Good morning, ladies and gentlemen, and welcome to Orla Mining's conference call for the fourth quarter 2025 results. My name is Regina, 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 will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one a second time. Please be advised that this call is being recorded. I would now like to turn the meeting over to Andrew Bradbury, Vice President, Investor Relations and Corporate Development. Please go ahead, Mr. Bradbury.
Thank you, Regina, and welcome to Orla's fourth quarter 2025 results conference call. We will be making forward-looking statements during today's call, and I would direct you to the next few slides of the presentation, which contain important cautionary notes regarding these forward-looking statements. All dollar amounts discussed today will refer to US dollars unless otherwise indicated. The Orla executive team is on the call this morning, and I'll now pass it to Jason Simpson, President and CEO.
Thanks, Andrew. Good morning, everyone. The fourth quarter 2025 was an incredibly strong period to end a pivotal year for Orla. We more than doubled our annual gold production through the addition of our Musselwhite Mine. Alongside record gold prices, we generated significant cash flow, which positioned us to delever the balance sheet, initiate a dividend, and continue investing in the growth of our business in Canada, the United States, and Mexico. Our acquisition of Musselwhite meant the addition of a high-quality team and an exceptional geologic asset that is already exceeding our expectations. Only a year into ownership, we validated the geological upside by discovering mineralization 2 km beyond the current operations. This geologic upside is being matched by operational excellence.
We closed the year with six consecutive months of nearly uninterrupted ore supply, averaging nearly 4,000 tpd , which represents the highest throughput since at least 2012. I want to thank publicly all our Musselwhite employees who contributed to that achievement. At Camino Rojo in Mexico, our resilience was tested in 2025 with a pit wall event. The team rebounded safely, and our operating adaptability was highlighted with a solid second half of the year, and I would like to thank our Camino Rojo team for delivering that safely. The benefits of our diversified business were on display with the strength of Musselwhite buoying a challenge at Camino Rojo. Ultimately, we were able to not only meet revised production guidance but actually exceed the initial guidance range.
Beyond our operations, we are making large strides in advancing our next two growth opportunities. We are marching towards field mobilization in Nevada, and our South Carlin team is growing fast. In Mexico, we released a PEA for the underground project at Camino Rojo, a key step to unlocking the site's long-term potential. Earlier this week, we announced an important milestone on that path. From acquisition to exploration success and the return of capital, Orla is stronger and more diversified than ever before. Andrew Cormier, our Chief Operating Officer, will now discuss our operating performance.
Thank you, Jason. During the fourth quarter, Musselwhite mined 371,000 tons of ore and processed 361,000 tons at a mill grade of 6.77 g/t Au . Gold recovery was 95.65%, resulting in production of nearly 76,000 oz of gold. Main ramp development was extended to the next level in the PQ Zone, providing another mining horizon with additional operational flexibility. Development in the 1080 exploration ramp continued to advance in preparation for the arrival of several additional underground diamond drills in the first quarter of 2026. We currently have six drills underground. Lateral development in the quarter totaled 3,338 m.
This work provides access to mining horizons for existing reserves and creates additional drill platforms to support the underground exploration program, growing reserves, resources, and mineral inventories. As access to high-grade material improved in the second half of the year, the mill processed ore from the PQ Deeps and Red Wings areas, driving fourth quarter processed grades up to approximately 6.8 g/t . The Camino Rojo oxide mine produced 19,587 oz of gold in the fourth quarter. During the quarter, Camino Rojo mined nearly 1.8 million tons of ore and nearly 2.7 million tons of waste for an implied strip ratio of 1.52. This higher strip ratio was a result of the pit wall event that occurred in July of 2025.
As stabilization activities continued through the second half of 2026, a new ramp was established that required the removal of overburden and waste material, which resulted in a higher than normal strip ratio. During the quarter, a total of 1.9 million tons of ore grading an average of 0.47 gram per ton were placed on the heap leach pad. This included material from the upper benches as a result of ramping back up to full capacity following the pit wall event in late July. In a short period at Musselwhite, we have already begun redefining the mine's potential with a stated growth for longer mantra. By identifying key bottlenecks prior to taking full ownership, we made operational changes that yielded immediate results. With the commissioning of four new scoops and four trucks in 2025, the mine stabilized ore delivery to the mill.
