Exhibit 99.2
Exhibit
99.2
MANAGEMENT INFORMATION CIRCULAR
NOTICE OF ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS
JUNE 21, 2023
DATED AS OF MAY 11, 2023
What’s Inside
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TSX: OLA
NYSE AMERICAN: ORLA
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ORLA MINING LTD.
NOTICE OF ANNUAL
AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the annual and
special meeting (the “Meeting”) of the holders of common shares (“Shareholders”) of Orla Mining
Ltd. (the “Company”) will be held via conference call on the 21st day of June, 2023, at 8:00 a.m. (Vancouver
time) for the following purposes:
| (a) | to receive the audited consolidated financial statements of the Company as at and for the financial year
ended December 31, 2022, together with the report of the auditor thereon; |
| (b) | to elect directors of the Company for the ensuing year; |
| (c) | to appoint Ernst & Young LLP as auditor of the Company for the ensuing year and authorize the board
of directors to fix the remuneration of the auditor; |
| (d) | to consider a non-binding advisory resolution on the Company’s approach to executive compensation,
as more fully described in the accompanying management information circular (the “Circular”); and |
| (e) | to transact such other business as may properly come before the Meeting or any adjournment or postponement
thereof. |
The Meeting will be held in a virtual only format,
which will be conducted via conference call and available for guests via live webcast, as follows:
Conference Call (Participant or Guest):
877-407-6184 (toll free)
Webcast (Guest Only): https://event.choruscall.com/mediaframe/webcast.html?webcastid=qSF3Sajw
Only registered Shareholders and duly appointed
proxyholders will be able to vote in real time and ask questions at the Meeting via conference call, provided they are connected to the
call and comply with all of the requirements set out in the Circular. Once dialed in, instructions will be provided as to how Shareholders
entitled to vote at the Meeting may participate, vote and ask questions at the Meeting. Any person, including registered shareholders
and duly appointed proxyholders, who participates at the Meeting via webcast only will not be able to vote on matters put before the Meeting,
ask questions, or otherwise participate at the Meeting and must vote in advance of the Meeting by using the voting instruction form or
form of proxy mailed to them with the Circular.
Non-registered Shareholders (being Shareholders
who beneficially own shares that are registered in the name of an intermediary such as a bank, trust company, securities broker or other
nominee, or in the name of a depository of which the intermediary is a participant) who have not duly appointed themselves as proxyholder
will be able to attend the Meeting via conference call or webcast as guests, but guests will not be able to vote, ask questions or otherwise
participate at the Meeting.
The specific details of the foregoing matters to
be put before the Meeting, as well as further information with respect to voting by proxy and detailed instructions about how to participate
at the virtual Meeting are set forth in the Circular which accompanies, and is deemed to form a part of, this Notice of Meeting.
Registered Shareholders are requested to
complete, sign, date and return the enclosed form of proxy either in the addressed envelope enclosed to Computershare Investor Services
Inc., Attn: Proxy Department, 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, or via fax to 1-866-249-7775 (toll free North
America) or 1-416-263-9524 (International). Alternatively, registered shareholders may vote by telephone by calling 1-866-732-8683 (toll
free) or online www.investorvote.com. In each case, proxies must be received not later than
8:00 a.m. (Vancouver time) on June 19, 2023, or at least 48 hours (excluding Saturdays and holidays), before the time for holding the
Meeting or any adjournment thereof.
Non-registered Shareholders who receive
these materials through their broker or other intermediary are requested to follow the instructions for voting provided by their broker
or intermediary, which may include the completion and delivery of a voting instruction form. If you are a non-registered Shareholder and
do not complete and return the materials in accordance with such instructions, you will not be able to vote, ask questions or otherwise
participate at the Meeting.
A Shareholder who wishes to appoint a person other
than the proxyholders identified on the form of proxy or voting instruction form (including a non-registered Shareholder who wishes to
appoint themselves as proxyholder in order to attend and vote at the Meeting via conference call) must carefully follow the instructions
in the Circular and on their form of proxy or voting instruction form accompanying this Notice of Meeting.
Please review the accompanying Circular before
voting as it contains important information about the Meeting. If you have any questions about the procedures required to qualify to vote
at the Meeting or about obtaining and depositing the required form of proxy, you should contact Computershare by telephone (toll free)
at 1-800-564-6253, by fax at 1-866-249-7775 or by e-mail at service@computershare.com.
Dated May 11, 2023.
By Order of the Board of Directors
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“Jason Simpson” |
Jason Simpson
President, Chief Executive Officer and Director |
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MANAGEMENT
INFORMATION CIRCULAR
This management information circular (the “Circular”)
is furnished in connection with the solicitation by management (“Management”) of Orla Mining Ltd. (the “Company”
or “Orla”) of proxies to be used at the Company’s annual and special meeting of the holders (“Shareholders”)
of common shares of the Company (the “Common Shares”) to be held on June 21, 2023 (the “Meeting”)
or at any adjournment or postponement thereof at the time and place and for the purposes set forth in the accompanying notice of annual
and special meeting (“Notice of Meeting”).
The Meeting will be held in a virtual only format,
which will be conducted via conference call and available for guests via live webcast. Shareholders and duly appointed proxyholders can
attend the Meeting as follows:
Conference Call (Participant or Guest):
877-407-6184 (toll free)
Webcast (Guest Only): https://event.choruscall.com/mediaframe/webcast.html?webcastid=qSF3Sajw
Only registered Shareholders and duly appointed
proxyholders will be able to vote and ask questions in real time at the Meeting via conference call, provided they are connected to the
call and comply with all of the requirements set out in this Circular. Once dialed in, instructions will be provided as to how Shareholders
entitled to vote at the Meeting may participate, vote and ask questions at the Meeting. Any person, including registered shareholders
and duly appointed proxyholders, who participates at the Meeting via webcast only will not be able to vote on matters put before the Meeting,
ask questions or otherwise participate at the Meeting and must vote in advance of the Meeting by using the voting instruction form or
form of proxy mailed to them with the Circular. Shareholders will not be able to physically attend the Meeting. For a summary of how
Shareholders may attend the Meeting via conference call, see “Voting at the Virtual Meeting” below.
Except as otherwise indicated, the information
contained in this Circular is stated as at May 11, 2023. All dollar amounts referenced herein, unless otherwise indicated, are expressed
in Canadian dollars.
SOLICITATION
OF PROXIES AND VOTING INSTRUCTIONS
SOLICITATION
OF PROXIES
It is anticipated that the solicitations will be
made primarily by mail in relation to the delivery of the Circular. Proxies may also be solicited personally or by telephone by directors,
officers or employees of the Company at nominal cost. The cost of the solicitation will be borne by the Company. The Company has arranged
for Intermediaries (as defined below) to forward the meeting materials to Non-Registered Shareholders (as defined below) and the Company
will reimburse the Intermediaries for their reasonable fees and disbursements in that regard.
This solicitation of proxies and voting instruction
forms involves securities of a Company located in Canada and is being effected in accordance with the applicable corporate and securities
laws of Canada. The proxy solicitation rules under the United States Securities Exchange Act of 1934, as amended (the “Exchange
Act”), are not applicable to the Company or this solicitation. Shareholders should be aware that disclosure and proxy solicitation
requirements under the applicable securities laws of Canada and the Toronto Stock Exchange (“TSX”) differ from the
disclosure and proxy solicitation requirements under United States securities laws.
Appointment
and Revocation of Proxies
The person(s) designated by Management in the enclosed
form of proxy are directors and/or officers of the Company (the “Management Proxyholders”). Each Shareholder has
the right to appoint as proxyholder a person (who need not be a Shareholder) other than Management Proxyholders to represent the
Shareholder at the Meeting or at any adjournment
or postponement thereof. Such right may be exercised by striking out the names of the person(s) printed in the accompanying form of proxy
and inserting the name of the person in the blank space provided in the enclosed form of proxy or by completing another suitable form
of proxy and, in either case, delivering the completed and executed form of proxy as provided below.
If you are a Non-Registered Shareholder and wish
to vote at the Meeting, you have to insert your own name in the blank space provided on the voting instruction form or form of proxy sent
to you by your Intermediary and follow the applicable instructions provided by your Intermediary.
Voting
of Proxies
On any ballot that may be called for, the Common
Shares represented by a properly executed proxy given in favour of the Management Proxyholders will be voted or withheld from voting in
accordance with the instructions given on the ballot. If the Shareholder specifies a choice with respect to any matter to be acted upon,
the Common Shares will be voted accordingly.
In the absence of any direction in the instrument
of proxy, such Common Shares will be voted in favour of the matters set forth in the accompanying Notice of Meeting. The enclosed form
of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified
in the accompanying Notice of Meeting, and with respect to other matters which may properly come before the Meeting or any adjournment
or postponement thereof. At the date of this Circular, Management is not aware of any such amendment, variation or other matter to come
before the Meeting. However, if any amendments or variations to matters identified in the accompanying Notice of Meeting or any other
matters which are not now known to Management should properly come before the Meeting or any adjournment or postponement thereof, the
Common Shares represented by properly executed proxies given in favour of the Management Proxyholders will be voted on such matters pursuant
to such discretionary authority.
Registered
Shareholders
In the case of registered Shareholders (“Registered
Shareholders”), the completed, signed and dated form of proxy should be sent in the addressed envelope enclosed to Computershare
Investor Services Inc., Attn: Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Yl, or via fax to 1-866-249-7775
(toll free North America) or 1-416-263-9524 (International). Alternatively, Registered Shareholders may vote by telephone by calling 1-866-732-8683
(toll free) or online via www.investorvote.com. To be effective, a proxy must be received not
later than 8:00 a.m. (Vancouver time) on June 19, 2023, or at least 48 hours (excluding Saturdays and holidays), before the time for holding
the Meeting or any adjournment thereof.
A Registered Shareholder who has given a proxy
may revoke it by depositing an instrument in writing, including another proxy bearing a later date, signed by the Registered Shareholder
or by the Registered Shareholder’s attorney, who is authorized in writing, or by transmitting, by telephonic or electronic means,
a revocation signed by electronic signature by the Registered Shareholder or by the Registered Shareholder’s attorney, who is authorized
in writing, to the head office of the Company at any time up to and including the last business day preceding the day of the Meeting,
or in the case of any adjournment or postponement of the Meeting, the last business day preceding the day of the adjournment or postponement,
or by dialing into the Meeting via conference call and accepting the terms and conditions (see “Voting at the Virtual Meeting”
below). A Registered Shareholder may also revoke a proxy in any other manner permitted by law. Only Registered Shareholders have the right
to revoke a proxy. A Non-Registered Shareholder who wishes to change its vote must arrange for its Intermediary to revoke its proxy on
its behalf.
Non-Registered
Holders
Only Registered Shareholders (or duly appointed
proxyholders) are permitted to vote at the Meeting. However, in many cases, Shareholders are “non-registered” Shareholders
because the Common Shares they own are not registered in their names, but are instead registered in the name of the brokerage firm, bank
or trust company through which they purchased the Common Shares. More particularly, a person is not a Registered Shareholder in respect
of Common Shares which are held on behalf of that person (a “Non-Registered Shareholder”), but which are registered
either: (a) in the name of an intermediary (an “Intermediary”) that the Non-Registered Shareholder deals with in respect
of the Common Shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators
of self-administered RRSPs, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as The Canadian Depository
for Securities Limited) of which the Intermediary is a participant. Non-Registered Shareholders do not appear on the list of Shareholders
maintained by the transfer agent.
Non-Registered Shareholders who have not objected
to their Intermediary disclosing certain ownership information about themselves to the Company are referred to as Non-Objecting Beneficial
Owners (“NOBOs”). Those Non-Registered Shareholders who have objected to their Intermediary disclosing ownership information
about themselves to the Company are referred to as Objecting Beneficial Owners (“OBOs”).
Issuers can request and obtain a list of their
NOBOs from Intermediaries via their transfer agents, pursuant to National Instrument 54-101—Communication with Beneficial Owners
of Securities of a Reporting Issuer (“NI 54- 101”) and issuers can use this NOBO list for distribution of proxy-related
materials directly to NOBOs. The Company has decided to take advantage of those provisions of NI 54-101 that allow it to directly deliver
proxy-related materials to its NOBOs. As a result, NOBOs can expect to receive a voting instruction form from the Company’s transfer
agent, Computershare Investor Services Inc. (“Computershare”). These voting instruction forms are to be completed and
returned to Computershare in the envelope provided or by facsimile. Computershare will tabulate the results of the voting instruction
forms received from NOBOs and will provide appropriate instructions at the Meeting with respect to the Common Shares represented by voting
instruction forms they receive. Alternatively, NOBOs may vote following the instructions on the voting instruction form, via the internet
or by phone.
These securityholder materials are being sent
to both registered and non-registered owners of the securities. If you are a non-registered owner, and the issuer or its agent has sent
these materials directly to you, your name and address and information about your holdings of securities, have been obtained in accordance
with applicable securities regulatory requirements from the intermediary holding on your behalf.
By choosing to send these materials to you directly,
the issuer (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and
(ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.
With respect to OBOs, in accordance with applicable
securities law requirements, the Company will have distributed copies of the Notice of Meeting, this Circular, the form of proxy or voting
instruction form and the supplemental mailing list request card (collectively, the “Meeting Materials”) to the clearing
agencies and Intermediaries for distribution to Non-Registered Shareholders. The Company intends to pay for Intermediaries to deliver
the Meeting Materials to OBOs.
Intermediaries are required to forward the Meeting
Materials to Non-Registered Shareholders unless a Non-Registered Shareholder has waived the right to receive them. Very often, Intermediaries
will use service companies to forward the Meeting Materials to Non-Registered Shareholders. Generally, Non-Registered Shareholders who
have not waived the right to receive the Meeting Materials will either:
| (a) | be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile,
stamped signature), which is restricted as to the number of Common Shares beneficially owned by the Non-Registered Shareholder but which
is otherwise not completed. Because the Intermediary has |
already signed the form of proxy, this
form of proxy is not required to be signed by the Non-Registered Shareholder when submitting the proxy. If the Non-Registered Shareholder
does not wish to attend and vote at the virtual Meeting in person (or have another person attend and vote on the holder’s behalf),
the Non-Registered Shareholder must complete the form of proxy and deposit it with the Company’s registrar and transfer agent, Computershare,
as provided above; or
| (b) | be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed
and signed by the Non-Registered Shareholder and returned to the Intermediary or its service company, will constitute voting instructions
(often called a “proxy authorization form”), which the Intermediary must follow. Typically, the proxy authorization form will
consist of a one-page pre-printed form. Sometimes, instead of the one-page pre-printed form, the proxy authorization form will consist
of a regular printed proxy form accompanied by a page of instructions, which contains a removable label containing a barcode and other
information. In order for the form of proxy to validly constitute a proxy authorization form, the Non-Registered Shareholder must remove
the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and return it to the Intermediary
or its service company in accordance with the instructions of the Intermediary or its service company. If the Non-Registered Shareholder
does not wish to attend and vote at the virtual Meeting in person (or have another person attend and vote on the holder’s behalf),
the voting instruction form must be completed, signed and returned in accordance with the directions on the form. |
In either case, the purpose of this procedure is
to permit a Non-Registered Shareholder to direct the voting of the Common Shares which they beneficially own. In addition, an Intermediary
subject to the New York Stock Exchange rules and who has not received specific voting instructions from the Non-Registered Shareholder
will not be able to vote the Common Shares on all or, as applicable, any matters at the Meeting. Non-Registered Shareholders should
carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form
is to be delivered. Only Registered Shareholders have the right to revoke a proxy. A Non-Registered Shareholder who wishes to change
its vote must arrange for its Intermediary to revoke its proxy on its behalf.
Voting
at the Virtual Meeting
The Company will hold its Meeting in a virtual
only format, which will be conducted via conference call and available for guests via live webcast. The Company believes that hosting
a virtual meeting will increase participation by its Shareholders, as it will enable Shareholders to more easily attend the Meeting regardless
of their geographic location. Shareholders will not be able to physically attend the Meeting.
In order to streamline the Meeting process,
the Company encourages Shareholders to vote in advance of the Meeting using the voting instruction form or the form of proxy mailed to
them with the Meeting Materials. Shareholders wishing to attend the Meeting may continue to do so as follows:
Conference Call (Participant or Guest):
877-407-6184 (toll free)
Webcast (Guest Only): https://event.choruscall.com/mediaframe/webcast.html?webcastid=qSF3Sajw
Only Registered Shareholders and duly appointed
proxyholders will be able to vote in real time at the Meeting via conference call, provided they are connected to the call and comply
with all of the requirements set out in this Circular. Once dialed in, instructions will be provided as to how Shareholders entitled to
vote at the Meeting may participate, vote and ask questions at the Meeting. Any person, including Registered Shareholders and duly
appointed proxyholders, who participates at the Meeting via webcast only will not be able to vote on matters put before the Meeting, ask
questions or otherwise participate at the Meeting and must vote in advance of the Meeting by using the voting instruction form or form
of proxy mailed to them with the Circular. If you attend the Meeting via conference call, it is important that you call in early and
remain connected for the duration of the Meeting in order to vote when balloting commences. It is your responsibility to ensure that
you remain connected. The Meeting will begin promptly at 8:00 a.m. (Vancouver time) on June 21, 2023,
unless otherwise adjourned or postponed. You should
allow ample time for the check-in procedures prior to the start of the Meeting.
Registered Shareholders and duly appointed proxyholders
who participate in the Meeting via conference call may ask questions in accordance with the instructions provided at the Meeting. Questions
will generally only be addressed during a question period at the end of the Meeting, however, questions regarding procedural matters or
directly related to a specific motion may be addressed during the Meeting.
Non-Registered Shareholders who have not duly appointed
themselves as proxyholders may attend the Meeting as guests. Guests will be able to listen to the Meeting, but will not be able to vote,
ask questions or otherwise participate at the Meeting. This is because the transfer agent, Computershare, does not have a record of the
Non-Registered Shareholders of and, as a result, will have no knowledge of shareholdings or entitlement to vote, unless the Non-Registered
Shareholder appoints itself as proxyholder.
If you are a Non-Registered Shareholders and
wish to vote at the Meeting, you must appoint yourself as proxyholder by inserting your own name in the space provided for appointing
a proxyholder on the voting instruction form sent to you and follow all of the applicable instructions, including the deadline, provided
by the Intermediary.
A summary of the information Shareholders will
need to attend and vote at the virtual meeting is provided below.
| · | Registered Shareholders and duly appointed proxyholders must dial in prior to the start of the
Meeting and, once dialed in, follow the instructions provided. |
| · | Guests, including Non-Registered Shareholders who have not duly appointed themselves as proxyholder
can listen to the Meeting, but will not be able to vote, ask questions or otherwise participate at the Meeting. Log in online through
the webcast or dial-in via conference call, and then complete the registration. |
If you are dialing into the Meeting via conference
call and you accept the terms and conditions, you will be revoking any and all previously submitted proxies. However, in such a case you
will be provided the opportunity to vote by ballot on the matters put forth at the Meeting. If you DO NOT wish to revoke
all previously submitted proxies: (i) do not accept the terms and conditions, in which case you can only enter the Meeting as a guest;
or (ii) join the Meeting via webcast, in which case you will be able to listen to the Meeting, but will not be able to vote, ask questions
or otherwise participate at the Meeting.
Record
Date
The board of directors of the Company (the “Board”)
has fixed May 11, 2023 (the “Record Date”) as the record date for the purpose of determining holders of Common Shares
entitled to receive notice of and to vote at the Meeting. In accordance with the provisions of the Canada Business Corporation Act
(the “CBCA”), the Company or its transfer agent will prepare a list of holders of Common Shares on the Record Date.
Each Shareholder named in the list or such Shareholder’s proxy will be entitled to vote the Common Shares shown opposite such Shareholder’s
name on the list at the Meeting.
Voting
Shares
The authorized voting securities of the Company
consist of an unlimited number of Common Shares. As at Record Date, the Company had 312,832,449 Common Shares outstanding, each carrying
the right to one vote. Except as otherwise noted in this Circular, a simple majority of the votes cast at the Meeting, whether in person,
by proxy or otherwise, will constitute approval of any matter submitted to a vote.
Quorum
A quorum will be present at the Meeting if there
are at least two persons present in person, each being a Shareholder entitled to vote thereat or a duly appointed proxy or proxyholder
for an absent Shareholder so entitled, holding or representing in the aggregate not less than 25% of the issued and outstanding Common
Shares.
Principal
Shareholders
To the knowledge of the directors and executive
officers of the Company, as at the Record Date, no person beneficially owned, controlled or directed, directly or indirectly, more than
10% of the voting rights attached to the outstanding Common Shares except the following:
| Shareholder |
Number of Common Shares |
% of Outstanding
Common Shares |
| Newmont Corporation (“Newmont”) |
43,245,294 |
13.82% |
| Pierre Lassonde |
31,840,763(1) |
10.18% |
| Agnico Eagle Mines Limited (“Agnico Eagle”) |
27,602,589(2) |
8.82% |
Notes:
| (1) | Mr. Lassonde also holds warrants to purchase 6,700,000 Common Shares, which upon exercise and together
with his Common Shares represents approximately 12.06% of the Common Shares on a partially-diluted basis. |
| (2) | Agnico Eagle also holds warrants to purchase 10,400,000 Common
Shares, which upon exercise and together with its Common Shares represents approximately 11.76% of the Common Shares on a partially-diluted
basis. |
INTEREST
OF CERTAIN PERSONS OR COMPANIES
IN MATTERS TO BE ACTED UPON
No: (i) director or executive officer of the Company
at any time since the beginning of the last completed financial year; (ii) proposed nominee for election as a director; or (iii) any associate
of a person in (i) or (ii) has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in
any matter to be acted upon at the Meeting.
Particulars
of Matters to be Acted Upon at the Meeting
Financial
Statements
The audited consolidated financial statements for
the financial year ended December 31, 2022 and the report of the auditor thereon will be placed before the shareholders at the Meeting,
but no vote thereon is required. These documents are available upon request or they can be found under the Company’s profile on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov or on its website
at www.orlamining.com.
Election
of Directors
The Company’s Articles of Arrangement (the
“Articles”) provide that the Board consist of a minimum of three and a maximum of ten directors. The Board currently
consists of eight directors and the term of office of each of the present directors expires at the close of the Meeting. The Board has
fixed the size of the Board for election at the Meeting at nine directors. At the Meeting, the nine persons set out below will be proposed
for election as directors of the Company (the “Nominees”). Each of the Nominees is currently a director, other than
Ana Sofía Ríos. Each
director elected will hold office until the close
of the next annual meeting of shareholders or until such person’s successor is elected or appointed. Management does not contemplate
that any of the Nominees will be unable to serve as a director, but if that should occur for any reason prior to the Meeting, it is intended
that discretionary authority will be exercised by the persons named in the accompanying proxy to vote the proxy for the election of any
other person or persons in place of any Nominee or Nominees unable to serve. All Nominees have established their eligibility and willingness
to serve as directors.
The Board recommends that Shareholders vote
FOR the election of each of the Nominees. Unless authority is withheld, the Management Proxyholders intend to vote FOR the
election of each of the Nominees.
In accordance with the new requirements of the
CBCA, directors stand for election each year at the annual meeting of shareholders, and a separate vote of Shareholders is taken with
respect to each candidate nominated for director. If there is only one candidate nominated for each position available on the Board (an
uncontested election), each candidate is elected only if the number of votes cast in their favor represents a majority of the votes cast
for and against them by the Shareholders who are present in person or represented by proxy. If an incumbent director is not re-elected
in an uncontested election, the director may continue in office until the earlier of the 90th day after the day of the election
and the day on which their successor is appointed or elected. Majority voting will not apply in the case of a contested election of directors,
in which case the directors will be elected by a plurality of votes of the shares represented in person or by proxy at the meeting and
voted on the election of directors. The amendments to the CBCA satisfy the TSX’s majority voting requirements and the Company is
no longer required to have a majority voting policy in place. On that basis, the Board has approved the revocation of the Company’s
Majority Voting Policy.
The following tables set forth information with
respect to each Nominee and is based upon information furnished by the respective proposed Nominee. Except as indicated below, each of
the proposed Nominees has held the principal occupation shown beside the Nominee’s name in the table below or another executive
office with the same or a related company, for the last five years.
