Orla Mining's Resilience and Growth Amid Operational Challenges

In the volatile world of gold mining, Orla Mining Ltd. (TSX: OLA; NYSE: ORLA) stands out as a case study in resilience. Despite a recent pit wall event at its Camino Rojo Oxide Mine in Mexico, the company reported a record quarterly gold production of 77,811 ounces in Q2 2025, driven by the full-quarter contribution of its newly acquired Musselwhite Mine in Ontario. This performance underscores Orla's strategic pivot toward operational diversification and exploration-driven growth, positioning it to outperform peers in a high-gold-price environment.

Strategic Diversification: Musselwhite's Game-Changing Impact

The acquisition of Musselwhite in February 2025 has been a masterstroke. In its first full quarter of contribution, the mine produced 52,666 ounces of gold, with a 96.5% recovery rate, far outpacing Camino Rojo's 25,145 ounces. Musselwhite's high-grade ore (5.52 g/t gold) and efficient processing have not only bolstered production but also diversified Orla's geographic and operational risk. While Camino Rojo's recent pit wall event temporarily disrupted operations, Musselwhite's stability ensured the company met its quarterly output targets. This dual-mine strategy creates a buffer against localized disruptions, a critical advantage in an industry prone to geological and logistical challenges.

Exploration-Driven Growth: Unlocking Camino Rojo's Underground Potential

Beyond operational resilience, Orla's exploration efforts at Camino Rojo are unlocking a new chapter of growth. The company's 2025 infill drilling program at Zone 22—a polymetallic extension of the sulphide mineralization—has returned staggering results, including 142.0 g/t gold equivalent over 1.4 meters and 25.9 g/t gold equivalent over 1.2 meters. These high-grade intersections, combined with a 15,000-meter drilling program (later expanded to 20,000 meters), have confirmed the continuity of mineralization in a 500-meter strike length, extending from 700 to 1,300 meters below surface.

The June 2025 initial underground resource estimate revealed 50.1 million tonnes of measured and indicated resources at 2.58 g/t gold equivalent, with inferred resources of 5.6 million tonnes. Zone 22 alone accounts for 7% of the indicated resource and 19% of the inferred resource, yet it remains open at depth and along strike. Orla's plan to construct an exploration drift in 2026 will enable tighter-spaced drilling, accelerating resource upgrades and paving the way for a Preliminary Economic Assessment (PEA) in 2026. This exploration-led approach not only extends the mine's life but also enhances its economic viability through polymetallic recovery (gold, silver, zinc).

Navigating Short-Term Setbacks, Focusing on Long-Term Value

The July 2025 pit wall event at Camino Rojo, while disruptive, is a temporary setback. The company has revised its 2025 production guidance to 265,000–285,000 ounces, a range that still outperforms its 2024 output of 136,748 ounces. Crucially, Musselwhite's integration and the underground resource expansion at Camino Rojo provide a clear path to exceeding these targets in subsequent years. With gold prices trading near $2,300/oz (a 30% premium to 2024 levels), Orla's all-in sustaining costs of $826/oz in Q2 2025 (down from $900/oz guidance) highlight its cost discipline and margin resilience.

Investment Thesis: A Gold Sector Outperformer

Orla's combination of operational diversification, exploration success, and cost efficiency makes it a compelling long-term play. While peers struggle with stagnant production and high capital expenditures, Orla is leveraging its dual-mine model and underground resource potential to drive growth. The company's 2025 exploration budget, which funded the expanded drilling program without diluting shareholders, demonstrates its commitment to organic growth.

For investors, the key risks include short-term production delays at Camino Rojo and permitting challenges for the exploration drift. However, these are outweighed by the upside from Musselwhite's ramp-up and the potential for a 2026 PEA to unlock significant value. With a market cap of ~$3.5 billion (as of August 2025), Orla offers a compelling risk-reward profile, particularly in a sector where exploration-driven growth is rare.

Conclusion: Buy for the Long Haul

Orla Mining's ability to turn operational challenges into opportunities—whether through Musselwhite's integration or Camino Rojo's underground expansion—proves its mettle in a high-gold-price environment. While near-term production may lag, the company's strategic focus on resource growth and operational resilience positions it to outperform peers over the next 12–24 months. For investors seeking exposure to a gold miner with both immediate production and long-term exploration upside, Orla is a buy.