Chesser's Diamba Sud project is 12km southwest of Barrick’s Loulo mine and 7km west of its Gounkoto mine, both across the border in Mali.
PERTH (miningweekly.com) – TSX-listed Fortuna Silver Mines has struck a takeover deal with ASX-listed Chesser Resources in order to strengthen its presence in West Africa.
Fortuna said this week that the acquisition of Chesser would 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 told shareholders that it would prioritise exploration to expand the mineral resource before advancing Diamba Sud to development stage.
Under the proposal, Chesser shareholders will receive 0.0248 Fortuna shares for each Chesser share held, implying a value of 14.2c a share, implying a value of A$89-million to Chesser on a fully diluted equity basis.
The offer represents a 95% premium to Chesser’s last closing price of 7.3c a share on the ASX, and an 83% premium to the company’s 30-day volume weighted average share price.
The board of Chesser has unanimously recommended that shareholders vote in favour of the transaction in the absence of a superior offer, and subject to an independent expert concluding that the offer is in the best interest of shareholders.
“Chesser’s strategy has focused on the standalone development of the Diamba Sud project and we have made excellent progress in this regard through exploration success, resource delineation and the delivery of a highly attractive scoping study late last year,” said Chesser MD Andrew Grove.
“After taking into consideration a range of factors including 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, the board has resolved that the opportunity to combine with a substantial multi-asset precious metals producer with a strong operational track record in Fortuna represents an attractive outcome.
“This transaction will provide a substantial immediate premium and greater liquidity to our shareholders while giving them exposure to a successful intermediate precious metals producer with a diversified production profile, mine development expertise and strong access to capital. We also believe the transaction will be of benefit to our local stakeholders in Senegal with greater certainty around the future development of Diamba Sud.”
A 2022 scoping study estimates that the project will produce 704 000 oz of gold over a seven-and-a-half-year mine life, at an average all-in sustaining cost of $820/oz, with 244 000 oz to be delivered over the first two years of production.
The scoping study estimates a post-tax net present value of A$419-million and an internal rate of return of 59%, and estimated a pre-production capital cost of $159-million, which included a $23-million contingency.
The scoping study is based on the 781 000 oz gold maiden mineral resource inventory covering Area A and Area D deposits, and a standard two-million-tonne-a-year carbon-in-leach operation.
Fortuna president and CEO Jorge A Ganoza commended Chesser on its efforts to advance Diamba Sud from early stage exploration project to a preliminary economic 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,” Ganoza said.
“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.”