Vancouver-based Fortuna Silver to buy Roxgold in $1-billion deal – by Niall McGee (Globe and Mail – April 27, 2021)

Fortuna Silver Mines Inc.’s $1.1-billion takeover offer for fellow Canadian miner Roxgold Inc. was given a sour reception on the stock market, with the shares of both companies falling short of expectations, and analysts questioning the deal’s rationale.

Vancouver-based Fortuna, which mostly mines silver and whose operations are in the Americas, said on Monday it intends to pay 0.283 of its shares, and 0.1 cent in cash, for each Roxgold share, a 41-per-cent premium to Roxgold’s closing price on Friday.

Toronto-based Roxgold operates a high-grade, low-cost gold mine in Burkina Faso, and has plans to build another one in Ivory Coast. Even though the boards of both companies approved the transaction, their shareholders appear concerned about the merits of the marriage.

After the deal was announced, Fortuna shares slid by 18.1 per cent to close at $7.90 on the Toronto Stock Exchange, their worst daily performance in more than a year. Meantime, Roxgold shares rose only by 15.1 per cent, to $2.21, far below the offer, which is worth approximately $2.73 on paper.

Chris Thompson, analyst with PI Financial, was one of a number of analysts who questioned the rationale for Fortuna’s pursuit of Roxgold, calling it a “weird combination.”

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