Fortuna Mining Corp. (FVI) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Fortuna and Roxgold Business Combination call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Linda Desaulniers. Ma'am, the floor is yours.

Thank you. Good morning, ladies and gentlemen. I would like to welcome you to the Fortuna Silver Mines and Roxgold conference call to discuss the details of the business combination of the two companies announced today, which will create a low-cost intermediate global gold and silver producer. The participants from the two companies on the call today are Jorge Ganoza, President, Chief Executive Officer and the Director of Fortuna; Luis Ganoza, Chief Financial Officer of Fortuna; John Dorward, President, Chief Executive Officer and the Director of Roxgold; and Paul Criddle, Chief Operating Officer of Roxgold. Today's webcast presentation will be available after this call on the Fortuna website at fortunasilver.com by clicking on the Investors tab and then on the presentation sub tab. You can also download the presentation on the Roxgold website by going to roxgold.com and by clicking on the Investors tab and then on the Events & Presentations sub tab. As a reminder, all statements made by either company during this call are subject to the reader advisories included in today's news release and in the presentation. These advisories describe the forward-looking statements, non-GAAP financial measures and outline the risk factors and assumptions relevant to the transaction. All of the financial figures contained in the presentation and discussed in today's call are presented in U.S. dollars, unless otherwise stated. I would now like to turn the call over to Jorge Alberto Ganoza, the Co-Founder of Fortuna.

Thank you, Linda. I'm very pleased to be here today with John and Paul to share with you our joint visions for this combination and the benefit to our shareholders. Put simply, what builds success in our business is the identification of quality assets, followed by strong operational and financial execution. We have followed the success of the Roxgold team for a number of years from their early start at Yaramoko back in 2015. Since then, John and team have successfully continued to expand their business in West Africa. And today, by combining our companies, Fortuna is gaining access to a platform for continued growth in one of the most prolific gold regions in the world.

Thank you, Jorge. We feel very confident that this is the logical next step for Roxgold. While we have had a great deal of success in Burkina Faso and Côte d'Ivoire over recent years, we feel that the best future for our stakeholders is to combine with the company of the caliber of Fortuna. The future belongs to liquid, well diversified and capitalized companies, and the combined company will have a wealth of compelling growth opportunities to pursue. I've known Jorge and his team for a number of years, and have always respected the professional manner in which they have built their company. Fortuna is comprised of genuine operators and mine builders, and we look forward to a very bright future.

Thank you, John. And gaining access to the Roxgold platform will mean one immediately adding low-cost production from Yaramoko; second, a permitted feasibility stage development project, Séguéla, with 49% IRR and pre-operational CapEx under $150 million; third, a robust exploration pipeline; and fourth, a seasoned team of senior executives and site managers with a track record of success discovering, developing and operating mines in the region. Following to the bullets we show in the slide, we want to stress the following. This transaction creates a premier global intermediate precious metals producer with exciting near and medium-term growth. We anticipate a combined production of 400,000 to 0.5 million gold equivalent ounces for 2021 through 2023 at all-in sustaining costs under $1,000. I want to underscore, this is not just a combination of quality assets, but equally important, we're bringing together 2 teams of high performers in their respective jurisdictions, and this is one of the things I am personally most excited about. We're creating a very potent business with annual projected average EBITDA of $0.5 billion for 2021 through 2023. The combination brings a robust pipeline of high upside exploration projects at different stages of development. Size in our business does matter. The pro forma company will benefit from diversified production, a stronger balance sheet, enhanced capital markets relevance and a lower cost of capital. All of this translates into the ability to lower the risks for the business, accelerate value-creating opportunities and enhanced competitiveness in the continued search for quality assets in the future. With respect to the pro forma production mix of gold and silver, I want to advance that we remain committed to silver, but more importantly, we're even more committed to the construction of a portfolio of assets that can perform throughout the precious metals price cycle. On a pro forma basis, silver will contribute approximately 20% of revenue, and our initiatives to grow silver contribution remain active in the Americas. Looking at the transaction summary on Page 7. Under the proposed transaction, Fortuna is to acquire 100% of the issued and outstanding common shares of Roxgold under a plan of arrangement. The implied fully diluted value of the transaction is approximately CAD 1.1 billion. The exchange ratio agreed to 0.283 of a Fortuna share, which results in a pro forma ownership of 64.3% Fortuna and 35.7% Roxgold. Premiums on the closing price of Friday and the 20-day VWAPs are 42% and 40%, respectively. Key conditions are all customary for a transaction of this nature with relevant voting support from directors, officers and Appian Natural Resources Fund, Roxgold's largest shareholder. Moving on to Slide 8, pro forma capitalization. Things to highlight here are: the strong cash position, close to $200 million and approximately $40 million of net cash; the large trading liquidity that comes from Fortuna's market recognition and dual listing; and 2021 gold equivalent production of 450,000 ounces at an estimated all-in sustaining costs under $1,000 per ounce with a very robust annual EBITDA of $0.5 billion. Slide 9 presents a global footprint of the combined company, demonstrating our global reach and highlights our presence in key mining jurisdictions for gold and silver. Slide 10, under benefit to shareholders. John, can you please elaborate on the benefits to Roxgold shareholders?

