Mining M&A Heating Up

Late on Tuesday, it was announced that Fortuna Silver Mines (NYSE:FSM,TSX:FVI) has entered an agreement to acquire Goldrock Mines (TSXV:GRM). The all-share deal would be worth approximately C$129 million.
With the acquisition, Fortuna would gain control of Goldrock’s Lindero project, an open pit, heap leach gold project in Argentina. As per a 2016 feasibility study, Lindero is expected to produce 26.5 million ounces of silver equivalent per year by 2018, with an all in sustaining cost (AISC) of less than US$10 per ounce of silver equivalent.
Shares of Goldrock shot up more than 50 percent on the news on Wednesday morning, pushing the company’s share price to $1.01.

“We are very excited to combine Goldrock with Fortuna,” said Goldrock President and CEO Paul Matysek in a statement. “This transaction provides our shareholders with an immediate premium while retaining exposure to longer term value creation that the Lindero Project will offer to the merged company.”
Jorge Ganoza, president and CEO of Fortuna, stated that with its anticipated low cost of production, adding Lindero to the company’s portfolio would help it become “one of the lowest cost precious metals producers globally.”
The news comes behind a number of recent M&A deals in the mining space—Goldcorp (TSX:G) announced it would acquire Kaminak Gold (TSXV:KAM) for C$520 million on May 12, and Hecla Mining (NYSE:HL) signed an agreement to acquire Mines Management (NYSEMKT:MGN,TSX:MGT) two weeks later.
With gold and silver prices up 18.25 and 20.49 percent respectively year to date, investors may want to keep an eye out for other potential acquisition targets.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.