Good morning, ladies and gentlemen, and welcome to Orla Mining's conference call to discuss the acquisition of Gold Standard Ventures. My name is Julianne, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Please be advised that this conference is being recorded. I would now like to turn the meeting over to Andrew Bradbury, Vice President of Investor Relations and Corporate Development for Orla Mining. Please go ahead, Mr. Bradbury.
Thank you, operator, and welcome everyone to Orla Mining's call to discuss our acquisition of Gold Standard Ventures. During today's call, we will be making forward-looking statements. I would invite you to review the cautionary language on the first and second and third slide of today's presentation, which describes some of the risks and uncertainties that may affect Orla's performance in the future. I'd also like to mention that unless otherwise indicated, all dollar amounts discussed today will refer to U.S. dollars. Joining me on the call this morning is Chuck Jeannes, Chairman, and Jason Simpson, President and Chief Executive Officer, Orla Mining, alongside the Orla management team, and Jason Attew, President and Chief Executive of Gold Standard Ventures. This morning, we announced the acquisition of Gold Standard Ventures, the owner of the South Railroad heap leach project located on the prolific Carlin Trend.
This low capital intensity, high return project will diversify and strengthen Orla's portfolio of assets, and we're pleased to step into Nevada, a highly attractive jurisdiction. I'll now turn the call over to Chuck Jeannes, Orla's Chairman.
Thanks, Andrew, and thank you all for joining us this morning for what is a very exciting day for Orla Mining as we announce the acquisition of Gold Standard Ventures, a TSX and NYSE American-listed company. In a very short period, Orla has gone from an explorer to a producing company generating strong cash flows. This is on the back of the Camino Rojo oxide mine, the foundation for the growth of the company. We're now taking that experience and cash flow, and we'll look to build another low capital intensity, high margin, open pit, heap leach mine at Gold Standard's South Railroad project. This acquisition dovetails nicely into Orla's portfolio and strategy of creating stakeholder value by responsibly building and operating strong cash flow-generating mines in stable jurisdictions with superior geology.
Gold Standard South Railroad project is very similar to Camino Rojo, as it's a low complexity heap leach project with attractive economics. The addition of South Railroad also boosts our reserve and resource base, and the combination with Orla's existing pipeline provides a clear pathway towards a 500,000 ounces of annual gold production at industry-leading costs and margins. Gold Standard's land positions are well- situated on the prolific Carlin and Battle Mountain Trends, highly prospective areas that provide opportunity for long-term growth beyond the current project. The Carlin Trend, in particular, hosts some of the largest gold mines in the world, and over 90 million ounces of gold has been produced on the trend to date. While we already have a robust organic pipeline, we believe in the importance of always seeking to strengthen our portfolio with good assets and geographic diversification.
We're very excited about this entry point into Nevada, adding to our opportunities in Panama and Mexico. I believe the foundation for success of any company are its people. We've put together a fantastic team at Orla who have just demonstrated at Camino Rojo that they are outstanding mine builders who can deliver projects on time and on budget. With this acquisition, we're looking to replicate this success, combining our teams and financial capacity with Gold Standard's high-quality project to create further shareholder value. I want to thank Jason Attew, the board, and the entire team at Gold Standard for all their great work to bring the South Railroad project to this point. We now believe that we have the people and the resources, including strong cash flow generation, to develop South Railroad without further equity dilution.
Our strategy from the beginning at Orla has been to build a great company using these high margin, quick payback, heap leach projects as the platform. We believe that we are the right team to move the South Railroad project forward, and we welcome Gold Standard shareholders to participate in our future growth. With that, I'd like to pass the call over to Jason Simpson, President and CEO of Orla, to discuss the acquisition in more detail.
Thanks, Chuck. We have always kept an eye on the good work of Gold Standard and the efforts they have made to advance South Railroad. In 2021, we began having discussions with Jason and his team to understand if there was an opportunity for Orla to support project advancement. With Camino Rojo reaching commercial production and South Railroad finalizing a feasibility study, we believed it was an appropriate time to take the next step. As such, we have reached an agreement to acquire Gold Standard by way of court-approved plan of arrangement.
