Orla Mining(ORLA) - 2025 Q2 - Quarterly Report

Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Balance Sheets The balance sheet reflects a substantial increase in total assets and liabilities from December 31, 2024, to June 30, 2025, primarily due to the Musselwhite Mine acquisition, while shareholders' equity slightly decreased | Metric | Dec 31, 2024 (in thousands USD) | Jun 30, 2025 (in thousands USD) | Change (Absolute) | Change (%) | | :----- | :------------------------------ | :------------------------------ | :---------------- | :--------- | | Total Assets | 598,349 | 1,861,285 | 1,262,936 | 211.07% | | Total Liabilities | 90,904 | 1,363,445 | 1,272,541 | 1399.88% | | Total Shareholders' Equity | 507,445 | 497,840 | (9,605) | -1.89% | | Cash | 160,849 | 215,448 | 54,599 | 33.94% | | Property, plant and equipment | 202,585 | 1,318,540 | 1,115,955 | 550.89% | Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) The company reported a net loss for the six months ended June 30, 2025, a significant decline from prior year's net income, despite substantial revenue growth, primarily due to increased costs and fair value adjustments | Metric | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | Change (Absolute) | Change (%) | | :----- | :--------------------------------------------- | :--------------------------------------------- | :---------------- | :--------- | | Revenue | 404,417 | 151,848 | 252,569 | 166.33% | | Earnings from Mining Operations | 203,263 | 93,075 | 110,188 | 118.39% | | Income (Loss) Before Taxes | 45,548 | 77,430 | (31,882) | -41.17% | | Income (Loss) for the Period | (21,620) | 41,750 | (63,370) | -151.79% | | Basic EPS | (0.07) | 0.13 | (0.20) | -153.85% | | Diluted EPS | (0.07) | 0.13 | (0.20) | -153.85% | - Fair value adjustments on financial instruments significantly impacted income, resulting in a loss of $83,700 thousand for the six months ended June 30, 2025, compared to zero in the prior year[3] Condensed Interim Consolidated Statements of Cash Flows Operating cash flow significantly increased, while investing activities resulted in a substantial outflow due to the Musselwhite Mine acquisition, with financing activities providing significant funds from credit facilities and convertible notes | Metric | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | Change (Absolute) | Change (%) | | :----- | :--------------------------------------------- | :--------------------------------------------- | :---------------- | :--------- | | Cash provided by operating activities | 506,287 | 77,119 | 429,168 | 556.51% | | Cash used in investing activities | (846,181) | (9,130) | (837,051) | 9168.14% | | Cash provided by (used in) financing activities | 393,722 | (9,566) | 403,288 | 4215.87% | | Net increase in cash | 54,599 | 57,670 | (3,071) | -5.32% | | Cash, end of period | 215,448 | 154,302 | 61,146 | 39.63% | - The acquisition of Musselwhite Mine resulted in a cash outflow of $798,500 thousand for investing activities during the six months ended June 30, 2025[4] - Financing activities were significantly boosted by $220,000 thousand from the Credit Facility and $200,000 thousand from Convertible Notes in 2025[4] Condensed Interim Consolidated Statements of Changes in Equity Total shareholders' equity slightly decreased from January 1, 2025, to June 30, 2025, primarily due to a net loss for the period, partially offset by equity-related transactions | Metric | Jan 1, 2025 (in thousands USD) | Jun 30, 2025 (in thousands USD) | Change (Absolute) | Change (%) | | :----- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Total Shareholders' Equity | 507,445 | 497,840 | (9,605) | -1.89% | | Share Capital | 494,833 | 507,366 | 12,533 | 2.53% | | Reserves | 25,182 | 24,720 | (462) | -1.83% | | Accumulated Deficit | (8,787) | (30,407) | (21,620) | 246.05% | - The company recognized a loss of $21,620 thousand for the period ended June 30, 2025, contributing to the increase in accumulated deficit[6] Notes to the Consolidated Financial Statements 1. CORPORATE INFORMATION AND NATURE OF OPERATIONS Orla Mining Ltd. is a Canadian company focused on mineral property acquisition, exploration, development, and exploitation, expanding its operational footprint with the acquisition of Musselwhite Mine in February 2025 - Orla Mining Ltd. is engaged in the acquisition, exploration, development, and exploitation of mineral properties[9] - The company acquired the Musselwhite Mine in Ontario, Canada, on February 28, 2025[9] | Name | Principal activity | Ownership | Location | | :--- | :----------------- | :-------- | :------- | | Musselwhite Mine Ltd. | Production | 100% | Canada | | Minera Camino Rojo SA de CV | Production | 100% | Mexico | | Gold Standard Ventures (US) Inc. | Exploration | 100% | USA | | Minera Cerro