EX-99.1 2 tm2311762d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

 

Presented in United States dollars

 

 

 

 

ORLA MINING LTD.

Condensed Interim Consolidated Balance Sheets

(Unaudited - thousands of United States dollars)

 

As at  March 31,
2023		   December 31, 2022 
ASSETS        
Current assets          
Cash and cash equivalents  $83,809   $96,278 
Trade and other receivables   357    365 
Value added taxes recoverable (note 10)   8,529    8,659 
Inventory (note 9)   24,878    22,446 
Prepaid expenses   3,677    2,824 
Restricted cash   —    2,290 
    121,250    132,862 
Restricted cash   1,148    1,142 
Value added taxes recoverable (note 10)   5,033    5,229 
Long-term inventory (note 9)   4,807    4,096 
Property, plant and equipment (note 11)   219,370    224,416 
Exploration and evaluation properties (note 12)   242,743    242,743 
Deferred tax asset   2,708    2,405 
Other non-current assets   1,052    923 
TOTAL ASSETS  $598,111   $613,816 
           
LIABILITIES          
Current liabilities          
Trade payables and accrued liabilities (note 13)  $14,917   $19,675 
Current portion of long term debt (note 14)   45,000    45,000 
Taxes payable   10,173    33,102 
    70,090    97,777 
Lease obligations (note 17)   2,234    2,327 
Long term debt (note 14)   95,390    100,795 
Deferred revenue   7,809    7,500 
Site closure provisions (note 18)   7,895    8,261 
Other long term liabilities   209    172 
TOTAL LIABILITIES   183,627    216,832 
           
SHAREHOLDERS' EQUITY          
Share capital (note 19)   449,647    445,316 
Reserves   23,882    24,009 
Accumulated other comprehensive income   (1,522)   (1,583)
Accumulated deficit   (57,523)   (70,758)
TOTAL SHAREHOLDERS' EQUITY   414,484    396,984 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $598,111   $613,816 

 

/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)

 

   Three months ended
March 31		 
   2023   2022 
REVENUE (note 4)  $51,131   $39,645 
           
COST OF SALES          
     Operating costs (note 5(a))   (11,792)   (9,366)
     Depletion and depreciation (note 5(c))   (5,854)   — 
     Royalties (note 5(b))   (1,306)   (1,064)
    (18,952)   (10,430)
           
EARNINGS FROM MINING OPERATIONS   32,179    29,215 
           
EXPLORATION AND EVALUATION EXPENSES (note 6)   (6,866)   (2,466)
GENERAL AND ADMINISTRATIVE EXPENSES (note 7)   (3,265)   (2,943)
           
OTHER          
     Interest income   1,131    168 
     Depreciation   (118)   (36)
     Share based payments (note 21)   (1,107)   (865)
     Interest and accretion expense (note 8)   (3,247)   (493)
     Foreign exchange and other gain (loss)   (802)   (1,363)
    (4,143)   (2,589)
           
INCOME BEFORE TAXES   17,905    21,217 
Income taxes (note 28)   (4,670)   (2,435)
           
INCOME FOR THE PERIOD  $13,235   $18,782 
           
OTHER COMPREHENSIVE INCOME          
Items that may in future periods be reclassified to profit or loss:          
Foreign currency differences arising on translation   61    1,063 
TOTAL COMPREHENSIVE INCOME  $13,296   $19,845 
           
           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (note 20)          
     Basic (millions)   306.3    247.8 
     Diluted (millions)   325.6    274.4 
           
EARNINGS PER SHARE (note 20)          
     Basic  $0.04   $0.08 
     Diluted  $0.04   $0.07 

 

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 March 31 
   2023   2022 
OPERATING ACTIVITIES          
Income for the period  $13,235   $18,782 
Adjustments for:          
Interest and accretion expense (note 8)   3,247    493 
Income tax expense   4,670    2,435 
Income taxes paid   (26,529)   (244)
Payment of cash settled RSUs and DSUs   (466)   (1,723)
Adjustments for items not affecting cash:          
Depreciation and depletion   5,972    375 
Share based payments (note 21)   1,107    865 
Unrealized foreign exchange loss (gain)   (1,803)   1,013 
Other   519    22 
Cash provided by (used in) operating activities before changes in non-cash working capital   (48)   22,018 
Accounts receivable and prepaid expenses   (855)   (3,840)
Inventory   (2,416)   (1,808)
Valued added taxes   1,283    — 
Trade payables and accrued liabilities   (2,886)   4,123 
Cash provided by (used in) operating activities   (4,922)   20,493 
           
INVESTING ACTIVITIES          
Purchase of plant and equipment   (1,159)   (928)
Deposits and other payments on long term assets   (128)   — 
Mineral properties and related construction   (1,589)   (5,643)
Restricted cash and environmental bonding   2,284    (40)
Value added taxes received   —    2,460 
Cash used in investing activities   (592)   (4,151)
           
