EX-99.1 2 tm2420626d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

Condensed Interim Consolidated Financial Statements

 

Three and six months ended June 30, 2024 and 2023

 

Presented in United States dollars

 

 

 

 

ORLA MINING LTD.

Condensed Interim Consolidated Balance Sheets

(Unaudited - thousands of United States dollars)

 

   June 30,
2024		   December 31,
2023		 
ASSETS          
Current assets          
Cash and cash equivalents  $154,302   $96,632 
Trade and other receivables   190    379 
Value added taxes recoverable (note 10)   6,880    15,571 
Inventory (note 9)   28,659    29,451 
Prepaid expenses   3,242    3,142 
    193,273    145,175 
Restricted cash   1,014    1,011 
Value added taxes recoverable (note 10)   759    826 
Long term inventory (note 9)   5,924    5,627 
Property, plant and equipment (note 11)   210,025    211,719 
Exploration and evaluation properties (note 12)   182,203    170,000 
Other non-current assets   858    1,420 
TOTAL ASSETS  $594,056   $535,778 
           
LIABILITIES          
Current liabilities          
Trade payables and accrued liabilities (note 14)  $19,596   $20,656 
Income taxes payable   13,191    8,002 
    32,787    28,658 
Lease obligations (note 16)   1,905    1,993 
Long term debt (note 15)   78,350    88,350 
Deferred revenue   8,419    8,176 
Site closure provisions (note 17)   8,095    7,424 
Other long term liabilities   784    443 
Deferred tax liabilities   7,888    193 
TOTAL LIABILITIES   138,228    135,237 
           
SHAREHOLDERS' EQUITY          
Share capital (note 18)   489,476    474,361 
Reserves   24,690    24,387 
Accumulated other comprehensive loss   (2,320)   (439)
Accumulated deficit   (56,018)   (97,768)
TOTAL SHAREHOLDERS’ EQUITY   455,828    400,541 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $594,056   $535,778 

 

/s/ Jason Simpson   /s/ Elizabeth McGregor
Jason Simpson, Director   Elizabeth McGregor, Director

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

Page 2

 

 

ORLA MINING LTD.

Condensed Interim Consolidated Statements of Income and Comprehensive Income

(Unaudited - thousands of United States dollars, except per-share amounts)

 

   Three months ended June 30   Six months ended June 30 
   2024   2023   2024   2023 
REVENUE (note 4)  $84,570   $59,272   $151,848   $110,403 
                     
COST OF SALES                    
Operating costs (note 5(a))   (18,524)   (13,458)   (36,633)   (25,250)
Depletion and depreciation   (9,575)   (6,827)   (18,374)   (12,681)
Royalties (note 5(b))   (2,098)   (1,448)   (3,766)   (2,754)
    (30,197)   (21,733)   (58,773)   (40,685)
                     
EARNINGS FROM MINING OPERATIONS   54,373    37,539    93,075    69,718 
                     
GENERAL AND ADMINISTRATIVE EXPENSES (note 7)   (3,878)   (3,107)   (7,747)   (6,372)
                     
EXPLORATION AND EVALUATION (note 6)   (6,649)   (7,201)   (11,393)   (14,067)
                     
OTHER                    
Interest income   5,715    1,189    7,120    2,320 
Depreciation   (126)   (120)   (253)   (238)
Share based payments (note 20)   (835)   (806)   (2,254)   (1,913)
Interest and accretion expense (note 8)   (2,067)   (2,655)   (4,142)   (5,902)
Foreign exchange and other gains (losses)   2,080    (1,240)   3,024    (2,042)
    4,767    (3,632)   3,495    (7,775)
                     
INCOME BEFORE TAXES   48,613    23,599    77,430    41,504 
Income taxes (note 27)   (24,348)   (10,772)   (35,680)   (15,442)
                     
INCOME FOR THE PERIOD  $24,265   $12,827   $41,750   $26,062 
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Items that may in future periods be reclassified to profit or loss:                    
Foreign currency differences arising on translation   (579)   1,444    (1,881)   1,505 
TOTAL COMPREHENSIVE INCOME  $23,686   $14,271   $39,869   $27,567 
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (note 19)                    
Basic (millions)   318.0    311.2    316.6    308.8 
Diluted (millions)   333.0    329.4    330.5    327.5 
                     
EARNINGS PER SHARE (note 19)                    
Basic  $0.08   $0.04   $0.13   $0.08 
Diluted  $0.07   $0.04   $0.13   $0.08 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

Page 3

 

 

ORLA MINING LTD.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited - thousands of United States dollars)

 

   Three months ended June 30   Six months ended June 30 
   2024   2023   2024   2023 
OPERATING ACTIVITIES                    
Income for the period  $24,265   $12,827   $41,750   $26,062 
Adjustments for:                    
Interest and accretion expense (note 8)   2,067    2,655    4,142    5,902 
Income tax expense   24,348    10,772    35,680    15,442 
Income taxes paid   (283)   (423)   (14,275)   (26,952)
Income tax instalments paid   (2,055)   (12,157)   (6,725)   (12,157)
Payment of cash settled RSUs and DSUs   —    —    —    (466)
Interest income not related to operating activities   (4,136)   —    (4,136)   — 
Adjustments for items not affecting cash:                    
Depreciation and depletion   9,701    6,947    18,627    12,919 
Share based payments expense (note 20)   835    806    2,254    1,913 
Unrealized foreign exchange loss (gain)   (1,520)   1,097    (2,431)   (706)
Other   (64)   (120)   (17)   399 
Cash provided by operating activities before changes in non-cash working capital   53,158    22,404    74,869    22,356 
Changes in non-cash working capital (note 22(b))   (4,189)   892    2,250    (3,982)
Cash provided by operating activities   48,969    23,296    77,119    18,374 
                     
