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Orla Mining Ltd. — Interim / Quarterly Report 2024
May 14, 2024
46100_rns_2024-05-14_16335dd4-a40a-412e-96bd-844f5081c413.pdf
Interim / Quarterly Report
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Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
Presented in United States dollars
Condensed Interim Consolidated Balance Sheets (Unaudited - thousands of United States dollars)
ORLA MINING LTD.
| March 31, | December 31, | December 31, | ||
|---|---|---|---|---|
| 2024 | 2023 | |||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 118,067 |
$ | 96,632 |
| Income taxes recoverable | 4,400 | — | ||
| Trade and other receivables | 582 | 379 | ||
| Value added taxes recoverable (note 10) | 10,639 | 15,571 | ||
| Inventory (note 9) | 28,686 | 29,451 | ||
| Prepaid expenses | 3,924 | 3,142 | ||
| 166,298 | 145,175 | |||
| Restricted cash | 1,012 | 1,011 | ||
| Value added taxes recoverable (note 10) | 836 | 826 | ||
| Long term inventory (note 9) | 5,854 | 5,627 | ||
| Property, plant and equipment (note 11) | 211,724 | 211,719 | ||
| Exploration and evaluation properties (note 12) | 170,000 | 170,000 | ||
| Other non-current assets | 1,400 | 1,420 | ||
| TOTAL ASSETS | $ | 557,124 |
$ | 535,778 |
| LIABILITIES | ||||
| Current liabilities | ||||
| Trade payables and accrued liabilities (note 13) | $ | 26,319 |
$ | 20,656 |
| Income taxespayable | 2,980 | 8,002 | ||
| 29,299 | 28,658 | |||
| Lease obligations (note 15) | 1,821 | 1,993 | ||
| Long term debt (note 14) | 88,350 | 88,350 | ||
| Deferred revenue | 8,297 | 8,176 | ||
| Site closure provisions (note 16) | 8,169 | 7,424 | ||
| Other long term liabilities | 617 | 443 | ||
| Deferred tax liabilities | 2,379 | 193 | ||
| TOTAL LIABILITIES | 138,932 | 135,237 | ||
| SHAREHOLDERS' EQUITY | ||||
| Share capital (note 17) | 474,843 | 474,361 | ||
| Reserves | 25,373 | 24,387 | ||
| Accumulated other comprehensive loss | (1,741) | (439) | ||
| Accumulated deficit | (80,283) | (97,768) | ||
| TOTAL SHAREHOLDERS’ EQUITY | 418,192 | 400,541 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 557,124 |
$ | 535,778 |
/s/ Jason Simpson /s/ Elizabeth McGregor
Jason Simpson, Director
Elizabeth McGregor, Director
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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Condensed Interim Consolidated Statements of Income and Comprehensive Income (Unaudited - thousands of United States dollars, except per-share amounts)
ORLA MINING LTD.
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| REVENUE(note 4) | $ 67,278 $ 51,131 |
| COST OF SALES Operating costs (note 5(a)) Depletion and depreciation Royalties (note 5(b)) |
(18,109) (11,792) (8,799) (5,854) (1,668) (1,306) |
| (28,576) (18,952) |
|
| EARNINGS FROM MINING OPERATIONS | 38,702 32,179 |
| GENERAL AND ADMINISTRATIVE EXPENSES(note 7) EXPLORATION AND EVALUATION(note 6) OTHER Interest income Depreciation Share based payments (note 19) Interest and accretion expense (note 8) Foreign exchange and othergains(losses) |
(3,869) (3,265) (4,744) (6,866) 1,405 1,131 (127) (118) (1,419) (1,107) (2,075) (3,247) 944 (802) |
| (1,272) (4,143) |
|
| INCOME BEFORE TAXES Income taxes (note 26) |
28,817 17,905 (11,332) (4,670) |
| INCOME FOR THE PERIOD OTHER COMPREHENSIVE INCOME (LOSS) Items that may in future periods be reclassified to profit or loss: Foreign currencydifferences arisingon translation |
$ 17,485 $ 13,235 (1,302) 61 |
| TOTAL COMPREHENSIVE INCOME | $ 16,183 $ 13,296 |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING(note 18) Basic (millions) Diluted (millions) EARNINGS PER SHARE(note 18) Basic Diluted |
315.1 306.3 327.7 325.6 $ 0.06 $ 0.04 $ 0.05 $ 0.04 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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Condensed Interim Consolidated Statements of Cash Flows (Unaudited - thousands of United States dollars)
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ORLA MINING LTD.
