Orla says normal operations to resume at Mexico mine

Orla Mining (TSX: OLA; NYSE: ORLA) said operations at its Camino Rojo gold mine in Mexico are poised to resume in the next few hours as the company works to end an illegal blockade that halted production earlier this week. The stock rose.

Talks with union representatives and labour authorities have advanced following a meeting with Mexico’s Department of Federal Labour Conciliation, Vancouver-based Orla said Thursday in a statement. All parties agreed “that the blockade is illegal and falls outside the bounds of the collective bargaining framework,” Orla said.

The disruption, which began Monday, forced Orla to suspend operations at its flagship Mexican mine while maintaining essential activities required to protect workers, equipment and the environment. It comes as Orla works toward a $18.5 billion (C$25.5 billion) merger with Equinox Gold (TSX, NYSE: EQX).

Union leadership is communicating to the group of unionized employees the need to lift the blockade and resume safe, normal operations by Thursday evening, Orla said. Should the blockade not be lifted, Orla vowed to “pursue additional steps to resume operations in coordination with labour authorities,” without elaborating.

Orla shares rose 3.5% to $16.09 Thursday morning in Toronto, valuing the company at about C$5.5 billion ($4 billion). The stock has traded between C$12.76 and C$29.99 in the past year. It fell almost 8% Monday when news of the work stoppage was disclosed.

Bonus talks

The disruption stems from a dispute over two separate payments: a worker productivity bonus and a statutory profit-sharing entitlement. Orla said this week it successfully negotiated the productivity bonus with union representatives, but workers objected to the amount distributed under the profit-sharing program and launched a blockade that the company said didn’t follow procedures required under Mexican law.

Negotiations on productivity bonus payments will resume once normal mine operations have been restored, Orla said Thursday. Management is “committed to finding a resolution on the productivity bonus discussions,” it said.

"We welcome this step to return to normal operation at Camino Rojo so we can welcome all our employees back to work," CEO Jason Simpson said in the statement.

"We are also committed to resuming good-faith discussions with the union regarding the productivity bonus within the parameters of that framework, and we are optimistic that a mutually beneficial agreement can be reached.”

Open-pit mine

Located in Zacatecas state, Camino Rojo is one of Mexico's newer gold mines. The operation consists of an open-pit mine and heap-leach processing facility that achieved commercial production in 2022.

Production at Camino Rojo is expected to range between 110,000 and 120,000 oz. gold this year, about one-third of the company’s total output. The operation produced 96,764 oz. of gold last year.

Orla vowed Monday to “assess any potential impact of the work stoppage on its full-year production guidance for Camino Rojo.” An update will be provided in due course, the company added.