FINANCING ACTIVITIES          
Principal repayments of the Credit Facility (note 15)   (5,550)   — 
Proceeds from exercise of stock options and warrants   2,968    1,377 
Interest paid   (4,294)   (3,237)
Lease payments   (162)   (132)
Cash provided by used in financing activities   (7,038)   (1,992)
           
Effects of exchange rate changes on cash   83    172 
           
Net increase (decrease) in cash   (12,469)   14,522 
Cash, beginning of period   96,278    20,516 
CASH, END OF PERIOD  $83,809   $35,038 
           
Supplemental cash flow information (note 23)          

 

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, 2022   247,600   $269,198   $10,051   $19,255   $29,306   $2,441   $(116,528)  $184,417 
Warrants exercised (note 19)   295    675    —    (82)   (82)   —    —    593 
Options exercised (note 21)   723    1,523    (739)   —    (739)   —    —    784 
RSUs redeemed (note 21)   36    138    (138)   —    (138)   —    —    — 
RSUs settled in cash (note 21)   —    (1,320)   (403)   —    (403)   —    —    (1,723)
Share based payments (note 21)   —    —    865    —    865    —    —    865 
Income for the period   —    —    —    —    —    —    18,782    18,782 
Other comprehensive income   —    —    —    —    —    1,063    —    1,063 
Balance at March 31, 2022   248,654   $270,214   $9,636   $19,173   $28,809   $3,504   $(97,746)  $204,781 
                                         
Balance at January 1, 2023   305,809   $445,316   $9,897   $14,112   $24,009   $(1,583)  $(70,758)  $396,984 
Shares issued for property payments   61    242    —    —    —    —    —    242 
Warrants exercised (note 19)   557    1,377    —    (148)   (148)   —    —    1,229 
Options exercised (note 21)   1,465    2,494    (755)   —    (755)   —    —    1,739 
RSUs redeemed (note 21)   55    218    (218)   —    (218)   —    —    — 
Share based payments (note 21)   —    —    994    —    994    —    —    994 
Income for the period   —    —    —    —    —    —    13,235    13,235 
Other comprehensive income   —    —    —    —    —    61    —    61 
Balance at March 31, 2023   307,947   $449,647   $9,918   $13,964   $23,882   $(1,522)  $(57,523)  $414,484 

 

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 months ended March 31, 2023 and 2022

(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, Cerro Quema gold project in Panama, and the South Railroad and Lewis gold projects in Nevada, USA.

 

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. The Company declared commercial production at Camino Rojo, effective April 1, 2022.

 

2.BASIS OF PREPARATION

 

(a)Statement of compliance and basis of presentation

 

These condensed interim consolidated financial statements have been prepared 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 May 11, 2023, the Board of Directors approved these condensed interim consolidated financial statements for issuance.

 

3.SIGNIFICANT ACCOUNTING POLICIES

 

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, 2022 and 2021.

 

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, 2022, except as noted herein. 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, 2022.

 

Page 6

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

4.REVENUE

 

Camino Rojo was under commissioning during the three months ended March 31, 2022. The Company declared commercial production at Camino Rojo, effective April 1, 2022.

 

Revenue by significant product type:

 

   Three months ended
March 31		 
   2023   2022
(note 29)		 
Gold  $50,707   $39,426 
Silver   424    219 
Revenue  $51,131   $39,645 
           
Customer A  $11,788   $39,645 
Customer B   36,594    — 
Others   2,749    — 
Revenue  $51,131   $39,645 

 

5.COST OF SALES

 

Camino Rojo was under construction during the three months ended March 31, 2022. The Company declared commercial production at Camino Rojo effective April 1, 2022. Consequently, no depletion or Extraordinary Mining Duty was recorded prior to April 1, 2022.

 

(a)Operating costs

 

   Three months ended
March 31		 
   2023   2022
(note 29)		 
Mining and processing costs  $11,623   $9,126 
Refining and transportation costs   169    240 
   $11,792   $9,366 

 

Page 7

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(b)Royalties

 

   Three months ended
March 31		 
   2023   2022 
Camino Rojo Oxide 2% NSR royalty (note 11)  $1,009   $1,064 
Mexican 0.5% Extraordinary Mining Duty   297    — 
   $1,306   $1,064 

 

(c)Depletion and depreciation

 

   Three months ended
March 31		 
   2023   2022 
Depletion of producing mineral property  $2,771   $— 
Depreciation of plant and equipment   3,083    — 
Depletion and depreciation  $5,854   $— 

 

6.EXPLORATION AND EVALUATION EXPENSES

 

