loss (gain) | | | (2,074 | ) | | | (1,437 | ) | | | (4,505 | ) | | | (2,143 | ) |
| Other | | | 234 | | | | 1,757 | | | | 217 | | | | 2,156 | |
| Cash provided by operating activities before changes in non-cash working capital | | | 51,987 | | | | 21,790 | | | | 126,856 | | | | 44,146 | |
| Changes in non-cash working capital (note 22(b)) | | | 712 | | | | 3,229 | | | | 2,962 | | | | (753 | ) |
| Cash provided by operating activities | | | 52,699 | | | | 25,019 | | | | 129,818 | | | | 43,393 | |
| | | | | | | | | | | | | | | | | |
| INVESTING ACTIVITIES | | | | | | | | | | | | | | | | |
| Purchase of plant and equipment | | | (4,165 | ) | | | (1,864 | ) | | | (13,546 | ) | | | (4,538 | ) |
| Expenditures on mineral properties | | | (3,710 | ) | | | (4,560 | ) | | | (10,689 | ) | | | (9,433 | ) |
| Acquisition of Contact Gold Corp., net of cash received (note 13) | | | — | | | | — | | | | (2,666 | ) | | | — | |
| Deposits and payments on long term assets | | | 283 | | | | 47 | | | | 1,816 | | | | (119 | ) |
| Restricted cash and environmental bonding | | | 205 | | | | 147 | | | | 200 | | | | 2,424 | |
| Value added taxes and interest received | | | — | | | | — | | | | 8,368 | | | | — | |
| Cash used in investing activities | | | (7,387 | ) | | | (6,230 | ) | | | (16,517 | ) | | | (11,666 | ) |
| | | | | | | | | | | | | | | | | |
| FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
| Proceeds from issuance of common shares, net | | | — | | | | — | | | | — | | | | 18,434 | |
| Principal repayments of the Revolving Facility and Credit Facility (note 15) | | | (20,000 | ) | | | — | | | | (30,000 | ) | | | (11,100 | ) |
| Proceeds from exercise of stock options and warrants | | | 2,591 | | | | 2,283 | | | | 7,180 | | | | 7,168 | |
| Interest paid | | | (1,476 | ) | | | (2,142 | ) | | | (5,148 | ) | | | (9,094 | ) |
| Lease payments | | | (186 | ) | | | (285 | ) | | | (669 | ) | | | (715 | ) |
| Cash provided by (used in) financing activities | | | (19,071 | ) | | | (144 | ) | | | (28,637 | ) | | | 4,693 | |
| | | | | | | | | | | | | | | | | |
| Effects of exchange rate changes on cash | | | 355 | | | | (418 | ) | | | (398 | ) | | | 59 | |
| | | | | | | | | | | | | | | | | |
| Net increase in cash | | | 26,596 | | | | 18,227 | | | | 84,266 | | | | 36,479 | |
| Cash, beginning of period | | | 154,302 | | | | 114,530 | | | | 96,632 | | | | 96,278 | |
| CASH, END OF PERIOD | | $ | 180,898 | | | $ | 132,757 | | | $ | 180,898 | | | $ | 132,757 | |
Supplemental cash flow information (note 22)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
ORLA MINING LTD.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited - thousands of United States dollars)
| | | Common shares | | | Reserves | | | | | | | | | | |
| | | Number of
shares
(thousands) | | | Amount | | | Share based
payments
reserve | | | Warrants
reserve | | | Total | | | Accumulated
Other
Comprehensive
Income (loss) | | | Accumulated
deficit | | | Total | |
| Balance at January 1, 2023 | | | 305,809 | | | $ | 445,316 | | | $ | 9,897 | | | $ | 14,112 | | | $ | 24,009 | | | $ | (1,583 | ) | | $ | (70,758 | ) | | $ | 396,984 | |
| Shares issued pursuant to top up right | | | 3,987 | | | | 18,434 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18,434 | |
| Shares issued for property payments | | | 62 | | | | 242 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 242 | |
| Warrants exercised (note 17) | | | 1,282 | | | | 3,190 | | | | — | | | | (343 | ) | | | (343 | ) | | | — | | | | — | | | | 2,847 | |
| Options exercised (note 19) | | | 3,223 | | | | 6,108 | | | | (1,787 | ) | | | — | | | | (1,787 | ) | | | — | | | | — | | | | 4,321 | |
| RSUs redeemed (note 19) | | | 58 | | | | 228 | | | | (228 | ) | | | — | | | | (228 | ) | | | — | | | | — | | | | — | |
| Share based payments (note 19) | | | — | | | | — | | | | 2,313 | | | | — | | | | 2,313 | | | | — | | | | — | | | | 2,313 | |
| Income for the period | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31,432 | | | | 31,432 | |
| Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 137 | | | | — | | | | 137 | |
| Balance at September 30, 2023 | | | 314,421 | | | $ | 473,518 | | | $ | 10,195 | | | $ | 13,769 | | | $ | 23,964 | | | $ | (1,446 | ) | | $ | (39,326 | ) | | $ | 456,710 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2024 | | | 315,074 | | | $ | 474,361 | | | $ | 10,620 | | | $ | 13,767 | | | $ | 24,387 | | | $ | (439 | ) | | $ | (97,768 | ) | | $ | 400,541 | |
| Shares issued pursuant to acquisition, (note 13) | | | 2,221 | | | | 8,937 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,937 | |
| Share issuance costs | | | — | | | | (71 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (71 | ) |
| Warrants exercised (note 18) | | | 2,031 | | | | 5,003 | | | | — | | | | (539 | ) | | | (539 | ) | | | — | | | | — | | | | 4,464 | |
| Options exercised (note 20) | | | 1,406 | | | | 3,701 | | | | (985 | ) | | | — | | | | (985 | ) | | | — | | | | — | | | | 2,716 | |
| RSUs redeemed (note 20) | | | 139 | | | | 623 | | | | (623 | ) | | | — | | | | (623 | ) | | | — | | | | — | | | | — | |
| Share based payments (note 20) | | | — | | | | — | | | | 2,633 | | | | — | | | | 2,633 | | | | — | | | | — | | | | 2,633 | |
| Income for the period | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 62,894 | | | | 62,894 | |
| Other comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,381 | ) | | | — | | | | (1,381 | ) |
| Balance at September 30, 2024 | | | 320,871 | | | $ | 492,554 | | | $ | 11,645 | | | $ | 13,228 | | | $ | 24,873 | | | $ | (1,820 | ) | | $ | (34,874 | ) | | $ | 480,733 | |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| 1. | CORPORATE INFORMATION AND NATURE OF OPERATIONS |
Orla Mining Ltd. was incorporated in Alberta in 2007 and was continued into British Columbia in 2010 and subsequently into Ontario under the Business Corporations Act (Ontario) in 2014. In 2016, the Company was continued as a federal company under the Canada Business Corporations Act. The “Company”, “Orla”, “we”, and “our” refer to Orla Mining Ltd. and its subsidiaries. The registered office of the Company is located at Suite 1010, 1075 West Georgia Street, Vancouver, Canada.