Quema SA | Exploration | 100% | Panama | 2. BASIS OF PREPARATION These condensed interim consolidated financial statements are prepared in accordance with IAS 34 and presented in United States dollars, consolidating the company and its subsidiaries on a going concern basis 2. (a) Statement of compliance and basis of presentation - Financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" and presented in United States dollars[10][12] 2. (b) Going concern - The financial statements are prepared on the assumption that the Company will continue as a going concern[12] 2. (c) Basis of consolidation - Consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, with intercompany transactions eliminated[12][14] 3. MATERIAL ACCOUNTING POLICY INFORMATION The company applied consistent accounting policies in these interim consolidated financial statements as those used in its audited consolidated financial statements for the year ended December 31, 2024 - The same accounting policies were applied as in the audited consolidated financial statements for the year ended December 31, 2024[16] 4. SIGNIFICANT JUDGEMENTS AND ESTIMATES The financial statements involve significant judgments and estimates, particularly following the Musselwhite Mine acquisition, impacting areas such as business combinations, revenue recognition, functional currency, and fair value measurements of financial instruments 4. (a) Material accounting policies and judgements adopted in the period - The acquisition of Musselwhite Mine was determined to be a business combination under IFRS 3[17] - The gold prepay arrangement was classified as a contract liability (deferred revenue) under IFRS 15, not a financial liability[18] - The functional currency of Orla Mining Ltd. changed from Canadian dollars to United States dollars effective February 28, 2025, due to the Musselwhite Mine acquisition and related financing[22] 4. (b) Key Sources of Estimation Uncertainty - Valuation of convertible notes and gold prepay arrangement involves complex models and unobservable inputs, subject to significant changes with market conditions[24] - Revenue recognition from the gold prepay is based on estimated future delivery schedules and discount rates[25] - Estimates of mineral reserves and resources for Musselwhite Mine impact future depreciation and site closure obligations[26] 5. REVENUE Total revenue for the six months ended June 30, 2025, significantly increased, primarily driven by gold sales, with three customers contributing a substantial portion, though the company is not economically dependent on any single customer | Revenue Source | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Gold | 256,540 | 81,314 | 391,677 | 147,282 | | Silver | 7,207 | 3,256 | 12,740 | 4,566 | | Total Revenue | 263,747 | 84,570 | 404,417 | 151,848 | - For the six months ended June 30, 2025, three customers contributed approximately 88% of total revenues[29] - The Company is not economically dependent on any specific customers for gold sales due to the availability of numerous gold traders worldwide[29] 6. COST OF SALES Cost of sales significantly increased for both the three and six months ended June 30, 2025, primarily due to higher mining and processing costs and the introduction of Musselwhite Mine royalties 6. (a) Operating costs | Cost Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :-------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Mining and processing costs | 82,700 | 18,118 | 129,953 | 35,877 | | Refining and transportation costs | 2,879 | 406 | 3,898 | 756 | | Total Operating Costs | 85,579 | 18,524 | 133,851 | 36,633 | 6. (b) Royalties | Royalty Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :----------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Camino Rojo Oxide NSR royalty | 1,872 | 1,675 | 3,707 | 3,007 | | Mexican Extraordinary Mining Duty | 951 | 423 | 1,881 | 759 | | Musselwhite Mine royalty | 3,577 | — | 4,157 | — | | Total Royalties | 6,400 | 2,098 | 9,745 | 3,766 | 7. EXPLORATION AND EVALUATION EXPENSES Exploration and evaluation expenses for the six months ended June 30, 2025, increased significantly, driven by spending at South Railroad, Cerro Quema, and new expenses related to Musselwhite Mine | Project | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :------ | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Camino Rojo | 1,833 | 1,751 | 3,367 | 3,433 | | Musselwhite Mine | 194 | — | 419 | — | | South Railroad | 6,307 | 3,606 | 9,849 | 5,695 | | Cerro Quema | 951 | 1,209 | 4,394 | 2,080 | | Other | 127 | 83 | 262 | 185 | | Total | 9,412 | 6,649 | 18,291 | 11,393 | 8. