#1 Silver Play with Positive Cashflow Gold Miner (Top Notch Team)

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This material is provided for informational and educational purposes only and should not be considered financial, investment, legal, tax, or other professional advice. The views expressed are based on publicly available information, company filings, technical reports, news releases, and personal analysis at the time of writing, and they may change without notice. While every effort has been made to present accurate and reasonable information, no representation or warranty is made regarding completeness, accuracy, or reliability.

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Discovery Silver Corp. TSX: DSV / OTCQX: DSVSF

Introduction

Discovery Silver Corp. is no longer just a silver development company. After acquiring the Porcupine Operations from Newmont in 2025, Discovery has transformed into a producing Canadian gold company with a major silver growth asset in Mexico. The company now combines operating gold production in Timmins, Ontario with 100 percent ownership of the Cordero project in Chihuahua, Mexico, one of the world’s largest undeveloped silver deposits. Discovery describes itself as an Americas-focused precious metals company with producing gold assets in Canada and a large silver development-stage project in Mexico.

The bull case is simple: Discovery now has real cash flow from Porcupine, a top-tier operating team, a huge silver reserve base at Cordero, and a clear ambition to grow gold production in Timmins to more than 500,000 ounces per year. In Q1 2026, Discovery produced 60,269 ounces of gold, generated US$285.0M of revenue, reported US$81.7M of net earnings, and ended the quarter with US$634.9M of total liquidity, including US$384.9M cash and an undrawn US$250M revolving credit facility.

This is important because Discovery is now a very different company from the old “Cordero-only” story. Before Porcupine, the investment case depended mainly on permitting, financing, and building a large silver mine in Mexico. Today, the company already has production, cash flow, technical teams, infrastructure, and a strong platform in one of Canada’s most famous gold camps.

The main risk is also clear: Discovery must prove it can operate and grow Porcupine efficiently, integrate the Kidd acquisition, manage high capital spending, and still unlock the long-term value of Cordero without excessive dilution or balance sheet stress.

Overall, Discovery Silver is now a hybrid gold-silver growth story: near-term value from Porcupine gold production, medium-term growth from Timmins expansion, and long-term optionality from Cordero’s massive silver reserve.

Projects / Location / MRE / Grades

Project 1: Porcupine Operations, Ontario, Canada (Current Gold Producer)

Main asset

Porcupine is now Discovery’s producing engine. The Porcupine Operations are located in and near Timmins, Ontario, one of the world’s most prolific gold camps. The land package covers approximately 1,400 km² and includes Hoyle Pond, Pamour, Hollinger, Dome, Borden, the Dome mill, and multiple near-mine and regional exploration targets. Production from the Porcupine camp began in 1910, and the area has historically produced close to 70 million ounces of gold.

This matters because Discovery did not buy a greenfield dream. It bought a large, historic, operating gold complex with mines, mills, infrastructure, technical teams, and decades of geological data. Porcupine gives Discovery scale, operating credibility, and cash flow.

Current production comes mainly from Hoyle Pond and Borden underground mines. Pamour open-pit production was expected to begin in mid-2025, while Dome and Hollinger provide future optionality. Borden ore is trucked around 190 km to the Dome plant, while mineralization from the operating mines is treated at Dome.

Grade feel

Porcupine has a mix of high-grade underground and large lower-grade open-pit resources. Hoyle Pond is especially high grade, with indicated resource grade reported at 12.90 g/t Au and inferred resource grade at 15.24 g/t Au. Borden is also high grade for an underground Canadian gold mine, with measured resources at 6.17 g/t Au and indicated resources at 6.15 g/t Au. Pamour is lower grade but much larger, with indicated resources at 1.30 g/t Au. Dome is a massive inferred-resource optionality asset at 1.49 g/t Au.

This is a good mix. Hoyle Pond and Borden provide high-grade underground feed, while Pamour and Dome offer scale. The key question is whether Discovery can improve production, reduce unit costs, and convert more of the large inferred resource base into mineable ounces.