[Remainder of Page Intentionally Left Bank]
| CHARLES JEANNES |
Principal Occupation |
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Corporate Director |
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Board and Board Committees |
2022 Meeting
Attendance |
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Board of Directors (Chair) |
100% |
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Human Resources and Compensation Committee |
100% |
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Audit Committee |
100% |
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Corporate Governance and Nominating Committee |
100% |
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Nevada, USA |
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Age, 64 |
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Securities Holdings as at May 11, 2023 |
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Director since June 2017 |
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Common
Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
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| Independent |
| |
Diversity Factors: N/A |
|
3,307,843 (1) |
314,067 |
520,000 |
215,655 |
Satisfied |
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Historical Voting Results |
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Other Board Memberships |
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Year |
For |
Withhold |
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Pan American Silver Corp. (Director) |
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2022 |
82.78% |
17.22% |
|
Wheaton Precious Metals Corp. (Director) |
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2021 |
90.75% |
9.25% |
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2020 |
98.82% |
1.18% |
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Biography |
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Mr. Jeannes served as President and Chief Executive Officer of Goldcorp from 2009 until April 2016, and Executive Vice President, Corporate Development from 2006 until 2008. From 1999 until the acquisition of Glamis Gold Ltd. (“Glamis”) by Goldcorp, he was Executive Vice President, Administration, General Counsel and Secretary of Glamis. Prior to joining Glamis, Mr. Jeannes worked for Placer Dome Inc., most recently as Vice President of Placer Dome North America. He is also currently a Director of Pan American Silver Corp. and Wheaton Precious Metals Corp. (formerly Silver Wheaton Corp.) and serves as a Trustee of the Wolf Pack Athletic Association of the University of Nevada (a non-profit Board). He holds a Bachelor of Arts degree from UNR and graduated from the University of Arizona School of Law with honours in 1983. He practiced law from 1983 until 1994 and has broad experience in capital markets, mergers and acquisitions, public and private financing, and international operations. |
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|
|
|
|
|
|
|
Note:
| (1) | In addition, Mr. Jeannes is entitled to 500,000 Bonus Shares (as defined herein). The Bonus Shares will
become issuable on the date Mr. Jeannes ceases to act as a director following June 18, 2020. See “Statement of Executive Compensation
– Director Compensation”. |
| JASON SIMPSON |
Principal Occupation |
|
|
| |
 |
|
President, Chief Executive Officer and Director of the Company |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
Board of Directors |
100% |
|
| |
|
Environmental, Sustainability, Health and Safety Committee |
100% |
|
| |
|
|
|
|
| |
Ontario, Canada |
|
|
|
| |
Age, 50 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since November 2018 |
|
Common
Shares |
Options |
RSUs |
PSUs |
Warrants |
Ownership
Requirement |
|
| Not Independent |
| |
Diversity Factors: N/A |
|
1,312,036 |
1,336,183 |
175,007 |
82,847 |
NIL |
Satisfied |
|
| |
|
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
None |
|
| |
2022 |
91.28% |
8.72% |
|
|
|
| |
2021 |
97.64% |
2.36% |
|
|
|
| |
2020 |
98.88% |
1.12% |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Mr. Simpson was appointed the Company’s President and Chief Executive Officer effective November 12, 2018. In addition to the role of President and CEO, Mr. Simpson also serves as a director of the Company. Mr. Simpson is a mining executive with over 25 years of experience in operations leadership, mining engineering and project construction. Most recently, he was Chief Operating Officer of Torex Gold Resources (“Torex”) where, over his nearly six-year tenure, he oversaw the successful construction and operation of the ELG Mine in Mexico. Prior to Torex, Mr. Simpson spent 11 years at Vale in various roles of increasing responsibility ending his tenure as General Manager of the Labrador Operations (Voisey’s Bay) in 2013. Mr. Simpson also worked at McIntosh Redpath Engineering on mining studies for companies including Barrick, Freeport McMoran, CVRD, Rio Tinto and Falconbridge, among others, where he gained global multi-commodity experience and perspective. Mr. Simpson holds dual degrees in Mining Engineering from the Technical University of Nova Scotia and in Physics from Dalhousie University. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| JEAN ROBITAILLE |
Principal Occupation |
|
|
| |
 |
|
Executive Vice-President, Chief Strategy & Technology Officer at Agnico Eagle |
|
| |
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
Board of Directors |
100% |
|
| |
|
Human Resources and Compensation Committee (Chair) |
100% |
|
| |
|
Environmental, Sustainability, Health and Safety Committee |
100% |
|
| |
Ontario, Canada |
|
|
|
| |
Age, 61 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since December 2016 |
|
Common Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Independent |
| |
Diversity Factors: N/A |
|
2,324,450 |
160,027 |
NIL |
112,880 |
Satisfied |
|
| |
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
None |
|
| |
2022 |
83.00% |
17.00% |
|
|
|
| |
2021 |
93.57% |
6.43% |
|
|
|
| |
2020 |
98.82% |
1.18% |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Mr. Robitaille joined the Board in December 2016, upon closing of the Company’s acquisition of Pershimco Resources Inc. Mr. Robitaille is Executive Vice-President, Chief Strategy & Technology Officer at Agnico Eagle. Prior to this nomination and since 1988, he served Agnico Eagle in various senior executive roles for Corporate Development, Business Strategy, Technical Services, Project Development and Operations. Before joining Agnico Eagle, Mr. Robitaille worked as a metallurgist with Teck Mining Group and served as a Director of Pershimco Resources Inc. (2011 to 2016). Mr. Robitaille is a mining graduate of the College de l’Abitibi Témiscamingue with a specialty in mineral processing. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| TIM HALDANE |
Principal Occupation |
|
|
| |
 |
|
Mining professional/Corporate Director |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
Board of Directors |
100% |
|
| |
|
Environmental, Sustainability, Health and Safety Committee (Chair) |
100% |
|
| |
|
Corporate Governance and Nominating Committee |
100% |
|
| |
Arizona, USA |
|
|
|
| |
Age, 66 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since June 2017 |
|
Common Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Independent |
| |
Diversity Factors: N/A |
|
241,900 |
242,322 |
NIL |
119,956 |
Satisfied |
|
| |
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
None |
|
| |
2022 |
99.85% |
0.15% |
|
|
|
| |
2021 |
99.80% |
0.20% |
|
|
|
| |
2020 |
99.99% |
0.01% |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Mr. Haldane joined the Board in June 2017. Mr. Haldane is a mining professional with 40 years of operating and project development experience including 15 years in Mexico. Mr. Haldane most recently held the position of Senior Vice President of Operations - USA & Latin America at Agnico Eagle from 2014 until February 2017. Mr. Haldane holds a B.S. in Metallurgical Engineering from Montana Technological University and is a Registered Professional Engineer. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| DAVID STEPHENS |
Principal Occupation |
|
|
| |
 |
|
Partner at Agentis Capital Mining Partners |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
Board of Directors |
100% |
|
| |
|
Audit Committee |
100% |
|
| |
|
Corporate Governance and Nominating Committee (Chair) |
100% |
|
| |
Ontario, Canada |
|
|
|
| |
Age, 41 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since March 2018 |
|
Common Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Independent |
| |
Diversity Factors: N/A |
|
12,500 |
37,503 |
65,000 |
100,003 |
Satisfied |
|
| |
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
None |
|
| |
2022 |
82.77% |
17.23% |
|
|
|
| |
2021 |
93.37% |
6.63% |
|
|
|
| |
2020 |
98.82% |
1.18% |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Mr. Stephens is a partner at Agentis Capital Mining Partners, which provides capital markets advisory services. Mr. Stephens also provides consulting services in the mining and technology industries through his private consulting company. He was the Vice President, Corporate Development and Marketing at Goldcorp until its acquisition by Newmont on April 18, 2019, having previously served as Vice President and Treasurer. Prior to joining Goldcorp, Mr. Stephens spent ten years working in investment banking and equity research at various organizations including Macquarie Capital Markets Canada Ltd. and Orion Securities. Mr. Stephens holds a Bachelor’s degree in Electrical Engineering and Computer Science from Harvard University. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| ELIZABETH McGREGOR |
Principal Occupation |
|
|
| |
 |
|
Finance professional/Corporate Director |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
Board of Directors |
100% |
|
| |
|
Audit Committee (Chair) |
100% |
|
| |
|
Human Resources and Compensation Committee |
100% |
|
| |
British Columbia, Canada |
|
|
|
| |
Age, 46 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since June 2019 |
|
Common
Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Independent |
| |
Diversity Factors: Female, Indigenous |
|
24,400 |
123,621 |
65,000 |
83,217 |
Satisfied |
|
| |
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
Kinross Gold Corporation (Director) |
|
| |
2022 |
82.97% |
17.03% |
|
Infield Minerals Corp. (Director) |
|
| |
2021 |
95.44% |
4.56% |
|
|
|
| |
2020 |
98.84% |
1.16% |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Ms. McGregor served as the Executive Vice President and Chief Financial Officer of Tahoe Resources Inc. from August 9, 2016 until the acquisition by Pan American Silver Corp. on February 22, 2019. Ms. McGregor is a Canadian Chartered Professional Accountant (CPA, CA) and, prior to her role as Chief Financial Officer, served as Tahoe Resources Inc.’s VP Treasurer. She directed financial planning, corporate liquidity, financial reporting and risk management. Prior to joining Tahoe Resources Inc., she worked at Goldcorp from 2007 to 2013 where she held various financial roles including Director of Project Finance and Cost Control; Administration Manager at the Peñasquito mine; and Director of Risk. Ms. McGregor has also served as a director of Kinross Gold Corporation since November 6, 2019. Ms. McGregor began her career at KPMG as Audit Manager. She holds a B.A. (Hons) from Queen’s University in Kingston. |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| TAMARA BROWN |
Principal Occupation |
|
|
| |
 |
|
Corporate Director |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
Board of Directors |
100% |
|
| |
|
Audit Committee |
100% |
|
| |
|
Corporate Governance and Nominating Committee |
100% |
|
| |
Ontario, Canada |
|
|
|
| |
Age, 50 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since June 2022 |
|
Common Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Independent |
| |
Diversity Factors: Female |
|
4,400 |
26,580 |
NIL |
26,795 |
N/A |
|
| |
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
Lithium Royalty Corp. (Director) |
|
| |
2022 |
99.84% |
0.16% |
|
Superior Gold Inc. (Director) |
|
| |
2021 |
- |
- |
|
29Metals Limited (Director) |
|
| |
2020 |
- |
- |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Ms. Brown is a mining industry professional with over 25 years of experience in the mining and capital markets sectors. Most recently she was the Interim CEO of Superior Gold Inc. from 2020 to 2021. Ms. Brown is currently an Independent Director of Lithium Royalty Corp. (TSX), Superior Gold Inc. (TSX-V) and 29Metals Limited (ASX) and was previously a Non-Executive Director for Lundin Gold Inc. and Eastmain Resources Inc. Her previous executive roles include Vice President, Investor Relations and Corporate Development (Americas) for Newcrest Mining, Vice President, Corporate Development and Investor Relations for Primero Mining Corp., and Director of Investor Relations for IAMGOLD Corp. Ms. Brown was also a professional engineer in the mining industry and is a partner of a boutique investment banking firm. She has a Bachelor of Engineering degree from Curtin University in Australia and has completed the Chartered Business Valuator course at York University. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| ANA SOFÍA RÍOS |
Principal Occupation |
|
| |
 |
|
Partner, Chevez Ruiz Zamarripa |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting
Attendance |
|
| |
|
N/A |
N/A |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Mexico City, Mexico |
|
|
|
| |
Age, 37 |
|
Securities Holdings as at May 11, 2023 |
|
| |
New Nominee as Director |
|
Common Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Independent |
| |
Diversity Factors: Female, Visible Minority |
|
NIL |
NIL |
NIL |
NIL |
N/A |
|
| |
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
None |
|
| |
2022 |
- |
- |
|
|
|
| |
2021 |
- |
- |
|
|
|
| |
2020 |
- |
- |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Ms. Ríos is a partner with the Mexican law firm of Chevez Ruiz Zamarripa. Her practice focuses on corporate law, banking and finance, including mergers and acquisitions, private equity, as well as advising clients and family offices on wealth management matters. In addition, Ms. Ríos advises public and private companies on corporate governance and regulatory compliance matters. She is currently an alternate independent board member of Grupo Corporativo Cever, S.A. de C.V. (a private Mexican corporate group that manages vehicle dealerships and restaurant brands). Ms. Ríos is also the Vice-president Legal Committee, Banking Commission of the International Chamber of Commerce - Mexico (ICC Mexico) and a Member of the Mexican Bar Association, College of Attorneys-at-Law. She has a law degree from the Universidad Iberoamericana (UIA) and a Master’s Degree in Corporate Law from New York University School of Law. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| SCOTT LANGLEY (1) |
Principal Occupation |
|
|
| |
 |
|
Vice President, Corporate Development, Newmont Corporation |
|
| |
|
|
|
| |
|
Board and Board Committees |
2022 Meeting Attendance |
|
| |
|
Board of Directors |
67% |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Ontario, Canada |
|
|
|
| |
Age, 48 |
|
Securities Holdings as at May 11, 2023 |
|
| |
Director since June 2022 |
|
Common Shares |
Options |
Warrants |
DSUs |
Ownership
Requirement |
|
| Not Independent |
| |
Diversity Factors: N/A |
|
NIL |
NIL |
NIL |
NIL |
N/A |
|
| |
|
|
|
|
|
|
|
|
| |
Historical Voting Results |
|
Other Board Memberships |
|
| |
Year |
For |
Withhold |
|
None |
|
| |
2022 |
87.71% |
12.29 |
|
|
|
| |
2021 |
- |
- |
|
|
|
| |
2020 |
- |
- |
|
|
|
| |
|
|
|
|
|
|
| |
Biography |
|
| |
Mr. Langley is Vice President, Corporate Development at Newmont. Prior to joining Newmont in 2022, he spent over 15 years working in investment banking, at both National Bank Financial and Bank of America, and was most recently Managing Director, Head of North American Metals & Mining for Bank of America. Mr. Langley has worked on numerous equity and debt capital markets transactions as well as M&A transactions, including acting as financial advisor to Agnico Eagle on its 2021 merger transaction with Kirkland Lake Gold. Mr. Langley holds a Master of Business Administration from the Richard Ivey School of Business, and a Bachelor of Commerce from Queens University. |
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Notes:
| (1) | Mr. Langley is the director nominee of Newmont. See “Investor Rights Agreement” below.
Accordingly, Mr. Langley will waive his annual base retainer and will not be subject to share ownership requirements. |
Cease
Trade Orders, Bankruptcies, Penalties or Sanction
No director or proposed director of the Company
is, as at the date of this Circular, or has been, within the 10 years preceding the date of this Circular, a director, chief executive
officer and chief financial officer of any company (including the Company) that:
| (a) | while that person was acting in that capacity, was the subject of a cease trade, an order similar to a
cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that
was in effect for a period of more than 30 consecutive days (each, an “Order”); |
| (b) | was subject to an Order that was issued after the proposed director ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as a director,
chief executive officer or chief financial officer; or |
| (c) | while that person was acting in that capacity, or within a year of that person ceasing to act in that
capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted
any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. |
No director or proposed director of the Company
has, within the 10 years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy
or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver
manager or trustee appointed to hold the assets of such director or proposed director.
To the knowledge of the Company, as of the date
hereof, no proposed director has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation
or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any
other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security
holder in deciding whether to vote for a proposed director.
Advance
Notice Provisions
The Company’s amended and restated by-law
No 1. (the “By-Laws”) contains an advance-notice provision for director nominations. Shareholders who wish to nominate
candidates for election as directors must provide written notice of their intention to the Corporate Secretary (via personal delivery
to 1010-1075 West Georgia Street, Vancouver, BC, V6E 3C9, or via email at info@orlamining.com)
and include certain information as set out in Part Four of the By-Laws. The notice must be made not less than 30 days prior to the date
of our next annual meeting, in compliance with Part Four. If you wish to submit a director nomination to be presented at the Meeting,
the required information must be sent to our Corporate Secretary by May 19, 2023. A copy of the By-Laws is available on the Company’s
website and was filed on May 20, 2022 under the Company’s profile on SEDAR and EDGAR at www.sedar.com
and www.sec.gov, respectively.
Investor
Rights Agreements
In accordance with the terms of the investor rights
agreement dated November 7, 2017 between Goldcorp Inc. (now Newmont) and Orla (the “Newmont Agreement”), Newmont has,
among other rights, the right to nominate an individual for election to the Board. In the event the number of directors on the Board is
increased to more than ten directors, Newmont shall be entitled to designate an additional nominee, provided that at the time of such
increase in the size of the Board it holds at least 10% of the Common Shares. Newmont’s current nominee to the Board is Mr. Scott
Langley.
Under the terms of the Newmont Agreement, Newmont
has agreed to vote its Common Shares in accordance with the recommendations of the Board or Management on all matters to be submitted
to Shareholders, including for the Management nominee’s for directors, except in the case of voting in respect of: (i) any issuer
bid, insider bid, related party transaction or business combination; (ii) any amendment to the constating documents of the Company, other
than immaterial or administrative changes; (iii) any matter in relation to which a recognized proxy advisor is recommending against Management
or the Board on any resolution for Shareholders; (iv) any disposition of assets for consideration equal or greater than 50% of the market
capitalization immediately prior to the entering into of such transaction; (v) any proposed distribution of securities where the number
of Common Shares issued or issuable thereunder is greater than 25% of the Common Shares which are outstanding prior to closing; and (vi)
in any circumstances where the Company or its directors or officers are not in compliance with the Newmont Agreement or applicable laws,
in which case Newmont is entitled to vote its Common Shares in its discretion. Any nominee of Newmont on the Board will not be required
to vote in accordance with the recommendations of the Board and Management but will exercise his or her fiduciary responsibilities as
a director by voting as he or she sees fit.
Pursuant to the Newmont Agreement, Newmont has
been granted certain participation rights to maintain its pro rata interest in future offerings for as long as it maintains ownership
of at least 10% of the Common Shares.
Similarly, in accordance with an amended and restated
investor rights agreement dated December 17, 2019 (the “Agnico Agreement”) between Agnico Eagle and the Company, Agnico
Eagle has, among other rights, the right to nominate an individual for election to the Board, provided it holds at least 5% of the Common
Shares. As of the date hereof, Agnico Eagle has not exercised its right to nominate an individual for election to the Board.
Pursuant to the Agnico Agreement, Agnico Eagle
has been granted certain participation rights to maintain its pro rata interest in future offerings for as long as it maintains
ownership of at least 5% of the Common Shares.
Appointment
of Auditor
On March 25, 2020, Ernst & Young LLP (“Ernst
& Young”) was appointed as the auditor of Orla, to replace Davidson & Company LLP, Chartered Professional Accountants,
which appointment was last approved by Shareholders at the annual general meeting held on June 23, 2023. At the Meeting, Management is
recommending the re-appointment of Ernst & Young as auditor for the Company, to hold office until the next annual general meeting
of the Shareholders at a remuneration to be fixed by the Board.
To be effective, the resolution to re-appoint Ernst
& Young must be approved by not less than a majority of the votes cast by the Shareholders present in person, or represented by proxy,
at the Meeting.
The Board recommends that Shareholders vote
FOR the re-appointment of Ernst & Young. Unless authority is withheld, the Management Proxyholders intend to vote FOR
the re-appointment of Ernst & Young as the auditor of the Company to hold office until the next annual general meeting of Shareholders
or until a successor is appointed and the Board is authorized to fix their remuneration.
Say on
Pay Advisory Vote
The Board has adopted a non-binding Shareholder
advisory vote on the Company’s approach to executive compensation to provide Shareholders a formal opportunity to provide their
views on the Company’s executive compensation program as set forth in this Circular under the heading “Statement of Executive
Compensation” beginning on page 39.
The Company will disclose the results of the vote
as part of its report on the voting results for the Meeting. The advisory vote is non-binding on the Company and it remains the duty of
the Board to develop and implement appropriate executive compensation policies. However, the Board will take the results into account
when considering the executive compensation plans and policies of the Company for future periods. In the event that a significant number
of Shareholders oppose the resolution, the Board will endeavour to consult with its
Shareholders as appropriate (particularly those
who are known to have voted against it) to understand their concerns and will review the Company’s approach to compensation in the
context of those concerns. The Board will consider disclosing to Shareholders as soon as is practicable, and no later than in the management
information circular for its next annual meeting, a summary of any comments received from Shareholders in the engagement process and any
changes to the compensation plans made or to be made by the Board (or why no changes will be made).
At the Meeting, Shareholders will be asked to consider
a non-binding advisory resolution on executive compensation, known as “Say on Pay”, as follows (the “Say on
Pay Advisory Resolution”):
“BE IT RESOLVED THAT, on an advisory
basis and not to diminish the role and responsibilities of the Board of Directors, the shareholders of Orla Mining Ltd. (the “Company”)
accept the approach to executive compensation disclosed in the Company’s Management Information Circular dated May 11, 2023, with
respect to the Annual and Special Meeting of Shareholders.”
The Board recommends that Shareholders vote
FOR the Say on Pay Advisory Resolution to approve the Company’s approach to executive compensation. Unless otherwise instructed,
the Management Proxyholders intend to vote FOR the Say on Pay Advisory Resolution.
Statement
of Corporate Governance
The Company and the Board recognize the importance
of corporate governance to the effective management of the Company and to the protection of its employees, Shareholders and other stakeholders.
The Company’s approach to significant issues of corporate governance is designed with a view to ensuring that the business and affairs
of the Company are effectively managed to enhance Shareholder value. The Company’s corporate governance practices are intended to
comply with the applicable rules under applicable Canadian securities laws, the TSX and the NYSE American LLC (“NYSE American”).
The Company continues to monitor developments in Canada and the United States with a view to further revising its governance policies
and practices, if appropriate. A list of ways in which the Company’s corporate governance practices differ from those required of
U.S. domestic companies under the rules of the NYSE American can be found on the Company’s website at www.orlamining.com.
National Policy 58-201 – Corporate Governance
Guidelines (the “Guidelines”) and National Instrument 58-101 – Disclosure of Corporate Governance Practices
(the “Governance Disclosure Rule”) have been adopted by the securities regulatory authorities in Canada. The Guidelines
deal with matters such as the constitution and independence of corporate boards, their functions, the effectiveness and education of Board
members and other items dealing with sound corporate governance practices. The Governance Disclosure Rule requires that, if management
of an issuer solicits proxies from its security holders for the purpose of electing directors, specified disclosure of its corporate governance
practices must be included in its management information circular. As required by the Governance Disclosure Rule and other applicable
regulatory instruments, the following disclosure describes the Company’s corporate governance policies and initiatives.
The Company continually reviews and monitors developments
in Canada with a view to further revising its governance policies and practices, as appropriate. Subsequent to the completion of the acquisition
of Pershimco Resources Inc. in December 2016, the Camino Rojo gold project in November 2017, the graduation to the TSX in November 2018
and the listing on the NYSE American in December 2020, the Company’s corporate governance practices and policies were reviewed and
enhanced in order to ensure the Company was well situated with best practices in light of its stage of development. The Board continues
to monitor such practices on an ongoing basis and, when necessary, will implement such additional practices as it deems appropriate.
The Board
of Directors
The Board discharges its responsibility for overseeing
the management of the Company’s business by delegating to the Company’s senior officers the responsibility for day-to-day
management of the Company. The Board discharges its responsibilities both directly and through its standing committees; namely, the Audit
Committee, the Corporate Governance & Nominating Committee (also referred to herein as the “CGNC”), the Environmental,
Sustainability, Health & Safety Committee and the Human Resources and Compensation Committee (also referred to herein as the “HRCC”).
In addition to these regular committees, the Board may appoint ad hoc committees periodically to address issues of a more short-term
nature. The Board’s primary roles are overseeing corporate performance and providing quality, depth and continuity of management
to meet Orla’s strategic objectives. A copy of the mandate of the Board is attached hereto as Schedule A and is available on the
Company’s website at www.orlamining.com.
The Board is responsible
for, among other things:
| ● | appointment
of management, including the Chief Executive Officer and other senior officers, as well
as the oversight of succession planning; |
| ● | board
organization, including managing its own affairs, composition, size, new candidates,
committee appointments and committee mandates; |
| ● | strategic
planning, including developing, reviewing and approving the business objectives and goals
of the Company, reviewing the business, financial and strategic plans by which it is proposed
that Orla may reach those goals, providing input to management on emerging trends and issues,
and considering alternate strategies for possible change of control transactions; |
| ● | monitoring
financial performance and other financial reporting matters, including enhancing congruence
between shareholder expectations, corporate objectives and management performance, monitoring
progress toward strategic and operational goals, revising direction to management in light
of changing circumstances, taking action when performance falls short of goals, reviewing
and approving the financial statements and management’s discussion and analysis, as
well as Orla’s management information circular and annual information form, and reviewing
and approving transactions outside the ordinary course of business; |
| ● | risk
management, including identifying the principal risks of the Company’s business
and ensuring the implementation of appropriate systems to effectively monitor and manage
those risks with a view to the long-term viability of the Company and achieving a proper
balance between the risks incurred and the potential return to Orla’s shareholders; |
| ● | environmental
oversight, including ensuring the implementation of appropriate environmental stewardship
and health and safety management systems, which are sufficient within the terms and practices
of the mining industry, to ensure compliance with applicable laws; |
| ● | policies
and procedures, including approving and monitoring compliance with all significant policies
and procedures; and |
| ● | communications
and reporting, including overseeing the accurate reporting of the financial performance
on a timely and regular basis, taking steps to enhance the timely disclosure of any other
developments that have a significant and material impact, reporting annually to shareholders
on its stewardship for the preceding year, and overseeing Orla’s implementation of
systems to accommodate feedback from shareholders. |
Board
Composition and Experience
The Board of Directors and the CGNC review the
experience, qualifications, and skills of the Company’s directors each year to ensure that the composition of the Board of Directors
and committees and the competencies and skills of the members are in line with the evolving needs of the Company.