   Three months ended
March 31		 
   2023   2022 
Camino Rojo  $1,687   $1,505 
Cerro Quema   2,644    727 
Nevada projects (South Railroad, Lewis and Monitor Gold)   2,418    83 
Other   117    151 
   $6,866   $2,466 

 

Page 8

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

7.GENERAL AND ADMINISTRATIVE EXPENSES

 

   Three months ended
March 31		 
   2023   2022 
Office and administrative  $710   $633 
Professional fees   397    450 
Regulatory and transfer agent   286    198 
Salaries and benefits   1,872    1,662 
   $3,265   $2,943 

 

8.INTEREST AND ACCRETION EXPENSE

 

   Three months ended
March 31		 
   2023   2022 
Interest (note 8(a))  $2,957   $14 
Accretion (note 8(b))   290    479 
Interest and accretion expense  $3,247   $493 

 

(a)Interest expense

 

   Three months ended
March 31		 
   2023   2022 
Credit Facility (note 15)  $2,268    — 
Fresnillo obligation (note 16)   285    — 
Interest expense on leases (note 17)   41    13 
Deferred revenue   309    — 
Other   54    1 
   $2,957   $14 

 

The Company declared commercial production at Camino Rojo effective April 1, 2022. Borrowing costs prior to that date were capitalized. Consequently, they do not appear in interest expense.

 

Page 9

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(b)Accretion expense

 

   Three months ended
March 31		 
   2023   2022 
Newmont loan  $—   $366 
Credit Facility (note 15)   146    — 
Accretion of site closure provisions   144    113 
   $290   $479 

 

9.INVENTORY

 

   March 31,
2023		   December 31,
2022		 
Current          
     Stockpiled ore  $1,282   $1,869 
     In-process inventory   19,138    15,961 
     Finished goods inventory   797    1,406 
     Materials and supplies   3,661    3,210 
     Inventory – current  $24,878   $22,446 
           
Long term          
     Stockpiled ore  $4,807   $4,096 

 

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

 

Included within inventory at March 31, 2023 is $7.2 million of depreciation (December 31, 2022 — $6.3 million).

 

10.VALUE ADDED TAXES RECOVERABLE

 

   March 31,
2023		   December 31,
2022		 
Current portion  $8,529   $8,659 
Long term portion   5,033    5,229 
   $13,562   $13,888 

 

Value added taxes (“IVA”) paid in Mexico are fully recoverable. However, IVA 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.

 

Page 10

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

Of the long term portion, approximately $4.7 million (December 31, 2022 — $4.4 million) is under dispute with the taxation authorities.

 

11.PROPERTY, PLANT AND EQUIPMENT

 

Our operating property is the Camino Rojo Oxide Gold Mine in Mexico and constitute substantially all our buildings, and machinery and equipment. Other assets and other right of use assets include assets located at other locations.

 

   Producing
mineral
property		   Buildings   Machinery
and
equipment		   Other assets   Other right
of use assets		   Total 
Cost                        
At December 31, 2021   —    66    5,238    1,261    2,119    8,684 
Additions   6,616    1,788    3,272    666    2,300    14,642 
Transfer from construction   127,002    58,869    36,684    608    —    223,163 
Reclassification of capitalized interest   (19,020)   11,585    7,341    94    —    — 
Change in site closure provision (note 18)   1,155    (300)   (190)   —    —    665 
Leased assets derecognized at end of lease   —    —    —    —    (215)   (215)
Due to changes in exchange rates   —    —    —    (9)   (44)   (53)
At December 31, 2022  $115,753   $72,008   $52,345   $2,620   $4,160   $246,886 
Additions   1,589    372    522    265    —    2,748 
Change in site closure provision (note 18)   (241)   (523)   (331)   —    —    (1,095)
Due to changes in exchange rates   —    —    —    1    —    1 
At March 31, 2023  $117,101   $71,857   $52,536   $2,886   $4,160   $248,540 
                               
Accumulated depreciation                              
At December 31, 2021   —    6    350    288    405    1,049 
Depletion and depreciation   9,641    6,280    4,541    421    764    21,647 
Leased assets derecognized at end of lease   —    —    —    —    (215)   (215)
Due to changes in exchange rates   —    —    —    (4)   (7)   (11)
At December 31, 2022  $9,641   $6,286   $4,891   $705   $947   $22,470 
Depletion and depreciation   3,110    1,867    1,305    160    258    6,700 
At March 31, 2023  $12,751   $8,153   $6,196   $865   $1,205   $29,170 
                               
Net book value                              
At December 31, 2022  $106,112   $65,722   $47,454   $1,915   $3,213   $224,416 
At March 31, 2023  $104,350   $63,704   $46,340   $2,021   $2,955   $219,370 

 

Page 11

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

12.EXPLORATION AND EVALUATION PROPERTIES

 

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

 

Acquisition costs  Nevada
projects		   Cerro Quema   Total 
As at March 31, 2023 and December 31, 2022  $160,314   $82,429   $242,743 

