Fortuna Mining (NYSE: FSM, TSX: FVI) has agreed to sell its operations in Burkina Faso to Mauritius-based Soleil Resources International for approximately $130 million in cash.

According to Fortuna’s CEO, Jorge Ganoza, this sale represents “a prudent exit that optimizes value” due to the escalating challenges in the Burkina Faso business environment. The Yaramoko mine, the company’s principal asset in the region, has about one year left on its reserves.

Burkina Faso has faced a wave of military takeovers aimed at combating militant Islamists, with juntas also working to modify mining codes to extract more value from foreign miners.

Mohamed Sidibé, an analyst at National Bank Financial in Toronto, noted that exiting Burkina Faso “improves the company’s jurisdiction profile.” He stated that this transaction enables Fortuna to realize value at an attractive multiple compared to recent West African deals, while avoiding closure liabilities amounting to $20 million at the mine.

On Friday, Fortuna’s shares reached a 52-week high of C$9.18 in Toronto but later settled at C$8.99 by afternoon trading. This fluctuation gave the company a market capitalization of about C$2.8 billion.

Strengthening the Balance Sheet

Fortuna had acquired Yaramoko during its $884 million purchase of Roxgold in 2021. The mine, situated in Burkina Faso’s Houndé greenstone belt, consists of two underground deposits with around 150,000 ounces of gold reserves. Last year’s production reached 116,200 ounces.

Currently, Fortuna operates in three other countries: Argentina, Côte d’Ivoire, and Peru. Its largest operation by annual gold production is the Séguéla mine in Côte d’Ivoire, commissioned two years ago, followed by Yaramoko. Earlier this year, the company sold its non-core San Jose mine in Mexico for $6 million, also to a local private firm.

For the Burkina Faso assets, Fortuna will receive an initial $70 million upon closing the deal, along with an additional $57.5 million in cash dividends. The company also has the option to collect up to $53 million in value-added tax receivables upon fulfilling specific conditions.

Ganoza expressed confidence in Soleil’s capabilities as a local private company, highlighting its potential to continue operations at the Yaramoko mine, benefiting employees and local stakeholders. Soleil operates three mines and holds exploration permits and a drilling company in Burkina Faso.

Following a record year in 2024, with about 370,000 ounces of gold and 3.72 million ounces of silver produced, Fortuna anticipates a 7%-17% decline in production this year due to the sale of the San Jose mine in January.

Analyst Sidibé indicated that the increased liquidity from the sale will enhance Fortuna’s balance sheet, support investments in high-value exploration projects, and enable “opportunistic” acquisitions. Targeted regions include coastal countries in West Africa and various locations in North and South America, including Argentina, Guyana, Mexico, and Peru.