INVESTING ACTIVITIES                    
Purchase of plant and equipment   (4,759)   (1,515)   (9,381)   (2,674)
Expenditures on mineral properties   (3,103)   (3,284)   (6,979)   (4,873)
Acquisition of Contact Gold Corp., net of cash received (note 13)   (2,666)   —    (2,666)   — 
Deposits and payments on long term assets   (2,743)   (38)   1,533    (166)
Restricted cash and environmental bonding   (3)   (7)   (5)   2,277 
Value added taxes and interest received   8,368    —    8,368    — 
Cash used in investing activities   (4,906)   (4,844)   (9,130)   (5,436)
                     
FINANCING ACTIVITIES                    
Proceeds from issuance of common shares, net   —    18,434    —    18,434 
Principal repayments of the Revolving Facility and Credit Facility (note 15)   (10,000)   (5,550)   (10,000)   (11,100)
Proceeds from exercise of stock options and warrants   4,417    1,917    4,589    4,885 
Interest paid   (1,793)   (2,658)   (3,672)   (6,952)
Lease payments   (243)   (268)   (483)   (430)
Cash provided by (used in) financing activities   (7,619)   11,875    (9,566)   4,837 
                     
Effects of exchange rate changes on cash   (209)   394    (753)   477 
                     
Net increase in cash   36,235    30,721    57,670    18,252 
Cash, beginning of period   118,067    83,809    96,632    96,278 
CASH, END OF PERIOD  $154,302   $114,530   $154,302   $114,530 

 

Supplemental cash flow information (note 22)

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

Page 4

 

 

ORLA MINING LTD.

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited - thousands of United States dollars)

 

   Common shares   Reserves             
   Number of
shares
(thousands)		   Amount   Share based
payments
reserve		   Warrants
reserve		   Total   Accumulated
Other
Comprehensive
Income (loss)		   Accumulated
deficit		   Total 
Balance at January 1, 2023   305,809   $445,316   $9,897   $14,112   $24,009   $(1,583)  $(70,758)  $396,984 
Shares issued pursuant to top up right, net   3,987    18,434    —    —    —    —    —    18,434 
Shares issued for property payments   61    242    —    —    —    —    —    242 
Warrants exercised (note 18)   864    2,149    —    (230)   (230)   —    —    1,919 
Options exercised (note 20)   2,598    4,247    (1,281)   —    (1,281)   —    —    2,966 
RSUs redeemed (note 20)   58    228    (228)   —    (228)   —    —    — 
Share based payments (note 20)   —    —    1,710    —    1,710    —    —    1,710 
Income for the period   —    —    —    —    —    —    26,062    26,062 
Other comprehensive income   —    —    —    —    —    1,505    —    1,505 
Balance at June 30, 2023   313,377   $470,616   $10,098   $13,882   $23,980   $(78)  $(44,696)  $449,822 
                                         
Balance at January 1, 2024   315,074   $474,361   $10,620   $13,767   $24,387   $(439)  $(97,768)  $400,541 
Shares issued pursuant to acquisition, (note 13)   2,221    8,937    —    —    —    —    —    8,937 
Share issuance costs (note 13)   —    (71)   —    —    —    —    —    (71)
Warrants exercised (note 18)   1,183    2,905    —    (313)   (313)   —    —    2,592 
Options exercised (note 20)   1,138    2,721    (724)   —    (724)   —    —    1,997 
RSUs redeemed (note 20)   139    623    (623)   —    (623)   —    —    — 
Share based payments (note 20)   —    —    1,963    —    1,963    —    —    1,963 
Income for the period   —    —    —    —    —    —    41,750    41,750 
Other comprehensive income   —    —    —    —    —    (1,881)   —    (1,881)
Balance at June 30, 2024   319,755   $489,476   $11,236   $13,454   $24,690   $(2,320)  $(56,018)  $455,828 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

Page 5

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts) 

 

1.CORPORATE INFORMATION AND NATURE OF OPERATIONS

 

Orla Mining Ltd. was incorporated in Alberta in 2007 and was continued into British Columbia in 2010 and subsequently into Ontario under the Business Corporations Act (Ontario) in 2014. In 2016, the Company was continued as a federal company under the Canada Business Corporations Act. The “Company”, “Orla”, “we”, and “our” refer to Orla Mining Ltd. and its subsidiaries. The registered office of the Company is located at Suite 1010, 1075 West Georgia Street, Vancouver, Canada.

 

The Company is engaged in the acquisition, exploration, development, and exploitation of mineral properties, and holds the Camino Rojo gold and silver mine in Zacatecas State, Mexico, the South Railroad and Lewis gold projects in Nevada, USA, and the Cerro Quema gold project in Panama.

 

These condensed interim consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.

 

2.BASIS OF PREPARATION

 

(a)Statement of compliance and basis of presentation

 

We have prepared these condensed interim consolidated financial statements of the Company in accordance with IAS 34 «Interim Financial Reporting» and do not include all the information required for full annual financial statements.

 

The preparation of these condensed interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

These condensed interim consolidated financial statements are presented in United States dollars and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated upon consolidation.

 

On August 12, 2024, the Board of Directors approved these condensed interim consolidated financial statements for issuance.

 

3.MATERIAL ACCOUNTING POLICY INFORMATION

 

These condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as at and for the years ended December 31, 2023 and 2022.

 

We applied the same accounting policies in these condensed interim consolidated financial statements as those applied in the Company’s audited consolidated financial statements as at and for the year ended December 31, 2023.

 

Page 6

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

In preparing these condensed interim consolidated financial statements, the significant judgements we made in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements as at and for the year ended December 31, 2023.

