Q3 2024 Orla Mining Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to Orla Mining conference call for the third quarter 2024 results. My name is Rob and I will be your conference operator today all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this.
Simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question again press Star one 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. Barber.
Yeah.
Speaker Change: Thank you operator, and welcome cheap or the third quarter 2024 results conference call.
Speaker Change: We will be making forward looking statements during today's call and I direct you to the first one.
Speaker Change: Third slide presentation, which contains important question with regarding these forward looking statements. All dollar amounts as Scott stated well refer to U S dollars unless otherwise indicated.
Speaker Change: All the executive team is on the call. This morning, and I'll now pass the call to Jason <unk> President of <unk>.
Jason: Thanks, Andrew.
Jason: During the third quarter Camino Rojo had record production at low costs.
Jason: This record production and low costs in a record gold price environment drove strong margins and cash flow.
Jason: As a result, we took the opportunity to pay off all of our outstanding debt, taking us to be debt free status.
Jason: <unk> well for future investment in the business.
Jason: Part of the growth investment we will discuss today is the construction planning for the South Railroad project and exploration in Nevada on Ourself Carlin complex.
Jason: We have the executive team on the call to provide specific updates.
Jason: As a result of the continued performance at Camino Rojo, we increased our production guidance for a second time this year and are tracking to 130 to 100.
Jason: 40000 ounces produced at.
Jason: At the low end of the all in sustaining cost guidance of 800 to $900 per ounce.
Our Chief operating Officer, Andrew Colombia will now discuss this operating performance.
Andrew Colombia: Thank you Jason.
Andrew Colombia: As mentioned our operating team in Mexico delivered an impressive quarter, while remaining committed to the health and safety of the team.
Andrew Colombia: During the quarter, we mined over one 9 billion tons of ore at a strip ratio of 1.46.
Andrew Colombia: The increased strip ratio in the second half is in line with the mine plan for the year.
Andrew Colombia: The average gold grade of ore processed during the third quarter was 93 eight grams per tonne.
Andrew Colombia: We expect that in the fourth quarter grades will come down slightly while remaining in line with the plan.
Andrew Colombia: We also achieved an average stacking rate of 18434 tonnes of ore per day.
Andrew Colombia: The recovery improvement program continues to show positive results and we have demonstrated that we can maintain the crushing and stacking rigs.
We are pleased with the plaza recovered results, but it's worth noting that much of the test work and operational results had been with oxide material.
Andrew Colombia: As we increase processing rates of transition material, we'll continue testing to understand that these recovery improvement can be expected as observed with the oxide material.
Andrew Colombia: With the continued strong mining and operating performance in the third quarter.
Andrew Colombia: At East a new quarterly record of nearly 43000 ounces of gold.
Andrew Colombia: Year to date, we have outperformed on tons grade and recovery for both gold and silver.
Speaker Change: As Jason mentioned with the continued operational execution and performance we increased our production guidance for the full year to 130 to 140000 ounces of gold.
Speaker Change: And we are well on track to achieve this target.
Speaker Change: Permitting of are they back in Mexico continues and we have resubmitted the application of permits to the federal government with the full endorsement of the state government.
Speaker Change: In recent weeks the New administration has reached out to Florida, and the broader mining community to discuss investment.
Speaker Change: Including these meetings in Toronto, and Mexico, which are CEO attended.
Speaker Change: We see this as a positive Steven.
Speaker Change: We anticipate the new administration will be prepared to respond where expansion permit application in the new year.
Speaker Change: And Nevada permitting for that project continues to progress.
We are finalizing 20 supplemental environmental reports required to be prepared for the Bureau of land management prior conditioning the notice of intent.
Speaker Change: To date 15 reports have been reviewed by the Bureau of land management and cooperating agencies and.
Speaker Change: And our consultants are completing the final five incorporating the feedback.
Speaker Change: The company aims to finalize all the supplemental environmental report by the end of 2024.
Speaker Change: The completion of this work ahead of the notice of intent should aid in the preparation of subsequent stocking.
The notice of intent is then expected to be published in 2025 with a targeted record of decision the final permitting decision.
Speaker Change: Mid 2026.
Speaker Change: Following this approval construction on the South Railroad project would commence with the first gold production anticipated in 2027.
Speaker Change: At the state level, we have received class one and two are operating permits.
Speaker Change: Applications of impaired water pollution control permit and the national meeting discharge elimination system discharge permit which will be submitted after the notice of intent in 2025.
Speaker Change: The EPC contract is set to be awarded later this year.
The detailed engineering will proceed in 2040 bond in 2026 to align with the construction following the record of decision.
