Q1 2024 Orla Mining Ltd Earnings Call
Okay.
Ian: Good morning, ladies and gentlemen, and welcome to Orla Mining's conference call for the first quarter 2024 results. My name is Ian, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise.
Good morning, ladies and gentlemen, and welcome to Orla Mining's conference call for the first quarter 'twenty 'twenty four results.
Speaker Change: As Ian and I will be your conference operator today.
All lines have been placed on mute to prevent any background noise.
Ian: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound. Please be advised that this call is being recorded. I would like to turn the meeting over to Andrew Bradbury, Vice President, Investor Relations and Corporate Development. Please go ahead, Mr. Bradbury.
Speaker Change: After the Speakers' remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.
Speaker Change: If you would like to withdraw your question press the pound key.
Please be advised that this call is being recorded.
Speaker Change: I would like to turn the meeting over to Andrew Bradbury, Vice President Investor Relations and corporate development. Please go ahead Mr. Bradbury.
Andrew Bradbury: Thank you, operator, and welcome to Orla's first quarter 2024 Resolve conference call. We will be making forward-looking statements during today's call, and I would direct you to the first and second slides of the presentation, which contain important cost-sharing notes regarding these forward-looking statements. All dollar amounts discussed today will refer to U.S. dollars unless otherwise indicated. The Orla executive team is on the call this morning, and I'll now pass the call to Jason Simpson, President and CEO. Thanks, Andrew.
Andrew Bradbury: Thank you operator, and welcome to <unk> first quarter 'twenty 'twenty four results conference call.
Andrew Bradbury: We will be making forward looking statements during today's call and I would direct you to the first and second slides of the presentation.
Andrew Bradbury: Which contains important cautionary notes regarding these forward looking statements.
Andrew Bradbury: All dollar amounts discussed today will refer to U S dollars unless otherwise indicated.
Jason Douglas Simpson: Our fourth quarter highlights include continued strong performance at the communal level on safety, environmental management, operations, and costs. We have maintained consistent low-cost gold production, which coupled with an increase in the gold price has led to margin expansion and strong cash flow generation. Exploration ramped up in Mexico in the first quarter, and we look forward to providing updates on the exciting Camino Rojo extension. We recently completed the acquisition of Contact Gold, and we are integrating the Pony Creek property into our portfolio and expanding our exploration efforts in Nevada.
Andrew Bradbury: All of the executive team is on the call. This morning, and I'll now pass the call to you, Jason Simpson President and CEO.
Jason Douglas Simpson: Thanks, Andrew.
Jason Douglas Simpson: Our fourth quarter highlights include continued strong performance at <unk>.
Jason Douglas Simpson: Safety environmental management operations and costs.
Jason Douglas Simpson: We have maintained consistent low cost gold production, which coupled with an increase in gold price has led to margin expansion and strong cash flow generation.
Jason Douglas Simpson: Exploration ramped up in Mexico in the first quarter, and we look forward to providing updates on the exciting Camino Rojo extensions.
We recently completed the acquisition of contact and we are integrating the Pone Creek property into our portfolio and expanding our exploration efforts in Nevada.
Jason Douglas Simpson: With respect to our interests in Panama, through our Cerro Quema project, we have suspended investment and are pursuing legal remedies, with our preference being a constructive resolution with the Government of Panama that results in a positive outcome for all stakeholders. We have the entire executive team on the call to provide specific updates, so first, I'll pass it over to Andrew Cormier, our Chief Operating Officer, for a first quarter operational update.
Speaker Change: With respect to our interest in Panama through our Cheryl came a project we have suspended investment and are pursuing legal remedies without breakfast.
Speaker Change: A constructive resolution with the government.
Speaker Change: Ken.
Ken: That results in a positive outcome for all stakeholders.
Speaker Change: We have the entire executive team on the call provide specific updates so first I'll pass it over to Andrew Clark, Our Chief operating officer for a first quarter operational update.
Andrew Bradbury: Thank you Jason.
Andrew Bradbury: We are pleased to carry out positive operational performance from 2023 into 2024. This was demonstrated by the strong Q1 mining and processing performance at Camino Rojo while maintaining the health and safety of our team. We mined over 1.9 million tons of ore at a strip ratio of 0.45. The average gold grade of ore processed during the first quarter was 0.82 grams per ton. We also achieved an average stacking rate of 19,597 tons per day.
Andrew Bradbury: We are pleased to carry out the positive operational performance from 2023 into 2024.
Andrew Bradbury: This was demonstrated by the strong Q1 mining and processing performance at Camino Rojo, while maintaining the health and safety of our team.
Speaker Change: We mined over one 9 million tonnes of ore at a strip ratio of point for fun.
Speaker Change: The average gold grade of ore processed during the first quarter was eight two grams per tonne.
Speaker Change: We also achieved an average stacking rate of 19597 tonnes per day.
Andrew Bradbury: The mine door tones in grey continue to reconcile well with the block model. During the second half of 2023, we initiated a program to test the impact of reducing the crusher product size from a PAD of 28 mm to 23 mm. The initial results of this test program are positive, and we're seeing higher glow recovery from the heat bleach as a result. The testing will continue in 2024 to quantify the positive impact that the crush size will have on the various types of ore going forward. We produced 33,223 ounces of gold during the first quarter.
