Arizona Eagle Mining Corp. press release

Orla Mining Reports Fourth Quarter and Year End 2022 Results

2023-03-16

TSXV - TSX Venture Exchange · Canada · Corporate Finance

Canada NewsWire

Strong First Year at Camino Rojo Provides Foundation for Growth

VANCOUVER, BC , March 16, 2023 /CNW/ - Orla Mining Ltd. (TSX: OLA) (NYSE: ORLA) ("Orla" or the "Company") today announces the results for the fourth quarter and year ended December 31, 2022 .

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

Fourth Quarter and Full-Year 2022 Highlights:

Gold production during the fourth quarter was 32,017 ounces and total gold production for 2022 was 109,596 ounces, achieving high end of the increased annual production guidance range of 100,000 to 110,000 ounces _(pre-released, please see the news release dated January 16, 2023 , Orla Mining Achieves High End of Increased 2022 Production Guidance and Provides 2023 Guidance ).

_ All-in sustaining costs ("AISC") 1 ,2 of $634 per ounce of gold sold during the fourth quarter 2022 resulting in a full year 2022 AISC of $611 per ounce, at the low end of the guidance range of $600 - $700 /oz.

Adjusted earnings for the fourth quarter was $20.7 million or $0.07 per share and for the full year 2022 was $57.1 million or $0.21 per share.

Net income for the fourth quarter was $18.7 million or $0.06 per share which included $5.6 million in expensed exploration and development costs across the portfolio. Net income for the full year 2022 was $45.8 million or $0.17 per share, which included $18.9 million in expensed exploration and development costs.

Cash flow from operating activities before changes in non-cash working capital during the fourth quarter and for the full year 2022 were $55.1 million and $111.1 million , respectively. Free cash flow 1 during the fourth quarter and for the full year 2022 totalled $11.6 million and $82.0 million , respectively.

Cash balance of $96.3 million and net debt of $49.5 million at December 31, 2022 .

Successfully completed the commissioning and ramp-up of the Camino Rojo Oxide Mine on time and under budget with declaration of commercial production on April 1, 2022 .

Completed refinancing of project facility in April 2022 with a $150 million secured credit facility.

Strengthened growth pipeline with the acquisition of Gold Standard Ventures Corp. ("Gold Standard"), the owner of the South Railroad Project ("South Railroad"), a permitting-stage, open pit, heap leach project located on the Carlin trend in Nevada . Exploration at South Railroad was immediately reactivated upon completion of the transaction.

"2022 was a monumental year for Orla as we transitioned to a cash flowing gold producer," said Jason Simpson , President and Chief Executive Officer of Orla. "The strong cash flows from Camino Rojo will provide a foundation to build upon. Our rich pipeline of exploration and development assets, which we are aggressively advancing, will be critical in growing the Company and increasing value for shareholders. We thank our stakeholders and partners for their continued support."

| _ | | 1 Cash cost, AISC, free cash flow and adjusted earnings are non-GAAP measures. See the "Non-GAAP Measures" section of this news release for additional information. |

Financial and Operations Update

| Table 1: Financial and Operating Highlights | | Q4 2022 | FY 2022 | | Operating | | | | | Gold Produced | oz | 32,017 | 109,596 | | Gold Sold | oz | 32,438 | 107,502 | | Average Realized Gold Price 1 | $/oz | $1,743 | $1,790 | | Cost of Sales – Operating Cost | $M | $13.5 | $45.6 | | Cash Cost per Ounce 1,2 | $/oz | $453 | $449 | | All-in Sustaining Cost per Ounce 1,2 | $/oz | $634 | $611 | | | | | | | Financial | | | | | Revenue | $M | $56.8 | $193.2 | | Net Income (loss) | $M | $18.7 | $45.8 | | Adjusted Earnings 1 | $M | $20.7 | $57.1 | | Earnings (loss) per Share – basic | $/sh | $0.06 | $0.17 | | Adjusted Earnings per Share – basic 1 | $/sh | $0.07 | $0.21 | | | | | | | Cash Flow from Operating Activities before Changes in Non-Cash Working Capital | $M | $55.1 | $111.1 | | Free Cash Flow 1 | $M | $11.6 | $82.0 | | | | | | | Financial Position | | Dec 31, 2022 | | | Cash and Cash Equivalents | $M | $96.3 | | | Net Debt 1 | $M | $49.5 | |

| 1. | "Average Realized Gold Price", "Cash Cost per Ounce", "All-in Sustaining Cost per Ounce", "Adjusted Earnings", "Adjusted Earnings per Share – basic", "Free Cash Flow", and "Net Debt" are non-GAAP measures. See the " _Non-GAAP Measures _" section of this news release for additional information. | | 2. | The Company declared commercial production at Camino Rojo effective April 1, 2022. Consequently, the "full year" figures for cash cost per ounce and all-in sustaining cost per ounce are for the period April 1, 2022 to December 31, 2022. |