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for the six months ended June 30, 2025, significantly increased, primarily driven by a substantial rise in professional fees | Expense Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :----------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Office and administrative | 1,179 | 875 | 2,410 | 1,706 | | Professional fees | 3,913 | 1,028 | 15,268 | 1,815 | | Regulatory and transfer agent | 72 | 49 | 547 | 326 | | Salaries and benefits | 2,737 | 1,926 | 5,478 | 3,900 | | Total | 7,901 | 3,878 | 23,703 | 7,747 | 9. INTEREST AND ACCRETION EXPENSE Interest and accretion expense for the six months ended June 30, 2025, surged, largely driven by new interest expenses from the Amended Credit Facility and Convertible Notes, alongside increased accretion from deferred revenue and site closure provisions | Expense Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :----------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Interest expense - Amended Credit Facility | 4,448 | — | 6,098 | — | | Interest expense - Convertible notes | 2,244 | — | 3,008 | — | | Interest expense - Credit Facility | — | 1,656 | — | 3,354 | | Accretion of site closure provisions | 948 | 138 | 1,326 | 255 | | Accretion of deferred revenue | 7,828 | 122 | 10,878 | 244 | | Total Interest and Accretion Expense | 17,050 | 2,067 | 23,849 | 4,142 | 10. INVENTORY Total current inventory significantly increased from December 31, 2024, to June 30, 2025, primarily due to increases in stockpiled ore, in-process inventory, and materials and supplies, while long-term inventory remained stable | Inventory Type | Jun 30, 2025 (in thousands USD) | Dec 31, 2024 (in thousands USD) | Change (Absolute) | Change (%) | | :------------- | :------------------------------ | :------------------------------ | :---------------- | :--------- | | Stockpiled ore (Current) | 6,633 | 1,063 | 5,570 | 524.00% | | In-process inventory | 29,707 | 15,014 | 14,693 | 97.86% | | Finished goods inventory | 6,709 | 8,520 | (1,811) | -21.26% | | Materials and supplies | 27,145 | 4,615 | 22,530 | 488.22% | | Total Current Inventory | 70,194 | 29,212 | 40,982 | 140.29% | | Long term inventory | 6,538 | 6,924 | (386) | -5.57% | - Inventory at June 30, 2025, includes $14,300 thousand of depreciation and depletion, up from $8,800 thousand at December 31, 2024[35] 11. VALUE ADDED TAXES RECOVERABLE Value added taxes recoverable significantly increased from December 31, 2024, to June 30, 2025, primarily driven by a substantial increase in Canada | Location | Jun 30, 2025 (in thousands USD) | Dec 31, 2024 (in thousands USD) | Change (Absolute) | Change (%) | | :------- | :------------------------------ | :------------------------------ | :---------------- | :--------- | | Canada | 11,257 | 153 | 11,104 | 7257.52% | | Mexico | 7,250 | 8,329 | (1,079) | -12.95% | | Total | 18,507 | 8,482 | 10,025 | 118.19% | 12. EXPLORATION AND EVALUATION PROPERTIES The total value of exploration and evaluation properties remained stable from December 31, 2024, to June 30, 2025, comprising the South Carlin Complex in Nevada and the Cerro Quema Project in Panama - Exploration and evaluation properties consist of the South Carlin Complex in Nevada, United States, and the Cerro Quema Project in Panama[37] | Project | At January 1, 2024 (in thousands USD) | Acquisition of Contact Gold Corp. (in thousands USD) | Farm out proceeds (in thousands USD) | At December 31, 2024 and June 30, 2025 (in thousands USD) | | :------ | :------------------------------------ | :--------------------------------------------------- | :----------------------------------- | :-------------------------------------------------------- | | South Railroad | 160,000 | 12,203 | (210) | 171,993 | | Cerro Quema | 10,000 | — | — | 10,000 | | Total | 170,000 | 12,203 | (210) | 181,993 | 13. PROPERTY, PLANT AND EQUIPMENT The net book value of property, plant and equipment significantly increased from December 31, 2024, to June 30, 2025, primarily due to the acquisition of Musselwhite Mine | Category | At December 31, 2024 (in thousands USD) | At June 30, 2025 (in thousands USD) | Change (Absolute) | Change (%) | | :------- | :-------------------------------------- | :------------------------------------ | :---------------- | :--------- | | Producing mineral property | 98,638 | 999,758 | 901,120 | 913.57% | | Buildings | 56,882 | 101,106 | 44,224 | 77.75% | | Machinery and equipment | 37,804 | 183,941 | 146,137 | 386.57% | | Other assets | 1,749 | 11,406 | 9,657 | 552.14% | | Other right of use assets | 2,171 | 9,461 | 7,290 | 335.88% | | Construction in progress | 5,341 | 12,868 | 7,527 | 140.93% | | Total | 202,585 | 1,318,540 | 1,115,955 | 550.89% | - The acquisition of Musselwhite Mine contributed $1,097,800 thousand to the cost of property, plant and equipment[39] 14. ACQUISITION OF MUSSELWHITE MINE On February 28, 2025, the company acquired Musselwhite Mine Ltd. for a total purchase