In 2026, we will complete the replacement and rebuilding of the underground mine mobile fleet. By year-end, Musselwhite had achieved six consecutive months of consistent ore production, averaging approximately 3,800 tpd on a six-month rolling average basis. A production milestone not reached in many years, and the team is not stopping there. Subsequent to year-end, we released the results of a preliminary economic assessment for the underground project at Camino Rojo. The PEA evaluates the technical and economic potential of a standalone underground development project beneath the existing open pit operation and outlines a potential pathway forward to a large scale, long life underground mining operation and processing facility. This study validates the significant economic potential of our sulfide resource and confirms a clearer path to long-term growth.
We expect annual production to exceed 220,000 oz over the first 10 years, effectively doubling our current output. The deposit remains open in Zone 22, offering meaningful resource upside beyond this initial study. This next phase of Camino Rojo represents further growth and value creation, cementing its place as a cornerstone asset for Orla over the long term. This week, we are thrilled to announce that the Mexican authorities approved our environmental impact statement at Camino Rojo. This approval, together with the change of land use authorization, provides the permits required to mine the remainder of the oxide pit, including the layback area to the north. It also permits construction of an underground exploration drift to support the advancement of the underground project.
Subject to board approval, we intend to begin work on the exploration decline in the second half of 2026, with a pre-feasibility study targeted for 2027. We are grateful to the Mexican authorities for their confidence in Orla and our commitment to being a leading employer in the region. Mexico was the foundation of our business, and we intend to be there for a long time, continuing to be a strong positive contributor both socially and fiscally. In January 2026, we released our optimized feasibility study for the South Railroad Project in Nevada, confirming a robust production profile. This study outlines average output of 103,000 oz of gold annually over the first five years at an all-in sustaining cost of approximately $1,485 /oz .
At $4,500 gold price, the project delivers an after-tax NPV of $1.7 billion and a 95% IRR. Our third operating asset, South Railroad, is expected to drive our annual production towards 500,000 oz per year. Throughout 2025, we successfully transitioned from pre-permitting preparation to formal environmental review under the National Environmental Policy Act. Engineering work moved steadily towards construction readiness, supported by engineering, procurement, and construction management contract awarded to M3 Engineering. By the end of February, we had reached approximately 38% completion in engineering, having advanced mine plan updates, equipment trade-off analysis, and site investigations. Key milestones include the water treatment plant reaching issued for construction status and the issuance of limited notices to proceed for long lead items, including the ADR plant and crushing systems.
With civil bid package walks completed on-site and initial capital cost estimates of $395 million, our construction sequencing is validated and ready for mobilization. South Railroad is advancing as a FAST-41 covered project under the guidance of the Bureau of Land Management, providing the tools needed for an efficient regulatory review while ensuring we meet the highest standards of environmental stewardship. We are targeting a final Record of Decision for mid-2026, with construction to commence shortly thereafter. Based on an 18-month build schedule, we are targeting first gold production in 2028. Etienne Morin, our Chief Financial Officer, will now discuss the financial results for the quarter.
Thanks, Andrew. During the fourth quarter, we sold just under 93,000 oz of gold at a realized price of $4,025 /oz , and that's including the impact of the gold prepay. That resulted in $378 million in revenue for the quarter. We delivered just over 12,000 oz towards our gold prepay in Q4 at an average price of $2,940 /oz , which is captured in the total average realized price I just mentioned. If we exclude the impact of the gold prepay, our average realized price for the quarter was $4,187 /oz , beating the average for the quarter.
At the end of the year, we had approximately 105,000 oz remaining under the gold prepay with equal monthly deliveries of just over 4,000 oz until February 2028. Consolidated cash costs and all-in sustaining costs for the fourth quarter total $1,093 and $1,536 /oz of gold sold, respectively. We recorded net income for the quarter of $79 million or $0.23 per share, and on an adjusted basis, our adjusted earnings were $143 million or $0.42 per share. The cash flow from operating activities before changes in non-cash working capital is $165 million with free cash flow for the quarter of $133 million.