The Company is engaged in the acquisition, exploration, development, and exploitation of mineral properties, and holds the Camino Rojo gold and silver mine in Zacatecas State, Mexico, the South Railroad and Lewis gold projects in Nevada, USA, and the Cerro Quema gold project in Panama.
These condensed interim consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.
| (a) | Statement of compliance and basis of presentation |
We have prepared these condensed interim consolidated financial statements of the Company in accordance with IAS 34 «Interim Financial Reporting» and do not include all the information required for full annual financial statements.
The preparation of these condensed interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
These condensed interim consolidated financial statements are presented in United States dollars and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated upon consolidation.
On November 12, 2024, the Board of Directors approved these condensed interim consolidated financial statements for issuance.
| 3. | MATERIAL ACCOUNTING POLICY INFORMATION |
These condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as at and for the years ended December 31, 2023 and 2022.
We applied the same accounting policies in these condensed interim consolidated financial statements as those applied in the Company’s audited consolidated financial statements as at and for the year ended December 31, 2023.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
In preparing these condensed interim consolidated financial statements, the significant judgements we made in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements as at and for the year ended December 31, 2023.
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Gold | | $ | 94,791 | | | $ | 59,671 | | | $ | 242,073 | | | $ | 169,175 | |
| Silver | | | 4,516 | | | | 623 | | | | 9,082 | | | | 1,522 | |
| Revenue | | $ | 99,307 | | | $ | 60,294 | | | $ | 251,155 | | | $ | 170,697 | |
| | | | | | | | | | | | | | | | | |
| Customer A | | $ | 5,885 | | | $ | 19,225 | | | $ | 22,866 | | | $ | 49,062 | |
| Customer B | | | 46,954 | | | | 2,889 | | | | 96,334 | | | | 57,311 | |
| Customer C | | | 41,448 | | | | 36,044 | | | | 116,431 | | | | 55,225 | |
| Others | | | 5,020 | | | | 2,136 | | | | 15,524 | | | | 9,099 | |
| Revenue | | $ | 99,307 | | | $ | 60,294 | | | $ | 251,155 | | | $ | 170,697 | |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Mining and processing costs | | $ | 20,188 | | | $ | 15,859 | | | $ | 56,065 | | | $ | 40,757 | |
| Refining and transportation costs | | | 321 | | | | 180 | | | | 1,077 | | | | 532 | |
| | | $ | 20,509 | | | $ | 16,039 | | | $ | 57,142 | | | $ | 41,289 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Camino Rojo Oxide 2% NSR royalty | | $ | 1,969 | | | $ | 1,197 | | | $ | 4,976 | | | $ | 3,381 | |
| Mexican 0.5% Extraordinary Mining Duty | | | 497 | | | | 282 | | | | 1,256 | | | | 852 | |
| | | $ | 2,466 | | | $ | 1,479 | | | $ | 6,232 | | | $ | 4,233 | |
| 6. | EXPLORATION AND EVALUATION EXPENSES |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Camino Rojo | | $ | 2,508 | | | $ | 2,645 | | | $ | 5,941 | | | $ | 6,636 | |
| South Railroad | | | 9,107 | | | | 7,920 | | | | 14,802 | | | | 13,358 | |
| Cerro Quema | | | 1,923 | | | | 494 | | | | 4,003 | | | | 4,899 | |
| Other | | | 115 | | | | 174 | | | | 300 | | | | 407 | |
| | | $ | 13,653 | | | $ | 11,233 | | | $ | 25,046 | | | $ | 25,300 | |
| 7. | GENERAL AND ADMINISTRATIVE EXPENSES |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Office and administrative | | $ | 1,033 | | | $ | 929 | | | $ | 2,739 | | | $ | 2,473 | |
| Professional fees | | | 1,159 | | | | 550 | | | | 2,974 | | | | 1,463 | |
| Regulatory and transfer agent | | | 43 | | | | 37 | | | | 369 | | | | 433 | |
| Salaries and benefits | | | 1,783 | | | | 1,607 | | | | 5,683 | | | | 5,126 | |
| | | $ | 4,018 | | | $ | 3,123 | | | $ | 11,765 | | | $ | 9,495 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| 8. | INTEREST AND ACCRETION EXPENSE |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Interest expense | | | | | | | | | | | | | | | | |
| Revolving Facility | | $ | 1,313 | | | $ | — | | | $ | 4,667 | | | $ | — | |
| Interest expense on lease liabilities (note 16) | | | 42 | | | | 37 | | | | 110 | | | | 118 | |
| Credit Facility (note 15) | | | — | | | | 2,321 | | | | — | | | | 6,898 | |
| Fresnillo obligation | | | — | | | | 292 | | | | — | | | | 868 | |
| Other | | | 141 | | | | 614 | | | | 362 | | | | 726 | |
| Interest expense | | | 1,496 | | | $ | 3,264 | | | | 5,139 | | | $ | 8,610 | |
| | | | | | | | | | | | | | | | | |
| Accretion expense | | | | | | | | | | | | | | | | |
| Accretion of site closure provisions (note 17) | | | 128 | | | | 142 | | | | 383 | | | | 406 | |
| Deferred revenue | | | 122 | | | | — | | | | 366 | | | | — | |
| Credit Facility (note 15) | | | — | | | | 77 | | | | — | | | | 369 | |
| Accretion expense | | | 250 | | | | 219 | | | | 749 | | | | 775 | |
| | | | | | | | | | | | | | | | | |
| Interest and accretion expense | | $ | 1,746 | | | $ | 3,483 | | | $ | 5,888 | | | $ | 9,385 | |
| | | September 30,
2024 | | | December 31,
2023 | |
| Current | | | | | | | | |
| Stockpiled ore | | $ | 1,149 | | | $ | 913 | |
| In-process inventory | | | 14,984 | | | | 20,509 | |
| Finished goods inventory | | | 8,472 | | | | 4,041 | |
| Materials and supplies | | | 4,225 | | | | 3,988 | |
| Inventory – current | | $ | 28,830 | | | $ | 29,451 | |
| | | | | | | | | |
| Long term | | | | | | | | |
| Stockpiled ore | | $ | 6,517 | | | $ | 5,627 | |
Long term inventory consists of stockpiled ore that is not expected to be processed within 12 months.
Included within inventory at September 30, 2024 is $10.5 million of depreciation and depletion (December 31, 2023 — $9.2 million).