 

13.TRADE PAYABLES AND ACCRUED LIABILITIES

 

   March 31,
2023		   December 31,
2022		 
Trade payables  $2,756   $6,707 
Goods or services received awaiting vendor invoices   5,172    3,139 
Payroll related   3,853    3,380 
Royalties payable   1,295    2,119 
Current portion of lease obligations (note 17)   878    846 
Accrued interest on Credit Facility (note 15)   26    1,660 
Restricted share units expected to be cash settled (note 21(b))   —    352 
Other   937    1,472 
   $14,917   $19,675 

 

Page 12

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

14.LONG TERM DEBT

 

   March 31, 2023 
   Current   Long term   Total 
Credit Facility (note 15)  $22,200   $95,390   $117,590 
Fresnillo obligation (note 16)   22,800    —    22,800 
   $45,000   $95,390   $140,390 

 

   December 31, 2022 
   Current   Long term   Total 
Credit Facility (note 15)  $22,200   $100,795   $122,995 
Fresnillo obligation (note 16)   22,800    —    22,800 
   $45,000   $100,795   $145,795 

 

15.CREDIT FACILITY

 

On April 28, 2022, the Company entered into a Credit Facility consisting of a $100 million term facility and a $50 million revolving facility through a syndicate of lenders composed of The Bank of Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce. The Credit Facility is secured by the Company’s present and future assets, property and all proceeds thereof other than present and future assets owned by Cerro Quema, which is excluded from the collateral.

 

The Credit Facility consists of two parts:

 

1.$100 million term facility with a five-year term, repayable in 18 equal quarterly instalments commencing December 31, 2022.

 

2.$50 million revolving facility, with the ability to increase to $75 million subject to certain conditions and customary consents. The revolving facility has a three-year term, with an option to extend the term of the revolving facility by up to one-year intervals subject to certain conditions and customary consents. Full repayment of the revolving facility is due upon maturity.

 

The applicable interest rate for each Credit Facility is based on the term Secured Overnight Financing Rate (“SOFR”), plus an applicable margin ranging from 2.75% to 3.75% based on the Company’s leverage ratio at the end of each fiscal quarter. During the quarter ended March 31, 2023, the average interest rate paid on the outstanding Credit Facility was 7.4% per annum (three months ended March 31, 2022 – not applicable).

 

The undrawn portion of the revolving facility is subject to a standby fee ranging from 0.6875% to 0.9375%.

 

The Credit Facility is subject to certain covenants – refer to note 25(c) for details. The Company may prepay all or any portion of the amounts owed under the credit agreement without penalty.

 

Page 13

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

   Term facility   Revolving
facility		   Total 
At December 31, 2022  $93,338   $29,657   $122,995 
Interest expense during the period   1,721    547    2,268 
Accretion during the period   114    32    146 
Interest paid during the period   (1,703)   (541)   (2,244)
Principal repayments during the period   (5,550)   —    (5,550)
Reallocated to accrued interest payable   (19)   (6)   (25)
At March 31, 2023  $87,901   $29,689   $117,590 
                
Current   22,200    —    22,200 
Non-current   65,701    29,689    95,390 
   $87,901   $29,689   $117,590 

 

16.FRESNILLO OBLIGATION

 

Pursuant to the terms of the Layback Agreement, we agreed to pay Fresnillo total cash consideration of $62.8 million through the following staged payment schedule:

 

i.$25.0 million upon closing of the transaction (paid);
ii.$15.0 million on December 1, 2022 (paid); and
iii.$22.8 million on December 1, 2023

 

The amounts payable bear interest at 5% per annum, payable quarterly. To March 31, 2022, we capitalized the interest on this loan to “Mineral properties and related construction”. On April 1, 2022, we commenced commercial production at the Camino Rojo Oxide Gold Mine and began to expense the interest on this obligation.

 

   March 31,
2023		   December 31,
2022		 
Beginning of period  $22,800   $37,800 
Interest capitalized during the period   —    473 
Interest expense during the period (note 8)   285    1,383 
Principal repaid   —    (15,000)
Cash interest paid   (285)   (1,856)
 End of period  $22,800   $22,800 
           
Current   22,800    22,800 
Non-current   —    — 
   $22,800   $22,800 

 

Page 14

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

17.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

 

   March 31,
2023		   December 31,
2022		 
Beginning of year  $3,173   $1,401 
Additions   —    2,300 
Interest expense   41    87 
Lease payments   (203)   (661)
Due to changes in exchange rates   101    46 
End of period  $3,112   $3,173 
           
Current  $878   $846 
Non-current   2,234    2,327 
   $3,112   $3,173 

 

(b)Lease expenses recognized

 