The Board maintains a skills matrix to identify
and evaluate the competencies and skills of the members based on the individual experience and background of each director.
The skills matrix was instituted in 2022 and will be reviewed and updated each year based on:
| ● | a
self-assessment by each director through which each director is asked to provide feedback
on their expertise, skills and background |
| ● | an
overall review conducted by the CGNC in light of the responses of each director to
the self-assessment |
This information is compiled into a matrix representing
the primary expertise, skills and background of the directors in areas prioritized by the Board. This matrix is maintained to identify
areas for strengthening the Board, if any, and address them through the recruitment of new members. The skills matrix is also used by
the CGNC to evaluate the Board’s diversity and tenure. Such information is used in the annual review of the Board’s composition
and will be used by the CGNC when filling Board vacancies and changing its composition, as further discussed below.
The following skills matrix outlines the primary
expertise, skills and background, as well as the composition of the current directors and the first time Nominee. Additional information
with respect to each individual is contained in their biography, starting on page 13 of this Circular.
| |
|
Charles
Jeannes |
Jason
Simpson |
Jean
Robitaille |
Tim
Haldane |
David
Stephens |
Elizabeth
McGregor |
Tamara
Brown |
Scott
Langley |
Ana
Sofía
Ríos(1) |
Total /
Average
(n=9) |
| Relevant Industry Skills |
Mining
Industry |
● |
● |
● |
● |
● |
● |
● |
● |
● |
9 |
| Operations |
● |
● |
● |
● |
|
|
● |
|
|
5 |
| Environment,
Health, Safety and Sustainability |
● |
● |
● |
● |
|
|
● |
|
● |
6 |
| Geology
and Exploration |
● |
● |
● |
● |
|
|
● |
|
|
5 |
| General Business Skills |
Financial Literacy |
● |
|
|
|
● |
● |
● |
● |
● |
6 |
| Compensation
/ HR |
● |
● |
● |
|
|
● |
● |
|
|
5 |
| Governance |
● |
● |
● |
● |
● |
● |
● |
|
● |
8 |
| Senior
Executive |
● |
● |
● |
● |
● |
● |
● |
● |
|
8 |
| Risk
Management |
● |
● |
● |
● |
● |
● |
● |
|
● |
8 |
| Legal
|
● |
|
|
|
|
|
|
|
● |
2 |
| International
Markets |
● |
● |
● |
● |
● |
● |
● |
● |
● |
9 |
| Capital
Markets |
● |
|
|
|
● |
● |
● |
● |
● |
6 |
| Mergers
and Acquisitions |
● |
|
● |
● |
● |
|
● |
● |
● |
7 |
| |
|
|
Charles
Jeannes |
Jason
Simpson |
Jean
Robitaille |
Tim
Haldane |
David
Stephens |
Elizabeth
McGregor |
Tamara
Brown |
Scott
Langley |
Ana
Sofía
Ríos(1) |
Total /
Average
(n=9) |
| Composition |
Residence |
|
USA |
CAN |
CAN |
USA |
CAN |
CAN |
CAN |
CAN |
MX |
- |
| Age |
|
64 |
50 |
61 |
66 |
41 |
46 |
50 |
48 |
37 |
51.4 |
| Gender |
Male |
● |
● |
● |
● |
● |
|
|
● |
|
6 |
| Female |
|
|
|
|
|
● |
● |
|
● |
3 |
| Tenure
(Years) |
|
5.8 |
4.4 |
6.4 |
5.8 |
5.1 |
3.9 |
0.8 |
0.8 |
- |
3.7 |
| Diverse
Directors |
|
|
|
|
|
|
● (2,3) |
● (2) |
|
●(2,4) |
3 |
| Independent |
|
● |
|
● |
● |
● |
● |
● |
|
● |
7 |
| Other
Public Board Positions |
|
2 |
0 |
0 |
0 |
0 |
1 |
3 |
0 |
0 |
0.7 |
Notes:
| (1) | Proposed as a first time Nominee for election as a director of the Company |
| (2) | Diversity Factor: Female |
| (3) | Diversity Factor: Métis |
| (4) | Diversity Factor: Visible Minority |
Meetings
of the Board
The Board fulfills its mandate at regularly scheduled
meetings or as required. The directors are kept informed of the Company’s operations at these meetings as well as through reports
and discussions with Management throughout the year. The frequency of the meetings and the nature of the meeting agendas are dependent
upon the nature of the business and affairs which the Company faces from time to time. The Board’s practice is that, at the end
of each meeting of the Board, directors meet in the absence of Management to hold an open and candid discussion. For the financial year
ended December 31, 2022, all Board and committee meetings were accompanied by an in-camera session with the Chief Executive Officer
but absent other members of Management, and an in-camera session where neither the Chief Executive Officer nor other members of
Management were in attendance.
The majority of directors in office constitutes
a quorum for the transaction of business and a quorum of directors may exercise all the powers of directors at a meeting. Directors are
expected to attend all meetings of the Board and the committees upon which they serve, to come to such meetings fully prepared (including
full review of all documentation sent prior to the meeting), and to remain in attendance for the duration of the meeting.
In certain circumstances, non-directors will be
permitted to attend Board and committee meetings to provide information and opinions to assist the directors in their deliberations. The
Board, through the Chair, will determine non-director attendees for a meeting, and no non-directors will be permitted to table material
at the Board meeting without the prior approval of the Chair (in the case of the Board) or committee chair (in the case of a committee
of the Board).
The following table sets forth the Board and committee
meeting attendance for the financial year ended December 31, 2022.
| Meeting |
|
Number of Meetings in
2022 |
|
Meeting
Attendance |
| Board |
|
6 |
|
92% |
| Audit |
|
4 |
|
100% |
| HRCC |
|
6 |
|
100% |
| CGNC |
|
4 |
|
100% |
| ESH&S |
|
4 |
|
100% |
Independence
of the Board
The Governance Disclosure Rule defines an “independent”
director with reference to the definition of independence under National Instrument 52-110 – Audit Committees of the Canadian
Securities Administrators (“NI 52-110”), being a director who has no direct or indirect material relationship with
the Company. A “material relationship” is in turn defined as a relationship which could, in the view of the Board, be reasonably
expected to interfere with such member’s independent judgment.
The Board is currently comprised of eight directors.
The Board has determined that six out of the eight current members are “independent” directors within the meaning of NI 52-110
and under the applicable rules of the NYSE American. Mr. Jason Simpson is not considered “independent” as a result of his
role as an executive officer, and Mr. Scott Langley, Newmont’s director nominee, is not considered “independent” as
a result of Orla’s transactional relationship with Newmont. Messrs. Charles Jeannes, Jean Robitaille, Tim Haldane and David Stephens
and Mss. Elizabeth McGregor and Tamara Brown are each considered to be “independent” directors of the Company under NI 52-110
and under the applicable rules of the NYSE American.
If the proposed Nominees put forth by Management
are elected at the Meeting, the Board will be comprised of nine directors, seven of whom (Messrs. Jeannes, Robitaille, Haldane, Stephens
and Mss. McGregor, Brown and Ríos) will be considered “independent” directors and two of whom (Messrs. Simpson and
Langley) will not be considered “independent”.
In December 2019, the Company entered into a loan
agreement with Trinity Capital Partners Company (“Trinity Capital”) and certain other lenders with respect to a US$125
million project finance facility (“Facility”) for the development of the Camino Rojo Oxide Gold Project located in
Zacatecas, Mexico. The Facility was arranged by Trinity Capital and included a large syndicate of 29 lenders led by Agnico-Eagle, Pierre
Lassonde and Trinity Capital. The Company’s key objective with respect to the Facility was to align the interests of Shareholders
and debtholders by building a syndicate of lenders that included some of the Company’s key Shareholders. All key decisions related
to the Facility were managed by a group of lenders representing 75% of the syndicate (“Majority Lenders”). The Majority
Lenders exercised influence and acted as representatives for the rest of the syndicate. Certain directors (Mr. Jeannes, Ms. McGregor and
Mr. Stephens) participated in the Facility as minority lenders, were not part of the Majority Lenders and therefore acted as passive investors
with no influence or control over the decisions made by the Majority Lenders on behalf of the syndicate as a whole. In aggregate, the
participation of the directors represented 2% of the Facility and such participation was not considered material to the Facility or to
the individual directors. The Facility, including the participation of Mr. Jeannes, Ms. McGregor and Mr. Stephens, was considered, and
ultimately approved by the Board, other than the participating directors. The directors who participated as lenders declared and disclosed
their interest in the Facility to the Board, and did not vote on the matter nor did they participate in the negotiation of the terms of
the Facility. On April 28, 2022, the Company entered into a credit agreement with a syndicate of new lenders and the Facility was repaid
in full in accordance with its terms. As a result, Mr. Jeannes, Ms. McGregor and Mr. Stephens ceased to be lenders to the Company. The
CGNC has considered Mr. Jeannes, Ms. McGregor and Mr. Stephens’ prior participation in the Facility and concluded that such participation
did not and does not, in any way, result in a
relationship with the Company that could reasonably
be expected to impact such directors’ independent judgement or interfere with their objectivity.
In previous years, Institutional Shareholder Services
(“ISS”), a proxy advisory firm, determined that Mr. Jeannes, Ms. McGregor and Mr. Stephens were not “independent”
of the Company due to their participation in the Facility. ISS’ policy considers participation in a banking syndicate by a non-lead
bank to constitute a transactional relationship with the Company. In light of ISS’ determination, the Board has adopted a policy
that prohibits independent directors of the Company from participating in a banking syndicate in the future. This policy also requires
the CGNC to assess and determine director independence at each quarterly meeting and, in doing so, consider applicable securities laws
and the rules of the NYSE American, as well as other matters the CGNC considers relevant, including investor and proxy voting guidelines.
The CGNC will make a recommendation to the Board regarding its determination and the Board, as a whole, will do the same, in each case,
with any non-independent directors abstaining from voting. The policy also requires new directors to advise the CGNC of any potential
relationship that may compromise their independence, as well as requiring existing directors to advise the CGNC of any new information
or changes regarding their independence on an ongoing basis.
Chair
of the Board
The current Chair of the Board is Mr. Charles Jeannes.
Mr. Jeannes is considered independent. The Chair’s role and responsibilities include providing leadership to the Board, assisting
the Board in satisfying its oversight responsibilities, managing Board meetings, promoting the delivery of information to the directors
of the Company on a timely basis such that directors are fully apprised of all matters which are material to directors, presiding over
Shareholder meetings and such other functions as may be ancillary to the duties and responsibilities and as may be delegated to the Chair
by the Board from time to time. The Role Statement for Non-Executive Chair is available on the Company’s website at www.orlamining.com.
Chief
Executive Officer
The Chief Executive Officer of the Company is responsible
for managing the business and affairs of the Company within the corporate policies and mandates and authority limitations established
by the Board from time to time. The Role Statement for the Chief Executive Officer is available on the Company’s website at www.orlamining.com.
Other
Reporting Issuer Directorships
The following table sets forth the directors of
the Company who currently hold directorships in other reporting issuers:
| Name |
|
Name of Reporting Issuer |
|
Exchange |
|
Term |
| Charles Jeannes |
|
Wheaton Precious Metals Corp. |
|
TSX, NYSE |
|
2016 to Present |
| |
Pan American Silver Corp. |
|
TSX, NASDAQ |
|
2019 to Present |
| Elizabeth McGregor |
|
Kinross Gold Corporation |
|
TSX, NYSE |
|
2019 to Present |
| |
Infield Minerals Corp. |
|
TSXV |
|
2021 to Present |
| Tamara Brown |
|
Lithium Royalty Corp. |
|
TSX |
|
2023 to Present |
| |
Superior Gold Inc. |
|
TSX Venture Exchange |
|
2016 to Present |
| |
29Metals Limited |
|
ASX |
|
2023 to Present |
Orientation
and Continuing Education
Given the size and stage of the Company, the Board
as a whole is responsible for ensuring that new directors are provided with an orientation program, which includes written information
about the business, documents from recent Board meetings and governance policies. In addition, directors are encouraged to visit and meet
with Management on a regular basis and are provided the opportunity to independently consult with legal counsel to the Company to understand
their legal obligations as directors.
The Company also encourages continuing education
of its directors and officers where appropriate in order to ensure that they have the necessary skills and knowledge to meet their respective
obligations to the Company. To facilitate ongoing education, the CGNC will: (a) periodically canvass the directors to determine their
training and education needs and interests; (b) arrange for directors to visit the Company’s development and operating sites; (c)
encourage directors to attend seminars, industry conferences such as the Denver Gold Forum and the Prospectors and Developers Association
of Canada (PDAC) conference, and other professional development events; and (d) encourage and facilitate presentations by outside experts
to the Board and committees on matters of particular importance or emerging significance. The Environmental, Sustainability, Health and
Safety Committee also coordinates visits to the Company’s project sites for the directors, with the last such visit being to Camino
Rojo in March 2022.
At each quarterly Board meeting, Management makes
a presentation to the Board regarding various elements of the Company’s business, including investor relations, operational matters,
exploration, sustainability, health and safety, regulatory matters, legal updates, corporate development, cybersecurity, as well as a
comprehensive overview of the Company’s financial performance, anticipated future financial results and market trends. In addition,
together with the Company’s Corporate Counsel, the Chair of the Board and the Chair of the CGNC continually review the latest securities
rules and policies and best practices in corporate governance. Any changes or new requirements will then be brought to the attention of
the Company’s directors. Board members are encouraged to communicate with Management, auditors, legal counsel and technical consultants;
to keep themselves current with industry trends and developments and changes in legislation with Management’s assistance; and to
attend related industry seminars and visit the Company’s projects. Board members have full access to the Company’s records.
Ethical
Business Conduct
The Board expects Management to operate the business
of the Company in a manner that enhances shareholder value and is consistent with the highest level of integrity. Management is expected
to execute the Company’s business plan and to meet performance goals and objectives according to the highest ethical standards.
To this end, the Board has adopted a Code of Business Conduct and Ethics (the “Code”) for its directors, officers and
employees.
Compliance with all applicable laws and regulations
is essential to the conduct of the Company’s business and is the foundation on which the Company’s ethical standards are built.
Employees, officers, the Board, consultants and contractors have a responsibility to meet and exceed the standards contemplated in the
laws and regulations of each country in which the Company operates. If any such individual has any questions regarding the best course
of action to take in a particular situation or suspects a possible violation of a law, regulation or of the Code, then such person should
promptly contact the Chief Financial Officer who, depending on the issue raised will convey any concern to the Chair of the Audit Committee
or to the Chief Executive Officer as the case may require. Every reasonable effort will be made to ensure the confidentiality of those
furnishing information. Concerns which regard the Chief Financial Officer are to be addressed to the Chair of the Audit Committee. The
Company encourages its representatives to raise possible ethical issues and will not tolerate retaliatory action against any individual
for raising legitimate concerns or questions regarding ethics matters or for reporting suspected violations in good faith.
The Company expects its representatives to take
all responsible steps to prevent a violation of the Code. Any representative who observes or otherwise becomes aware of any illegal or
unethical behaviour shall report the violation as soon as reasonably possible in accordance with the Company’s Whistleblower
Policy. Representatives are encouraged to talk to supervisors, managers or other appropriate personnel when in doubt about the best
course of action to take in a particular situation. Representatives may also contact a member of senior management or the Chair of the
Audit Committee if appropriate. The Company has also put in place an independent and confidential alternative reporting channel. The Whistleblower
Policy provides that concerns and/or complaints will be kept confidential and may be communicated anonymously if desired. Following
the receipt of any complaints submitted hereunder, the Chair of the Audit Committee shall promptly investigate each matter so reported.
A copy of the Code and the Whistleblower Policy
is available on the Company’s website at www.orlamining.com and a copy of the Code has also
been filed on SEDAR and may be accessed under the Company’s profile at www.sedar.com and in the
U.S. on EDGAR at www.sec.gov.
The Board monitors compliance with the Code and
Management provides an annual report to the Board regarding issues, if any, arising under the Code and the Company’s corporate governance
policies. The Board and Management are also required to review and certify that they have read the Code on an annual basis.
In addition, as some of the directors of the Company
also serve as directors and officers of other companies engaged in similar activities, the Board must comply with the conflict of interest
provisions of the CBCA, as well as the relevant securities regulatory instruments, in order to ensure that directors exercise independent
judgment in considering transactions and agreements in respect of which a director or officer has a material interest. Each director is
required to declare the nature and extent of his or her interest and is not entitled to vote at meetings which involve such conflict.
Human
Resources and Compensation Committee
The Human Resources and Compensation Committee
or HRCC is currently comprised of four independent directors, being Messrs. Robitaille (Chair) and Jeannes and Mss. McGregor and Brown,
each of whom is considered to be independent within the meaning of NI 52-110 and under the applicable rules of the NYSE American.
The HRCC has adopted a written mandate and is responsible
for the review and approval of the philosophy and design of the Company’s compensation programs and the compensation of the Company’s
executives, members of the Board and employees and for submitting recommendations to the Board in this regard. In addition, the HRCC is
responsible for reviewing and making recommendations to the Board, as appropriate, in connection with the Company’s succession planning
with respect to the Chief Executive Officer and other senior executive officers and ensuring that the structure, design and application
of the Company’s material compensation programs meet the Company’s principles, objectives and risk profile and do not encourage
excessive risk taking.
See “Statement of Executive Compensation
– Executive Compensation Discussion and Analysis” below for details regarding the Company’s objectives and philosophy
regarding executive compensation and the application of this philosophy to the Company’s executive compensation arrangements. During
the financial year ended December 31, 2022, the HRCC met six times.
Corporate
Governance and Nominating Committee
The Corporate Governance and Nominating Committee
or CGNC is currently comprised of three independent directors, being Messrs. Stephens (Chair), Jeannes and Haldane, each of whom is considered
to be independent within the meaning of NI 52-110 and under the applicable rules of the NYSE American.
The CGNC is in place to provide a focus on governance
that will enhance the Company’s performance, to monitor compliance to the Code, to assess and make recommendations regarding the
Board’s effectiveness and to
establish and lead the process for identifying,
recruiting, appointing, re-appointing, evaluating and providing ongoing development for directors. The full text of the CGNC’s charter
is available on the Company’s website at www.orlamining.com. During the financial year ended
December 31, 2022, the Corporate Governance and Nominating Committee met four times.
Audit
Committee
The Audit Committee is currently comprised of four
independent directors, being Mss. McGregor (Chair) and Brown and Messrs. Stephens and Jeannes. All members of the Audit Committee are
considered to be (i) independent within the meaning of NI 52-110 and within the meaning of Rule 10A-3 under the Exchange Act and the applicable
rules of the NYSE American; and (ii) considered to be financially literate within the meaning of NI 52-110 and the applicable rules of
the NYSE American. The Board has determined that each of Mss. McGregor and Brown and Messrs. Stephens and Jeannes is an “audit committee
financial expert” within the meaning of the applicable U.S. securities laws.
The Audit Committee is responsible for the Company’s
financial reporting process and the quality of its financial reporting. The Audit Committee is charged with the mandate of providing independent
review and oversight of the Company’s financial reporting process, the system of internal control and management of financial risks
and the audit process, including the selection, oversight and compensation of the Company’s external auditors. The Audit Committee
also assists the Board in fulfilling its responsibilities in reviewing the Company’s process for monitoring compliance with laws
and regulations, receives quarterly reports from Management on the Company’s cybersecurity program and annually reviews the Company’s
insurance policies. In performing its duties, the Audit Committee maintains effective working relationships with the Board, Management
and the external auditors and monitors the performance and independence of those auditors. The full text of the Audit Committee’s
charter is available on the Company’s website at www.orlamining.com. During the financial
year ended December 31, 2022, the Audit Committee met four times.
The aggregate fees billed by the Company’s
external auditors in each of the last two financial years are as follows:
| Financial Year Ended |
|
Audit Fees (1) |
|
Audit-Related Fees (2) |
|
Tax Fees (3) |
|
All Other Fees (4) |
| December 31, 2022 |
|
C$506,000 |
|
C$NIL |
|
C$27,000 |
|
C$NIL |
| December 31, 2021 |
|
C$418,100 |
|
C$NIL |
|
C$67,600 |
|
C$NIL |
| (1) | Fees billed for professional services rendered by the Company’s
external auditor for the audit and review of the financial statements or services that are normally provided by the external auditor
in connection with statutory and regulatory filings or engagements. |
| (2) | Fees billed by the Company's external auditor for assurance-related
services that are not included in “audit fees”. |
| (3) | Fees for professional services rendered by the Company’s
external auditor for tax compliance, tax advice and tax planning. |
| (4) | Fees for products and services provided by the Company’s
external auditor, other than services reported under the table headings “Audit Fees”, “Audit-Related Fees” or
“Tax Fees”. |
Additional information with respect to the Audit
Committee can be found in the Company’s most recent Annual Information Form, available on Company’s profile on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov or on its website at www.orlamining.com.
Environmental,
Sustainability, Health and Safety Committee
The Environmental, Sustainability, Heath and Safety
Committee is currently comprised of three directors, being Messrs. Haldane (Chair) and Robitaille, both of whom are considered to be independent
within the meaning of NI 52-110 and under the applicable rules of the NYSE American, and Mr. Simpson, who is not considered to be independent.
The purpose of the Environmental, Sustainability,
Heath and Safety Committee is to monitor and review the health, safety, environmental and sustainable development policies, principles,
practices and processes of the
Company and monitor and review the regulatory issues
related to health, safety, the environment and sustainable development (including climate change and water management). The Environmental,
Sustainability, Heath and Safety Committee has the authority to engage independent counsel or other experts and conduct any investigation
that it considers appropriate. It is responsible for amongst other things, reviewing and approving annual disclosure relating to the Company’s
sustainability, health, safety and environment policies and activities, reviewing sustainability, environmental and health and safety
reports and identifying the principal health, safety and environmental risks and impacts of the Company.
During the financial year ended December 31, 2022,
the Environmental, Sustainability, Heath and Safety Committee met four times.
Assessment
of Board Performance
Led by the independent Chair of the CGNC, the Board
as a whole is expected to evaluate the effectiveness of the Board, its committees and individual directors on an annual basis. The Board
has adopted a questionnaire that asks the directors to assess the effectiveness of the Board and its committees in respect of: structure
and composition; roles and responsibilities; operations; effectiveness; committee meetings’ operations and effectiveness; and individual
director performance. The Board evaluation process was designed to provide directors with an opportunity each year to examine how the
Board is operating and to make suggestions for improvement. The Chair of the CGNC is responsible for ensuring the questionnaire covers
all necessary topics of discussion and for gathering the feedback from other directors or the Company.
Director
Term Limits and Other Mechanisms of Board Renewal
The Company has not adopted term limits for the
directors on the Board or other mechanisms of Board renewal at this time. Term limits are not considered necessary, as the Board believes
it has adopted sufficient practices and mechanisms for renewal. In particular, the Board has appointed the CGNC comprised solely of independent
directors to provide a focus on governance that will enhance the Company’s performance; to assess and make recommendations regarding
the Board’s effectiveness; and to establish and lead the process for identifying, recruiting, appointing, re-appointing and providing
ongoing development for directors. The CGNC will complete annual reviews of the Board’s relationship with Management to ensure the
Board is able to, and in fact does, function independently of Management. The CGNC will also develop, and annually update and recommend
to the Board for approval, a long-term plan for Board composition that takes into consideration, among other matters, the current strengths,
skills and experience represented by each director, as they affect Board dynamics as well as retirement dates. The Board believes that
the perspective of longer service directors with industry experience is of benefit to the Board. In addition, the Board believes that
the experience and diversity of the current Board would be very difficult to replicate and that regular evaluation of Board skills and
experience, rather than arbitrary term limits, will result in better Board performance.
Corporate
Policies
Environmental
& Sustainability, Health & Safety Policy
The Company is committed to meeting or surpassing
regulatory requirements in all of its exploration and development activities while working to protect the environment both within and
beyond the Company’s operational boundaries. In keeping with this commitment, Orla has adopted an Environmental, Sustainability
and Health & Safety Policy. The Company will conduct all of its operations in a manner that ensures full compliance with its Environmental,
Sustainability and Health & Safety Policy, applicable legislation and government requirements. The aim of this policy is to protect
the surroundings in which the Company operates, to minimize and manage environmental risk and to enhance sustainable environmental practices.