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| 10. | VALUE ADDED TAXES RECOVERABLE |
| | | September 30,
2024 | | | December 31,
2023 | |
| Current portion | | $ | 8,132 | | | $ | 15,571 | |
| Long term portion | | | — | | | | 826 | |
| | | $ | 8,132 | | | $ | 16,397 | |
Value added taxes (“VAT”) paid in Mexico are fully recoverable. However, VAT recovery returns in Mexico are subject to complex filing requirements and detailed audit or review by the fiscal authorities. Consequently, the timing of receipt of refunds is uncertain. We have used judgement in classifying the current and non-current portions of our Mexican VAT receivables. Factors that we considered include (i) the regularity of payments received, (ii) discussions with and communications from the Mexican tax authorities with respect to specific claims, and (iii) the expected length of time for refunds in accordance with Mexico’s regulations.
During the third quarter of 2024, we wrote off the 13.9 million Mexican Pesos ($0.8 million) long term portion of VAT following the unfavorable resolution of an outstanding dispute with the Mexican tax authorities.
At September 30, 2024, there were no material VAT amounts (December 31, 2023 — $0.8 million) under dispute with the taxation authorities.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| 11. | PROPERTY, PLANT AND EQUIPMENT |
| | | Producing
mineral
property | | | Buildings | | | Machinery
and
equipment | | | Other
assets | | | Other right
of use
assets | | | Construction
in progress | | | Total | |
| Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| At January 1, 2023 | | $ | 115,753 | | | $ | 72,008 | | | $ | 52,345 | | | $ | 2,620 | | | $ | 4,160 | | | $ | — | | | $ | 246,886 | |
| Additions | | | 12,705 | | | | 141 | | | | 2,305 | | | | 823 | | | | 484 | | | | 4,881 | | | | 21,339 | |
| Change in site closure provision (note 17) | | | (559 | ) | | | (927 | ) | | | (593 | ) | | | — | | | | — | | | | — | | | | (2,079 | ) |
| Derecognition | | | — | | | | — | | | | — | | | | — | | | | (117 | ) | | | — | | | | (117 | ) |
| Due to changes in exchange rates | | | — | | | | — | | | | (5 | ) | | | 7 | | | | 22 | | | | — | | | | 24 | |
| At December 31, 2023 | | | 127,899 | | | | 71,222 | | | | 54,052 | | | | 3,450 | | | | 4,549 | | | | 4,881 | | | | 266,053 | |
| Additions | | | 10,689 | | | | — | | | | 103 | | | | 15 | | | | 1,201 | | | | 13,428 | | | | 25,436 | |
| Transfers | | | — | | | | 11,672 | | | | 2,276 | | | | 214 | | | | — | | | | (14,162 | ) | | | — | |
| Change in site closure provision (note 17) | | | 59 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 59 | |
| Derecognition | | | — | | | | — | | | | — | | | | — | | | | (586 | ) | | | — | | | | (586 | ) |
| Disposals | | | — | | | | — | | | | (253 | ) | | | (149 | ) | | | (1,359 | ) | | | — | | | | (1,761 | ) |
| At September 30, 2024 | | $ | 138,647 | | | $ | 82,894 | | | $ | 56,178 | | | $ | 3,530 | | | $ | 3,805 | | | $ | 4,147 | | | $ | 289,201 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Accumulated depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| At January 1, 2023 | | $ | 9,641 | | | $ | 6,286 | | | $ | 4,891 | | | $ | 705 | | | $ | 947 | | | $ | — | | | $ | 22,470 | |
| Depletion and depreciation | | | 13,844 | | | | 9,610 | | | | 6,789 | | | | 563 | | | | 1,115 | | | | — | | | | 31,921 | |
| Derecognition | | | — | | | | — | | | | (5 | ) | | | — | | | | (52 | ) | | | — | | | | (57 | ) |
| At December 31, 2023 | | | 23,485 | | | | 15,896 | | | | 11,675 | | | | 1,268 | | | | 2,010 | | | | — | | | | 54,334 | |
| Disposals | | | — | | | | — | | | | (253 | ) | | | (149 | ) | | | (1,359 | ) | | | — | | | | (1,761 | ) |
| Depletion and depreciation | | | 16,070 | | | | 8,184 | | | | 6,086 | | | | 517 | | | | 737 | | | | — | | | | 31,594 | |
| At September 30, 2024 | | $ | 39,555 | | | $ | 24,080 | | | $ | 17,508 | | | $ | 1,636 | | | $ | 1,388 | | | $ | — | | | $ | 84,167 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| At December 31, 2023 | | $ | 104,414 | | | $ | 55,326 | | | $ | 42,377 | | | $ | 2,182 | | | $ | 2,539 | | | $ | 4,881 | | | $ | 211,719 | |
| At September 30, 2024 | | $ | 99,092 | | | $ | 58,814 | | | $ | 38,670 | | | $ | 1,894 | | | $ | 2,417 | | | $ | 4,147 | | | $ | 205,034 | |
| 12. | EXPLORATION AND EVALUATION PROPERTIES |
Our exploration and evaluation properties consist of the South Railroad Project in Nevada, United States and the Cerro Quema Project in Panama).
| | | South Railroad | | | Cerro Quema | | | Total | |
| At December 31, 2023 | | $ | 160,000 | | | $ | 10,000 | | | $ | 170,000 | |
| Acquisition of Contact Gold Corp. | | | 12,168 | | | | — | | | | 12,168 | |
| At September 30, 2024 | | $ | 172,168 | | | $ | 10,000 | | | $ | 182,168 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| 13. | ACQUISITION OF CONTACT GOLD CORP. |
On April 29, 2024, the Company completed the acquisition of Contact Gold Corp. (“Contact”) through a court-approved plan of arrangement (the “Transaction”). On closing of the Transaction, shareholders of Contact received 0.0063 (“Exchange Ratio”) Orla shares for each share of Contact held. This resulted in the issuance of 2,220,901 Orla common shares to Contact shareholders. The Contact warrants which were outstanding at April 29, 2024 (the “Contact Warrants”) became exercisable for shares of Orla based on the Exchange Ratio, resulting in 315,000 Orla shares issuable on exercise of such warrants. We accounted for this acquisition as a purchase of assets. Accordingly, we allocated the sum of consideration paid and transaction costs incurred to the net assets acquired based on relative fair values.
The purchase consideration was calculated as follows:
| Estimated fair value of 2,220,901 common shares issued by the Company | | $ | 8,937 | |
| Transaction costs | | | 2,676 | |
| Total purchase consideration | | $ | 11,613 | |
Assets acquired and liabilities assumed:
| Cash and cash equivalents | | $ | 83 | |
| Restricted cash | | | 18 | |
| Receivables and other assets | | | 209 | |
| Trade and other payables | | | (717 | ) |
| Lease liabilities | | | (27 | ) |
| Asset retirement obligations | | | (156 | ) |
| Exploration and evaluation properties – South Railroad | | | 12,203 | |
| Total assets acquired and liabilities assumed, net | | $ | 11,613 | |
The fair value of Orla common shares issued was determined using the Company’s closing share price of C$5.50 on the trading day immediately prior to the date of closing of the Transaction and the exchange rate of 1.3668 CAD/USD.
