Processing plant at Yaramoko. Credit: Roxgold
Fortuna Mining (NYSE: FSM, TSX: FVI) agreed to sell its Burkina Faso operations to Mauritius-based Soleil Resources International for about $130 million cash.
The sale represents “a prudent exit that optimizes value” given the increasingly challenging business climate in Burkina Faso, Fortuna CEO Jorge Ganoza said in a statement Friday. The Yaramoko mine, the company’s main asset in the country, has about one year remaining on its reserves.
Burkina Faso is among countries in West Africa that have seen juntas assume control in recent years to fight militant Islamists. They have also sought to revise mining codes to squeeze more out of foreign miners.
Exiting Burkina Faso “improves the (company’s) jurisdiction profile,” Mohamed Sidibé, an analyst at National Bank Financial in Toronto, said in a note Friday. “In our view, the transaction allows a realization of value at an attractive multiple relative to recent transactions in West Africa and avoids closure liabilities of $20 million at the mine.”
Fortuna’s shares hit a 52-week high of C$9.18 Friday in Toronto before retreating to C$8.99 apiece in afternoon trading. That gave the company a market capitalization of about C$2.8 billion.
Stronger balance sheet
Fortuna acquired Yaramoko as part of its $884 million purchase of Roxgold back in 2021. The mine, located in the Houndé greenstone belt of Burkina Faso, consists of two underground deposits that hold about 150,000 oz. in gold reserves. Its production last year was 116,200 ounces.
Vancouver-based Fortuna currently operates in three other countries: Argentina, Côte d’Ivoire and Peru. Its biggest by annual gold production is the Séguéla mine in Côte d’Ivoire, which came online two years ago, followed by Yaramoko. Earlier this year, the precious metals miner sold its non-core San Jose mine in Mexico for $6 million, also to a private local company.
Fortuna will receive a much larger payout for the Burkina Faso assets, including $70 million upon closing the deal with Soleil, plus a further $57.5 million in cash dividends. The company also has the right to receive up to $53 million of value-added tax receivables upon the completion of certain conditions.
“We believe that Soleil, as a private local company, is well positioned to continue operations at the Yaramoko mine to the benefit of employees and local stakeholders,” Ganoza said. Soleil currently operates three mines, holds exploration permits and owns a drilling company, all in Burkina Faso.
Fortuna is coming off a record year of gold-equivalent production in 2024 with about 370,000 oz. of gold and 3.72 million oz. of silver, but is expecting a 7%-17% decline this year after selling the San Jose mine in January.
The added liquidity will help Fortuna strengthen its balance sheet, invest in high-value exploration projects and “opportunistic” acquisitions, Sidibé said. Targeted jurisdictions include coastal countries in West Africa as well as North and South American countries such as Argentina, Guyana, Mexico and Peru, he said.