   Three months ended
March 31		 
   2023   2022 
Interest on lease liabilities  $41   $13 
Variable lease payments not included in the measurement of lease liabilities   3,403    2,872 
Expenses relating to short-term leases   69    6 
Expenses relating to leases of low-value assets, excluding short-term leases   33    27 
   $3,546   $2,918 

 

Page 15

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

18.SITE CLOSURE PROVISIONS

 

   Camino
Rojo		   Cerro
Quema
Project		   Nevada
projects		   Total 
At December 31, 2021  $5,117   $343   $—   $5,460 
Acquisition of Gold Standard   —    —    1,603    1,603 
Changes in cost estimates   351    —    —    351 
Change in estimated cash flows resulting from current activities   427    —    —    427 
Remediation activities conducted during the period   (88)   —    —    (88)
Accretion during the period (note 8)   494    —    14    508 
At December 31, 2022   6,301    343    1,617    8,261 
Changes in cost estimates   (1,095)   —    281    (814)
Change in estimated cash flows resulting from current activities   304    —    —    304 
Accretion during the period (note 8)   140    —    4    144 
At March 31, 2023  $5,650   $343   $1,902   $7,895 
                     
Current  $—   $—   $—   $— 
Non-current   5,650    343    1,902    7,895 
   $5,650   $343   $1,902   $7,895 

 

   Camino
Rojo		   Cerro Quema
Project		   Nevada
projects		 
Estimated settlement dates  2033 to 2047       2034 
Undiscounted risk-adjusted cash flows  $9,345   $343   $2,102 
Inflation rate   5.3%   —    2.5%
Discount rate   9.5%   —    3.4%

 

19.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 months ended March 31, 2023 and 2022

(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 the number of warrants outstanding during the period.

 

Expiry date  Exercise
price		   December 31,
2022		   Exercised   Expired   March 31,
2023		 
December 18, 2026  C$3.00    29,545,000    (556,500)   —    28,988,500 
                          
Weighted average exercise price       C$3.00   C$3.00   C$—   C$3.00 

 

Subsequent to the reporting period, the Company issued 287,300 common shares for proceeds of C$861,900 ($640,000) pursuant to the exercise of warrants.

 

20.EARNINGS PER SHARE

 

Earnings (loss) per share has been calculated using the weighted average number of common shares outstanding for the three months ended March 31, 2023 and 2022 as follows:

 

(a)Basic

 

   Three months ended
March 31		 
   2023   2022 
Income for the period  $13,235   $18,782 
Weighted average number of common shares (thousands)   306,305    247,762 
Basic earnings per share  $0.04   $0.08 

 

Page 17

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(b)Diluted

 

   Three months ended
March 31		 
   2023   2022 
Income for the period  $13,235   $18,782 
           
Weighted average number of common shares (thousands)   306,305    247,762 
Weighted average shares dilution adjustments:          
     Warrants   14,076    18,665 
     Options   3,842    6,214 
     RSUs   357    593 
     DSUs   565    712 
     Bonus shares   500    500 
Weighted average number of ordinary shares   325,645    274,446 
           
Diluted earnings per share  $0.04   $0.07 

 

21.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
March 31		 
Share-based payments expense  2023   2022 
Stock options (note 21(a))  $356   $399 
Restricted share units (note 21(b))   276    193 
Deferred share units (note 21(c))   475    273 
Share based payments expense  $1,107   $865 

 

(a)Stock options

 

Stock options granted by the Company prior to 2022 typically had a five-year life, with one third each vesting on grant date, and one year and two years after grant date. Commencing in 2022, stock options granted by the Company have a five-year life, with one third each vesting one, two, and three years after grant date.

 

Stock options of Gold Standard Ventures Inc. (“Gold Standard”) that were outstanding at the acquisition date of August 12, 2022 were exchanged for options to acquire common shares of Orla (“Replacement Options”), resulting in the issuance of 1,758,334 Replacement Options, which are exercisable until their original expiry dates. For those individuals who did not continue on with Orla, the expiry date is capped at August 12, 2024.

 

Page 18

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

   Three months ended March 31 
   2023   2022 
Stock options outstanding  Number   Weighted
average
exercise price		   Number   Weighted
average
exercise price		 
Outstanding, January 1   9,178,889   C$3.71    9,900,874   C$1.86 
Granted   445,988    6.58    924,080    5.81 
Exercised   (1,464,553)   1.61    (722,500)   1.37 
Expired, forfeited or cancelled   (162,270)   17.02    —    — 
Outstanding, March 31   7,998,054   C$3.98    10,102,454   C$2.26 
                     
Vested, March 31   6,601,044   C$3.60    8,602,252   C$1.78 

 

The stock options granted during the three months ended March 31, 2023 had a grant date fair value of C$1.4 million ($1.0 million) using the following weighted average assumptions:

 

•Share price at grant date – C$6.58, expected volatility 50%, expected life - 5 years, risk free interest rate 3.0% and expected dividends – nil.

