Orla Mining Ltd. ($OLA)

Hello, everyone. Thank you for joining us, and welcome to Orla Mining First Quarter 2026 results. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions] I will now hand the conference over to Andrew Bradbury, Vice President, Investor Relations and Corporate Development. Please go ahead, Mr. Bradbury.

Thank you, Christine, and welcome to Orla's First Quarter 2026 Results Conference Call. We will be making forward-looking statements during today's call, and I'm [indiscernible] direct you to Slides 2, 3 and 4 of the presentation, which contain important cautionary notes regarding these forward-looking statements. All dollar amounts discussed today will refer to U.S. dollars unless otherwise indicated. [indiscernible] executive team is on the call this morning, and I'll pass it to Jason Simpson, President and CEO.

Thanks, Andrew. Good morning, everyone. As we turn to Slide 5, the first quarter 2026 has set a strong foundation for the year. We advanced several strategic operational and exploration initiatives across our portfolio, firmly positioning the company for immediate delivery and long-term value creation. Operationally, it was a strong quarter. We produced over 81,000 ounces of gold. Both assets are delivering steady, reliable performance keeping us firmly on track to meet our full year guidance of 340,000 ounces to 360,000 ounces. At Musselwhite, we are effectively balancing active or processing with forward-looking development. We made significant progress on the 1080 exploration drift and are continuing to meet and increase production targets. On the exploration front, the results coming out of Musselwhite are exceptional. We have now confirmed the extension of high-grade mineralization from more than 2 kilometers down plunge, which reinforces our belief of a material extension of the mine's life. In addition to the success of our mine extension surface drilling, underground drilling continues to deliver strong results that support growth in reserves and resources. While near mine surface drilling at Camp Bay is intersecting broad zones of shallow mineralization. Beyond the drilling success, we are also looking at the bigger picture, advancing a regional targeting program across our massive 65,000 Pectera land package to unlock the next generation of opportunities. At Camino Rojo, we reached a major regulatory milestone with the receipt of the environmental permit for Mexican authorities, allowing us to remain -- mine the remaining oxide open pit and layback area while beginning construction of an underground exploration decline. This is a critical step in optimizing the current operation and moving forward with the next step of development for the Camino Rojo underground project. Beyond our operations, we are making large strides in advancing our next 2 growth opportunities. We are mixing towards field mobilization at South Railroad in Nevada with our team growing fast. We expect to receive final permits midyear, allowing us to move into full construction. In Mexico, we released a PEA for the underground project at Camino Rojo, a key step in unlocking the site's long-term sulfide potential. We delivered on production, derisked our expansion in Mexico and set the stage for our next mine in Nevada. Our pipeline of organic growth has never been stronger. At Orla, we are committed to maintaining the highest standards of integrity across our operations. Regarding the recent Cusma Rapid Response labor mechanism determination we are taking the panel's findings very seriously. We have been working closely with Mexican authorities since 2024 to reinforce labor protections, we are advancing a leadership-driven action plan that aligns with the panel's recommendations. Operational excellence is inseparable from the safety and well-being of our workforce. To that end, we are currently executing 9 core initiatives designed to strengthen oversight and protection of fundamental worker rights. By collaborating with the relevant authorities and leaning into these concrete actions, we are ensuring that Camino Rojo is a safe, fair and productive environment for all. Andrew Cormier, our Chief Operating Officer, will now discuss our operating performance.