Certainly, Jorge. This transaction strikes an attractive balance between both immediate and long-term benefits for Roxgold shareholders. The exchange ratio outlined provides an attractive upfront premium, which recognizes the significant organic pipeline that we have built in recent years, along with enhanced liquidity. Perhaps more importantly, however, is the fact that Roxgold shareholders will retain a significant ownership in the combined company, and it is my belief that the combined company will emerge as the go-to name for investors seeking meaningful growth allied to a strong balance sheet with proven management. Back to you, Jorge.

For Fortuna shareholders, this transaction is accretive on meaningful production and financial metrics. We will benefit from the continuation of a highly regarded West African team, led by Paul Criddle as Chief Operating Officer for the African region and Paul Weedon as VP, African exploration, will benefit from low-cost assets of low technical complexity, will benefit from very exciting brownfields and greenfields opportunities underscored by continued reporting of drilling success at Séguéla and Boussoura. And this transaction is consistent with our objective to preserve a very strong balance sheet. Moving on to Slide 11. Here, we show our senior operating team. We plan to retain the full capabilities of the operating and exploration teams, and empower them to allow this group of high performers to continue delivering. The Roxgold operations and explorations team's track record of bringing projects on-time and on-budget and unlocking value through exploration is a distinctive feature of the Roxgold organization we will seek to preserve. Slide 12. This is an important view that shows how the asset portfolio of the combined companies is complementary, resulting in diversified production from 4 operating mines and a well-populated pipeline of projects from development through to different phases of exploration. Slide 13. Paul, you want to share the highlights of the mines and projects?

Thanks, Jorge. Initially, with Yaramoko, Yaramoko continues to be the solid cash engine for Roxgold. In 2020, the mine delivered great results, despite the challenges presented with COVID, by exceeding our production guidance and cost landing within expectations after COVID adjustments. Also, late in 2020, we've restated the reserves at Yaramoko, maintaining the 7-year mine life horizon as we have since the original DFS and after 5 years of production as well, a trend that we plan on continuing to deliver with the current and 2022 infill and extension programs. Active brownfields exploration is underway with several targets, including the 109 Zone and Bagassi South structures as well as numerous additional overservice targets. 2 service and 2 underground rigs are at the project now with programs underway, prosecuting both surface and underground targets. Now moving to Séguéla. As outlined in our recent DFS announcement, Séguéla is a great project that is continuing to get better. The project as defined today is compelling with extremely manageable preproduction capital burn of only $142 million, the very strong production profile that you can see in the right here, especially in the first 6 years at an average of 133,000 ounces per annum, and the all-in sustaining cost of $832 an ounce life of mine. The project is class-leading in all categories. With that said, that is the project as it's defined today, and the DFS is really just a snapshot in time that will be updated as we advance the many value optimization opportunities at this exceptional project. Those opportunities include debt extension at Ancien and Koula. Especially at Koula, where the deep drilling has now significantly extended the base of the deposit, it's clear that an underground story is emerging. Together, with a review of pit design and schedule, the opportunity would be to lift the floor of this pit, and in doing so, removes a substantial amount of waste in the project. In addition, further drilling and extension of reserves at -- and geotechnical and pit design optimization of the pits also presented an opportunity, and of course, the continued development of the very exciting Sunbird discovery to be integrated into the mine planned at Séguéla will only make the project better for longer. The project has each of these exciting upside scenarios contemplated in the plant and infrastructure design to facilitate further expansion of the project that is currently assumed in the DFS. We're very excited to continue to uncover what Séguéla has the potential to be.

