National Bank of Canada’s Bullish Call on Discovery Silver: A Golden Opportunity in Mining’s Next Growth Phase

National Bank Financial, the corporate and investment banking arm of the National Bank of Canada, has thrown its weight behind Discovery Silver Corp. (DSV-T) with an “Outperform” rating and a $4 price target, signaling the Canadian miner’s emergence as a high-potential growth story in the precious metals sector. The initiation of coverage, led by analyst Rabi Nizami, underscores Discovery Silver’s strategic shift from explorer to mid-tier producer, driven by its transformative $425 million acquisition of Newmont Corp.’s Porcupine Complex in Ontario. Let’s dissect the rationale, risks, and upside catalysts behind this bullish stance.

The Porcupine Complex: A Growth Engine for Discovery Silver

At the heart of National Bank’s bullish thesis is the Porcupine Complex, a 1,400 km² land package in Ontario’s prolific Timmins mining district. The acquisition immediately adds production and free cash flow while unlocking exploration potential. Key highlights include:
- Production Growth: Discovery Silver is projected to ramp up output to over 300,000 ounces per year (koz/yr) by 2030, driven by a 10% compound annual growth rate (CAGR). This growth is fueled by cost optimization at existing mines and untapped resources like the 11 million-ounce (Moz) Inferred resource at the Dome Mine, which remains unmodeled in current projections.
- Operational Synergy: The Porcupine Complex benefits from Tier-1 infrastructure, including spare mill capacity and a skilled workforce, reducing execution risk. National Bank notes that Discovery Silver’s focus on low-cost operations positions it to thrive even in moderate gold price environments.

Leadership and Balance Sheet Strength

Discovery Silver’s management team, led by CEO Tony Makuch (formerly of Kirkland Lake Gold), has a proven track record of mine optimization and value creation. Their deep knowledge of the Timmins region is critical to unlocking the Porcupine Complex’s full potential. Financially, the company enters its producer phase with $170 million in cash and a $100 million undrawn credit facility, ensuring ample liquidity. Strategic shareholders like Newmont (15%), Franco-Nevada (~14%), and Eric Sprott (15%) further bolster credibility and capital support.

Valuation: A Discounted Gem with Upside Catalysts

National Bank’s $4 price target represents a 25% premium to the average analyst target of $3.36 and implies significant upside. The valuation hinges on two pillars:
1. Near-Term Performance: A 5.0x EV/EBITDA multiple for 2026, reflecting stable production and cost controls.
2. Long-Term Growth: A 0.80x price-to-net-asset-value (P/NAV) ratio, capturing the potential of the Cordero silver project in Mexico and untapped exploration targets.

Discovery Silver currently trades at a 0.56x P/NAV and 3.2x EV/EBITDA 2026, both below mid-tier peer averages. National Bank argues this discount is unwarranted given the company’s self-funding model and asset quality.

Risks and Catalysts to Watch

• Risks: Commodity price volatility and permitting delays at the Cordero project could pressure margins and timelines. However, National Bank highlights the company’s low-cost structure and diversified operations as mitigants.
• Catalysts:
• 2025–2026: Production metrics from Porcupine, exploration updates at the Dome Mine, and permitting progress for Cordero.
• Long-Term: A feasibility study for Cordero could re-rate the stock if it confirms its potential as a low-cost, multi-metal operation.

Conclusion: A Compelling Case for Growth

National Bank’s initiation of coverage on Discovery Silver is a strong endorsement of its transition to a Canadian gold producer with high-growth DNA. With a 10% CAGR, a $4 price target, and a management team that has delivered in the past, Discovery Silver offers a blend of near-term cash flow and long-term exploration upside.

The $170 million cash position and strategic partnerships provide a safety net, while the Porcupine Complex and Cordero projects create a clear path to value creation. At current prices (~$2.50 as of May 2025), the stock trades at a 51% discount to National Bank’s target, making it a compelling entry point for investors seeking exposure to a rising mid-tier mining star.

As the precious metals sector continues to benefit from macro tailwinds—geopolitical uncertainty, inflation, and dollar weakness—Discovery Silver’s strategic moves and asset quality position it to outperform. The question isn’t whether the company will grow, but how much faster it can exceed expectations.