Thank you, Jason. Turning to our operating results on Slide 6. The Musselwhite mine delivered an exceptional start to the year. During the first quarter, Musselwhite mined over 333,000 tonnes of ore and processed over 332,000 tons at a mill head grade of 6.29 grams per tonne gold. Gold recovery was 95.9% and resulting in production of nearly 63,000 ounces of gold. Camino Rojo produced approximately 18,000 ounces of gold in the first quarter. The operation mined over 2 million tonnes of ore and approximately 2.3 million tonnes of waste, with a strip ratio in line with expectations. Approximately 1.8 million tonnes of ore at an average grade of 0.59 gram per tonne gold was stacked, averaging approximately 2,300 tonnes per day, which remains consistent with the quarter-over-quarter production levels. Turning to the next slide. This quarter, muscle weight exceeded planned production rates, primarily driven by strategic mine plan resequencing and development. The mine averaged 3,706 tonnes per day, building on a strong momentum from 2025, we accessed higher grade or significantly earlier than forecasted plan. We also focused on the development rates in the 100 exploration drift and provided additional drill platforms for the increased drilling plan in the zone. The planned performance remained stable, averaging 3,698 tonnes per day with gold recovery continuing to meet plan. Process grades ranged from 5.88 grams to 6.89 grams per tonne. We have also successfully grown our available stockpiles to support mill feed. We entered the second quarter well positioned to deliver on our full year 2026 guidance. with mining and milling rates stabilized in the 1080 drift expansion on schedule, our focus remains on consistent execution and leveraging our expanded drill capacity to drive further value. Turning to Slide 8. This quarter, we released the results of a preliminary economic assessment for the underground project at Camino Rojo. The PEA evaluates the technical and economic potential of a stand-alone underground development project, [indiscernible] the existing open pit operation and outlines a potential pathway toward a larger scale, long-life underground binding operation and process facility. This study validates the significant economic potential of our sulfide resource and confirms a clear path to long-term growth. We expect annual production to exceed 220,000 ounces of gold equivalent over the first 10 years, effectively doubling our current output in Mexico. The deposit remains open in Zone 22, offering meaningful resource upside beyond this initial study. Moving to Slide 9. Another significant milestone this quarter was the approval of the environmental impact statement at Camino Rojo. This approval, together with the change of land use authorization and the permits required to mine the remainder of the oxide open pit including the layback areas of the north. The permit also allows for the construction of exploration to support advanced -- to support the advancement of the underground project. This will enable us to advance resource definition of the sulphide mineralization that need the current open pit and advance the technical evaluation of an underground operation with a pre-feasibility study targeted for 2027. Orla expects to award the contract for the exploration decline in early Q3 and begin work immediately thereafter. The Board has approved the scope of the project which includes an additional spend of $20 million for 2026. The exploration decline is expected to be completed in 2028. This next phase of Camino Rojo represents further growth and value creation, cementing its place as a cornerstone asset for Orla over the long term. On Slide 10. In January 2026, we released our optimized feasibility study for the South railroad project in Nevada, confirming a robust production profile. The study outlines output and -- the study outlines average output of 130,000 ounces of gold annually over the first 5 years at an all-in sustaining cost of approximately $1,485 per ounce. At a $4,500 gold price, the project delivers an after-tax NPV of $1.7 billion and a 95% internal rate of return. As our third operating asset, South Railroad is expected to drive our annual production towards 500,000 ounces. This quarter, we reached several critical derisking milestones. We issued purchase orders for long lead equipment, specifically our crushing equipment, power generators and the absorption desorption and recovery serving. Beyond procurement, we awarded the contract to the water treatment facility and issued limited notices to proceed for major civil works, including the central site access upgrades. We closed the quarter with engineering at 41% complete, keeping us firmly on track as we transition from detailed design into active site construction. South Railroad is advancing as a fast 41 covered project under the guidance of the Bureau of Land Management. We are tracking towards a final record of decision in mid-2026, with construction to commence shortly thereafter. Based on an estimated 18-month build schedule, we are targeting burst gold production in 2028. Etienne Morin, our Chief Financial Officer, will now discuss the financial results for the quarter.

