- Orla Mining (TSX:OLA) will acquire the Musselwhite gold mine in Ontario, Canada, from Newmont (TSX:NGT) for US$810 million in cash and US$40 million in payments linked to the gold price
- Total consideration comes at a discount to the US$910 million-US$940 million valuation from Stifel Canada, Scotiabank and Davidson & Company delivered to Orla to inform the transaction
- Orla Mining acquires, develops and operates mineral properties in Canada, Panama and the United States
- Orla Mining stock has added over 40 per cent year-over-year and over 230 per cent since 2019
Orla Mining (TSX:OLA) will acquire the Musselwhite gold mine in Ontario, Canada, from Newmont (TSX:NGT) for US$810 million in cash and US$40 million in payments linked to the gold price. Total consideration comes at a discount to the US$910 million-US$940 million valuation from Stifel Canada, Scotiabank and Davidson & Company delivered to Orla to inform the transaction.
The acquisition significantly enhances Orla’s free cash flow by an average of US$150 million over the next six years and more than doubles annual gold production to over 300,000 ounces with near-term growth to 500,000 ounces.
Musselwhite has yielded almost 6 million ounces of gold since inception in 1997 and benefits from robust reserves, resources and exploration potential in a tier-1 mining jurisdiction on the shore of Opapimiskan Lake in Northwestern Ontario. Here’s a breakdown as of December 31, 2023:
- Proven and probable gold reserves of 1.5 million ounces.
- Measured and indicated resources of 1.8 million ounces.
- Inferred resources of 0.19 million ounces.
An NI 43-101 technical report for Musselwhite reserves commissioned by Orla details a seven-year mine life (2024-2030) with average annual gold production of 202,000 ounces at US$1,269 per ounce in all-in sustaining costs. The property’s processing facility has a nameplate capacity of 1.5 million tons per year with only 1 million tons currently being utilized at a gold recovery rate of about 96 per cent.
The net present value (5 per cent) for the property as of January 1, 2025, stands at US$760 million supposing US$2,150 per ounce of gold and about US$1 billion supposing a US$2,500 gold price.
Orla plans to self-fund exploration of Musselwhite’s 65,000-hectare concession, including historical drilling that suggests 2 to 3 kilometers of mineralized strike beyond current reserves. This work will run concurrently to developments at the company’s South Railroad project, Camino Rojo sulphides project and exploration across its portfolio in Canada, Mexico and the United States.
Orla’s financing package for Musselwhite includes bank-provided debt and gold prepay financing, as well as a placement of convertible notes led by Fairfax Financial, Pierre Lassonde and Trinity Capital Partners, allowing investors to retain exposure to Orla with no upfront equity dilution.
A special meeting of Orla shareholders to consider and approve the transaction is slated for January 2025.
Leadership insights
“This acquisition is a significant milestone for Orla Mining. It more than doubles our annual production, while providing us with a presence in Ontario, Canada, one of the premier mining jurisdictions in the world and where I began my career,” Jason Simpson, president and chief executive officer of Orla Mining, said in a statement. “We intend to not only continue to operate Musselwhite, but to seek optimization opportunities and to invest in its future, grow its reserves and resources and extend its mine life. The mine has a proven history of successful production, cash generation and reserve replacement, having consistently added to mine life.
We have been impressed with the operating team at Musselwhite, which runs an exceptional mine and has developed positive and strong ties with First Nations, local partners and community members. We are fully committed to respecting and growing these relationships.
Thanks to our shareholders, notably Pierre Lassonde and Prem Watsa of Fairfax, and our banking and financial partners, for their continued support as we strive to elevate Orla into an even stronger and more robust mining company. We are also grateful to Newmont for their trust in our vision and commitment to sustainability. We intend to be responsible stewards of Musselwhite, creating a legacy of excellence, respect and value for all stakeholders,” Simpson concluded.
Click here for full details about Orla Mining’s acquisition of Newmont’s Musselwhite gold mine.
About Orla Mining
Orla acquires, develops and operates mineral properties where its expertise can substantially increase stakeholder value. Its portfolio includes the producing Camino Rojo gold project in Zacatecas State, Mexico, the feasibility-stage South Railroad gold project in Nevada, United States, and the pre-feasibility-stage Cerro Quema gold and copper project in Panama.
Orla Mining stock (TSX:OLA) opened with a gain of 6.13 per cent trading at C$5.89 per share. The stock has added over 40 per cent year-over-year and over 230 per cent since 2019.
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(Top photo of the Musselwhite gold mine in Ontario: Newmont)