Exploration and project development costs this quarter were $43.9 million, of which approximately 12.3 million was expensed and $31.6 million was capitalized. Our cash balance at the end of December 2025 was $421 million, with total liquidity of $481 million, including the undrawn portion of our revolving credit facility. That positions us very well to fund the development of South Railroad and the Camino Rojo underground going forward. Subsequent to quarter end, we repaid $30 million on our revolving credit facility to bring the outstanding balance to $60 million. Also in Q1, we have a few other significant cash payments, including $68 million at Musselwhite related to 2025 income tax.
Next week, we have to make a $24 million payment at Camino Rojo for Special Mining Duty, which is payable once a year at the end of March. You might also recall that as part of the Musselwhite acquisition, we had two $20 million payments that were contingent on the price of gold during the first two years post-closing. Since the average gold price during that first year exceeded $2,900 /oz , we had to make the first payment to Newmont last week. In December 2025, we announced our first quarterly dividend with the initial payment made in February. This dividend policy really reflects our disciplined approach to capital allocation by balancing strategic growth initiatives or investments, exploring for new discoveries, de-leveraging and returning capital to shareholders.
As our South Railroad construction begins later this year, our strong cash position allows us to self-fund the build along with other internal growth initiatives, all that while maintaining our commitment to this disciplined capital allocation approach. With that, I'll pass it over to our Senior Vice President of Exploration, Sylvain Guerard, who will now provide you with an update on our exploration activities.
Thank you, Etienne. The 2025 exploration program at Musselwhite has delivered a strong finish to the year. Throughout 2025 and the fourth quarter, our teams remain focused on three key pillars, advancing deep directional drilling along mine extension, expanding our underground resource and reserve, and moving our near mine surface program forward. Our deep directional drilling has successfully tracked the down plunge extension of the mine trend. With over 12,500 m completed in 2025, fourth quarter results have confirmed that gold mineralization continues to at least 2 km beyond our current operation. We are seeing evidence of stockwork mineralization zones on the mine extension interpreted as the lenses in PQ zones. Most of the drilling on the extensions to date appears to have intersected the lenses horizon, with the PQ extension lying beneath it.
This suggests significant additional potential as we continue testing deeper along sections. We'll keep evaluating this through 2026 as we work to define the geometry and grade distribution of these zones. Turning to our underground exploration, we completed more than 32,000 m of drilling in 2025, which delivered multiple strong drilling intersections. This work is focused on reserve replacement and resource expansion within the lenses, Red Wings, and PQ zones. This drilling delivered high-grade realization that support production, drives growth, and increased geological confidence in near-term production areas. Our near mine surface program concluded in October returned shallow gold mineralization across several targets, including a narrow, high-grade intersection northwest of Karl Zeemal. When combined with historical data, these results highlight the potential to advance future mill feed sources.
Follow-up drilling began in the Camp Bay area in Q1, and additional drilling is planned along 4-km trend southeast of Musselwhite Mine in 2026. Our strategy is clear: grow our resource base to significantly increase annual gold production and extend the mine life of our operations. Turning to our Camino Rojo project, 2025 was a pivotal year for advancing the Zone 22 underground resource. By year-end, we successfully completed close to 22,000-m drilling. The results from this program, together with the intensive drilling completed by Orla since 2020, were instrumental in supporting the updated underground resource estimate in our February PEA. This PEA serves as a major milestone, confirming the robust potential of the Camino Rojo underground project.
Looking ahead to 2026, we have started a 4,300-m program designed to generate the metallurgical, geotechnical, and hydrogeological data required for our upcoming pre-feasibility study in 2027. In Nevada, our South Carlin Complex is one of the largest continuous land positions on the Carlin Trend, a district-scale opportunity with significant growth potential beyond our currently defined reserves. In November, we concluded our 2025 drilling program, totaling over 18,000 m. We reinforced geological models, confirming economic mineralization outside the Darkstar and Pinion projected pit boundaries, and identified new oxide mineralization of the Spike and Far Drop targets, demonstrating that significant oxide gold exists beyond our existing pit shells. Our 2026 program is scheduled to start in the second quarter, targeting pit extension at Pinion, Darkstar, and Jasperoid Wash, while continuing to advance oxide targets proximal to the development project.
I will now hand over to Silvana Costa, our Chief Sustainability Officer, to continue the presentation.
