AUS
NZ
UK
CA
USA
IND
.jpg)
Summary
- Fortuna Silver is buying fellow Canadian precious metals miner Roxgold in a cash-and-stock deal.
- After the deal, Fortuna’s annual gold equivalent production is estimated to reach 450,000 ounces.
- Its pro forma average annual EBITDA will likely cross US$ 500 million after the deal is completed.
Fortuna Silver Mines Inc (TSX:FVI) announced on Monday, April 26, that it is buying fellow Canadian precious metals miner Roxgold Inc (TSX:ROXG) in a cash-and-stock deal worth C$ 1 billion. This deal is expected to enable Fortuna Silver, which presently operates in North and South America, expand its operations in West Africa.
Apart from creating a low-cost platform for precious metals production growth, Fortuna’s annual gold equivalent production is estimated to reach 450,000 ounces after this deal. Also, its pro forma average annual EBITDA will likely cross US$ 500 million.
Amid this move, let's take a look at the stock performances and financials of Fortuna Silver Mines and Roxgold Inc.
Fortuna Silver Mines Inc. (TSX:FVI)
The market cap of Fortuna Silver Mines is nearly C$ 1.5 billion at the moment, as per TMX. Following the deal's announcement, its stocks plunged by over 18 per cent and closed at C$ 7.9 apiece on Monday.
Fortuna stock soared by 107 per cent in the last one year. However, it dwindled by over 24 per cent year-to-date (YTD). The company's return on equity (ROE) is 3.14 per cent and 2.14 per cent is its return on assets (ROA).
1-year chart of stock performance of Fortuna Silver (Source: EODHD/Others/Thomson Reuters)
In 2020, Fortuna’s sales stood at US$ 279 million, up from that of US$ 257.2 million in 2019. Its cash and cash equivalents also increased to US$ 131.9 million in fiscal 2020.
Roxgold Inc (TSX:ROXG)
Roxgold Inc, a small-cap Canadian company, has mining operations in West Africa. In Yaramoko, Roxgold produced 35,308 ounces of gold in the first quarter of fiscal 2021. Its debt-to-equity (D/E) ratio is 0.27 and it gives an ROE of 10.1 per cent, as per TMX.
Breaching its 52-week high of C$ 2.08 (April 19, 2021), Roxgold stock skyrocketed by over 15 per cent to close at C$ 2.21 apiece Monday.
The stock surged by nearly 86 per cent in the last one year and grew by about 50 per cent over the past three months.
1-year chart of stock performance of Roxgold (Source: EODHD/Others/Thomson Reuters)
In 2020, Roxgold achieved a mine operating profit of US$ 88.4 million, up from US$ 60.9 million in 2019. The worth of the company's total assets increased to US$ 343.5 million in fiscal 2020, up from US$ 291.7 in 2019.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