consideration of $811,100 thousand, financed through a credit facility, gold prepayment, and convertible notes, with accounting for this business combination being provisional - On February 28, 2025, Orla Mining Ltd. acquired Musselwhite Mine Ltd. from Newmont Corporation, accounted for as a business combination under IFRS 3[40] | Item | Provisional Preliminary (in thousands USD) | Adjustments (in thousands USD) | Adjusted Preliminary (in thousands USD) | | :--- | :--------------------------------------- | :----------------------------- | :-------------------------------------- | | Upfront cash payments made by the Company | 798,504 | — | 798,504 | | Fair value of contingent consideration | 17,000 | — | 17,000 | | Working capital adjustments | — | (4,400) | (4,400) | | Total purchase consideration | 815,504 | (4,400) | 811,104 | - The upfront payment was financed by a $250,000 thousand credit facility, a $360,000 thousand gold prepayment, and $200,000 thousand in senior unsecured convertible notes. Contingent consideration includes two $20,000 thousand payments if the average spot price of gold exceeds $2,900/oz (for 2026) and $3,000/oz (for 2027)[42] 15. DERIVATIVE CONTRACTS The company holds various derivative instruments, including gold forward contracts, a redemption right on convertible notes, contingent consideration, and warrants, all measured at fair value through profit or loss, impacting financial results 15. (a) Gold forward contracts - Gold forward contracts were entered into in November 2024 to manage gold price fluctuations, with a weighted average price of $2,834/ounce for 144,887 ounces[46] - These contracts were closed out immediately before the gold prepay arrangements in February 2025[47] 15. (b) Redemption Right - The Company holds a redemption right on convertible notes, exercisable after 18 months if the common share VWAP is at least 130% of the conversion price[49] - This redemption right is classified as a derivative financial asset and measured at fair value through profit or loss[50] 15. (c) Contingent consideration - Contingent consideration for Musselwhite Mine acquisition totals up to $40,000 thousand, dependent on future gold prices exceeding $2,900/oz and $3,000/oz in specified periods[52] - Fair value is estimated using a Monte Carlo simulation model, and subsequent changes are recognized in profit or loss[54] 15. (d) Warrants - 23,392,397 common share purchase warrants were issued on February 28, 2025, with an exercise price of C$11.50 and expiring on February 28, 2030[55] - These warrants are classified as derivative financial liabilities and measured at fair value through profit or loss due to being denominated in Canadian dollars while the parent entity's functional currency is US dollars[56][95] | Assumption | Jun 30, 2025 | Feb 28, 2025 | | :--------- | :----------- | :----------- | | Share price | C$13.68 | C$10.13 | | Exercise price | C$11.50 | C$11.50 | | Implied volatility | 44.8% | 37.3% | | Risk-free interest rate | 2.6% | 4.0% | | Term to maturity (years) | 4.7 | 5.0 | 16. TRADE PAYABLES AND ACCRUED LIABILITIES Trade payables and accrued liabilities significantly increased from December 31, 2024, to June 30, 2025, primarily driven by higher trade payables, accrued trade liabilities, and payroll-related accruals | Item | Jun 30, 2025 (in thousands USD) | Dec 31, 2024 (in thousands USD) | Change (Absolute) | Change (%) | | :--- | :------------------------------ | :------------------------------ | :---------------- | :--------- | | Trade payables and accrued trade liabilities | 58,070 | 11,339 | 46,731 | 412.14% | | Royalties payable | 3,842 | 3,415 | 427 | 12.50% | | Payroll related | 13,738 | 5,547 | 8,191 | 147.67% | | Current portion of lease obligations | 3,413 | 833 | 2,580 | 309.72% | | Other | 1,987 | 1,460 | 527 | 36.10% | | Total | 81,050 | 22,594 | 58,456 | 258.72% | 17. LONG TERM DEBT Total long-term debt substantially increased to $387,700 thousand at June 30, 2025, primarily due to advances from the Amended Credit Facility and the issuance of convertible notes 17. (a) Amended Credit Facility - The Credit Facility was amended in February 2025, now comprising a $150,000 thousand Amended Revolving Facility and a $100,000 thousand Term Facility[62] - The Term Facility requires quarterly principal payments of $5,000 thousand starting December 31, 2025, with the balance due at maturity[63] - The Company was in compliance with all financial covenants (leverage ratio, interest service coverage ratio, tangible net worth, minimum liquidity) as of June 30, 2025[67][72] 17. (b) Convertible notes - $200,000 thousand of unsecured senior convertible notes were issued on February 28, 2025, maturing March 1, 2030, with a 4.5% annual interest rate[68][69] - Notes are convertible at the