Speaker Change: Long lead equipment will be identified and purchase orders potentially placed in 2025.
Speaker Change: We have been asked if the election of the new president in the United States will have an impact on the permitting timeline.
Speaker Change: Our base schedule assumes that a notice of intent is received in early 2025.
Speaker Change: With the new President we think the potential for delays in the schedule is reduced.
We will monitor and update as we get more information.
Speaker Change: Now over to our Chief Financial Officer.
Speaker Change: Wanted to discuss the financial results for the quarter.
Speaker Change: Yes.
Thanks, Andrea <unk> during the quarter, we sold 38000 ounces of gold at a realized price of 2000 and $477 per ounce, resulting in record $99 million in revenue for the quarter.
Speaker Change: Our all in sustaining costs for the third quarter was $720 per ounce lower in part due to higher gold sales and higher silver byproduct credits.
Speaker Change: With a strong oil production and cost management, we're now guiding to the low end of the improved 2024, all in sustaining cost guidance range of 800 to $900 per ounce of gold sold.
Speaker Change: And we remain on track to achieve that target.
Speaker Change: Our low cost production, coupled with the higher gold prices are driving strong earnings and cash flow generation. Our net earnings for the quarter were $21 $1 million or seven cents per share and after adjusting for unrealized foreign exchange gains and other small items adjusted net earnings were.
Speaker Change: We're at $19 $2 million or six cents per share.
Speaker Change: These strong as earnings are reflected in robust operating margins of 65% and record free cash flow generation.
Speaker Change: During the quarter exploration and project costs were $17 $4 million of which $13 seven was expense and $3 7 million was capitalized of note. This quarter represented the peak of exploration and project spending for the year.
Speaker Change: We are on track to need a 40 year guidance for both exploration and project development spending.
Speaker Change: Cash flow from operating activities before changes in noncash working capital was $52 million of 16 cents per share for the quarter.
And we generated a record $45 million in free cash flow of 14 cents per share.
During the quarter, our total capital expenditures were $7 $9 million of which $3 8 million.
Speaker Change: Where non sustaining and related capitalized exploration in Mexico, and $4 1 million or sustaining and mainly related to the construction of phase two of the heap Leach pad, which was completed in the third quarter.
Speaker Change: At the start of 2024, we had nearly $90 million in long term debt outstanding we were making incremental quarterly payments, but as gold price continued to increase in our operating results strengthened we were in a position to pay off the full amount outstanding in October and became debt free only two and a.
Speaker Change: A half year's after achieving commercial production.
Speaker Change: All while continuing to invest in our growth pipeline.
Speaker Change: Our cash balance as of today is approximately $145 million with no debt and an undrawn $150 million revolving credit facility, bringing our total liquidity to nearly $300 million.
Speaker Change: So with that I'll pass it on to survey you are our senior Vice president of exploration.
Speaker Change: Thanks, It's is in Mexico, the drilling in the first part of the year successfully they're finding gold and plenty of metallic mineralization within the first 500 meter beneath the kinder all wholesome fired resources.
Speaker Change: In the second half ongoing during his focus.
Speaker Change: On extending this monetization from half to one kilometer beyond the existing resources.
Speaker Change: New results are being received and an update on our <unk> program as Glenn before year end.
Speaker Change: I will now walk you through a short update on the exploration of the saltwater well project in Nevada, which is now part of what we are calling the salt Carlin complex.
Speaker Change: This complex, it's 25000 hectare land package with the 30 kilometer strike and combines the salt railroad and poorly Creek properties.
Speaker Change: We recently released results from the first barges poleward 'twenty 'twenty four pool rhythm.
Speaker Change: Which tested potential extensions of Gordon organization.
Speaker Change: Beyond the current projected open pit.
Speaker Change: Dark star and opinions.
The results returns seem to Ken Goldman's are set in the oxide and sulfide zones.
Speaker Change: The EMA is on the right shows the Darfur pits and Hull recent drilling has successfully intersecting new mineralization. All started the current open pit boundaries, concluding this follow area located between Dark Star, Maine and North zone.
We find these results very promising.
Speaker Change: And the payment of balls at infill drilling confirmed the continuity in the end screen between historical holes, while new and historical results accruals. The target area indicate that Golden realization remains open salt piece of the project the open pit.
Speaker Change: Ultimately, we intend to expand the resource base by following key structure that's controlled amortization.
Speaker Change: And exploring hoping those zones designing programs shipboard forward in Nevada, Australia is due to it.
Speaker Change: Project value and extend mine life by identifying additional oxide.
Speaker Change: Losses.
Speaker Change: And making new discoveries across doesn't package.