Thanks, Andrew. Now turning to Slide 11. During the quarter, we sold just under 82,000 ounces of gold at a realized price net of the gold prepay of $4,575 per ounce, and that generated $379 million in revenue. We delivered just over 12,000 ounces towards the gold prepay in the first quarter at an average price of just under $3,000 per ounce. We have approximately 88,000 ounces of gold left to deliver under the gold prepay during the remaining 22 months. On a consolidated basis, cash costs during the first quarter was $1,251 per ounce and all-in sustaining cost was $1,668 per ounce of gold sold, and we remain on track to achieve our full year AISC guidance of $5.50 to $17.50 per ounce. We recorded net income for the quarter of $75.4 million or $0.22 per share. And after adjusting for certain items, adjusted earnings were $134.7 million or $0.39 per share. Cash flow from operating activities before changes in noncash working capital was $103.5 million with free cash flow for the quarter of nearly $63 million. Exploration and project development costs this quarter were $36 million, of which approximately $6 million was expensed and $30 million was capitalized. On Slide 12, looking at our cash flow for the first quarter. We've been focused on checking off several key financial milestones. Our cash balance at March 31 was $427 million, with total liquidity of $517 million, including the undrawn portion of our revolving credit facility. Our strong cash position allows us to self-fund the construction of South Railroad in the upcoming Camino Rojo underground project, along with exploration and other internal growth initiatives all that while maintaining our commitment to our disciplined capital allocation approach. We also had several notable cash payments during the quarter we paid approximately $118 million in tax-related payments during the quarter, nearly 2/3 of that was related to 2025 income tax at Musselwhite since we did not have to make any monthly installments during most of 2025. So there was a large true-up this quarter. We also paid $25 million related to the 2025 annual Camino Rojo special mining duty payment, which occurs once a year in March. And we paid $26 million in regular 2026 monthly tax installments at both Camino Rojo and Musselwhite. On top of that, we paid a $20 million contingent payment to Newmont as the average gold price during the first year post acquisition of Musselwhite exceeded $2,900 per ounce. At the same time, we kept our balance sheet a priority by paying down another $35 million in debt in Q1 and of course, we're continuing to prioritize our shareholders. We declared a quarterly dividend of $0.015 per share payable on June 9 of this year. Our second dividend after the inaugural dividend paid during the first quarter. Lastly, energy prices have risen this quarter, as everybody knows, our gross exposure to diesel in 2026 is approximately $25 million or just over 4% of total operating cost. We've experienced an approximate 6% increase in diesel prices, but we've not experienced any fuel availability issues. So our Senior Vice President, Exploration, Sylvain Guerard, will now provide you with an update on our exploration programs.

Thank you, Etienne. Turning to Slide 13. This quarter, the Musselwhite exploration program successfully advanced on 3 key priority areas: Surface sterling along the extension of the mine trend; underground resource definition; and near-mine surface drilling. The major highlight was the searches deep directional program where results confirming the continuity of the length in PQ zones up to 2 kilometers beyond current operations. [indiscernible] intersected the PQ extensions and return [indiscernible] with visible gold at the predicted locations validating our exploration model. Underground exploration focused on reserve replacement and resource expansion across the length, Red Wings, [indiscernible] and PQ zones with over 12,000 meters completed which is consistently returning strong results. 5 of our 6 exploration active rigs are currently concentrated on the length and PQ extensions to drive growth at that while the 6 rig target the upper mine areas. On Slide 14, follow-up drilling on our near-mine surface program began this quarter and return brought shadow intercepts of gold [indiscernible] reinforcing that significant near-mine growth potential remains even after over 25 years of operation. We are also advancing original data competition across the 65,000 hectare Musselwhite Land Package to build on our broader exploration pipeline integrating historical [indiscernible] data sets is defining priority original target with discovery potential. This work complements our priority underground drilling and mine trend extension drilling and to a lesser extent our [indiscernible] surface program by highlighting longer-term opportunities across the property. Turning to Camino Rojo on Slide 15. We have initiated a 4,300 meter drilling program to generate additional Methodological Geotechnical and Hydrological Data Act regard for the PSS and to support permitting in 2027. This work advances to technical understanding needed to progress the underground project. With respect to regional exploration activities started in Q2 with the majority of the planned '26 program schedule for the second half of the year. On Slide 16 now, our South [indiscernible] is one of the largest continuous land position to the con a district scale opportunity with significant growth potential beyond our currently the fund reserves. Our '26 exploration program drilling program is scheduled to start in the second quarter, targeting pit extension opportunities [indiscernible] Dark Star and Jasperiod Wash while continuing to advance promising [indiscernible] targets proximal to the development project. I would now hand it over to Silvana Costa, our Chief Sustainability Officer to continue the presentation.