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| OPERATING ACTIVITIES Income for the period Adjustments for: Interest and accretion expense (note 8) Income tax expense Income taxes paid Income tax instalments paid Payment of cash settled RSUs and DSUs Adjustments for items not affecting cash: Depreciation and depletion Share based payments expense (note 19) Unrealized foreign exchange loss (gain) Other |
$ 17,485 $ 13,235 2,075 3,247 11,332 4,670 (13,992) (26,529) (4,670) — — (466) 8,926 5,972 1,419 1,107 (911) (1,803) 47 519 |
| Cash provided by operating activities before changes in non-cash working capital Changes in non-cash workingcapital (note 21(b)) |
21,711 (48) 10,695 (4,874) |
| Cashprovided by(used in) operatingactivities | 32,406 (4,922) |
| INVESTING ACTIVITIES Purchase of plant and equipment Expenditures on mineral properties Deposits and other payments on long term assets Restricted cash and environmental bonding |
(4,622) (1,159) (3,876) (1,589) 20 (128) (2) 2,284 |
| Cash used in investingactivities | (8,480) (592) |
| FINANCING ACTIVITIES Principal repayments of the Revolving Facility and Credit Facility (note 14) Proceeds from exercise of stock options and warrants Interest paid Leasepayments |
— (5,550) 172 2,968 (1,879) (4,294) (240) (162) |
| Cash used in financingactivities | (1,947) (7,038) |
| Effects of exchange rate changes on cash | (544) 83 |
| Net increase in cash Cash, beginningofperiod |
21,435 (12,469) 96,632 96,278 |
| CASH, END OF PERIOD | $ 118,067 $ 83,809 |
| Supplemental cash flow information (note 21) |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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ORLA MINING LTD.
Condensed Interim Consolidated Statements of Changes in Equity (Unaudited - thousands of United States dollars)
| Common shares Number of shares (thousands) Amount 305,809 $ 445,316 61 242 557 1,377 1,465 2,494 55 218 — — — — — — 307,947 $ 449,647 315,074 $ 474,361 162 244 60 238 — — — — — — 315,296 $ 474,843 |
Reserves Share based payments reserve Warrants reserve Total $ 9,897 $ 14,112 $ 24,009 — — — — (148) (148) (755) — (755) (218) — (218) 994 — 994 — — — — — — $ 9,918 $ 13,964 $ 23,882 $ 10,620 $ 13,767 $ 24,387 (72) — (72) (238) — (238) 1,296 — 1,296 — — — — — — $ 11,606 $ 13,767 $ 25,373 |
Accumulated Other Comprehensive Income (loss) $ (1,583) — — — — — — 61 $ (1,522) $ (439) — — — — (1,302) $ (1,741) |
Accumulated deficit $ (70,758) — — — — — 13,235 — $ (57,523) $ (97,768) — — — 17,485 — $ (80,283) |
Total |
|
|---|---|---|---|---|---|
| Balance at January 1, 2023 Shares issued for property payments Warrants exercised (note 17) Options exercised (note 19) RSUs redeemed (note 19) Share based payments (note 19) Income for the period Other comprehensive income |
$ 396,984 242 1,229 1,739 — 994 13,235 61 |
||||
| Balance at March 31, 2023 | $ 414,484 | ||||
| Balance at January 1, 2024 Options exercised (note 19) RSUs redeemed (note 19) Share based payments (note 19) Income for the period Other comprehensive income |
$ 400,541 172 — 1,296 17,485 (1,302) |
||||
| Balance at March 31, 2024 | $ 418,192 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
1. CORPORATE INFORMATION AND NATURE OF OPERATIONS
Orla Mining Ltd. was incorporated in Alberta in 2007 and was continued into British Columbia in 2010 and subsequently into Ontario under the Business Corporations Act (Ontario) in 2014. In 2016, the Company was continued as a federal company under the Canada Business Corporations Act. The “Company”, “Orla”, “we”, and “our” refer to Orla Mining Ltd. and its subsidiaries. The registered office of the Company is located at Suite 1010, 1075 West Georgia Street, Vancouver, Canada.
The Company is engaged in the acquisition, exploration, development, and exploitation of mineral properties, and holds the Camino Rojo gold and silver mine in Zacatecas State, Mexico, the South Railroad and Lewis gold projects in Nevada, USA, and the Cerro Quema gold project in Panama.
These condensed interim consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.
2. BASIS OF PREPARATION
(a) Statement of compliance and basis of presentation
We have prepared these condensed interim consolidated financial statements of the Company in accordance with IAS 34 «Interim Financial Reporting» and do not include all the information required for full annual financial statements.
The preparation of these condensed interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
These condensed interim consolidated financial statements are presented in United States dollars and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated upon consolidation.
On May 14, 2024, the Board of Directors approved these condensed interim consolidated financial statements for issuance.
3. MATERIAL ACCOUNTING POLICY INFORMATION
These condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as at and for the years ended December 31, 2023 and 2022.
We applied the same accounting policies in these condensed interim consolidated financial statements as those applied in the Company’s audited consolidated financial statements as at and for the year ended December 31, 2023. In
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
preparing these condensed interim consolidated financial statements, the significant judgements we made in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements as at and for the year ended December 31, 2023.