 

Subsequent to the reporting period, 608,109 stock options were exercised, for gross proceeds to the Company of C$840,000 ($622,000).

 

(b)Restricted Share Units

 

Restricted Share Units (“RSU’s) awarded by the Company typically vest one-third each one, two, and three years after award date.

 

   Three months ended
March 31		 
Number of RSUs outstanding:  2023   2022 
Outstanding, January 1  443,267   707,840 
Awarded  283,032   172,301 
Vested and settled  (149,651)  (402,430)
Forfeitures during the period  —   — 
Outstanding, March 31  576,648   477,711 

 

       Number vesting in the year 
Number of RSUs outstanding:  Total   2022   2023   2024   2025   2026 
Outstanding, March 31, 2022   477,711    41,865    242,610    135,798    57,438    — 
Outstanding, March 31, 2023   576,648    N/A    2,552    331,679    148,061    94,356 

 

Page 19

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

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. Certain RSUs may be settled in cash at the option of the Company.

 

During the three months ended March 31, 2023, the Company elected to settle 94,063 RSUs in cash for $0.5 million (three months ended March 31, 2022 — 365,935 RSUs cash-settled for $1.7 million).

 

(c)Deferred Share Units

 

Deferred Share Units (“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.

 

  Three months ended
March 31		 
Number of DSUs outstanding:  2023   2022 
Outstanding, January 1  559,725   707,028 
Awarded and vested immediately  98,781   57,692 
Outstanding, March 31  658,506   764,720 
         
Vested, March 31  658,506   764,720 

 

(d)Performance share units

 

In March 2023, the Board of Directors approved a performance share unit (“PSUs”) 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.

 

On March 27, 2023, the Company issued a total of 198,737 PSUs with an estimated aggregate grant date fair value of $1.27 million. To March 31, 2023, no share based compensation was recognized in respect of these PSUs as the amount was negligible.

 

Page 20

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

   Three months ended
March 31		 
Number of PSUs outstanding:  2023   2022 
Outstanding, January 1  —   — 
Granted during the period   198,737    — 
Outstanding, March 31   198,737    — 
           
Vested, March 31   —    — 

 

(e)Bonus shares

 

During 2017, the Board of Directors awarded 500,000 common shares to the non-executive Chairman of the Company as bonus shares. The bonus shares were subject to a vesting period from June 19, 2017, to June 18, 2020 (the “Eligibility Period”). The bonus shares 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.

 

Number of bonus shares outstanding:  March 31,
2023		   December 31,
2022		 
Outstanding   500,000    500,000 
Vested   500,000    500,000 

 

22.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.

 

Page 21

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(a)Key Management Personnel

 

Compensation to key management personnel was as follows:

 

   Three months ended
March 31		 
   2023   2022 
Salaries and short term incentives paid  $2,284   $1,531 
Directors’ fees   83    79 
Share based payments   923    745 
   $3,290   $2,355 

 

(b)Transactions

 

The Company had no other material transactions with related parties other than key management personnel during the three months ended March 31, 2023, and 2022.

 

(c)Outstanding balances at the Reporting Date

 

At March 31, 2023, estimated accrued short term incentive compensation totaled $0.3 million and is included in accrued liabilities (December 31, 2022 – $1.1 million).

 

23.SUPPLEMENTAL CASH FLOW INFORMATION

 

(a)Cash and cash equivalents

 

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

 

Page 22

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(b)Non-cash investing and financing activities

 

   Three months ended
March 31		 
   2023   2022 
Financing activities          
Stock options exercised, credited to share capital with an offset to reserves  $755   $739 
Warrants exercised, credited to share capital with an offset to reserves   148    82 
Common shares issued on maturity of RSUs, credited to share capital with an offset to reserves   218    541 
           
Investing activities          
Marketable securities adjustment included in account receivable with an offset to other gains   4    3 
Initial recognition of right of use assets with an offset to lease obligation   —    187 

 

24.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 Mexican project, (2) the Panamanian 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.

 

Page 23

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(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

 

   Mexico   Panama   Nevada   Corporate   Total 
Three months ended March 31, 2023                         
  Revenue (note 4)  $50,939   $—   $—   $192   $51,131 
  Cost of sales   (18,873)   —    —    (79)   (18,952)
  Earnings from mining operations   32,066    —    —    113    32,179 
  Exploration and evaluation expenses (note 6)   (1,675)   (2,654)   (2,418)   (119)   (6,866)
  General and administrative expenses (note 7)   —    —    —    (3,265)   (3,265)
  Depreciation   (14)   (4)   (31)   (69)   (118)
  Share based payments (note 21)   (41)   (18)   (47)   (1,001)   (1,107)
  Interest income   930    —    —    201    1,131 
  Interest and accretion expense   (441)   —    (338)   (2,468)   (3,247)
  Foreign exchange and other gain (loss)   (705)   —         (97)   (802)
  Income taxes   (4,239)   —    —    (431)   (4,670)
  Income (loss) for the period  $25,881   $(2,676)  $(2,834)  $(7,136)  $13,235 