Speaker Change: The mined ore tonnes and grades continued to reset reconcile well to the block model.
Speaker Change: During the second half of 2023, we initiated a program to test the impact of reducing the crusher product size from a ph D of 28 millimeters to 23 millimeters.
Speaker Change: The initial results of this test program are positive and we're seeing higher gold recovery from the heap Leach as a result.
Speaker Change: The testing will continue in 2024 to quantify the positive impact that the crush size will have various types of work going forward.
Speaker Change: We produced 33223 ounces of gold during the first quarter setting us up well to deliver on our 2024 production guidance of 110 to 120000 ounces of gold.
Andrew Bradbury: This sets us up well to deliver on our 2024 production guidance of 110 to 120,000 ounces of gold. In terms of permitting, we're continuing to work through permitting delays in Mexico. Our operating team has adjusted our mine plan to not only maintain the tons and grade feeding gold production but also strip approximately 90% of our planned waste for the year. In Nevada, we are continuing our baseline environmental data collection and studies required to develop the environmental impact study and overall permitting process.
Speaker Change: In terms of permitting we're continuing to work through permitting delays in Mexico.
Speaker Change: Our operating team have adjusted our mine plan to not only maintain the tonnes and grade getting gold production, but also stripping approximately 90% of our plant based for the year.
Speaker Change: In Nevada, we are continuing our baseline environmental data collection and studies required to develop the environmental impact study and overall permitting process.
Andrew Bradbury: We are currently in the federal NEPA process, working with BLM, and expect permitting to continue through 2024 and 2025, ideally allowing construction through 2026 and production in 2027. Based on this timeline, we expect to begin engineering optimization, updating estimates, and procurement in 2025. As you can see from this chart, Camino Rojo has been a consistent gold producer quarter over quarter. It is our objective to maintain predictable operational results as a foundation for our business. And with that, I'll pass the call to Etienne Morin, our Chief Financial Officer, who will now discuss the financial results for the quarter.
Speaker Change: We are currently in the federal NEPA process, working with B L. M. I expect permitting to continue through 2024 and 2025.
Speaker Change: Daily, allowing construction through 2026 and production in 2027.
Based on this timeline, we expect to begin engineering optimization.
Speaker Change: Any estimates in procurement in 2025.
Speaker Change: Okay.
Speaker Change: As you can see from this chart Camino Rojo has been a consistent oil producer quarter over quarter.
Speaker Change: It is our objective to maintain predictable operational results.
Speaker Change: <unk> for our business.
Speaker Change: And with that I'll pass the call to Tim Moran, Our Chief Financial Officer will now discuss the financial results for the quarter.
Tim Moran: Thanks, Andrew.
Etienne Morin: During the quarter, we sold 32,000 ounces of gold at a realized price of $2,059 per ounce, resulting in $67 million in revenue for the period. Our all-in sustaining cost for the first quarter was $909 per ounce, tracking very comfortably within our annual cost guidance range of $875 to $975 per ounce. As per our plan, the first half of 2024 includes higher sustaining capital as we complete the phase two expansion of the heap leach pad that can meet a roll. As previously communicated, All In Sustaining Cost is expected to remain in the higher end of the range in Q2 and expected to come down in the second half of the year as we complete these projects.
Tim Moran: During the quarter, we sold 32000 ounces of gold at a realized price of $2059 per ounce, resulting in $67 million in revenue for the period.
Tim Moran: Our all in sustaining costs for the first quarter was $909 per ounce tracking very comfortably within our annual cost guidance range of $8 75 to $975 per ounce.
Tim Moran: As for our plan in the first half of 2024 includes higher sustaining capital as we complete the phase two expansion of the heap Leach pad that can meet our goal.
As previously communicated all in sustaining costs is expected to remain in the high end of the range in Q2 and expect it to come down in the second half of the year as we complete these projects.
Etienne Morin: Total capital expenditures in the first quarter were $8.5 million, of which $5 million was sustaining capital and $3.5 million was non-sustaining related to capitalized exploration in Mexico. Net earnings for the quarter were $17.5 million, or $0.06 per share, and after adjusting for unrealized foreign exchange gains and other small items, adjusted net earnings were $16.8 million, or $0.05 per share. It should be noted that during the quarter, expense, exploration, and project costs were $4.7 million, of which approximately $1.7 million was for exploration in Mexico and $2 million was for project development costs in Nevada.
Tim Moran: Total capital expenditures in the first quarter was $8 $5 million of which $5 million with sustaining capital and $3 5 million as non sustaining related to capitalized exploration Mexico.
Tim Moran: Net earnings for the quarter.
Tim Moran: $17 $5 million six per share and after adjusting for unrealized foreign exchange gain and other small items adjusted net earnings was $16 $8 million or five cents per share.
Tim Moran: Should be noted that the.
Tim Moran: During the quarter extends exploration and project costs were $4 $7 million of which approximately $1 $7 was exploration in Mexico and $2 million was project development costs in Nevada.