holder's option into common shares of the Company at C$7.90 per share[69] | Amount (in thousands USD) | Component | Initial recognition | Classification | | :------------------------ | :-------- | :------------------ | :------------- | | 50,000 | Warrants | Estimated fair value | Financial liability at fair value through profit or loss | | 167,000 | Host liability | Fair value of the host debt | Financial liability at amortized cost | | (18,000) | Company's redemption right | Estimated fair value | Financial asset at fair value through profit or loss | | 1,000 | Holders' conversion right | Residual | Equity | | 200,000 | Total | | | 18. DEFERRED REVENUE Deferred revenue significantly increased to $357,600 thousand at June 30, 2025, primarily due to a $384,400 thousand upfront cash payment received from new gold prepay arrangements 18. (a) Gold prepay arrangements - The Company received an upfront cash payment of $384,400 thousand from gold prepay agreements on February 26, 2025[77] - The Company agreed to deliver approximately 4,025 ounces of gold per month from March 2025 through February 2028, totaling 144,887 ounces[77] | Metric | 3 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2025 | | :----- | :-------------------------- | :-------------------------- | | Ounces delivered | 12,074 | 16,098 | | Revenue recognized (in thousands USD) | 34,823 | 46,358 | 18. (b) Stream arrangement - The Company is committed to deliver 100% of silver produced from the potential South Railroad mine under a silver streaming agreement[82] - The investor pays 15% of the prevailing market price of silver at the time of each delivery[82] - This arrangement is accounted for as a contract with a customer under IFRS 15, with deferred revenue accreted at a 6.5% effective interest rate[84] 19. LEASE OBLIGATIONS Lease obligations significantly increased from December 31, 2024, to June 30, 2025, primarily due to new lease contracts, leading to a substantial rise in lease expenses, including variable and short-term lease payments 19. (a) Lease obligations | Metric | Jun 30, 2025 (in thousands USD) | Dec 31, 2024 (in thousands USD) | Change (Absolute) | Change (%) | | :----- | :------------------------------ | :------------------------------ | :---------------- | :--------- | | Beginning of year | 2,179 | 2,908 | (729) | -25.07% | | Additions | 7,938 | 1,590 | 6,348 | 399.25% | | End of period | 9,558 | 2,179 | 7,379 | 338.64% | | Current | 3,413 | 833 | 2,580 | 309.72% | | Non-current | 6,145 | 1,346 | 4,799 | 356.54% | 19. (b) Lease expenses recognized | Expense Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :----------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Interest on lease liabilities | 91 | 33 | 140 | 68 | | Variable lease payments | 5,641 | 4,539 | 11,419 | 7,584 | | Expenses relating to short-term leases | 1,700 | 90 | 1,902 | 178 | | Total | 7,444 | 4,666 | 13,486 | 7,852 | 20. SITE CLOSURE PROVISIONS Site closure provisions significantly increased from December 31, 2024, to June 30, 2025, primarily due to the Musselwhite Mine acquisition and a required remeasurement under IAS 37 | Project | At December 31, 2024 (in thousands USD) | Acquisition of Musselwhite Mine (in thousands USD) | Required remeasurement under IAS 37 (in thousands USD) | At June 30, 2025 (in thousands USD) | | :------ | :-------------------------------------- | :------------------------------------------------- | :----------------------------------------------------- | :---------------------------------- | | Musselwhite Mine | — | 52,377 | 26,925 | 84,833 | | Camino Rojo | 6,553 | — | — | 6,299 | | Nevada projects | 2,708 | — | — | 3,084 | | Cerro Quema Project | 500 | — | — | 500 | | Total | 9,761 | 52,377 | 26,925 | 94,716 | - The $26,925 thousand increase in provision from remeasurement under IAS 37 is solely due to a change in discount rate methodology, not underlying cost estimates[89] | Project | Estimated settlement dates | Undiscounted risk-adjusted cash flows (in thousands USD) | Inflation rate | Discount rate | | :------ | :----------------------- | :----------------------------------------------------- | :------------- | :------------ | | Musselwhite Mine | 2029 to 2074 | 102,668 | 2.0% | 3.8% | | Camino Rojo | 2033 to 2047 | 12,000 | 3.7% | 9.0% | | Nevada projects | 2037 to 2039 | 3,221 | 2.5% | 4.2% | 21. SHARE CAPITAL The company's authorized share capital includes an unlimited number of common and preferred shares, with warrants classified as either equity or financial liabilities based on functional currency and exercise currency 21. (a) Authorized share capital - Authorized share capital consists of an unlimited number of common shares and preferred shares without par value[91] 21. (b) Warrants - Warrants issued when the parent entity's