Robust Margin Expansion Driving Record Free Cash Flow

Orla Mining Ltd. (TSX: OLA) (NYSE: ORLA) announces the results for the second quarter ended June 30, 2024.

(All amounts expressed in U.S. dollars unless otherwise stated)

Second Quarter 2024 Highlights

• Second quarter gold production was 33,206 ounces and gold sold was 34,875 ounces (pre-released). Year to date, Camino Rojo has been performing better than plan and, as a result, the Company is increasing full year gold production guidance to 120,000 to 130,000 ounces from its initial guidance of 110,000 to 120,000 ounces.
• Second quarter 2024 all-in sustaining cost¹ was $782 per ounce of gold sold, while year to date AISC is $843 per ounce of gold sold. AISC guidance for the full year 2024 has been improved to a range of $800 to $900 per ounce of gold sold from the original guidance of $875 to $975 per ounce.
• Adjusted earnings¹ for the second quarter were $23.0 million or $0.07 per share.
• Net income for the second quarter was $24.3 million or $0.08 per share.
• Second quarter operating profit margin² of 64%, and net profit margin³ of 29%.
• Cash flow from operating activities before changes in non-cash working capital during the second quarter was $53.2 million.
• Exploration and project expenditure¹ was $9.7 million during the quarter, of which $3.1 million was capitalized and $6.6 million was expensed.
• As at June 30, 2024, Orla’s cash balance was $154.3 million, an increase of $36.2 million over the previous quarter.  Net cash¹ at the end of the quarter was $76.0 million.
• During the quarter, the Company repaid $10.0 million on its revolving credit facility. Subsequent to quarter end, the Company made a further $20.0 million re-payment reducing the outstanding balance drawn to $58.4 million.

“The combination of Camino Rojo’s consistent low-cost production with a higher gold price is driving margin expansion and strong cash flow for the business. This cash is being used to invest in growth and strengthen our balance sheet. We have established a strong foundation to build upon.”

–   Jason Simpson, President and Chief Executive Officer of Orla

Financial and Operations Update

Second Quarter 2024 Financial and Operations Summary

The Camino Rojo Oxide Gold Mine produced 33,206 ounces of gold in the second quarter of 2024 at an average ore stacking rate of 19,717 tonnes per day. The average mining rate during the second quarter was 43,479 tonnes per day with a strip ratio of 1.08. The average grade of ore stacked during the second quarter was 0.87 g/t gold, in line with plan. Waste stripping is expected to continue to ramp up in the second half of the year at a strip ratio of approximately 1.50 and an average mining rate of approximately 50,000 tonnes per day. Gold sold during the second quarter 2024 totaled 34,875 ounces and cash costs and AISC totaled $498 and $782 per ounce of gold sold, respectively.

Sustaining capital during the second quarter of 2024 totaled $4.9 million. This included mainly the construction of phase 2 of the heap leach pad. Year to date, sustaining capital expenditures are on schedule and amount to $9.9 million, or 55% of the total planned for the full year.

During the second half of 2023, the Company initiated a program to test the impact of reduced crushed size from P80 28mm to P80 23mm. The initial results of this test program were positive and resulted in higher gold recovery from the heap leach in the range of 3-5%. The testing will continue in 2024, as will testing of reduced crush size on other ore types.

Exploration and Projects Update

In the second quarter, exploration efforts were primarily concentrated on drilling activities at Camino Rojo in Mexico, with a startup drill program commencing in Nevada in late May. By the end of the second quarter, a total of 20,958 metres had been drilled, with the focus mainly on the Camino Rojo Extension.

Camino Rojo Extension Exploration (Mexico)

As part of the near-mine exploration at Camino Rojo, the focus in the second quarter was on the promising Camino Rojo Extension, with a 30,000-metre drill program designed to test and expand the potential of the still-open mineralization at the expansive Camino Rojo deposit. The Company drilled over 7,847 metres and 13 holes during the quarter with assays and metallurgical testing in progress. Orla also issued a news release in late June, highlighting positive drill intersections and metallurgical results of exploration activities from the first half of 2024 at the Camino Rojo Sulphide Extension.