Orla will ensure that all of its activities are conducted in an environmentally safe and responsible manner and will ensure that its contractors
adhere to the same high environmental standards.
The full text of the Environment & Sustainability, Health & Safety Policy is available on the Company’s website at
www.orlamining.com.
Corporate
Social Responsibility Policy
The Company is committed to conducting its business
in a responsible manner at all times. In keeping with this commitment, Orla has implemented a Corporate Social Responsibility Policy
which sets out the guidelines by which the Company will (i) endeavour to respect the health and safety of its employees, (ii) protect
the environment, (iii) respect the human rights of its employees and the residents in the communities in which the Company operates and
(iv) contribute to the sustainable development of those communities.
Share
Ownership Policy
The Company has adopted a Share Ownership Policy
in order to align the interests of certain officers and the directors of the Company with those of the Company’s Shareholders by
requiring such persons to own a significant number of Common Shares. Such individuals are required to hold Common Shares equal to the
following multiples of base cash retainer in the case of directors and annual salary in the case of officers:
| Position |
|
Multiple |
| Non-Executive Director |
|
Three (3) times annual base retainer |
| President and CEO |
|
Three (3) times base salary |
| COO, CFO, CSO |
|
Two (2) times base salary |
| SVP |
|
One (1) times base salary |
The ownership guidelines will be deemed to be satisfied
following the date on which the price paid by the director or officer for Common Shares or the fair market value of the Common Shares
equals or exceeds the ownership threshold. For the purpose of calculating the value of the Common Shares held, restricted share units
(“RSUs”) and deferred share units (“DSUs”), whether vested or not vested are included; however,
performance share units (“PSUs”), unexercised stock options (whether vested or not vested) and Common Shares issuable
upon the exercise of share purchase warrants or any other convertible securities of the Company are not counted toward the ownership guidelines
set out in the Share Ownership Policy.
Individuals are required to comply with this policy
by the fifth anniversary of the date of the individual’s date of hire or appointment. If a participant fails to comply with the
policy, a retention ratio requirement would apply to the participant on future vesting of stock options or RSUs. The full text of the
Share Ownership Policy is available on the Company’s website at www.orlamining.com.
The following table shows each director and officer’s
holdings as of December 31, 2022 and whether they have met the requirement under the Share Ownership Policy.
| Name and Position |
|
Number of
Common
Shares |
|
Number of
RSUs or
DSUs |
|
Value of
Common
Shares, RSUs
and DSUs (1) |
|
Share
Ownership
Requirement |
|
Requirement
Met? |
| Officers |
|
|
|
|
|
|
|
|
|
|
Jason Simpson
President and Chief Executive Officer |
|
1,312,036 |
|
204,681 |
|
$8,337,951 |
|
$1,575,263 |
|
Yes |
| Name and Position |
|
Number of
Common
Shares |
|
Number of
RSUs or
DSUs |
|
Value of
Common
Shares, RSUs
and DSUs (1) |
|
Share
Ownership
Requirement |
|
Requirement
Met? |
Etienne Morin
Chief Financial Officer |
|
224,275 |
|
86,405 |
|
$1,715,254 |
|
$634,250 |
|
Yes |
Andrew
Cormier
Chief Operating Officer |
|
75,200 |
|
52,315 |
|
$712,127 |
|
$665,000 |
|
Yes |
Chafika Eddine
Chief Sustainability Officer |
|
– |
|
– |
|
– |
|
$570,000 |
|
N/A(2) |
Sylvain Guerard
Senior Vice President, Exploration |
|
4,271 |
|
17,524 |
|
$123,928 |
|
$275,000 |
|
N/A(2) |
| Non-Executive Directors |
|
|
|
|
|
|
|
|
|
|
Charles Jeannes
Director |
|
3,375,100 |
|
192,859 |
|
$19,558,686 |
|
$240,000 |
|
Yes |
Tim Haldane
Director |
|
241,900 |
|
104,759 |
|
$1,903,454 |
|
$135,000 |
|
Yes |
Elizabeth McGregor
Director |
|
24,400 |
|
68,020 |
|
$510,224 |
|
$135,000 |
|
Yes |
Jean Robitaille
Director |
|
2,324,450 |
|
97,683 |
|
$13,277,051 |
|
$135,000 |
|
Yes |
David Stephens
Director |
|
12,500 |
|
84,806 |
|
$536,999 |
|
$135,000 |
|
Yes |
Tamara Brown
Director |
|
4,400 |
|
11,598 |
|
$87,669 |
|
$135,000 |
|
N/A(2) |
Scott Langley
Director |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
N/A(3) |
Notes:
| (1) | Calculated as at December 31, 2022 using the greater of: (i) $5.48 (the closing price of the Common Shares
on the TSX on the last trading day of the most recently completed financial year); (ii) the average price at which the individual acquired
his or her Common Shares or, in the case of the RSUs and DSUs, the value attributed to such RSUs and DSUs on the award date. |
| (2) | Ms. McGregor was appointed as a director of the Company in 2019, Ms. Brown was appointed as a director
of the Company in 2022, Mr. Cormier joined the Company in 2020, Ms. Eddine joined the Company in 2022 and Mr. Guerard became subject to
the Share Ownership Policy in 2022. Accordingly, each has five years from such date to satisfy the requirement. |
| (3) | Mr. Langley acts as Newmont’s nominee and, accordingly, he waived his annual base retainer in 2022
and is not subject to the share ownership requirements. |
Corporate
Disclosure Policy
The Company has adopted a Corporate Disclosure
Policy to outline the required process for the timely disclosure of all material information relating to the Company’s business,
including both written and verbal disclosure, and to provide guidance and assistance to the Board, officers and employees in complying
with their obligations under the provisions of securities laws and stock exchange rules to preserve the confidentiality of the Company’s
non-public material information. The full text of the Corporate Disclosure Policy is available on the Company’s website at
www.orlamining.com.
Insider
Trading Policy
The Company has adopted an Insider Trading Policy.
Canadian securities laws and regulations prohibit “insider trading” and impose restrictions on trading securities while
in possession of material undisclosed information. The rules and procedures detailed in the Company’s Insider Trading Policy
have been implemented in order to prevent improper trading of the Company’s securities or of companies with which the Company
may have a business relationship. The full text of the Insider Trading Policy is available on the Company’s website at www.orlamining.com.
Whistleblower
Policy
For a summary of the Company’s
Whistleblower Policy see “Corporate Governance – Ethical Business Conduct” above or see the full text
available on the Company’s website at www.orlamining.com.
Clawback
Policy
The Company has adopted a Clawback Policy
in order to maintain a culture of focused, diligent and responsible management which discourages conduct detrimental to the growth of
the Company and to ensure that incentive-based compensation paid by the Company is based upon accurate financial data. The Clawback
Policy applies in the event of a material restatement of the Company’s financial results as a result of material non-compliance
with financial reporting requirements. The full text of the Clawback Policy is available on the Company’s website at www.orlamining.com.
Anti-Hedging
Policy
The Company has adopted a formal Anti-Hedging
Policy, the objective of which is to prohibit individuals who are subject to the policy from directly or indirectly engaging in hedging
against future declines in the market value of any securities of the Company through the purchase of financial instruments designed to
offset such risk. The Board believes that it is inappropriate for directors, officers or employees of the Company or its respective subsidiary
entities or, to the extent practicable, any other person (or their associates) in a special relationship with the Company, to hedge or
monetize transactions to lock in the value of holdings in the securities of the Company. Such transactions, while allowing the holder
to own the Company’s securities without the full risks and rewards of ownership, potentially separate the holder’s interests
from those of other stakeholders and, particularly in the case of equity securities, from the public shareholders of the Company. The
full text of the Anti-Hedging Policy is available on the Company’s website at www.orlamining.com.
Diversity
Policy
The Company is committed to creating and maintaining
a culture of workplace diversity. In keeping with this commitment, the Company has established a Diversity Policy. “Diversity”
is any dimension which can be used to differentiate groups and people from one another and it means the respect for and appreciation of
the differences in gender, age, ethnic origin, religion, education, sexual orientation, political belief or disability, amongst other
things. The Company recognizes the benefits arising from employee and Board diversity, including a broader pool of high-quality employees,
improving employee retention, accessing different perspectives and
ideas and benefiting from all available talent.
The Company respects and values the perspectives, experiences, cultures and differences that employees possess. The full text of the Diversity
Policy is available on the Company’s website at www.orlamining.com.
In accordance with the Diversity Policy,
the CGNC will strive for inclusion of diverse groups, knowledge and viewpoints on the Board and in executive officer positions. In conjunction
with its consideration of the qualifications and experience of potential directors and executive officers, as well as the skills, expertise,
experience and independence which the Board requires to be effective, the CGNC will consider the level of diversity (including the representation
of (i) women, (ii) Indigenous peoples, (iii) persons with disabilities or (iv) members of visible minorities (collectively, “members
of designated groups”)) on the Board when identifying and nominating candidates for election or re-election to the Board, and will
consider the level of diversity (including the representation of members of designated groups) in executive officer positions when the
Board makes executive officer appointments. The CGNC will be responsible for recommending qualified persons for Board nominations and
in doing so, it will consider the benefits of all aspects of diversity on the Board and develop recruitment protocols that seek to include
diverse candidates, including proactively searching for diverse candidates in the recruitment process.
Policies
Regarding the Representation of Members of Designated Groups on the Board
As noted above, the Company has established a Diversity
Policy, which sets out guidelines by which the Company will endeavour to promote, foster and support diversity, such as gender diversity,
throughout the Company, including at the Board level, and applies to executive and non-executive directors, full-time, part-time and casual
employees, contractors, consultants and advisors of Orla. Along with the adoption of the Diversity Policy, the Board also adopted
guidelines by which the CGNC is to consider the diversity of the Board in its recommendations to the Board of nominees for election to
the Board and long-term plan for Board composition. The Board will proactively monitor the Company’s performance in meeting the
standards outlined in the Diversity Policy. This will include an annual review of any diversity initiatives established by Management
and the Board, and progress in achieving them. All directors and senior executive officers are required to acknowledge that they have
read the Diversity Policy annually.
Consideration
of the Representation of Members of Designated Groups in the Director Identification and Selection Process
Pursuant to the Diversity Policy, the Board
will consider diversity, such as members of designated groups, in the selection criteria of new Board members. The CGNC will follow its
charter and, with the assistance of the Board skills matrix discussed above under “Board Composition and Experience”,
consider the diversity of the Board in its recommendations to the Board of nominees for election to the Board and long-term plan for
Board composition. The CGNC will also consider the following with respect to
recommending nominees for election to the Board:
| ● | competencies
and skills each nominee will bring to the Board; |
| ● | past
business experience; |
| ● | ability
to contribute to the success of the Company; |
| ● | past
experience of directors or Management with potential candidates; |
| ● | expected
contribution to achieving an overall Board which can function as a high-performance team
with sound judgment and proven leadership; |
| ● | whether
the nominee can devote sufficient time and resources to his or her duties as a Board member;
and |
| ● | any
other factors as may be considered appropriate. |
Consideration
Given to the Representation of Members of Designated Groups in Executive Officer Appointments
Pursuant to the Diversity Policy, the Board
will consider diversity, such as members of designated groups, in the selection criteria of new senior executive officer appointments.
Management is responsible for recruiting and fostering a diverse and inclusive culture. Management will promote a work environment that
values and utilizes the contributions of women and men and of members of designated groups equally, with a variety of backgrounds, experiences
and perspectives through awareness of the benefits of workforce diversity and successful management of diversity.
Targets
and Number of Members of Designated Groups on the Board and in Executive Officer Positions
The Company has not established targets regarding
the representation of members of designated groups on the Board or executive officer positions at this time, as it believes it has adopted
sufficient practices and mechanisms for ensuring diversity. Further to its Diversity Policy, the Company will continue to consider
appropriate methods of achieving enhanced diversity at the Board level, including without limitation, changes to the Diversity Policy
to include the adoption of a formal commitment to achieve a defined percentage of women on the Board within a defined timeframe.
Representation
of Designated Groups
The following table sets forth the representation
of designated groups among the Board and Management as of the date of this Circular. As of the date of this Circular, there are eight
members of the Board (including Jason Simpson, the President and Chief Executive Officer of the Company) and seven members of Management
(not including Mr. Simpson). Following the Meeting, and assuming all Nominees are elected to the Board, the Board will consist of nine
members.
| |
|
Board Current
(n=8) |
|
Board Post-Meeting
(n=9) |
|
Management
(n=7) |
| Designated Group |
|
Number |
|
Percentage |
|
Number |
|
Percentage |
|
Number |
|
Percentage |
| Women |
|
2 |
|
25% |
|
3 |
|
33% |
|
1 |
|
14% |
| Indigenous Peoples |
|
1 |
|
13% |
|
1 |
|
11% |
|
NIL |
|
0% |
| Members of Visible Minorities |
|
NIL |
|
0% |
|
1 |
|
11% |
|
2 |
|
29% |
| Persons with Disabilities |
|
NIL |
|
0% |
|
NIL |
|
0% |
|
NIL |
|
0% |
| Number of Individuals that are Members of more than one Designated Group |
|
1 |
|
13% |
|
2 |
|
22% |
|
1 |
|
14% |
[Remainder of Page Intentionally Left Bank]
LETTER
FROM THE CHAIR OF THE HUMAN
RESOURCES AND COMPENSATION COMMITTEE
Dear Shareholders,
On behalf of the Board of Directors
and the Human Resources and Compensation Committee (or HRCC), thank you for your continued support.
2022 was a monumental year
for Orla Mining. With the successful commissioning of the Camino Rojo Oxide Mine on time and under budget, we made the transition from
developer to a cash flowing gold producer. We achieved this important milestone while maintaining the health and safety or our employees,
protection of the local communities in the jurisdictions in which we operate and a strong environmental record, all despite the challenges
posed by the COVID-19 pandemic. In the last two years, the mining industry and global economy have been challenged by inflationary pressures
and supply chain issues. Despite these challenges, we have continued to operate Camino Rojo at an industry leading all-in sustaining cost
and produced gold at the high end of our increased 2022 annual production guidance.
Camino Rojo represents the
foundation upon which we will continue to grow. In 2022 we renewed our focus on our growth pipeline, which included increased exploration
spending and the addition of the South Railroad Project to our portfolio through the acquisition of Gold Standard Ventures Corp. (Gold
Standard). The South Railroad Project is a permitting-stage, open pit, heap leach project located on the Carlin trend in Nevada, USA.
On the corporate side, we strengthened
our balance sheet by completing the re-financing of our project loan in April 2022 and we advanced our Environmental, Social Governance
(ESG) efforts, which included the appointment of Chafika Eddine as Chief Sustainability Officer. We continue to make efforts on our ESG
program and we expect to release our first sustainability report in 2023.
As we have transitioned from
developer to producer, we have also updated our approach to executive compensation. As outlined in the 2022 Information Circular, we made
substantial updates to our executive compensation program for 2022 and we continued to do so in 2023. For my first year as Chair of the
HRCC, I am pleased to discuss how our accomplishments and challenges informed the compensation outcomes for 2022, as well as the committee’s
activities and improvements to our compensation programs for 2023 and beyond.
Performance
Results for 2022
Our approach to executive compensation
reflects a “pay-for-performance” philosophy. To this end, on an annual basis we establish corporate objectives and targets
for our executives based on strategic priorities that drive our long-term growth and success. The corporate objectives for 2022 were focused
on ESG performance, production and cost at Camino Rojo, and certain strategic objectives. Using the same methodology, personal objectives
were also set based on each executive’s role. A summary of the corporate objectives and the Chief Executive Officer’s individual
objectives is set out under the heading “Statement of Executive Compensation – 2022 Executive Compensation Discussion and
Analysis – Short – Term Incentive Plan” below. At the end of the 2022 financial year, the HRCC reviewed the corporate
and individual objectives and considered the relative difficulty of the objectives and the macro circumstances of the achievements.
We generally exceeded or far
exceeded expectations for each of the corporate objectives in 2022. As a result, an overall corporate objective score of 160% for
the 2022 short term incentive plan was applied based on the following achievements:
| ● | Health
and Safety: An excellent health and safety record, with a lost time injury frequency
rate of 1.49 and no COVID outbreaks caused by our operations. |
| ● | Environmental
Protection: No category 4 or 5 (serious through catastrophic) incidents as defined by
the US Environmental Protection Agency during a full year of operations at Camino Rojo. |
| ● | Social
License: We continued to maintain our social license to operate, with no disruptions
to operations. We also continued our successful local engagement and strengthened our relationships
in the communities where we operate. |
| ● | Production:
We achieved the top range of our increased production guidance, while being on budget
in terms of operating costs and under budget on capital costs. |
| ● | Corporate
Development: We completed the acquisition of Gold Standard and the South Railroad Project
in August 2022 and improved our balance sheet through the completion of the re-financing
of our project loan. |
| ● | Exploration:
We continued to advance exploration and study work in Mexico, Panama and our newly acquired
project in Nevada, which included the completion of drilling programs at each project. With
the success of the sulphide drilling in Mexico, we elected to continue drilling to a spacing
that would support a maiden underground resource. This decision postponed the preliminary
economic assessment planned for the sulphide portion of Camino Rojo. |
Activities
and Changes for the 2023 Compensation Year
As
we transitioned in 2022 to a cash flow producer, the HRCC undertook a comprehensive review of our executive compensation programs and
related governance practices for the 2023 compensation year. Initiatives included the following:
| ● | Independent
Advisor: We continued our engagement of Southlea Group LP (Southlea) as the HRCC’s
independent compensation advisor. In 2022 and 2023, Southlea has continued to support the
HRCC with the review and update of our executive compensation program to ensure that we maintain
alignment with our peer group and industry best practices. |
| ● | Peer
Group: We reviewed and updated our peer group to ensure that the comparators reflect
the stage, size and complexity of our producing mining company. |
| ● | Benchmark
Pay: We benchmarked compensation levels for our Named Executive Officers relative to
the revised peer group. This benchmarking looked at the elements of target total direct compensation,
including salary, target short-term incentives and long-term incentives, with our philosophy
being to target the 50th percentile of our industry for expected levels of performance. |
| ● | Pay-For-Performance:
We reviewed industry practices and trends, including short- and long-term incentive plan
designs. This review led to the introduction of performance share units (PSUs) as part of
the c-suite compensation structure. PSUs will constitute 50% of the long-term incentive plan
awards for 2023, which aligns with our philosophy of “pay-for-performance” and
evolving market practice. |
| ● | Say-on-Pay:
This year we introduced a non-binding “Say-on-Pay” vote on our approach
to executive compensation. The HRCC’s goal is to design an executive compensation program
that maximizes stakeholder value. As one of our key stakeholders, this vote provides Shareholders
with an opportunity to express their views on our executive compensation program.
We will take the results into |
consideration when considering our 2024
executive compensation program and, if deemed appropriate, we will consult with Shareholders to understand any concerns.
Additional details on these
initiatives and changes for the 2023 compensation year are discussed below under “Statement of Executive Compensation –
Changes to 2023 Executive Compensation Pay and Design”.
Conclusion
With the improvements made
in 2022 and 2023, the HRCC believes that our executive compensation program will achieve the objectives of aligning executives’
interests with those of our Shareholders, encouraging and motivating outstanding performance and linking compensation outcomes with short-
and long-term objectives. However, compensation programs are not static. We will continue to review and consider ways to align our programs
and policies and related governance practices with our compensation philosophy and evolving market practices.
On behalf of the
Human Resources and Compensation Committee,
(signed) “Jean Robitaille”
Jean Robitaille
Chair of the Human Resources
and Compensation Committee
Statement
of Executive Compensation
2022 Executive
Compensation Discussion and Analysis
In accordance with the requirements of applicable
securities legislation in Canada, the following executive compensation disclosure is provided in respect of each person who served as
the Company’s Chief Executive Officer or Chief Financial Officer during the financial year ended December 31, 2022 and each of the
three other most highly compensated executive officers of the Company for the financial year ended December 31, 2022, whose annual aggregate
compensation exceeded $150,000 (collectively, the “Named Executive Officers” or “NEOs”).
The Named Executive Officers for the financial
year ended December 31, 2022 were:
| (a) | Jason Simpson, President and Chief Executive Officer; |
| (b) | Etienne Morin, Chief Financial Officer; |
| (c) | Andrew Cormier, Chief Operating Officer; |
| (d) | Chafika Eddine, Chief Sustainability Officer; and |
| (e) | Sylvain Guerard, Senior Vice-President, Exploration. |
This Compensation Discussion and Analysis section
of this Circular sets out the Company’s objectives and philosophy regarding executive compensation and the application of this philosophy
to the Company’s executive compensation arrangements. It also provides an analysis of the Company’s compensation design, and
the decisions the HRCC made in and subsequent to the financial year ended December 31, 2022, with respect to the Named Executive Officers.
Approach
to Compensation
Overview
The following table
summarizes Orla’s approach to executive compensation.
| What
Orla does: |
|
What
Orla does NOT do: |
☑
Pay for performance, aligning the interests
of executives and stakeholders
☑
Regularly reviews compensation levels and
design vs. industry peers, with support from Southlea, the HRCC’s independent compensation advisor
☑
Positions target compensation around the
median of industry peers for expected levels of performance
☑ Balances focus on short-term and longer-term incentive
plans
☑
Sets performance goals that are mindful of all stakeholders
☑
Stress-tests incentive compensation programs and payouts
☑
Caps the payout value of the short-term incentive and
the vesting score of PSUs at 200% of target
☑
Uses informed judgement in the evaluation
of performance and pay decisions
☑
Requires executives to achieve and maintain
minimum share ownership levels (as part of the Share Ownership Policy)
|
|
☒ Does
not guarantee pay
☒
Does not make pay decisions solely based on formulaic
performance results
☒
Does not re-price outstanding equity without Shareholder
approval
☒
Does not provide employee loans or provide tax
gross ups
☒
Does not vest PSUs if total
share holder returns are below the 25th percentile of the S&P/TSX Global Gold Index constituents, and caps vesting
at 100% of target if total Shareholder returns are negative after three years
☒
Does not permit insider trading (as part of the
Insider Trading Policy) or
|
| What
Orla does: |
|
What
Orla does NOT do: |
|
☑
Provides employment agreements to senior executives
with contract terms and severance provisions aligned with market practice
☑
Provides employment agreements that include
a double-trigger requirement (change of control event AND termination of employment) upon a change of control for additional severance
payments and accelerated vesting of equity awards
☑
Recoups compensation paid (Clawback Policy)
following a material restatement of financial results due to material non-compliance with reporting requirements
|
|
hedging
of equity-based compensation (as part of the Anti-Hedging Policy)
|
Compensation
Philosophy and Objectives
The
Board and the HRCC consider many factors when reviewing and making recommendations for compensation arrangements for the Named
Executive Officers, such as pre-defined corporate and individual objectives, the relative complexity of the executive’s role within
the organization, the executive’s performance and potential for future advancement, as well as the compensation paid by a group
of comparable companies, as further discussed under “2022 Peer Group” below.
When determining the compensation
arrangements for the Named Executive Officers, the HRCC considers the following objectives:
| ● | retaining
executives who are critical to the success of the Company and the enhancement of Shareholder
value |
| ● | providing
fair and competitive compensation that targets the 50th percentile of our industry
per group for expected levels of performance |
| ● | aligning
the interests of Management and Shareholders |
| ● | rewarding
performance, both on an individual basis and with respect to the business in general |
Pay for Performance
The Company operates in a cyclical and capital-intensive
industry, and it takes a long-term view of building value for Shareholders. The Company’s pay-for-performance philosophy is reinforced
by executive compensation weighted heavily towards variable “at-risk” incentive compensation tied to short-, medium- and long-term
performance.
Key elements
of the Company’s pay-for-performance program are:
| ● | a
large portion of compensation is longer-term in nature, which discourages short-term risk-taking
behaviour and directly aligns pay outcomes with the experience of Shareholders |
| ● | incentivizing
short-term results that drive both near-term and long-term value creation |
| ● | compensation
increases or decreases as a result of success or failure in realizing corporate, operational,
financial and strategic performance objectives |
| ● | emphasizing
equity-based compensation allows those most accountable for the Company’s long-term
success to acquire and hold Common Shares |
The HRCC continually monitors the alignment of
the compensation programs with the Company’s pay-for-performance philosophy. For 2023, this review included the introduction of
PSUs, which made up 50% of the long-term incentive plan (“LTIP”) grant value for c-suite executives. See “Changes
to 2023 Executive Compensation Program”.
The following illustrates the portion of the Named
Executive Officers’ pay that was “at-risk” for the year ended December 31, 2022.
