GoldHaven Resources Corp. press release
Discovery Announces Transformational Acquisition of Newmont's Porcupine Complex
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Discovery Announces Transformational Acquisition of Newmont’s Porcupine Complex
THE BASE SHELF PROSPECTUS IS ACCESSIBLE, AND THE SHELF PROSPECTUS SUPPLEMENT FOR THE PUBLIC OFFERING AND ANY AMENDMENT TO THE DOCUMENTS WILL BE ACCESSIBLE WITHIN TWO BUSINESS DAYS, THROUGH SEDAR+
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
Establishes Discovery as a growing Canadian gold producer with large Mineral Resource base in a Tier 1 jurisdiction with significant upside potential Attractive acquisition with base case NPV of $1.2 billion using analyst consensus gold prices (including a long-term (“LT”) gold price of $2,150 per ounce) and $2.3 billion at a +23% sensitivity case using LT gold price of $2,650 per ounce Consideration at closing of $275 million, including $200 million of cash and $75 million of equity, with additional $150 million of deferred cash consideration starting in late 2027 Attractive $555 million financing package provides substantial financial strength Brings to the Porcupine Complex a management team, led by Tony Makuch, with a solid track record for value creation within the industry and significant experience working in the Timmins Camp _Discovery launches __C$225 million __(approximately $155 million) subscription receipt bought deal public offering as part of the financing package _
All operating and financial estimates in this press release are taken from the technical report entitled, “Porcupine Complex, Ontario, Canada, Technical Report on Preliminary Economic Assessment”, (the “Porcupine Technical Report”) filed at www.sedarplus.ca on or before January 29, 2025. The report includes the results of a preliminary economic assessment which is preliminary in nature. It includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the estimates will be realized.
TORONTO, Jan. 27, 2025 (GLOBE NEWSWIRE) -- Discovery Silver Corp. (TSX: DSV, OTCQX: DSVSF) (“ Discovery ” or the “ Company ”) is pleased to announce that it has entered into a definitive agreement (the “ Agreement ”) to acquire from a wholly owned subsidiary of Newmont Corporation (“ Newmont ”) 100% of Newmont’s interest in its Porcupine Operations (the “ Porcupine Complex ” or “ Porcupine ”) based in and near Timmins, Ontario, Canada (the “ Timmins Camp ”) for total consideration of $425 million (the " Transaction "). All dollar amounts are in US dollars unless otherwise specified.
The consideration to Newmont for the Transaction consists of $200 million in cash (the “ Closing Cash Consideration ”) and $75 million payable in common shares of Discovery (the “ Closing Equity Consideration ”), both of which are payable upon closing of the Transaction (the “ Closing Date ”), and $150 million of deferred consideration (the “ Deferred Consideration ”) to be paid in four annual cash payments of $37.5 million commencing on December 31, 2027.
To fund the Transaction and provide liquidity in support of operating and growing the Porcupine Complex, Discovery has entered into binding commitments for approximately $555 million of financing (the “ Financing Package ”), including $400 million related to royalty and debt agreements with Franco-Nevada Corporation (“ Franco-Nevada ”) and approximately $155 million from a bought deal public offering of subscription receipts (the “ Public Offering ” or “ Offering ”). Details of the Financing Package are provided in the section entitled, “ FINANCING, ” later in this press release.
Tony Makuch, Discovery’s CEO, commented: “The acquisition of the Porcupine Complex is an important step forward as we work to build a highly profitable precious metals producer. 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.
“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. On a personal level, I am from Timmins and have worked extensively in the area, including serving as General Manager at Hoyle Pond and other sites, and acting as CEO of Lake Shore Gold, which built and operated the first new major mining operation in Timmins in over two decades (Timmins West Mine). Other members of our team are also from the area and have similar experience working in various operational and management roles in Timmins. 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, and will bring to Timmins the same commitment to responsible mining that has resulted in Discovery receiving numerous recognitions in Mexico, including the Mexican Government’s Quality Environmental Certification. 1 In Timmins, the Company is planning significant investments in site restoration and progressive rehabilitation in order to ensure that all sites are properly remediated and are available for future use by the community.