Each Contact Warrant gives the holder rights to acquire common shares of the Company in accordance with the terms of the plan of arrangement. The effective exercise price of the Contact Warrants (C$7.94 per Orla share) was determined by dividing the exercise price of the Contact warrants by the Exchange Ratio. The fair value of the Contact Warrants was determined using the Black-Scholes option pricing model. On issuance, the weighted average fair value of the Contact Warrants was C$0.93 per share issuable under the warrants. However, the effect of the Contact Warrants on the purchase consideration was immaterial and was therefore not included.
| (a) | Mineral properties acquired |
The Contact properties acquired consist primarily of the Pony Creek property and the Green Springs property, as well as several other smaller properties.
The Pony Creek property is located adjacent to the South Railroad property and situated within a prospective land package along the Carlin Trend in Nevada. The property is subject to a 3% net smelter return (“NSR”) royalty in favour of Sandstorm Gold Ltd. This property is now included within the South Railroad Project for accounting purposes.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
The Green Springs property is an early-stage exploration property located in the southern end of Nevada’s Cortez trend. Certain claims within Green Springs are subject to NSR royalties ranging from 3% to 4.5%.
Pursuant to an agreement with Centerra Gold Inc. (“Centerra”), dated December 8, 2022, Centerra has an option to acquire a 70% interest in Green Springs for cumulative earn-in exploration expenditures and aggregate cash payments to the Company as follows:
| In thousands of US dollars | | Cash payments | | | Exploration
expenditures
commitment | |
| On signing (completed) | | $ | 150 | | | $ | — | |
| On or before December 8, 2023 (completed) | | | 175 | | | | 1,500 | |
| On or before December 8, 2024 | | | 175 | | | | 2,000 | |
| On or before December 8, 2025 | | | 250 | | | | 2,750 | |
| On or before December 8, 2026 | | | 250 | | | | 3,750 | |
| | | $ | 1,000 | | | $ | 10,000 | |
Provided Centerra fulfills the total exploration expenditure commitment and makes the required cash payments, a joint venture is to be established to manage and operate the property. Both parties will proportionately fund future activities at Green Springs, subject to dilution provisions. If the Company’s interest is diluted to less than 10%, it will convert to a 1.5% NSR royalty interest.
The Company’s accounting policy is to credit any consideration received pursuant to farm-out agreements in respect of exploration and evaluation properties against the carrying amount of the exploration and evaluation asset, with any excess consideration greater than the carrying amount being credited to profit or loss. During the three and nine months ended September 30, 2024, $35,000 (2023 – $nil) were credited against properties acquired as part of Contact Gold Corp.
| 14. | TRADE PAYABLES AND ACCRUED LIABILITIES |
| | | September 30,
2024 | | | December 31,
2023 | |
| Trade payables and accrued trade liabilities | | $ | 13,754 | | | $ | 9,793 | |
| Royalties payable (note 5(b)) | | | 3,122 | | | | 2,466 | |
| Payroll related | | | 4,355 | | | | 6,532 | |
| Current portion of lease obligations (note 16) | | | 1,205 | | | | 915 | |
| Other | | | 1,361 | | | | 950 | |
| | | $ | 23,797 | | | $ | 20,656 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| | | Credit Facility | | | Revolving Facility | |
| At January 1, 2023 | | $ | 122,995 | | | $ | — | |
| Converted from Credit Facility to Revolving Facility | | | (113,350 | ) | | | 113,350 | |
| Unamortized transaction costs expensed | | | 1,455 | | | | — | |
| Principal repayments during the period | | | (11,100 | ) | | | (25,000 | ) |
| At December 31, 2023 | | | — | | | | 88,350 | |
| Principal repayments during the period | | | — | | | | (30,000 | ) |
| At September 30, 2024 | | $ | — | | | $ | 58,350 | |
In April 2022, the Company entered into a credit facility (the “Credit Facility”) consisting of a $100 million term facility and a $50 million revolving facility through a syndicate of lenders. In August 2023, the term facility was extinguished in its entirety and the amounts due thereunder were transferred to a new $150 million revolving facility (the “Revolving Facility”).
The Revolving Facility has a four-year term maturing on August 28, 2027, with an option to increase this facility to $200 million, subject to certain conditions.
The applicable interest rate for the Revolving Facility is based on the term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin ranging from 2.50% to 3.75% based on the Company’s leverage ratio at the end of each fiscal quarter. During the quarter ended September 30, 2024, the average interest rate paid on the Revolving Facility was 7.9% per annum (three months ended September 30, 2023 – 7.9% on the Credit Facility).
A standby fee is payable on the undrawn portion of the Revolving Facility. The standby fee is charged at 0.56% to 0.84% depending on the leverage ratio. At September 30, 2024, the undrawn amount was $91.6 million.
We may prepay all or any portion of the amounts owed under the Revolving Facility without penalty.
The Revolving Facility is secured by the Company’s present and future assets, property and all proceeds thereof, other than present and future assets owned by Minera Cerro Quema which are excluded from the collateral. The Company is prohibited from declaring, paying or setting aside for payment any dividends unless certain financial covenants and ratios are met.
The Revolving Facility includes covenants customary for a facility of this nature, including compliance with customary restrictive covenants, and the following financial covenants all as defined in the related agreements:
| · | maintaining a leverage ratio at less than or equal to 3.50, |
| · | an interest service coverage ratio at greater than or equal to 4, |
| · | a tangible net worth greater than or equal to $278.6 million, and |
| · | minimum liquidity in an amount greater than or equal to $15.0 million. |
As at September 30, 2024, the Company was in compliance with these covenants.