The
Human Resources and Compensation Committee
The HRCC is comprised of four independent directors,
being Messrs. Robitaille (Chair) and Jeannes and Mss. McGregor and Brown. During the year ended December 31, 2022, the HRCC held six committee
meetings, plus two additional committee meetings in the first quarter of 2023. The primary goal of these meetings was to ensure that the
compensation provided to the Named Executive Officers was determined with regard to the Company’s business strategies and objectives,
such that the interests of the executive officers was aligned with the interests of Shareholders, and to ensure that their compensation
was fair and reasonable and sufficient to attract and retain qualified and experienced executives. The HRCC has adopted a written mandate
that governs its practices. See “Role of the Human Resources and Compensation Committee and the Board” below and “Statement
of Corporate Governance – Corporate Governance – Human Resources and Compensation Committee”.
The Board considers the past experience of each
director in determining the composition of the HRCC and strives to include a range of skills and experiences when making appointments
to ensure the HRCC is comprised of directors that act independently and think analytically about the Company’s compensation practices
and alignment with performance objectives. Each of the members of the HRCC have direct experience and skills relevant to their responsibilities
in executive compensation, including with respect to enabling such directors in making informed decisions on the suitability of the Company’s
compensation policies and practices. Each of these directors have experience on the board of directors and related committees of other
public companies, as described under “Particulars of Matters to be Acted Upon at the Meeting – Election of Directors.”
Role
of the Human Resources and Compensation Committee and the Board
The HRCC assists the Board in monitoring the Company’s
guidelines and practices with respect to compensation and benefits and ensures that the Company’s compensation program is competitive
and fair. With respect to compensation, the HRCC’s responsibilities include, among other things:
| (a) | reviewing and submitting to the Board recommendations concerning
executive compensation and compensation plan matters; |
| (b) | providing periodic reports to the Board on compensation matters
that review and assess the design and competitiveness of the Company’s compensation and benefits programs generally, while considering
the implications of any risks associated with the Company’s compensation policies and practices; |
| (c) | reviewing and making recommendations, in consultation with
the Chair of the Board and the Chief Executive Officer, to the Board with respect to implementing or varying share option, share purchase,
compensation and other incentive plans; and |
| (d) | reviewing and making recommendations to the Board regarding
the Company’s executive succession planning in support of sustainable operations and long-term value for Shareholders. |
In addition, the HRCC reviews and recommends compensation
policies and processes, and any new incentive compensation and equity compensation plans or changes to such plans. The Board makes final
decisions on overall executive compensation after receiving advice and recommendations from the HRCC.
Recommendations
of Management
For the financial year ended December 31, 2022,
the HRCC consulted with the Chief Executive Officer regarding the Company’s annual business objectives and achievements. In addition,
the HRCC consulted with the Chief Executive Officer regarding executive officer target short-term incentive awards and actual payouts,
and long-term incentive grants, which the HRCC then considered and recommended to the Board, as appropriate. The Chief Executive Officer
did not make any recommendations with respect to his own compensation package, which was determined by the HRCC directly and recommended
to the Board.
The HRCC retains full decision-making authority
and can exercise discretion in modifying any of the recommendations from the Chief Executive Officer prior to making recommendations to
the Board.
Risks
Associated with the Company’s Compensation Policies and Practices
The Company does not believe that its compensation
program for the financial year ended December 31, 2022 encouraged excessive or inappropriate risk taking as the Company’s employees
received both fixed (salary) and variable compensation (short-term incentive plan, RSUs and options) designed to balance the level of
risk-taking while focusing on generating longer-term value for shareholders.
Policy
on Purchase of Financial Instruments
The Board has adopted a policy that prohibits the
purchase by Named Executive Officers or Directors of financial instruments that are designed to hedge or offset a decrease in market value
of equity securities granted as compensation or held, directly or indirectly, by the Named Executive Officer or director. See “Statement
of Corporate Governance – Corporate Policies – Anti-Hedging Policy”.
Independent
Compensation Consultant
Beginning in 2021, the HRCC, in consultation with
Management, has retained Southlea Group LP (“Southlea”) as the Company’s independent compensation
consultant. In 2022, Southlea supported the HRCC with the following items:
| ● | attend
and participate in HRCC meetings during the year; |
| ● | review
the Circular with disclosure of pay decisions made for 2021 and changes made to the executive
compensation program for 2022; |
| ● | review
the Company’s current approach to selecting its peer group of companies and update
the selection criteria and peer group members; |
| ● | benchmark
pay levels for the Company’s executive officers relative to the approved peer group,
as well as reviewing target total direct compensation, including salary, short-term incentive
plan (“STIP”) and LTIP; |
| ● | review
industry practices and trends, with comparison to the Company’s compensation programs
and recommend changes, as appropriate; and |
| ● | review
the LTIP, and design a new PSU plan, with a mix of 50% PSUs for senior executives for LTIP grants made in 2023. |
The following table details the aggregate fees
incurred on behalf of the HRCC in consideration of the services provided by Southlea:
| Southlea Group LP |
2021 |
2022 |
| Executive compensation-related fees |
$60,000 |
$107,575 |
| All other fees |
Nil |
Nil |
| Total Fees |
$60,000 |
$107,575 |
2022
Peer Group
The selection of companies that make up the peer
group are intended to reflect a market with which the Company competes for executive officers. For compensation relating to the financial
year ended December 31, 2022, the HRCC, in consultation with Southlea, completed a review and update of the Company’s peer group
(the “2022 Peer Group”) to better reflect the Company entering into the production phase and to reflect its increasing
complexity and risk profile as a gold producer in Mexico. In selecting the 2022 Peer Group, the HRCC considered the following:
| Country
and Industry |
Company
Size |
Other
Considerations |
●
Canadian or U.S. headquarters
●
Publicly traded
●
“Gold”, “Silver”, or “Precious Metals and Minerals”, with a majority of gold mining peers
●
Direct mining operations
|
●
Comparable size based on market capitalization and assets
●
Producing company or late-stage development
●
Focus on mining operations in the Americas
●
Similar complexity as measured by the number and stage of operating mines and development projects
|
●
Part of the S&P Global Gold Index
●
Cross-listed on multiple stock exchanges
●
Availability of relevant benchmarks, robust disclosure of executive and board of director compensation levels
|
Based on the foregoing selection considerations,
at the end of 2021, the HRCC and Board approved the following members of the 2022 Peer Group:
| Argonaut Gold Inc. |
Pure Gold Mining Inc. |
| Calibre Mining Corp. |
Silvercrest Metals Inc. |
| Dundee Precious Metals Inc. |
Torex Gold Resources Inc. |
| Endeavour Silver Corp. |
Victoria Gold Corp. |
| Fortuna Silver Mines Inc. |
Wesdome Gold Mines Ltd. |
| Lundin Gold Inc. |
The HRCC reviewed market data for the peer group
to determine and confirm the appropriate levels of base salaries, target short-term incentives, target grant levels of long-term incentives
and total compensation for the Named Executive Officers, with the Company’s philosophy being to target the 50th percentile
of the peer group.
Elements
of Named Executive Officer Compensation
The compensation paid to the Named Executive Officers
consisted of four primary components:
| |
Element |
Purpose of Element |
| FIXED |
Base Salary |
Base salaries are fixed and therefore provide a level of certainty for Named Executive Officers. They are also used to ensure the Company’s compensation programs remain competitive in the mining industry and to determine other compensation elements and benefits that are linked to salary levels. Base salary recognizes the value of an individual to the Company based on his or her role, skills, performance, contributions, leadership and potential. It is critical in attracting and retaining executives in the markets in which the Company competes for talent. |
| AT RISK |
Short-term Incentive Plan (STIP) |
The STIP is an annual cash award designed to reward Named Executive Officers for the achievement of annual corporate and individual objectives. These objectives are set by the HRCC and approved by the Board on an annual basis. Although the STIP is based on a one-year performance period, the HRCC sets challenging operating, financial and strategic objectives designed to build long-term Shareholder value. The combination of the STIP and LTIP, described below, is intended to motivate the executives to be committed to achieving current year STIP targets without taking excessive risks or compromising future performance. |
| Long-term Incentive Plan (LTIP) |
The purpose of the LTIP is to attract and retain Named Executive Officers who are expected to significantly contribute to the long-term success of the Company, motivate them to perform at a high level and reward the achievement of creating long-term Shareholder value. The LTIP aligns the experience of the Company’s executives with that of its Shareholders by tying a significant portion of their total compensation to the long-term performance of the Common Shares. The LTIP encourages the Company’s executives to focus on the long-term impact of their decisions and actions and to provide rewards in the event their efforts result in long-term value creation. |
| FIXED |
Benefit Plans |
The Company provides a group benefit plan to the employees of the Company in which the Named Executive Officers participate. The terms of the group benefit plan are customary. The Company does not provide any post-retirement benefits to any of the Named Executive Officers or employees of the Company and the Named Executive Officers do not participate in any defined benefit pension plan, defined contribution plan or deferred compensation plan. In 2023, the Company initiated a 6% RRSP matching program for its employees, which the Named Executive Officers also participate in. |
| |
The key features of the three primary components of compensation (base salary, STIP and LTIP) are described below. |
Base Salary
Base salaries for the Named Executive Officers
are reviewed annually. Any change in base salary of a Named Executive Officer will generally be determined by an assessment of such executive’s
performance, a review of competitive compensation levels at companies similar to the Company (in particular, the peer group described
above) and a review of the performance of the Company as a whole and the role the executive officer played in such corporate performance.
Base salaries for the Named Executive Officers
for the financial year ended December 31, 2022 were as follows:
| Name and Position |
2022 Base Salary |
Increase from 2021 |
| Jason Simpson, President and Chief Executive Officer |
$525,087 |
10.5% |
| Etienne Morin, Chief Financial Officer |
$317,125 |
8.6% |
| Andrew Cormier, Chief Operating Officer |
$332,500 |
8.1% |
| Chafika Eddine, Chief Sustainability Officer |
$285,000 |
- (1) |
| Sylvain Guerard, Senior Vice-President, Exploration |
$275,000 |
7.2% |
Notes:
| (1) | Ms. Eddine was appointed as the Company’s Chief Sustainability Officer on March 1, 2022. Her base
salary for 2022 is presented on an annualized basis. |
Short-term Incentive Plan (STIP)
Each of the Named Executive Officers has a defined target STIP, expressed as a percentage of base salary. For the financial year ended
December 31, 2022, STIP awards were determined and awarded based on an assessment by the HRCC of corporate and individual objectives calculated
as follows:
The table below shows the 2022 target STIP and
the relative weight on individual and corporate performance for each of the Named Executive Officers.
| Name and Position |
Target STIP |
Corporate
Objectives |
Individual
Objectives |
|
| |
| Jason Simpson, President and Chief Executive Officer |
100% |
80% |
20% |
|
| Etienne Morin, Chief Financial Officer |
70% |
70% |
30% |
|
| Andrew Cormier, Chief Operating Officer |
70% |
70% |
30% |
|
| Chafika Eddine, Chief Sustainability Officer |
70% |
70% |
30% |
|
| Sylvain Guerard, Senior Vice-President, Exploration |
50% |
40% |
60% |
|
Corporate Objectives
For the financial year ended December 31, 2022,
corporate objectives were developed by the HRCC based on discussions with Management. These corporate objectives were adopted and recommended
by the HRCC and approved by the Board and were developed based on matters deemed to be critical to advancing the Company’s overall
strategic goals and objectives. Performance against the corporate objectives was assessed by the HRCC at the end of the 2022 financial
year based on its review of the relative achievement of the objective. The HRCC then considered the relative difficulty of the objective
and the macro circumstances of the achievement. An overall score in the range of 0% to 200% was then applied.
The following
table describes the corporate objectives set for the financial year ended December 31, 2022.
| 2022
Corporate Objectives |
Weight |
Result |
Criteria
/ Discussion |
ESG:
●
Lost time injury rates
●
Community Health
●
Environmental incidents
●
Sustained operations
|
25% |
Exceeded
Expectations |
● Lost Time Injury Frequency of 1.49 during a full operational year
● No COVID-19 outbreaks caused by operations
● No category 4 or 5 incidents as defined by the US Environmental Protection Agency during a full construction year
● No disruptions to operations and maintenance of community relations
|
Production:
●
Gold poured versus guidance
|
25% |
Exceeded
Expectations |
● 109,600 oz of gold poured versus original guidance of 90,000 to 100,000 oz |
Expenditure:
●
Operating and capital cost versus budget
|
25% |
Exceeded
Expectations |
● Operating costs on budget
● Capital costs approximately 50% under budget |
Strategic
Objectives:
●
Exploration
●
Project Development
●
Corporate Development
●
Improved Balance Sheet
|
25% |
Exceeded
Expectations |
● Reserve and resource update for Camino Rojo Oxide Mine completed
● Drilling
programs completed
● Acquisition of Gold Standard
● Re-financing of project debt
● Study work at Camino Rojo Sulfides postponed
|
| Overall Performance Score |
|
160% |
|
For 2022, the HRCC determined that the corporate
objectives either exceeded or far exceeded expectations, other than decisions related to study work at the Camino Rojo Sulphides. Accordingly,
the overall performance score was above target. During the year, the Company maintained an excellent health and safety record, maintained
support of the local communities, surpassed both its original and revised production guidance, completed the acquisition of Gold Standard,
continued exploration and study work at each project and completed the re-financing of its project loan. The only objective that was not
completed related to certain study work, specifically the completion of a preliminary economic assessment (“PEA”) on
the sulphide project at Camino Rojo. It was determined that completion of this objective was not in the best interest of the Company,
as the receipt of positive drilling results at the Camino Rojo sulphides needed to be incorporated into development planning before a
PEA could be initiated. As a result, the HRCC recommended, and the Board approved, an overall corporate performance score of 160% for
the financial year ended December 31, 2022.
Individual Objectives
At the start of the year, each Named Executive
Officer developed individual objectives for 2022, which were reviewed and recommended by the HRCC and approved by the Board. At the end
of the financial year, the HRCC,
with input from the Chief Executive Officer for
his direct reports, assessed individual performance and assigned an overall performance score according to the executive’s rate
of success using the same methodology as the corporate objectives described above.
The following table provides an overview of the
Chief Executive Officer’s individual objectives for the 2022 financial year and the score applied by the HRCC. For 2022, the HRCC
determined that Mr. Simpson either exceeded or far exceeded expectations for each goal, other than in relation to the Company’s
ESG strategy, which was progressing in line with expectations. Accordingly, an overall score of 160% was applied.
| 2022
Individual Objectives - CEO |
Weight |
Score |
Criteria
/ Discussion |
Company
Finances
● Monitor
financial performance (revenues and spending) within the 2022 approved budget
●
Complete the re-financing of the project debt
|
20% |
Exceeded
Expectations |
●
Operating costs on budget and capital costs under budget
●
Re-financing of project debt complete
|
Company
Operations
●
Produce gold safely consistent with budget
|
20% |
Exceeded
Expectations |
●
Production above guidance
●
Excellent health and safety record
|
Company
ESG
●
Oversee the Company’s delivery of its second year ESG strategy
|
20% |
Met
Expectations |
●
ESG strategy progressing |
Corporate
Development
●
Evaluate and present, if reasonable, new growth opportunities
|
20% |
Far
Exceeded Expectations |
●
Acquisition of Gold Standard completed |
Corporate
Representation
● Performance as the key spokesperson for the company with all stakeholders
|
20% |
Far
Exceeded Expectations |
●
Company outperformed most peers and all indices |
| Overall
Performance Score |
|
160% |
|
STIP Summary
Based on the foregoing, on the recommendation of
the HRCC, as approved by the Board, short-term incentives awarded for the Named Executive Officers for the financial year ended December
31, 2022 were determined and awarded as follows:
| Name and Position |
Target STIP
(% of Base
Salary) |
Corporate
Score |
Individual
Score |
Overall
Weighted
Score |
Actual
STIP |
Actual STIP
(% of Base
Salary) |
|
Jason Simpson,
President and Chief Executive Officer
|
100% |
160% |
160% |
160% |
$840,140 |
160% |
|
Etienne Morin,
Chief Financial Officer
|
70% |
160% |
150% |
157% |
$348,520 |
110% |
|
Andrew Cormier,
Chief Operating Officer
|
70% |
160% |
150% |
157% |
$365,418 |
110% |
|
Chafika Eddine,
Chief Sustainability Officer
|
70% |
160% |
100% |
142% |
$237,498 |
100%(1) |
| Name and Position |
Target STIP
(% of Base
Salary) |
Corporate
Score |
Individual
Score |
Overall
Weighted
Score |
Actual
STIP |
Actual STIP
(% of Base
Salary) |
|
Sylvain Guerard,
Senior Vice-President, Exploration
|
50% |
160% |
130% |
142% |
$195,250 |
72% |
Notes:
| (1) | Ms. Eddine was appointed as the Company’s Chief Sustainability Officer on March 1, 2022. Her STIP
award for 2022 was pro rated accordingly. |
Long-term Incentive Plan (LTIP)
Each Named Executive Officer has a target grant
level for LTIP, expressed as a percentage of base salary. For 2022, the LTIP was granted in stock options and RSUs with a relative mix
as follows:
| Name and Position |
Target LTIP
(% of Base Salary) |
Stock Options |
RSUs |
|
| |
Jason Simpson
President and Chief Executive Officer |
150% |
60% |
40% |
|
Etienne Morin
Chief Financial Officer |
120% |
60% |
40% |
|
Andrew Cormier
Chief Operating Officer |
120% |
60% |
40% |
|
Chafika Eddine
Chief Sustainability Officer |
N/A |
N/A |
N/A |
|
Sylvain Guerard
Senior Vice-President, Exploration |
40% |
50% |
50% |
|
Notes:
| (1) | Ms. Eddine was appointed as the Company’s Chief Sustainability Officer on March 1, 2022 and was not
eligible for the 2022 LTIP award. However, Ms. Eddine received an initial grant of 250,000 stock options upon her appointment, as further
described in the footnotes to the table below. |
On the recommendation of the HRCC, as approved
by the Board, stock option and RSU grants for the Named Executive Officers for the financial year ended December 31, 2022, were determined
and awarded as follows:
| Name and Position |
Stock
Options
Awarded |
Value of Stock
Options
Awarded(1) |
RSUs
Awarded(2) |
Value of
RSUs
Awarded(2) |
Jason Simpson
President and Chief Executive Officer |
188,628 |
$472,570 |
52,684 |
$315,000 |
Etienne Morin
Chief Financial Officer |
91,137 |
$228,326 |
25,455 |
$153,000 |
Andrew Cormier
Chief Operating Officer |
95,556 |
$239,400 |
26,689 |
$159,000 |
Chafika Eddine(3)
Chief Sustainability Officer |
N/A |
N/A |
N/A |
N/A |
Sylvain Guerard
Senior Vice-President, Exploration |
21,438 |
$57,709 |
8,982 |
$54,000 |
Notes:
| (1) | The stock options issued reflect the annual grant in 2022. The
grant date fair value of stock options was calculated using the Black-Scholes methodology. These options are exercisable at a price of
$5.98 until March 24, 2027. The key assumptions used under the Black-Scholes model that were used for the share option awards in the
table above were: risk-free interest rate 2.20%; expected life five years; expected annualized volatility 45%; expected dividend rate
nil. The Company chose to use the Black-Scholes model as the basis for calculating fair value of the options granted as this methodology
is commonly accepted by issuers. The values presented are consistent with the accounting values used in the Company’s audited financial
statements. |
| (2) | The RSUs issued reflect the annual grant in 2022. The values
were calculated using the market value at grant date being $5.98, consistent with the approach used in the Company’s audited financial
statements. |
| (3) | Ms. Eddine was appointed as the Company’s Chief Sustainability
Officer on March 1, 2022 and was not eligible for the 2022 LTIP award. Upon her appointment, Ms. Eddine received an initial grant of
250,000 stock options with a grant date fair value of $597,579. These options are exercisable at a price of $5.37 until March 1, 2027.
The key assumptions used under the Black-Scholes model for this share option award were: risk-free interest rate 1.48%; expected life
five years; expected annualized volatility 50%; expected dividend rate nil. |
Stock Options
Stock options are granted
under the Company’s stock option plan (the “Stock Option Plan”). All stock options granted by the Company to
date have had a term of five years expiring on the fifth anniversary of the date of the grant. Prior to LTIP grants in 2022, options were
issued with vesting conditions being one-third on the date of the grant, one-third on the first anniversary and one-third on the second
anniversary of the grant. Commencing with LTIP grants in 2022 and onwards, options were issued with vesting conditions being one-third
on the first anniversary of the date of grant, one-third on the second anniversary of the date of grant and one-third on the third anniversary
of the date of grant. See “Securities Authorized for Issuance Under the Equity Compensation Plans” for a summary of
the Stock Option Plan.
RSUs
RSUs are granted under the
Company’s restricted share unit plan (the “RSU Plan”). Each RSU granted, subject to the terms of the RSU Plan,
entitles such holder to receive one Common Share upon vesting. RSUs vest one-third on each of the first, second and third anniversary
of the date of grant. See “Securities Authorized for Issuance Under the Equity Compensation Plans” for a summary of
the RSU Plan.
Performance
Graph
The following table and graph compare the cumulative
total shareholder return of $100 invested in Common Shares of the Company from December 31, 2017 to December 31, 2022 against the cumulative
total shareholder return of each of the S&P/TSX Composite Index and the S&P/TSX Global Gold Index for the same period.
| |
December
2017 |
December
2018 |
December
2019 |
December
2020 |
December
2021 |
December
2022 |
| Orla Mining Ltd. |
$100.00 |
$58.99 |
$112.36 |
$385.39 |
$271.35 |
$307.87 |
| S&P/TSX Composite Index |
$100.00 |
$91.12 |
$111.97 |
$118.25 |
$147.99 |
$139.48 |
| S&P/TSX Global Gold Index |
$100.00 |
$96.56 |
$136.44 |
$166.58 |
$157.71 |
$153.91 |
During
the periods indicated, the total return to shareholders has generally outperformed both the S&P/TSX Composite Index and the S&P/TSX
Global Gold Index. Over the same period, Orla saw an increase in the scope and complexity of its operations as it completed various acquisitions
and transitioned to a producing company. Consequently, the disclosed value of total compensation awarded to Named Executive Officers has
increased since 2017 (refer to the Summary Compensation Table below), and the actual realized and realizable value of total compensation
has also increased, directly aligned with share price performance and the total return to Shareholders. The HRCC considers the increases
to be appropriate given the increase in scope and complexity of the Company’s operations and the operating, financial and strategic
achievements made during this time.
Summary
Compensation Table
The following table summarizes the compensation
paid to or earned by the Named Executive Officers during the financial years ended December 31, 2022, 2021, and 2020.
Name and Principal
Position of Named
Executive Officer |
Year (1) |
Salary
($) |
Share-based
awards (2)
($) |
Option-
based
awards (3)
($) |
Non-Equity
Incentive Plan
Compensation (4) |
All Other
Compensation
($) |
Total
Compensation
($) |
Annual
Incentive
Plans ($) |
Long-Term
Incentive
Plans ($) |
Jason Simpson
President and Chief Executive Officer (5) |
2022 |
$525,088 |
$315,000 |
$472,570 |
$840,140 |
Nil |
Nil |
$2,152,798 |
| 2021 |
$475,087 |
$429,000 |
$285,052 |
$831,403 |
Nil |
Nil |
$2,020,542 |
| 2020 |
$463,500 |
$417,000 |
$278,100 |
$399,500 |
Nil |
Nil |
$1,558,100 |
Etienne Morin
Chief Financial Officer |
2022 |
$317,125 |
$153,000 |
$228,326 |
$348,520 |
Nil |
Nil |
$1,046,971 |
| 2021 |
$292,125 |
$174,000 |
$116,850 |
$332,292 |
Nil |
Nil |
$915,267 |
| 2020 |
$270,000 |
$162,000 |
$108,000 |
$120,700 |
Nil |
Nil |
$660,700 |
Andrew Cormier
Chief Operating Officer (6) |
2022 |
$332,500 |
$159,000 |
$239,400 |
$365,418 |
Nil |
Nil |
$1,096,318 |
| 2021 |
$307,500 |
$185,000 |
$123,000 |
$349,781 |
Nil |
Nil |
$965,281 |
| 2020 |
$212,500 |
Nil |
$616,265 |
$90,300 |
Nil |
$50,000(9) |
$969,065 |
|
Chafika Eddine
Chief Sustainability Officer (7)
|
2022 |
$237,500 |
Nil |
$597,579 |
$237,498 |
Nil |
Nil |
$1,072,577 |
| 2021 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| 2020 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Sylvain Guerard
Senior Vice-President, Exploration (8) |
2022 |
$275,000 |
$54,000 |
$53,709 |
$195,250 |
Nil |
Nil |
$571,509 |
| 2021 |
$256,250 |
$63,000 |
$41,000 |
$184,518 |
Nil |
Nil |
$544,768 |
| 2020 |
$89,080 |
Nil |
$534,700 |
$39,200 |
Nil |
$25,000(9) |
$687,980 |
Notes:
| (1) | Financial years ended December 31. |
| (2) | Reflects award date value of RSUs granted. |
| (3) | The fair value of stock options was estimated on the date of
grant using the Black-Scholes pricing model. The assumptions used for the grants in 2022 are presented on page 52. |
| (4) | The figures presented are for amounts earned in respect of the year, paid in the subsequent year. |
| (5) | Mr. Simpson is also a director of the Company and does not receive
any additional compensation for that role. |
| (6) | Mr. Cormier was appointed Chief Operating Officer of the Company
on April 16, 2020. |
| (7) | Ms. Eddine was appointed Chief Sustainability Officer of the
Company on March 1, 2022. |
| (8) | Mr. Guerard was appointed Senior Vice-President, Exploration
of the Company on August 24, 2020 |
| (9) | Amount relates to signing bonus paid upon hiring. |
Named
Executive Officers – Outstanding Option- and Share-Based Awards
The table below reflects the incentive plan awards
outstanding for the Named Executive Officers as at December 31, 2022.
