Newmont (ASX:NEM) is selling its Porcupine operation in Ontario, Canada to Discovery Silver (TSX:DSV) for $425 million in cash and shares.
On completion of this latest deal, Newmont will have generated $4.3 billion in proceeds from the non-core asset divestitures and investments.
BMO Capital Markets acted as financial adviser and Goodmans acted as legal adviser for the transaction.
Porcupine is the final non-core asset in the $75 billion miner’s portfolio.
CEO Tom Palmer says the sale of non-core assets is part of Newmont’s plan to focus on its tier one projects.
“Including the Porcupine divestiture, we expect to generate up to $4.3 billion in total proceeds from the announced sales of our high-quality non-core assets and investments, enabling us to further reduce debt and return capital to shareholders,” he says.
In February 2024, Newmont revealed its plans to divest its non-core assets, including six operations and two projects from its Australian, Ghanaian, and North American businesses.
Non-core divestments generated $3.8 billion of the proceeds and $527 million came from the sale of other investments, including the Lundin Gold stream credit facility and offtake agreement, and the monetisation of Newmont’s Batu Hijau contingent payments.
Meanwhile, Franco-Nevada (TSX:FNV) is backing the acquisition of the Porcupine operation by Discovery Silver by providing financing for the deal.
The financing package includes a 4.25% net smelter return royalty for US$300 million ($480 million), a US$100 million senior secured term loan available to be drawn by Discovery Silver within two years of closing, and roughly US$49 million of equity participation with a cornerstone investment in a concurrent C$225 million ($249.8 million) equity raise by Discovery Silver.
The financing package covers the purchase of Porcupine and will also fund the planned capital program for the operation.
Franco-Nevada President Paul Brink says the Porcupine operation is host to some of Ontario’s most successful historical gold producers and its extensive mineral resources present compelling upside potential.
Discovery Silver CEO Tony Makuch says the explorer’s roots are largely in Northern Ontario, and the company knows the Timmins Camp, which hosts the Porcupine operation, very well.
The Ontario Ministry of Mines ranks the Timmins Camp, located in the prolific Abitibi Greenstone Belt, as the largest producer of gold in the region.
The Government of Canada says the camp produced 70.5 million ounces between 1906 and 2019 and is the world’s largest Archean orogenic gold camp, with deposits distributed over 50km of strike length.
The Porcupine operation has measured and inferred resources of 69.7 million tonnes at 1.76 grams per tonne gold for 3.9 million contained ounces and an inferred resource of 254.5 million tonnes at 1.53g/t for 12.5 million contained ounces.
The sale of Porcupine is expected to be completed in the first half of the year. Newmont will receive $200 million in cash and $75 million worth of Discovery Silver shares on closing of the transaction.
The remaining $150 million will be paid in four annual installments of $37.5 million starting 31 December 2027.
Write to Angela East at Mining.com.au
Images: Newmont