 

4.REVENUE

 

   Three months ended   Six months ended 
   June 30   June 30 
   2024   2023   2024   2023 
Gold  $81,314   $58,797   $147,282   $109,504 
Silver   3,256    475    4,566    899 
Revenue  $84,570   $59,272   $151,848   $110,403 
                     
Customer A  $12,320   $18,049   $16,981   $29,837 
Customer B   28,165    17,828    49,380    54,422 
Customer C   37,959    19,181    74,983    19,181 
Others   6,126    4,214    10,504    6,963 
Revenue  $84,570   $59,272   $151,848   $110,403 
                     

5.COST OF SALES

 

(a)Operating costs

 

   Three months ended   Six months ended 
   June 30   June 30 
   2024   2023   2024   2023 
Mining and processing costs  $18,118   $13,275   $35,877   $24,898 
Refining and transportation costs   406    183    756    352 
   $18,524   $13,458   $36,633   $25,250 
                     

 

Page 7

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

(b)Royalties

 

   Three months ended   Six months ended 
   June 30   June 30 
   2024   2023   2024   2023 
Camino Rojo Oxide 2% NSR royalty  $1,675   $1,175   $3,007   $2,184 
Mexican 0.5% Extraordinary Mining Duty   423    273    759    570 
   $2,098   $1,448   $3,766   $2,754 

 

6.EXPLORATION AND EVALUATION EXPENSES

 

   Three months ended   Six months ended 
   June 30   June 30 
   2024   2023   2024   2023 
Camino Rojo  $1,751   $2,304   $3,433   $3,991 
South Railroad   3,606    3,020    5,695    5,438 
Cerro Quema   1,209    1,761    2,080    4,405 
Other   83    116    185    233 
   $6,649   $7,201   $11,393   $14,067 
                     

7.GENERAL AND ADMINISTRATIVE EXPENSES

 

   Three months ended   Six months ended 
   June 30   June 30 
   2024   2023   2024   2023 
Office and administrative  $875   $834   $1,706   $1,544 
Professional fees   1,028    516    1,815    913 
Regulatory and transfer agent   49    110    326    396 
Salaries and benefits   1,926    1,647    3,900    3,519 
   $3,878   $3,107   $7,747   $6,372 

 

Page 8

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

8.INTEREST AND ACCRETION EXPENSE

 

   Three months ended   Six months ended 
   June 30   June 30 
   2024   2023   2024   2023 
Interest expense                    
Revolving Facility  $1,656   $—   $3,354   $— 
Interest expense on lease liabilities (note 16)   33    40    68    81 
Credit Facility (note 15)   —    2,309    —    4,577 
Fresnillo obligation   —    291    —    576 
Other   118    58    221    112 
Interest expense   1,807   $2,698    3,643   $5,346 
                     
Accretion expense                    
Accretion of site closure provisions (note 17)   138    121    255    265 
Deferred revenue   122    (309)   244    — 
Credit Facility (note 15)   —    145    —    291 
Accretion expense   260    (43)   499    556 
                     
Interest and accretion expense  $2,067   $2,655   $4,142   $5,902 

 

9.INVENTORY

 

   June 30,
2024		   December 31,
2023		 
Current          
Stockpiled ore  $1,017   $913 
In-process inventory   20,016    20,509 
Finished goods inventory   3,694    4,041 
Materials and supplies   3,932    3,988 
Inventory – current  $28,659   $29,451 
           
Long term          
Stockpiled low grade ore  $5,924   $5,627 
           

Long term inventory consists of stockpiled ore that is not expected to be processed within 12 months.

 

Included within inventory at June 30, 2024 is $9.3 million of depreciation and depletion (December 31, 2023 — $9.2 million).

 

Page 9

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

10.VALUE ADDED TAXES RECOVERABLE

 

   June 30,
2024		   December 31,
2023		 
Current portion  $6,880   $15,571 
Long term portion   759    826 
   $7,639   $16,397 
           

Value added taxes (“VAT”) paid in Mexico are fully recoverable. However, VAT recovery returns in Mexico are subject to complex filing requirements and detailed audit or review by the fiscal authorities. Consequently, the timing of receipt of refunds is uncertain. We have used judgement in classifying the current and non-current portions of our Mexican VAT receivables. Factors that we considered include (i) the regularity of payments received, (ii) discussions with and communications from the Mexican tax authorities with respect to specific claims, and (iii) the expected length of time for refunds in accordance with Mexico’s regulations.

 

At June 30, 2024, approximately 13.9 million Mexican pesos ($0.8 million) (December 31, 2023 — $0.8 million) were under dispute with the taxation authorities. This amount is classified as long-term.

 

Page 10

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

11.PROPERTY, PLANT AND EQUIPMENT

 

   Producing
mineral
property		   Buildings   Machinery
and
equipment		   Other
assets		   Other right
of use
assets		   Construction
in progress		   Total 
Cost                                   
At January 1, 2023  $115,753   $72,008   $52,345   $2,620   $4,160   $—   $246,886 
Additions   12,705    141    2,305    823    484    4,881    21,339 
Change in site closure provision (note 17)   (559)   (927)   (593)   —    —    —    (2,079)
Disposals   —    —    (5)   —    —    —    (5)
Derecognition   —    —    —    —    (117)   —    (117)
Due to changes in exchange rates   —    —    —    7    22    —    29 
At December 31, 2023   127,899    71,222    54,052    3,450    4,549    4,881    266,053 
Additions   6,979    158    1,904    194    657    7,120    17,012 
Change in site closure provision (note 17)   277    —    —    —    —    —    277 
Derecognition   —    —    —    —    (323)   —    (323)
Disposals   —    —    (253)   (145)   (1,071)   —    (1,469)
At June 30, 2024  $135,155   $71,380   $55,703   $3,499   $3,812   $12,001   $281,550 
                                    
Accumulated depreciation                                   
At January 1, 2023  $9,641   $6,286   $4,891   $705   $947   $—   $22,470 
Disposals   —    —    (5)   —    —    —    (5)
Depletion and depreciation   13,844    9,610    6,789    563    1,115    —    31,921 
Derecognition   —    —    —    —    (52)   —    (52)
At December 31, 2023   23,485    15,896    11,675    1,268    2,010    —    54,334 
Disposals   —    —    (253)   (145)   (1,071)   —    (1,469)
Depletion and depreciation   9,286    4,882    3,659    329    504    —    18,660 
At June 30, 2024  $32,771   $20,778   $15,081   $1,452   $1,443   $—   $71,525 
                                    
Net book value                                   
At December 31, 2023  $104,414   $55,326   $42,377   $2,182   $2,539   $4,881   $211,719 
At June 30, 2024  $102,384   $50,602   $40,622   $2,047   $2,369   $12,001   $210,025 

 

12.EXPLORATION AND EVALUATION PROPERTIES

 

Our exploration and evaluation properties consist of the South Railroad Project in Nevada, United States and the Cerro Quema Project in Panama).

