Franco-Nevada’s Financing Transaction with Discovery Silver Corporation: A Detailed Look
On January 27, 2025, Franco-Nevada Corporation (Franco-Nevada) announced a comprehensive financing transaction with Discovery Silver Corporation (Discovery) to support Discovery’s proposed acquisition of the Porcupine Complex from Newmont Corporation. This transaction is expected to significantly enhance Franco-Nevada’s gold streaming portfolio and strengthen its position in the mining industry.
Components of the Financing Transaction
The financing transaction comprises three main components:
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Royalty: Franco-Nevada will acquire a 4.25% net smelter return royalty (the “Royalty”) on production from the Porcupine Complex for an upfront consideration of $300M. The Royalty is divided into two tranches: $200M for the first 15 years and $100M for the subsequent years.
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Senior Secured Term Loan: Discovery will have access to a $100M senior secured term loan (the “Loan”) available to be drawn by Discovery within two years of closing.
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Equity Participation: Franco-Nevada will participate in a concurrent C$225M (approximately $155M) Discovery equity raise, investing approximately $49M for a 20.6% ownership stake in Discovery.
Impact on Franco-Nevada
The acquisition of the Porcupine Complex Royalty will add approximately 150,000 ounces of gold equivalent production per year to Franco-Nevada’s portfolio, making it one of the largest gold streaming companies in the world. The Royalty also provides a long-term, predictable cash flow stream, contributing to Franco-Nevada’s profitability and stability.
Impact on the World
The financing transaction between Franco-Nevada and Discovery is expected to have a positive impact on the mining industry as a whole. The transaction reinforces the trend of gold streaming companies playing a more prominent role in the financing and development of mining projects. It also highlights the growing importance of alternative financing structures, such as royalty and streaming agreements, in the mining industry.
Conclusion
Franco-Nevada’s financing transaction with Discovery Silver Corporation is a significant development in the mining industry. The acquisition of the Porcupine Complex Royalty will add valuable production to Franco-Nevada’s portfolio and contribute to its long-term profitability. Additionally, the transaction underscores the growing role of gold streaming companies in the financing and development of mining projects, providing a valuable alternative to traditional financing structures. The mining industry will continue to evolve, and Franco-Nevada’s transaction with Discovery is a clear indication of the innovative approaches being taken to finance and develop mining projects in the 21st century.
Franco-Nevada’s commitment to profitability, focus on education, and intense pursuit of growth opportunities are evident in this transaction. As the mining industry continues to evolve, Franco-Nevada is poised to remain at the forefront, driving innovation and delivering value to its stakeholders.
By providing financing solutions tailored to mining companies, Franco-Nevada is helping to fuel the growth of the mining industry and contribute to a more sustainable and prosperous future for all.