“For shareholders, the Transaction is attractive and will establish a new North American precious metals producer with excellent value creation upside through future operating performance, multiple development projects and extensive exploration potential. We are also diversifying our portfolio, which will reduce risk and provide shareholders with significant leverage to both gold and silver prices. Through our $555 million Financing Package, we will both fund the Transaction and significantly enhance our balance sheet strength. We will also move forward with Newmont and Franco-Nevada as new major shareholders, which will provide these companies with an attractive opportunity to participate in the substantial value we intend to create.”
1 The Quality Environmental Certification was received in both 2023 and 2024 from Mexico’s Federal Attorney’s Office for Environmental Protection.
TRANSACTION HIGHLIGHTS AND RATIONALE
Establishes 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 ounces of total historical production, 2 with a large base of Mineral Resources remaining and substantial exploration upside. Adds growing gold production with anticipated average annual production of over 285,000 ounces during the next 10 years and a total expected mine life of 22 years with substantial upside potential. Provides opportunity to unlock value with numerous opportunities identified to increase production and reduce costs at the Hoyle Pond, Borden and Pamour mines, the potential to upgrade the nearly 11.0 million ounce Inferred Mineral Resource 3 at Dome Mine (currently closed) and a commitment to invest in drilling to realize the significant exploration upside that exists in the Timmins Camp. Allows Discovery’s management team to apply its extensive experience working in the Timmins Camp to maximize the value of the Porcupine Complex, with over a century of collective experience in exploration, discovery, development and operations of deposits and mines in the area. Attractive acquisition with Porcupine Complex expected to generate significant after-tax free cash flow and an attractive net present value (“ NPV ”) at 5% discount rate. Free cash flow of $1.3 billion in first 10 years with NPV of $1.2 billion at base case analyst consensus gold prices 4 Project NPV of $2.3 billion at a +23% sensitivity case using LT gold price of $2,650 per ounce. 5
Positions Discovery to build substantial financial strength through attractive $555 million financing package and future production from the Porcupine Complex. Establishes a diversified portfolio with the strength of the Porcupine Complex to support the financing, and ultimate development and operation, of the Company’s Cordero silver project (“ Cordero ”) in Mexico. Creates potential for value creation through multiple expansion and enhanced capital markets profile with Discovery trading at a substantial discount to mid-tier gold producers.
2 Refers to total aggregate production from the Timmins Camp (approximately 65 million ounces of total aggregate production from assets included in the Porcupine Complex (see Porcupine Technical Report page 6-7)). 3 Inferred Mineral Resources at Dome were not included in the PEA economic analysis. 4 Project economics in the PEA were generated with a base case using CIBC World Markets Inc.’s December 2024 analyst consensus gold prices, including 2025: $2,576/ounce; 2026: $2,484 per ounce; 2027: $2,437 per ounce; and a LT gold price of $2,150 per ounce beginning in 2028. 5 Sensitivity case involves gold prices +23% to the base case, including a LT gold price of $2,650 per ounce.
PORCUPINE OVERVIEW
The Porcupine Complex consists of the Hoyle Pond and Pamour mine properties and the Dome mine property and milling facility (collectively “ Dome ”) in Timmins, Ontario, as well as the Borden underground mining operation near Chapleau, Ontario. Based on the results of a new technical report (see the section, “ PORCUPINE COMPLEX –TECHNICAL REPORT” , which follows), annual production at the Porcupine Complex is expected to average more than 285,000 ounces 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. Significant opportunities exist to grow production, reduce costs and/or extend mine life at the Porcupine Complex. Below is a summary of key opportunities identified to date. Hoyle Pond : Improve ventilation, material handling and backfill systems, increase automation, including expanding the use of tele-remote delivery systems, and evaluate known zones of mineralization that currently do not have Mineral Resource estimates and were not included the PEA LOM plan (e.g. TVZ). Borden : Upgrade the haulage fleet, including increasing the use of electric vehicles, improve ground support and backfill systems and increase ventilation levels. Pamour : Complete development of the Pamour open-pit project. Production is expected to average approximately 150,000 ounces per year over a 21-year mine life (with an additional year of stockpile processing). Opportunities to enhance the value of the project include reducing or eliminating waste-rock rehandling and investigating the use of alternative delivery systems to replace truck haulage from the open pit to the Dome Mill. Dome : Evaluate the opportunity to upgrade the nearly 11.0 million ounce Inferred Mineral Resource 6 and assess the potential for resuming mine production at Dome, where production ceased in 2017 after over a century of operations.