 

   Mexico   Panama   USA   Corporate   Total 
Three months ended March 31, 2022                         
  Revenue (note 4)  $39,645   $—   $—   $—   $39,645 
  Cost of sales   (10,430)   —    —    —    (10,430)
  Earnings from mining operations   29,215    —    —    —    29,215 
  Exploration and evaluation expenses (note 6)   (1,505)   (727)   (83)   (151)   (2,466)
  General and administrative expenses (note 7)   —    —    —    (2,943)   (2,943)
  Depreciation   (1)   (3)   —    (32)   (36)
  Share based payments (note 21)   (20)   (13)   —    (832)   (865)
  Interest and finance costs   (340)   —    —    15    (325)
  Foreign exchange and other gain (loss)   (555)   —    —    (808)   (1,363)
  Current income taxes   (2,191)   —    —    (244)   (2,435)
  Income (loss) for the period  $24,603   $(743)  $(83)  $(4,995)  $18,782 

 

Page 24

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(ii)Assets by segment

 

   Mexico   Panama   Nevada   Corporate   Total 
At March 31, 2023                         
  Property, plant and equipment  $217,791   $35   $560   $984   $219,370 
  Exploration and evaluation properties   —    82,429    160,314    —    242,743 
  Total assets   332,828    83,484    163,155    18,644    598,111 

 

   Mexico   Panama   Nevada   Corporate   Total 
At December 31, 2022                         
  Property, plant and equipment  $222,767   $39   $577   $1,033   $224,416 
  Exploration and evaluation properties   —    82,429    160,314    —    242,743 
  Total assets   348,390    83,291    163,857    18,278    613,816 

 

25.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.

 

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.

 

Page 25

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(c)Credit Facility

 

On April 28, 2022, the Company entered into a Credit Facility which includes a $100 million term facility and a $50 million revolving facility pursuant to which we had drawn $30 million as of March 31, 2023. The agreement includes covenants customary for a facility of this nature, including compliance with customary restrictive covenants and financial covenants related to maintaining a leverage ratio at less than or equal to 3.00, an interest service coverage ratio at greater than or equal to 4, a tangible net worth greater than or equal to $151.6 million, and minimum liquidity in an amount greater than or equal to $15 million. The Company is prohibited from declaring, paying or setting aside for payment any dividends unless certain financial covenants and ratios are met.

 

As at March 31, 2023, the Company was in compliance with all covenants.

 

26.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 1 The 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 2 The 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 3 If 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, accounts receivable, restricted cash, trade payables and accrued liabilities approximates the fair value due to the short-term nature of the instruments. The fair value of the Credit Facility and Fresnillo obligation 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 Credit Facility at March 31, 2023 was estimated at $118.9 million (December 31, 2022 – $124.5 million) using a discount rate of 7.8% (December 31, 2022 – 7.5%). The fair value of the Fresnillo obligation at March 31, 2023 was estimated at $22.4 million (December 31, 2022 – $22.3 million) using a discount rate of 7.8% (December 31, 2022 – 7.5%).

 

Page 26

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

At March 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   Short term
nature		   Total fair
value		 
Financial assets                                 
   Cash and cash equivalents  FVTPL  $83,809   $83,809   $—   $—   $—   $83,809 
   Accounts receivable  Amortized cost   322    25    —    —    297    322 
   Restricted cash  Amortized cost   1,148    1,148    —    —    —    1,148 
      $85,279   $84,982   $—   $—   $297   $85,279 
                                  
Financial liabilities                                 
   Trade and other payables  Amortized cost  $4,313   $—   $—   $—   $4,313   $4,313 
   Accrued liabilities  Amortized cost   7,069    —    —    —    7,069    7,069 
   Lease obligation  Amortized cost   3,112    —    3,112    —    —    3,112 
   Credit facility  Amortized cost   117,590    —    —    118,900    —    118,900 
   Fresnillo obligation  Amortized cost   22,800    —    —    22,384    —    22,384 
      $154,898   $—   $3,112   $141,284   $11,382   $155,778 

 

At December 31, 2022, the carrying values and fair values of our financial instruments by category were as follows:

 