Thank you, Sylvain. Our commitment to developing our people and to environmental, social, and governance performance are cornerstones of our strategy, and I'm proud to share key milestones from the fourth quarter across our sites. Since acquiring Musselwhite, our focus has been the transparent ownership transition through active community presence and the development of our talent pipeline. A key milestone in Q4 was the announcement of a $6.6 million partnership with Newmont and First Nations LP, a partnership of 24 First Nations in northern Ontario. This 10-year investment funds STEM and trades training, as well as land-based learning that supports long-term local workforce development. At Camino Rojo, we deepened community ties by renewing key exploration and social responsibility agreements with local ejido communities.
Social investments focused on infrastructure and education, notably advancing the San Tiburcio egg farm project and delivering specialized training programs for community members. Our PRO-ABC Project , launched earlier in 2025, saw intense activity in Q4, including environmental education events, ecological studies, and livelihood initiatives in partnership with local communities and civil society organizations. In Nevada, we continue to invest in the region's future and maintain proactive, transparent dialogue with local community members, governments, and civil society about the South Carlin project. During the quarter, we established a partnership with the Great Basin College, aiming at supporting continuing education and strengthening the skilled workforce in the region. Our team also volunteered locally and continued to support education and meal delivery programs. Throughout 2025, we also strengthened our ESG governance and disclosures. All our updated ESG ratings have either improved or remained stable, confirming the effectiveness of our prioritized efforts.
On the people front, during Q4, we continued to roll out all our bespoke leadership training program, training almost 300 employees across our sites. These development experiences reinforce our values and equip our leaders with tools to support their daily work as well as their professional development journey. These achievements demonstrate our commitment to responsible gold production and to work in partnership with our host communities and indigenous partners to build a sustainable and inclusive future with our stakeholders. I'd like now to pass it back to Jason for his closing remarks.
Thanks, Silvana. Orla enters 2026 with strong operational momentum and a clear path to continued production expansion. We are guiding toward another record-breaking year, forecasting 340,000-360,000 oz at an all-in sustaining cost of $1,550-$1,750 /oz . Looking at 2026, we have several upcoming catalysts. Notably, we are getting ready to go into the field with construction at South Carlin, with planning and procurement and final permits anticipated for mid-2026. Continued exploration of the underground and deep directional drill programs at Musselwhite will continue to extend mineralization and mine life. Finally, continuing our exploration and resource development at Camino Rojo, working towards a pre-feasibility study and permit submission in 2027. 2025 marked by operational resilience and significant advancements in growing our business.
Thank you to our teams in the countries where we operate, whose commitment and delivery are driving this business forward. At this point, I'll open the call to questions and hand it back to the operator.
We will now begin the question and answer session. To ask a question, press star, then the number one on your telephone keypad. Our first question will come from the line of Francesco Costanzo with Scotiabank. Please go ahead.
Morning, everyone. Thanks a lot for taking my questions. Congrats on the beat this quarter and, very happy to see the MIA approval come through on Camino Rojo. My first question here, can you just describe for us, how the mine plan at Camino Rojo might change going into this year and next or even longer term in response to the latest permit?
Yeah. Thanks for the question. I'll be clear, the mine plan for 2026 will not change as a result of that permit. The guidance presumed that the permit would be received in this quarter, which has occurred. Our mine plan in 2026 at Camino Rojo really is focused on the work that we began in 2025, including a return to the top of the deposit stripping back to the Fresnillo boundary. Additionally, we're also working in the bottom of the pit to get prepared for the portal establishment. Both of those things are considered within our guidance. The capital for the exploration drift we'll guide to once approved by the board later in the second quarter.
Going forward, Francesco, in the life of mine plan for the oxides, as we outlined in the technical study that was put out this week, we intend to continue to mine the oxides until the end of the decade, setting up during that time to move underground for the continuation of Camino Rojo into the next phase. That's our plan until the end of the decade for Camino Rojo.
Yeah. Thanks a lot for the clear response, Jason. That covered off my follow-up question, which was on the underground portal and decline development. Maybe I'll just switch gears then to South Railroad. With the permitting process at South Railroad on track for Q3 this year, can you give us a bit more color on some of the key development milestones you're aiming to achieve this year? That's for you, Jason, or for Andrew, whoever wants to take it.