The total consideration is valued at CAD 242 million based on an implied purchase price of CAD 0.65 per Gold Standard share. This represents a 35% premium on the June 10th, 2022 closing price on the Toronto Stock Exchange and a 35% premium on a 10-day VWAP basis. Gold Standard shareholders will receive in exchange for each Gold Standard common share held 0.1193 of a common share of Orla. Existing shareholders of Orla and Gold Standard will own approximately 87% and 13% of the pro forma company, respectively following the close of this transaction. We believe that this is a good deal for all shareholders. The premium is fair and reasonable and rewards Gold Standard shareholders immediately while allowing for additional value capture as the project is advanced through permitting, construction, and towards production.
I too would like to congratulate Jason Attew and his team for a job well done to move the South Railroad through feasibility. I would like to pass the call over to Jason at this time.
Thanks, Jason. All things Chuck and Jason have said are on point, and I unequivocally believe this is the right transaction for Gold Standard shareholders. This combination rewards Gold Standard shareholders with an immediate 35% premium to the last close on Friday. It also provides ongoing exposure to future value, creating milestones at our South Railroad feasibility level project, as well as our highly prospective land position at Lewis, as well as Orla's robust portfolio of high-quality producing and development assets. This combination will allow continued participation by our stakeholders, and in particular, our shareholders, in an established gold producer with proven construction capabilities, a strong exploration track record, and an industry-leading low-cost growth profile. Orla team has established an exceptional reputation for mine building and execution, and they are the ideal acquirer to move this project forward.
South Railroad and Camino Rojo share very similar project characteristics, and Orla's recent experience in building the Camino Rojo oxide mine on time and under budget will be invaluable as they advance South Railroad. Besides the benefits Orla brings to advancing South Railroad, we believe this acquisition provides Gold Standard shareholders with exposure to one of the most attractive growth pipelines for an emerging gold producer. The combination of high-quality production, development, and exploration assets in Mexico, Panama, and now Nevada provides an impressive platform for growth and shareholder value creation. The deal will also provide access to Orla's strong balance sheet and internally- generated cash flows to fund both the construction of South Railroad as well as future exploration initiatives, all at reduced dilution, financing, development, and execution risk than GSV would experience as a standalone company.
This combination brings enhanced financial strength, cash flow generation, a strong institutional investor following, increased trading liquidity, and an opportunity for additional index inclusions. The acquisition has been unanimously approved by our board of directors who recommend that Gold Standard shareholders vote in favor of the transaction. The transaction will be effected by way of a court-approved plan of arrangement under the British or the Business Corporations Act, British Columbia, and will require approval on three metrics. First, 66 2/3 of the votes cast by Gold Standard shareholders. Second, 66 2/3 of the votes cast by Gold Standard security holders, which is comprised of shareholders, option holders, and restricted share unit holders voting as a single class.
Third, a simple majority of votes cast by Gold Standard shareholders, excluding certain related parties as prescribed by Multilateral Instrument 61-101, which is an instrument that affords protection to minority security holders. Voting will take place at a Gold Standard meeting expected to occur in August 2022, and an information circular regarding the transaction will be filed with the regulatory authorities and mailed to Gold Standard security holders in the coming weeks. The transaction is expected to be completed shortly after the Gold Standard meeting. With that, I'd like to pass the call back to Jason. Thanks, Jason. As Chuck mentioned, the addition of South Railroad augments our growth strategy while providing enhanced diversification. Gold Standard brings an advanced stage asset in a Tier 1 jurisdiction.
We will now have three oxide open pit heap leach projects with low CapEx and high returns. All projects have sulfide resources which will provide significant optionality for the future. Orla brings a multi-year track record of creating value for shareholders, largely on the back of proven construction and operating experience. These skill sets include engineering and permitting mines properly for construction.
