Executive Summary / Key Takeaways

• Orla Mining is rapidly transforming into a multi-asset gold producer, driven by the successful integration of the Musselwhite Mine and the consistent performance of Camino Rojo, targeting approximately 500,000 ounces of gold production annually across three jurisdictions.
• Despite a recent pit wall incident at Camino Rojo, the company demonstrated robust operational resilience and safety protocols, with no injuries or equipment damage, and has swiftly implemented a remediation plan, though 2025 guidance has been adjusted.
• Orla's strategic focus on aggressive exploration at Musselwhite and the Camino Rojo Sulfides (Zone 22) aims to significantly extend mine life and unlock substantial future growth, with key resource updates and a PEA for Camino Rojo Sulfides planned for 2026.
• The South Railroad project in Nevada is advancing through permitting, with a Record of Decision targeted for Q3 2026 and first gold production in early 2028, positioning Orla for a third low-cost, open-pit heap leach operation.
• Financially, Orla exhibits strong cash generation and a commitment to deleveraging, having achieved debt-free status in late 2024, providing flexibility to fund growth initiatives without significant dilution.

A New Era of Growth: Orla Mining's Strategic Expansion

Orla Mining Ltd. ($ORLA) is rapidly evolving from a single-asset producer to a diversified, multi-mine gold operator, strategically expanding its footprint across North America. Incorporated in 2007, the company's journey accelerated with the commercial production of its flagship Camino Rojo mine in Mexico around April 2022, marking a pivotal shift to substantial revenue generation. This foundational asset, known for its low-cost production, has been the bedrock for Orla's ambitious growth strategy, which now includes the transformational acquisition of the Musselwhite Mine in Canada and the advancement of the South Railroad project in Nevada. This expansion positions Orla to become a significant mid-tier gold producer, targeting approximately 500,000 ounces of gold annually from three distinct operations.

The gold mining industry currently benefits from robust commodity prices, driving strong margins for efficient producers. Broader market trends, such as the increasing demand for critical minerals and the U.S. administration's support for domestic mineral production, also create a favorable backdrop for Orla's development projects. However, the sector remains highly competitive, dominated by large-scale players like Barrick Gold and Newmont Corporation , who leverage immense scale and technological prowess. Orla differentiates itself through its agile project development, focused exploration expertise, and a commitment to operational efficiency, aiming to carve out a niche in high-potential, underexplored regions.

Operational Excellence and Technological Edge

Orla's operational philosophy centers on continuous improvement and the strategic deployment of technology to enhance safety, efficiency, and resource recovery. At Camino Rojo, the company has implemented a "recovery improvement program" that continues to show positive results. This ongoing process innovation is critical for maximizing gold extraction from the heap leach operation. Furthermore, the mine utilizes advanced pit monitoring systems, which proved instrumental during an uncontrolled material movement event on July 23, 2025. These systems enabled "early detection" and "critical decision-making," preventing any injuries, equipment damage, or environmental impact from the 390,000-tonne material slide. This highlights a tangible benefit of Orla's operational technology: enhanced safety and risk mitigation, which directly protects human capital and operational continuity.

The recent acquisition of Musselwhite also underscores Orla's commitment to technological and operational upgrades. The company plans a significant investment of approximately $115 million in 2025, primarily for "underground lateral development, to improve ore availability and efficiency for future years, as well as access for underground exploration drilling". This investment extends to "improving the underground mobile equipment". Management explicitly stated that "an additional critical mass of new gold inventory will give us a pathway to improve the material handling to increase production rates in a material way and reduce operating costs". This strategic focus on material handling technology and operational efficiency is designed to unlock Musselwhite's full potential, aiming for consistent all-in sustaining costs (AISC) between $1,300 and $1,500 per ounce by 2026.

For the South Railroad project, Orla has engaged M3 Engineering & Technology for the EPCM contract, with "basic and detailed engineering proceeding this year and into 2026". This reliance on advanced engineering and project management expertise is a key differentiator, allowing Orla to plan for efficient construction, potentially replicating the rapid development pace seen at Camino Rojo. These technological and operational advancements collectively contribute to Orla's competitive moat by driving down costs, improving safety, and optimizing resource utilization, which are critical for sustaining profitability in a cyclical industry.

Financial Performance and Liquidity

Orla Mining has demonstrated robust financial performance, particularly in the wake of Camino Rojo's commercial production and the recent Musselwhite acquisition. In the second quarter of 2025, the company reported record gold sales of 79,000 ounces at a realized price of $3,251 per ounce, generating approximately $264 million in revenue. This drove strong earnings, with net income reaching $48 million ($0.15 per share) and adjusted net earnings of $64 million ($0.20 per share). Cash flow from operating activities, before changes in non-cash working capital, was a healthy $103 million ($0.32 per share) for the quarter.

The company's financial discipline is evident in its deleveraging efforts. Orla successfully repaid $30 million towards its revolving credit facility in Q2 2025, reducing net debt to approximately $205 million, with a cash balance of $215 million at June 30, 2025. This follows a significant milestone in Q3 2024, when Orla became debt-free, having paid off all outstanding debt just 2.5 years after Camino Rojo achieved commercial production. This strong liquidity position, including an undrawn $150 million revolving credit facility, provides substantial financial flexibility to fund ongoing operations and future growth initiatives without relying on dilutive equity financing.