4. REVENUE
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Gold Silver |
$ 65,968 $ 50,707 1,310 424 |
| Revenue | $ 67,278 $ 51,131 |
| Customer A Customer B Customer C Others |
$ 4,661 $ 11,788 21,215 36,594 37,024 — 4,378 2,749 |
| Revenue | $ 67,278 $ 51,131 |
5. COST OF SALES
(a) Operating costs
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Mining and processing costs Refiningand transportation costs |
$ 17,759 $ 11,623 350 169 |
| $ 18,109 $ 11,792 |
(b) Royalties
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Camino Rojo Oxide 2% NSR royalty Mexican 0.5% ExtraordinaryMiningDuty |
$ 1,332 $ 1,009 336 297 |
| $ 1,668 $ 1,306 |
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
6. EXPLORATION AND EVALUATION EXPENSES
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Camino Rojo South Railroad Cerro Quema Other |
$ 1,682 $ 1,687 2,089 2,418 871 2,644 102 117 |
| $ 4,744 $ 6,866 |
7. GENERAL AND ADMINISTRATIVE EXPENSES
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Office and administrative Professional fees Regulatory and transfer agent Salaries and benefits |
$ 831 $ 710 787 397 277 286 1,974 1,872 |
| $ 3,869 $ 3,265 |
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
8. INTEREST AND ACCRETION EXPENSE
| Three months ended March 31 2024 2023 |
|
|---|---|
| Interest expense (note 8(a)) Accretion expense(note 8(b)) |
$ 1,836 $ 2,648 239 599 |
| Interest and accretion expense | $ 2,075 $ 3,247 |
(a) Interest expense
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Revolving Facility (note 14) Interest expense on lease liabilities (note 15) Credit Facility (note 14) Fresnillo obligation Other |
$ 1,698 $ — 35 41 — 2,268 — 285 103 54 |
| $ 1,836 $ 2,648 |
(b) Accretion expense
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Accretion of site closure provisions (note 16) Deferred revenue Credit Facility (note 14) |
$ 117 $ 144 122 309 — 146 |
| $ 239 $ 599 |
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
9. INVENTORY
| March 31, | December 31, | December 31, | ||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Current | ||||
| Stockpiled ore | $ | 1,002 | $ | 913 |
| In-process inventory | 18,886 | 20,509 | ||
| Finished goods inventory | 5,167 | 4,041 | ||
| Materials and supplies | 3,631 | 3,988 | ||
| Inventory– current | $ | 28,686 | $ | 29,451 |
| Long term | ||||
| Stockpiled lowgrade ore | $ | 5,854 | $ | 5,627 |
Long term inventory consists of stockpiled ore that is not expected to be processed within 12 months.
Movements in inventory are as follows:
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| At January 1 Additions to inventory during the period Expensed to cost of sales duringtheperiod |
$ 35,078 $ 26,542 26,020 20,620 (26,558) (17,477) |
| At March 31 | $ 34,540 $ 29,685 |
Included within inventory at March 31, 2024 is $9.4 million of depreciation and depletion (December 31, 2023 — $9.2 million).
10. VALUE ADDED TAXES RECOVERABLE
| March 31, | December 31, | December 31, | ||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Current portion | $ | 10,639 | $ | 15,571 |
| Longtermportion | 836 | 826 | ||
| $ | 11,475 | $ | 16,397 |
Value added taxes (“VAT”) paid in Mexico are fully recoverable. However, VAT recovery returns in Mexico are subject to complex filing requirements and detailed audit or review by the fiscal authorities. Consequently, the timing of receipt of refunds is uncertain. We have used judgement in classifying the current and non-current portions of our Mexican VAT receivables. Factors that we considered include (i) the regularity of payments received, (ii) discussions with and communications from the Mexican tax authorities with respect to specific claims, and (iii) the expected length of time for refunds in accordance with Mexico’s regulations.
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
At March 31, 2024, approximately 13.9 million Mexican pesos ($0.8 million) (December 31, 2023 — $0.8 million) were under dispute with the taxation authorities. This amount is included within long-term value-added taxes recoverable.
Subsequent to the quarter end, the Company received a Mexican VAT refund in respect of the $4.2 million VAT paid in 2017 upon the acquisition of Camino Rojo. The amount received of $8.3 million includes interest and inflation on the original submitted amount.
11. PROPERTY, PLANT AND EQUIPMENT
| Producing | Producing | Machinery | Machinery | Other right | Other right | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| mineral | and | Other | of use | Construction | |||||||||
| property | Buildings | equipment | assets | assets | inprogress | Total | |||||||
| Cost | |||||||||||||
| At January 1, 2023 | 115,753 | 72,008 | 52,345 | 2,620 | 4,160 | — | 246,886 | ||||||
| Additions | 12,705 | 141 | 2,305 | 823 | 484 | 4,881 | 21,339 | ||||||
| Change in site closure provision (note 16) | (559) | (927) | (593) | — | — | — | (2,079) | ||||||
| Disposals | — | — | (5) | — | — | — | (5) | ||||||
| Derecognition | — | — | — | — | (117) | — | (117) | ||||||
| Due to changes in exchange rates | — | — | — | 7 | 22 | — | 29 | ||||||
| At December 31, 2023 | $ | 127,899 | $ | 71,222 | $ | 54,052 | $ | 3,450 | $ | 4,549 | $ | 4,881 |
$ 266,053 |
| Additions | 3,876 | 36 | 31 | 37 | — | 4,516 | 8,496 | ||||||
| Change in site closure provision (note 16) | 581 | — | — | — | — | — | 581 | ||||||
| Disposals | — | — | (253) | (145) | — | — | (398) | ||||||
| Due to changes in exchange rates | — | — | — | (7) | (22) | — | (29) | ||||||
| At March 31, 2024 | $ | 132,356 | $ | 71,258 | $ | 53,830 | $ | 3,335 | $ | 4,527 | $ | 9,397 |
$ 274,703 |
| Accumulated depreciation | |||||||||||||
| At January 1, 2023 | $ | 9,641 |
$ | 6,286 |
$ | 4,891 | $ | 705 | $ | 947 | $ | — |
$ 22,470 |
| Disposals | — | — | (5) | — | — | — | (5) | ||||||
| Depletion and depreciation | 13,844 | 9,610 | 6,789 | 563 | 1,115 | — | 31,921 | ||||||
| Derecognition | — | — | — | — | (52) | — | (52) | ||||||
| At December 31, 2023 | $ | 23,485 | $ | 15,896 | $ | 11,675 | $ | 1,268 | $ | 2,010 | $ | — |
$ 54,334 |
| Disposals | — | — | (253) | (145) | — | — | (398) | ||||||
| Depletion and depreciation | 4,427 | 2,398 | 1,801 | 162 | 255 | — | 9,043 | ||||||
| At March 31, 2024 | $ | 27,912 | $ | 18,294 | $ | 13,223 | $ | 1,285 | $ | 2,265 | $ | — |
$ 62,979 |
| Net book value | |||||||||||||
| At December 31, 2023 | $ | 104,414 | $ | 55,326 | $ | 42,377 | $ | 2,182 | $ | 2,539 | $ | 4,881 |
$ 211,719 |
| At March 31, 2024 | $ | 104,444 | $ | 52,964 | $ | 40,607 | $ | 2,050 | $ | 2,262 | $ | 9,397 |
$ 211,724 |
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
12. EXPLORATION AND EVALUATION PROPERTIES
Our exploration and evaluation properties consist of the South Railroad Project in Nevada, United States and the Cerro Quema Project in Panama).