Financial and Operations Summary

The Company declared commercial production at Camino Rojo on April 1, 2022 following sixteen months of construction which began in December 2020 . Camino Rojo achieved record quarterly gold production of 32,017 ounces of gold in Q4 2022, primarily as a result of an increased ore stacking rate during the quarter which achieved a record 19,591 tonnes per day, 9% above nameplate capacity of 18,000 tonnes per day. The average mining rate during the fourth quarter was 41,128 tonnes per day which resulted in a strip ratio of 0.70 during the quarter and 0.67 for the full year 2022. The average grade of ore processed during the fourth quarter was 0.78 g/t gold, in line with plan, and the average grade of processed for the full year 2022, was 0.82 g/t gold, approximately 5% higher than plan.

Gold sold during the fourth quarter and for the first full year of operation totalled 32,438 ounces and 107,502 ounces, respectively.

Fourth quarter cash costs and AISC totalled $453 and $634 per ounce of gold sold, respectively. The key contributors to the AISC being at the lower end of the guidance range is attributable to mining softer ore than anticipated in the upper benches of the mine during the first year of operation. As a result of the softer ore, maintenance required on the crushing, conveying and stacking systems was less than anticipated due to low wear. Lower consumption rates on key inputs such as electricity and reagents also contributed to the low AISC. The Company's AISC guidance for 2023 is a range of $750 to $850 per ounce of gold sold. The increase in AISC from 2022 to 2023 is primarily related to increased maintenance costs as the operations begin to encounter more competent ore conditions, and moderate price inflation on key costs inputs including reagents, consumables, and labour. Sustaining capital in 2023 will be primarily the construction of a dome at the ore stockpile for dust control management. Infill drilling on the layback area at the Camino Rojo oxide mine will be capitalized as sustaining capital and is expected to total $2 million .

During the first quarter of 2023, the Company will make its first income tax payment (including the Special Mining Duty) in Mexico of approximately $34 million related to the 2022 fiscal year. In 2023, the Company will continue to strengthen its balance sheet through the repayment of $45.0 million towards debt and other obligations. The Company will also make increasing investments into its prospective exploration and development growth portfolio, enabled by the Company's strong financial position and continued high margin gold production.

Exploration Update

Additional exploration details related to 2022 results and 2023 plans on individual country exploration programs was provided in press releases dated January 31, 2023 , February 8, 2023 , and February 16, 2023 . In 2023, the exploration spending will be increased to $35 million , with the project spend breakdown in the Guidance Summary outlined below.

Camino Rojo Sulphide Project and Regional Exploration Update ( Mexico )

During the 2022 directional drill program into the Camino Rojo Sulphide, drilling continued to intercept wide zones of higher-grade gold mineralization. These results in conjunction with metallurgical results from the 2021 drilling supports the potential for underground development and a standalone processing option for the Camino Rojo Sulphides. A large component of 2022 program included infilling the sulphide deposit and improving the geological model to support potential underground mine development scenario. A total of 9,174 metres was completed in 15 holes in 2022, returning 32 significant mineralized drill intercepts with grade-by-thickness factor greater than 50 g/t by metre Au (g/t * m), including 16 intercepts with grade-by-thickness factor greater than 100 g/t by metre Au.

Drill results have also shown that gold mineralization extends deeper than the limit of the current mineral resource. These deeper intercepts suggest gold mineralization remains open at depth along and adjacent to interpreted feeder-like structures for the currently defined Camino Rojo deposit.

A 34,000-metre, 57-hole follow-up drill program will continue to infill the Camino Rojo Sulphides in 2023 (20% of the holes will extend to test the deep potential of the deposit). In addition, 6,500 metres will be drilled on the extensions of the Camino Rojo oxide deposit to update and expand resources and reserves. The 2023 drilling is expected to strengthen the confidence for the development of a Preliminary Economic Assessment that contemplates underground mining by infilling the higher-grade (>2 g/t) portions of the deposit with 50 metre spacing of south-oriented drill holes. Overall drill spacing at the end of this next phase, including historical north-oriented drill holes, will be 25-30 metres.