Discovery plans to commit significant resources to exploration drilling at the 140,000-hectare total land position comprising the Porcupine Complex given the considerable potential that exists to identify new mineralization at or near existing mine infrastructure, as well as the opportunity for new discoveries at the many regional targets included in the land package. The Company plans to make significant investments in mine closure, site reclamation and rehabilitation to ensure the successful remediation of all current and past operating sites to allow for their safe and effective use by the community for generations to come. These investments are included in the economic analysis included in the PEA.
6 Inferred Mineral Resources at Dome were not included in PEA economic analysis.
PORCUPINE COMPLEX – TECHNICAL REPORT
As part of the Company’s evaluation of the Porcupine Complex, Discovery has completed a technical report prepared in accordance with National Instrument 43-101 – _Standards of Disclosure for Mineral Projects _(“ NI 43-101 ”) entitled, “ Porcupine Complex, Ontario, Canada, Technical Report on Preliminary Economic Assessment .” The Porcupine Technical Report has an effective date of January 13, 2025.
The Porcupine Technical Report includes the results of a preliminary economic assessment which is preliminary in nature. The PEA includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the preliminary economic assessment will be realized.
Following the Closing Date, the Company expects to complete additional studies to more fully evaluate the growth and optimization opportunities related to the Porcupine Complex.
Porcupine Technical Report Highlights
Base case NPV of $1.2 billion using CIBC World Markets Inc.’s December 2024 analyst consensus gold prices, including a LT gold price of $2,150 per ounce (the “ Base Case ”), and $2.3 billion assuming a +23% sensitivity case using a LT gold price of $2,650 per ounce. After-tax free cash flow 7 totaling $1.3 billion over the first 10 years and $1.8 billion over the LOM at the Base Case gold prices. Large base of Mineral Resources including Measured & Indicated Mineral Resources of 3.9 million ounces (69.7 million tonnes (“Mt”) at an average grade of 1.76 grams per tonne (“g/t”) gold) and Inferred Mineral Resources of 12.5 million ounces (254.5 Mt at 1.53 g/t gold). 8 Growing gold production averaging over 285,000 ounces per year over the next 10 years and approximately 4.9 million ounces over the 22-year mine life with upside potential, including opportunities to improve throughput and lower costs at Hoyle Pond, Borden and Pamour and resume mining operations at the Dome mine. Attractive exploration upside with significant drilling planned across the 140,000-hectare land position in Timmins and at Borden. Potential exists to both extend existing zones and identify new areas of mineralization at current and past operations and to drill for new discoveries at numerous regional targets across the Timmins Camp. AISC averaging $1,504 per ounce over the LOM and $1,278 per ounce from 2030 to 2035. Capital expenditures (excluding reclamation costs) totaling $854 million from 2025 to 2030, with sustaining capital expenditures averaging $110 million per year over the same period, total development capital expenditures of $122 million, almost all related to investments to complete the Pamour open-pit project in 2025 and 2026, and total planned exploration capital from 2025 to 2030 totaling $69 million, reflecting the significant exploration potential existing at the Porcupine Complex.
7 Example of non-GAAP financial measure – See cautionary note: NON-GAAP FINANCIAL MEASURES. 8 See the section, "PORCUPINE COMPLEX – TECHNICAL REPORT MINERAL RESOURCES" for a breakout of Mineral Resource estimates.