Practical and cost-efficient project financing. On schedule and budget construction. Always seeking opportunities for optimization and additional value capture. Working responsibly and looking to generate benefits for all stakeholders, including our host communities and governments, while minimizing our impacts. We do this while maintaining support from our shareholders. We have continued to see value appreciation. All in, we believe our enhanced portfolio provides a pathway towards annual production of 500,000 ounces at leading all-in sustaining costs. This complement of quality assets and proven team will create additional value for all of our shareholders. Let's discuss the asset base that provides this pathway. Our Camino Rojo oxide project was successfully built on time and under budget and has achieved nameplate capacity. The project was pouring gold just over a year after first breaking ground and is now building cash. Operations are progressing as expected.
Processing throughput has achieved steady state. Mined tons and grade are on track and reconciling well against the block model, and metallurgical reconciliation is performing as expected. Near mine and regional exploration programs to extend mine life and support potential expansion are underway. We have a significant underlying resource base of nearly 10 million ounces, including the tremendous sulfide optionality. We are well-situated in a mining-friendly state. We have strong community and stakeholder relations. Importantly, we have an excellent safety and environmental performance record, and we are well on track to produce 90,000-100,000 ounces this year. In terms of optionality, the Camino Rojo sulfides represents a tremendous opportunity for the company with its large mineral endowment. Multiple development studies are being evaluated, and we are targeting to complete a PEA by year-end.
Current test work suggests the possibility of a stand-alone operation with a phased approach to processing, which will maximize recoveries, reduce initial capital, all to the benefit of NAV. The sulfides are a large value creation opportunity, and we are working towards achieving it. Our asset base in Panama has similar DNA to Mexico, with a starter oxide project and a sulfide endowment. The Cerro Quema oxide project presents strong economics on the back of low capital intensity, low OpEx, and high heap leach gold recovery rates. This could represent a production start in Panama as we advance exploration on the copper-gold mineralization and other prospects on this highly prospective land package.
While we await permit approval in Panama, the Caballito resource is the next opportunity, and we announced an impressive initial resource in late 2021, and we have drilling planned in 2022 to grow this discovery. Let's now discuss South Railroad, a quality open-pit heap leach project with strong margins. We see it as another low-complexity project where we can replicate our recent success at Camino Rojo. Key project highlights, as outlined in their February 2022 feasibility study, include annual average gold production of 152,000 ounces over the first four years and 124,000 ounces over the mine life. Life of mine all-in sustaining costs of $1,020 per gold ounce. Total gold production of 1 million ounces over an eight-year mine life. Initial capital of $190 million.
Average annual free cash flow of $98 million over the first four years. A $315 million after-tax net present value at the 5% discount rate results in 44% after-tax internal rate of return. Reserves of 1.6 million gold ounces at 0.77 g per ton. Measured and indicated resources of 1.8 million gold ounces at 0.74 g per ton. South Railroad starts with an eight-year mine life with production levels that will support our growth ambitions towards 500,000 ounces per year. South Railroad is progressing towards a Record of Decision from the US Bureau of Land Management. Our team completed a comprehensive due diligence process on Gold Standard. M3 Engineering, Orla's EPCM for Camino Rojo, also completed the recent South Railroad feasibility, and we trust their work.
As the permitting process continues, we will look for opportunities to optimize the project, including gold recoveries. As Chuck mentioned, oxide projects like Camino Rojo, Cerro Quema, and now South Railroad will be foundational in building our business. These projects are low capital intensity, high return with quick payback periods. We will leverage our core competency of building and operating gold mines with strong margins. We have a strong balance sheet that is improving weekly with approximately $55 million of cash on hand. We also have an improved credit facility that has a lower cost of capital and some improved flexibility. With the combination of our balance sheet strengths and our free cash flow generation, we have the financial resources to build our next project.
With Camino Rojo looking at cash margins of over $1,000 per ounce and annual gold production at or above 100,000 ounces, this asset can support our growth. We understand the impacts of the global inflation in the mining industry, and we will be mindful as we move forward with another project. We will complete detailed engineering and construction costing estimates as we look to deliver this project to market expectations. The Gold Standard team has done an excellent job to get the project to this point. We will work with them to support the ongoing permitting process, selection of the EPCM, and advancing the construction engineering. South Railroad is situated within a prospective 21,000-hectare land package that provides future opportunities for resource expansion and conversion and the discovery of new deposits.