 

   South Railroad   Cerro Quema   Total 
At December 31, 2023  $160,000   $10,000   $170,000 
Acquisition of Contact Gold Corp. (note 13)   12,203    —   $12,203 
At June 30, 2024  $172,203   $10,000   $182,203 

 

Page 11

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

13.ACQUISITION OF CONTACT GOLD CORP.

 

On April 29, 2024, the Company completed the acquisition of Contact Gold Corp. (“Contact”) through a court-approved plan of arrangement (the “Transaction”). On closing of the Transaction, shareholders of Contact received 0.0063 (“Exchange Ratio”) Orla shares for each share of Contact held. This resulted in the issuance of 2,220,901 Orla common shares to Contact shareholders. The Contact warrants which were outstanding at April 29, 2024 (the “Contact Warrants”) became exercisable for shares of Orla based on the Exchange Ratio, resulting in 315,000 Orla shares issuable on exercise of such warrants. We accounted for this acquisition as a purchase of assets. Accordingly, we allocated the sum of consideration paid and transaction costs incurred to the net assets acquired based on relative fair values.

 

The purchase consideration was calculated follows:

 

Estimated fair value of 2,220,901 common shares issued by the Company  $8,937 
Transaction costs   2,676 
Total purchase consideration  $11,613 

 

Assets acquired and liabilities assumed:

 

Cash and cash equivalents  $83 
Restricted cash   18 
Receivables and other assets   209 
Trade and other payables   (717)
Lease liabilities   (27)
Asset retirement obligations   (156)
Exploration and evaluation properties – South Railroad   12,203 
Total assets acquired and liabilities assumed, net  $11,613 

 

The fair value of Orla common shares issued was determined using the Company’s closing share price of C$5.50 on the trading day immediately prior to the date of closing of the Transaction and the exchange rate of 1.3668 CAD/USD.

 

Each Contact Warrant gives the holder rights to acquire common shares of the Company in accordance with the terms of the plan of arrangement. The effective exercise price of the Contact Warrants (C$7.94 per Orla share) was determined by dividing the exercise price of the Contact warrants by the Exchange Ratio. The fair value of the Contact Warrants was determined using the Black-Scholes option pricing model. On issuance, the weighted average fair value of the Contact Warrants was C$0.93 per share issuable under the warrants. However, the effect of the Contact Warrants on the purchase consideration was immaterial and was therefore not included.

 

(a)Mineral properties acquired

 

The Contact properties acquired consist primarily of the Pony Creek property and the Green Springs property, as well as several other smaller properties. These properties are now included within the South Railroad Project for accounting purposes.

 

(i)Pony Creek

 

The Pony Creek property is located adjacent to the South Railroad property and situated within a prospective land package along the Carlin Trend in Nevada. The property is subject to a 3% net smelter return (“NSR”) royalty in favour of Sandstorm Gold Ltd.

 

Page 12

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

(ii)Green Springs

 

The Green Springs property is an early-stage exploration property located in the southern end of Nevada’s Cortez trend. Certain claims within Green Springs are subject to NSR royalties ranging from 3% to 4.5%.

 

Pursuant to an agreement with Centerra Gold Inc. (“Centerra”), dated December 8, 2022, Centerra has an option to acquire a 70% interest in Green Springs for cumulative earn-in exploration expenditures and aggregate cash payments to the Company as follows:

 

In thousands of US dollars  Cash payments   Exploration
expenditures
commitment		 
On signing (completed)  $150   $— 
On or before December 8, 2023 (completed)   175    1,500 
On or before December 8, 2024   175    2,000 
On or before December 8, 2025   250    2,750 
On or before December 8, 2026   250    3,750 
   $1,000   $10,000 

 

Provided Centerra fulfills the total exploration expenditure commitment and makes the required cash payments, a joint venture is to be established to manage and operate the property. Both parties will proportionately fund future activities at Green Springs, subject to dilution provisions. If the Company’s interest is diluted to less than 10%, it will convert to a 1.5% NSR royalty interest.

 

The Company’s accounting policy is to credit any consideration received pursuant to farm-out agreements in respect of exploration and evaluation properties against the carrying amount of the exploration and evaluation asset, with any excess consideration greater than the carrying amount being credited to profit or loss.

 

14.TRADE PAYABLES AND ACCRUED LIABILITIES

 

   June 30,
2024		   December 31,
2023		 
Trade payables and accrued trade liabilities  $11,853   $9,793 
Royalties payable (note 5(b))   2,387    2,466 
Payroll related   4,120    6,532 
Current portion of lease obligations (note 16)   682    915 
Accrued interest payable   —    59 
Other   554    891 
   $19,596   $20,656 

 

Page 13

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

15.LONG TERM DEBT

 

   Credit Facility   Revolving
Facility		 
At January 1, 2023  $122,995   $— 
Converted from Credit Facility to Revolving Facility   (113,350)   113,350 
Unamortized transaction costs expensed   1,455    — 
Principal repayments during the period   (11,100)   (25,000)
At December 31, 2023   —    88,350 
Principal repayments during the period   —    (10,000)
At June 30, 2024  $—   $78,350 

 

In April 2022, the Company entered into a credit facility (the “Credit Facility”) consisting of a $100 million term facility and a $50 million revolving facility through a syndicate of lenders. In August 2023, the term facility was extinguished in its entirety and the amounts due thereunder were transferred to a new $150 million revolving facility (the “Revolving Facility”).