| South | Railroad | Cerro | Quema | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| At December | 31, | 2023 | and March | 31, | 2024 | $ | 160,000 | $ | 10,000 | $ | 170,000 |
13. TRADE PAYABLES AND ACCRUED LIABILITIES
| March 31, | December 31, | December 31, | ||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Trade payables | $ | 5,904 | $ | 5,739 |
| Royalties payable (note 5(b)) | 2,909 | 2,466 | ||
| Goods or services received awaiting vendor invoices | 7,769 | 4,054 | ||
| Payroll related | 8,120 | 6,532 | ||
| Current portion of lease obligations (note 15) | 847 | 915 | ||
| Accrued interest payable (notes 14) | — | 59 | ||
| Other | 770 | 891 | ||
| $ | 26,319 | $ | 20,656 |
14. LONG TERM DEBT
| Revolving | ||
|---|---|---|
| facility | ||
| At January 1, 2023 | $ | — |
| Converted from Credit Facility to Revolving Facility (note (a)) | 113,350 | |
| Principal repayments duringtheperiod | (25,000) | |
| At December 31, 2023 | $ | 88,350 |
| At March 31, 2024 | $ | 88,350 |
In April 2022, the Company entered into a credit facility (the “Credit Facility”) consisting of a $100 million term facility and a $50 million revolving facility through a syndicate of lenders. In August 2023, the term facility was extinguished in its entirety and the amounts due thereunder were transferred to a new $150 million revolving facility (the “Revolving Facility”).
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
The Revolving Facility has a four-year term maturing on August 28, 2027, with an option to increase this facility to $200 million, subject to certain conditions.
The applicable interest rate for the Revolving Facility is based on the term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin ranging from 2.50% to 3.75% based on the Company’s leverage ratio at the end of each fiscal quarter. During the quarter ended March 31, 2024, the average interest rate paid on the Revolving Facility was 7.9% per annum (three months ended March 31, 2023 – not applicable).
A standby fee is payable on the undrawn portion of the Revolving Facility. The standby fee is charged at 0.56% to 0.84% depending on the leverage ratio. At March 31, 2024, the undrawn amount was $61.6 million.
We may prepay all or any portion of the amounts owed under the Revolving Facility without penalty.
The Revolving Facility is secured by the Company’s present and future assets, property and all proceeds thereof, other than present and future assets owned by Minera Cerro Quema which is excluded from the collateral. The Company is prohibited from declaring, paying or setting aside for payment any dividends unless certain financial covenants and ratios are met.
The Revolving Facility includes covenants customary for a facility of this nature, including compliance with customary restrictive covenants, and the following financial covenants all as defined in the related agreements:
-
maintaining a leverage ratio at less than or equal to 3.50,
-
an interest service coverage ratio at greater than or equal to 4,
-
a tangible net worth greater than or equal to $278.6 million, and
-
minimum liquidity in an amount greater than or equal to $15 million.
As at March 31, 2024, the Company was in compliance with all covenants.
Subsequent to the reporting period, the Company made a principal repayment of $10 million on the Revolving Facility.
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
15. LEASE OBLIGATIONS
The Company has lease contracts for mining equipment, vehicles and buildings. Leases of mining equipment have lease terms of five years, while vehicles and buildings generally have lease terms between three and five years.