Name and
Position |
Option-Based Awards |
Share-Based Awards |
|
Number of
Securities
Underlying
Unexercised Options (1)
(#) |
Option
Exercise
Price
($) |
Option Expiry
Date |
Value of
Unexercised
In- the-
Money
Options(2)
($) |
Number
of Shares
or Units
That Have
Not
Vested
(#) |
Market or
Payout
Value of
Share-
Based
Awards
That Have
Not Vested
($) |
Market or
Payout
Value of
Vested
Share-
Based
Awards not
Paid Out or
Distributed
($) |
Number of
Unvested
RSUs(3)
(#)
|
Market
Value of
Unvested
RSUs(4)
($) |
Jason Simpson
President and Chief Executive Officer |
250,000
573,248
318,192
148,542
188,628
|
$1.30
$1.06
$2.21
$4.80
$5.98
|
Nov 13, 2023
Mar 29, 2024
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$1,045,000
$2,533,756
$1,040,488
$101,009
Nil
|
Nil |
$Nil |
$162,718 |
174,988 |
$958,934 |
Etienne Morin
Chief Financial Officer |
100,000
159,292
212,314
123,570
60,891
91,137
|
$1.25
$1.25
$1.06
$2.21
$4.80
$5.98
|
May 31, 2023
Jun 27, 2023
Mar 29, 2024
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$423,000
$673,805
$938,428
$404,074
$41,406
Nil
|
Nil |
N/A |
N/A |
74,233 |
406,797 |
Andrew Cormier
Chief Operating Officer |
600,000
64,096
95,556
|
$2.39
$4.80
$5.98
|
Apr 16, 2025
Mar 24, 2026
Mar 24, 2027
|
$1,854,000
$43,585
Nil
|
Nil |
N/A |
N/A |
52,315 |
286,686 |
|
Chafika Eddine
Chief Sustainability Officer
|
250,000 |
$5.37 |
Mar 1, 2027 |
$27,500 |
Nil |
N/A |
N/A |
Nil |
Nil |
Sylvain Guerard
Senior Vice-President, Exploration |
200,000
21,365
21,438
|
$6.03
$4.80
$5.98
|
Aug 24, 2025
Mar 24, 2026
Mar 24, 2027
|
Nil
$14,528
Nil
|
Nil |
N/A |
N/A |
17,524 |
96,032 |
Notes:
| (1) | Each option entitles the holder to purchase one Common Share. |
| (2) | Calculated using the closing market price of the Common Shares
on the TSX on December 31, 2022 of $5.48 and subtracting the exercise price of in-the-money stock options. These stock options have not
been, and may never be, exercised and actual gains, if any, on exercise will depend on the value of the Common Shares on the date of
exercise. |
| (3) | These RSUs vest as to one third each on the first, second, and
third anniversary dates of award. |
| (4) | Calculated using the closing market price of the Common Shares
on the TSX on December 31, 2022 of $5.48. |
The Company did not re-price any stock options
during the year ended December 31, 2022, or at any time prior to then.
Named
Executive Officers – Incentive Award Plan – Value Vested or Earned During the Year
The following table provides information concerning
the value vested or earned under incentive award plans of the Company with respect to each Named Executive Officer during the financial
year ended December 31, 2022.
| Name and Position |
Option-Based
Awards – Value
Vested During
the
Year (1)
($) |
Share-Based
Awards – Value
Vested During
the
Year (2)
($) |
Non-Equity Incentive
Plan Compensation -
Value
Earned
During the Year (3)
($) |
Jason Simpson
President and Chief Executive Officer |
$471,015 |
$1,338,254 |
$840,140 |
Etienne Morin
Chief Financial Officer |
$184,180 |
$509,567 |
$348,520 |
Andrew Cormier
Chief Operating Officer |
$847,211 |
$76,616 |
$365,418 |
|
Chafika Eddine
Chief Sustainability Officer
|
Nil |
Nil |
$237,498 |
|
Sylvain Guerard
Senior Vice-President, Exploration
|
$8,404 |
$25,541 |
$195,250 |
Notes:
| (1) | “Value vested during the year” means the aggregate
dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date. This amount
is calculated using the closing market prices of the Common Shares on the TSX on the dates on which stock options vested during the year,
and subtracting the exercise price of in-the-money stock options. |
| (2) | “Value vested during the year” means the aggregate dollar value of the Common Shares that
are issued on the vesting of the RSUs. This amount is calculated using the closing market price of the Common Shares on the dates on which
the restricted periods of the RSUs expired during the year ended December 31, 2022. |
| (3) | Reflects the annual STIP bonus paid to each Named Executive Officer. These amounts were paid in 2023 in
respect of 2022 performance. |
Termination
and Change of Control Benefits
Employment Agreements
The Company has entered into employment agreements
with each of the NEOs that contain substantially similar provisions in the event of termination and change of control.
The employment agreements provide that, in the
event that the NEO is terminated without cause (as defined in the employment agreement), the NEO is terminated for good reason (as defined
in the employment agreement) or, in the event the Company does not have disability insurance, the NEO’s employment is terminated
as a result of a disability (as defined in the employment agreement), the NEO will be entitled to an amount equal to (i) 12 months of
their base salary; plus (ii) the bonus they would have earned through that 12-month period based on the greater of (a) the annual bonus
received by the NEO in the year immediately preceding the termination of employment; and (b) the annual bonus target for the year in which
employment is terminated. The NEO will also continue to participate in the Company’s benefits programs through such 12-month period
to the maximum extent permitted under applicable plan terms. In addition, any unvested stock options shall immediately vest upon notification
of termination.
If there is a change of control (as defined in
the applicable employment agreement), and within 12 months of such change of control, there is a termination of the NEO by the Company
without cause or termination by the NEO for good reason, the NEO will be entitled to an amount equal to: (i) the compensation and benefits
set forth
in the paragraph immediately above, except that
the applicable period will be 24 months rather than 12 months (or, in the case of Mr. Sylvain Guerard, 18 months rather than 12 months);
plus (ii) the NEO’s pro rata bonus calculated from the beginning of the year of termination to the date of termination based
on the greater of (a) the annual bonus received by the NEO in the year immediately preceding the termination of employment; and (b) the
annual bonus target for the year in which employment is terminated. In addition, notwithstanding any contrary terms in the RSU Plan, the
RSUs held by the NEO will immediately vest, notwithstanding any stated vesting period.
The employment agreements also contain non-competition
and non-solicitation restrictions.
Estimated Incremental Payments on
Termination or Change of Control
Pursuant to the applicable employment agreements,
if a severance payment triggering event had occurred on December 31, 2022, the severance payments that would be payable to each of the
Named Executive Officers would have been as follows:
| Name and Position |
Termination without
Cause or Resignation
for Good Reason
($) |
Termination without
Cause or Resignation for Good Reason
+
Change of Control
($) |
| Jason Simpson, President and Chief Executive Officer |
$1,356,490 |
$3,544,383 |
| Etienne Morin, Chief Financial Officer |
$649,417 |
$1,631,126 |
| Andrew Cormier, Chief Operating Officer |
$682,281 |
$1,714,343 |
| Chafika Eddine, Chief Sustainability Officer |
$484,500 |
$1,168,500 |
| Sylvain Guerard, Senior Vice President, Exploration |
$459,518 |
$873,795 |
| Total: |
$3,632,206 |
$8,932,147 |
The accelerated value of the aforementioned NEO’s
existing stock options and RSUs as of December 31, 2022 is detailed under “Named Executive Officers – Outstanding Option-
And Share-Based Awards” in this Circular.
Changes
to 2023 Executive Compensation Program
Over the course of late 2022 and early 2023, the
HRCC completed its annual review of the Company’s executive compensation program with support from Southlea. This section describes
the HRCC’s review process and the approved changes for 2023. Other than as described below, there were no material changes to the
Company’s executive compensation practices since the end of the most recently completed fiscal year.
2023
Peer Group
In consultation with Southlea, the HRCC completed
a review and update of the Company’s peer group for 2023 (the “2023 Peer Group”). In selecting the 2023 Peer
Group, the HRCC applied the same criteria as the 2022 Peer Group, as discussed above. Based on this criteria, the HRCC and Board approved
the following members of the 2023 Peer Group (new member is denoted in italics):
| Argonaut Gold Inc. |
New Gold Inc. (new for 2023) |
| Calibre Mining Corp. |
Silvercrest Metals Inc. |
| Dundee Precious Metals Inc. |
Torex Gold Resources Inc. |
| Endeavour Silver Corp. |
Victoria Gold Corp. |
| Fortuna Silver Mines Inc. |
Wesdome Gold Mines Ltd. |
| Lundin Gold Inc. |
Pure Gold Mining Inc. was removed from the 2023
Peer Group. The Company is generally positioned at the 50th percentile of the various size and scope indicators.
Market
Review
The HRCC, in consultation with Southlea, reviewed
market data for the 2023 Peer Group to determine the appropriate level of base salaries, target STIP, grant levels of LTIP and total compensation
for the Named Executive Officers for 2023. The Company undertook a formal benchmarking and adopted a compensation philosophy to target
the 50th percentile within the 2023 Peer Group. However, the HRCC retained discretion for setting Named Executive Officer compensation
to appropriately reflect each executive’s value and their contributions, as well as the executive’s leadership, commitment
to the Company’s values, contribution to Company culture and potential for advancement.
The following sections provide an overview of changes
to elements of executive compensation for 2023. See “Elements of Named Executive Officer Compensation” above for additional
explanation and the purpose of each such element.
Base Salary
Base salaries for the Named Executive Officers
for the financial year ending December 31, 2023 are as follows. For the Chief Executive Officer, Chief Financial Officer and Chief Operating
Officer, meaningful increases to base salary were approved by the HRCC and Board to close the gap to the 50th percentile of
industry peers:
| Name and Position |
2023 Base Salary |
Increase from 2022 |
| Jason Simpson, President and Chief Executive Officer |
$625,000 |
19% |
| Etienne Morin, Chief Financial Officer |
$380,000 |
20% |
| Andrew Cormier, Chief Operating Officer |
$400,000 |
20% |
| Chafika Eddine, Chief Sustainability Officer |
$300,000 |
5% |
| Sylvain Guerard, Senior Vice-President, Exploration |
$300,000 |
9% |
Short-term Incentive Plan (STIP)
There were no changes to STIP targets for the Named
Executive Officers and no material changes to the STIP design for the financial year ended December 31, 2023.
Corporate Objectives
The following table describes the Company
objectives for the financial year ended December 31, 2023 and the relevant weight of each objective.
| 2023
Corporate Objectives |
Weight |
|
Weight |
ESG
●
Long term injury frequency rate
●
Sustainability
●
Environmental Incidents
●
Operational Continuity
|
25% |
Strategic
Objectives
●
Exploration
●
Project development
●
Corporate development
●
Improve financial strength |
25% |
| 2023
Corporate Objectives |
Weight |
|
Weight |
Production
●
Gold poured
|
25% |
Expenditure
●
Operating cost
●
Capital cost
|
25% |
Individual Objectives
The following table provides an overview of the
Chief Executive Officer’s individual objectives for the 2023 financial year and the relevant weight of each objective.
| 2023 Individual Objectives – CEO |
Weight |
|
Weight |
| Company Finances |
20% |
Company Operations |
20% |
| Company ESG |
20% |
Corporate Development |
20% |
| Corporate Representation |
20% |
|
Long-term Incentive Plan (LTIP)
For 2023, the HRCC and Board approved changes to
the LTIP structure, introducing a new PSU plan with 50% weight within the LTIP mix, and increasing target LTIP grant levels for certain
Named Executive Officers to better align total compensation with the 50th percentile of industry peers.
The following table sets forth the target LTIP
grant levels approved by the HRCC for the fiscal year ended December 31, 2023.
| Position |
Target LTIP
(% of Base Salary) |
Stock
Options |
RSUs |
PSUs |
| Jason Simpson, President and Chief Executive Officer |
175% |
30% |
20% |
50% |
| Etienne Morin, Chief Financial Officer`` |
150% |
30% |
20% |
50% |
| Andrew Cormier, Chief Operating Officer |
150% |
30% |
20% |
50% |
| Chafika Eddine, Chief Sustainability Officer |
120% |
30% |
20% |
50% |
| Sylvain Guerard, Senior Vice-President, Exploration |
75% |
30% |
70% |
- |
Performance Share Unit Summary
For 2023, the HRCC recommended, and the Board approved
the adoption of PSUs as part of the LTIP for c-suite executives, with 50% weight. The purpose of PSUs is to align the executive’s
interest with those of the Shareholders and motivate share price growth and total shareholder return, relative to the Company’s
industry peers.
PSUs are settled in cash and cliff-vest on the
third anniversary of the date of grant. The ultimate payout value of the PSUs is determined by a vesting multiplier called the “Performance
Percentage” and the Company’s share price at settlement, calculated as follows:
The Performance Percentage is calculated based
on the Company’s total shareholder returns (“TSR”) relative to a peer group (the “PSU Peer Group”).
The Company’s percentile ranking within the PSU Peer Group determines the Performance Percentage applied, as follows:
Percentile Rank of Company
in PSU Peer Group |
Performance Percentage |
| <25% |
0% |
| ≥25% to 50% |
Linear Interpolation |
| 50% |
100% |
| 50% to 100% |
Linear Interpolation |
| 100% |
200% |
TSR is calculated over a three year “Payment
Criteria Period”, which commences on January 1 of the year of grant and ends on December 31 of the year prior to vesting. Share
prices for TSR are calculated using the 20-day volume weighted average price at the beginning and end of the Payment Criteria Period,
plus cumulative dividends.
Regardless of relative performance against the
PSU Peer Group, if the Company has a negative TSR in any Payment Criteria Period, the Performance Percentage for those PSUs is capped
at 100%.
For the Company’s 2023 LTIP grants, the PSU
Peer Group consists of the constituents of the S&P/TSX Global Gold Index (other than the Company) at the commencement of the Payment
Criteria Period. The Payment Criteria Period will be from January 1, 2023 to December 31, 2025. The PSU Peer Group is fixed and will not
be adjusted, provided that, if a company in the PSU Peer Group is not publicly traded at the end of the Payment Criteria Period due
to merger, amalgamation, statutory arrangement or other business combination transaction, that company shall be removed from the PSU Peer
Group.
Director
Compensation
The objective of the Company’s compensation
program for directors is to attract and retain members of the Board of a quality and nature that will enhance the performance and growth
of the Company. Director compensation is intended to provide an appropriate level of remuneration considering the experience, responsibilities,
time requirements and accountability of their roles.
In addition, in order to appropriately align the
interests of members of the Board with those of Shareholders, the Board has implemented a director share ownership policy. See “Statement
of Corporate Governance – Corporate Governance Policies – Share Ownership Policy.”
In 2022 and concurrent with the HRCC’s review
of the Company’s approach to executive compensation, the HRCC reviewed the compensation program for directors, which indicated a
gap to the 50th percentile of total compensation. To reduce this gap, the Board approved a two-year phased increase to position
the Company’s director compensation slightly above the 25th percentile for 2022 and near the 50th percentile for 2023.
The changes to the Company’s compensation program for directors were intended to better align the Company’s practices with
the 2022 Peer Group and to reflect an appropriate level of remuneration given the Company’s evolution into a producing mining company.
In addition, and in light of the Company’s
development and industry trends, the equity retainer issued to independent directors for 2023 consisted solely of DSUs, as opposed to
the Company’s previous practice of 50% DSUs and stock options.
The following table sets forth the 2022 and 2023
compensation program for directors of the Company, as recommended by the HRCC and approved by the Board.
| |
|
|
|
2022 |
2023 |
|
| |
Chairman |
|
Cash
Retainer
Equity
Retainer (1)
|
$50,000
$150,000 |
$100,000
$150,000 |
|
| |
|
Total
Compensation |
|
$200,000 |
$250,000 |
|
| |
|
Base |
Cash
Retainer
Equity Retainer (1) |
$45,000
$90,000 |
$60,000
$100,000 |
|
| |
Non-Chairman |
Total
Base Compensation |
|
$100,000 |
$160,000 |
|
| |
|
Additional
Cash Retainer for Committee Chairs |
Audit
HRCC
ESH&S
CGNC |
$15,000
$15,000
$10,000
$10,000 |
$15,000
$15,000
$10,000
$10,000 |
|
Notes:
| (1) | For 2022, equity retainer awards are allocated equally between stock options and DSUs. For 2023, equity
retainer awards were comprised solely of DSUs. |
The following table sets out certain information
respecting the compensation paid to non-executive directors (being those directors of the Company who were not Named Executive Officers)
during the financial year ended December 31, 2022:
| Director’s Name |
Fees
earned
($) |
Share-
based
awards
(DSUs) ($)(1) |
Option-based
awards
(Options)
($)(1) (2) |
Non-equity
incentive plan
compensation
($) |
All other
compensation
($) |
Total
($) |
| Charles Jeannes |
$80,000 |
$75,000 |
$75,000 |
Nil |
Nil |
$230,000 |
| Tim Haldane |
$55,000 |
$45,000 |
$45,000 |
Nil |
Nil |
$145,000 |
| Elizabeth McGregor |
$60,000 |
$45,000 |
$45,000 |
Nil |
Nil |
$150,000 |
| Jean Robitaille |
$52,500 |
$45,000 |
$45,000 |
Nil |
Nil |
$142,500 |
| David Stephens |
$50,000 |
$45,000 |
$45,000 |
Nil |
Nil |
$140,000 |
| Tamara Brown(3) |
$23,500 |
$45,000 |
$45,000 |
Nil |
Nil |
$113,500 |
| George Albino(4) |
$27,500 |
$45,000 |
$45,000 |
Nil |
Nil |
$117,500 |
| Director’s Name |
Fees
earned
($) |
Share-
based
awards
(DSUs) ($)(1) |
Option-based
awards
(Options)
($)(1) (2) |
Non-equity
incentive plan
compensation
($) |
All other
compensation
($) |
Total
($) |
| Richard Hall(4) |
$30,000 |
$45,000 |
$45,000 |
Nil |
Nil |
$120,000 |
| Scott Langley(5) |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
| Eric Colby(5) |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
Notes:
| (1) | Share-based awards and option-based awards are allocated equally
between stock options and DSUs. |
| (2) | The fair value of stock options is estimated on the date of grant using the Black-Scholes pricing model.
The following assumptions were used in the fair value calculation: risk-free interest rate – 0.95%; expected life five years; expected
annualized volatility – 45%; expected dividend rate – nil. This is consistent with the methodology used by the Company in
its audited financial statements. |
| (3) | Ms. Tamara Brown was elected to the Board at the Company’s annual general meeting held on June 23,
2022. |
| (4) | Messrs. Albino and Hall did not stand for re-election at the Company’s annual general meeting held
on June 23, 2022. |
| (5) | Mr. Scott Langley was elected to the Board at the Company’s annual general meeting held on June
23, 2022, and replaced Mr. Eric Colby as the director nominee of Newmont at such time. As nominees of Newmont, Messrs. Langley and Colby
voluntarily waived all compensation entitlements in 2022. |
Directors
– Option-Based and Share-Based Awards
The table below reflects the incentive plan awards
for each non-executive director outstanding as at December 31, 2022.
| Name |
Option-Based Awards |
Share-Based Awards |
|
Number of
Securities
Underlying
Unexercised
Options
(#) |
Option
Exercise
Price
($) |
Option Expiry
Date |
Value of
Unexercised
In- the-
Money
Options (1)
($) |
Number
of Shares
or Units
That
Have Not
Vested
(#) |
Market or
Payout
Value of
Share-
Based
Awards
That Have
Not
Vested(2)
($) |
Market or
Payout
Value of
Vested
Share-Based
Awards not
Paid Out or
Distributed
($) |
Number of
DSUs(3)
(#) |
Market
Value of
Unvested
DSUs (3)
($) |
| Charles Jeannes |
132,743
159,236
85,812
39,083
29,936
|
$1.25
$1.06
$2.21
$4.80
$5.98
|
Jun 27, 2023
Mar 29, 2024
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$561,503
$703,823
$280,605
$26,576
Nil |
500,000(4) |
$2,740,000 |
Nil |
192,859 |
$1,056,867 |
| Tim Haldane |
66,372
95,541
42,906
19,541
17,962
|
$1.25
$1.06
$2.21
$4.80
$5.98
|
Jun 27, 2023
Mar 29, 2024
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$280,754
$422,291
$140,303
$13,288
Nil
|
Nil |
Nil |
Nil |
104,759 |
$574,079 |
| Elizabeth McGregor |
103,212
42,906
19,541
17,962
|
$1.65
$2.21
$4.80
$5.98
|
Aug 13, 2024
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$395,302
$140,303
$13,288
Nil
|
Nil |
Nil |
Nil |
68,020 |
$372,750 |
| Jean Robitaille |
66,372
79,618
42,906
19,541
17,962
|
$1.25
$1.06
$2.21
$4.80
$5.98
|
Jun 27, 2023
Mar 29, 2024
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$280,754
$351,912
$140,303
$13,288
Nil
|
Nil |
Nil |
Nil |
97,683 |
$535,303 |
| Name |
Option-Based Awards |
Share-Based Awards |
|
Number of
Securities
Underlying
Unexercised
Options
(#) |
Option
Exercise
Price
($) |
Option Expiry
Date |
Value of
Unexercised
In- the-
Money
Options (1)
($) |
Number
of Shares
or Units
That
Have Not
Vested
(#) |
Market or
Payout
Value of
Share-
Based
Awards
That Have
Not
Vested(2)
($) |
Market or
Payout
Value of
Vested
Share-Based
Awards not
Paid Out or
Distributed
($) |
Number of
DSUs(3)
(#) |
Market
Value of
Unvested
DSUs (3)
($) |
| David Stephens |
42,906
19,541
17,962
|
$2.21
$4.80
$5.98
|
Mar 25, 2025
Mar 24, 2026
Mar 24, 2027
|
$140,303
$13,288
Nil
|
Nil |
Nil |
Nil |
84,806 |
$464,737 |
| Tamara Brown |
26,580 |
$3.88 |
Jun 23, 2027 |
$42,528 |
Nil |
Nil |
Nil |
11,598 |
$63,557 |
| Scott Langley |
Nil |
N/A |
N/A |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Notes:
| (1) | Calculated using the closing market price of the Common Shares
on the TSX on December 31, 2022 of $5.48 and subtracting the exercise price of in-the-money stock options. These stock options have not
been, and may never be, exercised and actual gains, if any, on exercise will depend on the value of the Common Shares on the date of
exercise. |
| (2) | Calculated using market price at December 31, 2022 of $5.48. |
| (3) | DSU awards vest immediately upon award. However, DSUs can only
be redeemed when the DSU holder ceases to be a director of the Company. For more meaningful disclosure, information is provided on unredeemed
DSUs rather than unvested DSUs (as there are no unvested DSUs). The unredeemed value of DSUs is calculated using the closing market price
of the Common Shares on the TSX on December 31, 2022 of $5.48. |
| (4) | Upon the recommendation of the HRCC, the Board approved a one-time
award of 500,000 Common Shares (the “Bonus Shares”) to Mr. Jeannes at a deemed issue price of $1.39 per Bonus Share
(the “Issue Price”) in consideration for Mr. Jeannes acting as Chairman of the Board. The Issue Price is equal to
the closing price of the Common Shares on the TSX Venture Exchange on June 23, 2017. The Bonus Shares will become issuable on the date
Mr. Jeannes ceases to act as a director. |
Directors
– Incentive Plan Awards – Value Vested or Earned During the Year
The following table provides information concerning
the value vested or earned under incentive award plans of the Company with respect to each non-executive director of the Company during
the financial year ended December 31, 2022.
| Name of Director |
Option-Based Awards -
Value Vested During the
Year (1)
($) |
Share-Based Awards –
Value Vested During
the Year (2)
($) |
Non-Equity Incentive Plan
Compensation - Value
Earned During the Year
($) |
| Charles Jeannes |
$126,643 |
$75,000 |
Nil |
| George Albino(3) |
$63,321 |
$45,000 |
Nil |
| Tim Haldane |
$63,321 |
$45,000 |
Nil |
| Richard Hall(3) |
$63,321 |
$45,000 |
Nil |
| Elizabeth McGregor |
$63,321 |
$45,000 |
Nil |
| Jean Robitaille |
$63,321 |
$45,000 |
Nil |
| David Stephens |
$63,321 |
$45,000 |
Nil |
| Tamara Brown |
Nil |
Nil |
Nil |
| Name of Director |
Option-Based Awards -
Value Vested During the
Year (1)
($) |
Share-Based Awards –
Value Vested During
the Year (2)
($) |
Non-Equity Incentive Plan
Compensation - Value
Earned During the Year
($) |
| Scott Langley |
Nil |
Nil |
Nil |
Notes:
| (1) | “Value vested during the year” means the aggregate
dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date. This amount
is calculated using the closing market prices of the Common Shares on the TSX on the dates on which stock options vested during the year,
and subtracting the exercise price of in-the-money stock options. |
| (2) | “Value vested during the year” for share-based awards
means the aggregate dollar value of the Common Shares that would be issued on the vesting of the DSUs. This amount is calculated using
the closing market price of the Common Shares on the TSX on the dates on which the DSUs were awarded. |
| (3) | Messrs. Albino and Hall did not stand for re-election at the
Company’s annual general meeting held on June 23, 2022 and, accordingly, their term in office as directors of the Company expired
at such time. |
Deferred
Share Units
DSUs are issued pursuant
to the Company’s deferred share unit plan (the “DSU Plan”). Each DSU granted, subject to the terms of the DSU
Plan, entitles such holder to receive upon redemption, at the discretion of the Board, one Common Share, the cash equivalent thereof or
a mix of both. DSUs vest immediately upon award; however, DSUs can only be redeemed when the DSU holder ceases to be a director of the
Company. See “Securities Authorized for Issuance Under the Equity Compensation Plans” for additional information on
the DSU Plan.