Thank you, Paul. And on Slide 15, over the last month, Roxgold exploration programs have continued to demonstrate the potential of the prospects with consistent drill results from high-grade gold at Boussoura and discovery and expansion of new deposits at Séguéla, like Koula and Sunbird, just like Paul just mentioned. Additionally, we share the excitement on the prospects for new ounces at Yaramoko where the underground and near-surface residual programs are underway. Paul?

Thanks, Jorge. Séguéla Regional, look, this is the same package that today that delivered the 5 deposits we discussed now into the Séguéla mine plan. This package will continue to be targeted by Paul Weedon's team. With mineralization now drilled to find over an 800-meter strike, Sunbird remains open down plunge into the south, and there is still over 20 high priority targets to test on this package. In Boussoura, the project continues to grow in footprint and scale at Fofora and Galgouli as well as within those delivering exciting high-grade in excess across [indiscernible]. We currently have 2 rigs at the project extending and defining these prospects, and Paul's team hope to deliver an initial resource estimate at the project later this year. With depth potential testing limited to only 240 meters at this stage and only a fraction of the vain corridors on the project tested, we are very excited to contemplate just what this project could be. On Côte d'Ivoire Regional, outside of Séguéla, the team has recruited a large package with excellent exposure to largely unexplored belts, being hosted significant gold systems and deposits. Kadyoha and Dianra are generating first past-year chemistry anomalies for follow-up testing. It's an extremely prospective area, same terrain and a long-strike from Barrick's 5 million-ounce Tongon operation, montages Mana Hounde project and [indiscernible] Birimian and Juliet properties. Although, not mentioned on the slide, back at Yaramoko, in addition to the brownfields opportunities referred to earlier, the recent success of the open pit evaluation of the 55 Zone has provided a new lens for the team to prosecute several dozen targets on the more regional of Yaramoko package. Back to you, Jorge.

Thank you. On Slide 16, this slide helps convey how prolific the Greenstone Belts of West Africa are. The quantity of gold ounces discovered and growth in gold production in the region over the last 15 years is not only attributable to your logic potential, but also to governments that value and foster the expansion of responsible mining in their respective jurisdictions. John, if you want to add here something?

Sure. It's probably difficult to name a more vibrant region to gold developments over the past 10 years than West Africa. While many jurisdictions assert, they are mining-friendly. Countries such as Burkina Faso and Côte d'Ivoire actually walk the walk and have been proactive in attracting foreign direct investment through mining. One fact that I have been keen to promote over the years is that it only took 5 years from discovery drill hole for first gold production at Yaramoko. There are very few countries where this can be achieved, and we are well on track for delivering a similar timeframe at Séguéla.

Thank you. Luis?

Yes. On Slide 17, as Jorge has emphasized, the key features of this combination are the bump in production scale, taking us immediately to a new relevant threshold of 0.5 million gold equivalent ounces, low-cost production profile, strong EBITDA margin business and significant and resilient free cash flow generation capacity. A quick note is that all figures are based on consensus numbers, except 2021 production and all-in sustaining costs, which are based on company guidance. A few aspects to highlight on the upper-left table, the increase in production, contribution from Roxgold as Séguéla is forecasted to come in line in 2023. In terms of all-in sustaining costs, we also see pro forma projected figures benefiting from lower expected all-in sustaining costs at Roxgold as Séguéla starts contributing low-cost ounces. Projected pro forma EBITDA and free cash flow reflects a similar trend with a meaningful expected impact over the medium term. Slide 18. In the upper portion of the slide, we highlight that from an absolute market cap and valuation multiple perspective, pro forma Fortuna will have plenty of room for further value recognition as we continue to execute and deliver. In the graph below, we show EBITDA margin and free cash flow generation are comfortably in the upper half of our comparative group with a clear path towards further growth and enhanced margins. The pro forma EBITDA margin of 55% speaks to the strength of the portfolio of mines, and reinforces the concept of growth with quality assets. On Slide 19, we reinforced the point that pro forma Fortuna will position itself as a meaningful company in the intermediate space of precious metals producers with all-in sustaining costs in a lower percentile of the comparative group and a well-diversified production base between West Africa and LATAM. An interesting graph at the bottom-right shows the market capitalization of relevant producers and developers with operations in West Africa. Here, you can observe the 2 largest gold mining companies in the world, followed by 4 other large producers, but then a break in size with respect to midsized producers with a group being led by Fortuna, the competitive positioning in terms of size, we believe, presents an advantage as new opportunities may arise. Back to you, Jorge.