Speaker Change: I will now pass the call back to our Chief Sustainability Officer Jessica.
Jessica: Thank you Suzanne.
Jessica: On the sustainability front, we recently inaugurated our egg poultry farm in partnership with a local high school in Santee Butsu near our Comino Rojo mine, which.
<unk> achieved its first egg production.
Jessica: This project was designed for community economic development and agricultural education, and it's a model for most stake hold their partnership with pre sold egg production set to supply Camino Rojo and all their nearby mines, including <unk>.
Speaker Change: Keep it up.
We were pleased to celebrate this important achievement with our neighbors, our and project partners and we hope it Spurs continued partnerships and more local business endeavors.
Speaker Change: Internally at Orla.
Speaker Change: We've been equipping our leaders across our sites with essential soft and technical skills empowering them to train others and facilitates learning modules within our leadership system and other initiatives this past quarter.
Speaker Change: Team leaders in Canada, Mexico, and Nevada conducted workshops for their teams on responsible procurement practice, our social investment toolkit, and our leadership foundations workshop, which is rooted in systems leaders.
Speaker Change: Principles.
Speaker Change: So this training we are preparing our leaders to guide their teams effectively fostering growth, that's both responsible and sustainable and.
Speaker Change: And with that I'll pass the call back to Jason.
Speaker Change: Thank you sure FICO.
Jason: Record production and cash generation.
Jason: Debt free while making significant growth investments.
Jason: More gold discovered and permitting progressing.
Jason: Well it is getting stronger bigger and more valuable.
Jason: I am proud that this team continues to execute.
Speaker Change: Thank you to our teams in the countries, where we operate whose commitment and delivery are driving this business forward and at this point I'd like to open the call to questions and hand, it back to the operator.
Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad you raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Our first question comes from the line of Anita Soni from CIBC. Your line is open.
Speaker Change: Good morning, Jason and team.
Speaker Change: Question I had with respect to the mine plan.
Speaker Change: 1025.
Speaker Change: Your permits I think you said you're going to submit them in November had they been submitted yet.
Speaker Change: Hi, Anita yes, thanks, I'm glad to have you on our call now we submitted the permits are on November 11th so they have been submitted.
Speaker Change: That submission is Andrew referenced with with the full support of the state government.
Speaker Change: So we handle libert those on November 11th.
Speaker Change: As a as Andrew also mentioned I've been fortunate enough to be asked to be part of two meetings with the Mexican government.
Ed and facilitated by the Canadian government as they.
Speaker Change: Have open dialogue with the mining industry and other executives most recently last Friday.
Speaker Change: We expect that with their feedback on the submission including that.
Speaker Change: That we can expect a response from the federal government in the first half of 2025.
Speaker Change: Okay, and then as we move into thinking about.
The first half of 2025 I'm, assuming once you get the permit you'll be able to move forward pretty quickly, but what does the mine plan look like I know the strip ratio increased in the back half of this year.
Speaker Change: To maintain consistent ore feed does that drop next year or does that remain consistent.
Speaker Change: Yeah, no that will remain consistent in and as the permits are being evaluated and we receive response our plan will continue and we will not be interrupted in 2025 earlier in 'twenty 'twenty four we made a decision to.
Speaker Change: Invest in our in our.
Speaker Change: Redesigned an internal ramp in the pit such that our production through 'twenty four 'twenty five would remain uninterrupted.
Speaker Change: So we will continue with that the mine design is as Andrew referenced the plan.
And.
Speaker Change: That includes throughout 2025, where we'll look to maintain a balanced amount of stripping enhance a balanced amount of cost to the business throughout.
Speaker Change: Throughout the year next year.
Speaker Change: Okay, and then how does that impact the grades next year as well.
Speaker Change: Scott the great. The grades are really a function of where we are within the pit. There are portions as you can imagine the pit that has a higher grades and portions lower grades.
Speaker Change: And all of that will be part of our budget planning for 2025 that leads to our guidance calculation. The other thing that we should also keep in mind is what Andrew referenced related to the recoveries. We are extremely pleased with the recovery improvements.
Speaker Change: That have translated to additional production in 2024.
Speaker Change: Some of that can be carried into 2025, but as we go deeper.
Speaker Change: In the oxide pits I remind our audience that are that there are four zones of material through that pit.
Speaker Change: And as we get deeper and deeper into the pit the recovery profile changes and so we'll need to consider that in our production planning for 2025, along with the great that you asked about.
Speaker Change: And presumably maintaining our throughput despite getting deeper that'll all come together for our 2025 guidance.
Speaker Change: And we should expect or less production over the past two years this year and next year to be a reasonably predictable.