Thank you, Sylvain. Please turn to Slide 17. Our commitment to developing our people into the environmental, social and governance performance are cornerstones of our strategy and I'm proud to share key milestones from the first quarter across our sites. Musselwhite continues to advance community partnerships and workforce development through targeted economic and social initiatives. To enhance economic reconciliation, the site is conducting a comprehensive review of its indigenous procurement strategy. The site's indigenous focused training programs have now been centralized under the Musselwhite Academy, which successfully launched the [indiscernible] school program in Q1. We Additionally, a new trade readiness program is being developed to build technical capacity within our partner communities. At Camino Rojo, our operation became the first mining operation in Mexico to receive the Women in Mining award at Platinum level solidifying our leadership in equity and diversity. During the quarter, we continued to advance our water, biodiversity and climate project promoting environmental stewardship and enabling sustainable livelihoods. At South Railroad, community engagement and sustainability remains central to the project's advancement. As permitting progressed efforts shifted towards operational readiness through targeted regional recruitment and the hiring of critical roles. We continue to collaborate with local partners on scholarships and on a new infrastructure project designed to deliver long-term benefits to the local community. These achievements demonstrate our commitment to responsible gold production and to work in close collaboration with our host communities and indigenous partners to build a sustainable and inclusive future with our stakeholders. Regarding ESG disclosures we have completed Orla's third modern [ slavery ] report in alignment with the fighting against Forced Labor and the Child Labor and Supply Chain Act. The act requires companies to report on their efforts to combat force and child labor in their operations and supply chains. Our 2025 report will be mailed to shareholders and provides updates on our work to enhance modern label training across the company and to strengthening the process to assess risk of modern [ slavery ] in our supply chain. We also completed a biannual materiality assessment and are actively working on the 2025 Orla sustainability report. We are on track to publish the report by the end of Q2. We I would now like to pass it back to Jason for his closing remarks.

Thank you, Silvana. Turning to Slide 18. Orla enters 2026 with strong operational momentum and a clear path to continued production expansion. We are guiding toward another record-breaking year, forecasting 340,000 to 360,000 ounces of gold at an all-in sustaining cost of $15.50 to $17.50 per ounce. Looking at 2026 on Slide 19, we have several upcoming value-driving catalysts. Notably, we are getting ready for construction at South Railroad with planning and procurement with final permits anticipated for mid-2026. Continued exploration of the underground and deep directional drill programs at Musselwhite to extend the mineralization and mine life. Continued exploration and resource development at Camino Rojo working towards a prefeasibility study and permanent submission in 2027. Thank you to our teams in the countries where we operate, whose commitment and delivery are driving this business forward. And at this point, I'd like to open the call to questions and pass it back to the operator.

[Operator Instructions] Your first question comes from the line of Cosmos Chiu with CIBC

Maybe my first question is on Camino Rojo. Just trying to get a better understanding of your stockpiling and stacking strategy. I noticed that stockpiles at Camino Rojo actually increased in Q1. As we all know, given some of the issues that have been going on last year, you drew out on your stockpiles last year, and there was a mix of crush shore and rent of mine ore. So I'm just trying to understand the mixture and also the strategy on a go-forward basis. Are you looking to increase your stockpiles? Or how should we look at it?

I'm very proud of the Camino Rojo team since we built the line consistently exceeding our crushing and stacking nameplate design. So as you'll notice in this quarter's numbers, we continue that trend with over 20,000 tonnes per day crush and stack in a facility that was built for 18,000 tonnes a day. But as always, our mining capability is not the bottleneck. And so we have, through a mining contractor there, the capability of stripping and producing ore at a greater rate than we can crush and stack it. And so as a consequence of that, and now that we're completely into the layback area and mining down, we need to, as we have done in the past, introduce feed into the crusher and stack it in a way that's consistent with our stacking plan. And as you'll notice in our guidance and throughout our quarters this year, we'll continuously increase the grade stacked from last year to the fourth quarter of this year. And now I'll hand the response across to Andrew Cormier, who can offer any additional comments he wants to on the stockpiling crushing and stacking plan.

As Jason said, we're back to our, call it, regular operations. So last year, we did draw down our stockpile, and we're now back at the top of the pit, mining oxide material as well as the low-grade ore that we would -- were previously stockpiled. So we are rebuilding our low-grade stockpiles while we mine and stack reserve grade material on the heap leach.

Great to hear. And that leads well to my next question in terms of it's great to see that you now have the full year [indiscernible] on the Fresnillo concessions. I think you kind of answered my question, but are you now in that area? Are you now kind of pushing back on that those Fresnillo concessions?

Yes, Cos, absolutely. We had planned for the receipt of the permit in the first quarter of this year, which is what occurred. And so we -- our plan for 2026 was certainly to begin stripping back towards the North, and that is certainly underway and will continue throughout the year and next until we get to the final agreed to boundary with Fresnillo and continue to descend into the pit to the bottom by the end of the decade.

