Musselwhite Mine in northwestern Ontario finally has a new owner.
Denver-based Newmont is selling Musselwhite to Vancouver’s Orla Mining for up to US$850 million in total consideration.
Newmont receives cash consideration of $810 million when the deal will be finalized in the first quarter of 2025 and up to US$40 million in contingent payments based on the average spot gold price following the two years after the transaction is closed.
The fly-in, fly-out underground operation is roughly 500 kilometres north of Thunder Bay.
The much-anticipated news stems from Newmont’s strategy announced in February to divest certain non-core assets, including Musselwhite and Porcupine mines in Timmins, in order to chase opportunity in British Columbia’s Golden Triangle.
There’s been no news on new ownership for Timmins.
Newmont said it has definitive agreements in place to divest other assets in Australia and Ghana. Once these sales will be concluded in early 2025, the gross proceeds of these transactions expected to be in the range of $2.9 billion, the company said.
In a news release, Orla is calling this transaction a “strategic entry” into Canada in acquiring a mine with plenty of upside for growth through exploration.
Orla said this move will double its current production to more than 300,000 ounces a year by picking up a second mining asset. The company operates the Camino Rojo Mine in Mexico and has its South Railroad Mine Project in Nevada at the feasibility stage.
In a news release, Orla said there will be no job losses at Musselwhite. The existing team will continue to run the operation. The company said it’s committed to safety and ensuring “Musselwhite remains one of the best gold mines in Canada for years to come.”
Investment in Musselwhite is on the horizon, Orla said, and the plan is to grow the mine’s reserves and resources to extend its mining longevity. The company said it’s committed to working with area First Nation community partners in the “spirit of trust, collaboration and transparency” and will honour will agreements and commitments with local stakeholders and suppliers.
In the release, Orla said it did its homework on Musselwhite in commissioning an independent technical report that determined the mine has a seven-year mine life (2024 to 2030) based on current reserves.
Orla said it intends to “aggressively explore” the 65,000-hectare land package, with follow-ups on historical drilling that suggests two to three kilometres of mineralized strike potential further afield than what's known in the current gold reserves.
Musselwhite has been in production for 28 years, generating close to 6 million ounces to date. Gold reserves, of last Dec. 31, stands at 1.5 million ounces, within 7.4 million tonnes, at a grade of 6.23 grams per tonne (g/t). The measured and indicated resource is 1.8 millions, inside 9.52 million tonnes, at a grade of 5.78 g/t. The inferred resources comes in at 0.19 million ounces.
Orla said it’s financing this acquisition through a combination of available cash, loans, a gold prepayment agreement,and convertible debentures issues to its major shareholders in Fairfax Financial and Pierre Lassonde.
Orla’s CEO, Jason Simpson, has been on the job since November 2018 and has 27 years under his belt in the industry, previously serving as chief operating officer at Torex Gold Resources from 2013 to 2018. Mine development and operations are his specialty as the company is following a mergers and acquisitions strategy. Simpson spent 11 years at Vale, ending his time there as general manager of Labrador-Voisey’s Bay operations in 2013.