functional currency was Canadian dollars are accounted for as equity[93] - 23,392,397 warrants issued on February 28, 2025, are classified as financial liabilities because the parent entity's functional currency was US dollars at issuance, but the warrants are exercisable in Canadian dollars[95] | Expiry date | Exercise price | Dec 31, 2024 (Number) | Exercised (Number) | Jun 30, 2025 (Number) | | :---------- | :------------- | :-------------------- | :----------------- | :-------------------- | | December 18, 2026 | C$3.00 | 25,540,000 | (1,652,500) | 23,887,500 | | February 23, 2026 | C$7.94 | 315,000 | (77,175) | 237,825 | | Total | | 25,855,000 | (1,729,675) | 24,125,325 | 22. EARNINGS (LOSS) PER SHARE Basic and diluted earnings per share for the six months ended June 30, 2025, reflected a loss, a decline from prior year's earnings, with potential ordinary shares being anti-dilutive and thus excluded from diluted EPS calculation 22. (a) Basic | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) for the period (in thousands USD) | 48,212 | 24,265 | (21,620) | 41,750 | | Weighted average number of common shares (thousands) | 324,903 | 318,033 | 323,633 | 316,567 | | Basic earnings (loss) per share | $0.15 | $0.08 | $(0.07) | $0.13 | 22. (b) Diluted | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) for the period - diluted (in thousands USD) | 51,799 | 24,265 | (21,620) | 41,750 | | Weighted average number of ordinary shares (thousands) | 387,613 | 333,048 | 323,633 | 330,528 | | Diluted earnings (loss) per share | $0.13 | $0.07 | $(0.07) | $0.13 | - Potential ordinary shares from convertible notes, warrants, stock options, RSUs, DSUs, and bonus shares were anti-dilutive for the six months ended June 30, 2025, and thus excluded from diluted loss per share calculation[98] 23. SHARE-BASED PAYMENTS The company offers five forms of share-based payments, with total expense for the six months ended June 30, 2025, increasing significantly, primarily driven by Performance Share Units (PSUs) - The Company has five forms of share-based payments: stock options, restricted share units (RSUs), deferred share units (DSUs), performance share units (PSUs), and bonus shares[100] | Expense Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :----------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Stock options | 359 | 315 | 585 | 598 | | Restricted share units | 691 | 352 | 997 | 633 | | Deferred share units | — | 1 | 689 | 732 | | Performance share units | 531 | 167 | 2,628 | 291 | | Total | 1,581 | 835 | 4,899 | 2,254 | 23. (a) Stock options - Stock options have a five-year life and vest one-third each one, two, and three years after the grant date[102] | Metric | Jun 30, 2025 | Jun 30, 2024 | | :----- | :----------- | :----------- | | Outstanding, January 1 (Number) | 3,570,471 | 5,523,297 | | Granted (Number) | 455,655 | 651,955 | | Exercised (Number) | (1,618,152) | (1,137,594) | | Outstanding, June 30 (Number) | 2,379,616 | 4,919,247 | | Weighted average exercise price (C$) | 7.07 | 5.32 | 23. (b) Restricted share units ("RSUs") - RSUs typically vest one-third each one, two, and three years after the award date[106] | Metric | Jun 30, 2025 | Jun 30, 2024 | | :----- | :----------- | :----------- | | Outstanding, January 1 (Number) | 821,040 | 580,219 | | Awarded (Number) | 383,066 | 409,014 | | Vested and settled (Number) | (208,738) | (139,200) | | Outstanding, June 30 (Number) | 967,374 | 843,183 | 23. (c) Deferred share units ("DSUs") - DSUs are awarded to directors, vest immediately, and are settled in cash or common shares at the Company's option upon the director's tenure end[109] | Metric | Jun 30, 2025 | Jun 30, 2024 | | :----- | :----------- | :----------- | | Outstanding, January 1 (Number) | 894,903 | 701,927 | | Awarded and vested immediately (Number) | 75,570 | 192,976 | | Settled (Number) | (152,507) | — | | Outstanding, June 30 (Number) | 817,966 | 894,903 | 23. (d) Performance share units ("PSUs") - PSUs cliff vest after three years and are settled in cash, with payment based on share price and performance relative to the S&P/TSX Global Gold Index[111] - The PSU liability totaled $4,300 thousand as of June 30, 2025[113] | Metric | Jun 30, 2025 | Jun 30, 2024 | | :----- | :----------- | :----------- | | Outstanding, January 1 (Number) | 522,876 | 198,737 | | Awarded during the period (Number) | 160,637 | 324,139 | | Outstanding, June 30 (Number) | 683,513 | 522,876 | 23. (e) Bonus shares - 500,000 bonus shares were awarded to the non-executive Chairman, vested on June 18, 2020, and are issuable upon cessation of directorship or change of control[116] 24. RELATED PARTY TRANSACTIONS Related party transactions primarily involve compensation to key management personnel and interest payments on convertible notes to