Etienne Morin: Cash flow from operating activities before changes in non-cash working capital was $21.7 million, or $0.07 per share, for the quarter. As outlined in this chart, we've continued to pay down the debt and strengthen our balance sheet. We ended the quarter with $118 million in cash, an increase of $21 million during the first quarter. And subsequent to quarter end, we repaid an additional $10 million on our credit facility, bringing the outstanding balance down to $78 million.
Tim Moran: Cash flow from operating activities before changes in noncash working capital was $21 $7 million seven per share for the quarter.
Speaker Change: So as outlined on this chart, we've continued to pay down the debt and strengthened our balance sheet. We ended the quarter with $118 million in cash an increase of $21 million during the first quarter and subsequent to quarter end, we repaid an additional $10 million on our credit facility.
Speaker Change: The outstanding balance down to $78 million. So at March 30, <unk>, our net cash balance had improved to $30 million.
Etienne Morin: So, at March 31st, our net cash balance had improved to $30 million. We'll continue to evaluate opportunities to reduce debt, particularly in this strong gold price environment, allowing us to minimize interest charges and remain, and rather maintain, our financial flexibility to fund our internal project pipeline. We also continue reinvesting in our business through our exploration programs, and that is a helpful segue to pass the call over to Sylvain Guerard, our Senior Vice President of Exploration.
Speaker Change: We will continue to evaluate opportunities to reduce debt, particularly in the strong gold price environment, and allowing us to minimize interest charges and remaining and maintaining rather our financial flexibility to fund our internal project pipeline.
Speaker Change: We also continue reinvesting into our business through our exploration programs and that is a helpful. Helpful segue to pass the call over to survey.
Speaker Change: And again, our senior Vice President of exploration.
Sylvain Guerard: Thank you, Etienne. In 2023, we increased our exploration efforts company-wide, and we are maintaining that momentum this year. In the first quarter, our exploration efforts were concentrated on drilling at Camino Rojo in Mexico and preparing our drill program in Nevada. Throughout the quarter, we drilled nearly 13,000 meters, focused on Kamino-Ohu oxide and sulfide extension. We also issued a number of press releases highlighting the results of the exploration activities in the second half of 2023 at the Camino Rojo and Salt Railroad Project.
Speaker Change: Thank you Richard and 2023 we increased our exploration that Fords company wide and we are maintaining that momentum this year.
Speaker Change: In the first quarter, our exploration efforts were concentrated on drilling up coming onboard in Mexico, and preparing our drill program in Nevada.
Speaker Change: Throughout the quarter, we drilled nearly 13000 meters focused on Camino rojo oxide and sulphide extensions.
Speaker Change: We also issued a number of press releases highlighting the results of the exploration activities from the second half of 2023, and becoming a hole and salt Rad enrolled projects.
Sylvain Guerard: As part of the near mine exploration at Camino Rojo, we are focusing our 2024 efforts on the promising Camino Rojo extension. We have designed a 30,000-meter drill program aimed at testing and expanding the potential of distilled open mineralization at the extensive Camino Rojo deposit. This program targets polymetallic replacement-style sulfides and scorn-type mineralization beyond the current resource boundary.
Speaker Change: As part of the near mine exploration at <unk>, we are focusing our 28 24 airports on the promising coming to a halt extinction.
Speaker Change: We have designed the 30000 meters during the program aims up testing and extending the potential of the still open mineralization and the extensive came to a halt or default.
Speaker Change: This program targets poly metallic replacement style sulfides and corn type mineralization below the current resource boundaries.
Sylvain Guerard: During the quarter, we drill over 10,000 meters and 10 holes with assays and metallurgical testing in progress, and we expect to report initial results shortly. As part of the Camino Rojo Sulphide Project planning, A preliminary underground resource estimate on the Camino Rojo sulfide is anticipated to be completed in the second half of 2024. Meteorological Study.
Speaker Change: During the quarter, we drill over 10000 meters and 10 Oleds.
Speaker Change: Without sales and metallurgical testing and progress and we expect to report initial results shortly.
Speaker Change: As part of that coming to a halt for sulfide project planning.
Speaker Change: Preliminary underground resource estimate on the chemical War horse sulfide is expected to be completed in the second half of 2824.
Speaker Change: <unk> called study.
Sylvain Guerard: In the recent phase of Camino Rojo sulfide infill, drilling is expected to continue throughout 2024. In Nevada, along the Carlin Train, we have an exciting drill program starting this month. With the acquisition of Compact Gold, we have increased the 2024 exploration budget by $3 million, bringing the planned total exploration spend at Salt Railroad and Pony Creek to $14 million. Our 2024 exploration program is progressing well, with drilling operations underway in Mexico and soon to commence in Nevada. We look forward to providing updates on our progress and results as we advance. I will now pass the call to Chafika Eddine. Thank you.
Speaker Change: The recent phase of cutting or whole sulfide infill drilling is expected to continue throughout 2024.
Speaker Change: And never dull along the Carlin trend and we have an exciting program starting this month.
Speaker Change: With the acquisition of contact goal, we have increased the 'twenty 'twenty four exploration budget by $3 million, bringing the plan total exploration spend that Salt Railroad and pointed creek to 14 million.
