Tony Makuch leads effort to buy Newmont's Timmins assets
Discovery Silver, led by Timmins own Tony Makuch, has finalized a definitive agreement to acquire Newmont Corporation’s Porcupine Complex in Timmins. The transaction, set to close in the first half of 2025, positions Discovery as a prominent Canadian gold producer, combining gold assets in one of the world’s most prolific gold camps with its flagship Cordero silver project in Mexico.
“This acquisition is transformative,” said Tony Makuch, CEO of Discovery Silver. “The Porcupine Complex brings growing gold production, extensive exploration upside, and the opportunity to leverage our deep roots and operational expertise in the Timmins Camp. With this purchase, we’re combining high-quality assets to establish Discovery as a leading North American precious metals producer.”
Key Terms of the Agreement
The $425 million consideration is structured as follows:
• $200 million in cash upon closing.
• $75 million in Discovery common shares, issued at closing.
• $150 million deferred cash, payable in four annual installments of $37.5 million starting December 31, 2027.
Discovery has secured $555 million in financing to support the acquisition and future development. This includes $400 million from Franco-Nevada Corporation through royalty and debt agreements and $155 million from a public offering of subscription receipts. Franco-Nevada will also participate as a cornerstone investor in the public offering.
Porcupine Complex Overview
The Porcupine Complex includes the Hoyle Pond, Pamour, and Dome mine properties, as well as the Borden underground mine near Chapleau, Ontario. The complex accounts for a significant portion of the Timmins Camp’s historical production of 70 million ounces of gold.
Current production is centered on Hoyle Pond, a high-grade underground mine, and Borden, a relatively new operation that began commercial production in 2019. The Pamour open-pit project is expected to produce 150,000 ounces annually over a 21-year mine life. The dormant Dome mine and milling facility offer additional upside, with nearly 11 million ounces of inferred mineral resources identified.
Growth and Optimization Opportunities
Discovery plans significant investments to enhance the Porcupine Complex, including:
• Hoyle Pond: Improving ventilation, backfill systems, and automation while expanding tele-remote operations.
• Borden: Upgrading the haulage fleet, increasing electric vehicle use, and optimizing ventilation and ground support systems.
• Pamour: Completing open-pit development, reducing waste-rock rehandling, and exploring alternative material delivery systems.
• Dome: Evaluating potential for resuming operations by upgrading inferred resources into measured and indicated categories.
Additionally, Discovery will commit $69 million to exploration drilling between 2025 and 2030, focusing on extending known mineralized zones and discovering new deposits within the Porcupine Complex’s 140,000-hectare land package.
Economic and Financial Highlights
A Preliminary Economic Assessment (PEA) highlights robust potential for the Porcupine Complex:
• Base case net present value (NPV): $1.2 billion at a 5% discount rate, assuming a long-term gold price of $2,150 per ounce.
• High-sensitivity case NPV: $2.3 billion with a gold price of $2,650 per ounce.
• After-tax free cash flow: $1.3 billion over the first 10 years and $1.8 billion over the life of mine.
• Average annual production: Over 285,000 ounces for the next decade, totaling approximately 4.9 million ounces across the 22-year mine life.
• All-in sustaining costs (AISC): Average of $1,504 per ounce over the life of mine, with reductions to $1,278 per ounce between 2030 and 2035.
Discovery will also invest significantly in mine closure and reclamation to ensure long-term environmental sustainability and future community use of the sites.
Community and Stakeholder Commitments
Discovery’s leadership team, many of whom have deep ties to Timmins, is committed to fostering local engagement and honoring agreements with First Nations communities. “We understand that mining is a privilege, and we are bringing the same responsible mining practices that earned us recognition in Mexico to Timmins,” said Makuch.
The company plans to collaborate closely with local stakeholders to support community initiatives, invest in site restoration, and ensure that past and present operations are remediated to benefit future generations.
Financing Package Details
Discovery’s $555 million financing package includes:
1. Franco-Nevada Royalty and Debt Agreements:
• $200 million for a 2.25% life-of-mine net smelter return royalty.
• $100 million for a 2.00% net smelter return royalty extinguishable after payments equivalent to 72,000 ounces of gold.
• $100 million senior debt facility with a seven-year maturity, a three-month SOFR rate plus 450 basis points, and no principal repayments required for the first five years.
2. Public Offering:
• $155 million raised through subscription receipts, with Franco-Nevada participating as a cornerstone investor for $50 million.
Strategic Implications
The acquisition solidifies Discovery Silver as a diversified precious metals producer with significant gold and silver exposure. The Porcupine Complex enhances Discovery’s financial strength, supports the development of its Cordero silver project in Mexico, and establishes a platform for long-term growth.
“This transaction is a rare opportunity to acquire high-quality, producing assets in a Tier 1 jurisdiction with exceptional exploration upside,” said Makuch. “Our focus is on maximizing value for all stakeholders while building a sustainable and profitable future for Discovery.”
Closing Conditions
The transaction is expected to close in the first half of 2025, pending regulatory approvals, shareholder consent for equity issuance, and other customary closing conditions.
By Kevin Vincent, Senior Contributing Editor to Mining Life Online and Mining Life & Exploration News
Tags: Northern Ontario / Deals & Financial / Gold / All Articles