Discovery Silver has agreed to acquire Newmont’s interest in the Porcupine gold mine operations located in Ontario, Canada, for a total consideration of $425m.
Under the terms of the definitive agreement, Discovery Silver will pay Newmont $200m in cash and $75m in common shares upon closing.
An additional $150m in deferred cash payments will be made in four annual instalments of $37.5m, beginning 31 December 2027.
To finance the acquisition and provide operational support for the Porcupine gold complex, Discovery Silver has secured a $555m financing package.
This includes $400m through royalty and debt agreements with Franco-Nevada and $155m from a bought deal public offering.
Through the acquisition, Discovery Silver aims to establish itself as a new Canadian gold producer with multiple operations in one of the world’s most prolific gold mining regions.
The Porcupine complex includes the Hoyle Pond and Pamour mines, the Dome mine property and milling facility, and the Borden underground mine near Chapleau, Ontario.
Discovery Silver CEO Tony Makuch said: “Through this acquisition, we are combining growing gold production at Porcupine with tremendous upside, in one of the world’s great gold camps, with our Cordero project, one of the industry’s leading silver development projects based on reserves and expected production.”
Discovery Silver expects the Porcupine gold mine operations to produce an average of 285,000 ounces of gold annually over the next decade, with a projected mine life of 22 years.
The company also aims to unlock significant value by increasing production, reducing costs, and exploring the potential of its 140,000-hectare land package.
Based in and near Timmins, the Porcupine mine has a net present value (NPV) of $1.2bn based on the technical report.
The Canadian gold complex is also expected to generate $1.3bn in after-tax free cash flow in the first 10 years and $1.8bn over the life of the mine.
According to the report, capital expenditures, excluding reclamation costs, are projected to total $854m between 2025 and 2030. This includes average sustaining capital expenditures of $110m per year during the same period.
Development capital expenditures are estimated at $122m, primarily allocated to completing the Pamour open-pit project in 2025 and 2026. Additionally, $69m has been earmarked for planned exploration activities over the six-year period.
Discovery Silver also plans to evaluate the potential to resume operations at the Dome mine, which ceased production in 2017, and upgrade its inferred mineral resources of nearly 11 million ounces.
The company also commits to mine closure, site reclamation, and rehabilitation to ensure sustainable post-mining use of the land.
Subject to regulatory approvals, including those from the Toronto Stock Exchange and Canada’s Competition Act, the transaction is expected to be completed in the first half of 2025.