Speaker Change: Our 2024 exploration program is progressing well with drilling operation on their way in Mexico and soon to come on covenants in Nevada.
Speaker Change: Look forward to providing updates on our progress and results as we have been.
Speaker Change: I will now pass the call to Jessica Indian.
Chafika Eddine: Thank you, Sylvain. On the sustainability front, there are two relevant updates to note. First, I would like to highlight our systems leadership program, which we call LEAD. This leadership training program is the cornerstone of our people's strategy and for building our culture. We started implementing this system in 2023 to improve our team leaders' understanding of leadership and how they are critical in creating and maintaining a positive working environment. The system also provides our leaders with skills to better understand our business and improve their contribution to Orla.
Jessica Indian: Thank you Susanne on the sustainability front there are two relevant updates to note.
Jessica Indian: First I would like to highlight our systems leadership program that we call.
Jessica Indian: This leadership training program is the cornerstone for our people strategy and for abusing our culture.
Jessica Indian: We started implementing this system in 2023 to improve our team leaders and extending our leadership and how old they are critical in creating and maintaining a positive working environment.
Speaker Change: The system also provides our leaders with skills to bear.
Speaker Change: Better understand our business and improve their contribution to OIBDA.
Chafika Eddine: We have trained more than 110 leaders across the four countries where we operate. And with this system, we are providing a safe space for our team leaders to grow, to share their experiences, and to learn from each other. Despite being a young company, we are proud to see how our investment in training is cementing a positive culture at Orla and contributing to our employees' personal and professional development. Another significant development in our ESG efforts is that we have updated our materiality assessment to continually prioritize our efforts on what matters to different stakeholders.
Speaker Change: We have trained more than 110 leaders across the four countries, where we operate and with this system. We are providing a safe space for our team leaders to grow to share their experiences and to learn from each other despite being a young company we are.
Speaker Change: Proud to see how our investment in training is cementing a positive culture at orla and contributing to our employees personal and professional development.
Speaker Change: Hello there.
Speaker Change: Developments in our ESG efforts is that we have updated our materiality assessment to continually prioritize our efforts on what matters to different stakeholders.
Chafika Eddine: The update will help us to keep addressing relevant issues of material matters in the environmental, social, and governance sets. We continue to transparently report the information that is considered important to all our stakeholders. Now, I'll pass the call back to Jason. Thank you.
Speaker Change: The update will help us to keep addressing relevant issues of material matters on the environmental social and governance setting.
Speaker Change: We continue to transparently report information that is considered important to all of our stakeholders now I'll pass the call back to Jason.
Jason Douglas Simpson: Thank you <unk>.
Jason Douglas Simpson: The recent gold price strength, in combination with our low cost production, is resulting in margin expansion and continued cash flow generation. This cash is being reinvested into our business, and Repaying Debt to Strengthen Our Balance, thus enabling us to advance our future projects that will support the growth of Orla. As always, I would like to thank our team who remain committed to our vision of building the emerging gold producer of choice and delivering value to all of our stakeholders. At this point, I'd like to open the call to questions and pass the call back to the operator.
Speaker Change: The recent gold price strength in combination with our low cost production is resulting in margin expansion and continued cash flow generation.
Jason Douglas Simpson: This cash is being reinvested into our business.
Jason Douglas Simpson: And repaying debt to strengthen our balance sheet thus.
Jason Douglas Simpson: Thus, enabling us to advance our future projects that will support the growth of Orla.
Jason Douglas Simpson: As always I would like to thank our team who remain committed to our vision of building the emerging gold producer choice and delivering value to all of our stakeholders.
Speaker Change: At this point I'd like to open the call to questions and pass the call back to the operator.
Jason Douglas Simpson: Yeah.
Ian: Thank you. Once again, as a reminder to ask a question, simply press star followed by the number one on your telephone keypad. Once again, that is star followed by the number one on your telephone keypad. I will pause for a moment to compile the Q&A roster. Our first question comes from the line of Bryce Adams with CIBC Capital Market. Your line is open.
Speaker Change: Thank you once again as a reminder to ask a question simply press star followed by the number one on your telephone keypad. Once again that is star followed by the number one on your telephone keypad.
Speaker Change: I will pause for a moment to compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: Our first question comes from the line of Bryce Adams with CIBC capital markets. Your line is open.
Bryce Adams: Thank you, operator. Thanks, Orla, for the presentation. I have a couple of questions, if that's OK. First one is for Jason.
Bryce Adams: Thank you operator, thank you all for the presentation.
Bryce Adams: I have a couple of questions. If that's okay first one for Jason and.
Bryce Adams: Any thoughts on the Mexican election and what changes that could bring? Is there an immediate impact on your business? I'm thinking of the layback land use permit, but are there others?
Bryce Adams: Any thoughts on the Mexican election, and what changes that could bring is there an immediate impact to your business I am thinking of the layback land use permit but other others.
Jason Douglas Simpson: Thanks, Bryson; good to hear from you. Yes, in relation to Mexico, we know that the election will take place at the beginning of June with the inauguration at the beginning of October. And I think it's safe to say that the current administration has not been helpful to permitting processes, not only in mining but more broadly across the country. So as we prepare and resubmit our permit amendments, we'll do so during the transition with the expectation that the new administration will be making decisions. And we're hopeful that the new administration will take a more positive view of all industries, including mining.
