Fortuna Silver Mines has announced that it has entered into a definitive Scheme Implementation Deed with Chesser Resources, pursuant to which Fortuna has agreed to acquire 100% of the fully-paid ordinary shares of Chesser in consideration for 0.0248 of a common share of Fortuna for each Chesser Share held. The Scheme Consideration represents a purchase price of approximately A$0.142 for each Chesser Share and values the transaction at approximately A$89.0 million (CA$80.6). The transaction as contemplated by the Agreement will be implemented by way of a scheme of arrangement pursuant to Part 5.1 of the Australian Corporations Act 2001 (Cth) (Scheme). Upon implementation of the Scheme, Fortuna expects to issue up to 15 545 682 Fortuna Shares to Chesser shareholders, representing approximately 5.1% of the issued and outstanding Fortuna Shares on an undiluted basis.
The acquisition of Chesser will expand Fortuna’s presence in West Africa 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 km2 of prospective ground located in close proximity to and sharing similar geologic features with tier one gold mines owned by Barrick Gold and B2Gold located in Mali. Diamba Sud itself comprises four open pitable high-grade gold deposits, along with numerous targets yet to be tested. Fortuna will prioritise exploration to expand the mineral resource before advancing Diamba Sud to development stage.
Jorge A. Ganoza, President and CEO of Fortuna, commented: “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. Within the larger and diversified Fortuna portfolio, the advancement of Diamba Sud will benefit from our technical and operational strength and lower cost of capital. Diamba Sud is located in the highly productive Senegal-Mali shear zone, close to world class gold mines. We are excited by the value creation opportunities this transaction offers to Chesser and Fortuna shareholders. This transaction is very much aligned with our strategy to bring high-value exploration and development opportunities in regions where we are established.”
On December 12, 2022, Chesser released a second update to its scoping study and Mineral Resource estimate that was originally released in March 2022. In this second updated report, Chesser reported an Indicated Mineral Resource estimate of 10.0 Mt averaging 1.9 g/t Au containing 625 000 oz of gold and an Inferred Mineral Resource estimate of 4.7 Mt averaging 1.5 g/t Au containing 235 000 oz of gold prepared in accordance with the JORC Code (as defined below). The mineral resources are distributed across the Area D, Area A, Karakara, and Bougouda deposits. Potential exploration opportunities exist, including the new discovery at Western Splay which warrants additional exploration.
The scoping study on Diamba Sud demonstrated that the project is a conventional open pit and CIL process design and has the potential to generate an attractive post-tax NPV% of US$218 million and 43% IRR over a 7.5-year mine life. Upon closing of the Transaction, Fortuna intends to conduct a detailed optimisation study of the current technical data and economic parameters relating to the project, together with the preparation of an updated exploration and development plan. Fortuna’s strong balance sheet and attractive cost of capital will serve to accelerate the continued exploration of Diamba Sud and future development.