Canadian precious metals mining company Fortuna Silver Mines and Canada-based gold mining company Roxgold have entered into a definitive agreement whereby Fortuna will acquire all the issued and outstanding securities of Roxgold pursuant to a plan of arrangement.
Under the terms of the transaction, Roxgold shareholders will receive 0.283 common shares in Fortuna and C$0.001 for each Roxgold common share held. The transaction is valued at about C$1.1-billion.
Upon completion of the transaction, existing Fortuna and Roxgold shareholders will own about 64.3% and 35.7% of the pro forma company shares, respectively.
The companies say the transaction will create a premier growth-oriented global intermediate gold and silver producer that is well positioned to pursue compelling organic and inorganic growth opportunities.
The enlarged organization will produce about 450 000 gold-equivalent ounces at an all-in sustaining cost of about $950 per gold-equivalent ounce.
Moreover, it will bring together two highly experienced management teams with records of value creation in the Americas and in West Africa. Fortuna is expected to benefit from the in-region operating experience of key members of Roxgold team.
The combined company will own a diversified, complementary portfolio of four quality operating assets and a development project in prolific jurisdictions.
The companies also cite an attractive near-term free cash flow profile with a robust pipeline of high-upside exploration assets.
They mention Boussoura, a gold exploration project, over twenty satellite targets identified at Séguéla, and an extensive portfolio of early-stage exploration assets in Côte d’Ivoire and Mexico.
The transaction will also enable participation in an enlarged company with a strong balance sheet, significantly higher liquidity, greater scale and enhanced capital markets relevance.
It will result in a lower cost of capital and stronger balance sheet to fund Séguéla’s construction and Boussoura’s development and flexibility to pursue other organic and external growth opportunities.
Moreover, it puts Fortuna in a stronger position to compete for meaningful assets in the Americas and in West Africa, which it considers to be a rapidly growing and highly prospective mining jurisdiction.
Silver will continue to be a meaningful contributor to revenue, with this exposure largely in line with silver producer peers, the company states.
“With Roxgold, we are acquiring a complete business platform which brings low-cost gold production; a permitted feasibility stage development project; a robust exploration pipeline; and key members of a seasoned executive team of proven mine builders, developers and explorers in West Africa.
“The combined company will be in a stronger position to continue accelerating the development of the Séguéla gold project at a lower cost of capital and aggressively pursuing the potential of a most exciting exploration pipeline in West Africa and Latin America,” says Fortuna CEO and president Jorge A Ganoza.
“This transaction recognizes the commitment and execution of the Roxgold team and the value creation over recent years, as we advanced from developer to low-cost gold producer with a growth pipeline that few of our peers could match.
“The combination with Fortuna provides our shareholders with an immediate premium and a unique opportunity to participate in the creation of a new global midtier precious metals producer with significant organic growth and cash flow generating potential,” adds Roxgold CEO and president John Dorward.