Bryce Adams: Thanks, Brian and good to hear from you, yes in relation to Mexico, We know that the <unk> will take place at the beginning of June with the inauguration of at the beginning of October.
Speaker Change: And I think it's safe to say that the current administration has not been helpful to the permitting processes not only in mining, but more broadly across the country. So as we.
Speaker Change: Prepare and resubmit our permit amendments will.
Speaker Change: We will do so during the transition with the expectation that the new administration.
Speaker Change: We will be making decisions and we're hopeful that the new administration will take a more positive view to all industries, including mining.
Bryce Adams: Okay. And the land use permit, that'd be resubmitted after the elections. Is that the right way to think about that?
Speaker Change: Okay, and the land use permit that'd be resubmitted. After the elections is that the right way to think about that.
Jason Douglas Simpson: Well, I think what I would characterize with Bryce is we're going to submit all of the amendments that we require to grow the mine in Mexico under a single resubmission. We're currently selecting the environmental consultant that we're going to do that work with, and we anticipate we'll be able to resubmit it after the election, but probably during the transition period, so that the technical people within the government can begin processing it And the final decision for the permanent amendments will come from the new administration, so that's going to happen throughout this summer and into the fall with the decisions being made within the new administration, which begins in October.
Speaker Change: Well I think what I would characterize that prices were going to submit all of the amendments that we require to grow.
Speaker Change: The mine in Mexico underwrite.
Speaker Change: A single Resubmission.
Speaker Change: Currently selecting environmental consultant that we're going to do that work with and we anticipate we'll be able to resubmit it.
Speaker Change: After the election, but probably during the transition period enabled the technical people within the government to begin processing it.
Speaker Change: And the final decision for.
Speaker Change: For the permit amendments to come in the New administration. So that's going to happen throughout this summer into the fall with the decisions being made within the New administration, which begins October.
Bryce Adams: Okay, speaking in Mexico, on the communal sulfides, we get the underground resource later this year. On the back of that, do you have a rough timeline for when a PEA or a technical report could be made public?
Speaker Change: Okay.
Speaker Change: Mexico on the sulfides.
Speaker Change: Sulfides, we get the underground resource later this year.
Speaker Change: On the back of that do you have a rough timeline for when a PPA or a technical report could be made public.
Jason Douglas Simpson: Yeah, we haven't we haven't talked about the timing for the next steps in the engineering process. What I have said is that people can expect, as you pointed out and we repeated today, the underground resource in the second half of this year. We're on schedule to deliver that. That resource, of course, will be needed to inform the next steps. And we will take the well-known and predictable steps of engineering, starting with the PEA, all of that engineering, leading towards a development plan so that we can be producing sulfides before the end of the decade.
Speaker Change: Yes, we haven't we haven't talked about the timing for the next steps in the engineering process, what I, what I have said is that peak.
Speaker Change: You can expect as you pointed out and we've repeated today.
Speaker Change: Underground resource in the second half of this year, we're on schedule to deliver that that resource of course will be needed to inform the next steps and and we will take the well known and predictable steps of engineering, starting with the <unk> all of that engineering, leading towards a development plan.
Speaker Change: We can.
Speaker Change: Be producing in the Sulphides.
Speaker Change: Before the end of the decade.
Bryce Adams: Okay, two more questions if I can hold the microphone for a little bit. Arbitration in Panama. Sorry if I missed this in the disclosures, but is there a value that you've included in the arbitration case? Like, if it goes down that path, how much are you looking for?
Speaker Change: Okay, two more questions. If I can help the microphone for a little bit arbitration in Panama, sorry, if I missed this in the disclosures, but is there a value that you've included in the arbitration case like if it goes down that path how much are you looking for.
Jason Douglas Simpson: Yeah, we haven't included a value yet, Bryce, so you didn't miss it. Where we are in the process is we've filed our notice of intent to arbitrate, which kicks off a period during which we can work with the government to find a resolution. If that is unsuccessful, we'll move to the next step, which is our request to arbitrate. We anticipate that that will happen around June. And at that time, we will also need to communicate the sum, which will be arbitrated.
Speaker Change: Yes, we haven't included a value yet brace you didn't miss it where we are in the process as we filed our notice of intent to arbitrate, which kicks off.
Speaker Change: A period that we can work with the with the government to find a resolution.
That is unsuccessful will move to the next step which is a request to all bricks arbitrate, we anticipate that that will happen around June and at that time, we will also need to communicate some of which will be arbitrate.
Bryce Adams: Okay, thanks. Last one, in Pony Creek, what gets you most excited about that property? What's the most obvious impact it could have on the South Railroad?
Speaker Change: Okay.
Speaker Change: Last one and party Craig.
Speaker Change: What gets you most excited about that property.
Speaker Change: What's the most obvious impact it can have on the South Railroad economics.