South Railroad is the second-largest contiguous land package on the Carlin Trend. It is a target-rich environment with favorable stratigraphic horizons and structural control of mineralization. Multiple zones of mineralization in oxide and sulfide, including wide, high-grade intersections, are already known. We believe there is an opportunity to support increased exploration activities, including completing a global project review with target definition and drilling of oxide and sulfide opportunities. Gold Standard also owns the Lewis Project, which is strategically located within the boundary of Nevada Gold Mines' Phoenix Operations plant. The Lewis Project has an inferred mineral resource of 206,000 ounces of gold at a grade of 0.83 g per ton, and several additional prospective targets that have the potential to expand the resource base. This transaction bolsters our already impressive pipeline of assets.
Building on this year's production guidance at Camino Rojo of 90,000-100,000 ounces, we believe through the addition of Cerro Quema oxides and South Railroad oxides, we can increase production by 300% in the medium term. Of course, this will require the necessary permitting, engineering, financing, and construction steps to get production going, but this is our strength. Beyond just the high-margin heap leach projects, we believe the sulfide resources in Mexico and Panama, and now Nevada, will provide a leg of production growth next. Orla's pipeline includes three oxide heap leach projects, three sulfide resources for the future, three large exploration land package, all of this charting a path to 500,000 ounces of annual production. This production pipeline is on the back of a large reserve and resource base improved upon by this transaction.
A 75% increase in reserves and a 17% increase in measured and indicated resources. Beyond the resources, we have almost 200,000 hectares of exploration land within prolific mining districts. This provides the opportunity for shareholder value through discovery and will feed our future production profile. Our geologists couldn't be more excited with the current opportunities and now additional target prospects in Nevada. We are generally an inward-focused organization, but it is clear looking at the market pro forma metrics, this transaction presents an attractive value proposition versus our peers. The combined growth profile on a relative basis, looking at consensus, shows that Orla will stand apart on production growth metrics. This production growth will not sacrifice Orla's leading cost profile, and the combined entity on a consensus basis will remain low cost relative to our peers.
Meanwhile, an already large resource base will further boosted and Orla remains a highly endowed growing producer. It should be reiterated that Orla is committed to delivering benefits to all stakeholders, which includes our investors, our employees, and the nations and communities where we operate. We are committed to this same approach as we expand into Nevada. We believe in maximizing the benefit to all stakeholders while mitigating our impacts. This approach underpins our ESG strategy. In addition, Jason Attew and his team, I would like to thank the Orla team for their continued efforts, including the board of directors, led by Chuck, whose deep experience continues to serve the interests of our shareholders. It should be noted that across both our portfolios, we are currently drilling, and you should expect to see the continued news flow throughout the remaining part of this year.
Most simply, the combination of our strategy, our partners, and our assets establishes the formula for value creation. South Railroad is an asset we are pleased to welcome into the portfolio. We have been speaking with them for some time. We liked what we saw, and we believe this asset deserves a closer look by the market. Projects like Camino Rojo oxides, Cerro Camacho oxides, and now South Railroad oxides will be foundational to building the business. These are low capital intensity, high return projects with quick payback. Sequentially, building oxide mines and growing our annual production and cash flow will provide the basis to help unlock the tremendous sulfide endowments within our existing asset base. We are charting a pathway toward 500,000 ounces in annual production at industry-leading costs using our quality portfolio of assets.
We believe we transform resources into shareholder value by leveraging our core competency of finding, building, and operating gold mines with strong margins. This formula has served us well and has generated over $1 billion in value over the past three years. At this point, I'd like to pass the call over to the operator and answer any questions.
Thank you. If you'd like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one again. We'll pause for just a moment to compile the Q&A roster. Our first question comes from Ovais Habib from Scotiabank. Please go ahead. Your line is open.
Thanks, operator. Hi, Jason and Jason. Congrats on the deal. Just a couple of questions from me, starting off with Jason Simpson, just in terms of the progression of your existing pipeline. I think you touched upon it in terms of, you know, what would come, you know, next for Orla, at the last site trip. But with this transaction, do things change? My question for Jason Attew is basically on a little bit more color on the permitting side, on your end as well and how does that play in with, I guess, you know, the sequencing of the projects that could come online? Thanks.