Securities
Authorized for Issuance Under the Equity Compensation Plans
The following table sets forth aggregated information
as at December 31, 2022, with respect to the compensation plan of the Company under which equity securities of the Company are authorized
for issuance.
| Plan Category |
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a) |
Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights (b) |
Number of Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans
(excluding securities
reflected in column (a))
(c) |
| Equity compensation plans approved by securityholders |
Stock options |
7,504,369(1) |
$2.75 |
20,399,029(1) |
| RSUs |
443,267 |
N/A |
2,128,419(2) |
| DSUs |
559,725 |
N/A |
1,328,441(3) |
| Replacement Options |
1,674,520(4) |
$8.01 |
NIL |
| Total |
10,181,881 |
N/A |
23,855,889 |
| Equity compensation plans not approved by securityholders |
Stock options |
Nil |
N/A |
Nil |
| Bonus shares(5) |
500,000 |
N/A |
Nil |
| Total: |
|
10,681,881 |
|
23,855,889 |
Notes:
| (1) | The aggregate number of Common Shares reserved for issuance in respect of all outstanding stock options
granted under the Stock Option Plan and all other security-based compensation arrangements of the Company cannot exceed 10% of the number
of issued and outstanding Common Shares (on a non-diluted basis). |
| (2) | The aggregate maximum number of Common Shares available for issuance under the RSU Plan shall not exceed
2,514,118 Common Shares. In addition, the number of Common Shares issuable pursuant to RSUs, together with Common Shares issuable under
all other security-based compensation arrangements of the Company, shall not exceed 10% of the number of issued and outstanding Common
Shares (on a non-diluted basis). Under the Prior RSU Plan (as defined below), the aggregate maximum number of Common Shares available
for issuance could not exceed 3,000,000. 1,538,086 RSUs had been issued under the Prior RSU Plan prior to its replacement with the RSU
Plan. 94,062 RSUs governed by the Prior RSU Plan remained outstanding as of December 31, 2022 and vested subsequent to the year end. No
further grants were permitted to be made under the Prior RSU Plan and such plan has now been terminated. |
| (3) | The aggregate maximum number of Common Shares that may be issued under the DSU Plan shall not exceed 2,000,000
Common Shares. In addition, the number of Common Shares issuable pursuant to DSUs, together with Common Shares issuable under all other
security-based compensation arrangements of the Company, shall not exceed 10% of the number of issued and outstanding Common Shares (on
a non-diluted basis). |
| (4) | The Company completed the acquisition of Gold Standard Ventures Corp. (“Gold Standard”)
on August 12, 2022. Gold Standard stock options (“GSV Options”) that were outstanding at such time were exchanged for
stock options to acquire Common Shares (the “Replacement Options”) based on an exchange ratio of 0.1193 of one Common
Shares for each Gold Standard share. |
| (5) | Upon the recommendation of the HRCC, the Board approved a one-time award of 500,000 Bonus Shares to Charles
Jeannes at a deemed Issue Price of $1.39 per Bonus Share in consideration for Mr. Jeannes acting as Chairman of the Board. The Issue Price
is equal to the closing price of the Common Shares on the TSX Venture Exchange on June 23, 2017. The Bonus Shares will become issuable
on the date Mr. Jeannes ceases to act as a director. |
10% Rolling
Stock Option Plan
The following provides a summary of the Company’s
10% rolling Stock Option Plan. The below summary is qualified in its entirely by the full text of the Stock Option Plan, which is available
under the Company’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
The Stock Option Plan was implemented to provide
effective incentives to senior officers, directors, employees (including management company employees) or consultants of the Company or
its subsidiaries (the “Eligible Persons”) and to enable the Company to attract, retain and motivate experienced and
qualified individuals in those positions by providing such individuals with the opportunity to acquire, through Common Share options,
an increased proprietary interest in the Company. Upon exercise of an option, subject to the terms of the Stock Option Plan, such holder
is entitled to receive one Common Share.
The Stock Option Plan provides that the aggregate
number of Common Shares of the Company which may be available for issuance under the Stock Option Plan, together with Common Shares issuable
under all security based compensation arrangements, will not exceed 10% of the total number of Common Shares of the Company issued and
outstanding from time to time. As at December 31, 2022, there were 7,504,369 options outstanding under the Stock Option Plan, representing
2.45% of the outstanding Common Shares and 20,399,029 options remained available for grant (after taking into account the outstanding
RSUs, DSUs and Replacement Options), representing 6.67% of the outstanding Common Shares. As at May 11, 2023, there were 5,881,049 options
outstanding under the Stock Option Plan, representing 1.88% of the outstanding Common Shares and 22,660,697 options remain available for
grant (after taking into account the outstanding RSUs, DSUs and Replacement Options), representing 7.24% of the outstanding Common Shares.
The total number of options which may be granted
to any one person under the Stock Option Plan within any 12 month period, together with all other security based compensation arrangements
of the Company (which, for the purposes of this section excludes the 500,000 Common Shares issuable to the Company’s Chairperson
as “bonus shares”), shall not exceed 5% of the issued and outstanding Common Shares. The maximum number of Common Shares which
may be reserved for issuance under options granted to insiders (as a group) under the Stock Option Plan, together with any other security
based compensation arrangements of the Company, shall be 10% of the Common Shares. Accordingly, as of May 11, 2023, a maximum of 22,660,697
options remain available for grant to insiders (representing 7.24% of the outstanding Common Shares) and as of December 31, 2022, a maximum
of 20,399,029 options remained available for grant to insiders (representing 6.67% of the outstanding Common Shares). The maximum number
of Common Shares which may be issued within any one-year period to
insiders (as a group) under the Stock Option Plan,
or together with any other security based compensation arrangements of the Company, shall be 10% of the issued and outstanding Common
Shares.
The maximum equity value that may be granted to
each non-employee director under the Stock Option Plan, together with all security-based compensation arrangements of the Company, shall
not exceed $150,000 in any fiscal year, of which not more than $100,000 may be in the form of stock options granted under the Stock Option
Plan.
All options granted by the Company to date have
had a term of five years expiring on the fifth anniversary of the date of the grant. Prior to the 2022 LTIP awards, stock options were
issued with vesting conditions being one-third on the date of the grant, one-third on the first anniversary and one-third on the second
anniversary of the grant. Commencing with the 2022 LTIP awards and going forward, stock options were issued with vesting conditions being
one-third on the first anniversary of the date of grant, one-third on the second anniversary of the date of grant and one-third on the
third anniversary of the date of grant.
The following table sets out the burn rate of stock
options for the three most recently completed financial years:
| Year |
Stock Options Granted |
Weighted Average Number of
Common Shares Outstanding |
Burn Rate(1) |
| 2022 |
1,278,264 |
272,202,000 |
0.5% |
| 2021 |
678,347 |
241,379,000 |
0.3% |
| 2020 |
2,233,438 |
217,146,000 |
1.0% |
Notes:
| (1) | The “burn rate” is defined as the number of stock options granted in a fiscal year divided
by the weighted average number of Common Shares outstanding in that year. The weighted average number of Common Shares outstanding is
the number of Common Shares outstanding at the beginning of the period, adjusted by the number of Common Shares bought back or issued
during the period multiplied by a time-weighting factor. Time-weighting factor is the number of days that the Common Shares are outstanding
as a proportion of the total number of days in the period. |
The Stock Option Plan shall be administered by
the Board or a committee established by the Board for that purpose. Subject to approval of the granting of options by the Board, the Company
shall grant options under the Stock Option Plan.
The exercise price for the Common Shares of the
Company under each option shall be determined by the Board on the basis of the “market price”, where “market price”
shall mean the prior trading day closing price of the Common Shares on the TSX, and where there is no such closing price or trade on the
prior trading day, “market price” shall mean the average of the daily high and low board lot trading prices of the Common
Shares on the TSX for the five immediately preceding trading days. Subject to the provisions of the Stock Option Plan and the particular
option, an option may be exercised by delivering a written notice of exercise to the Company along with payment in cash or certified cheque
for the full amount of the purchase price of the Common Shares then being purchased. The Stock Option Plan does not contemplate that the
Company will provide financial assistance to participants for the exercise or settlement of awards under the Stock Option Plan.
The period within which options may be exercised
and the number of options which may be exercised in any such period are determined by the Board at the time of granting the options provided,
however, that the maximum term of any options awarded under the Stock Option Plan is 10 years. On the expiry date of an option it will
expire and terminate, subject to any extension of such expiry date permitted in accordance with the Stock Option Plan.
An optionee who ceases to be an Eligible Person
(as defined in the Stock Option Plan) for any reason other than as a result of having been dismissed for cause or as a result of the optionee’s
death, may exercise any vested and unexpired options held by such optionee for a period of 90 days (or until the normal expiry date of
the option rights of such optionee if earlier) from the date of cessation (unless such period is extended by the Board). In the event
of death of an optionee, the optionee’s representative may exercise any vested and unexpired options held
by the optionee for a period of 12 months from
the optionee’s death (or until the normal expiry date of the option rights of such optionee if earlier). If an optionee ceases to
be either an Eligible Person as a result of having been dismissed from any such position for cause, all unexercised option rights of that
optionee under the Stock Option Plan shall immediately become terminated and shall lapse, notwithstanding the original term of the option
granted to such optionee under the Stock Option Plan.
In the event that the expiry date of an option
expires during, or within 48 hours of a trading blackout period imposed by the Company, and neither the Company nor the individual in
possession of the options is subject to a cease trade order in respect of the Company’s securities, then the expiry date of such
option shall be automatically extended to the 10th business day following the end of the blackout period.
Options granted under the Stock Option Plan will
be non-assignable and non-transferable by an optionee other than pursuant to a will or by the laws of descent and distribution, and such
option will be exercisable, during an optionee’s lifetime, only by the optionee.
The Stock Option Plan contains provisions for the
treatment and appropriate adjustment of options in relation to capital changes and with regard to a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure
or shares of the Company. The options granted under the Stock Option Plan may contain such provisions as the Board may determine with
respect to adjustments to be made in the number and kind of shares covered by such options and in the option price in the event of any
such change. If a bona fide offer ( an “Offer”) for Common Shares is made to shareholders of the Company generally
or to a class of shareholders which includes the optionee, which Offer, if accepted in whole or in part, would result in the offeror becoming
a control person of the Company, within the meaning of applicable Canadian securities laws, all optioned shares subject to such stock
option will become vested and the stock option may be exercised in whole or in part so as to permit the optionee to tender the optioned
shares received upon such exercise, pursuant to the Offer.
In the event of (i) a Change of Control (as defined
in the Stock Option Plan), and (ii) within 12 months of such Change of Control the Company terminates the employment of the Eligible Person
for any reason other than just cause, or the Eligible Person resigns for “Good Reason” as defined in the employment agreement
then all of a that person’s stock options will immediately vest on the date of such termination. In such event, all vested stock
options will be exercisable, conditionally or otherwise, from such date until their respective expiry dates, subject to the terms of any
employment agreement or other contractual arrangement between the person and the Company. If the person elects to exercise its stock options
following a Change of Control, the holder of stock options shall be entitled to receive, and shall accept, in lieu of the number of Common
Shares which the holder was entitled upon such exercise, the kind and amount of shares and other securities, property or cash which such
holder could have been entitled to receive as a result of such Change of Control, on the effective date thereof, had the holder been the
registered holder of the number of Common Shares to which it was entitled to purchase upon exercise of such stock options.
The Board may terminate, discontinue or amend the
Stock Option Plan at any time, provided that, without the consent of an option holder, such termination, discontinuance or amendment may
not in any manner adversely affect such optionee’s rights under any stock option granted under the Stock Option Plan.
The Board may, subject to receipt of requisite
regulatory and shareholder approval, make the following amendments to the Stock Option Plan or options under the Stock Option Plan:
| (a) | amendments to increase the number of Common Shares which may
be issued pursuant to the Stock Option Plan, other than adjustments by virtue of Section 15 of the Stock Option Plan; |
| (b) | amendments to reduce the exercise price, or cancel and reissue
stock options; |
| (c) | amendments that extend the term of a stock option beyond the
original expiry; |
| (d) | amendments to the definition of “Eligible Persons”
under the Stock Option Plan that may permit the introduction or reintroduction of non-employee directors on a discretionary basis or
amendments that |
increase limits previously imposed on
non-employee director participation in Section 5 of the Stock Option Plan;
| (e) | amendments to Section 14 of the Stock Option Plan that would
permit stock options, or any other right or interest of an optionee under the Stock Option Plan, to be assigned or transferred, other
than for normal estate settlement purposes; |
| (f) | amendments to the amendment provisions in Section 21 of the
Stock Option Plan; or |
| (g) | amendments to the participation limits in Section 5 of the Stock
Option Plan. |
The Board may, subject to receipt of requisite
regulatory approval (where required), but not subject to shareholder approval, in its sole discretion make all other amendments to the
Stock Option Plan or options under the Stock Option Plan that are not of the type contemplated above, including, without limitation:
| (a) | amendments of a housekeeping nature; |
| (b) | amendments to the exercise procedures or vesting provisions of a stock option or the Stock Option Plan; |
| (c) | amendments to the definitions, other than such definitions noted above; |
| (d) | to the take-over bid provisions provided for in Section 16 of the Stock Option Plan or the change of control
provisions provided for in Section 17 of the Stock Option Plan. For greater certainty, any change made to Section 16 of the Stock Option
Plan or Section 17 of the Stock Option Plan shall not allow optionees to be treated any more favourably than other holders of Common Shares
with respect to the consideration that the optionees would be entitled to receive for their Common Shares in the event of a take-over
bid or upon a Change of Control; |
| (e) | amendments to reflect changes to applicable securities laws; and |
| (f) | amendments to ensure that the stock options granted under the Stock Option Plan will comply with any provisions
respecting income tax and other laws in force in any country or jurisdiction of which a person to whom a stock option has been granted
may from time to time be a resident, citizen or otherwise subject to tax therein. |
The Stock Option Plan was last approved by Shareholders
at the annual and special meeting of the Company held on May 14, 2021.
Restricted
Share Unit Plan
The following provides a summary of the RSU Plan.
The below summary is qualified in its entirely by the full text of the RSU Plan, which is available under the Company’s profile
on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
The Company’s RSU Plan dated April 2, 2020,
was approved by Shareholders at the annual meeting held on May 13, 2020, and was implemented to provide for a wide range of incentive
plans to attract, retain and encourage eligible employees, directors and consultants of the Company due to the opportunity offered to
them to acquire a proprietary interest in the Company and to secure for the Company and Shareholders the benefits inherent in the ownership
of Common Shares by such persons. Each RSU granted, subject to the terms of the RSU Plan, entitles such holder to receive one Common Share.
The RSU Plan replaced the prior restricted share
unit plan (the “Prior RSU Plan”) as the only restricted share unit plan of the Company. Prior to its replacement, 1,538,086
RSUs were granted under the Prior RSU Plan, all of which remained subject to the terms of such plan. As at December 31, 2022, a total
of 94,063 RSUs (representing 0.03% of the outstanding Common Shares) remained outstanding under the Prior RSU Plan. No further grants
were permitted to be made under the Prior RSU Plan and, as of May 11, 2023, all existing grants under the Prior RSU Plan had vested. Accordingly,
such plan has been terminated.
The aggregate maximum number of Common Shares available
for issuance under the RSU Plan shall not exceed 2,514,118 Common Shares (being 0.8% of the outstanding Common Shares). In addition, the
number of Common Shares issuable pursuant to RSUs, together with Common Shares issuable under all other security-based compensation arrangements
of the Company, shall not exceed 10% of the number of issued and outstanding Common Shares (on a non-diluted basis). As at December 31,
2022, a total of 349,204 RSUs were outstanding under the RSU Plan, representing 0.11% of the outstanding Common Shares, and 2,128,419
RSUs remained available for grant, representing 0.7% of the outstanding Common Shares. As at May 11, 2023, a total of 574,096 RSUs were
outstanding under the RSU Plan, representing 0.18% of the outstanding Common Shares, and 1,845,387 RSUs remained available for grant,
representing 0.59% of the outstanding Common Shares.
The maximum number of RSUs available for grant
to any one person, in a 12-month period, pursuant to the RSU Plan and any other security-based compensation arrangements of the Company
(which, for the purposes of this section excludes the 500,000 Common Shares issuable to the Company’s Chairperson as “bonus
shares”), is 5% of the total number of Common Shares. In addition, the maximum number of Common Shares which may be issuable at
any time to insiders (as a group) pursuant to the RSU Plan, or together with any other security-based compensation arrangements of the
Company is 10% of the total number of Common Shares then outstanding. The maximum number of RSUs which may be granted to insiders (as
a group), within any one-year period, pursuant to the RSU Plan and any other security based compensation arrangements of the Company is
10% of the total number of Common Shares then outstanding. Accordingly, as of May 11, 2023, a maximum of 1,845,387 RSUs remain available
for grant to insiders (representing 0.59% of the outstanding Common Shares) and as of December 31, 2022, a maximum of 2,128,419 RSUs remained
available for grant to insiders (representing 0.7% of the outstanding Common Shares).
The maximum value of RSUs which may be granted
to each director who is not also an eligible employee, together with all other security-based compensation arrangements, shall not exceed
$150,000 (based on the closing trading price of the Common Shares on the grant date of an RSU in any financial year).
RSUs vest one-third on each of the first, second
and third anniversary of the date of grant.
The following table sets out the burn rate of RSUs
for the three most recently completed financial years:
| Year |
RSUs Granted |
Weighted Average Number
of Common Shares
Outstanding |
Burn Rate |
| 2022 |
172,301 |
272,202,000 |
0.1% |
| 2021 |
235,091 |
241,379,000 |
0.1% |
| 2020 |
320,447 |
217,146,000 |
0.1% |
The RSU Plan provides that RSUs may be granted
by the Board, or, if the Board so delegates, by the HRCC which administers the RSU Plan to eligible employees, directors, officers and
consultants of the Company or an affiliate as remuneration to such participant, as determined in the sole and absolute discretion of the
Board. The number of RSUs awarded will be credited to the participant’s account effective as of the grant date.
For purposes of determining the number of Common
Shares that remain available for issuance under the RSU Plan, the number of Common Shares underlying any grants of RSUs that are surrendered,
forfeited, waived, repurchased by the Company and/or cancelled without the Restricted Period (as defined below) having expired shall be
added back to the RSU Plan and again be available for future grant, whereas the number of Common Shares underlying any grants of RSUs
that are issued shall not be available for future grant.
Each RSU granted to a participant, subject to the
terms of the RSU Plan, entitles such participant to receive one Common Share for each RSU on the date following the period of time that
such RSU is not exercisable and the participant holding such RSU is ineligible to receive Common Shares (the “Restricted Period”)
or such date after
the after the Restricted Period to which the participant,
other than a US Participant (as defined below), has elected to defer receipt of the Common Shares (the “Deferred Payment Date”)
provided, that for a US Participant, the date of issuance shall not be more than 90 days after the end of the Restricted Period and provided
further, that such participant does not have a choice as to the taxable year of issuance. Participants who elect to set a Deferred Payment
Date must give the Company written notice of one or more Deferred Payment Dates not later than thirty (30) days prior to the expiration
of the Restricted Period. Participants may change a Deferred Payment Date by providing written notice to the Company not later than thirty
(30) days prior to the Deferred Payment Date.
The Board will have the absolute discretion to
credit a participant with additional RSUs equal to the aggregate amount of any dividends that would have been paid to the participant
if the RSUs had been Common Shares, divided by the market value of the Common Shares on the date on which dividends were paid by the Company.
Unless otherwise determined by the Board, in the
event that any Restricted Period expires or, if applicable, any Deferred Payment Date occurs during, or within 48 hours after, a self-imposed
blackout period on the trading of securities of the Company, such Restricted Period or Deferred Payment Date shall be automatically extended
until 48 hours after such blackout period has expired.
If the employment or services of the participant
that has been continuously employed by the Company or an affiliate since the date the RSUs were granted are terminated during the Restricted
Period, for any reason other than death, disability, termination without cause or resignation for good reason, then, except as provided
for in the RSU grant letter or as determined by the Board in its sole discretion, all RSUs will be forfeited by the participant (other
than any vested RSUs that have been deferred prior to such termination or resignation), and be of no further force and effect, as of the
date of termination or resignation. In the event of termination without cause or resignation for good reason during the Restricted Period,
the Company shall issue forthwith Common Shares in accordance with the RSUs held by the participant on the date of termination, notwithstanding
any applicable Deferred Payment Date, provided, that for a participant who would be subject to taxation under the United States Internal
Revenue Code of 1986, as amended (a “US Participant”), the date of issuance or payment shall not be more than 90 days
after the date of the participant’s termination or resignation and provided further, that such US Participant does not have a choice
as to the taxable year of payment. In the event of termination without cause or resignation for good reason following the Restricted Period
and prior to the Deferred Payment Date, the Company shall issue forthwith Common Shares in accordance with the RSUs held by the participant.
In the event of death, any Common Shares represented by RSUs held by the participant on the date of the participant’s death shall
be immediately issuable by the Company notwithstanding any Deferred Payment Date, provided, that for a US Participant, the date of issuance
shall not be more than 90 days after the date of the participant’s death and provided further, that such participant’s estate
does not have a choice as to the taxable year of issuance. In the event of the total disability of a participant, any Common Shares represented
by RSUs held by the participant on the date on which the participant is determined to be totally disabled, shall be immediately issuable
by the Company notwithstanding any applicable Deferred Payment Date(s), provided, that for a US Participant the date of issuance shall
not be more than 90 days after the date on which the participant is determined to be totally disabled and provided further, that such
participant does not have a choice as to the taxable year of issuance. In the event of (i) a Change of Control (as defined in the RSU
Plan), and (ii) within 12 months of such Change of Control the Company terminates the employment of the participant for any reason other
than just cause, then all unvested RSUs outstanding shall immediately vest on the date of such termination, and the Company shall forthwith
issue the Common Shares to the participant, notwithstanding any stated vesting period or any applicable Deferred Payment Date; provided,
that for a US Participant, except as described below in this paragraph, the date of issuance shall not be more than 90 days after the
date of the participant’s termination and provided further, that such participant does not have a choice as to the taxable year
of issuance. In any event, upon a Change of Control, participants shall not be treated any more favourably than Shareholders with respect
to the consideration that the participants would be entitled to receive for their Common Shares, provided, however, that for a US Participant,
any issuance must occur in full within five years of the date of the Change of Control.