Subsequent to the reporting period, the Company repaid the entirety of the outstanding balance on the Revolving Facility totaling $58.4 million.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
The Company has lease contracts for mining equipment, vehicles and buildings. Leases of mining equipment have lease terms of five years, while vehicles and buildings generally have lease terms between three and five years.
| | | September 30,
2024 | | | December 31,
2023 | |
| Beginning of year | | $ | 2,908 | | | $ | 3,173 | |
| Acquisition of Contact Gold Corp. (note 13) | | | 27 | | | | — | |
| Additions | | | 1,201 | | | | 484 | |
| Interest expense (note 8) | | | 110 | | | | 156 | |
| Lease payments | | | (779 | ) | | | (1,125 | ) |
| Derecognition | | | (586 | ) | | | — | |
| Due to changes in exchange rates | | | (278 | ) | | | 220 | |
| End of period | | $ | 2,603 | | | $ | 2,908 | |
| | | | | | | | | |
| Current (note 14) | | $ | 1,205 | | | $ | 915 | |
| Non-current | | | 1,398 | | | | 1,993 | |
| | | $ | 2,603 | | | $ | 2,908 | |
| (b) | Lease expenses recognized |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Interest on lease liabilities | | $ | 42 | | | $ | 37 | | | $ | 110 | | | $ | 118 | |
| Variable lease payments not included in the measurement of lease liabilities | | | 5,449 | | | | 3,333 | | | | 13,033 | | | | 9,917 | |
| Expenses relating to short-term leases | | | 66 | | | | 57 | | | | 244 | | | | 176 | |
| Expenses relating to leases of low-value assets, excluding short-term leases | | | — | | | | 3 | | | | 22 | | | | 67 | |
| | | $ | 5,557 | | | $ | 3,430 | | | $ | 13,409 | | | $ | 10,278 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| 17. | SITE CLOSURE PROVISIONS |
| | | Camino
Rojo | | | Nevada
projects | | | Cerro
Quema
Project | | | Total | |
| At December 31, 2022 | | $ | 6,301 | | | $ | 1,617 | | | $ | 343 | | | $ | 8,261 | |
| Changes in cost estimates | | | (1,996 | ) | | | 463 | | | | 157 | | | | (1,376 | ) |
| Accretion during the period | | | 521 | | | | 18 | | | | — | | | | 539 | |
| At December 31, 2023 | | | 4,826 | | | | 2,098 | | | | 500 | | | | 7,424 | |
| Acquisition of Contact Gold Corp. (note 13) | | | — | | | | 156 | | | | — | | | | 156 | |
| Changes in cost estimates | | | 59 | | | | 217 | | | | — | | | | 276 | |
| Accretion during the period (note 8) | | | 364 | | | | 19 | | | | — | | | | 383 | |
| At September 30, 2024 | | $ | 5,249 | | | $ | 2,490 | | | $ | 500 | | | $ | 8,239 | |
| | | September 30, 2024 | | | December 31, 2023 | |
| | | Camino Rojo | | | Nevada
projects | | | Cerro
Quema
Project | | | Camino Rojo | | | Nevada
projects | | | Cerro
Quema
Project | |
| Estimated settlement dates | | | 2033 to 2047 | | | | 2034 | | | | | | | | 2033 to 2047 | | | | 2034 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Undiscounted risk-adjusted cash flows | | $ | 9,818 | | | $ | 2,558 | | | $ | 500 | | | $ | 9,765 | | | $ | 2,336 | | | $ | 500 | |
| Inflation rate | | | 4.0 | % | | | 2.3 | % | | | — | | | | 3.7 | % | | | 2.6 | % | | | — | |
| Discount rate | | | 9.5 | % | | | 3.5 | % | | | — | | | | 9.8 | % | | | 3.6 | % | | | — | |
| (a) | Authorized share capital |
The Company’s authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
The following summarizes information about shares issuable upon the exercise of warrants outstanding during the period.
| Expiry date | | Exercise
price | | | December 31,
2023 | | | Contact Gold
acquisition | | | Exercised | | | Expired | | | September 30,
2024 | |
| December 18, 2026 | | C$ | 3.00 | | | | 28,253,200 | | | | | | | | (2,030,700 | ) | | | — | | | | 26,222,500 | |
| February 23, 2026 (note 13) | | C$ | 7.94 | | | | — | | | | 315,000 | | | | — | | | | — | | | | 315,000 | |
| Shares issuable upon exercise of warrants | | | | | | | 28,253,200 | | | | 315,000 | | | | (2,030,700 | ) | | | — | | | | 26,537,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average exercise price | | | | | | C$ | 3.00 | | | C$ | 7.94 | | | C$ | 3.00 | | | C$ | — | | | C$ | 3.06 | |
Subsequent to the reporting period, the Company issued 682,500 common shares for proceeds of $1.5 million pursuant to the exercise of warrants.
Earnings per share has been calculated using the weighted average number of common shares outstanding for the three months ended September 30, 2024 and 2023 as follows:
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Income for the period | | $ | 21,144 | | | $ | 5,370 | | | $ | 62,894 | | | $ | 31,432 | |
| Weighted average number of common shares (thousands) | | | 320,336 | | | | 313,817 | | | | 317,830 | | | | 310,462 | |
| Basic earnings per share | | $ | 0.07 | | | $ | 0.02 | | | $ | 0.20 | | | $ | 0.10 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Income for the period | | $ | 21,144 | | | $ | 5,370 | | | $ | 62,894 | | | $ | 31,432 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of common shares (thousands) | | | 320,336 | | | | 313,817 | | | | 317,830 | | | | 310,462 | |
| Dilutive potential ordinary shares | | | | | | | | | | | | | | | | |
| Warrants | | | 11,881 | | | | 14,181 | | | | 11,588 | | | | 14,181 | |
| Options | | | 523 | | | | 2,027 | | | | 750 | | | | 2,788 | |
| RSUs | | | 482 | | | | 311 | | | | 472 | | | | 336 | |
| DSUs | | | 895 | | | | 677 | | | | 832 | | | | 634 | |
| Bonus shares | | | 500 | | | | 500 | | | | 500 | | | | 500 | |
| Weighted average number of ordinary shares | | | 334,617 | | | | 331,513 | | | | 331,972 | | | | 328,901 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share | | $ | 0.06 | | | $ | 0.02 | | | $ | 0.19 | | | $ | 0.10 | |
The Company has five different forms of share-based payments for eligible recipients – stock options, restricted share units (“RSUs”), deferred share units (“DSUs”), performance share units (“PSUs”), and bonus shares. The bonus shares have fully vested but have not yet been issued.
