Orla Mining Announces Strategic Expansion into Canada with Acquisition of the Musselwhite Gold Mine

Press Release

Vancouver, BC – November 18, 2024 – Orla Mining Ltd. (TSX: OLA; NYSE: ORLA) (“Orla” or the “Company”) is pleased to announce it has entered into a definitive agreement (the “Agreement”) to acquire the Musselwhite Gold Mine (“Musselwhite”) in Ontario from Newmont Corporation (“Newmont”) for upfront cash consideration of $810 million and gold-price linked contingent consideration of $40 million (the “Transaction”)¹

The cash consideration will be financed through a combination of cash, existing undrawn debt capacity, new indebtedness, a gold pre-pay facility, and convertible notes led by Orla’s existing cornerstone investors. There is no upfront equity dilution associated with the Transaction.

The Transaction adds a second high quality, high margin producing asset to Orla’s portfolio. The combination of the proven Musselwhite mine and Orla’s low-cost Camino Rojo oxide operation more than doubles the Company’s annual gold production to over 300 koz, with expected near-term growth to over 500 koz of annual gold production as the South Railroad Project is expected to commence production in 2027. The Transaction will also significantly enhance the free cash flow of the Company, providing additional cash for the execution of Orla’s organic growth plans.

Transaction Highlights:

• Strategic acquisition of a proven Canadian operating gold mine with a skilled underground workforce located in a tier-one mining jurisdiction.
• Transforms Orla from a single asset producer to a multi asset intermediate producer.
• Immediately more than doubles gold production with a clear path to 500 koz of annual gold production.
• Musselwhite has robust reserves and resources as well as significant exploration potential.
• Well suited to the technical capabilities of Orla’s executive and operating teams.
• Transaction funded through a mix of debt facilities, with significant support from cornerstone shareholders and no upfront equity dilution.
• Materially accretive on all key operating and financial per-share metrics benefiting all existing shareholders.
• Builds on Orla’s established track record of development and operating success and is aligned with Orla’s strategy for growth and value creation.

Musselwhite Overview:

• Musselwhite is a producing, underground gold mine located on the shore of Opapimiskan Lake in Northwestern Ontario. It has been in operation for over 25 years, having produced close to 6 million ounces of gold to date, with a long history of resource growth and conversion.
• At December 31, 2023, proven and probable gold reserves contained 1.5 million ounces (7.4 million tonnes at grade of 6.23 g/t Au) within a measured and indicated resource² of 1.8 million ounces (9.52 million tonnes at 5.78 g/t Au) and an inferred resource of 0.19 million ounces (1.2 million tonnes at 4.96 g/t Au).
• Orla commissioned an independent NI 43-101 technical report for Musselwhite in connection with the Transaction. Based only on the current reserves, Musselwhite has a seven year mine life (2024-2030) with average annual gold production of 202 koz at $1,269/oz all-in sustaining cost (“AISC”)³
• The NPV5% at January 1, 2025, of Musselwhite is estimated at $760 million using a flat $2,150 gold price and increases to approximately $1 billion using a flat $2,500 flat gold price. Significant opportunities exist to optimize the operation and extend mine life though known extensions of the ore body.
• The Company intends to aggressively explore the 65,000-hectare concession, including following up on historical drilling that suggests 2 to 3 kilometers of mineralized strike potential beyond the current reserves.
• Additionally, the CIP processing facility has a nameplate capacity of 1.5 Mtpa with only 1.0 Mtpa currently being utilized, which allows Orla the opportunity to fill excess mill capacity through new discoveries and increased mining rates.

“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. 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.”  – Jason Simpson, President & Chief Executive Officer of Orla

Transaction Rationale:

• Acquisition of a high-quality, long-life, producing gold mine: Musselwhite is an established operation with nearly 6 Moz of gold produced over the past 28 years, 1.5 Moz of gold reserves with additional mineral resources, as well as identified upside potential supporting opportunities for significant mine life extension. The mineralization at Musselwhite is hosted in a banded iron formation (BIF) that remains open along a known strike extent, at least one kilometre beyond the current reserves. The total mining and exploration lease covers over 65,000 hectares.
• Strategic entry into Canada establishing an enhanced North American presence: Strengthened portfolio diversification with entry into Ontario, Canada – a tier one mining jurisdiction. Located in a mining-friendly region with a strong work force and robust stakeholder support, the operation benefits from a stable operating environment that further enhances its long-term value. The combination of quality assets in Ontario, Canada, Nevada, United States, and Zacatecas, Mexico creates a premier North America focused gold company.
• Immediately increases annual gold production by 140% to over 300 koz at competitive costs: Pro forma annual gold production of +300 koz at combined costs of $1,080/oz⁴ AISC. Through the development of South Railroad in Nevada, the Company has a pathway to annual production of 500 koz at industry leading costs.
• No upfront equity dilution with significant support from cornerstone shareholders: Attractive transaction financing package including bank-provided debt and gold prepay financing, as well as a placement of convertible notes led by Fairfax Financial Holdings Limited (“Fairfax”), Pierre Lassonde, and Trinity Capital Partners Corporation,allows shareholders to retain exposure to Orla’s increasing net asset value with no upfront equity dilution.
• Accretive to key metrics: Transaction is expected to be significantly accretive to operating and free cash flow, gold production and gold reserves and resources, all on a per share basis.
• Strengthened cash flow generation to support growth pipeline: Musselwhite is expected to generate over $150 million in average annual free cash flow over the next 6 years⁵. The combined cash flows of Camino Rojo and Musselwhite will allow the Company to self-fund continued investment in its growth pipeline. This includes Musselwhite’s growth development, the South Railroad Project, development of the Camino Rojo sulphides project, and exploration in all three countries. The Company has a robust cash position of approximately $145 million as of November 17, 2024.
• Musselwhite is well suited to Orla’s technical capabilities: Orla’s experienced management team boasts in-depth experience developing and operating underground mines, including many in Canada, and is supplemented by the Board of Director’s operating history with the asset.
• Increased leverage to strong gold price environment: Production uplift from Musselwhite increases exposure to the current record gold price environment.

Benefits to Orla Shareholders:

• Transforms Orla into a North America centred, geographically diversified gold producer with multiple producing assets and a self-funded growth portfolio.
• Strengthens Orla’s asset base and establishes a more robust mining company with strong gold production, competitive costs, cash flow generation, and a compelling pipeline with near- and medium-term growth opportunities.
• Delivers immediate earnings and cash flow accretion on a per-share basis.
• Transaction structure avoids upfront equity dilution to existing shareholders and takes advantage of the record gold price environment through the gold prepay arrangement.
• Aligns with Orla’s stated strategy for growth and value creation with net asset value per share to continue increasing as the Company executes its vision.

Musselwhite Stakeholders:

• Orla values the skills and commitment of the Musselwhite team and will rely on them to continue to run the operation.
• Orla will continue the highly constructive and collaborative relationship that has been developed with the local First Nations and will honour all existing commitments, obligations, and agreements with them.
• All existing agreements with suppliers and contractors will be honoured.
• The Company is committed to significantly investing in exploration and development activities to replace and grow mineral reserves and resources, with a clear focus on extending the mine life.
• Orla will honour all existing charitable community commitments.
• Orla is committed to building on the established Musselwhite stakeholder relationships and working together in a spirit of trust, collaboration, and transparency.

The Musselwhite Gold Mine:

Operational Overview

Musselwhite is a proven Canadian mining operation producing close to 6 Moz of gold since it began operating in 1997. It is a fly-in, fly-out underground mining operation located in northwestern Ontario, Canada, with mining taking place from two main zones via longitudinal retreat and transverse stoping, conveyed to surface via an internal winze and conveyor. Ore processing occurs via two-stage crushing, grinding, leach/cyanide-in-pulp (CIP), and final doré with annual throughput capacity of 1.5 Mtpa. Gold recovery rates have been approximately 96%.

The operation is well-run, and Orla will evaluate all continuous improvement initiatives to maximize the potential of the operation while studying the potential for growth.

Geology and Exploration

Musselwhite has a strong history of gold production, supported by consistent resource and reserve replenishment and growth, which have extended its operational life. Gold mineralization is primarily hosted within folded banded iron formations (BIF), characterized by close associations with pyrrhotite, quartz-carbonate veining, and quartz flooding.

Historical mining along the main mine trend demonstrated exceptional continuity and predictability of gold mineralization. Drilling by the previous operator (2018–2020) down plunge from the main mine trend confirmed that mineralization extends at least 8 km from surface and remains open at depth.

Orla’s exploration strategy would aim to replenish reserves and grow resources through sustained exploration investment. Underground drilling will continue to target infill and extension in key zones, while surface directional drilling at the PQ Deeps extension will resume to confirm continuity along the deposit plunge. Orla will also outline a long-term plan to explore the broader mine lease area and regional claims, recognizing strong potential for additional BIF-hosted and orogenic gold mineralization.