Jason Douglas Simpson: So I'm going to start this off and then I'll let Sylvain carry on the answer because he's probably the most excited about it. Really, as he explained to me, it comes down to the fact that we were able to, through our due diligence process, determine that the geologic structures continued in the southern part of our property continued onto the contact property through different geochemical and soil signatures that progressed down there. So there's... That is the reason that we thought that that modest tuck-in would be important geologically.
Speaker Change: So I'm going to start this off and then I'll, let us all then Kerry on the answer because he is probably the most excited about it.
Kerry: It really as he explained to me it comes down to the fact that we were able to.
Kerry: Through our due diligence process determined that the geologic structures continued in the southern part of our property continued.
Kerry: Onto the contact property through.
Kerry: Different geochemical and soil signatures that progress down there so so.
Speaker Change: So there is that is the reason that we thought that that modest tuck in would.
Speaker Change: With the important geologically we've also gotten a lot of interest from some of our key shareholders about the potential not only in our property, but now this expanded case and maybe I'll defer to sell them.
Jason Douglas Simpson: We've also gotten a lot of interest from some of our key shareholders about the potential, not only in our property, but now this expanded case. And maybe I'll defer to Sylvain to finish the answer about why we're excited about the addition of Pony Creek.
Paul: To finish the answer of why we're excited about the addition of Pone Creek certainly Paul.
Sylvain Guerard: Yes, certainly. Pony Creek is a natural extension of the same geology. The structural setting extends to the south as well, and we also have indication that the mineralization extends onto the Pony Creek property. There are three mineralized zones already defined, and we have very good working salt geochem trends that also extend into the south area. This is part of what is called the Railroad District. So, as I said, it's a natural extension. It belongs to the same project, and we are very pleased to have it. And we'll be doing it later this year.
Paul: <unk> Creek, it's a natural extension of the same geology and structure offsetting extend to the salt as well and we also have indications that the mineralization extend onto the appointed St. Barbara to those three mineralized zone.
Paul: Already defined.
We have very good working solids yoga and trends that also extend on to the salt RVO.
Paul: This is part of the what it's called the rail road.
Paul: So as I said, it's a natural extension.
Paul: Belonged to two two the same project and we are very pleased to have it and we'll be doing it.
Speaker Change: For this year.
Jason Douglas Simpson: Bryce, our philosophy in Nevada is consistent with Mexico, which is to get the first oxide mine up and running, and based on that cash flow from the oxide mine in Mexico and the future oxide mine in Nevada, we can continue exploring both of those properties, not only discovering more oxides to extend the mine life, but then transitioning the company into the next phase, which would be the sulfide development starting in Mexico and then likely continuing in Nevada.
Speaker Change: Our philosophy in Nevada is consistent with Mexico, which is to get the first mining oxide mine up and running and based on that cash flow from the oxide mine in Mexico and future oxide mine in Nevada, We can continue exploring both of those properties not only discovering more oxides to.
Speaker Change: The mine life, but but then transitioning the company.
Speaker Change: The next phase, which would be the sulfide development, starting in Mexico, and then likely continuing into that.
Bryce Adams: Perfect. That's it for me. Thanks so much. I'll jump back into the queue.
Speaker Change: Perfect. That's it for me. Thanks, so much I'll jump back in the queue.
Speaker Change: Thanks Bryce.
Andrew Rostislav Mikitchook: Our next question comes from the line of Andrew Mikitchook with BMO Capital Markets. Your line is open.
Speaker Change: Our next question comes from the line of Andrew <unk>.
Andrew Bradbury: With BMO capital markets. Your line is opened.
Andrew Rostislav Mikitchook: Jason, I guess lots of questions have already been asked, but can we just come back to this permitting in Mexico? You've been quite clear on your answers and your position. Can you just offer any context? Are you seeing any movement? You know, in your region or nationally, that would suggest that there's any change in behavior in the permitting authority at all, or is it just unchanged?
Jason Douglas Simpson: Jason I.
Jason Douglas Simpson: I guess lots of lots of questions already been asked but can we just come back to this.
Speaker Change: Permitting in.
In Mexico, you've been quite clear your answers but.
Speaker Change: And your position can you just offer any context are you seeing any movement.
Speaker Change: In your region or nationally.
Speaker Change: That would suggest that there's any change in behavior in the permitting authorities.
Speaker Change: At all or is it just unchanged.
Jason Douglas Simpson: Yeah, right now, Andrew, there would be no change. Everybody is focused on the election process in Mexico, and we're not going to be able to get anything achieved under this current system.
Speaker Change: Yes, I have right now Andrew there would be no change everybody is focused on the election process in Mexico, and we're not going to be able to get anything achieved under this current.
Okay.
Speaker Change:
Speaker Change: And then.
Andrew Rostislav Mikitchook: OK. [inaudible] Still unpermitting, but moving to Nevada, you guys put in fairly clear wording again in the text of the press release about the expectations for the BLM to publish the Notice of Intent. Any guidance on the timing that we should expect to see? I guess that that would be publicly disclosed.
Speaker Change: Still on permitting but moving to Nevada, you guys put in fairly clear wording again.
Speaker Change: Text of the press release.
Speaker Change: But the expectations.
Speaker Change: Four.
Speaker Change: The the BLM to publish the notice of intent.