              Fair value 
   Classification  Carrying
value		   Quoted
prices in
active
market for
identical
assets
(Level 1)		   Significant
other
observable
inputs
(Level 2)		   Significant
unobservable
inputs
(Level 3)		   Approximate
fair value
due to short
term nature
of the
instrument		   Total
Fair Value		 
Financial assets                                 
   Cash and cash equivalents  FVTPL  $96,278   $96,278   $—   $—   $—   $96,278 
   Accounts receivable  Amortized cost   317    21    —    —    296    317 
   Restricted cash  Amortized cost   3,432    3,432    —    —    —    3,432 
      $100,027   $99,731   $—   $—   $296   $100,027 
                                  
Financial liabilities                                 
   Trade and other payables  Amortized cost  $8,851   $—   $—   $—   $8,851   $8,851 
   Accrued liabilities  Amortized cost   7,967    352    —    —    7,615    7,967 
   Lease obligation  Amortized cost   3,173    —    3,173    —    —    3,173 
   Credit facility  Amortized cost   122,995    —    —    124,450    —    124,450 
   Fresnillo obligation  Amortized cost   22,800    —    —    22,296    —    22,296 
      $165,786   $352   $3,173   $146,746   $16,466   $166,737 

 

Our policy is to determine whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of the reporting period.

 

Page 27

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

27.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 March 31, 2023, these outstanding purchase orders and contracts totaled approximately $1.9 million (December 31, 2022 – $2.0 million), which we expect will be filled within the next 12 months.

 

The Company has a minimum commitment of $800,000 related to the South Railroad exploration and evaluation asset, which we expect will be filled within the next 24 months.

 

The Company is committed to making severance payments totalling approximately $6.1 million (December 31, 2022 – $3.7 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.

 

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.

 

(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.

 

28.INCOME TAX EXPENSE

 

Current income tax expense consists of three components - current income tax on taxable income, 7.5% special mining duty ("SMD") on income subject to SMD, and withholding taxes attributable to interest charged on intercompany loans to the Mexican operating company.

 

   Three months ended
March 31		 
   2023   2022 
Current income tax expense  $6,445   $— 
Mexican 7.5% Special Mining Duty   2,714    2,191 
Deferred income tax   (4,187)   — 
Deferred Mexican 7.5% Special Mining Duty expense   (733)   — 
Withholding taxes   431    244 
Tax expense  $4,670   $2,435 

 

Page 28

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

29.RECLASSIFICATIONS OF PRIOR PERIOD FIGURES

 

Certain of the prior period’s figures have been reclassified to conform to the presentation in the current period. These reclassifications were primarily the grouping and disaggregation of small balances.

 

(a)Income statement

 

   Three months ended
March 31, 2022		 
Revenue     
     As previously presented  $39,405 
     Refining and transportation reclassified to operating costs   240 
     As currently presented  $39,645 
      
Operating costs     
     As previously presented  $9,126 
     Refining and transportation reclassified from revenue   240 
     As currently presented  $9,366 
      
As previously presented     
     Interest (income) and finance costs  $325 
      
As currently presented     
     Interest (income)  $(168)
     Interest and accretion expense   493 
   $325 
      
Other gain (loss)     
     As previously presented  $(241)
     Withholding taxes reclassified to income taxes   244 
     As currently presented  $3 
      
Income taxes     
     As previously presented  $2,191 
     Withholding taxes reclassified from other gain (loss)   244 
     As currently presented  $2,435 

 

Page 29

 

 

ORLA MINING LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2023 and 2022

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

 

(b)Statement of cash flows

 

   Three months ended
March 31, 2022		 
Operating activities     
     Income tax expense – As previously presented  $— 
     Income tax expense reclassified from non-cash working capital   2,435 
     Income tax expense – As currently presented  $2,435 
      
Operating activities     
     Income taxes paid – As previously presented  $— 
     Withholding taxes paid reclassified from non-cash working capital   (244)
     Income taxes paid – As currently presented  $(244)
      
Operating activities     
     Changes in non-cash working capital – As previously presented  $666 
     Income tax expense shown separately   (2,435)
     Withholding taxes paid reclassified to income taxes paid   244 
     Changes in non-cash working capital – As currently presented  $(1,525)

 

30.EVENTS AFTER THE REPORTING PERIOD

 

(a)Private placement

 

Further to the Investor Rights Agreement between Agnico Eagle Mines Limited (“Agnico Eagle”) and the Company, Agnico Eagle partially exercised its top-up right and has subscribed for 3,987,241 common shares of the Company (the “Common Shares”) at a price of C$6.27 per Common Share, for proceeds of C$25 million (approximately $18,585,000) (the “Investment”) subsequent to the reporting period.

 

In accordance with the Investor Rights Agreement, Agnico Eagle’s top-up right was triggered as a result of its percentage ownership in the Company’s common shares being diluted by at least 1% due to the exercise or settlement of convertible securities of the Company.

 

(b)Exercise of stock options and warrants

 

Subsequent to the reporting period, the Company issued common shares pursuant to the exercise of stock options (note 21(a)) and warrants (note 19(b)).

 

Page 30