Camino Rojo Sulphides Project Planning (Mexico)

The Company plans on completing a preliminary underground resource estimate on the Camino Rojo Sulphides. A metallurgical study of the most recent phase of Camino Rojo Sulphide infill drilling is expected to continue throughout 2024.

South Railroad Exploration (Nevada)

The 2024 Exploration program at South Railroad began in late May, with a 23,000-metre drill program aimed at continuing to test potential extensions of known oxide deposits, such as the Pinion and Dark Star Development Projects, advancing satellite mineralized zones, and exploring new targets throughout the remainder of the year.

South Railroad Project Permitting (Nevada)

The Company continues baseline environmental data collection to facilitate the environmental studies required to support development of the Environmental Impact Statement, and the overall National Environmental Policy Act permitting process. Orla is currently expanding on this work to allow flexibility in project planning when working with the Bureau of Land Management during the permitting process. The next step in the NEPA process will be the BLM publishing the Notice of Intent in the Federal Register, followed by public scoping meetings in conjunction with the development of the EIS. SWCA Environmental Consultants have been engaged to manage the EIS process on behalf of the BLM. The process will culminate in the BLM publishing a Record of Decision for the project. The Company expects this permitting process to continue over 2024 and 2025, with construction at South Railroad commencing in 2026.

Contact Gold Acquisition

During the second quarter, on April 29, 2024, the Company acquired all the outstanding common shares of Contact Gold Corp. a publicly listed company. The Contact properties acquired consist mainly of the Pony Creek property and the Green Springs property both located in Nevada, USA.

For further details, please see the Company’s news releases dated February 26, 2024, and April 29, 2024.

Panama Update

In March 2024, the Company filed a Notice of Intent to Arbitrate with the Government of Panama under the Canada-Panama Free Trade Agreement, in respect of the Cerro Quema Project. The Notice of Intent asserted that certain measures taken by Panama constituted violations of Panama’s legal obligations under the FTA and customary international law. The Notice of Intent was intended to facilitate a 30-day consultation period to reach an amicable resolution to the Company’s claim. As no resolution was reached, the Company proceeded with filing a Request to Arbitrate on July 3, 2024. The arbitration will be facilitated and administered by the International Centre for Settlement of Investment Disputes (ICSID) in Washington, DC, under its Arbitration Rules. As part of the FTA requirements, the Company submitted an initial and preliminary estimate of damages claimed of no less than US$400 million, plus pre-award and post-award interest.

Although the Company intends to vigorously pursue these legal remedies, the Company’s preference is a constructive resolution with the Government of Panama that results in a positive outcome for all stakeholders.

2024 Guidance – Q2 Update

During the second quarter, the Company spent a total of $9.7 million in exploration and project development, of which $3.1 million was capitalized and $6.6 million was expensed.

The Company provides the following improved 2024 production and cost guidance which will be driven by higher stacked ore tonnes and improved metal recoveries of both gold and silver.

The Company is increasing full year gold production guidance to a range of 120,000 to 130,000 ounces from its initial guidance range of 100,000 to 110,000 ounces. The Company is also reducing AISC guidance for the full year 2024 to a range of $800 to $900 per ounce of gold sold from the original guidance of $875 to $975 per ounce.

Financial Statements

Orla’s unaudited financial statements and management’s discussion and analysis for the quarter ended June 30, 2024, are available on the Company’s website at www.orlamining.com, and under the Company’s profiles on SEDAR+ and EDGAR.

Qualified Persons Statement

The scientific and technical information in this news release was reviewed and approved by Mr. J. Andrew Cormier, P. Eng., Chief Operating Officer of the Company, and Mr. Sylvain Guerard, P. Geo., Senior Vice President, Exploration of the Company, who are the Qualified Persons as defined under NI 43-101 – Standards of Disclosure for Mineral Projects.

About Orla Mining Ltd.