Transaction Summary:

Under the terms of the Agreement, Orla will acquire all the outstanding shares of a wholly-owned subsidiary of Newmont that will own a 100% interest in Musselwhite.

Orla has agreed to pay Newmont $810 million in cash upon closing of the Transaction and up to $40 million in contingent consideration, payable as follows:

• $20 million to be paid should the average spot gold price exceed $2,900/oz for the initial one-year period following closing of the Transaction; and
• $20 million to be paid should the average spot gold price exceed $3,000/oz for the second full year period following closing of the Transaction.

As Newmont is a “related party” of Orla under the Canadian Securities Administrators’ Multinational Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the Transaction will require majority approval of the shareholders of the Company, other than Newmont. It is anticipated that a special meeting of the Company’s shareholders (the “Special Meeting”) called to consider and approve the Transaction will be held in January 2025.

Closing of the Transaction is expected to occur promptly following the Special Meeting and is subject to other customary closing conditions and receipt of certain regulatory approvals.

Full details of the Transaction will be included in the management information circular and related documents (the “Meeting Materials”) and are expected to be delivered to the Company’s shareholders in December 2024 in connection with the Special Meeting.

Transaction Structure and Financing:

The Transaction has been structured by Orla to take advantage of its strong balance sheet and financial flexibility and avoid any upfront equity dilution. The $810 million in upfront consideration will be funded from a combination of debt, new convertible notes, and cash on hand (collectively, the “Transaction Financing”) including:

• $150 million available on the Company’s existing revolving credit facility (the “RCF”) and a $100 million term loan (the “Term Loan” and together with the RCF, the “Credit Facility”) with a syndicate of lenders comprised of the Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and ING Capital LLC;
• $350 million gold prepayment (the “Gold Prepayment”) from a syndicate of lenders including Bank of Montreal, ING Capital Markets LLC, and Canadian Imperial Bank of Commerce;
• $200 million in senior unsecured convertible notes (the “Convertible Notes”) led by the Company’s cornerstone shareholders, Fairfax, Pierre Lassonde, and Trinity Capital Partners Corporation; and
• $10 million from existing cash on hand of approximately $145 million as of November 17, 2024.

Credit Facility

The Term Loan will have a three-year term with no principal payments during the first two quarters, following which the Term Loan will be repaid in quarterly installments of $5 million, with the balance repaid at maturity. The existing maturity date of August 2027 for the RCF will not change. Orla will have the ability to repay the Credit Facility in full, without penalties, at any time prior to the maturity date.

Interest, covenants and other terms of the Credit Facility will be substantially consistent with the Company’s existing RCF. The interest rate will be based on the term Secured Overnight Financing Rate (SOFR), plus an applicable margin ranging from 2.50% to 3.75% based on the Company’s leverage ratio at the end of each fiscal quarter, provided that for the first two quarters there will be a minimum margin of 3.0%.

The Credit Facility will be completed in connection with closing of the Transaction.

Gold Prepayment

The Company has binding commitments for a $350 million Gold Prepayment from a syndicate of lenders comprised of Bank of Montreal, ING Capital Markets LLC, and Canadian Imperial Bank of Commerce. Under the Gold Prepayment, the Company will have the obligation to deliver a set number of gold ounces over a three-year term in exchange for $350 million in cash upfront. Based on current pricing, approximately 150,000 ounces would be expected to be delivered over the three years subsequent to closing, representing approximately 16% of consolidated production. The Gold Prepayment will be completed in connection with the closing of the Transaction and the terms of the Gold Prepayment will be determined at the time of execution.

Private Placement of Convertible Notes

In connection with the Transaction, Orla has entered into a commitment letter with Fairfax, Pierre Lassonde, and Trinity Capital Partners Corporation for a non-brokered private placement of Convertible Notes in an aggregate principal amount of $200 million (the “Private Placement”). The Convertible Notes will have the following terms:

• Interest Rate: 4.5% per annum, payable in cash.
• Maturity: Five years from the date of issuance.
• Conversion Right: The Convertible Notes may be converted in full or in part at any time prior to the maturity date, by the holder thereof, into common shares (the “Shares”) of Orla.
• Conversion Price: The initial conversion price for the Convertible Notes will be CAD$7.90 per Share (the “Conversion Price”). The Conversion Price represents a premium of 42% relative to closing price of Shares on Friday November 15, 2024 and will be subject to standard anti-dilution adjustments.
• Redemption Right: After the 18-month anniversary of the issuance, the Company may redeem the Convertible Notes, provided that the 20-day volume weighted average price of the Shares is not less than 130% of the Conversion Price. Upon redemption, the Convertible Notes will convert into Shares at the Conversion Price.
• Warrants: On closing, each holder of the Convertible Notes will receive, for each Share issuable upon conversion thereof, 0.66 common share purchase warrants (the “Warrants”) to acquire Shares. The Warrants shall have an exercise price of CAD$11.50 per Share and shall expire on the fifth anniversary of the closing of the Private Placement.

