Orla Mining Expands Production Capabilities
Orla Mining (TSX: OLA) is set to acquire Newmont’s (NYSE: NEM) Musselwhite gold mine in northwestern Ontario for $850 million. This strategic move positions Orla to more than double its gold production at a time when gold prices remain near record highs.
The deal includes an upfront payment of $810 million in cash, with additional payments tied to gold prices exceeding $2,900 and $3,000 per ounce during specific periods post-closing. The transaction is expected to finalize in the first quarter of 2025.
A Transformative Deal for Orla Mining
Musselwhite, an underground gold mine with a 25-year operational history, had proven and probable reserves of 1.5 million ounces as of December 31, 2023. For Orla, which currently operates the Camino Rojo mine in Mexico, acquiring Musselwhite is a major step forward. This acquisition transforms Orla into a multi-asset producer, boosting its annual gold output to 300,000 ounces.
The company expects Musselwhite to contribute over $150 million in average annual free cash flow over the next six years. With gold prices surging, largely due to U.S. Federal Reserve actions, this acquisition strengthens Orla’s position in the gold market.
Commitment to Growth and Optimization
Orla’s vision extends beyond maintaining Musselwhite’s current operations. The company plans to explore optimization opportunities, invest in expanding reserves and resources, and extend the mine’s operational life. “Musselwhite has a proven history of production and reserve replacement. We aim to continue that legacy,” said Orla CEO Jason Simpson.
Looking ahead, Orla is also developing the South Railroad project in Nevada. Once operational, it could bring Orla’s total gold production to 500,000 ounces per year.
Newmont’s Strategic Asset Sales
For Newmont, the sale is part of a broader strategy to divest non-core assets following its $17 billion acquisition of Newcrest. The company aims to generate up to $2.9 billion through asset sales.
Additional Canadian properties on the market include the Éléonore and Porcupine mines and the Coffee project. In the U.S., Newmont plans to sell the Cripple Creek & Victor (CC&V) mine. Internationally, it has already agreed to sell its Akyem mine in Ghana to Zijin Mining Group for up to $1 billion and has divested two Australian assets for up to $475 million.
Conclusion
Orla Mining’s acquisition of the Musselwhite mine marks a pivotal moment in its growth journey, significantly enhancing its production capabilities and market position. Simultaneously, Newmont’s asset sales strategy demonstrates its focus on reshaping its portfolio post-Newcrest acquisition. As the gold market remains strong, both companies are poised to capitalize on the evolving industry landscape.
