Fortuna Silver acquiring Roxgold for $1.1 billion

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Fortuna Silver Mines Inc. [FVI-TSX, Lima; FSM-NYSE; F4S-FSE] said Monday April 26 that it has signed a definitive deal to acquire West Africa-focused Roxgold Inc. [ROXG-TSX; ROGFF-OTCQX] for $1.1 billion.

Under the terms of the transaction, Roxgold shareholders will receive 0.283 common shares of Fortuna and $0.001 for each Roxgold common share held. When the transaction is complete, Fortuna and Roxgold shareholders will own approximately 64.3% and 35.7% of the pro forma company, respectively.

The exchange ratio implies a consideration of approximately $2.73 per Roxgold common share based on the closing price of Fortuna common shares on the TSX on April 23, 2021, or a 42.1% premium to the closing price of Roxgold on the TSX on the same date.

Based on the 20-day volume weighted average price of Fortuna shares on the TSX during the period ended April 23, 2021, the exchange ratio implies a premium of 40.4% to Roxgold shareholders.

Roxgold shares jumped 14.6% or 28 cents to $2.20 on volume of 17.05 million. The shares were previously trading in a 52-week range of $2.08 and $1.09.

Fortuna eased 16.8% or $1.62 to $8.02 on volume of 4.2 million to trade in a 52-week range of $12.61 and $3.56.

Roxgold is a Canadian-based mining company that is aiming to be the next multi-asset gold producer in West Africa. The company owns and operates the high-grade Yaramoko Mine Complex located on the Hounde greenstone belt in western Burkina Faso. It is also advancing the development and exploration of the Seguela Gold Project in Côte D’Ivoire.

Yaramoko is expected to produce between 120,000 and 130,000 ounces of gold this year at an all-in-sustaining cost of US$895-US$975/oz.

Fortuna is a precious metals producer with a focus on Latin America. Its key assets are the Caylloma silver mine in southern Peru, the San Jose silver-gold mine in Mexico and the Lindero project in the Argentinian puna 260 km due west of Salta City.

In the joint statement, the companies said the transaction creates a premier growth-oriented global intermediate gold and silver producer, well positioned to pursue compelling organic and inorganic growth opportunities.

The combined company is expected to produce 450,000 ounces of gold equivalent annually at an all-in-sustaining cost of approximately US$950/oz.

The deal is backed by officers and directors of Roxgold, holding 3.52% of the total Roxgold shares. They have entered into support agreements with Fortuna.


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