Speaker Change: Any guidance on.
Speaker Change: Timing that we should expect to see that I guess that that would be publicly disclosed.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Alright.
Ian: Hello, hello. Yep.
Speaker Change: Hello Hello.
Speaker Change: Does that get cut off.
Jason Douglas Simpson: No, I think we got cut off, Andrew. I apologize for that.
Andrew: I think we got cut off Andrew I apologize for that hopefully you heard the answer there is a response on Mexico did you hear that.
Jason Douglas Simpson: Hopefully, you heard the response to Mexico. Did you hear that? Yeah, there's no change. Yeah, we're preparing for the next administration, and we'll look for resolution in Mexico in the next administration. I hope that you heard in Andrew's response that our technical team in Mexico has done the necessary redesign so that not only is gold production confirmed, but we'll actually be able to strip about 90% of the waste that we had originally planned.
Andrew: There's no change yes, we're preparing for the next administration and we will look for are for resolution.
Andrew: In Mexico in the next administration I hope that you heard in Andrews response that.
Speaker Change: Our technical team in Mexico has done the necessary redesigns, so that not only is gold production.
Speaker Change: Confirmed but we'll actually be able to strip about 90% of the right waste that we had originally planned. So we've mitigated all these are the risks to the business as it relates to the delay in the expansion permits in Mexico. I think your next question was about Nevada, and what we've updated the market on.
Jason Douglas Simpson: So, we've mitigated all the risk to the business as it relates to the delay in the expansion permits in Mexico. I think your next question was about Nevada, and what we've updated the market on with these results is that we are in the NEPA process. We are completing the supplemental environmental reports that will be the foundation for the EIS through SWCCA, the consultant that we in BLM work with to produce the EIS.
With these results as we are.
Jason Douglas Simpson: Milestones within the NEPA process, which you've asked about, notice of intent and record of decision, are key. If we can achieve notice of intent by the end of this year and the beginning of next, that should put us in good shape to be fully permitted, i.e. record of decision so that we can be constructing in 2026, which on the timelines of these styles of constructions has us producing in 2027. The details of that permitting process are there are 19 environmental reports that our team in Nevada is completing.
Speaker Change: Our in the NEPA process, we are completing the supplemental environmental report that will be the foundation for the EIF through.
Speaker Change: Through Swift get the consultant that we and BLM workforce worked with two to produce the.
Speaker Change: Yes.
Speaker Change: Milestones within the NEPA process, which you've asked about.
Speaker Change: Notice of intent and record of decision are key.
Speaker Change: If we can achieve a notice of intent by the end of this year beginning of next that should put us in good shape to be fully permitted ie record of decision.
Speaker Change: So that we can be constructing in 2026, which on the timelines of D style of constructions has us producing in 2027.
Speaker Change: The details of that.
Speaker Change: Permitting process are there are 19, environmental reports that and our team in Nevada.
Jason Douglas Simpson: We've submitted 18 of them to BLM, and we received 14 back with initial comments, so that's all evidence that we're progressing with our work with BLM, and some of those costs are included in what we describe as growth project costs. Hopefully, that helps with some timelines and some color on the process in Nevada.
Is completing we've submitted 18 of them.
Speaker Change: To BLM received 14 back with initial comments.
Speaker Change: That's all evidence that that we're progressing our work with with BLM and some of those costs are included in what we describe as growth project costs, hopefully that helps with some timelines and some color on that process in Nevada.
Andrew Rostislav Mikitchook: No, that's perfect. Thanks for the little bit of further detail on what we should expect. Just last extension question here is the, I guess, the new mining stripping plan for Camino Rojo. That's... [inaudible]
Speaker Change: No that's perfect. Thanks for that little bit further detail on what we should expect.
Speaker Change: Just last extension question here is the.
Speaker Change: I guess the re.
Speaker Change: Re a new the new mining stripping plan for Camino Rojo.
Speaker Change: Thats.
Speaker Change: Change in stripping location I guess.
Not a material change in tons that it would be essentially in line expectations for what was guided for the year in terms of stripping impact on all in sustaining costs at we shouldn't expect any material changes.
Jason Douglas Simpson: Yeah, that's what we've guided for the year.
Speaker Change: Yes, that's the way to guide for the.
Speaker Change: A year.
Speaker Change: Yes, that's the way to think about it certainly Andrew when we guided for the year, we anticipated doing the necessary stripping.
Jason Douglas Simpson: Yeah, that's the way to think about it. Certainly, Andrew, when we got it for the year, we anticipated doing the necessary stripping that we require to assure production, as well as doing some of the catch up from 2023. So we already anticipated that we would be able to strip waste. And now we have done the necessary engineering so that we'll be able to strip at least 90% of that waste. So everything should be as expected as it relates to our budget, which sets up our guidance for tons and the associated costs to enable us to produce and strip for future production.
Speaker Change: That will be required to assure production as well as do some of the catch up from 2023. So we already guided anticipating that we would be able to strip waste.
Speaker Change: And now we have done the necessary engineering, so that we will be able to strip at least 90% of that waste. So everything should be as expected as it relates to our budget, which set up our guidance.
