Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Camino Rojo produced higher-than-planned ounces at low costs, driving increased margins and cash flow.
- Full-year production guidance increased to 120,000 to 130,000 ounces of gold.
- All-in sustaining cost guidance decreased to $800 to $900 per ounce of gold sold.
- Record revenue of $85 million for the quarter with strong earnings of $24.3 million.
- Successful recovery improvement program increased gold recovery by 3% to 5%.
Negative Points
- Second half of the year expected to have lower gold grades compared to the first half.
- Increased stripping ratio to 1.5 in the second half, impacting operational costs.
- Exploration and project costs were $9.7 million, impacting overall expenses.
- Permitting process in Nevada is ongoing and expected to continue through next year.
- Debt repayment efforts continue, with $78 million in debt remaining at the end of Q2.
Q & A Highlights
Q: Congrats on a great quarter and another year of increasing guidance. Just on the recovery improvements. Just wondering when you'd expect to start increasing that crush size and to the finer grind? And just on the impact of processing costs, if you have a sense of that at this point.
A: We began reducing the crush size in August of last year. This has been underway for over a year now, and we are now able to communicate the percentage increase in recovery. This increased recovery is part of the reason for our increased production guidance and lower all-in sustaining cost guidance. We have been able to achieve the reduced particle size while maintaining our stacking throughput and keeping costs within budget.
Q: Just on the second half of the year. Just trying to get a sense on kind of gold grades. We've seen elevated levels first half. I'd assume you'd expect a bit of a decline. And then kind of same idea for first strip ratio on the opposite.
A: For the second half of the year, recoveries and throughput will continue to be contributors, but the grades will begin to level out. We expect overall year-end grades to be in line with plan. Regarding the waste, we have increased our stripping ratio beginning in quarter two. The 1.5 range is a reasonable number to expect in the second half of this year, resulting in about 90% of our waste stripping plan for the year.
Q: For the accelerated stripping in the second half, how will those costs be classified, assume capitalized, but will they be inside or outside of all-in sustaining cost?
A: The costs will be expensed and will flow through inventory and be part of the cost of sales. We do not do capitalized stripping at this point.
Q: Can you provide more details on the recovery improvement program and its impact on production and costs?
A: The recovery improvement program started in August 2023 aimed to increase gold recovery by reducing the crusher product size while maintaining daily throughput. This has resulted in an increased gold recovery between 3% to 5%. The program has been successful in maintaining stacking throughput and keeping costs within budget.
Q: What are the key factors contributing to the increased production guidance for the full year?
A: The increased production guidance for the full year is a result of increased total stock material and improved recoveries. Overall grades for the year will remain in line with the plan. The benefits of increased production guidance will be a function of recovery and stacking rate.
Q: Can you provide an update on the permitting efforts to expand the mine in Mexico and Nevada?
A: We are continuing our permitting efforts to expand the mine in Mexico and have the flexibility of the current mine plan. The permitting process also continues in Nevada. We are working through the federal permitting process with the Bureau of Land Management. We anticipate permitting will continue through this year and next year in advance of the target construction start in 2026.
Q: What were the financial highlights for the quarter?
A: During the quarter, we sold 35,000 ounces at a realized gold price of $2,332 per ounce resulting in a record $85 million in revenue. All-in sustaining costs for the second quarter was $782 per ounce. Our earnings for the quarter was $24.3 million or $0.08 per share. Adjusted net earnings was $23 million or $0.07 per share. Cash flow from operating activities before changes in non-cash working capital was $53.2 million or $0.17 per share.
Q: Can you provide an update on the exploration program at Camino Rojo and South Railroad?
A: In the second quarter, we drilled over 10,000 meters with approximately 7,800 meters on the Camino Rojo sulfide extension and 2,300 meters at South Railroad. The drilling results indicate potential expansion of the Camino Rojo sulfide resources at depth. The 2024 exploration program will continue to test potential extension of mineral zones, including targets on the edge of the Pinion and Dark Star deposits.
Q: What are the sustainability efforts and achievements of Orla Mining?
A: We are advancing our 2030 sustainability strategy to produce a net positive benefit for our stakeholders. Our second sustainability report will be released shortly. We are collaborating to protect and restore ecosystems and maintain a low carbon intensity index from our Camino Rojo mine. We strive to foster a fair, safe, and healthy working environment and engage with all stakeholders to develop partnerships to maximize benefits.
Q: What are the future projections and strategic decisions for Orla Mining?
A: Our execution and delivery at Camino Rojo continue to underpin Orla's success. We are holding our costs and seeing margins expand in this healthy gold price environment. We are committed to paying down our debt and maintaining financial flexibility to fund our internal project pipeline, including our exploration programs. Our vision is to become the gold producer of choice.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