Perfect. And then maybe moving on to Musselwhite. Great to see. A very good start in Q1. As you mentioned, the development rates and equipment availability has allowed you to get to the higher grade sooner, hitting 6.29 grams per tonne, higher than what you did last year 6.04 full year last year. Just trying to understand in terms of kind of sustainability of that higher grade. Can we expect kind of like further increases into 2026? And are you getting more from the higher -- the deeper parts of the mine because as I understand, grades could improve as you get deeper into Musselwhite?

Yes. What is occurring is we're continuing on the trajectory set in the fourth quarter of last year into some of the higher grade stope areas that have continued, and we've been able to advance in the first half of this year. But like any high-grade mine, there will be cycles of higher-grade stopes and lower-grade stopes. And although we had in our budget plan for some of the higher-grade stopes in the second half of this year, the reality is that we've been able to advance them and get them in the first half. But we continue to guide towards our overall annual grade so we expect that to normalize through the remainder of the year and achieve our guidance. Clearly, if we can stick to our plan and find a higher-grade material that will be to our advantage. You're correct that in the deeper parts of the mine, some of the highest grade areas, including, of course, the intercepts that [ Nate ] and the team have discovered 2 kilometers away, which is some of the highest grades ever seen at Musselwhite. But I would offer the drilling in the upper parts of the mine. We are very pleased, as you can reference in some of our press release that there are also very good grade areas, more proximal to surface and the luxury we have at Musselwhite is so many opportunities and a great team up there with the flexibility that we have given them have been able to prioritize and sequence the stoping consistent with our budget planning, but obviously informed by the current gold price. And so with that sort of flexibility, they've been able to exceed our expectations since day 1. We look forward to them continuing to do that.

Great. And then maybe one last question, Jason, before I pass it on. Just comparing your full year guidance on sustaining CapEx to what you did in Q1, looks like if I were to multiply your numbers at the numbers here for Camino Rojo, it will not equate to your full year guidance of $35 million. Musselwhite, I think you spent about $20 million in Q1, $120 million for the full year in terms of guidance. Same thing with development CapEx, 14.2 versus [ 2 15 ] for the full year in terms of guidance. Could you just just maybe walk through is that by design? And can you remind us how that will likely increase throughout 2026?

Yes. So the only increase we're guiding to at this point is the $20 million that Andrew referenced that the Board approved to begin the exploration decline. Cos, in my experience, teams tend to be optimistic about how quickly in the new year, they can begin spending capital. And in some regards, the heap leach expansion in Mexico is one example and some of the procurement in Canada as a second example, it's really just timing of those capital expenditures. So I'd offer that one shouldn't do any times for multiplying on the capital number and just stick to our guidance as provided with the addition of the $2 million that we've talked about.

Our next question comes from the line of Allison Carson with Desjardins.

My first question is on capital return. You've declared another quarterly dividend, which is great. Are you considering buying back shares? And is there a plan to make the capital return program sort of consistent and linked to anything like a percentage of free cash flow?

Yes. Thanks for the question, Allison. And I'm sort of smiling as you say that because I can assure you that is an active conversation at the Board, and we'll continue that dialogue to make sure that our return to shareholders is considered of our cash build and the current commodity price. I think all of those vehicles and the instrument in the way that you described it for dividends are something that Etienne Morin will converse with our board about buying back shares at times of weakness is [indiscernible] tool I would certainly like available to us as well as considering our shareholders in the cash build and how we can enhance return to them. The metric that you described and how we deliver that return, you will appreciate, has to be a conversation that the channel lead with management and then present to the Board, I think it's responsible for us to be having those conversations right now with a view to enhancing shareholder returns while maintaining sufficient cash reserves to grow the business for the next 4 years.

Very well, stay tuned for that then. And one other question. [indiscernible] Railroad the record of decision is expected sort of in August right now, I believe. Is there a chance that, that does get moved up closer to midyear in June or July? And then just in terms of construction, what's on the critical path for 2026?