The Private Placement is expected to close concurrently with and is conditional on the closing of the Transaction. The Private Placement is also subject to approval of the Toronto Stock Exchange (“TSX”) and NYSE American. Under the rules of the TSX, as the Private Placement will result in more than 10% of the issued and outstanding Shares being made issuable to “insiders” of the Company (as defined by the TSX) and create the potential for Fairfax to become a control person of the Company, the Private Placement will also be subject to approval by shareholders of the Company, excluding insiders participating in the Private Placement. Such approval will be sought at the Special Meeting along with the Transaction.

The Convertible Notes and Warrants will be subject to a four month and one day hold period pursuant to securities laws in Canada. The Convertible Notes and Warrants have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any applicable securities laws of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company, nor shall there be any offer or sale of any securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

As Fairfax and Mr. Lassonde are “related parties” of the Company as defined under MI 61-101, the issuance of the Convertible Notes and Warrants is a “related party transaction” within the meaning MI 61-101. However, as neither the fair market value of the securities acquired, nor the consideration for the securities paid, insofar as it involves Fairfax and Mr. Lassonde, exceeds 25% of the Company’s market capitalization, the issuance of securities is exempt from the formal valuation requirements of Section 5.4 of MI 61-101 pursuant to Subsection 5.5(a) of MI 61-101 and exempt from the minority approval requirements of Section 5.6 of MI 61-101 pursuant to Subsection 5.7(1)(a) of MI 61-101.

Board Recommendation

The Board of Directors of the Company (the “Board”), other than Mr. Scott Langley, has reviewed and evaluated the terms of the Transaction. Mr. Langley is Group Head, Corporate Development of Newmont and has recused himself from participating in any discussions or approvals related to the Transaction.

The Board engaged Stifel Canada and Scotiabank as its financial advisors, as well as Davidson & Company LLP (“Davidson”) to provide an independent formal valuation (the “Formal Valuation”) with respect to the Transaction as required under MI 61-101. Davidson has delivered to the Board the results of the Formal Valuation opining that, as of the date of the Agreement, subject to the assumptions, limitations and qualifications set forth therein, the fair market value of Musselwhite is between $910 million and $940 million.

Based on the Formal Valuation and the advice from its financial and legal advisors, the Board has unanimously determined (with Mr. Langley abstaining from voting) that the Transaction is in the best interest of the Company.

In respect of the Private Placement, the Board, along with its financial and legal advisors, considered the terms of the financing relative to alternative funding structures and market conditions, considering factors such as pricing, dilution, yield, cost of capital, the call option terms, and the strategic alignment between the Company and investors. After careful consideration, including the evaluation of other funding options, the Board has unanimously determined (with Mr. Langley abstaining from voting) that the terms of the Private Placement were fair, reasonable, and in the best interest of the Company.

The Board recommends that shareholders vote in favour of the Transaction and the Private Placement.

A copy of the Formal Valuation and other relevant background information will be included in the Meeting Materials sent to shareholders of the Company in connection with the Special Meeting. The Meeting Materials will also be available on the Company’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.

Support Agreements:

The Directors and Officers of the Company, along with certain key shareholders, namely Pierre Lassonde, Fairfax, Trinity Capital Partners Corporation, and Agnico Eagle Mines Limited, representing in aggregate approximately 52% of the issued and outstanding common shares of the Company, have entered into voting support agreements with Orla and Newmont and have agreed to vote in favour of the Transaction and the Private Placement. Newmont has also agreed to vote in favour of the Private Placement pursuant to the Agreement. Collectively, these shareholders represent approximately:

• 44.5% of the Shares eligible to vote on the resolution approving the Transaction (excluding the Shares held by Newmont)
• 34.1% of the Shares eligible to vote on the resolution approving the Private Placement (excluding the Shares held by insiders participating in the Private Placement)

Summary Timeline:

• December 2024: Meeting Materials mailing and filing
• First Quarter 2025
  • Shareholder meeting
  • Acquisition closing

Advisors and Counsel:

Stifel Canada, Scotiabank, and Trinity Advisors Corporation are acting as financial advisors to the Company and Blake, Cassels & Graydon LLP is acting as legal counsel.