Fairfax Financial Holdings Limited, a significant shareholder 24. (a) Key management personnel | Compensation Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :---------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Salaries and short term incentives | 493 | 414 | 2,769 | 2,260 | | Directors' fees | 147 | 149 | 289 | 300 | | Share based payments | 352 | 297 | 1,296 | 1,329 | | Total | 992 | 860 | 4,354 | 3,889 | 24. (b) Transactions - The Company paid $2,300 thousand in interest on convertible notes to Fairfax Financial Holdings Limited and its subsidiaries during the six months ended June 30, 2025[119] 24. (c) Outstanding balances at the reporting date - Fairfax Financial Holdings Limited subsidiaries held $150,000 thousand in convertible notes as of June 30, 2025[120] - Key management personnel's estimated accrued short-term incentive compensation totaled $900 thousand[120] 25. SUPPLEMENTAL CASH FLOW INFORMATION This section provides additional details on cash, income tax related operating cash flow items, changes in non-cash working capital, and non-cash investing and financing activities 25. (a) Cash - Cash comprises bank current accounts and cash on hand[121] 25. (b) Income taxes related operating cash flow items | Metric | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :----- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Income tax expense | 41,343 | 24,348 | 67,168 | 35,680 | | Income taxes paid | (2,053) | (283) | (35,032) | (14,275) | | Income tax instalments paid | (14,966) | (2,055) | (19,986) | (6,725) | | Tax related cash flow items | 24,324 | 22,010 | 12,150 | 14,680 | 25. (c) Changes in non-cash working capital | Item | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :--- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Accounts receivable and prepaid expenses | (647) | 887 | (3,586) | (125) | | Inventory | (3,024) | (130) | 3,800 | 533 | | Valued added taxes recoverable | (7,241) | (1,257) | (8,412) | 3,837 | | Trade payables and accrued liabilities | 3,053 | (3,689) | 10,574 | (1,995) | | Total | (7,859) | (4,189) | 2,376 | 2,250 | 25. (d) Non-cash investing and financing activities | Activity | Amount (in thousands USD) | | :------- | :------------------------ | | Stock options exercised, credited to share capital | 2,087 | | Warrants exercised, credited to share capital | 426 | | Common shares issued on maturity of RSUs and DSUs, credited to share capital | 1,216 | | Initial recognition of right of use assets | 7,938 | 26. SEGMENT INFORMATION The company's operations are divided into five reportable segments, with the Musselwhite Mine, acquired in February 2025, significantly contributing to external revenue and segment profit for the six months ended June 30, 2025 26. (a) Geographic segments - The Company operates in Canada, Mexico, USA, and Panama, with corporate offices in Canada[125] 26. (b) Reportable segments - The Company now has five operating and reportable segments: Musselwhite Mine, Camino Rojo Mine, Nevada projects, Cerro Quema project, and the corporate office[126] | Segment | External revenue (in thousands USD) | Operating costs (in thousands USD) | Royalties (in thousands USD) | Exploration and evaluation expenses (in thousands USD) | Segment profit (loss) (in thousands USD) | | :------ | :---------------------------------- | :--------------------------------- | :--------------------------- | :----------------------------------------------------- | :--------------------------------------- | | Musselwhite Mine | 133,939 | (91,268) | (4,158) | (419) | 126,328 | | Camino Rojo | 188,039 | (42,583) | (5,587) | (3,367) | 136,502 | | South Carlin Complex | — | — | — | (9,849) | (9,849) | | Cerro Quema | — | — | — | (4,394) | (4,394) | | Corporate | 82,439 | — | — | (262) | (29,760) | | Total | 404,417 | (133,851) | (9,745) | (18,291) | 218,827 | | Asset Type | Canada (in thousands USD) | Mexico (in thousands USD) | USA (in thousands USD) | Panama (in thousands USD) | Corporate (in thousands USD) | Total (in thousands USD) | | :--------- | :------------------------ | :------------------------ | :--------------------- | :---------------------- | :--------------------------- | :----------------------- | | Property, plant and equipment | 1,121,005 | 188,890 | 8,187 | — | 458 | 1,318,540 | | Exploration and evaluation properties | — | — | 171,993 | 10,000 | — | 181,993 | | Total assets | 1,239,626 | 373,864 | 181,579 | 10,769 | 55,447 | 1,861,285 | 27. CAPITAL MANAGEMENT The company's capital management objectives focus on ensuring going concern status, pursuing mineral property activities, and maintaining a flexible capital structure through cash flow management, financing, and low-risk investments 27. (a) Objectives - Objectives are to safeguard the Company's ability to continue