 

The Revolving Facility has a four-year term maturing on August 28, 2027, with an option to increase this facility to $200 million, subject to certain conditions.

 

The applicable interest rate for the Revolving Facility is 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. During the quarter ended June 30, 2024, the average interest rate paid on the Revolving Facility was 7.9% per annum (three months ended June 30, 2023 – 7.8% on the Credit Facility).

 

A standby fee is payable on the undrawn portion of the Revolving Facility. The standby fee is charged at 0.56% to 0.84% depending on the leverage ratio. At June 30, 2024, the undrawn amount was $71.6 million.

 

We may prepay all or any portion of the amounts owed under the Revolving Facility without penalty.

 

The Revolving Facility is secured by the Company’s present and future assets, property and all proceeds thereof, other than present and future assets owned by Minera Cerro Quema which are excluded from the collateral. The Company is prohibited from declaring, paying or setting aside for payment any dividends unless certain financial covenants and ratios are met.

 

The Revolving Facility includes covenants customary for a facility of this nature, including compliance with customary restrictive covenants, and the following financial covenants all as defined in the related agreements:

 

•maintaining a leverage ratio at less than or equal to 3.50,

•an interest service coverage ratio at greater than or equal to 4,

•a tangible net worth greater than or equal to $278.6 million, and

•minimum liquidity in an amount greater than or equal to $15.0 million.

 

As at June 30, 2024, the Company was in compliance with all covenants.

 

Subsequent to the reporting period, the Company made a principal repayment of $20 million on the Revolving Facility.

 

Page 14

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

16.LEASE OBLIGATIONS

 

The Company has lease contracts for mining equipment, vehicles and buildings. Leases of mining equipment have lease terms of five years, while vehicles and buildings generally have lease terms between three and five years.

 

(a)Lease obligations

 

   June 30,
2024		   December 31,
2023		 
Beginning of year  $2,908   $3,173 
Acquisition of Contact Gold Corp. (note 13)   27    — 
Additions   657    484 
Interest expense (note 8)   68    156 
Lease payments   (551)   (1,125)
Derecognition   (323)   — 
Due to changes in exchange rates   (199)   220 
End of period  $2,587   $2,908 
           
Current (note 14)  $682   $915 
Non-current   1,905    1,993 
   $2,587   $2,908 

 

(b)Lease expenses recognized

 

   Three months ended
June 30		   Six months ended
June 30		 
   2024   2023   2024   2023 
Interest on lease liabilities  $33   $40   $68   $81 
Variable lease payments not included in the measurement of lease liabilities   4,539    3,181    7,584    6,584 
Expenses relating to short-term leases   90    50    178    119 
Expenses relating to leases of low-value assets, excluding short-term leases   4    31    22    64 
   $4,666   $3,302   $7,852   $6,848 

 

Page 15

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

17.SITE CLOSURE PROVISIONS

 

   Camino
Rojo		   Nevada
projects		   Cerro
Quema
Project		   Total 
At December 31, 2022  $6,301   $1,617   $343   $8,261 
Changes in cost estimates   (1,996)   463    157    (1,376)
Accretion during the period   521    18    —    539 
At December 31, 2023   4,826    2,098    500    7,424 
Acquisition of Contact Gold Corp. (note 13)   —    156    —    156 
Changes in cost estimates   277    (17)   —    260 
Accretion during the period (note 8)   243    12    —    255 
At June 30, 2024  $5,346   $2,249   $500   $8,095 

 

   June 30, 2024   December 31, 2023 
   Camino Rojo   Nevada
projects		   Cerro
Quema
Project		   Camino Rojo   Nevada
projects		   Cerro
Quema
Project		 
Estimated settlement dates    2033 to 2047    2034          2033 to 2047    2034      
                               
Undiscounted risk-adjusted cash flows  $10,236   $2,453   $500   $9,765   $2,336   $500 
Inflation rate   4.0%   2.6%   —    3.7%   2.6%   — 
Discount rate   9.5%   4.0%   —    9.8%   3.6%   — 

 

18.SHARE CAPITAL

 

(a)Authorized share capital

 

The Company’s authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.

 

Page 16

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

(b)Warrants

 

The following summarizes information about shares issuable upon the exercise of warrants outstanding during the period.

 

Expiry date  Exercise
price		   December 31,
2023		   Contact Gold
acquisition		   Exercised   Expired   June 30, 2024 
December 18, 2026  C$3.00    28,253,200         (1,183,200)   —    27,070,000 
February 23, 2026 (note 13)  C$7.94    —    315,000    —    —    315,000 
Shares issuable upon exercise of warrants        28,253,200    315,000    (1,183,200)   —    27,385,000 
                               
Weighted average exercise price       C$3.00   C$7.94   C$3.00   C$—   C$3.06 

 

Subsequent to the reporting period, the Company issued 500,000 common shares for proceeds of $1.1 million pursuant to the exercise of warrants.

