Strategic Gold Mine Acquisition: Orla Mining Doubles Production with $850M Musselwhite Deal
Toronto, Monday, 18 November 2024.
In a transformative move announced today, Orla Mining will acquire the Musselwhite gold mine from Newmont for CAD 850 million, set to double its annual gold production to 300,000 ounces. The deal positions Orla for potential growth to 500,000 ounces annually through additional development projects, marking a significant shift from single-mine operator to multi-asset producer. The transaction, expected to close in Q1 2025, includes CAD 810 million upfront and CAD 40 million in contingent payments, with Musselwhite projected to generate over $150 million in yearly free cash flow over the next six years.
Orla’s Strategic Expansion
Orla Mining Ltd. (TSX:OLA) has strategically positioned itself to become a leading gold producer in North America with the acquisition of the Musselwhite gold mine. This acquisition, valued at CAD 850 million, is a part of Orla’s ambitious plan to bolster its annual gold output significantly. The deal not only promises to double Orla’s production capacity but also establishes a framework for future growth through the development of other potential projects, such as the South Railroad project in Nevada.
Financing the Acquisition
The financial structuring of the acquisition is meticulously planned to avoid upfront equity dilution for Orla’s shareholders. The CAD 810 million upfront payment will be sourced through a blend of debt, cash reserves, and innovative financial instruments, including a gold prepayment facility and convertible notes. This financing strategy ensures that Orla can maintain operational flexibility while pursuing its expansion goals[1][2].
Musselwhite Mine’s Future
Musselwhite, located in Ontario, is not just a strategic acquisition for Orla, but a robust asset with a proven track record of production and cash generation. The mine is expected to contribute significantly to Orla’s revenue streams, with an anticipated free cash flow exceeding $150 million annually over the next six years. Orla plans to optimize and invest in Musselwhite’s operations to enhance its reserves and extend its mine life, ensuring sustained profitability and growth[3][4].
Regulatory and Shareholder Approvals
The acquisition is subject to customary regulatory approvals and the approval of Orla’s shareholders, which is anticipated to occur at a special meeting in January 2025. The Board of Directors of Orla has unanimously approved the transaction, reflecting confidence in the strategic benefits of the acquisition. With the closing expected in the first quarter of 2025, this acquisition marks a pivotal moment in Orla’s growth strategy and positions the company to capitalize on higher market demands for gold[2][5].