Franco-Nevada has announced a financing package with Discovery Silver to support its acquisition of the Porcupine Complex in Ontario from Newmont.
The financing package supplies Discovery with the necessary capital to acquire the Porcupine Complex and support the intended capital initiatives aimed at realising its potential.
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The package includes a $300m (C$431.69m) net smelter return royalty in two tranches on achieving production from the complex and a $100m senior secured loan, which can be drawn by Discovery Silver within two years of closing. It also includes $49m of equity participation through a public offering.
This initiative aims to enhance Franco-Nevada’s gold exposure in a stable jurisdiction. Franco-Nevada plans to finance the transactions from cash on hand, remaining debt-free.
Franco-Nevada president and CEO Paul Brink said: “We are delighted to support Discovery in this transformative transaction to acquire the Porcupine Complex in Ontario and add another cash flowing gold asset to Franco-Nevada’s portfolio.
“Tony [Makuch] has assembled an experienced team and we expect that under their leadership the Porcupine Complex will be revitalised and continue its production legacy for decades to come. The Porcupine Complex is host to some of Ontario’s most successful historical gold producers and its extensive mineral resources present compelling upside potential.”
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By GlobalDataThe Porcupine Complex, located near Timmins, Ontario, has been producing gold for more than 100 years.
The complex includes infrastructure such as a central mill, the Hoyle Pond and Borden underground mines, the Pamour open-pit mine, and the Dome open-pit project. It is expected to produce approximately 4.9 million ounces (moz) of gold over a 22-year mine life.
Discovery Silver plans to optimise operations and explore the assets further.
Opportunities for expansion include increasing throughput at existing mines and developing the Dome open-pit project, which hosts inferred resources of approximately 11moz of gold.
Discovery Silver CEO Tony Makuch said: “We are honoured that Franco-Nevada has chosen to support us with the acquisition of the Porcupine Complex, which is a transformational achievement for Discovery Silver. We believe our strategic partnership will lead to significant value creation for both companies and all stakeholders.
“We are excited about the significant exploration upside that exists within the 140,000-hectare land position in one of the world’s most prolific gold mining regions. We also have a well-developed understanding of the many opportunities that exist to discover new resources, build reserves, expand production and mine life and lower costs at the existing operations.
“Our overall aim is to re-establish the Porcupine Complex as a Tier 1 mining asset in the gold space, one that we will operate with an overriding commitment to responsible mining and sustainability.”
Franco-Nevada will own approximately 9.9% of Discovery’s common shares upon closing the acquisition, which is expected in the first half of 2025.
The company will retain a right of first refusal on any future streams and royalties associated with the complex.
Franco-Nevada will also partner with Discovery on environmental and social initiatives in the project area.