Yes. So in terms of the date, it is on the federal website as currently August 8. And yes, our teams will work with BLM lead agency as well as our project manager from the Department of Interior to advance it at all possible. We're planning for that August start. It will actually begin with work on the access road, which is outside of the plan of operations before that record of decision date, we are mobilizing to the field as we speak. Simultaneously, we have team members in Washington and meeting with our state officials to try and advance the record of decision potentially into July. All of our planning and work currently is to build momentum, not only with our own workforce recruitment, but through our contractors, M3 engineering, mobilize on to site and the earthwork contractors with limited notices to proceed that Andrew references all intended to make sure that we overcome the inertia before we receive final permits. This is a strategy that we deployed on previous builds, including Camino Rojo that's proven very effective. In terms of critical path for 2026, as we build through '26 and '27 at South Railroad. As you can appreciate, it will start with mine access before the record of decision and then into the site after the record of decision, where earthworks will be followed by concrete and so on. I predict by the end of the year, the critical path will be focused on earthworks. And most of '27 will be led by mechanical -- electromechanical work and then followed by commissioning and start-up. So we can [indiscernible] as early as possible in 2028.

Our next question comes from the line of Andrew Mikitchook with BMO Capital Markets.

Great questions have been already answered, but I just have a quick one. This ramp to the sulfides at Camino Rojo is a multiyear trajectory here. Does it -- is it aligned so that you can let the exploration [indiscernible] in earlier to start drilling ahead of completion of the ramp? Or what should we expect to come out of that and for the benefit of the exploration team?

Yes. There's really 3 objectives with that underground exploration decline. Firstly, as you referenced, of course, exploration. We want to get underground, do less expensive drilling as we have done in the past from surface and get better angles to attack the sulfide zone, in particular, Zone 22, which has a lot more to give. And so yes, the exploration decline will have dual platform set up for our exploration team. But the other 2 benefits that starting that decline early and importantly, is the advancement of all of that development into and towards the ore body can often be the critical path for these underground projects. So every meter that we can drive in the upcoming years is less meters, we need to set up the eventual underground mine. And then finally, as was referenced in the remarks, we gained -- gather data in developing that exploration decline, hydrogeologic, geomechanical and other data that will be helpful to our upcoming permit submission in 2027, so that we have a firm understanding of the water dynamics, the ground dynamics and so on so that we can properly inform a responsible submission to the Mexican authorities and look for not only the underground mine permit, but the surface flotation facility that we've described in the PEA. Those are the 3 objectives for the exploration decline and my experience underground, it tells me that the more we can drive ahead of the plant being constructed and moving into full production, the better.

Our next question comes from the line of Lauren McConnell with Paradigm.

Congrats on the quarter. You guys gave a lot of disclosure around sort of diesel prices and the impact can have on operating costs, which is roughly 4% doesn't seem like a major one, but are there any other cost inflation areas that are more material than diesel for 2026? Is it consumables? Labor? Maybe just sort of walk us through that in terms of what could be the bigger swing factors for all-in sustaining cost guidance.

Yes. So I'll have a bit of context here, Lauren, and then let Etienne get into some of the grander details. What I always say about tariffs in this current conflict has certainly been inflationary, and we are no exception to that. Quite generally, you can expect as cost of living increases, salaries will need to increase commensurate with that. As it relates to energy prices and fuel in particular, that there's a lot of conversation about Yes, absolutely, in our operations, it's de minimis. Obviously, different mining companies use different amounts of fuel than we do. But I will be clear, the fuel is not only in our operation at the sites, but also in the transportation of all of our products and fuel surcharges for for everything that gets trucked into our various sites, as you can appreciate. So I think it's all inflationary. But specific to us, I would offer that compensation would be 1 area that we're watching, and then will offer our top costs across our portfolio and things that we observe in sort of our top 3. Go ahead, Etienne.

Yes. Thanks, Jason. Yes, the only other cost of in diesel and labor, like Jason mentioned that -- so a bit of an increase during Q1 was explosive, but we're talking around 10% higher than what we had planned for the year. So not overly significant, and it's not a huge -- necessarily a huge cost of [indiscernible] either. This is specific to Camino Rojo. But other than that, costs are pretty much in line.

Great. And then just quickly on Camino Rojo. With the underground exploration decline being approved and you guys are talking about expecting to award that contract in early Q3. Are there any sort of key execution risk between now and the start of the decline development and sort of what are the key milestones that we should be watching for before the 2027 PFS?