 

19.EARNINGS PER SHARE

 

Earnings per share has been calculated using the weighted average number of common shares outstanding for the three months ended June 30, 2024 and 2023 as follows:

 

(a)Basic

 

   Three months ended
June 30		   Six months ended
June 30		 
   2024   2023   2024   2023 
Income for the period  $24,265   $12,827   $41,750   $26,062 
Weighted average number of common shares (thousands)   318,033    311,186    316,567    308,763 
Basic earnings per share  $0.08   $0.04   $0.13   $0.08 

 

Page 17

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements 

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

(b)Diluted

 

   Three months ended
June 30		   Six months ended
June 30		 
  2024   2023   2024   2023 
Income for the period  $24,265   $12,827   $41,750   $26,062 
                     
Weighted average number of common shares (thousands)   318,033    311,186    316,567    308,763 
Dilutive potential ordinary shares                    
     Warrants   12,491    14,273    11,401    14,180 
     Options   728    2,484    853    3,166 
     RSUs   401    246    406    309 
     DSUs   895    661    801    613 
     Bonus shares   500    500    500    500 
Weighted average number of ordinary shares   333,048    329,350    330,528    327,531 
                     
Diluted earnings per share  $0.07   $0.04   $0.13   $0.08 

 

20.SHARE-BASED PAYMENTS

 

The Company has five different forms of share-based payments for eligible recipients – stock options, restricted share units (“RSUs”), deferred share units (“DSUs”), performance share units (“PSUs”), and bonus shares. The bonus shares have fully vested but have not yet been issued.

 

  Three months ended
June 30		   Six months ended
June 30		 
Share-based payments expense  2024   2023   2024   2023 
Stock options (note 20(a))  $315   $364   $598   $720 
Restricted share units (note 20(b))   352    275    633    551 
Deferred share units (note 20(c))   1    75    732    550 
Performance share units (note 20(d))   167    92    291    92 
Share based payments expense  $835   $806   $2,254   $1,913 

 

Page 18

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements 

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

(a)Stock options

 

Stock options granted by the Company have a five-year life, with one third each vesting one, two, and three years after grant date.

 

   Six months ended June 30 
   2024   2023 
Stock options outstanding  Number   Weighted
average
exercise price		   Number   Weighted
average
exercise price		 
Outstanding, January 1   5,523,297   C$ 4.93    9,178,889   C$3.71 
Granted   651,955    5.13    457,260    6.57 
Exercised   (1,137,594)   2.40    (2,597,240)   1.55 
Expired, forfeited or cancelled   (118,411)   14.20    (211,222)   14.39 
Outstanding, June 30   4,919,247   C$5.32    6,827,687   C$4.39 
                     
Vested, June 30   3,521,678   C$5.23    5,468,882   C$4.04 

 

The stock options granted during the three months ended June 30, 2024 had a grant date fair value of C$1.6 million ($1.2 million) using the Black Scholes option pricing model with the following weighted average assumptions:

 

·Share price at grant date – C$5.13, expected volatility 50%, expected life - 5 years, risk free interest rate 3.5% and expected dividends – nil.

 

(b)Restricted share units (“RSUs”)

 

RSUs awarded by the Company typically vest one-third each one, two, and three years after award date.

 

   Six months ended June 30 
Number of RSUs outstanding:  2024   2023 
Outstanding, January 1   580,219    443,267 
Awarded   409,014    295,429 
Vested and settled   (139,200)   (152,203)
Forfeitures   (6,850)   — 
Outstanding, June 30   843,183    586,493 

 

Page 19

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements 

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

       Number vesting in the year 
Number of RSUs outstanding:  Total   2024   2025   2026   2027 
Outstanding, June 30, 2023   586,493    335,811    152,193    98,489    — 
Outstanding, June 30, 2024   843,183    —    478,326    230,047    134,810 

 

Restricted Share Units (“RSUs”) are valued based on the closing price of the Company’s common shares on the trading day immediately prior to award. As at June 30, 2024, all RSU’s outstanding were accounted for as equity-settled.

 

During the three months ended June 30, 2024, there were no RSUs settled in cash (three months ended June 30, 2023 – 94,063 RSUs settled in cash for $0.5 million).

 

(c)Deferred share units (“DSUs”)

 

DSUs are awarded by the Company to directors. These DSUs vest immediately but are not settled until the end of the director’s tenure. They may be settled in cash or common shares at the option of the Company. DSUs are valued using the closing price of the Company’s common shares immediately prior to award.

 

   Six months ended June 30 
Number of DSUs outstanding:  2024   2023 
Outstanding, January 1   701,927    559,725 
Awarded and vested immediately   192,976    117,265 
Outstanding, June 30   894,903    676,990 
           
Vested, June 30   894,903    676,990 

 

(d)Performance share units (“PSUs”)

 

In March 2023, the Board of Directors approved a PSU plan for certain officers of the Company. The PSUs cliff vest after three years and are settled in cash. The cash payment upon vesting will be based on the number of PSUs, multiplied by the five-day volume weighted average price of the Company’s shares upon vesting, which is then multiplied by a “performance percentage”. The performance percentage ranges from 0% to 200% based on the Company’s total shareholder return compared to a peer group, consisting of the constituents of the S&P/TSX Global Gold Index.

 

We recognize share-based compensation expense related to these PSUs over the vesting period. We adjust the amount recognized at each reporting period to reflect changes in quoted market values of the Company and the peer group, the lapsed portion of the vesting period, the number of PSUs expected to vest, and the expected performance percentage.

 

Page 20

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements 

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

On March 30, 2024, the Company issued a total of 324,139 PSUs.

 

   Six months ended June 30 
Number of PSUs outstanding:  2024   2023 
Outstanding, January 1   198,737    — 
Awarded during the period   324,139    198,737 
Outstanding, June 30   522,876    198,737 
           
Vested, June 30   —    — 

 

(e)Bonus shares

 

There are 500,000 common shares which were awarded to the non-executive Chairman of the Company as bonus shares, which vested on June 18, 2020. Although the bonus shares have vested, they will become issuable (1) when the non-executive Chairman ceases to act as a director of the Company, or (2) upon a change of control of the Company.

 

21.RELATED PARTY TRANSACTIONS

 

The Company’s related parties include:

 

Related party  Nature of the relationship
Key management personnel  Key management personnel are the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Chief Sustainability Officer, the Senior Vice President Exploration, and members of the Board of Directors of the Company.