Yeah. Thank you, Ovais. It was a pleasure to host you at the Camino Rojo site a couple of weeks ago. You know, we have anticipated the question of the sequence for Orla. What I would offer is this, that we feel very fortunate now that we have two projects, quality projects that are in the permitting process, and the sequence of development will be dictated by the granting of permits. What I will reiterate, you may have heard in my script, is that it will be sequential. We would choose to build one project at a time.
With all three oxide mines producing, that's incredibly cash generative and gives us opportunities for the sulfides in all three nations. At that stage, I'll hand the call over to Jason Attew and offer a bit of insight into the permitting process and where GSV stands with that.
Thanks, Jason. Good question, Ovais. I think, you know, Nevada has a very tried and tested permitting process. The permitting schedule will not change based on, again, the acquisition by Orla Mining. We are right now, we're 18 months in the permitting process, as I think you know. To get to a Record of Decision, the big major event for us is to get to the Notice of Intent. From the Notice of Intent is essentially a 12-month period to the Record of Decision. We have not, as of yet, received the Notice of Intent. I think you know the lead agency is the Bureau of Land Management in Nevada.
We do expect to get the Notice of Intent, either this quarter or next quarter, and then you can kind of set the clock in terms of we're right in the NEPA process for which we can do the full environmental impact statement. We also will be able to conduct all the stakeholder consultation that is required to get to the record of decision. Again, approximately or our expectation or our guidance is approximately one year from today.
Thanks for that, Jason. Just a little bit more, maybe a color on exploration side. I mean, are you kind of, you know, focusing right now on near mine exploration, or is there regional potential that you're going after as well? A little bit more color on that would be great.
Yeah. I'll start, you know, and I think you mean, Ovais, what we're doing in Nevada, what Jason's team is doing in Nevada, so I'll give him a chance to speak to that. As per our site visit a couple of weeks ago, you know that we are doing on discovery drilling, for example, into the sulfides targeting those higher grade zones as well as regional drilling. Similar situation in Panama on discovery drilling at Caballito, but also regional exploration. I'll turn it over to Jason Attew to talk about the drill that I saw when we were on site a couple weeks ago.
Yeah. Thanks, Jason. We did announce our exploration program on April 18, so I would encourage you to go back and look at that disclosure. Effectively, we have a 5,000-m program, which for the first time in four years we're actually doing some exploration drilling. As you can appreciate, leading into the feasibility study, for the most part it was infill drilling to convert the resources into reserves in order for us to demonstrate a very robust feasibility study. The drills are turning, as Jason said, we have a number of targets very near to the South Railroad project. There's a combination of oxide and sulfide drilling. In addition to that, we are doing, as you would expect, we do have two pits, as I think you know, the Darkstar pit and the Pinion pit.
We continue to drill off the Pinion pit 'cause it is open to the south and the southeast. We're doing step-out drilling and infill drilling to convert some of those resources into reserves, which will just essentially extend the mine life at Pinion. Very exciting times. As I mentioned, for the first time in a number of years, we're actually doing some exploration work. We're excited to get those assays back. This is what we call the phase one drilling program.
If we do see success and obviously in consultation with the Orla Group, if we do see success on some of the, you know, the exploration drilling, we will up the budget to effectively get to the end of the field season to do more, again, exploration drilling 'cause it's highly prospective in terms of the targets that we've identified. I encourage you to go back to the April eighteenth press release because it lays out exactly what our program is.
Yeah. Ovais, I'll just wrap it up by saying, you met Sylvain Guerard on site in Mexico. He's a pretty excited exploration geologist now and look forward to working with the GSV team on all the prospective targets that they have.
Perfect. That's a great update. Thanks, guys. That's it for me.
Our next question comes from Andrew Mikitchook from BMO Capital Markets. Please go ahead. Your line is open.