On the regional exploration program, Orla completed its first diamond drill core hole outside Camino Rojo in 2022. The Guanamero target is approximately 7 kilometres northeast of Camino Rojo and the initial drill results were encouraging. The team is targeting new discoveries on the large regional land package testing targets on the northeast-southwest mine trend and the northwest-southeast regional trend.

For additional detail, please see the news release dated January 31, 2023 , Orla Mining Continues to Intersect Wide, Higher-Grade Sulphide Zones and Expose Deeper Potential at Camino Rojo, Mexico .

South Railroad Project and Exploration Update ( Nevada , US)

In August 2022 , Orla completed the acquisition of Gold Standard, the owner of South Railroad, a permitting-stage, open pit, heap leach project located on the Carlin trend in Nevada, USA . A Feasibility Study on South Railroad was completed in February 2022 under the previous owner and South Railroad has been integrated into the Company's growth plans with key priorities to include project permitting, review of project schedule including critical path activities, and assessment of current exploration supporting resource expansion.

Upon completion of the transaction, Orla accelerated exploration activities on the large, prospective land package. South Railroad is on the Carlin trend and is a target rich environment with multiple styles and zones of mineralization. The immediate exploration objectives have been to upgrade current resources and define new potential resources through infill and step out drilling. Drill results thus far have been significant and resource updates are expected in 2023.

For additional detail, please see the news release dated February 8, 2023 , Orla Mining Drills Significant Gold Intersections at Multiple Oxide Targets upon Reactivation of Exploration at South Railroad Project, Nevada .

Cerro Quema Exploration Update ( Panama )

In 2022, exploration drilling at Cerro Quema began with regional exploration at the La Prieta and La Pelona targets before moving to metallurgical, infill, and expansion drilling at Caballito and La Pava mineralized zones and early-stage follow-up drilling at Quemita Norte target. In total, 9,044 metres were drilled in Panama during the year.

Exploration at the Caballito and La Pava deposits and the Quemita Norte target in the second half of 2022 continued to generate significant drill intersections. These new drill results build on the previously reported 2022 positive drill results generated at the early stage La Pelona and La Prieta regional targets, and further highlight the presence of significant copper and gold mineralization at the Cerro Quema project.

The 2023 exploration program will follow-up on the encouraging results generated at La Pelona and La Prieta regional targets in 2022. Upon completion of the exploration and drilling campaign during the dry season in the first half of 2023, exploration and operational activities will be reduced in Panama . Data interpretation of the results will take place primarily in the second half of 2023 while on-the-ground activities will be minimal.

2023 Guidance Summary

On January 16, 2023 , the Company announced its 2023 annual guidance which contained the outlook for production, operating and capital costs, and exploration spending across the Company's portfolio, as set forth below. In addition, Orla expects to repay $45.0 million in debt and other obligations during the course of 2023. This includes $22.2 million related to principal repayments on the credit facility and $22.8 million as a final payment on the Layback Agreement.

| Gold Production | oz | 100,000 - 110,000 | | All-in Sustaining Costs ("AISC") 1,2 | $/oz Au sold | $750 - $850 | | Capital Expenditures 2 | | | | Sustaining Capital Expenditures | $m | $6 | | Non-Sustaining Capital Expenditures | $m | $4 | | Exploration | | | | Mexico | $m | $20 | | USA (Nevada) | $m | $10 | | Panama | $m | $3 | | Total Exploration | $m | $33 | | Site Admin & Permitting Expenses (Nevada/Panama) | $m | $11 | | Corporate G&A | $m | $15 |

| 1. AISC is a non-GAAP measure. See the " _Non-GAAP Measures _" section of this news release for additional information. | | 2. Exchange rates used to forecast cost metrics include MXN/USD of 20.0 and CAD/USD of 1.28 |

Financial Statements

Orla's audited financial statements and management's discussion and analysis for the year ended December 31, 2022 , will be available on the Company's website at www.orlamining.com , and under the Company's profiles on SEDAR and EDGAR.

