VANCOUVER – Fortuna Silver Mines Inc. [FVI-TSX, Lima; FSM-NYSE; F4S-FSE] said it aims to strengthen its presence in West Africa by acquiring Chesser Resources Ltd.
The acquisition of Chesser will expand Fortuna’s asset base to include the preliminary economic assessment-stage Diamba Sud gold project in Senegal, one of the new and emerging gold discoveries in the region.
Chesser holds tenements covering approximately 872-square kilometres of prospective ground located in close proximity to and sharing similar geological features with tier one gold mines owned by Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] and B2Gold Corp. [BTO-TSX, BTG-NYSE], located in Mali.
Fortuna Silver Mines is a Canadian company with four operating mines in Argentina, Burkina Faso, Mexico and Peru. It has a fifth mine under construction in Cote d’Ivoire, West Africa.
Fortuna said it has entered into a definitive scheme implementation deed with Chesser. Under the deal, Fortuna has agreed to acquire 100% of the fully paid ordinary shares of Chesser in exchange for 0.0248 of a common share of Fortuna for each Chesser share held.
The transaction will be implemented by way of a scheme of arrangement and is valued at A$0.1421 for each Chesser share or $80.6 million.
Upon implementation of the scheme, Fortuna expects to issue up to 15.5 million shares to Chesser shareholders, representing approximately 5.1% of the issued and outstanding Fortuna shares on an undiluted basis.
Terms of the deal were released after the close of trading on May 8, 2023, when Fortuna shares closed at $5.20. The shares are currently trading in a 52-week range of $5.61 and $2.82.
“In a short time, Chesser has done a great job advancing Diamba Sud from early-stage exploration to a PEA-stage project with multiple targets yet to be tested,’’ said Fortuna President and CEO Jorge Ganoza.
Diamba Sud consists of four open pitable high-grade gold deposits, along with numerous targets yet to be tested. Fortuna said it will prioritize exploration to expand the mineral resource before advancing Diamba Sud to development stage.
Diamba Sud is estimated to host an indicated mineral resource of 10 million tonnes o of average grade 1.9 g/t gold containing 625,000 ounces. On top of that is an inferred resource of 4.7 million tonnes of average grade 1.5 g/t gold, containing 235,000 ounces. These resources are distributed across the Area D, Area A, Karakara and Bouganda deposits. Fortuna said potential exploration opportunities exist, including the new discovery at Western Splay which warrants additional exploration.
In a press release on May 2, 2023, Fortuna said a small group of union employees, representing 15% of the mine and plant workforce, have illegally blockaded access to its San Jose mine in Mexico. As a result, operations at the mine have been temporarily halted.