Thank you. As a recap, this transaction is accretive on all relevant operational and financial metrics. We're bringing together quality assets in prolific jurisdictions along with top talent. Our combined reserves will stand at a solid 4 million gold equivalent ounces and inferred resources at 1.5 million gold equivalent ounces with clear opportunities for further discovery in multiple prospects and projects. We're growing while preserving a high-margin business with lower -- with below average all-in sustaining costs and EBITDA margins over 50% for the business. With this, I'll close our prepared remarks. We look forward to this new exciting phase for the company, and we continue to deliver value to our shareholders through the advancement of our assets and discoveries. Thank you.

Thank you, Jorge. I would now like to turn the call over to the audience for any questions that you might have. Operator, we're ready for questions.

[Operator Instructions] Your first question is coming from Cosmos Chiu.

Maybe, my first question is to Jorge. Certainly, we've had this COVID-19 pandemic in the past year and a bit now. How are you able to get comfortable with the due diligence process with the COVD-19 restrictions? Were you able to get to site? Just overall, how were you able to complete your due diligence?

Thank you, Cosmos. We were able to have a full team of -- or due diligence outside, both at Yaramoko and Séguéla. We -- in spite of some travel restrictions, we were able to set foot on the ground and spend time at both, as I said, Yaramoko and Séguéla with the Roxgold team. So we were able to conduct thorough on-site due diligence. Yes.

For sure. And then also, maybe Jorge, as you look at Roxgold, and I don't cover Roxgold, I don't know the assets as well, but when you were putting a value to Roxgold's assets, how much upside have you factored in? In the prepared comments I believe, John, might have mentioned, for example, Yaramoko, there is exploration potential here. If I work out the mine lives, it looks like it's only about 5 or 6 years of mine life left at Yaramoko. If I just look at reserves. I think John's team also mentioned Séguéla, the PFS is only really a starting point at this point in time. So I'm just wondering, as you were putting a value to Roxgold, how much value did you put on some of that upside potential?

One of the things we're most excited about is exploration potential. And to speak about that, one, we first learned about Yaramoko and back in 2015 when the mine had a 5-year mine life. And here, we are 5, 6 years later with a 5, 6-year mine life. So we've been on site. We have had deep exchanges with the exploration team. And we believe Yaramoko continues to offer opportunities for further discovery. And the team has 4 drill rigs on site. And we're just very upbeat about the potential at Yaramoko and Séguéla speaks for itself. The team continues to deliver consistent results in spite of them being focused on developing the engineering and feasibility work. Drill rigs have continued to turn and continue to deliver new areas and expansions of high-grade zones like Koula and the recently discovered Sunbird. When we look at Boussoura, Boussoura is our most exciting exploration property. In a way, I kind of shared the vision of the Roxgold team, it looks like Yaramoko look-alike in terms of potential for high grades, an underground mine of high-grade nature. And on top of that, there are 250,000 hectares of exploration ground. So we are very upbeat about the exploration. But you don't have to stretch much the exploration argument to find value in the current reserves, in the current feasibility study.

Okay. Jorge, maybe one just diving into a bit more detail into Séguéla here. Maybe hopefully, John can help me with us. Again, I don't cover Roxgold, but could you give me a bit more detail in terms of timeline, in terms of the permitting, in terms of CapEx? And are you going to be able to, as a combined company, internally fund that CapEx? Any of that detail quickly would really help.