Orla’s corporate strategy is to acquire, develop, and operate mineral properties where the Company’s expertise can substantially increase stakeholder value. The Company has two material gold projects: (1) Camino Rojo, located in Zacatecas State, Mexico and (2) South Railroad, located in Nevada, United States. Orla is operating the Camino Rojo Oxide Gold Mine, a gold and silver open-pit and heap leach mine. The property is 100% owned by Orla and covers over 139,000 hectares which contains a large oxide and sulphide mineral resource. Orla is also developing the South Railroad Project, a feasibility-stage, open pit, heap leach gold project located on the Carlin trend in Nevada. The technical reports for the Company’s material projects are available on Orla’s website at www.orlamining.com, and on SEDAR+ and EDGAR under the Company’s profile at www.sedarplus.ca and www.sec.gov, respectively.

Non-GAAP Measures

The Company has included certain performance measures in this news release which are not specified, defined, or determined under generally accepted accounting principles (in the Company’s case, International Financial Reporting Standards (“IFRS””)). These are common performance measures in the gold mining industry, but because they do not have any mandated standardized definitions, they may not be comparable to similar measures presented by other issuers. Accordingly, the Company uses such measures to provide additional information and you should not consider them in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles (“GAAP”).  In this section, all currency figures in tables are in thousands, except per-share and per-ounce amounts.

Average Realized Gold Price

Average realized gold price per ounce sold is calculated by dividing gold sales proceeds received by the Company for the relevant period by the ounces of gold sold.  The Company believes the measure is useful in understanding the gold price realized by the Company throughout the period.

Net Cash

Net cash is calculated as cash and cash equivalents and short-term investments less total debt adjusted for unamortized deferred financing charges at the end of the reporting period.  This measure is used by management to measure the Company’s debt leverage.  The Company believes that in addition to conventional measures prepared in accordance with IFRS, net debt is useful to evaluate the Company’s leverage and is also a key metric in determining the cost of debt.

Adjusted Earnings and Adjusted Earnings per share

Adjusted earnings excludes deferred taxes, unrealized foreign exchange, changes in fair values of financial instruments, impairments and reversals due to net realizable values, restructuring and severance, and other items which are significant but not reflective of the underlying operational performance of the Company.  The Company believes these measures are useful to market participants because they are important indicators of the strength of operations and the performance of the core business.  With the addition of performance share units (“PSUs”) at the end of Q1 2023, the Company expects greater volatility in share-based payments expense going forward.  Accordingly, the effect of these PSUs in the calculation of adjusted earnings was excluded.

Companies may choose to expense or capitalize their exploration expenditures.  The Company expenses exploration costs based on its accounting policy.  To assist the reader in comparing against those companies which capitalize their exploration costs, please note that included within Orla’s net income (loss) for each period are exploration costs which were expensed, as follows:

Free Cash Flow

The Company believes market participants use Free Cash Flow to evaluate the Company’s operating cash flow capacity to meet non-discretionary outflows of cash.  Free Cash Flow is not meant to be a substitute for the cash flow information presented in accordance with IFRS.  Free Cash Flow is calculated as the sum of cash flow from operating activities and cash flow from investing activities, excluding certain unusual transactions.

Cash Costs and All-In Sustaining Costs

The Company calculates cash cost per ounce by dividing the sum of operating costs and royalty costs, net of by-product silver credits, by ounces of gold sold.  Management believes that this measure is useful to market participants in assessing operating performance.

The Company has provided an AISC performance measure that reflects all the expenditures that are required to produce an ounce of gold from operations.  While there is no standardized meaning of the measure across the industry, the Company’s definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance dated November 14, 2018.  Orla believes that this measure is useful to market participants in assessing operating performance and the Company’s ability to generate free cash flow from current operations.

Figures are presented only from April 1, 2022, as the Camino Rojo Oxide Gold Mine commenced commercial production on that date.

Exploration and Project Development Costs

Exploration and project development costs are calculated as the sum of these costs, some of which have been expensed and some of which have been capitalized.  The Company believes this measure provides a more fulsome understanding to readers of the level of expenditures incurred on such activities during the period.