10:15 AM EST, 11/18/2024 (MT Newswires) -- (Adds National Bank commentary in fifth paragraph)

Orla Mining ( ORLA ) was at last look up near 6% on the TSX early Monday after signing a definitive agreement to acquire the Musselwhite Gold Mine in Ontario from Newmont ( NEM ) , up 2.7% on the TSX, for upfront cash consideration of US$810 million and gold-price linked contingent consideration of $40 million.

According to a statement, the cash consideration will be financed through a combination of cash, existing undrawn debt capacity, new indebtedness, a gold pre-pay facility, and convertible notes led by Orla's existing cornerstone investors. It said there is no upfront equity dilution associated with the transaction.

Monday's statement said the transaction adds a second "high quality, high margin producing asset" to Orla's portfolio. It added the combination of the proven Musselwhite mine and Orla's low-cost Camino Rojo oxide operation more than doubles the company's annual gold production to over 300 koz, with expected near-term growth to over 500 koz of annual gold production as the South Railroad Project is expected to commence production in 2027.

Orla said the transaction will also "significantly enhance" its free cash flow, providing additional cash for the execution of Orla's organic growth plans.

National Bank noted today's announcement marks the third non-core asset sale by Newmont ( NEM ) in its divestment program (Telfer, Akyem and now Musselwhite), with the remaining non-core assets for sale including Eleonore, Porcupine and CC&V as well as the Coffee development project in the Yukon. Newmont ( NEM ) noted that total gross proceeds from transactions announced in 2024 to date are expected to be up to US$2.9 billion.

National's Sector Perform rating is based on the lowered free cash flow outlook of the company over the medium term, the higher than expected cost structure and the uncertainty around the integration of the Newcrest assets. The bank derives its C$74.00 target price from a 100% weighted 5.50x NTM EV/EBITDA target multiple, which implies a P/NAV of 1.00x. As of Friday's close, Newmont ( NEM ) was trading at 5.6x and 4.6x National's 2024 and 2025 estimates on an EV/EBITDA basis and 0.78x NAV on a cash-adjusted basis.

Price: 5.92, Change: +0.37, Percent Change: +6.67