Yeah. I'll start there and then Andrew can build on the answer. We've got a number of things happening currently that we'll update the market on throughout the year. As Andrew referenced in his remarks, the work on engineering procurement is well underway. Andrew will give you some examples of things that we have acquired and contracts that we have signed in preparation for our field mobilization. The first half of this year, our updates to the market will be on all of those activities. Clearly Q3 with the receipt of the Record of Decision will then begin for the second half of the year being able to update the market on field mobilization and the first months of our construction on site.
Andrew, are there any particular pieces of equipment or contracts at this stage you'd like to give as examples?
Thank you, Jason. Yes, we're applying the same approach to South Carlin as we did with Camino Rojo, which is going into construction with a high level of detailed engineering. Things that we are doing this year, concurrent with the detailed engineering, is placing purchase orders for equipment to obtain certified drawings from vendors to allow engineering to proceed and awarding long lead equipment purchase orders, as well as tendering and awarding contracts for the early civil works. This will put us in a very strong position upon receipt of the Record of Decision to start construction and be starting the build with high quality quotes. That was one of the key factors for our success at Camino Rojo. We thought we're following the same model here.
Excellent. Yeah, that's all for me. Thanks a lot for taking my questions.
Again, for any questions, press star one on your telephone keypad. Our next question will come from the line of Vitaly Kononov with Freedom Broker. Please go ahead.
Hi, and thank you for taking my question. First of all, you set out a significant increase in capital expenditure budget in 2026, of which, over $200 million is attributed to South Carlin. Is that contingent on the permitting and final investment decision, or should we expect this amount to be smoothed over the course of 2026?
I think I caught the question as the $200 million that we have guided towards in South Railroad is contingent on the receipt of the Record of Decision and part of those costs include field mobilization and the early earthworks that's been awarded that Andrew referenced. Any advancement of the Record of Decision could result in us spending more in 2026 on the South Railroad Project. Clearly a delay would reduce that spending. As we move towards that date and any advancement or otherwise in the Record of Decision, we'll guide to on a quarterly basis to any adjustments to that particular area of capital within the business.
I got it. Thank you. On the Musselwhite, you highlighted new discoveries 2 km below the current mine sites, along with a $50 million budget in drilling, set out for the year. The question is, there are actually two. What's your assessment of the cost of mining in those deeper areas, and have you done any step-out drilling horizontally?
On the first, you know, as we go deeper in the mine, the cost certainly increases. That's a result of having to handle the material through our various material handling systems to get it to surface and to the mill. The solution to that, as we've articulated, is an improvement to the material handling system, something that we are planning to study for the first 24 months of ownership so that by 2027 we can come with a material handling improvement solution that could materially reduce the cost of the operation as we go deeper. Connected to that is your second question, which is the lateral extents. You are absolutely right.
We are also discovering a number of satellite lenses, laterally in all parts of the mine, including the upper part of the mine. Why that is important is one of the learnings in the first year of ownership is there's a lot more gold, laterally in the upper part of the mine. As we continue to drill that and define that will affect our material handling choices and any future capital investment at the site, because we've clearly demonstrated that we can push that site toward 300,000 oz without improving the material handling system. A question we'll need to answer is, what do we want to do in the upper part of the mine?
What might we consider as a material handling improvement to the lower part of the mine? All of that will result in more ore to the mill. The mill that we purchased that had only ever historically seen 1 million tpa , but had capability of 1.5 million tpa, has demonstrated, last six months of 2025, we're actually able to fill. We are already having discussions about changes we may make to the mill in years to come. All of that put together is very exciting. I look forward to continuing to define geologically and study engineering-wise opportunities to increase and make Musselwhite not only a longer term contributor to Orla, but also a larger gold ounce per year contributor to Orla.
All of that should come together in 2027, and we look forward to giving the market an update on our long-term plans and size of that asset.
This concludes our question and answer session, and I'll hand the call back over to Jason for any closing comments.
Thank you everyone for tuning in. Since there are no further questions, I wanna thank you for your time, your attention, and never hesitate to reach out to Orla should you have any follow-up questions. We pride ourselves on being a management team that's available.
This concludes today's conference call. Thank you all for joining. You may now disconnect.