Speaker Change: Okay. Thank you that's it for my question.
Nice to hear from you need them.
Speaker Change: Again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from the line of Andrew <unk> from BMO capital markets. Your line is open.
Andrew Colombia: Thank you congratulations on a record quarter and.
Andrew Colombia: Being debt free today.
Andrew Colombia:
Speaker Change: I just wanted to come back to South Railroad you had a nice chart in the presentation.
Speaker Change: And I think the commentary indicated there was five remaining.
Speaker Change: Submissions.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Is there any sense you can give us on how far along those submissions are.
Speaker Change: In terms of.
Speaker Change: The time and work that's already been put into to target this being.
Finished for submission I think the wording was by yearend.
Speaker Change: Yes.
Andrew Colombia: Yes, Andrew so so those submissions.
Andrew Colombia: Have already a very.
Andrew Colombia: <unk> gotten feedback from BLM on that so we're incorporating that feedback in the next draft that will go to them. So that we have all 20.
Andrew Colombia: You know submitted by <unk> by year end. So that's the work that that's already gone into it.
Andrew Colombia: The reports already written.
Andrew Colombia: Gone through one set of feedback with B L. M. There could potentially be as a second set of feedback and if it follows the same pattern as that of the first 15 that would that would conclude our submission.
Andrew Colombia: Okay.
Speaker Change: There's oh branding.
Speaker Change: Brandon <unk> box in the middle of that chart on page seven says option for early start any commentary that's I guess, if everything's rolling while you can accelerate the EPC MSR, what's that are first.
Speaker Change: Yeah, we've spoken to this in the past and the way I'd describe it as we would like to replicate the kind of success that we had in constructing Camino Rojo.
Andrews cornea and his team's approach to this is to make sure that we get the.
Speaker Change: Basic engineering done early such that we can.
Speaker Change: Let the contracts also early based upon detailed designs. Additionally earlier procurement.
Speaker Change: <unk> enable us to Derisk the project by having key equipment on the ground.
Speaker Change: In the case of Camino Rojo was actually before construction began.
Speaker Change: So we will look to to do the same thing where in a few weeks can submit a budget to the board for 2025, which will include in the first half of the year that.
Speaker Change: That basic engineering that I that I talked about and potentially.
Speaker Change: We will go back to the board of mid year next year to begin.
Speaker Change:
Speaker Change: Construction contracts and early procurement for long lead time items in the second half of this of next year.
Speaker Change: That are similar to accumulate or a whole process.
Speaker Change: We can build.
Speaker Change: Mine in Nevada in months.
Speaker Change: And then.
Speaker Change: If I can indulge with semi coupon here one last question on the exploration.
Speaker Change: Long section I think.
Speaker Change: On slide 11 of the Dark star.
Speaker Change: And.
Speaker Change: Obviously, the historical walls and your follow up calls released today.
Speaker Change: Suggests that the pit shapes will change.
Speaker Change: Yeah.
Speaker Change: And I think the commentary I guess at the same for Penguin.
Speaker Change: To me just to confirm that.
Speaker Change: Chart of the mine sequence.
Speaker Change: Looks intact. This is jess changes.
Speaker Change: Mid way too.
Speaker Change: Later in the mining sequence around this and would be part of the future. So it wouldn't impact the current permitting effort or the near term mine plan for this at the start is that accurate.
Speaker Change: Yeah, that's exactly how I would like it characterized andrew. Thank you clearly we're going to need to incorporate those are compelling results. In addition to an update to the gold price considerations.
Speaker Change: In due time it is important that we continue on the path that we're on right now through the permitting process began.
Speaker Change: The operation as designed.
Speaker Change: And then take the Liberty to incorporate all of these additional results and opportunities into the.
Speaker Change: The long term mine life.
And we as miners and similar to what we're doing at Camino Rojo.
Speaker Change: We'll look to add resources that replace depletion in addition to potentially expanding.
Speaker Change: Things when the time is right and that those times.
Speaker Change: We have.
Speaker Change: Justified and expansion.
Speaker Change: We will need to submit for a permit amendments.
Speaker Change: In that regard.
Speaker Change: Okay, well, thank you all I'll sign off and let others ask questions congratulations.
Speaker Change: Thanks, Andrew.
Speaker Change: And that concludes our question and answer session I will now turn the call back over to you Jason Simpson CEO for closing comments.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: I want to thank everyone for their time and dialing in today. Thank you operator, I'm very proud of the Orla team and.
Speaker Change: And we continue to deliver results.
Speaker Change: Ever have any questions. The Orla management team is available so don't hesitate to reach out.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
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