Porcupine Mineral Resource Estimate

Porcupine’s mineral resource estimate is based on the January 13, 2025 technical report. The resource base is large:

This is one of the strongest parts of Discovery’s story. The M&I base is already meaningful, but the real optionality sits in the very large inferred resource base, especially Dome. However, inferred resources are not reserves and do not have demonstrated economic viability, so Discovery still needs drilling, engineering, and mine planning to turn this geological inventory into value.

Porcupine Production and Costs

This means Discovery is already a meaningful gold producer, but the cost structure is not low yet. The company is investing heavily into Porcupine, with production expected to be weighted toward the second half of the year.

The market should not view Porcupine as a simple low-cost cash cow today. It is more like a turnaround and growth platform. If Discovery can spend capital wisely and lift production toward 500,000 ounces per year, Porcupine becomes much more valuable. If costs stay high and growth capital does not create better margins, the re-rating becomes harder.

Project 2: Cordero Silver Project, Chihuahua, Mexico (Top Silver Development Asset)

Main asset

Cordero is Discovery’s flagship silver asset and one of the largest undeveloped silver projects globally. It is located in Chihuahua State, Mexico, a major mining jurisdiction with established infrastructure and a long history of silver, lead, zinc, and gold mining. Discovery states that Cordero is the world’s largest undeveloped silver reserve and that the 2024 Feasibility Study positions it as one of the largest future silver producers globally.

Cordero is important because it gives Discovery huge silver leverage. Porcupine gives cash flow today, but Cordero gives the company a long-duration silver call option. If silver prices enter a major bull market, Cordero could become one of the most important silver development assets in the world.

Grade feel

Cordero is not a narrow-vein ultra-high-grade silver mine. It is a huge bulk-tonnage silver-lead-zinc-gold system. The project’s strength is not extreme grade. Its strength is scale, mine life, reserve size, and potential production volume.

The total M&I resource is 719Mt at 21 g/t Ag, 0.06 g/t Au, 0.30% Pb, and 0.57% Zn, containing 493Moz silver, 1.303Moz gold, 4.813Blb lead, 9.099Blb zinc, and 1.202Boz AgEq. Inferred resources add 149Mt at 14 g/t Ag, 0.03 g/t Au, 0.18% Pb, and 0.35% Zn, containing 65Moz silver and 155Moz AgEq.

For a silver development project, Cordero is enormous. The grade is moderate, but the scale is exceptional.

Cordero Mineral Reserve

Cordero has a very large proven and probable reserve base. The February 2024 reserve includes:

Discovery states that Cordero hosts the world’s largest undeveloped silver reserve. This is a major positive because the project already has a feasibility-stage reserve rather than only exploration-stage ounces.

Cordero Feasibility Study Economics

The February 2024 Feasibility Study shows Cordero as a large-scale, long-life silver project:

The key point is that Cordero is a serious development asset, not just exploration optionality. A 19-year mine life, 37Moz AgEq annual production, and sub-US$12.50/oz AgEq AISC in the early years would make Cordero one of the more important future silver mines globally.

The weakness is capex. US$606M is not small. Discovery can now support Cordero with Porcupine cash flow, but building a project this large still requires permits, financing, execution, and discipline. If the company rushes into construction without the right capital structure, dilution and debt risk could rise.

Project 3: Kidd Operations Acquisition (Infrastructure Optionality and Base Metal Exposure)

In March 2026, Discovery announced an agreement to acquire Glencore’s Kidd Operations in Timmins, Ontario. Kidd includes the Kidd Creek Mine, the Kidd Met Site, and the Kidd tailings management area. The deal includes US$10M paid through Discovery common shares, assumption of financial assurance and environmental obligations, offtake arrangements, and a deferred payment of up to US$75M payable after permits are received to deposit gold tailings at the Kidd tailings management area.

Kidd is strategically important because it could support Discovery’s Timmins growth plan. The Kidd Met Site includes a large integrated processing facility with four circuits and a 1,200-hectare tailings facility. Two circuits are currently operating, while two circuits are idle. Discovery wants to evaluate building one or possibly two gold circuits at Kidd Met to support future Porcupine growth.