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| Share-based payments expense | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Stock options (note 20(a)) | | $ | 316 | | | $ | 298 | | | $ | 915 | | | $ | 1,018 | |
| Restricted share units (note 20(b)) | | | 354 | | | | 307 | | | | 987 | | | | 858 | |
| Deferred share units (note 20(c)) | | | — | | | | — | | | | 731 | | | | 550 | |
| Performance share units (note 20(d)) | | | 42 | | | | 51 | | | | 333 | | | | 143 | |
| Share based payments expense | | $ | 712 | | | $ | 656 | | | $ | 2,966 | | | $ | 2,569 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
Stock options granted by the Company have a five-year life, with one third each vesting one, two, and three years after grant date.
| | | Nine months ended September 30 | |
| | | 2024 | | | 2023 | |
| Stock options outstanding | | Number | | | Weighted
average
exercise price | | | Number | | | Weighted
average
exercise price | |
| Outstanding, January 1 | | | 5,523,297 | | | C$ | 4.93 | | | | 9,178,889 | | | C$ | 3.71 | |
| Granted | | | 651,955 | | | | 5.13 | | | | 457,260 | | | | 6.57 | |
| Exercised | | | (1,406,407 | ) | | | 2.64 | | | | (3,222,960 | ) | | | 1.55 | |
| Expired, forfeited or cancelled | | | (1,091,911 | ) | | | 7.86 | | | | (246,644 | ) | | | 14.39 | |
| Outstanding, September 30 | | | 3,676,934 | | | C$ | 4.97 | | | | 6,166,545 | | | C$ | 4.39 | |
| | | | | | | | | | | | | | | | | |
| Vested, September 30 | | | 2,303,882 | | | C$ | 4.62 | | | | 4,842,167 | | | C$ | 4.04 | |
The stock options granted during the nine months ended September 30, 2024 had a grant date fair value of C$1.6 million ($1.2 million) using the Black Scholes option pricing model with the following weighted average assumptions:
| · | Share price at grant date – C$5.13, expected volatility 50%, expected life - 5 years, risk free interest rate 3.5% and expected dividends – nil. |
| (b) | Restricted share units (“RSUs”) |
RSUs awarded by the Company typically vest one-third each one, two, and three years after award date.
| | | Nine months ended
September 30 | |
| Number of RSUs outstanding: | | 2024 | | | 2023 | |
| Outstanding, January 1 | | | 580,219 | | | | 443,267 | |
| Awarded | | | 409,014 | | | | 295,429 | |
| Vested and settled | | | (139,200 | ) | | | (152,203 | ) |
| Forfeitures | | | (6,850 | ) | | | — | |
| Outstanding, September 30 | | | 843,183 | | | | 586,493 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| | | | | | Number vesting in the year | |
| Number of RSUs outstanding: | | Total | | | 2024 | | | 2025 | | | 2026 | | | 2027 | |
| Outstanding, September 30, 2023 | | | 586,493 | | | | 335,811 | | | | 152,193 | | | | 98,489 | | | | — | |
| Outstanding, September 30, 2024 | | | 843,183 | | | | — | | | | 478,326 | | | | 230,047 | | | | 134,810 | |
Restricted Share Units (“RSUs”) are valued based on the closing price of the Company’s common shares on the trading day immediately prior to award. As at September 30, 2024, all RSU’s outstanding were accounted for as equity-settled.
During the nine months ended September 30, 2024, there were no RSUs settled in cash (nine months ended September 30, 2023 – 94,063 RSUs settled in cash for $0.5 million).
| (c) | Deferred share units (“DSUs”) |
DSUs are awarded by the Company to directors. These DSUs vest immediately but are not settled until the end of the director’s tenure. They may be settled in cash or common shares at the option of the Company. DSUs are valued using the closing price of the Company’s common shares immediately prior to award.
| | | Nine months ended
September 30 | |
| Number of DSUs outstanding: | | 2024 | | | 2023 | |
| Outstanding, January 1 | | | 701,927 | | | | 559,725 | |
| Awarded and vested immediately | | | 192,976 | | | | 117,265 | |
| Outstanding, September 30 | | | 894,903 | | | | 676,990 | |
| | | | | | | | | |
| Vested, September 30 | | | 894,903 | | | | 676,990 | |
| (d) | Performance share units (“PSUs”) |
In March 2023, the Board of Directors approved a PSU plan for certain officers of the Company. The PSUs cliff vest after three years and are settled in cash. The cash payment upon vesting will be based on the number of PSUs, multiplied by the five-day volume weighted average price of the Company’s shares upon vesting, which is then multiplied by a “performance percentage”. The performance percentage ranges from 0% to 200% based on the Company’s total shareholder return compared to a peer group, consisting of the constituents of the S&P/TSX Global Gold Index.
We recognize share-based compensation expense related to these PSUs over the vesting period. We adjust the amount recognized at each reporting period to reflect changes in quoted market values of the Company and the peer group, the lapsed portion of the vesting period, the number of PSUs expected to vest, and the expected performance percentage.
On March 30, 2024, the Company issued a total of 324,139 PSUs.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| | | Nine months ended
September 30 | |
| Number of PSUs outstanding: | | 2024 | | | 2023 | |
| Outstanding, January 1 | | | 198,737 | | | | — | |
| Awarded during the period | | | 324,139 | | | | 198,737 | |
| Outstanding, September 30 | | | 522,876 | | | | 198,737 | |
| | | | | | | | | |
| Vested, September 30 | | | — | | | | — | |
There are 500,000 common shares which were awarded to the non-executive Chairman of the Company as bonus shares, which vested on June 18, 2020. Although the bonus shares have vested, they will become issuable (1) when the non-executive Chairman ceases to act as a director of the Company, or (2) upon a change of control of the Company.
| 21. | RELATED PARTY TRANSACTIONS |
The Company’s related parties include:
| Related party | Nature of the relationship |
| Key management personnel | Key management personnel are the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Chief Sustainability Officer, the Senior Vice President Exploration, and members of the Board of Directors of the Company. |
| (a) | Key management personnel |
Compensation to key management personnel was as follows:
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Salaries and short-term incentives | | $ | 387 | | | $ | 387 | | | $ | 2,647 | | | $ | 3,062 | |
| Directors’ fees | | | 149 | | | | 98 | | | | 449 | | | | 265 | |
| Share based payments | | | 300 | | | | 193 | | | | 1,629 | | | | 1,510 | |
| | | $ | 836 | | | $ | 678 | | | $ | 4,725 | | | $ | 4,837 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
The Company had no other material transactions with related parties other than key management personnel during the three months ended September 30, 2024, and 2023.
| (c) | Outstanding balances at the reporting date |
At September 30, 2024, estimated accrued short term incentive compensation totaled $1.1 million and is included in accrued liabilities (December 31, 2023 – $1.4 million).
| 22. | SUPPLEMENTAL CASH FLOW INFORMATION |
| (a) | Cash and cash equivalents |
Cash and cash equivalents consists of bank current accounts and cash on hand.