 

(a)Key management personnel

 

Compensation to key management personnel was as follows:

 

   Three months ended
June 30		   Six months ended
June 30		 
  2024   2023   2024   2023 
Salaries and short term incentives  $414   $391   $2,260   $2,675 
Directors’ fees   149    84    300    167 
Share based payments   297    394    1,329    1,317 
   $860   $869   $3,889   $4,159 

 

(b)Transactions

 

The Company had no other material transactions with related parties other than key management personnel during the three months ended June 30, 2024, and 2023.

 

Page 21

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements 

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

(c)Outstanding balances at the reporting date

 

At June 30, 2024, estimated accrued short term incentive compensation totaled $0.7 million and is included in accrued liabilities (December 31, 2023 – $1.4 million).

 

22.SUPPLEMENTAL CASH FLOW INFORMATION

 

(a)Cash and cash equivalents

 

Cash and cash equivalents consists of bank current accounts and cash on hand.

 

(b)Changes in non-cash working capital

 

   Three months ended
June 30		   Six months ended
June 30		 
  2024   2023   2024   2023 
Accounts receivable and prepaid expenses  $887   $(692)  $(125)  $(1,547)
Inventory   (130)   (1,546)   533    (3,962)
Valued added taxes recoverable   (1,257)   1,494    3,837    2,777 
Trade payables and accrued liabilities   (3,689)   1,636    (1,995)   (1,250)
Changes in non-cash working capital  $(4,189)  $892   $2,250   $(3,982)

 

(c)Non-cash investing and financing activities

 

   Three months ended
June 30		   Six months ended
June 30		 
  2024   2023   2024   2023 
Financing activities                    
Stock options exercised, credited to share capital with an offset to reserves  $652   $526   $724   $1,281 
Warrants exercised, credited to share capital with an offset to reserves   313    82    313    230 
Common shares issued on maturity of RSUs, credited to share capital with an offset to reserves   385    10    623    228 
                     
Investing activities                    
Marketable securities adjustment included in account receivable   —    (7)   —    (3)

 

Page 22

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements 

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

23.SEGMENT INFORMATION

 

(a)Reportable segments

 

The operating and reportable segments of the Company are based on the reports which are reviewed by the chief operating decision maker (“CODM”) in making strategic resource allocation decisions. These operating segments are (1) the Camino Rojo Mine, (2) the Cerro Quema project, (3) the Nevada projects and (4) the corporate office. The operating segments other than corporate office are each managed by a dedicated General Manager and management team. The corporate office oversees the plans and activities of early-stage exploration projects.

 

(b)Geographic segments

 

We conduct our activities in four geographic areas: Mexico, Panama, Nevada USA, and Canada (Corporate).

 

(i)Income (loss) for the period by segment

 

Six months ended June 30, 2024  Mexico   Panama   Nevada   Corporate   Total 
Revenue (note 4)  $151,848   $—   $—   $—   $151,848 
Cost of sales   (58,773)   —    —    —    (58,773)
Earnings from mining operations   93,075    —    —    —    93,075 
General and administrative expenses (note 7)   —    (116)   —    (7,631)   (7,747)
Exploration and evaluation expenses (note 6)   (3,433)   (2,080)   (5,695)   (185)   (11,393)
Interest income   6,475    —    —    645    7,120 
Depreciation   (42)   —    (74)   (137)   (253)
Share based payments (note 20)   (70)   (46)   (162)   (1,976)   (2,254)
Interest and accretion expense   (274)   —    (303)   (3,565)   (4,142)
Foreign exchange and other gain (loss)   1,732    —    —    1,292    3,024 
Income taxes   (35,070)   —    —    (610)   (35,680)
Income (loss) for the period  $62,393   $(2,242)  $(6,234)  $(12,167)  $41,750 

 

Page 23

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

Six months ended June 30, 2023  Mexico   Panama   Nevada   Corporate   Total 
Revenue (note 4)  $110,211   $—   $—   $192   $110,403 
Cost of sales   (40,616)   —    —    (69)   (40,685)
Earnings from mining operations   69,595    —    —    123    69,718 
General and administrative expenses (note 7)   —    —    —    (6,372)   (6,372)
Exploration and evaluation expenses (note 6)   (3,991)   (4,405)   (5,438)   (233)   (14,067)
Interest income   1,883    —    —    437    2,320 
Depreciation   (28)   (8)   (64)   (138)   (238)
Share based payments (note 20)   (88)   (41)   (146)   (1,638)   (1,913)
Interest and accretion expense   (869)   —    (59)   (4,974)   (5,902)
Foreign exchange and other gain (loss)   (1,062)   —    —    (980)   (2,042)
Income taxes   (14,588)   —    —    (854)   (15,442)
Income (loss) for the period  $50,852   $(4,454)  $(5,707)  $(14,629)  $26,062 

 

(ii)Assets by segment

 

At June 30, 2024  Mexico   Panama   Nevada   Corporate   Total 
Property, plant and equipment  $208,844   $—   $454   $727   $210,025 
Exploration and evaluation properties   —    10,000    172,203    —    182,203 
Total assets   380,540    10,812    172,893    29,811    594,056 

 

At December 31, 2023  Mexico   Panama   Nevada   Corporate   Total 
Property, plant and equipment  $210,339   $—   $525   $855   $211,719 
Exploration and evaluation properties   —    10,000    160,000    —    170,000 
Total assets   336,374    10,673    161,137    27,594    535,778 

 

24.CAPITAL MANAGEMENT

 

(a)Objectives

 

Our objectives when managing capital are to safeguard the Company’s ability to continue as a going concern to pursue the exploration, evaluation, development, and exploitation of our mineral properties and to maintain a flexible capital structure.

 

We manage our capital structure and adjust it considering changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the Company’s capital structure, we may issue new shares, take on additional debt or repay outstanding debt, or acquire or dispose of assets. We currently do not pay regular dividends.