Kidd also adds copper, zinc, and silver exposure. Over its 60-year operating history, Kidd has produced more than 772Mlb copper, 2.1Blb zinc, and 400Moz silver. In 2024, Kidd produced 40Mlb copper, 82Mlb zinc, and 1.5Moz silver.

This acquisition could be very smart if Discovery uses Kidd infrastructure to lower future Porcupine costs, expand processing capacity, and reduce tailings constraints. But there is risk. Kidd was expected by Glencore to close at the end of 2026, and Discovery is taking on environmental and rehabilitation obligations. The market needs to see whether Kidd becomes a value-creating infrastructure asset or an additional liability.

Project 4: Exploration Optionality

Discovery has multiple exploration engines:

This gives Discovery strong optionality. The company is not dependent on only one deposit. It now has gold, silver, copper, zinc, lead, and exploration upside across Canada and Mexico.

Share Structure / Ownership / Insiders

Capital Structure

Discovery’s website lists the following share structure:

The company’s share structure page says the data is “as at May 13, 2025,” so we treat this as the latest company-posted share structure page but potentially stale after subsequent corporate activity.

Share structure feel

The share count is high. Discovery is not a tight-share-structure junior anymore. The Porcupine acquisition, equity financing, and company transformation have moved Discovery into a larger producer/developer category.

That is not automatically bad. The company now has real assets, real production, cash flow, and a major reserve base. But from a multibagger perspective, the high share count and already large market cap mean Discovery is less explosive than a small-cap explorer. Future upside depends on operational growth, cost improvement, higher gold/silver prices, and Cordero development.

Ownership / Insiders

Insider alignment is not as obvious as in some smaller founder-led juniors. Discovery’s strongest alignment factor is more about management quality and institutional credibility than very high insider ownership. The team includes several former Kirkland Lake Gold executives and operators, which is important because Kirkland Lake was one of the best-performing gold companies of the last cycle.

Overall, we would rate ownership alignment as acceptable, but not the strongest part of the thesis. The stronger part is management execution history.

People / Management

Tony Makuch

President and CEO

Tony Makuch is the most important person in the Discovery Silver story. He has more than 35 years of mining industry experience and was previously President, CEO, and Director of Kirkland Lake Gold. During his time at Kirkland Lake, the company became one of the strongest gold stories in the sector before its acquisition by Agnico Eagle.

Management feel: Very strong. Makuch gives Discovery credibility as an operator, acquirer, and mine builder. This matters because Discovery is now executing a complex transformation from silver developer into gold-silver producer.

Pierre Rocque

Chief Operating Officer

Pierre Rocque is a mining engineer with more than 35 years of experience. He has worked at multiple Canadian gold mines and previously held senior roles at Kirkland Lake Gold, St Andrew Goldfields, Lake Shore Gold, and other operations.

Management feel: Strong operating background. This is important because Porcupine is not a passive asset. It requires operational improvement, capital discipline, underground mining expertise, open-pit planning, and mill optimization.

Alison White

Chief Financial Officer

Alison White has more than 20 years of executive finance leadership experience across mining, technology, and industrial sectors.

Management feel: Useful for a company with high capital requirements. Discovery needs strong financial control because it has Porcupine growth spending, Cordero development optionality, and Kidd integration obligations.

Eric Kallio

Senior Vice President, Exploration & Growth

Eric Kallio is a professional geologist with more than 39 years of experience in exploration, mine operations, scoping studies, and feasibility studies. His most recent full-time role was Executive Vice President Exploration Strategy and Growth at Agnico Eagle Mines.

Management feel: Strong. Exploration growth is a major part of the Porcupine thesis, especially given the huge inferred resource base and multiple near-mine targets.

Darin Smith

Senior Vice President, Corporate Development

Darin Smith has more than two decades of mining finance and strategic growth experience. He previously served as Senior Vice President of Corporate Development at Kirkland Lake Gold, where he worked on transaction execution and strategic review.

