Canada-based gold mining company Roxgold Inc. (ROXG:TSX), which is focused on developing assets in West Africa, and Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE), which operates silver and gold operations in North and South America, announced that they have entered into a definitive agreement for Fortuna to acquire 100% of Roxgold's issued and outstanding securities.
The agreement between the two firms stipulates that Roxgold shareholders will receive 0.283 common shares of Fortuna and CA$0.001 in cash for each Roxgold common share held. Following the completion of the transaction, the current Fortuna shareholders will own approximately 64.3% of the combined entity, with present Roxgold stockholders owning the remaining 35.7%.
The transaction implies a total consideration payable to Roxgold shareholder of about CA$2.73 per share which was estimated to represent a 42.1% premium to the closing price of Roxgold on the TSX on April 23, 2021. The total value of the transaction was stated to be around CA$1.1 billion.
The release stated that the merger "creates a premier growth-oriented global intermediate gold and silver producer, well positioned to pursue compelling organic and inorganic growth opportunities" with total yearly production of about 450,000 ounces gold equivalent with all-in sustaining costs (AISC) of around US$950/oz.
Fortuna Silver Mines' President and CEO Jorge A. Ganoza remarked, "With Roxgold we are acquiring a complete business platform which brings: i) low-cost gold production; ii) a permitted Feasibility stage development project; iii) a robust exploration pipeline; and iv) 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."
Roxgold's President and CEO John Dorward stated, "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 mid-tier precious metals producer with significant organic growth and cash flow generating potential."
The firms noted in the report that the combined entity will benefit from enhanced liquidity from a dual listing on both the Toronto and New York stock exchanges and will have market cap of approximately US$2 billion.
The report indicated that the transaction has already been unanimously approved each company's respective Board of Directors. The transaction is subject to shareholder and various regulatory approvals and is expected to close by late June or early July 2021.
Roxgold's mining assets are primarily located in West Africa. In Burkina Faso, the company owns and operates the Yaramoko Gold Mine and in Côte d'Ivoire is advancing the Séguéla Gold Project. Yaramoko includes two underground gold mines that produced about 120-130 Koz in 2020. The Séguéla Gold Project is an advanced stage development project being advanced toward a construction decision.
Fortuna Silver Mines Inc. is a precious metals mining company largely focused on silver and gold production with operations in Argentina, Mexico and Peru.
Roxgold started the day with a market cap of around $719.9 million with approximately 374.9 million shares outstanding. ROGFF shares opened 17% higher today at $1.822.3 (+$0.2742, +17.71%) over Friday's $1.5487 closing price and reached a new 52-week high price this morning of $1.8707. The stock has traded today between $1.7417 and $1.8707 per share and closed at $1.78 (+$0.25, +16.34%).
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