Fortuna, Chesser enter into a definitive agreement
Fortuna Silver Mines, a mining company, has entered into a definitive agreement with Chesser Resources to acquire 100% of the fully paid ordinary shares of Chesser. The acquisition will be carried out through a scheme of arrangement under the Australian Corporations Act 2001.
Under the agreement, Fortuna will exchange 0.0248 of its common shares for each Chesser share held, valuing the transaction at approximately A$89.0 million. This represents a purchase price of around A$0.1421 for each Chesser share. Upon completion of the scheme, Fortuna will issue up to 15,545,682 shares to Chesser shareholders, equivalent to approximately 5.1% of Fortuna’s issued and outstanding shares.
The acquisition of Chesser will expand Fortuna’s presence in West Africa, specifically in Senegal, where Chesser holds the Diamba Sud Gold Project. This project, at the preliminary economic assessment stage, consists of four open pit high-grade gold deposits and several untested exploration targets. Fortuna intends to prioritize exploration activities to expand the mineral resource before proceeding with the development of the Diamba Sud project.
Strategy
Jorge A. Ganoza, the President & CEO of Fortuna, expressed confidence in the acquisition, highlighting Chesser’s progress in advancing the Diamba Sud project and the value creation opportunities it presents to both Chesser and Fortuna shareholders. Ganoza emphasized that the transaction aligns with Fortuna’s strategy of pursuing high-value exploration and development opportunities in established regions.
As of December 2022, Chesser had reported an Indicated Mineral Resource estimate of 10 million tonnes with an average grade of 1.9 g/t Au, containing 625,000 ounces of gold. Additionally, an Inferred Mineral Resource estimate of 4.7 million tonnes with an average grade of 1.5 g/t Au, containing 235,000 ounces of gold, was reported. These estimates were prepared following the JORC Code guidelines. The mineral resources are located in various deposits within the Diamba Sud project, including Area D, Area A, Karakara, and Bougouda. Further exploration potential exists, including the Western Splay discovery, which warrants additional investigation.
A scoping study conducted on the Diamba Sud project indicated that it has the potential for a conventional open pit and CIL (carbon-in-leach) process design. The study projected a post-tax NPV5% (Net Present Value at a 5% discount rate) of US$218 million and a 43% internal rate of return (IRR) over a mine life of 7.5 years. After the transaction is completed, Fortuna plans to conduct an optimization study to further assess the project’s technical data and economic parameters, while also preparing an updated exploration and development plan. Fortuna’s strong financial position and favorable cost of capital will enable the company to accelerate the exploration activities at Diamba Sud and support its future development.