Yes, sure. So -- we've been working on getting ready for this for some time, and I'm proud that the team has already had the contractors at site completed the bidding process. And in the coming weeks, we'll be awarding that contract to the successful bidder. We needed to get the pit to a place where we could color the portal. And so that's now being achieved. And so really, the milestones you can look for and we'll, of course, disclose and in subsequent press releases is the framing of that portal, getting the portal started, and then there will be regular updates on how far we've progressed underground. How effective our underground mining contractor has been sort of meters per day type of numbers. The the milestones after that will be when we install our first drill underground, and then we'll start counting the number of drills that we have underground. And then finally, as we get data for -- from that drifting to inform the subsequent permit submission we'll be able to give the market an update of the ground integrity, what we're finding underground, and that will, of course, be reflected in some of the metrics on meters per day and so on. many of us have driven is underground in Mexico before are aware of the contractors across the business that have shown and demonstrated a capability. And so you can be assured that those are some of the parties that we're talking to about taking on the next phase for Camino Rojo underground.

Our last question comes from the line of Alex Terentiew with National Bank.

Lots of good questions already asked here. But just a couple of follow-ups on Musselwhite. So this mine seems to continue to surprise to the upside, at least to my numbers on grade, as you noted this quarter, and I think this is now the third consecutive quarter where throughput looks to be above target. Annualized Q1 is about 1.3 million tons and guidance for the year is 1.2. So -- and you also noted, I believe that stockpile is being built there. So I'm just curious, is there any slowdown or period of lower throughput that we should expect? Or is really just an opportunity to, if things keep going the way they are, maybe push production a bit higher? And then just secondly, a related question on Musselwhite. You've had some nice exploration results [indiscernible] some other regional targets really showing that there's a lot more gold minitization in this region. I know some of them are lower grade, but at surface, open pitable. And given that they are on mining claim boundaries, I believe some of these anyways, what's the process your time line to get these permitted into production to supplement the [indiscernible] that's your plan?

Thanks for the question, Alex. And that will give me an opportunity to sort of walk you through our thinking on this very subject. So let's just start with what we believed when we bought the asset. We believed in the geology and we believed in the capability of the people to deliver more at this asset. But we've learned a lot in the -- over a year that we've owned the asset, and we've seen a lot of demonstrated value creation from our team and from the geology up there. So with that learning, we've had to adapt how we see the potential at this site. And of course, that has just exceeded everybody's expectations. And so where we're at now is with all of those opportunities that you described on surface and as our teams have been able to demonstrate in the upper parts of the mine underground. And then the original thesis of the acquisition, the extension 2 kilometers down plunge. What's becoming apparent to our team is that we are going to be able to push the production rate with current infrastructure closer to that 300,000 ounce a year mark. And with an expansion considered of not only the material handling system, we may also need to consider enhancements to the mill processing facility because we are starting to demonstrate that we can hit mill capacity. And so what are we going to do to push ourselves to the next level of production at Musselwhite and what would be the best and most appropriate capital allocation to do that. And so all of that thinking, which has changed since we took ownership is part of the work that our team is doing, considering all of those opportunities. And so I look forward to unpacking that. And in 2027, giving clarity to the market of our long-term intentions at Musselwhite be that through the existing plant as well as expansions in the future. One of the things we'll need to watch for -- the team has done a great job to start to bump up against need plate capacity at that processing plant through delivery from underground aided by a lot of the equipment enhancements that we provided them, coupled with the flexibility we've given them to operate the site responsibly. We need to make sure that, that's sustainable. And so there is something that we'll be watching for, these are numbers that we can sustain, how can we support that team to go to the next level, production wise. So we're making those plans as we speak. We have great technical teams working in partnership with the site to outline the growth plans at Musselwhite in the short, medium and long term. the opportunity we have at Musselwhite, the luxury we have at Musselwhite is so many opportunities and making sure that we narrow our focus and make sure we're delivering on the opportunities that are going to create the most value is our challenge at that site.

We have reached the end of the Q&A session. I will now turn the call back to Jason for closing remarks.

Since there are no further questions, I want to thank everybody for your time. Never hesitate to reach out to Orla should you have any follow-up questions.

This concludes today's call. Thank you for attending. You may now disconnect.