Speaker Change: Four tons and the associated costs too.
Speaker Change: To enable us to produce and strip for future production.
Andrew Rostislav Mikitchook: Great, thank you very much for... Answer my questions or pass the microphone.
Speaker Change: Great. Thank you very much for.
Speaker Change: Answering my questions I'll pass the microphone.
Andrew: Thanks, Andrew.
Bryce Adams: Your next question comes from Bryce Adams of CIBC Capital Markets.
Speaker Change: Your next question comes from Bryce Adams of CIBC capital markets. Your line is open.
Bryce Adams: I'm back again. I must have had too much coffee this morning.
Speaker Change: I'm back again, I must add too much coffee this morning.
Ian: I want to talk about external growth. Sorry? Again, Brighton interrupts you.
Alright, Thank you hear or no growth.
Speaker Change: Alright, sorry, again brighten interrupt you.
Bryce Adams: I was going to ask about external growth, but I'm sure you look at opportunities as part of the normal course, the normal business process. Some of your peers have a preference for producing assets over projects. What how do you think about buy versus build? My instinct is that it's more of a build scenario, you know, leveraging your skill sets, but I wanted to double check on that point. So when you look at external options, bigger ones as compared to contact gold, is it still leaning towards projects?
Speaker Change: Yes, I was going to ask about external growth I am sure you look at opportunity as part of normal course normal business process.
Speaker Change: Your peers have a preference for producing assets out of projects. How do you think about buy versus build my instinct is that it's more of a build scenario leveraging your skill sets, but I wanted to double check on that point. So when you look at external auctions bigger ones as compared to contact go is it still leaning too.
Speaker Change: Awards projects.
Jason Douglas Simpson: Yeah, thanks for the question. I always start this answer, Bryce, as I have with you in the past, that the team needs to be focused on our organic pipeline. We have a lot of growth in our company already, and we need to focus on permitting, engineering, construction, and so on in our organic pipeline. However, of course, we will keep our eyes open for opportunities that could potentially accelerate that growth for Orla if it means acceleration that creates value for our shareholders.
Speaker Change: Yes. Thanks for the question I always start this answer Brian and as I have with you in the past is that the team needs to be focused on our organic pipeline. We have a lot of growth in our company already and we need to focus on permitting engineering and construction and so on in our organic pipeline.
Speaker Change: However of course, we will keep our eyes open for opportunities that could potentially accelerate that growth for or if it means acceleration that creates value for our shareholders now to get precise on what we look for in our company and at.
Jason Douglas Simpson: Now to get precise on what we look for in our company, and each company has to select a strategy that works for them; for us, we would be looking for something that is permitted because we are already in the permitting processes on other projects that we could begin construction on. We will extend that search all the way over to producers, but as a knowledgeable person in the industry knows, you'll pay more, particularly in this gold price environment, for producers.
Speaker Change: Each company has to selected.
Speaker Change: A strategy that works for them for us.
Speaker Change: We would be looking for something that is permitted because we are already in permitting processes on other projects that we could begin construction on.
Speaker Change: We will extend that search all the way over to producers, but as a knowledgeable person in industry knows.
Speaker Change: Pay more particularly in this gold price environment for producers, we're happy to be constructors, and if we can find the right project Thats permitted ready for construction I have great confidence in Andrew Cormier his teams too.
Jason Douglas Simpson: We're happy to be constructors, and if we can find the right project that's permitted and ready for construction, I have great confidence in Andrew Cormier and his teams to repeat the successes of the past. So we'll focus on our organic work to grow the company, and if we can find an accelerant to that growth with the right inorganic opportunity that adds value for shareholders, then we'll transact. Thanks, Jason.
Speaker Change: To repeat the successes of the past.
Speaker Change: We will focus on our organic work to grow the company and if we can find an accelerant to that growth with the right inorganic opportunity.
Speaker Change: That adds value for shareholders. Then then we'll transact.
Bryce Adams: Thanks, Jason. That's very clear and understood. Thanks again.
Speaker Change: Thanks, Jason that's a very clear and understood. Thanks again.
Bryce Adams: Thanks Bryce.
Bryce Adams: Yeah.
Ian: There are no further questions at this time. I would like to hand things over to Jason for some closing remarks.
Speaker Change: There are no further questions at this time I would like to hand things over to Jason for some closing remarks.
Jason Douglas Simpson: Thank you, operator. Since there are no further questions, I'd like to thank everybody for their participation on the call. Thank my teams, both here in Toronto but also in Mexico and Nevada, for their continued efforts. Thank you. Thank you all. This concludes today's conference call. You may now disconnect.
Jason Douglas Simpson: Thank you operator since there are no further questions I'd like to thank everybody for their participation on the call. Thank my teams both here in Toronto, but also in.
Speaker Change: Mexico.
Jason Douglas Simpson: And Nevada for their continued efforts.
Jason Douglas Simpson: Thank you.
Speaker Change: Thank you all this concludes today's conference call you may now disconnect.
Ian: Thanks for watching!
Speaker Change: [music].
Speaker Change: Okay.
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Speaker Change: Sure.
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Speaker Change: Okay.
Speaker Change: Yes.