(a) Lease obligations
| March 31, | December 31, | December 31, | ||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Beginning of year | $ | 2,908 | $ | 3,173 |
| Additions | — | 484 | ||
| Interest expense (note 8(a)) | 35 | 156 | ||
| Lease payments | (275) | (1,125) | ||
| Due to changes in exchange rates | — | 220 | ||
| End ofperiod | $ | 2,668 | $ | 2,908 |
| Current (note 13) | $ | 847 | $ | 915 |
| Non-current | 1,821 | 1,993 | ||
| $ | 2,668 | $ | 2,908 |
(b) Lease expenses recognized
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Interest on lease liabilities Variable lease payments not included in the measurement of lease liabilities Expenses relating to short-term leases Expenses relatingto leases of low-value assets, excludingshort-term leases |
$ 35 $ 41 3,045 3,403 88 69 18 33 |
| $ 3,186 $ 3,546 |
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
16. SITE CLOSURE PROVISIONS
| Cerro | |||||
|---|---|---|---|---|---|
| Camino | Nevada | Quema | |||
| Rojo | projects | Project | Total | ||
| At December 31, 2022 | $ 6,301 | $ 1,617 | $ | 343 |
$ 8,261 |
| Changes in cost estimates | (1,996) | 463 | 157 | (1,376) | |
| Accretion duringtheperiod(note 8(b)) | 521 | 18 | — | 539 | |
| At December 31, 2023 | $ 4,826 | $ 2,098 | $ | 500 |
$ 7,424 |
| Changes in cost estimates | 581 | 47 | — | 628 | |
| Accretion duringtheperiod(note 8(b)) | 112 | 5 | — | 117 | |
| At March 31, 2024 | $ 5,519 | $ 2,150 | $ | 500 |
$ 8,169 |
| March | 31, 2024 | December 31, 2023 | December 31, 2023 | |||
|---|---|---|---|---|---|---|
| Cerro | Cerro | |||||
| Nevada | Quema | Nevada | Quema | |||
| Camino Rojo | projects | Project | Camino Rojo | projects | Project | |
| Estimated settlement dates | 2033 to 2047 | 2034 | 2033 to 2047 | 2034 | ||
| Undiscounted risk-adjusted cash flows | $ 10,071 | $ 2,421 | $ 500 | $ 9,765 | $ 2,336 | $ 500 |
| Inflation rate | 4.0% | 2.6% | — | 3.7% | 2.6% | — |
| Discount rate | 9.5% | 3.6% | — | 9.8% | 3.6% | — |
17. SHARE CAPITAL
(a) Authorized share capital
The Company’s authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.
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ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
(b) Warrants
The following summarizes information about the warrants outstanding during the period.
| Exercise | December 31, | ||||||
|---|---|---|---|---|---|---|---|
| Expirydate | price | 2023 | Exercised | Expired | March 31, 2024 | ||
| December 18, 2026 | C$ 3.00 | 28,253,200 | — | — | 28,253,200 |
||
| Weighted average exerciseprice | C$ 3.00 | C$ | 3.00 | C$ | — | C$ 3.00 |
Subsequent to the reporting period, the Company issued 300,000 common shares for proceeds of $0.7 million pursuant to the exercise of warrants.
18. EARNINGS PER SHARE
Earnings per share has been calculated using the weighted average number of common shares outstanding for the three months ended March 31, 2024 and 2023 as follows:
(a) Basic
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Income for the period Weighted average number of common shares(thousands) |
$ 17,485 $ 13,235 315,088 306,305 |
| Basic earningsper share | $ 0.06 $ 0.04 |
Page 16
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
(b) Diluted
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Income for theperiod | $ 17,485 $ 13,235 |
| Weighted average number of common shares (thousands) Dilutive potential ordinary shares Warrants Options RSUs DSUs Bonus shares |
315,088 306,305 10,033 14,076 964 3,842 396 357 706 565 500 500 |
| Weighted average number of ordinary shares | 327,687 325,645 |
| Diluted earningsper share | $ 0.05 $ 0.04 |
19. SHARE-BASED PAYMENTS
The Company has five different forms of share-based payments for eligible recipients – stock options, restricted share units (“RSUs”), deferred share units (“DSUs”), performance share units (“PSUs”), and bonus shares. The bonus shares have fully vested but have not yet been issued.
| Share-based payments expense | Three months ended March 31 |
|---|---|
| 2024 2023 |
|
| Stock options (note 19(a)) Restricted share units (note 19(b)) Deferred share units (note 19(c)) Performance share units(note 19(d)) |
$ 283 $ 356 281 276 731 475 124 — |
| Share basedpayments expense | $ 1,419 $ 1,107 |
(a) Stock options
Stock options granted by the Company have a five-year life, with one third each vesting one, two, and three years after grant date.
Page 17
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
| Stock options outstanding | Three months ended March 31 |
|---|---|
| 2024 2023 |
|
| Number Weighted average exercise price Number Weighted average exercise price |
|
| Outstanding, January 1 Granted Exercised Expired, forfeited or cancelled |
5,523,297 C$ 4.93 9,178,889 C$ 3.71 651,955 5.13 445,988 6.58 (162,318) 1.44 (1,464,553) 1.61 (115,594) 14.19 (162,270) 17.02 |
| Outstanding, March 31 | 5,897,340 C$ 4.86 7,998,054 C$ 3.98 |
| Vested, March 31 | 4,487,154 C$ 4.66 6,601,044 C$ 3.60 |
The stock options granted during the three months ended March 31, 2024 had a grant date fair value of C$1.6 million ($1.2 million) using the Black Scholes option pricing model with the following weighted average assumptions:
- Share price at grant date – C$5.13, expected volatility 50%, expected life - 5 years, risk free interest rate 3.5% and expected dividends – nil.
Subsequent to the reporting period, 367,168 stock options were exercised, for gross proceeds to the Company of $0.3 million.