BENEFITS OF TRANSACTION FOR DISCOVERY SHAREHOLDERS
Transforms Discovery into a Canadian gold producer in a Tier 1 jurisdiction with significant upside potential. Provides growing gold production and significant leverage to the gold price during a period of record gold prices. Establishes a solid pipeline for growth through existing development projects as well as by providing substantial exploration upside with a large land position in one of the world’s most prolific gold regions. Contributes to increased financial strength and supports the financing of future growth initiatives, including the development of the Cordero silver project. Establishes a multi-asset portfolio that improves diversification and provides exposure to both gold and silver prices. Supports value creation by applying the Discovery management team’s extensive experience operating in the Timmins Camp to the Porcupine Complex.
Creates re-rate opportunity by transforming Discovery from a developer to a North American precious metals producer.
BENEFITS OF TRANSACTION FOR PORCUPINE COMPLEX STAKEHOLDERS
Positions the Porcupine Complex as core assets in a portfolio operated by a management team committed to growing and optimizing the assets to maximize stakeholder value and mine life.
Discovery recognizes that the skill and expertise of the Porcupine team represents a key strength and is committed to supporting the existing managers, employees, contractors and suppliers in continuing to drive the Porcupine Complex forward. The Discovery leadership team has deep roots in the Timmins community and will bring a strong commitment to supporting Timmins and the surrounding area through investment, donations and other initiatives. The Discovery leadership team already has long-standing and positive relationships with local First Nations groups around Timmins and will ensure that all existing commitments, obligations and agreements are honoured and will work cooperatively to identify new opportunities to further strengthen these relationships. Discovery fully understands that mining is a privilege, and it will bring the same commitment to responsible mining to Timmins that has resulted in the Company receiving numerous awards and distinctions in Mexico. In particular, the Company has included in its financial plan for the Porcupine Complex significant investment for mine closure and site reclamation and rehabilitation to ensure that both current operations and legacy sites are successfully remediated and available for future use by the community.
TRANSACTION SUMMARY AND TIMING
Under the Agreement, Discovery will acquire from a wholly owned subsidiary of Newmont (the “ Subsidiary ”) all the issued and outstanding common shares of a newly created entity (the “ Porcupine Entity ”) formed to hold 100% of Newmont's interest in the Porcupine Complex (the “ Reorganization ”).
Total consideration for the Transaction is $425 million (the “ Total Consideration ”). The Total Consideration includes $275 million of consideration payable on the Closing Date, comprising $200 million of Closing Cash Consideration and $75 million of Closing Equity Consideration, and $150 million of deferred consideration to be paid in four annual cash payments of $37.5 million commencing on December 31, 2027. The Closing Equity Consideration will be paid through the issuance of an aggregate of approximately 120 million Discovery common shares, which will be subject to a one-year lock-up arrangement. Discovery will also assume the environmental liabilities and reclamation obligations related to the Porcupine Complex.
Discovery anticipates that the Closing Date will occur in the first half of 2025. The Transaction’s closing is subject to certain conditions, including, among other things, the transfer of the Porcupine Complex by the Subsidiary to the Porcupine Entity (with the Reorganization being subject to certain approvals, including the consent of Ontario's Ministry of Mines), receipt of all required regulatory approvals (including the approval of the Toronto Stock Exchange (“ TSX ”) and approval, or expiry of the waiting period, under the Competition Act (Canada)), and other customary closing conditions for a transaction of this nature.
As the total number of shares to be issued to Newmont as part of the Closing Equity Consideration exceeds 25% of Discovery’s current shares outstanding, shareholder approval (50.1% of shares voting at the meeting) will be required to issue excess shares beyond such threshold (the “ Additional Shares ”). Discovery's two largest shareholders and directors and officers of Discovery, representing in the aggregate approximately 35% of the issued and outstanding Discovery shares, have entered into voting support agreements pursuant to which they have agreed to, among other things, vote their shares in favour of the issuance of the Additional Shares. If shareholder approval is not obtained, the value of the Additional Shares, calculated at the Issue Price (defined below) will be added to the first deferred payment which is due on December 31, 2027. Accordingly, shareholder approval is not a condition precedent to the closing of the Transaction.