“On the geology side, I just believe that the market is failing to assign full value to the potential of the [Roxgold] properties.” Jorge Ganoza, Fortuna Silver Mines CEO
On April 23rd, $FSM and $ROXG announced a definitive agreement in which FSM will acquire all of Roxgold’s shares. Fortuna’s stock was mercilessly pummeled. The sell-off in FSM’s share price was extraordinarily irrational and is another example of the stock market’s inefficiency with respect to valuing precious metals mining stocks. But it has created an opportunity to earn profits in excess of the risk-adjusted rate of return expectations for a stock with Fortuna’s risk/return profile.
West Africa is one of the hottest gold mining and gold exploration jurisdictions in the world. After South Africa’s Witswaterand basin, West Africa’s Birimian Gold Province has the second largest gold endowment in the world.
I originally presented FSM to subscribers in the October 17, 2019 issue of my Mining Stock Journal as a value play after I felt the stock was irrationally sold down to the low $3’s based on temporary technical factors. At the time I pounded the table on MSJ and bought a large position. I think the current sell-off has presented investors with yet another “golden” opportunity to buy into a world class high-grade gold and silver producer.
Trevor Hall, Chris Marchese, Peter Spina and myself had a conversation via Zoom with Jorge Ganoza, Fortuna’s CEO, in which he explained his vision and rationale for expanding into West Africa with Roxgold and why FSM will help accelerate the process of “unlocking” the value in Roxgold’s assets: