Newmont Corp. has agreed to sell its Porcupine Complex in Ontario, Canada, to Discovery Silver Corp. for a total consideration of up to $425 million, which includes $200 million, due upon closing, $75 million in Discovery shares, and a deferred cash consideration of $150 million.
The Porcupine Complex consists of the Hoyle Pond and Pamour mine properties and the Dome mine property and milling facility in Timmins, Ontario, as well as the Borden underground mining operation near Chapleau, Ontario. Based on the results of a new technical report, annual production at the Porcupine Complex is expected to average more than 285,000 ounces (oz) during the next 10 years. Current gold production comes primarily from Borden, a relatively new mine, with commercial production commencing in 2019, that is located on a large land position with extensive upside potential, as well as from Hoyle Pond, a high-grade underground mine, which commenced operations in 1987 and has established a solid track record for replacing reserves.
“The acquisition of the Porcupine Complex is an important step forward as we work to build a highly profitable precious metals producer,” said Tony Makuch, CEO, Discovery Silver. “A key feature of the Transaction is the unique opportunity it provides to combine high-quality gold production with a leadership team that has extensive experience in the Timmins Camp.”
Prior to taking the helm at Discovery two years ago, Makuch was CEO of Kirkland Lake Gold. He is from Timmins and he has worked extensively in the area, including serving as general manager at Hoyle Pond and other sites. “Other members of our team are also from the area and have similar experience working in various operational and management roles in Timmins,” Makuch said. “We know these assets well and have an extensive understanding of where the value creation opportunities exist. We have a deep connection to the community, including local First Nations groups.”
To fund the Transaction and provide liquidity in support of operating and growing the Porcupine Complex, Discovery has established binding commitments for $555 million of financing, including $400 million related to royalty and debt agreements with Franco-Nevada Corp. and approximately $155 million from a bought deal public offering.
The transaction will establish Discovery as a new Canadian gold producer with multiple operations in one of the world’s most prolific gold camps, accounting for approximately 70 million oz of total historical production, with a large base of mineral resources remaining and substantial exploration upside.
Discovery believes that it can unlock value with numerous opportunities, such as increasing production and reducing costs at the operating mines, upgrading the nearly 11 million oz inferred mineral resource at the Dome mine (currently closed) and drilling to realize the significant exploration upside that exists in the Timmins Camp.
