Porcupine Complex

A gold producing property located in Timmins, Ontario, the Porcupine Complex consists of the Hoyle Pond and Pamour mine properties, and the Dome mine property and milling facility, as well as the Borden underground mining operation near Chapleau, Ontario.

Prior to the acquisition by Discovery Silver Corp., it was 100% owned by Newmont Corporation.

Further information on the project can be found on Newmont’s website.

On January 27, 2025, Franco-Nevada Corporation ("Franco-Nevada") announced that it entered into a comprehensive financing transaction with Discovery Silver Corporation ("Discovery") to support its US$425 million acquisition of the Porcupine Complex from Newmont Corporation.

Key terms of the transaction included

1. a 4.25% net smelter return royalty for US$300 million, consisting of two tranches on production from the Porcupine Complex
   • 2.25% of net smelter returns in perpetuity on all minerals produced; and
   • 2.00% of net smelter returns on all minerals produced until the earlier of i) royalty payments equivalent to 72,000 gold ounces (attributable solely to the 2.00% net smelter return royalty) or ii) a cash payment equal to a pre-tax annual IRR of 12% in reference to a US$100 million attributable purchase price
2. a US$100 million senior secured term loan available to be drawn by Discovery within two years of closing and a 7-year maturity with amortization of 5% per quarter after year 5, with no restrictions on pre-payment
3. an approximately US$49 million of equity participation with a cornerstone investment in a concurrent C$247.5 million (approximately US$155 million) equity raise by Discovery
   • As part of the equity financing, which closed February 3, 2025, Franco-Nevada purchased 78,8333,333 subscription receipts (including 2,444,445 subscription receipts issued pursuant to the full exercise of an over-allotment option granted to the underwriters in connection with the offering) at a price of C$0.90 per receipt for an aggregate purchase price of approximately C$71.0 million (or US$49.4 million)

The financing package provided Discovery with the proceeds to successfully acquire the Porcupine Complex, which closed on April 16, 2025, and fund the planned capital program for the Complex to achieve its full potential.

Franco-Nevada will maintain a right of first refusal on future streams and royalties related to the Porcupine Complex, including a surrounding area of interest, as well as the right to purchase a matching 2.25% perpetual royalty should certain claims adjacent the operations be acquired in the future.

With the completion of the acquisition, and execution of all financing agreements, Discovery’s capital structure includes 797.5 million common shares outstanding, with existing shareholders owning approximately 50.5% of the pro forma shares outstanding, excluding any new common shares acquired by existing shareholders via the offering.

After receipt of all cash from the financing package, Discovery’s cash position increased approximately C$240 million (US$170 million), with the US$100 million senior secured term loan with Franco-Nevada remaining undrawn.

Further information can be found on Globe Newswire’s website.

Discovery is a precious metals company engaged in the acquisition, development and operation of high-quality assets, including its 100%-owned Cordero project, one of the world's largest undeveloped silver deposits, which is located close to infrastructure in a prolific mining belt in Chihuahua State, Mexico.

Franco-Nevada is the leading gold-focused royalty and streaming company with the largest and most diversified portfolio of cash-flow producing assets. Its business model provides investors with gold price and exploration optionality while limiting exposure to many of the risks of operating companies.