Chesser Resources agrees to $89m takeover by Fortuna Silver Mines

Chesser Resources (ASX: CHZ) is set to be bought out by Canadian-listed Fortuna Silver Mines Inc (TSX: FVI) for an implied transaction value price of $89 million.

Chesser announced this morning it had entered into a binding scheme of arrangement which would see Fortuna acquire all of its fully-paid ordinary shares for a consideration of 0.0248 Fortuna shares per one Chesser share.

The implied consideration of $0.142 per Chesser share represents a 95% premium to Chesser’s last closing price of $0.073 on 8 May and an 83% premium to the volume weighted average price of Chesser shares for the past 30 days.

The board of Chesser has considered the buy-out to be mutually beneficial and will allow  Fortuna’s existing asset portfolio and West African footprint to be further enhanced by the addition of Chesser’s Diamba Sud gold development project in the same region.

It said Chesser shareholders would have the opportunity to share in the potential future upside from an investment in Fortuna, which currently has four operating mines and a fifth mine scheduled to pour first gold later this month.

It also has the scale and access to capital, with a team which is well placed to develop Diamba Sud.

Chesser’s board has recommended that shareholders follow their lead and vote in favour of the transaction.

Exposure to production

Chesser managing director Andrew Grove said the buy-out would give shareholders exposure to a successful intermediate precious metals producer with a diversified production profile and mine development expertise.

“Our strategy has focused on the standalone development of Diamba Sud and we have made excellent progress through exploration success, resource delineation and the delivery of a highly-attractive scoping study last year,” he said.

“After taking into consideration the current challenges in securing development funding for new projects in the junior gold sector and the risk profile involved with taking an asset through feasibility and into production, we resolved that the opportunity to combine with Fortuna represents an attractive outcome.”

He said the transaction would also benefit local stakeholders in Senegal by providing greater certainty around the future development of Diamba Sud.

Fortuna profile

Founded in 2005 and headquartered in Vancouver, Fortuna has four producing mines in Peru, Argentina, Mexico and Burkina Faso.

A fifth project in Côte d’Ivoire is currently being commissioned with first gold pour expected this month.

Fortuna’s management and technical team has a history of mine development and a focus on driving sustainable, long-term growth and profitability from its projects.

Upon implementation of the buy-out, Chesser shareholders will own approximately 5.1% of Fortuna’s shares on issue.

Fortuna has offered Chesser a secured bridging loan of up to $3 million to assist with costs of the transaction.