Comparing Orla's financial health to its larger peers, its Gross Profit Margin (TTM) of 54.96% and EBITDA Margin (TTM) of 41.26% are competitive, though its Net Profit Margin (TTM) of 4.29% indicates areas for further optimization. While larger players like Barrick Gold and Newmont Corporation benefit from greater scale and diversification, Orla's focused approach has yielded impressive growth. Its historical EPS growth rate of 76.9% and projected growth of 185% for the current year significantly outpace the industry average, signaling strong momentum.

Operational Resilience and Outlook

The second quarter of 2025 marked a record period of production for Orla, largely due to Musselwhite's first full quarter of contribution. However, the uncontrolled material movement event at Camino Rojo on July 23, 2025, necessitated a revision of the 2025 guidance. The incident, caused by increased pore pressure from rainfall and a steep pit wall angle, led to a temporary pause in in-pit mining. Orla's action plan involves a substantial pushback of the north wall, which will yield approximately 9 million tonnes of predominantly oxidized ore (250,000 ounces at 0.74 g/t gold) to be crushed and stacked. This material was deferred, not lost, and the emergency remediation is permissible under Mexican law.

As a result, the 2025 consolidated guidance has been revised to 265,000 to 285,000 ounces of gold (down from 280,000-300,000 ounces), with cash costs of $900 to $1,100 per ounce and AISC of $1,350 to $1,550 per ounce. Camino Rojo's specific guidance was adjusted to 95,000 to 105,000 ounces (down from 110,000-120,000 ounces), with higher cash costs and AISC. Musselwhite's guidance remains unchanged, projecting 170,000 to 180,000 ounces for March-December 2025. Management expressed confidence in Musselwhite's annual and life-of-mine grade profile, despite expected quarter-over-quarter fluctuations.

Looking ahead, Orla has several catalysts. The Camino Rojo Sulfides (Zone 22) project, an underground extension, boasts an initial resource of 4.2 million gold equivalent ounces in the measured and indicated category. An initial Preliminary Economic Assessment (PEA) is planned for 2026, following an updated resource estimate from a successful 15,000-meter infill drill program completed in July 2025 and an additional 5,000 meters planned for 2025. Permitting for the Camino Rojo layback expansion is expected to receive a positive resolution late in 2025, following constructive dialogue with Mexican authorities.

In Nevada, the South Railroad project is progressing, with the Notice of Intent expected in the coming weeks and a Record of Decision targeted for Q3 2026. This timeline anticipates construction starting in Q4 2027 and gold production in early 2028. Orla aims to accelerate this development by initiating early engineering and procurement, mirroring its successful approach at Camino Rojo, to "build the mine in Nevada in months".

Competitive Landscape and Risks

Orla operates in a highly competitive global gold mining market. While it cannot match the sheer scale and diversified asset base of industry giants like Barrick Gold (GOLD) or Newmont Corporation (NEM), Orla's strength lies in its agility and focused expertise in developing and operating projects efficiently. Compared to these larger players, Orla's project-level innovation and adaptability allow for potentially faster development cycles for new sites. However, it lags in overall market positioning, growth rates, and profitability margins due to the inherent advantages of scale enjoyed by its larger rivals. Agnico Eagle Mines (AEM), another significant competitor, emphasizes stable, low-risk operations, often achieving lower costs and higher efficiency, which Orla aims to emulate through its operational improvements at Musselwhite.

Key risks for Orla include operational challenges, as evidenced by the Camino Rojo pit wall event, which, while safely managed, impacted short-term production guidance. Geopolitical and regulatory risks in Mexico also persist, with ongoing reviews of "potential criminal activity and looking into the regional security risks affecting the mine and neighboring communities". Furthermore, the company faces allegations of labor rights abuses at Camino Rojo, with complaints filed under the CUSMA Rapid Response Mechanism. While management states the review has not affected operations, these issues could pose reputational and operational challenges. Commodity price fluctuations and permitting delays for development projects also remain inherent risks in the mining sector.

Conclusion

Orla Mining is at a pivotal juncture, successfully transitioning into a multi-asset gold producer with a clear trajectory for growth. The strategic acquisition of Musselwhite, coupled with the consistent performance and future potential of Camino Rojo and the South Railroad project, underpins a compelling investment thesis. Despite recent operational setbacks at Camino Rojo, the company's swift and effective response highlights its robust safety protocols and operational discipline. Orla's commitment to aggressive exploration, technological enhancements, and disciplined capital allocation positions it to significantly extend mine life, enhance productivity, and drive down costs across its expanding portfolio. With strong cash generation and a healthy balance sheet, Orla is well-equipped to fund its growth initiatives and solidify its standing as a valuable player in the global gold market. Investors should closely monitor the progress of permitting milestones, exploration results, and the continued integration of Musselwhite as key indicators of Orla's long-term value creation.