Thank you, Jason and Jason. Congratulations. Fairly comprehensive presentation already and a couple of good questions asked. Can I just get two comments? Number one, can you provide, Jason Simpson, further commentary on the concept and timing to be able to complete detailed engineering over the next months or remaining period of the permitting at Railroad? Just one point of clarification for the other Jason. I think I wrote down that you said that the permit you're, you guys would be targeting the concept of about a year from today. Is that the accurate wording that I scribbled down? Thank you.
Yeah, I'll start. It's Jason Simpson here. In terms of construction engineering that I described in the remarks, we'll take a page out of our Camino Rojo playbook. As we learned in that experience, getting ahead on engineering and in fact, to a certain extent, procurement, you know, leads to project success. We would look to replicate that, you know, with the GSV project. South Railroad, you know, engineering and the beginning of procurement, you know, will begin this year while waiting for permits, with the intent being that that'll lead to greater project success.
I've got Andrew Cormier sitting next to me, and I can tell you that he's a big believer in getting ahead on engineering and procurement as a recipe for project success. We'll certainly, you know, with the capacity we have financially, be able to do that while we await permits. I'll hand it over to Jason Attew to talk and reiterate what he sees as the permitting horizon.
Yeah. Thanks for the question, Andrew. Just for clarification, what I did say is the 12-month time horizon is really dictated by, again, us having receipt of the Notice of Intent, which essentially is a project filing on the Federal Register. That's obviously something that the GSV management can't control. If you actually look at past projects, the fact that we've been in the permitting process for 18 months, we do think it's coming shortly, and then it will be a 12-month. Obviously, we'll press release when we get that, and then it's effectively a 12-month timeframe for which the Bureau of Land Management, there's no prescribed time, timetable for it. Again, if you look at precedents around projects like this, they usually complete and get to a Record of Decision after 12 months.
Okay. Thank you for reiterating that. I've got that all down accurately. I'll let others ask questions. Thank you.
Thanks, Andrew.
As a reminder, if you'd like to ask a question, please press star followed by the number one on your telephone keypad. Our next question comes from Banu Nadarajah from CIBC. Please go ahead. Your line is open.
Hey there. Thanks for taking my questions. I think we covered most of the bases already, but if we can dig in a bit more with the exploration that's planned? I know you said that you're targeting both the oxides and sulfides. Do you see that there's a lot more potential for the oxides, or do we see most of the exploration focus on the sulfides? And then with the sulfide ore, is it refractory? And it's likely longer dated, but have we thought about if the sulfides can support its own infrastructure or toll milling is what's likely? Thanks.
Yeah. I'll start the response. I think you're referring to Nevada, so I'll let Jason Attew carry the remarks. Like what we have in Panama and Mexico from Orla's perspective, you know, we have a number of targets, both oxide and sulfide. Clearly, oxides proximal to the infrastructure that we build in those nations adds to mine life and simply generates more value over a longer period of time. In the future, in all nations, including Nevada, you know, any sulfide considerations will be dependent upon size and scale, metallurgical characteristics. I think it is you know early to make any characterization of what the sulfides may be in Nevada. We're buying an oxide project with optionality of sulfides.
That's a recipe that's worked for Orla previously, and we expect it'll work again in Nevada. Jason, any other comments on the oxide sulfide mix in Nevada?
No, I think you're absolutely on point, Jason. Ben, to answer your question, about 50% of our drilling this year is focused on sulfides, 50% on oxides. The strategy and the rationale for us to start looking at sulfides, 'cause again, we haven't done it for a number of years, is if you've looked through our feasibility study, we actually will be extracting it beyond surface, about 32,000 ounces of sulfide ore. That, by the way, is not in the economics of the feasibility study, so essentially it's just sitting on surface. The way we see that you could create value for shareholders is essentially through a toll processing agreement.
However, 32,000 ounces to go through all the brain damage to get a toll processing arrangement. You do need again to have a good negotiating position, the prospect or the opportunity for a lot more sulfides within the property. I think, you know, in terms of whether it's refractory or not, again, we haven't done the detailed metallurgical work, but we do expect it would be refractory. Therefore, there's two processing facilities in very close proximity to the railroad project, the first one being owned by First Majestic and the second one being owned by Nevada Gold Mines. Lastly, i-80 also has processing capabilities or facilities. I think there's certainly some options with respect to again our sulfide inventory.