| (b) | Changes in non-cash working capital |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Accounts receivable and prepaid expenses | | $ | (2,193 | ) | | $ | (942 | ) | | $ | (2,318 | ) | | $ | (2,489 | ) |
| Inventory | | | 447 | | | | (1,067 | ) | | | 980 | | | | (5,029 | ) |
| Valued added taxes recoverable | | | (1,116 | ) | | | 572 | | | | 2,721 | | | | 3,349 | |
| Trade payables and accrued liabilities | | | 3,574 | | | | 4,666 | | | | 1,579 | | | | 3,416 | |
| Changes in non-cash working capital | | $ | 712 | | | $ | 3,229 | | | $ | 2,962 | | | $ | (753 | ) |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| (c) | Non-cash investing and financing activities |
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Financing activities | | | | | | | | | | | | | | | | |
| Stock options exercised, credited to share capital with an offset to reserves | | $ | 261 | | | $ | 506 | | | $ | 985 | | | $ | 1,787 | |
| Warrants exercised, credited to share capital with an offset to reserves | | | 226 | | | | 113 | | | | 539 | | | | 343 | |
| Common shares issued on maturity of RSUs, credited to share capital with an offset to reserves | | | — | | | | — | | | | 623 | | | | 228 | |
| | | | | | | | | | | | | | | | | |
| Investing activities | | | | | | | | | | | | | | | | |
| Initial recognition of right of use assets,with an offset to lease obligation | | | 1,201 | | | | 533 | | | | 1,201 | | | | 533 | |
| Marketable securities adjustment included in account receivable | | | — | | | | — | | | | — | | | | (3 | ) |
The operating and reportable segments of the Company are based on the reports which are reviewed by the chief operating decision maker (“CODM”) in making strategic resource allocation decisions. These operating segments are (1) the Camino Rojo Mine, (2) the Nevada projects, (3) the Cerro Quema project and (4) the corporate office. The operating segments other than corporate office are each managed by a dedicated General Manager and management team. The corporate office oversees the plans and activities of early-stage exploration projects.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
We conduct our activities in four geographic areas: Mexico, Nevada USA, Panama, and Canada (Corporate).
| (i) | Income (loss) for the period by segment |
| Nine months ended September 30, 2024 | | Mexico | | | Nevada | | | Panama | | | Corporate | | | Total | |
| Revenue (note 4) | | $ | 251,155 | | | $ | — | | | $ | — | | | $ | — | | | $ | 251,155 | |
| Cost of sales | | | (93,345 | ) | | | — | | | | — | | | | — | | | | (93,345 | ) |
| Earnings from mining operations | | | 157,810 | | | | — | | | | — | | | | — | | | | 157,810 | |
| General and administrative expenses (note 7) | | | — | | | | — | | | | (174 | ) | | | (11,591 | ) | | | (11,765 | ) |
| Exploration and evaluation expenses (note 6) | | | (5,941 | ) | | | (14,802 | ) | | | (4,003 | ) | | | (300 | ) | | | (25,046 | ) |
| Interest income | | | 8,004 | | | | — | | | | — | | | | 1,032 | | | | 9,036 | |
| Depreciation | | | (58 | ) | | | (112 | ) | | | — | | | | (204 | ) | | | (374 | ) |
| Share based payments (note 20) | | | (110 | ) | | | (259 | ) | | | (70 | ) | | | (2,527 | ) | | | (2,966 | ) |
| Interest and accretion expense | | | (415 | ) | | | (462 | ) | | | — | | | | (5,011 | ) | | | (5,888 | ) |
| Foreign exchange and other gain (loss) | | | 4,391 | | | | — | | | | — | | | | 909 | | | | 5,300 | |
| Income taxes | | | (62,386 | ) | | | — | | | | — | | | | (827 | ) | | | (63,213 | ) |
| Income (loss) for the period | | $ | 101,295 | | | $ | (15,635 | ) | | $ | (4,247 | ) | | $ | (18,519 | ) | | $ | 62,894 | |
| Nine months ended September 30, 2023 | | Mexico | | | Nevada | | | Panama | | | Corporate | | | Total | |
| Revenue (note 4) | | $ | 170,505 | | | $ | — | | | $ | — | | | $ | 192 | | | $ | 170,697 | |
| Cost of sales | | | (65,708 | ) | | | — | | | | — | | | | (69 | ) | | | (65,777 | ) |
| Earnings from mining operations | | | 104,797 | | | | — | | | | — | | | | 123 | | | | 104,920 | |
| General and administrative expenses (note 7) | | | — | | | | — | | | | — | | | | (9,495 | ) | | | (9,495 | ) |
| Exploration and evaluation expenses (note 6) | | | (6,636 | ) | | | (13,358 | ) | | | (4,899 | ) | | | (407 | ) | | | (25,300 | ) |
| Interest income | | | 3,001 | | | | — | | | | — | | | | 803 | | | | 3,804 | |
| Depreciation | | | (42 | ) | | | (101 | ) | | | (12 | ) | | | (200 | ) | | | (355 | ) |
| Share based payments (note 20) | | | (124 | ) | | | (246 | ) | | | (63 | ) | | | (2,136 | ) | | | (2,569 | ) |
| Interest and accretion expense | | | (1,313 | ) | | | (641 | ) | | | — | | | | (7,431 | ) | | | (9,385 | ) |
| Loss on extinguishment of credit facility | | | — | | | | — | | | | — | | | | (1,547 | ) | | | (1,547 | ) |
| Foreign exchange and other gain (loss) | | | (787 | ) | | | — | | | | — | | | | (48 | ) | | | (835 | ) |
| Income taxes | | | (26,530 | ) | | | — | | | | — | | | | (1,276 | ) | | | (27,806 | ) |
| Income (loss) for the period | | $ | 72,366 | | | $ | (14,346 | ) | | $ | (4,974 | ) | | $ | (21,614 | ) | | $ | 31,432 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| At September 30, 2024 | | Mexico | | | Nevada | | | Panama | | | Corporate | | | Total | |
| Property, plant and equipment | | $ | 203,851 | | | $ | 522 | | | $ | — | | | $ | 661 | | | $ | 205,034 | |
| Exploration and evaluation properties | | | — | | | $ | 172,168 | | | $ | 10,000 | | | | — | | | $ | 182,168 | |
| Total assets | | $ | 402,307 | | | $ | 172,146 | | | $ | 10,848 | | | $ | 33,396 | | | $ | 618,697 | |
| At December 31, 2023 | | Mexico | | | Nevada | | | Panama | | | Corporate | | | Total | |
| Property, plant and equipment | | $ | 210,339 | | | $ | 525 | | | $ | — | | | $ | 855 | | | $ | 211,719 | |
| Exploration and evaluation properties | | | — | | | | 160,000 | | | | 10,000 | | | | — | | | | 170,000 | |
| Total assets | | | 336,374 | | | | 161,137 | | | | 10,673 | | | | 27,594 | | | | 535,778 | |
Our objectives when managing capital are to safeguard the Company’s ability to continue as a going concern to pursue the exploration, evaluation, development, and exploitation of our mineral properties and to maintain a flexible capital structure.
We manage our capital structure and adjust it considering changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the Company’s capital structure, we may issue new shares, take on additional debt or repay outstanding debt, or acquire or dispose of assets. We currently do not pay regular dividends.
Our ability to carry out our long-range strategic objectives in future periods depends on our ability to generate positive cash flows from our mining operations and to raise financing from lenders, shareholders, and new investors. We regularly review and consider financing alternatives to fund the Company’s ongoing operational, exploration and development activities.