Qualified Persons Statement

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

Fourth Quarter and Year End 2022 Conference Call

Orla will host a conference call on Friday, March 17, 2023 , at 10:00 AM, Eastern Time , to provide a corporate update following the release of its financial and operating results for the fourth quarter and year ended 2022:

Dial-In Numbers:

Conference ID: 5844017 Toll Free Dial-In: 1 (888) 550-5302 Toll Dial-In: 1 (646) 960-0685 Webcast: https://orlamining.com/investors/presentations-and-events/

About Orla Mining Ltd.

Orla is operating the Camino Rojo Oxide Gold Mine, a gold and silver open-pit and heap leach mine, located in Zacatecas State, Mexico . The property is 100% owned by Orla and covers over 160,000 hectares. The technical report for the 2021 Feasibility Study on the Camino Rojo oxide gold project entitled _"Unconstrained Feasibility Study NI 43-101 Technical Report on the Camino Rojo Gold Project – Municipality of Mazapil, Zacatecas, Mexico " _dated January 11, 2021 , is available on SEDAR and EDGAR under the Company's profile at www.sedar.com and www.sec.gov , respectively. Orla also owns 100% of Cerro Quema located in Panama which includes a gold production scenario and various exploration targets. Cerro Quema is a proposed open pit mine and gold heap leach operation. The technical report for the Pre-Feasibility Study on the Cerro Quema oxide gold project entitled _" Project Pre-Feasibility Updated NI 43-101 Technical Report on the Cerro Quema Project, Province of Los Santos , Panama " _dated January 18, 2022, is available on SEDAR and EDGAR under the Company's profile at www.sedar.com and www.sec.gov , respectively. Orla also owns 100% of the South Railroad Project, a feasibility-stage, open pit, heap leach project located on the Carlin trend in Nevada . The technical report for the 2022 Feasibility Study entitled _"South Railroad Project, Form 43-101F1 Technical Report Feasibility Study, Elko County, Nevada " _dated March 23, 2022 , is available on SEDAR and EDGAR under the Company's profile at www.sedar.com and www.sec.gov , respectively. The technical reports are available on Orla's website at www.orlamining.com .

Non-GAAP Measures

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

In this section, all currency figures in tables are in thousands, except per-share and per-ounce amounts.

Average Realized Gold Price

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

| AVERAGE REALIZED GOLD PRICE | Q4 2022 | Q4 2021 | | 2022 | 2021 | | Revenue | $ 56,758 | 4,091 | | $ 193,230 | 4,091 | | Silver sales | (229) | (30) | | (836) | (30) | | Gold sales | 56,529 | 4,061 | | 192,394 | 4,061 | | Ounces of gold sold | 32,438 | 2,422 | | 107,502 | 2,422 | | AVERAGE REALIZED GOLD PRICE PER OUNCE SOLD | $ 1,743 | 1,677 | | $ 1,790 | 1,677 |

Net Debt

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

| NET DEBT | December 31, 2022 | December 31, 2021 | | Current portion of long term debt | $ 45,000 | $ 25,293 | | Long term debt | 100,795 | 136,060 | | Less: Cash and cash equivalents | (96,278) | (20,516) | | NET DEBT | $ 49,517 | $ 140,837 |

Adjusted Earnings (Loss) and Adjusted Earnings (Loss) per share

Adjusted earnings (loss) excludes deferred taxes, unrealized foreign exchange, changes in fair values of financial instruments, impairments and reversals due to net realizable values, restructuring and severance, and other items which are significant but not reflective of the underlying operational performance of the Company. We believe these measures are useful to market participants because they are important indicators of the strength of our operations and the performance of our core business.

| ADJUSTED EARNINGS | Q4 2022 | Q4 2021 | | 2022 | 2021 | | Net income (loss) for the period | $ 18,690 | $ (5,018) | | $ 45,770 | $ (26,278) | | Unrealized foreign exchange | 1,971 | 1,903 | | (1,862) | 3,921 | | Loss on early settlement of project loan | — | — | | 13,219 | — | | ADJUSTED EARNINGS (LOSS) | $ 20,661 | $ (3,115) | | $ 57,127 | $ (22,357) | | | | | | | | | Millions of shares outstanding – basic | 304.5 | 247.6 | | 272.2 | 241.4 | | Adjusted earnings (loss) per share – basic | $ 0.07 | $ (0.01) | | $ 0.21 | $ (0.09) | | | | | | | |

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