Management feel: Strong. Discovery’s current strategy is acquisition-driven and infrastructure-driven, so corporate development skill matters.

José Jabalera

Senior Vice President, Corporate Affairs and Sustainability, Mexico

José Jabalera previously served as General Director of Mining Development in Mexico’s Federal Ministry of Economy from 2019 to 2022.

Management feel: Very useful for Cordero. Permitting, government relationships, local communities, and Mexican regulatory knowledge are critical for a large mine development project.

Risks / Catalysts / Timeline

Key Risks

Catalysts

Expected Timeline to Full Production

Valuation Summary

This is an updated, simplified FCF-based valuation incorporating all major projects (Porcupine gold production + growth, Kidd infrastructure/optionality, and Cordero silver development).

Important Assumptions & Notes (conservative & transparent):

• Current data (as of late May 2026): ~810M shares outstanding, ~831M fully diluted (FD). Current market cap ~US$4.9–5.1B.
• Porcupine (core cash flow generator): 2026 guidance 260–300 koz Au (midpoint 280 koz). Current AISC guidance ~US$1,950–2,250/oz (high due to growth investments). Q1 2026 adjusted FCF was US$62.7M (annualized ~US$251M, but this was low-production quarter).
• Sustainable FCF estimate: Model mid-cycle sustainable FCF after growth capital normalizes (targeting 400–500+ koz Au long-term with Kidd support). Assumes ~US$1,800–2,000/oz AISC at higher production (improved from current). Taxes, royalties, sustaining capex (~US$150M/yr normalized), and modest corporate G&A included.
• Cordero: FS base NPV5% ~US$1.2B at ~US$22/oz Ag (highly leveraged to silver). Sensitivities show strong upside at higher prices.
• Kidd: Adds infrastructure optionality for Porcupine growth + minor Cu/Zn/Ag production (not fully quantified yet, treated as modest positive).
• Multiples (10x/15x/20x): Applied to normalized annual FCF. Conservative
• Prices are long-term assumptions (not spot; current ~US$4,500/oz Au, ~US$76/oz Ag). All in USD.

1. Porcupine + Kidd Normalized FCF Estimates (Annual, mid-cycle)

2. FCF Multiple Valuation (Porcupine/Kidd Core)

Value per FD share (831M shares):

At $6,000/oz Au:

• 10x FCF: US$12.0B – 14.4B market cap → US$14.45 – 17.33/share
• 15x FCF: US$18.0B – 21.6B → US$21.66 – 25.99/share
• 20x FCF: US$24.0B – 28.8B → US$28.88 – 34.66/share

At $7,000/oz Au:

• 10x FCF: US$16.8B – 19.2B → US$20.22 – 23.11/share
• 15x FCF: US$25.2B – 28.8B → US$30.32 – 34.66/share
• 20x FCF: US$33.6B – 38.4B → US$40.43 – 46.21/share

3. Cordero NPV Optionality (Additive)

Using FS sensitivities (scaled approximately; very levered to Ag):

Combined Valuation Summary (Porcupine/Kidd FCF + Cordero Optionality)

Summary & Quick Scorecard

RT Rating, Commentary

Discovery Silver is on our watchlist.

We would rate this as 5 out of 5 stars.

Discovery is a high-quality producer-developer with a strong management team, meaningful gold production, huge silver optionality, and a serious growth platform in Timmins. The company is much stronger today than when it was only a Cordero development story.

The perfect version of this story is simple: Porcupine production grows toward 500,000 ounces per year, Kidd infrastructure reduces bottlenecks, Cordero becomes construction-ready into a silver bull market, and management repeats the kind of value creation seen in Kirkland Lake Gold. If that happens, Discovery can become one of the most important North American precious metals growth stories. But if costs stay high, Kidd becomes a liability, or Cordero stays stuck as a paper project, the stock could struggle because expectations are already high.

The only drawdown is their share structure. The market cap is already large, the share count is high. If you bought it earlier, then you already have your win lottery.

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