(b) Restricted share units (“RSUs”)
RSUs awarded by the Company typically vest one-third each one, two, and three years after award date.
| Number of RSUs outstanding: | Three months ended March 31 |
|---|---|
| 2024 2023 |
|
| Outstanding, January 1 Awarded Vested and settled |
580,219 443,267 409,014 283,032 (59,660) (149,651) |
| Outstanding, March 31 | 929,573 576,648 |
| Number of RSUs outstanding: Total Outstanding, March 31, 2023 576,648 Outstanding, March 31, 2024 929,573 |
Number vestingin theyear |
|---|---|
2023 2024 2025 2026 2027 |
|
2,552 331,679 148,061 94,356 — |
|
— 79,539 480,993 232,714 136,327 |
Restricted Share Units (“RSUs”) are valued based on the closing price of the Company’s common shares on the trading day immediately prior to award. As at March 31, 2024, all RSU’s outstanding were accounted for as equity-settled.
Page 18
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
During the three months ended March 31, 2024, there were no RSUs settled in cash (three months ended March 31, 2023 — 94,063 RSUs settled in cash for $0.5 million).
(c) Deferred share units (“DSUs”)
DSUs are awarded by the Company to directors. These DSUs vest immediately but are not settled until the end of the director’s tenure. They may be settled in cash or common shares at the option of the Company. DSUs are valued using the closing price of the Company’s common shares immediately prior to award.
| Number of DSUs outstanding: | Three months ended March 31 |
|---|---|
| 2024 2023 |
|
| Outstanding, January 1 Awarded and vested immediately |
701,927 559,725 192,976 98,781 |
| Outstanding, March 31 | 894,903 658,506 |
| Vested, March 31 | 894,903 658,506 |
(d) Performance share units (“PSUs”)
In March 2023, the Board of Directors approved a PSU plan for certain officers of the Company. The PSUs cliff vest after three years and are settled in cash. The cash payment upon vesting will be based on the number of PSUs, multiplied by the five-day volume weighted average price of the Company’s shares upon vesting, which is then multiplied by a “performance percentage”. The performance percentage ranges from 0% to 200% based on the Company’s total shareholder return compared to a peer group, consisting of the constituents of the S&P/TSX Global Gold Index.
We recognize share-based compensation expense related to these PSUs over the vesting period. We adjust the amount recognized at each reporting period to reflect changes in quoted market values of the Company and the peer group, the lapsed portion of the vesting period, the number of PSUs expected to vest, and the expected performance percentage.
On March 30, 2024, the Company issued a total of 324,139 PSUs. To March 31, 2023, no share based compensation was recognized in respect of these PSUs as the amount was negligible.
| Number of PSUs outstanding: | Three months ended March 31 |
|---|---|
| 2024 2023 |
|
| Outstanding, January 1 Granted duringtheperiod |
198,737 — 324,139 198,737 |
| Outstanding, March 31 | 522,876 198,737 |
| Vested, March 31 | — — |
(e) Bonus shares
‐ During 2017, the Board of Directors awarded 500,000 common shares to the non executive Chairman of the Company as bonus shares. The bonus shares were subject to a vesting period from June 19, 2017, to June 18, 2020 (the “Eligibility
Page 19
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
Period”). Although the bonus shares have vested, they will become issuable (1) when the non ‐ executive Chairman ceases to act as a director of the Company, or (2) upon a change of control of the Company.
20. RELATED PARTY TRANSACTIONS
The Company’s related parties include:
Related party Nature of the relationship
Key management personnel
Key management personnel are the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Chief Sustainability Officer, the Senior Vice President Exploration, and members of the Board of Directors of the Company.
(a) Key management personnel
Compensation to key management personnel was as follows:
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Salaries and short term incentives Directors’ fees Share basedpayments |
$ 1,846 $ 2,284 151 83 1,032 923 |
| $ 3,029 $ 3,290 |
(b) Transactions
The Company had no other material transactions with related parties other than key management personnel during the three months ended March 31, 2024, and 2023.
(c) Outstanding balances at the reporting date
At March 31, 2024, estimated accrued short term incentive compensation totaled $1.8 million and is included in accrued liabilities (December 31, 2023 – $1.4 million).
21. SUPPLEMENTAL CASH FLOW INFORMATION
(a) Cash and cash equivalents
Cash and cash equivalents consists of bank current accounts and cash on hand.
Page 20
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
(b) Changes in non-cash working capital
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Accounts receivable and prepaid expenses Inventory Valued added taxes recoverable Tradepayables and accrued liabilities |
$ (1,012) $ (855) 663 (2,416) 5,094 1,283 5,950 (2,886) |
| Changes in non-cash workingcapital | $ 10,695 $ (4,874) |
(c) Non-cash investing and financing activities
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Financing activities Stock options exercised, credited to share capital with an offset to reserves Warrants exercised, credited to share capital with an offset to reserves Common shares issued on maturity of RSUs, credited to share capital with an offset to reserves Investing activities Marketable securities adjustment included in account receivable |
$ 72 $ 755 — 148 238 218 — 4 |
Marketable securities adjustment included in account receivable
22. SEGMENT INFORMATION
(a) Reportable segments
The operating and reportable segments of the Company are based on the reports which are reviewed by the chief operating decision maker (“CODM”) in making strategic resource allocation decisions. These operating segments are (1) the Camino Rojo Mine, (2) the Cerro Quema project, (3) the Nevada projects and (4) the corporate office. The operating segments other than corporate office are each managed by a dedicated General Manager and management team. The corporate office oversees the plans and activities of early-stage exploration projects.