Conference Call and Webcast:

Orla will host a conference call and webcast on Monday, November 18th, 2024, at 10:00 a.m. Eastern time to discuss the Transaction.

Dial-In Numbers / Webcast:

USA / International Toll: 1 (646) 307-1963

USA – Toll-Free: (800) 715-9871

Conference ID 6314211

Webcast: https://orlamining.com/investors/presentations-and-events/

Technical Information

The independent technical report for Musselwhite (the “Technical Report”), prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), will be filed on SEDAR+ and EDGAR under the Company’s profile at www.sedarplus.ca and www.sec.gov, respectively, and will be available on the Company’s website at www.orlamining.com, along with the filing of the Meeting Materials or within 45 days of this news release, whichever is earlier. The Technical Report is being prepared and compiled by DRA Global Limited (“DRA”) and supported by independent consulting firms, WSP Canada Inc. (“WSP”) and SLR Consultant Canada Ltd. (“SLR”).

Qualified Persons

The Technical Report is prepared by independent representatives of DRA, WSP and SLR, each of whom are a Qualified Person (“QP”) as defined under NI 43-101. Each of the QPs are independent of Orla and have reviewed and confirmed that this news release fairly and accurately reflects, in the form and context in which it appears, the information contained in the respective sections of the Technical Report for which they are responsible. The affiliation and areas of responsibility for each QP involved in preparing the Technical Report are provided below.

DRA QP
Ryan Wilson, P.Geo. – Mineral Resources estimate, geology, exploration and drilling.
David Frost, FAusIMM. – Metallurgical testwork, process design, infrastructure, process plant and site costing
Daniel M. Gagnon, P.Eng. – Financial analysis

WSP QP
Paul Gauthier, P.Eng. – Mineral Reserves, mine design, general mining details and scheduling.
Paul Palmer, P.Eng. – UG mine geotechnical.
William Richard McBride, P.Eng. – Mine costing

SLR QP
James Theriault, P.Eng. – Social, environmental, permitting and tailings storage facility.

The scientific and technical information in this news release has been reviewed and approved by Mr. J. Andrew Cormier, P. Eng., Chief Operating Officer of the Company, and Mr. Sylvain Guerard, P Geo., SVP Exploration of the Company, each of whom is a QP as defined under NI 43-101.

Data Verification

Mineral resource Qualified Person Ryan Wilson, P. Geo. completed a site visit on November 7, 2024. The visit included stops made to multiple active headings, diamond drill set-up during the underground tour and stops made to the core logging, sampling and preparation facilities, outcrop exposures along the south shore of Opapimiskan Lake on the surface tour. Review of key drill core intercepts supported the mineralization styles observed underground. Standard operating procedures and related documentation for all drilling, geological, sampling, assaying and database management were also reviewed during additional meetings with the site exploration team. Sample storage, security and chain of custody systems and infrastructure were also noted.

Specific core intervals were pulled and inspected, photographed, and/or filmed for later review and reference. No analytical facilities (e.g., Actlabs in Dryden) were inspected during the visit. No samples were collected for additional laboratory verification; however, mineralized intervals were inspected and compared with assay values for confirmation of mineralization. The quality of the drill hole database and contained assay results is considered reliable and adequate for the estimation of mineral resources.

Mineral reserve Qualified Person Paul Gauthier, P.Eng. completed a site visit on September 5, 2024. The visit included multiple stops made to active headings, maintenance shops and other underground facilities. Discussions with site management for the purpose of data verification also took place.

The Qualified Persons confirm that the data available are a reasonable and accurate representation of the Musselwhite Mine and are of sufficient quality to provide the basis for the conclusions and recommendations reached in the Technical Report.

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. The project is located on the Company’s 25,000-hectare South Carlin Complex, in Nevada, which contains several mineral resources and exploration targets. Orla also owns 100% of Cerro Quema located in Panama which includes a pre-feasibility-stage, open-pit, heap leach gold project and a copper-gold sulphide resource. 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.

For further information, please contact:

Jason Simpson
President & Chief Executive Officer

Andrew Bradbury
Vice President, Investor Relations & Corporate Development

www.orlamining.com
info@orlamining.com

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