Okay. That's helpful. Thank you.
Our next question comes from Rabi Nizami from National Bank Financial. Please go ahead. Your line is open.
Hey, team. Congrats on the deal. It's good to hear about it. Lots of questions have been answered already, so I'll just ask Jason Simpson about your Panamanian project. Could you give us an update on the permitting there? Could we be looking at a situation where that and South Railroad would be kind of competing as your next project, or are you feeling quite certain on South Railroad being the road forward, assuming the NOI gets filed and the process from there?
Yeah, certainly. Let's start with what we can expect in Panamá. In the coming months, the big mine in the country, Cobre Panamá, will get its new agreement enshrined in law through their House. The recent discussions we've had with the Panamanian government is that once that's completed, that we can expect movement in regards to our permits and requirements in the nation. To your larger question of, you know, which one first, what I would offer is whichever project gets permitted first, we would look to move forward.
If we're in a fortunate circumstance where they're permitted at the same time, we think that South Railroad would be the superior project, and we would move that project forward in advance of the project in Panama. Both of them add, you know, tremendous cash flow, but we will only build one at a time. The scale and economics of the South Railroad project are currently superior to what we have in Panama, so we would build that one first, then build the one in Panama. With the combination of three oxide mines producing over 300,000 ounces a year at over $1,000 an ounce margin, we'll be in very good shape as a company.
Great. Thanks very much. I appreciate that color.
Our last question comes from Kerry Smith from Haywood Securities. Please go ahead. Your line is open.
Thanks, operator. Jason Attew, with, you know, being maybe only three to six months away from Notice of Intent, why not wait until you had that in hand and use that as leverage to try and do a merger then rather than merging now prior to any permitting success?
Kerry, thanks for the question. Look, I would say you know, I think this business combination is the right thing to do for both Orla and our shareholders. The fact is you can't necessarily dictate timing. If it was a perfect world, we'd try and dictate timing around here, but I do think this is the right combination. Investors will get more details in our management circular due out in a few weeks with respect to the background of the transaction. However, what I can tell you is GSV, Gold Standard didn't run a public process. However, as Jason mentioned, Orla and ourselves have been in discussions around a combination in one fashion or another since 2021. So it was the right thing, right combination to do.
The fact that we got our feasibility study out and the fact that Orla's now hit their commercial production milestones, I think was something quite important in terms of catalysts for both our companies. The fact is the Notice of Intent to some degree, to a large degree, is out of our control, being GSV management's control. You know, like, we could have sat here, but there's no guarantee that the Orla Group can come in with a combination if we wait three to six months, Kerry.
Okay, and Jason Simpson, if I can just ask a follow-up. What have you done in terms of due diligence to understand the permitting process in Nevada and the status of the permit? Are you confident in that timetable that Jason has kind of outlined the next quarter or two to get the Notice of Intent?
Yeah. Our process, and I'll speak specifically to permitting, but as you will appreciate, we have a comprehensive due diligence process. We've looked at a number of opportunities, and we feel that through our due diligence, this is the best one for Orla from a strategic fit point of view. Very quickly, our process starts with geology, flows through metallurgy, and then moves into the question you asked, which is permitting and constructability of an asset. In addition to our own team, we utilize consultants that we've worked with before, specific with Nevada and U.S. experience. As Jason Attew pointed out, you know, Nevada, like Mexico, has a long history of mining and an established process.
I think you know through our process we have gained comfort in what we can expect in Nevada as it relates to permitting. We will be, as you would know from Orla, conservative on our estimates of when we'll be able to construction start. In the meantime, we won't lose any time in doing our engineering and procurement to be ready for when that construction start occurs.
Okay. Okay, thank you. Appreciate it.
We have no further questions in queue. I'd like to turn the call back over to the presenters for any closing remarks.
Since there are no further questions, I would like to thank our team for their continued effort in advancing our key projects. Never hesitate to reach out to Orla or GSV should you have any follow-up questions, and hopefully we'll see some of you out and around during PDAC. Thank you everyone for your time.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.