Fortuna faces pushback from retail investors on merits of proposed Roxgold $1.1-billion acquisition – by Niall McGee (Globe and Mail – May 14, 2021)

Fortuna Silver Mines Inc. is facing some resistance from its significant retail shareholder base on the merits of its proposed $1.1-billion takeover of Roxgold Inc. ROXG-T +2.71%increase, raising doubts about whether the deal will succeed.

Vancouver-based Fortuna on April 26 announced a friendly agreement to acquire Toronto-based Roxgold in an all-stock transaction. On the day the deal was announced, Fortuna’s shares sank by 18 per cent.

Investors’ main concerns include silver specialist Fortuna straying out of its main bailiwick by buying a gold miner, the Americas-focused company increasing its risk profile by buying assets in risky West Africa, and the steep 40-per-cent premium being paid.

More than two weeks later, even as Fortuna’s management continues to push the merits of the deal based on the quality of Roxgold’s assets, its stock has fallen further, trading some 23 per cent below its predeal level.

Despite the difficulties, Fortuna’s chief executive, Jorge Ganoza, said the company will “absolutely not” walk away from the acquisition. Institutional shareholders have been mostly supportive, he said.

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