 

Page 24

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

Our ability to carry out our long-range strategic objectives in future periods depends on our ability to generate positive cash flows from our mining operations and to raise financing from lenders, shareholders, and new investors. We regularly review and consider financing alternatives to fund the Company’s ongoing operational, exploration and development activities.

 

(b)Investment policy

 

Our investment policy is to invest the Company’s excess cash in low-risk financial instruments such as demand deposits and savings accounts with major Canadian banks. By using this strategy, the Company preserves its cash resources and can marginally increase these resources with low risk through the yields on these investments. Our financial instruments are exposed to certain financial risks, which include currency risk, credit risk, and liquidity risk.

 

25.FINANCIAL INSTRUMENTS

 

(a)Fair value hierarchy

 

To provide an indication of the reliability of the inputs used in determining fair value, we classify our financial instruments into the three levels prescribed by the accounting standards.

 

Level 1The fair value of financial instruments traded in active markets (such as publicly traded equity securities) is based on quoted (unadjusted) market prices as at the reporting date. The quoted market price used for financial assets held by the Company is the closing trading price on the reporting date. Such instruments are included in Level 1.

 

Level 2The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, we include that instrument in Level 2.

 

Level 3If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

 

The carrying value of cash and cash equivalents, trade and other receivables, and restricted cash approximates the fair value due to the short-term nature of the instruments.

 

The fair value of the Revolving Facility is determined using discounted cash flows based on the expected amounts and timing of the cash flows discounted using a market rate of interest adjusted for appropriate credit risk.

 

The fair value of the Revolving Facility at June 30, 2024 was estimated at $78.4 million (December 31, 2023 - $88.4 million) using a discount rate of 7.9% (December 31, 2023 – 7.9%).

 

Page 25

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

At June 30, 2024, the carrying values and fair values of our financial instruments by category were as follows:

 

         Fair value 
   Classification  Carrying
value		  Level 1  Level 2  Level 3 
Financial assets                    
Cash and cash equivalents  FVTPL  $154,302  $154,302  $—  $— 
Accounts receivable  Amortized cost   98   98   —   — 
Restricted cash  Amortized cost   1,014   1,014   —   — 
      $155,414  $155,414  $—  $— 
                     
Financial liabilities                    
Lease obligation  Amortized cost   2,587   —   2,587   — 
Revolving Facility  Amortized cost   78,350   —   —   78,350 
      $80,937  $—  $2,587  $78,350 

 

At December 31, 2023, the carrying values and fair values of our financial instruments by category were as follows:

 

         Fair value 
   Classification  Carrying
value		  Level 1  Level 2  Level 3 
Financial assets                    
Cash and cash equivalents  FVTPL  $96,632  $96,632  $—  $— 
Accounts receivable  Amortized cost   18   18   —   — 
Restricted cash  Amortized cost   1,011   1,011   —   — 
      $97,661  $97,661  $—  $— 
                     
Financial liabilities                    
Accrued liabilities  Amortized cost   122   122   —   — 
Lease obligation  Amortized cost   2,908   —   2,908   — 
Revolving Facility  Amortized cost   88,350   —   —   88,350 
      $91,380  $122  $2,908  $88,350 

 

We determine whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

 

Page 26

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

26.COMMITMENTS AND CONTINGENCIES

 

(a)Commitments

 

The Company has issued purchase orders for construction, equipment purchases, materials and supplies, and other services at Camino Rojo. At June 30, 2024, these outstanding purchase orders and contracts totaled approximately $2.8 million (December 31, 2023 – $3.7 million), which we expect will be filled within the next 12 months.

 

The Company is committed to making severance payments totaling approximately $6.4 million (December 31, 2023 – $7.4 million) to certain officers and management in the event of a change in control. As the likelihood of these events occurring is not determinable, this amount is not reflected in these consolidated financial statements.

 

(b)Discretionary mineral property-related commitments

 

As is customary in mineral exploration, some of the mineral properties held by the Company as exploration and evaluation assets have annual minimum work commitments and lease payments required to maintain these properties in good standing pursuant to their underlying agreements.

 

(c)Contingencies

 

An ecological tax implemented by the state legislature of Zacatecas could have a significant impact on the economics of the Camino Rojo Project. This tax is applied to cubic metres of material extracted during mining, square metres of material impacted by dangerous substances, tonnes of carbon dioxide produced during mining processes, and tonnes of waste stored in landfills. The Company has received assessments related to previous periods in respect of this tax; however, the Company’s view is that the sections of the law pursuant to which these assessments have been issued do not apply to the Company at this time and, accordingly, we have filed the appropriate appeals. We expect this matter will be resolved by judicial process. As the outcome of these events is not determinable, no amounts have been accrued in respect of this tax.

 

We may, from time to time, be a party to legal proceedings, which arise in the ordinary course of our business. We are not aware of any pending or threatened litigation that, if resolved against us, would have a material effect on our consolidated financial position, results of operations or cash flows.

 

Page 27

 

 

ORLA MINING LTD 

Notes to the Condensed Interim Consolidated Financial Statements

Three and six months ended June 30, 2024 and 2023

(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)

 

27.INCOME TAXES

 

Tax expense consists of (i) current income tax on taxable income, (ii) 7.5% special mining duty ("SMD") on income subject to SMD, and (iii) withholding taxes attributable to interest charged on intercompany loans to the Mexican operating company, as well as (iv) deferred income tax, and (v) deferred special mining duty.

 

   Three months ended
June 30		   Six months ended
June 30		 
  2024  2023   2024  2023 
Current income tax  $14,240  $9,151   $20,134  $15,596 
Mexican 7.5% Special Mining Duty   4,316   3,058    7,241   5,772 
Withholding tax   283   423    610   854 
Deferred income tax (recovery)   5,159   (2,265)   7,344   (6,452)
Deferred Mexican 7.5% Special Mining Duty   350   405    351   (328)
Tax expense   $24,348  $10,772   $35,680  $15,442 

 

Page 28