Paul?

Sure. The -- Cosmos, the capital outlay plan for Séguéla is $142 million. So very, very modest and manageable outlay. At the moment, we have in hand our ESIA and exploitation permits, both what you need to commence construction of the mine. We have commenced early stage works at site, building the -- a combination village and the access road to site. We're in the process of completing the mining convention negotiations. And all that said is done, we expect to make a development decision towards the middle of the year and advance the project. As we understand, the current development timeline and construction schedule, I would see, is commissioning towards the end of 2022, start of 2023.

Perfect. Maybe one last question, on the financials. The financial metrics. Jorge, and I think, Luis, you also mentioned that the deal is accretive on our metrics. I think there was a slide you talked about, on an absolute basis, EBITDA increasing, free cash flow increasing. But could you give us more granularity in terms of potentially what multiples that you might have paid? Is this accretive on per share metrics in terms of cash flow, in terms of earnings, or if that's the case, what is it accretive on a per share basis?

Yes. We -- the transaction is accretive on 2021, 2025 production cash flow and reserves and resources, right? So we are seeing accretion on all those metrics. And something important that we value is that the accretion on reserves, the accretion on resources, the accretion on near-term free cash and production can -- at -- I lost my train of thought here for a second. The accretion metrics on all those aspects -- as I said, we're seeing accretion on all those metrics above the 35% that Roxgold is taking part on the company.

Your next question is coming from Chris Thompson.

Just -- I've got 3 questions. I'll just -- I'll ask John and Paul, the first question. I guess, Paul, obviously, looking forward to chatting again. Nice to see the 2 companies combined. John, what's the future for you?

The future looks a little hazy at the moment, Chris. I don't have a great insight. But look, I think one step at a time, and that's to see this transaction consummated and across the line, and the companies and all of our employees and all of our shareholders and stakeholders enjoying the fruits of the combined entity. So that's really first and foremost. Beyond that, I still think -- apart from the photo on the front of the presentation, I'm actually still quite a young fellow. So I think there's a few more innings in me. So time will tell, but certainly interested in staying in the mining game. I think it's the -- despite its challenges, it's the main gaming town and the best place to be.

Yes, I totally agree with you on that. Okay, Jorge, I've got 2 questions for you. I would imagine I'm going alone in saying this or thinking this, but what about the timing here? I mean, why now? Seeing that you really haven't completed the job at Lindero, what is the impetus for making this acquisition today or at least bidding for it?

Well, our work at Lindero is pretty much done. We have finished through the grant of the work. And Lindero is on a steady ramp up, showing continuous trend towards design. We're starting to see free cash flow emerge from day 1, actually. So we -- there are 3 things that we've been focusing on: one is strengthening the balance sheet; second is advancing exploration opportunities; and third, looking at opportunities -- new opportunities out there. And as I said, we've been intrigued by Roxgold's success since 2015. Back then, our interest in Roxgold was mainly driven by the high-grade nature of the Yaramoko reserves. And today, when we revisited the story, what we've seen is something different is a platform really. I cannot underscore enough the fact that Yaramoko -- sorry, Roxgold offers a platform with low-cost production, a very exciting and highly -- and profitable development project, a robust high-grade exploration pipeline. And more importantly, a team with vast experience in the region that will join the C-suite at Fortuna, right? So we believe it's an opportunity presented itself. And I believe, we're not compromising our balance sheet. To the contrary, we're giving ourselves opportunity with this transaction to strengthen even further the balance sheet, right? So we're thinking not short term, we're thinking medium to long term, and we believe this is going to be a tremendous success story, yes.

Jorge, I can't disagree with you. A great team with Roxgold there. The final question, I guess, is reading between the lines here, is this a confirmation, in your opinion, that the best days for San Jose are behind you at the moment?