Pursuant to the terms of the RSU Plan, the Board
or the HRCC, as the case may be, may discontinue or amend the RSU Plan at any time, provided that, without the consent of a participant,
such discontinuance or amendment may not in any manner adversely affect the participant’s rights under any RSU granted under the
RSU Plan.
The Board may, subject to receipt of requisite
regulatory and Shareholder approval, make the following amendments to the RSU Plan or RSUs under the RSU Plan:
| (a) | amendments to increase the number of Common Shares, subject
to the RSU Plan, which may be issued pursuant to the RSU Plan; |
| (b) | amendments to the definition of “Participant” under
the RSU Plan which would have the potential of narrowing, broadening or increasing insider participation; |
| (c) | amendments to cancel and reissue RSUs; |
| (d) | amendments to the amendment provisions of the RSU Plan; |
| (e) | amendments that extend the term of an RSU; |
| (f) | amendments to the participation limits as set out in the RSU
Plan; or |
| (g) | amendments that would permit RSUs, or any other right or interest
of a participant under the RSU Plan, to be assigned or transferred, other than for normal estate settlement purposes. |
The Board may, subject to receipt of requisite
regulatory approval, where required, but not subject to Shareholder approval, in its sole discretion make all other amendments to the
RSU Plan or RSUs under the RSU Plan that are not of the type contemplated above, including, without limitation:
| (a) | amendments of a housekeeping nature; |
| (b) | amendments to the vesting provisions of an RSU or the RSU Plan; |
| (c) | amendments to the definitions, other than such definitions noted
above; |
| (d) | amendments to reflect changes to applicable securities laws;
and |
| (e) | amendments to ensure that the RSUs granted under the RSU Plan
will comply with any provisions respecting income tax and other laws in force in any country or jurisdiction of which a participant to
whom an RSU has been granted may from time to time be a resident, citizen or otherwise subject to tax therein. |
Except as otherwise may be expressly provided for
under the RSU Plan or pursuant to a will or by the laws of descent and distribution, no RSU and no other right or interest of a participant
is assignable or transferable, and any such assignment or transfer in violation of the RSU Plan shall be null and void.
In the event there is any change to the Common
Shares, whether by reason of a stock dividend, consolidation, subdivision or reclassification, an appropriate adjustment shall be made
by the Board in the number of Common Shares available under the RSU Plan and the number of Common Shares subject to any RSUs. If there
is an increase in the number of Common Shares outstanding for any reason, other than by reason of a stock dividend, consolidation, subdivision
or reclassification as described above (for example, as a result of a private placement of Common Shares or the issuance of Common Shares
in connection with the acquisition of an asset), there will be no adjustment to the number of Common Shares that a participant will receive
under his or her RSU grant letter award and no adjustment to the number of Common Shares available under the RSU Plan.
If the foregoing adjustment shall result in a fractional
Common Share, the fraction shall be disregarded. All such adjustments shall be conclusive, final and binding for all purposes of the RSU
Plan.
The RSU Plan was last approved by Shareholders
at the annual and special meeting of the Company held on May 13, 2020.
Deferred
Share Unit Plan
The following provides a summary of the DSU Plan.
The below summary is qualified in its entirely by the full text of the DSU Plan, which is available under the Company’s profile
on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
The Company’s existing DSU Plan which, among
other things, provides for the award of DSUs to directors who, at the relevant time, are not otherwise employees or consultants of the
Company or of any of its affiliates, as further described below. Each DSU granted, subject to the terms of the DSU Plan, entitles such
holder to receive one Common Share. The aggregate maximum number of Common Shares that may be issued under the DSU Plan shall not exceed
2,000,000 Common Shares (representing 0.64% of the outstanding Common Shares). In addition, the number of Common Shares issuable pursuant
to DSUs, together with Common Shares issuable under all other security-based compensation arrangements of the Company, shall not exceed
10% of the number of issued and outstanding Common Shares (on a non-diluted basis). As at December 31, 2022, a total of 559,725 DSUs were
outstanding under the DSU Plan, representing 0.18% of the outstanding Common Shares, and 1,328,441 DSUs remained available for grant,
representing 0.43% of the outstanding Common Shares. As at May 11, 2023, 658,506 DSUs were outstanding under the DSU Plan, representing
0.21% of the outstanding Common Shares, and 1,229,660 DSUs remain available for grant, representing 0.39% of the outstanding Common Shares.
The maximum number of Common Shares issuable to
any one person, in a 12-month period, pursuant to the DSU Plan and any other security-based compensation arrangements of the Company (which,
for the purposes of this section excludes the 500,000 Common Shares issuable to the Company’s Chairperson as “bonus shares”),
is 5% of the total number of Common Shares then outstanding. The maximum number of Common Shares which may be issuable at any time to
insiders (as a group) pursuant to the DSU Plan and any other security based compensation arrangements of the Company is 10% of the total
number of Common Shares then outstanding. The maximum number of DSUs which may be granted to insiders (as a group), within any one year
period, pursuant to the DSU Plan and any other security based compensation arrangements of the Company is 10% of the total number of Common
Shares then outstanding. Accordingly, as of May 11, 2023, a maximum of 1,229,660 DSUs remain available for grant to insiders (representing
0.39% of the outstanding Common Shares) and as of December 31, 2022, a maximum of 1,328,441 DSUs remained available for grant to insiders
(representing 0.43% of the outstanding Common Shares.
The maximum value of DSUs which may be granted
to each eligible director who is not also an employee or consultant of the Company or any affiliate, together with all security based
compensation arrangements of the Company, shall not exceed $150,000 (based on the market value of the DSUs) in any financial year.
DSUs vest immediately upon award. However, DSUs
can only be redeemed when the DSU holder ceases to be a director of the Company.
The following table sets out the burn rate of DSUs
for the three most recently completed financial years:
| Year |
DSUs Awarded |
Weighted Average Securities
Outstanding |
Burn Rate |
| 2022 |
69,290 |
272,202,000 |
0.0% |
| 2021 |
62,503 |
241,379,000 |
0.0% |
| 2020 |
135,745 |
217,146,000 |
0.1% |
The purpose of the DSU Plan is to strengthen the
alignment of interests between the eligible directors and Shareholders by linking a portion of annual director compensation, as determined
by the Board from time to time, to the future value of the Common Shares. In addition, the DSU Plan advances the interests of the Company
by motivating, attracting and retaining the directors of the Company and its affiliates and encouraging their commitment and performance
due to the opportunity offered to them to receive compensation in line with the
value of the Common Shares. The DSU Plan is administered
by the Board, or, if the Board so delegates, by the HRCC. The Board has full discretionary authority to administer the DSU Plan, including
the authority to interpret and construe any provision of the DSU Plan and to adopt, amend and rescind such rules and regulations for administering
the DSU Plan as the Board deems necessary to comply with the provisions of the DSU Plan.
For purposes of determining the number of Common
Shares that remain available for issuance under the DSU Plan, the number of Common Shares underlying any grants of DSUs that are surrendered,
forfeited, waived, repurchased by the Company and/or cancelled shall be added back to the DSU Plan and again be available for future grant,
whereas the number of Common Shares underlying any grants of DSUs that are issued shall not be available for future grant.
Under the DSU Plan, non-executive directors may
receive a grant of DSUs, as determined by the Board from time to time. Each DSU entitles the participant to payment in fully-paid Common
Shares, issued from the treasury of the Company, a cash payment, in an amount equal to the number of DSUs held by the participant on the
date the participant ceases to be an eligible director for any reason whatsoever (the “Separation Date”) multiplied
by the fair market value of one Common Share on the date the DSU is redeemed, in lieu thereof, or any combination thereof, at the Board’s
discretion. DSUs must be retained until the eligible director leaves the Board, at which time the DSUs will be paid out. In the event
dividends are declared and paid, additional DSUs may be credited to reflect dividends paid on the Common Shares, at the absolute discretion
of the Board. In such case, the number of additional DSUs will be equal to the aggregate amount of dividends that would have been paid
to the participant if the DSUs in the participant’s account had been Common Shares divided by the market value of a Common Share
on the date on which dividends were paid by the Company.
Unless otherwise determined by the Board, in the
event that any Separation Date occurs during, or within 48 hours after a self-imposed blackout period on the trading of securities of
the Company, settlement of the applicable DSUs will occur on the applicable Redemption Date (as defined in the DSU Plan).
Each outstanding DSU held by a participant shall
be redeemed by the Company on the participant’s Separation Date, less applicable taxes and other source deductions required to be
held by the Company. Fractional DSUs will be cancelled.
The Company or its affiliates may take such steps
as are considered necessary or appropriate for the withholding of any taxes required to be paid by any law or regulation of any governmental
authority whatsoever to withhold in connection with any payment or delivery of Common Shares or cash made under the DSU Plan including,
without limitation, the withholding of all or any portion of any payment or the withholding of the issue of Common Shares to be issued
under the DSU Plan, until such time as the participant has paid any amount which the Company and its affiliates are required to withhold
with respect to such taxes. For greater certainty, immediately upon delivery of any Common Shares, the Company shall have the right to
require that a participant sell a given number of Common Shares to the Company or an affiliate of the Company sufficient to cover any
applicable withholding taxes and any other source deductions to be withheld by the Company in connection with payments made in satisfaction
of the participant’s vested DSUs.
The Board may, subject to receipt of requisite
regulatory and Shareholder approval, make the following amendments to the DSU Plan or to DSUs under the DSU Plan:
| (a) | amendments to increase the number of Common Shares which may be issued pursuant to the DSU Plan; |
| (b) | amendments to the amendment provisions of the DSU Plan; |
| (c) | amendments to cancel and reissue DSUs; |
| (d) | amendments that extend the term of a DSU; |
| (e) | amendments to the participation limits in the DSU Plan; |
| (f) | amendments that would permit DSUs to be transferred other than for normal estate settlement purposes;
or |
| (g) | materially modify the requirements as to eligibility for participation in the DSU Plan. |
The Board may, subject to receipt of requisite
regulatory approval, where required, in its sole discretion, without Shareholder approval, make all other amendments to the DSU Plan or
to DSUs under the DSU Plan that are not of the type contemplated above, including, without limitation:
| (a) | amendments of a housekeeping nature; |
| (b) | amendments to the definitions; |
| (c) | amendments to reflect changes to applicable securities laws; and |
| (d) | amendments to ensure that the DSUs granted under the DSU Plan will comply with any provisions respecting
income tax and other laws in force in any country or jurisdiction of which a participant to whom a DSU has been granted may from time
to time be a resident or otherwise subject to tax therein. |
Except as otherwise may be expressly provided for
under the DSU Plan or pursuant to a will or by the laws of descent and distribution, no DSU and no other right or interest of a participant
is assignable or transferable, and any such assignment or transfer in violation of the DSU Plan shall be null and void.
In the event there is any change to the Common
Shares, whether by reason of a stock dividend, consolidation, subdivision or reclassification, an appropriate adjustment shall be made
by the Board with respect to the number of Common Shares available under the DSU Plan and the number of Common Shares subject to or underlying
any DSU as the Board may determine. However, if there is an increase in the number of Common Shares outstanding for any reason other than
by reason of a stock dividend, consolidation, subdivision or reclassification as described above (for example, as a result of a private
placement of Common Shares or the issuance of Common Shares in connection with the acquisition of an asset) there will be no adjustment
to the number of Common Shares that a participant will receive under his or her DSU grant letter award and no adjustment to the number
of Common Shares available under the DSU Plan.
If the foregoing adjustment shall result in a fractional
Share, the fraction shall be disregarded. All such adjustments shall be conclusive, final and binding for all purposes of the DSU Plan.
The DSU Plan was last approved by Shareholders
at the annual and special meeting of the Company held on June 12, 2019.
Replacement
Option Plan
The Company completed the acquisition of Gold Standard
on August 12, 2022. Under the terms of the transaction, all GSV Options that were outstanding at such time were exchanged for Replacement
Options based on an exchange ratio of 0.1193 of one Common Share for each Gold Standard share. 1,758,334 Replacement Options were originally
issued. As of December 31, 2022, there were 1,674,520 Replacement Options outstanding, representing 0.55% of the outstanding Common Shares
and, as of May 11, 2023, there were 1,508,896 Replacement Options outstanding, representing 0.48% of the outstanding Common Shares. No
additional grants of Replacement Options will be made.
The Replacement Options held by or on behalf of
an individual who continued as a director, officer, employee or consultant of the Company following its acquisition of Gold Standard are
exercisable until the original expiry date of the exchanged GSV Options, and the Replacement Options held by or on behalf of an individual
who did not continue as a director, officer, employee or consultant of the Company following the acquisition are exercisable until the
earlier of August 12, 2024 and the original expiry date of the exchanged GSV Options. GSV Options were originally issued with a term of
five years from the date of grant. Except as set out above, all other terms and conditions of the Replacement Option, including the vesting
terms and conditions to and manner of exercising, will be the same as the GSV Option so exchanged, and will be governed by the terms of
Gold Standard’s 2020 Option Plan (the “Replacement Option Plan”).
Under the Replacement Option Plan, if an optionee
ceases to be a director, office, employee, consultant or management company employee of the Company or its affiliates due to termination
without cause, only such Replacement Options that have vested will be exercisable for a period that is the earlier of (i) 90 days following
the termination of the optionees relationship with the Company; or (ii) the expiry date of the grant of options. If an optionee ceases
to be a director, office, employee, consultant or management company employee of the Company or its affiliates due to death or disability,
only such Replacement Options that have vested will be exercisable for a period that is the earlier of (i) 12 months following the termination
of the optionees relationship with the Company; or (ii) the expiry date of the grant of options. If an optionee who satisfies the definition
of an individual consultant or management company employee, the optionee’s employer: (a) ceases to be employed or engaged by the
Company and any of its subsidiaries for cause, as that term is interpreted by the courts of the jurisdiction in which the optionee or
optionee’s employer is employed or engaged; (b) ceases to be a director/officer, employee, consultant or management company employee
of the Company and any of its affiliates by order of any securities commission, recognized stock exchange, or any regulatory body having
jurisdiction to so order; or (c) ceases to be eligible to hold office as a director of the Company and any of its subsidiaries under the
provisions of the applicable corporate statute, only such Replacement Options that have vested will be exercisable for a period that is
the earlier of (i) the date on which the optionee ceases to be in at least one of the categories of eligible persons under the plan; or
(ii) the expiry date of the grant of options.
As the Company’s acquisition of Gold Standard
constituted a “Change of Control” under the Replacement Option Plan, any unvested Replacement Options shall immediately vest
if the participant is terminated without cause or resigns with good reason (as such term has been defined under common law, including
any reason that would be considered to amount to constructive dismissal by a court of competent jurisdiction) from their position with
the Company within the period ending 12 months from the date of the completion of the Company’s transaction with Gold Standard.
The Board may amend or terminate the Replacement
Option Plan at any time if and when it is advisable; provided, however, that no such amendment or termination shall adversely affect any
outstanding Replacement Options without the consent of the optionee. Any amendment to the Replacement Option Plan shall also be subject
to any necessary approvals of any stock exchange or regulatory body having jurisdiction over the securities of the Company and, where
applicable, the approval of the Shareholders. The types of amendments that do not require the approval of the Shareholders include, but
are not limited to: (a) amendments of a ‘‘housekeeping’’ nature, including those required to clarify any ambiguity
or rectify any inconsistency in the Replacement Option Plan; (b) amendments made to comply with any changes required by applicable regulatory
authorities having jurisdiction over securities of the Company from time to time including, but not limited to, the TSX or other mandatory
provisions of applicable law; (c) amendments which are advisable to accommodate changes in tax laws; (d) the extension of accelerated
expiry dates to, but not beyond, the expiry date originally set at the time of the Replacement Option; (e) amendments to the vesting provisions
of any Replacement Option; and (f) amendments to the terms of Replacement Options in order to maintain their value in connection with
an adjustment in the Common Shares of the Company as contemplated under the Replacement Option Plan. The Board may not, without the prior
approval of the Shareholders, make amendments to the Replacement Option Plan in certain circumstances, including: (a) to reduce the exercise
price of any outstanding Replacement Option; (b) to extend the expiry date of any Replacement Options, except where the expiry date is
extended because it would have occurred during a blackout period; (c) to amend the non-assignability provision contained the plan, except
as otherwise permitted by the TSX or for estate planning or estate settlement purposes; (d) to add or change the provisions relating to
any form of financial assistance provided by the Company to participants in the Replacement Option Plan that would facilitate the purchase
of securities under the plan; and (e) to amend the amending provisions of the Replacement Option Plan.
All Replacement Options are non-assignable and
non-transferable, except in the event of death of an optionee and, if issued to insiders or granted at an exercise price less than market
price.
If a Replacement Option expiry date falls on a
date which is during or within two business days from an applicable trading blackout, the expiry date will be extended to 10 days following
the expiration of the blackout period.
Indebtedness
of Directors and Executive Officers
None of the directors and executive officers, or
former directors or executive officers, nor any associate of such individuals, of the Company is as at the date hereof, or has been, during
the financial year ended December 31, 2022, indebted to the Company or its subsidiaries in connection with a purchase of securities or
otherwise. In addition, no indebtedness of these individuals to another entity has been the subject of a guarantee, support agreement,
letter of credit or similar arrangement or understanding with Orla or any of its subsidiaries.
Interest
of Informed Persons in Material Transactions
Management is not aware of any material interest,
direct or indirect, of any informed person of the Company, any proposed director or any associate or affiliate of any informed person
or proposed director in any transaction since the commencement of our most recently completed financial year, or in any proposed transaction,
that has materially affected or would materially affect Orla or any of its affiliates or subsidiaries.
Other
Business
Management knows of no amendment, variation or
other matter to come before the Meeting other than those set forth in the Notice of Meeting. However, if any other matter properly comes
before the Meeting, the Common Shares represented by the accompanying proxy will be voted on such matter in accordance with the best judgment
of the person or persons voting the proxy.
SHAREHOLDER
PROPOSALS
The CBCA permits certain eligible shareholders
to submit shareholder proposals to the Company, which may be included in a management proxy circular relating to an annual meeting of
shareholders. Shareholder proposals for the annual meeting of shareholders in 2024 must be received by the Company between January 23,
2024 and March 25, 2024. It is the Company’s position that Shareholder proposals need be recognized only if made in accordance with
the provisions of the CBCA.
Additional
Information
Additional information relating to the Company
can be found under the Company’s profile on SEDAR at www.sedar.com. Additional financial information
is provided in the Company’s comparative financial statements for the year ended December 31, 2022 and 2021, and related and management’s
discussion and analysis which can be found under the Company’s profile on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov or on the Company’s website at www.orlamining.com.
Shareholders may also obtain these documents, without charge, upon request at Orla Mining Ltd., Suite 1010 – 1075 West Georgia Street,
Vancouver, British Columbia, V6E 3C9.
Approval
of Directors
The contents and the sending of this Circular have
been approved by the directors of the Company and a copy of this Circular has been sent to each director, the auditor of the Company and
each Shareholder entitled to notice of the Meeting.
DATED as of the 11th day of May,
2023.
| |
“Jason Simpson” |
| |
JASON SIMPSON
President, Chief Executive Officer and Director |
SCHEDULE
A
MANDATE OF THE BOARD OF DIRECTORS
ORLA MINING LTD.
MANDATE OF THE BOARD OF DIRECTORS
INTRODUCTION
The directors of Orla Mining Ltd. (the “Company”
or “Orla”) are elected by the Company’s shareholders and are responsible for the stewardship of the business and affairs
of the Company. The board of directors (the “Board”) seeks to discharge this responsibility by reviewing, discussing and approving
the Company’s strategic planning and organizational structure and supervising management to oversee that the long-term operational
and financial goals and organizational structure enhance and preserve the business of the Company and the underlying value of the Company.
The Board discharges its responsibility for overseeing
the management of the Company’s business by delegating to the Company’s senior officers the responsibility for day-to-day
management of the Company. The Board discharges its responsibilities both directly and through its standing committees; namely, the Audit
Committee, the Corporate Governance & Nominating Committee, the Environmental, Sustainability, Health & Safety Committee and the
Compensation Committee. In addition to these regular committees, the Board may appoint ad hoc committees periodically to address issues
of a more short-term nature. The Board's primary roles are overseeing corporate performance and providing quality, depth and continuity
of management to meet the Orla’s strategic objectives. Other principal duties include, but are not limited to, the following categories:
Appointment of Management
| (a) | The Board is responsible for approving the appointment of
Orla’s Chief Executive Officer and other senior officers. The Compensation Committee is responsible for approving the compensation
of the Chief Executive Officer and the other executive officers, senior management and key personnel of the Company. |
| (b) | The Board from time to time delegates to senior management
the authority to enter into transactions, such as financial transactions, subject to specified limits. Investments and other expenditures
above the specified limits, and material transactions outside the ordinary course of business are reviewed by and are subject to the
prior approval of the Board. |
| (c) | The Board oversees that succession planning programs are
in place, including the appointment and monitoring of senior management. The Board is responsible for approving succession plans for
the Chief Executive Officer and the other senior officers of the Company. |
Board Organization
| (a) | The Board is responsible for managing its own affairs including
approving its composition and size, the selection of the Chair of the Board, candidates nominated for election to the Board, committee
appointments and committee mandates. |
| (b) | The Board may delegate to Board committees matters the Board
is responsible for, including the approval of compensation matters relating to the Board, the conduct of performance evaluations and
oversight of internal controls systems, but the Board retains its oversight function and ultimate responsibility for these matters and
all other delegated responsibilities. |
Strategic Planning
| (a) | The Board has oversight responsibility to participate directly,
and through its committees, in developing, reviewing and approving the business objectives and goals of the Company. |
| (b) | The Board is responsible for reviewing the business, financial
and strategic plans by which it is proposed that Orla may reach those goals. |
| (c) | The Board is responsible for providing input to management
on emerging trends and issues and on strategic plans, objectives and goals that management develops. |
| (d) | The Board will consider alternate strategies in response
to possible change of control transactions or take-over bids with a view of maximizing value for shareholders. |
Monitoring of Financial
Performance and Other Financial Reporting Matters
| (a) | The Board is responsible for enhancing congruence between
shareholder expectations, corporate objectives and management performance. |
| (b) | The Board is responsible for: |
| (i) | monitoring the Company’s progress toward its strategic
and operational goals, and to revise its direction to management in light of changing circumstances affecting the Company; and |
| (ii) | taking action when Orla’s performance falls short of
its goals, or when other special circumstances warrant. |
| (c) | The Board is responsible for reviewing and approving the
annual consolidated audited financial statements, the interim consolidated financial statements, and the notes and management's discussion
and analysis accompanying such financial statements, as well as Orla’s management information circular and annual information form. |
| (d) | The Board is responsible for reviewing and approving material
transactions outside the ordinary course of business and those matters which the Board is required to approve under Orla's governing
statute, including the payment of dividends, the issuance, purchase and redemption of securities, acquisitions and dispositions of material
assets and material expenditures. |
Risk Management
| (a) | The Board is responsible for the identification of the principal
risks of the Company's business and ensuring the implementation of appropriate systems to effectively monitor and manage those risks
with a view to the long-term viability of the Company and achieving a proper balance between the risks incurred and the potential return
to Orla's shareholders. |
Environmental Oversight
| (a) | The Board is responsible for ensuring the implementation
of appropriate environmental stewardship and health and safety management systems, which are sufficient within the terms and practices
of the mining industry, to ensure compliance with applicable laws. |
Policies and Procedures
| (a) | The Board is responsible for: |
| (i) | approving and monitoring compliance with all significant policies
and procedures by which the Company is operated; |
| (ii) | approving policies and procedures designed to ensure that
Orla operates at all times within applicable laws and regulations and in accordance with ethical and moral standards. |
| (b) | The Board shall enforce its policy respecting confidential
treatment of the Company’s proprietary information and the confidentiality of Board deliberations. |
Communications and
Reporting
| (a) | The Board will review from time to time as circumstances
warrant the Company’s corporate disclosure procedures to address communications with shareholders, employees, financial analysts,
governments and regulatory authorities, the media and the communities in which the business of the Company is conducted. |
| (b) | The Board is responsible for: |
| (i) | overseeing the accurate reporting of the financial performance
of the Company to shareholders, other security holders and regulators on a timely and regular basis; |
| (ii) | overseeing that the financial results are reported fairly
and in accordance with generally accepted accounting standards and related legal disclosure requirements; |
| (iii) | taking steps to enhance the timely disclosure of any other
developments that have a significant and material impact on the Company; |
| (iv) | reporting annually to shareholders on its stewardship for
the preceding year; and |
| (v) | overseeing Orla's implementation of systems to accommodate
feedback from shareholders. |
ADOPTED AND APPROVED by the Board on December
6, 2016.
AMENDED AND APPROVED by the Board on August
10, 2020.
