Orla Mining: A Bedrock of Success and Strategy in Mexico

Q: Orla Mining’s story in Mexico is widely regarded as a major success, yet it has faced its share of hurdles. What drives your deep conviction in your Mexican investment, and how are you and your stakeholders navigating the challenges?

A: My conviction is rooted in 14 years of direct experience in the country, which has consistently confirmed two things: Mexico has the right rocks and the right people. Geologically, Mexico is a prolific jurisdiction, much like Canada where our other operations reside. But what is perhaps unique to Mexico is the tremendous in-country capability. We can source everything nationally, from skilled employees to business partners, suppliers, and contractors.

Our Mexican operation is 100% Mexican-run, a fact we are very proud of because the talent is readily available. When you combine strong geological assets with that level of talent, you have the right recipe to do business. Our intent is to grow our investment significantly. We started with what is currently our smallest mine, which has been operating for five years and will continue through the end of the decade, but we are now moving toward much larger projects.

Q: You recently released a Preliminary Economic Assessment (PEA) for an underground project at Camino Rojo. How will this transition change Orla’s long-term profile in Zacatecas?

A: It represents a massive shift. From a production standpoint, it will more than double our output from Mexico. When combined with our production in Canada and the United States, it will push Orla comfortably past the 500,000oz/y mark.

By the end of the decade, we want to transition from an open-pit producer of roughly 100,000oz/y to an underground producer of over 200,000oz/y. This will require significant underground development, which we aim to start this year, as well as the construction of a new processing plant. This move to underground mining and flotation concentrate sales ensures that Mexico remains a fundamental cornerstone of the Orla portfolio through 2050.

Q: Last year, you dealt with a pit wall event at Camino Rojo. How did your safety philosophy hold up during that incident, and what lessons were learned?

A: All these matters are connected. We have been waiting for a permit that would allow us to lay back the north wall of the pit at a shallower, safer angle. While waiting for that permit, we had to steepen that wall, which we knew increased risk. Because of that, we took proactive measures, including installing radar on monitoring the wall with radar.

When a combination of rain and that steepness caused instability, our systems detected it immediately. We moved everyone out of the operation, and as a result, there were no physical injuries or environmental consequences. The reality is that with the permit we have been seeking since November 2024, we can mitigate this risk entirely by flattening that angle.

Q: You have stated you expect to receive that final permit this month. Given the regulatory climate, what gives you such confidence in that timeline?

A: My view is based on extensive dialogue with federal authorities and the commitments they have made. It is essential for all stakeholders that we receive this permit to continue operations through the end of the decade; without it, the mine would eventually have to shut down.

We are not alone in requiring permits, but our case is a "brownfield" expansion of an existing site rather than a "greenfield" startup. We are not trying to short-circuit the diligence of agencies like SEMARNAT. We support a rigorous process, but after years of discussion, we are confident that the net benefit to ordinary Mexicans and our commitment to environmental responsibility will lead to a positive conclusion in March.

Q: Beyond permitting, what technical hurdles remain before you can fully greenlight the underground construction?

A: There are several. If permitted, we will start heading underground this year to collect critical data on ground stability and hydrogeology to inform the final design. We also need to finalize our understanding of concentrate markets and mine design planning. This is a multi-year process of de-risking. We expect to reach a formal construction decision by 2028. Each milestone, from the exploration decline to the pre-feasibility study in 2027, provides a checkpoint for the international investment community and our board.

Q: Zacatecas is a water-stressed region. How has Orla managed to reduce water consumption, and how does that affect your relationship with regulators?

A: In Zacatecas, water scarcity is a critical issue for the population. Our approach with CONAGUA has been to be a responsible partner by minimizing the water our industrial activity requires and maximizing the water available to local citizens. We have helped locate and drill water wells for local communities to ensure they have a clean supply. We have even returned some of our water concessions to the federal agency so they can be redistributed to the public. We believe being sensitive to these community needs shows regulators that we are a partner worth supporting.

Q: How does the "Orla Way" differ from more traditional mining ESG programs?

A: After 30 years in business, I have seen the evolution from basic legal compliance to proactive responsibility. Society only tolerates the delivery of the minerals it needs if we do it responsibly. For us, sustainability is not just about reporting; it is about going into the regions where we operate, listening to the unique needs of those communities, and contributing to their improvement. Whether it is human rights, water, or waste, our business decisions are always filtered through the lens of how we can operate as a better neighbor.

Q: You take great pride in Camino Rojo being run by Mexicans. As you transition to more complex underground mining, how will you address the potential skills gap in your workforce?

A: As industrial activity and commodity prices rise, there is always competition for talent. However, our philosophy is that if you are local to our area, we are committed to training you, regardless of your prior education.

During the transition to more complex underground mining and processing, we may briefly supplement our national workforce with international experts, but only to facilitate training. We will not import a permanent workforce. People create value in this industry, and our success is tied directly to their training, growth, and success.

Q: Looking ahead, Orla is expanding into Canada and the US. Does this mean the company’s "Mexican DNA" will eventually be diluted?

A: Not at all. We started this company in Mexico, and its success is a result of the Mexican people. Mexico will always be a cornerstone of Orla. While I believe in diversification, which is why we have our Canadian assets and are building a third mine in Nevada, Mexico is where our roots are. We are committed to overcoming current challenges and continuing our investment in the country for decades to come.

Orla Mining is a precious metals company focused on gold and silver properties with operations in the United States, Panama, and Mexico. It operates the Camino Rojo mine in Mexico, which has been surpassing production guidance year over year.