Page 21
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
(b) Geographic segments
We conduct our activities in four geographic areas: Mexico, Panama, Nevada USA, and Canada (Corporate).
(i) Income (loss) for the period by segment
| Three months ended March 31, 2024 | Mexico | Panama | Panama | Nevada | Nevada | Corporate | Corporate | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue (note 4) | $ | 67,278 |
$ | — | $ | — | $ | — $ | 67,278 |
| Cost of sales | (28,576) | — | — | — | (28,576) | ||||
| Earnings from mining operations | 38,702 | — | — | — | 38,702 | ||||
| General and administrative expenses (note 7) | — | (58) | — | (3,811) | (3,869) | ||||
| Exploration and evaluation expenses (note 6) | (1,682) | (871) | (2,089) | (102) | (4,744) | ||||
| Interest income | 1,081 | — | — | 324 | 1,405 | ||||
| Depreciation | (24) | — | (37) | (66) | (127) | ||||
| Share based payments (note 19) | (30) | (22) | (66) | (1,301) | (1,419) | ||||
| Interest and accretion expense | (122) | — | (151) | (1,802) | (2,075) | ||||
| Foreign exchange and other gain (loss) | 16 | — | — | 928 | 944 | ||||
| Income taxes | (11,005) | — | — | (327) | (11,332) | ||||
| Income(loss)for theperiod | $ | 26,936 |
$ | (951) | $ | (2,343) | $ | (6,157)$ | 17,485 |
| Three months ended March 31, 2023 | Mexico | Panama | Panama | Nevada | Nevada | Corporate | Corporate | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue (note 4) | $ | 50,939 |
$ | — | $ | — | $ | 192 $ | 51,131 |
| Cost of sales | (18,873) | — | — | (79) | (18,952) | ||||
| Earnings from mining operations | 32,066 | — | — | 113 | 32,179 | ||||
| General and administrative expenses (note 7) | — | — | — | (3,265) | (3,265) | ||||
| Exploration and evaluation expenses (note 6) | (1,675) | (2,654) | (2,418) | (119) | (6,866) | ||||
| Interest income | 930 | — | — | 201 | 1,131 | ||||
| Depreciation | (14) | (4) | (31) | (69) | (118) | ||||
| Share based payments (note 19) | (41) | (18) | (47) | (1,001) | (1,107) | ||||
| Interest and accretion expense | (441) | — | (338) | (2,468) | (3,247) | ||||
| Foreign exchange and other gain (loss) | (705) | — | — | (97) | (802) | ||||
| Income taxes | (4,239) | — | — | (431) | (4,670) | ||||
| Income(loss)for theperiod | $ | 25,881 |
$ | (2,676) | $ | (2,834) | $ | (7,136)$ | 13,235 |
Page 22
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
(ii) Assets by segment
| At March 31, 2024 | Mexico | Panama | Panama | Nevada | Corporate | Corporate | Total | |
|---|---|---|---|---|---|---|---|---|
| Property, plant and equipment | $ 210,460 | $ | — | $ | 491 |
$ | 773 | $ 211,724 |
| Exploration and evaluation properties | — | 10,000 | 160,000 | — | 170,000 | |||
| Total assets | 359,353 | 11,079 | 160,684 | 26,008 | 557,124 |
| At December 31, 2023 | Mexico | Panama | Panama | Nevada | Corporate | Corporate | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Property, plant and equipment | $ 210,339 | $ | — | $ | 525 |
$ | 855 | $ | 211,719 |
| Exploration and evaluation properties | — | 10,000 | 160,000 | — | 170,000 | ||||
| Total assets | 336,374 | 10,673 | 161,137 | 27,594 | 535,778 |
23. CAPITAL MANAGEMENT
(a) Objectives
Our objectives when managing capital are to safeguard the Company’s ability to continue as a going concern to pursue the exploration, evaluation, development, and exploitation of our mineral properties and to maintain a flexible capital structure.
We manage our capital structure and adjust it considering changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the Company’s capital structure, we may issue new shares, take on additional debt or repay outstanding debt, or acquire or dispose of assets. We currently do not pay regular dividends.
Our ability to carry out our long-range strategic objectives in future periods depends on our ability to generate positive cash flows from our mining operations and to raise financing from lenders, shareholders, and new investors. We regularly review and consider financing alternatives to fund the Company’s ongoing operational, exploration and development activities.
(b) Investment policy
Our investment policy is to invest the Company’s excess cash in low-risk financial instruments such as demand deposits and savings accounts with major Canadian banks. By using this strategy, the Company preserves its cash resources and can marginally increase these resources with low risk through the yields on these investments. Our financial instruments are exposed to certain financial risks, which include currency risk, credit risk, and liquidity risk.
Page 23
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
24. FINANCIAL INSTRUMENTS
- (a) Fair value hierarchy
To provide an indication of the reliability of the inputs used in determining fair value, we classify our financial instruments into the three levels prescribed by the accounting standards.
-
Level 1 The fair value of financial instruments traded in active markets (such as publicly traded equity securities) is based on quoted (unadjusted) market prices as at the reporting date. The quoted market price used for financial assets held by the Company is the closing trading price on the reporting date. Such instruments are included in Level 1.
