Canada’s Fortuna Silver Mines (NYSE: FSM) (TSX: FVI) is buying fellow miner Roxgold (TSX: ROXG) in a cash-and-stock deal valued at about C$1 billion ($884.32 million), as strong gold prices spur a wave of mergers and acquisitions in the sector.
Vancouver-based Fortuna, which has operations in Peru, Mexico and Argentina, said the combined company would produce about 450,000 ounces of gold equivalent a year.
West-Africa focused Roxgold’s shareholders will receive 0.283 common shares of Fortuna and C$0.001 for each Roxgold common share held. The exchange ratio implies a consideration of about C$2.73 per Roxgold share, a 42.1% premium to its last closing price.
After the merger, existing Fortuna and Roxgold shareholders will own about 64.3% and 35.7%, respectively, of the combined miner.
Investors reacted negatively to the news, with Fortuna’s shares falling as much as 16% to C$8.09 during mid-morning trading in Toronto.
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