Orla Mining announces $75 million bought deal

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Orla Mining Ltd. [OLA-TSX; ORRLF-OTC] said it is raising $75 million from a bought deal financing to fund exploration and development at the company’s Camino Rojo Oxide gold project in Zacatecas, Mexico.

Details of the financing, which were announced after the close of trading on March 26, 2020, come after the company’s said its board of directors has approved the start of construction spending at Camino Rojo.

Orla said it has struck a deal with an underwriting syndicated led by Stifel Nicholaus Canada Inc., which has agreed to purchase on a bought deal basis, 36.6 million shares of Orla at $2.05 per share, raising gross proceeds of $75 million.

On Friday, Orla shares eased 10.4% or 23 cents to $1.97 and now trade in a 52-week range of 86 cents and $2.71.

The Camino Rojo Oxide Gold Project is an advanced gold and silver open-pit heap leach project. The project is 100%-owned by Orla and covers over 200,000 hectares.

Hosting 1.03 million ounces of gold and 20.1 million ounces of silver reserves Camino Rojo will be Orla’s first mine. It is expected to produce 97,000 ounces of gold annually at an all-in-sustaining cost of US$575 an ounce.

Orla acquired the Camino Rojo from Newmont Goldcorp Corp., [NGT-TSX; NEM-NYSE] in November 2017 in return for the issuance of 32 million Orla shares, or 19.9% of the shares outstanding.

To fund development of Camino Rojo, Orla recently entered into a loan agreement with Trinity Capital Partners Corp. and certain other lenders in connection with a previously announced US$125 million project financing facility,

The credit facility was arranged by Trinity Capital and included a syndicate of lenders led by Agnico-Eagle Mines Ltd. [AEM-TSX, NYSE], Pierre Lassonde and Trinity Capital, creating a key alignment between debt and equity holders who will support the company’s development going forward.

Pierre Lassonde is best known for his long association with Franco Nevada Mining Corp. [FNV-TSX, NYSE]. He holds an 11.6% stake in Orla, according to company documents.

In its March 26, 2020 press release, Orla said Newmont and Agnico-Eagle have each indicated that they intend to subscribe for a number shares offered in the bought deal that will allow them to maintain their respective ownership positions, and along with a commitment by Pierre Lassonde.

Orla also said it has agreed to grant the underwriters an over-allotment option to purchase up to an additional 5.5 million common shares at the offering price. That option is exercisable for up to 30 days after closing.

The over-allotment option, if exercised, could add another $11.25 million to the proceeds, raising the total proceeds of the offering to $86.3 million. The offering is scheduled to close by April 3, 2020.

Orla also owns 100% of the Cerro Quema Project in Panama. It includes a near-term gold production scenario and various exploration targets. It will also be developed as a proposed open pit mine and heap leach gold operation.


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