Our investment policy is to invest the Company’s excess cash in low-risk financial instruments such as demand deposits and savings accounts with major Canadian banks. By using this strategy, the Company preserves its cash resources and can marginally increase these resources with low risk through the yields on these investments. Our financial instruments are exposed to certain financial risks, which include currency risk, credit risk, and liquidity risk.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
To provide an indication of the reliability of the inputs used in determining fair value, we classify our financial instruments into the three levels prescribed by the accounting standards.
Level 1 The fair value of financial instruments traded in active markets (such as publicly traded equity securities) is based on quoted (unadjusted) market prices as at the reporting date. The quoted market price used for financial assets held by the Company is the closing trading price on the reporting date. Such instruments are included in Level 1.
Level 2 The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, we include that instrument in Level 2.
Level 3 If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The carrying value of cash and cash equivalents, trade and other receivables, and restricted cash approximates the fair value due to the short-term nature of the instruments.
The fair value of the Revolving Facility is determined using discounted cash flows based on the expected amounts and timing of the cash flows discounted using a market rate of interest adjusted for appropriate credit risk.
The fair value of the Revolving Facility at September 30, 2024 was estimated at $58.4 million (December 31, 2023 - $88.4 million) using a discount rate of 7.9% (December 31, 2023 – 7.9%).
At September 30, 2024, the carrying values and fair values of our financial instruments by category were as follows:
| | | | | | | | Fair value | |
| | | Classification | | Carrying
value | | | Level 1 | | | Level 2 | | | Level 3 | |
| Financial assets | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | FVTPL | | $ | 180,898 | | | $ | 180,898 | | | $ | — | | | $ | — | |
| Accounts receivable | | FVTPL | | | 69 | | | | 69 | | | | — | | | | — | |
| Restricted cash | | Amortized cost | | | 829 | | | | 829 | | | | — | | | | — | |
| | | | | $ | 181,796 | | | $ | 181,796 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | |
| Financial liabilities | | | | | | | | | | | | | | | | | | |
| Lease obligation | | Amortized cost | | | 2,603 | | | | — | | | | 2,603 | | | | — | |
| Revolving Facility | | Amortized cost | | | 58,350 | | | | — | | | | — | | | | 58,350 | |
| | | | | $ | 60,953 | | | $ | — | | | $ | 2,603 | | | $ | 58,350 | |
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
At December 31, 2023, the carrying values and fair values of our financial instruments by category were as follows:
| | | | | | | | Fair value | |
| | | Classification | | Carrying
value | | | Level 1 | | | Level 2 | | | Level 3 | |
| Financial assets | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | FVTPL | | $ | 96,632 | | | $ | 96,632 | | | $ | — | | | $ | — | |
| Accounts receivable | | FVTPL | | | 18 | | | | 18 | | | | — | | | | — | |
| Restricted cash | | Amortized cost | | | 1,011 | | | | 1,011 | | | | — | | | | — | |
| | | | | $ | 97,661 | | | $ | 97,661 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | |
| Financial liabilities | | | | | | | | | | | | | | | | | | |
| Accrued liabilities | | Amortized cost | | | 122 | | | | 122 | | | | — | | | | — | |
| Lease obligation | | Amortized cost | | | 2,908 | | | | — | | | | 2,908 | | | | — | |
| Revolving Facility | | Amortized cost | | | 88,350 | | | | — | | | | — | | | | 88,350 | |
| | | | | $ | 91,380 | | | $ | 122 | | | $ | 2,908 | | | $ | 88,350 | |
We determine whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.
| 26. | COMMITMENTS AND CONTINGENCIES |
The Company has issued purchase orders for construction, equipment purchases, materials and supplies, and other services at Camino Rojo. At September 30, 2024, these outstanding purchase orders and contracts totaled approximately $2.5 million (December 31, 2023 – $3.7 million), which we expect will be filled within the next 12 months.
The Company is committed to making severance payments totaling approximately $6.9 million (December 31, 2023 – $7.4 million) to certain officers and management in the event of a change in control. As the likelihood of these events occurring is not determinable, this amount is not reflected in these consolidated financial statements.
| (b) | Discretionary mineral property-related commitments |
As is customary in mineral exploration, some of the mineral properties held by the Company as exploration and evaluation assets have annual minimum work commitments and lease payments required to maintain these properties in good standing pursuant to their underlying agreements.
An ecological tax implemented by the state legislature of Zacatecas could have a significant impact on the economics of the Camino Rojo Project. This tax is applied to cubic metres of material extracted during mining, square metres of material impacted by dangerous substances, tonnes of carbon dioxide produced during mining processes, and tonnes of waste stored in landfills. The Company has received assessments related to previous periods in respect of this tax; however, the Company’s view is that the sections of the law pursuant to which these assessments have been issued do not apply to the Company at this time and, accordingly, we have filed the appropriate appeals. We expect this matter will be resolved by judicial process. As the outcome of these events is not determinable, no amounts have been accrued in respect of this tax.
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and nine months ended September 30, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
We may, from time to time, be a party to legal proceedings, which arise in the ordinary course of our business. We are not aware of any pending or threatened litigation that, if resolved against us, would have a material effect on our consolidated financial position, results of operations or cash flows.
Tax expense consists of (i) current income tax on taxable income, (ii) 7.5% special mining duty ("SMD") on income subject to SMD, and (iii) withholding taxes attributable to interest charged on intercompany loans to the Mexican operating company, as well as (iv) deferred income tax, and (v) deferred special mining duty.
| | | Three months ended
September 30 | | | Nine months ended
September 30 | |
| | | 2024 | | | 2023 | | | 2024 | | | 2023 | |
| Current income tax | | $ | 18,826 | | | $ | 8,471 | | | $ | 38,960 | | | $ | 24,067 | |
| Mexican 7.5% Special Mining Duty | | | 5,051 | | | | 3,280 | | | | 12,292 | | | | 9,052 | |
| Withholding tax | | | 217 | | | | 422 | | | | 827 | | | | 1,276 | |
| Deferred income tax expense (recovery) | | | 2,932 | | | | 1,184 | | | | 10,276 | | | | (5,268 | ) |
| Deferred Mexican 7.5% Special Mining Duty | | | 507 | | | | (993 | ) | | | 858 | | | | (1,321 | ) |
| Tax expense | | $ | 27,533 | | | $ | 12,364 | | | $ | 63,213 | | | $ | 27,806 | |
| 28. | EVENTS AFTER THE REPORTING PERIOD |
| (a) | Revolving facility principal payment |
Subsequent to the reporting period, the Company repaid the entire outstanding balance on the Revolving Facility totaling $58.4 million (note 15).
Subsequent to the reporting period, the Company issued common shares pursuant to the exercise of warrants (note 18(b).