-
Level 2 The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, we include that instrument in Level 2.
-
Level 3 If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The carrying value of cash and cash equivalents, trade and other receivables, restricted cash, trade payables and accrued liabilities approximates the fair value due to the short-term nature of the instruments.
The fair value of the Revolving Facility is determined using discounted cash flows based on the expected amounts and timing of the cash flows discounted using a market rate of interest adjusted for appropriate credit risk.
The fair value of the Revolving Facility at March 31, 2024 and December 31, 2023 was estimated at $88.4 million using a discount rate of 7.9%.
At March 31, 2024, the carrying values and fair values of our financial instruments by category were as follows:
| Classification Carrying value |
Fair value |
|---|---|
| Level 1 Level 2 Level 3 |
|
| Financial assets Cash and cash equivalents FVTPL $ 118,067 Accounts receivable Amortized cost 18 Restricted cash Amortized cost 1,012 |
$ 118,067 $ — $ — 18 — — 1,012 — — |
| $ 119,097 | $ 119,097 $ — $ — |
| Financial liabilities Accrued liabilities Amortized cost 243 Lease obligation Amortized cost 2,668 RevolvingFacility Amortized cost 88,350 |
243 — — — 2,668 — — — 88,350 |
| $ 91,261 | $ 243 $ 2,668 $ 88,350 |
Page 24
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
At December 31, 2023, the carrying values and fair values of our financial instruments by category were as follows:
| Fair value | |
|---|---|
| Level 1 Level 2 Level 3 |
|
| Financial assets Cash and cash equivalents FVTPL $ 96,632 Accounts receivable Amortized cost 18 Restricted cash Amortized cost 1,011 |
$ 96,632 $ — $ — 18 — — 1,011 — — |
| $ 97,661 | $ 97,661 $ — $ — |
| Financial liabilities Accrued liabilities Amortized cost 122 Lease obligation Amortized cost 2,908 RevolvingFacility Amortized cost 88,350 |
122 — — — 2,908 — — — 88,350 |
| $ 91,380 | $ 122 $ 2,908 $ 88,350 |
We determine whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.
25. COMMITMENTS AND CONTINGENCIES
(a) Commitments
The Company has issued purchase orders for construction, equipment purchases, materials and supplies, and other services at Camino Rojo. At March 31, 2024, these outstanding purchase orders and contracts totaled approximately $7.2 million (December 31, 2023 – $3.7 million), which we expect will be filled within the next 12 months.
The Company is committed to making severance payments totaling approximately $6.1 million (December 31, 2023 – $7.4 million) to certain officers and management in the event of a change in control. As the likelihood of these events occurring is not determinable, this amount is not reflected in these consolidated financial statements.
(b) Discretionary mineral property-related commitments
As is customary in mineral exploration, some of the mineral properties held by the Company as exploration and evaluation assets have annual minimum work commitments and lease payments required to maintain these properties in good standing pursuant to their underlying agreements.
(c) Contingencies
An ecological tax implemented by the state legislature of Zacatecas could have a significant impact on the economics of the Camino Rojo Project. This tax is applied to cubic metres of material extracted during mining, square metres of material impacted by dangerous substances, tonnes of carbon dioxide produced during mining processes, and tonnes of waste stored in landfills. The Company has received assessments in respect of this tax; however, the Company’s view is that the sections of the law pursuant to which these assessments have been issued do not apply to the Company at
Page 25
ORLA MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023
(United States dollars, unless otherwise stated. All currency figures in tables are in thousands, except per-share amounts)
this time and, accordingly, we have filed the appropriate appeals. We expect this matter will be resolved by judicial process. As the outcome of these events is not determinable, no amounts have been accrued in respect of this tax.
We may, from time to time, be a party to legal proceedings, which arise in the ordinary course of our business. We are not aware of any pending or threatened litigation that, if resolved against us, would have a material effect on our consolidated financial position, results of operations or cash flows.
26. INCOME TAXES
Tax expense consists of (i) current income tax on taxable income, (ii) 7.5% special mining duty ("SMD") on income subject to SMD, and (iii) withholding taxes attributable to interest charged on intercompany loans to the Mexican operating company, as well as (iv) deferred income tax, and (v) deferred special mining duty.
| Three months ended March 31 | |
|---|---|
| 2024 2023 |
|
| Current income tax expense Mexican 7.5% Special Mining Duty expense Withholding tax expense Deferred income tax expense (recovery) Deferred Mexican 7.5% Special MiningDutyexpense(recovery) |
$ 5,894 $ 6,445 2,925 2,714 327 431 2,185 (4,187) 1 (733) |
| Tax expense | $ 11,332 $ 4,670 |
27. EVENTS AFTER THE REPORTING PERIOD
(a) Revolving Facility Principal Repayment
Subsequent to the reporting period, the Company repaid $10 million of principal on the Revolving Facility (note 14).
(b) Acquisition of Contact Gold Corp.
Subsequent to the reporting period, on April 29, 2024, the Company completed the acquisition of Contact Gold Corp.
(“Contact”).
The Company acquired all of the issued and outstanding Contact common shares and Contact became a wholly-owned subsidiary of the Company. The Company issued approximately 2.2 million common shares to effect the acquisition.
Page 26