Musselwhite Integration And Zone 22 Exploration Will Unlock Long-Term Value

Key Takeaways

• Diversified revenue streams, rising gold demand, and operational expansion improve long-term stability and earnings potential while reducing risk.
  
• Strong exploration results, efficiency initiatives, and ESG advancements enhance future production, margins, and attractiveness to investors.
  
• Orla Mining faces heightened operational, regulatory, and jurisdictional risks that threaten production reliability, cost control, and future revenue stability amid shifting industry dynamics.

Catalysts

Acquires, explores, develops, and exploits mineral properties.

• Robust production growth and revenue diversification from integrating Musselwhite, as well as future contributions from South Railroad and expanded Camino Rojo underground, are likely underappreciated catalysts that will increase long-term revenue and reduce operational risk.
  
• The ongoing global push for renewable energy and EV adoption, alongside persistent macroeconomic uncertainty, are driving structural demand strength and elevated gold prices, supporting higher realized prices and enhancing Orla's earnings potential.
  
• Active and large-scale exploration programs across Mexico, Canada, and the US-particularly the promising Zone 22 and updated underground resource estimates-point toward significant future reserve growth that could drive long-term production and earnings growth.
  
• Continued focus on operational efficiency, cost containment, and the ramp-up of Musselwhite with targeted AISC improvements positions Orla to expand net margins and free cash flow, especially as operational synergies and scale benefits materialize.
  
• Advancements in ESG practices, stakeholder engagement, and transparent permitting (including expected forthcoming approvals in Mexico and Nevada) position Orla attractively for institutional capital inflows and protect project timelines, bolstering long-term financial stability and valuation.

Orla Mining Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Orla Mining's revenue will grow by 31.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.3% today to 53.3% in 3 years time.
• Analysts expect earnings to reach $721.9 million (and earnings per share of $1.1) by about September 2028, up from $25.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 7.5x on those 2028 earnings, down from 145.7x today. This future PE is lower than the current PE for the CA Metals and Mining industry at 18.0x.
• Analysts expect the number of shares outstanding to grow by 1.32% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.61%, as per the Simply Wall St company report.

Orla Mining Future Earnings Per Share Growth

Risks

• Regulatory and permitting risk remains significant, as Orla Mining's ongoing operations and expansion plans (especially the larger layback and new projects like South Railroad) are heavily dependent on timely government approvals in Mexico and Nevada; delays, tightening environmental compliance, or unexpected permit denials could defer or reduce production, impacting revenue and earnings.
  
• The mining incident at Camino Rojo underscores operational risks tied to complex geotechnical and weather-related challenges; further material movement events, pit wall failures, or environmental disruptions could lead to production shutdowns, elevated remediation costs, or higher strip ratios-eroding net margins and increasing expenses.
  
• Elevated all-in sustaining costs (AISC) guidance and increased reliance on low-grade stockpiles due to mine resequencing signal pressure on Orla's cost structure; persistent cost increases from declining grades, strip ratio changes, or inflation in labor and material inputs may compress net margins and reduce operating cash flow.
  
• Concentration of assets in Mexico and potential regional security risks, labor disputes, and unresolved criminal activity investigations at Camino Rojo expose Orla to jurisdictional instability and reputational threats, any of which could disrupt production and impair revenue stability or require costly interventions.
  
• Long-term industry and secular trends-such as institutional shifts toward digital assets or ESG-driven portfolio reallocation, or growing competition from recycled metals-could weaken demand for newly mined gold, placing downward pressure on realized prices and constraining Orla Mining's long-term revenue growth and earnings.

Valuation

• The analysts have a consensus price target of CA$18.264 for Orla Mining based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$21.9, and the most bearish reporting a price target of just CA$15.03.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $721.9 million, and it would be trading on a PE ratio of 7.5x, assuming you use a discount rate of 6.6%.
• Given the current share price of CA$15.8, the analyst price target of CA$18.26 is 13.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.