as a going concern, pursue mineral property activities, and maintain a flexible capital structure[132] - The Company may issue new shares, take on or repay debt, or acquire/dispose of assets to adjust its capital structure[133] - Long-range strategic objectives depend on generating positive cash flows from mining operations and raising financing[134] 27. (b) Investment policy - Excess cash is invested in low-risk financial instruments such as demand deposits and savings accounts with major Canadian banks[135] 28. FINANCIAL INSTRUMENTS The company classifies its financial instruments into a fair value hierarchy (Level 1, 2, or 3) based on input observability, with derivative assets and liabilities primarily Level 2, and the Credit Facility and Convertible Notes as Level 3 28. (a) Fair value hierarchy - Financial instruments are classified into Level 1 (quoted prices), Level 2 (observable market data), and Level 3 (unobservable inputs) for fair value measurement[136][138] | Item | Classification | Carrying value (in thousands USD) | Level 1 (in thousands USD) | Level 2 (in thousands USD) | Level 3 (in thousands USD) | | :--- | :------------- | :-------------------------------- | :------------------------- | :------------------------- | :------------------------- | | Cash | FVTPL | 215,448 | 215,448 | — | — | | Accounts receivable | FVTPL | 4,215 | 46 | 4,169 | — | | Derivative assets | FVTPL | 29,000 | — | 29,000 | — | | Restricted cash | Amortized cost | 770 | 770 | — | — | | Derivative liabilities | FVTPL | 135,000 | — | 135,000 | — | | Credit facility | Amortized cost | 218,946 | — | — | 220,000 | | Convertible notes | Amortized cost | 168,788 | — | — | 168,788 | - The fair value of the Credit Facility at June 30, 2025, was estimated at $220,000 thousand using a discount rate of 7.4%[140] 29. COMMITMENTS AND CONTINGENCIES The company has commitments for purchase orders and potential severance payments, alongside contingencies related to an ecological tax in Mexico and other ordinary course legal proceedings 29. (a) Commitments - Outstanding purchase orders and contracts totaled approximately $19,500 thousand at June 30, 2025[141] - The Company is committed to $8,700 thousand in severance payments to certain officers and management in the event of a change of control, not reflected in financial statements due to indeterminable likelihood[142] 29. (b) Discretionary mineral property-related commitments - Mineral properties have annual minimum work commitments and lease payments to maintain good standing[142] 29. (c) Contingencies - The Company is appealing assessments for an ecological tax in Zacatecas, Mexico, believing the law does not apply to its operations, and has not accrued any amounts due to the indeterminable outcome[142] - No other pending or threatened litigation is expected to have a material effect on the Company's financial position, results, or cash flows[143] 30. INCOME TAXES Tax expense includes current income tax, Ontario mining tax, Mexican Special Mining Duty (which increased to 8.5% effective January 1, 2025), withholding taxes, and deferred income tax, with total expense increasing significantly for the six months ended June 30, 2025 - Tax expense includes current income tax, Ontario mining tax, Mexican Special Mining Duty, withholding taxes, and deferred income tax[145] - The Mexican Special Mining Duty increased from 7.5% to 8.5% effective January 1, 2025[146] | Tax Type | 3 Months Ended Jun 30, 2025 (in thousands USD) | 3 Months Ended Jun 30, 2024 (in thousands USD) | 6 Months Ended Jun 30, 2025 (in thousands USD) | 6 Months Ended Jun 30, 2024 (in thousands USD) | | :------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Current income tax | 32,447 | 14,240 | 50,446 | 20,134 | | Mexican 8.5% Special Mining Duty | 5,172 | 4,316 | 10,577 | 7,241 | | Ontario Mining Tax | 3,280 | — | 4,371 | — | | Withholding tax | 2,053 | 283 | 3,566 | 610 | | Deferred income tax (recovery) | (951) | 5,159 | (1,569) | 7,344 | | Total Tax Expense | 41,343 | 24,348 | 67,168 | 35,680 | 31. EVENTS AFTER THE REPORTING PERIOD Subsequent to June 30, 2025, the company issued common shares from the exercise of warrants and options, and entered into foreign exchange forward contracts to hedge Canadian dollar exposure 31. (a) Exercise of stock options and warrants - Subsequent to the reporting period, common shares were issued from the exercise of warrants and options[147] 31. (b) Foreign exchange forward contracts - In July 2025, the Company entered into twelve foreign exchange forward contracts for a total notional purchase amount of C$144,000 thousand, maturing monthly from July 2025 through June 2026[148] - The weighted average contracted exchange rate for these forward contracts is 1.3614 Canadian dollars per US dollar[148]