Well, if you look at the reserves, we are starting to see the declining rates in the reserves. But you see the potential -- the geologic potential and the opportunities that we're starting to capture. Bear in mind that for the last 3 years, we shortchanged some of our exploration because we were allocating capital to the Lindero construction. Our investment on exploration back in 2017 was about 4% of sales. Our drilling meters was around 30,000 meters. In 2020, our investment in exploration was only 1% of sales with our total drilling meter is about 8,000 meters. Clearly, not enough to replenish reserves or expand resources. Today, our budgets are refocused on exploration. Our total drilling meterage for Fortuna stands at around 50,000 meters with investment that on exploration at around 4% -- 4.5% of sales from a much larger base of sales. And sure enough, we have started to see success with the drill bit. We published a few weeks ago, a couple of weeks ago, some very exciting discoveries on the North -- upper-North extent of the San Jose mine, with 5.5 meters with 2 kilos of silver equivalent grades. So we believe that as we start letting the drill rigs turn again, we're going to be able to start showing success with the drill bit.

This is Luis. Let me go back to our prior question to help complement and be more specific on the question on accretion. So yes, we see accretion on reserves with the accretion of resources. We see accretion on the average annual cash flow for the period up to 2025. We see accretion on annual average gold equivalent production, again through 2025. And on NAV, well, on the base case scenarios, you're always paying fair value, but when you consider the exploration potential, we've talked a lot about, we certainly see a lot of potential accretion as well, which, of course, Roxgold's shareholders will be certainly a part of.

Your next question is coming from Trevor Turnbull.

Yes, Jorge, I guess I had a question with respect to completing Lindero and having that team together that just built that. I was wondering, if you do make a development decision as a combined company to go forward with Séguéla, would you -- is there anything that potentially you could contribute from what you've learned at Lindero? And are there any people that potentially could also get involved in the development of that project as well from Lindero?

We believe that Roxgold has a solid proven team of operators and builders led by Paul. We've met -- we had technical sessions with Paul and his team, and the team is in place. So what we will do is from our corporate role, then all the technical support and help back so and his team can deliver. We do not anticipate any significant changes to the Roxgold operational structure. Again, if it's not broken, don't fix it. They have delivered and in a great way, under budget on time, and we will continue to support that.

Great. And then just, I guess, to reiterate on the exploration, you were talking to Chris about how you really boosted exploration budgets this year relative to the recent past. But going forward, with this merger, that won't impact -- you won't need to revisit any of your exploration budgets in the Americas. Those are going to stay intact. Is that right?

Absolutely.

Your next question is coming from Don DeMarco.

In terms of the Lindero free cash flow, is it going to be used to fund Séguéla? And is there any concerns about getting cash out of Argentina?

Well, the consolidated -- one of the benefits of the consolidation or coming together is strengthening the balance sheet. For 2021, our plans for repatriation of capital are going accordingly to our budgets. So we are currently repatriating funds from Argentina. And as we are cash flowing positive, we're repatriating capital. So we -- one of the benefits of the combination is lowering the cost of capital for Séguéla, right? And Luis, do you want to add?

Yes. Sorry, I believe we can comfortably say that the funding of Séguéla and the pro forma company is something that will be addressed through internal resources and through the additional or expanded built in strength of the balance sheet.

Okay. Great. Maybe just a couple of other questions. Just trying to understand some read-throughs on this. Jorge, I think at one point, you had actually considered Roxgold, maybe even as an alternative to Lindero, now you've got both. Is there any read-through here that maybe West Africa is edging ahead of Latin America for opportunities? And can you give any indication of what the company's strategy might be going from here with respect to, say, continued growth?

We're very committed to Latin America. But developing nations, politics in developing nations are a pendulum. So you have to take a long-term view, and that's what we have. So first, we're driven by quality of assets, and then we look hard at jurisdiction. And we remain very committed to Latin America, and we look forward to a long-term commitment in West Africa. And I believe, as I said in -- through the presentation, these are 2 premier mining jurisdictions. This business is built. Success in this business is built, not on the mine right next to your house is built on quality of assets and mining is a frontier business. It has always been and continues to be a frontier business, and we have to go where the good assets are and where the governments will allow you to develop them. And I believe that we've taken a long-term view on these 2 regions, and we look forward to remain committed to the 2 regions. Knowing that things sometimes get a bit harder here or there, but in mining, you have to take a long-term view.

Okay. Maybe finally then, we've seen other silver companies acquire gold assets recently. Is there any read-through here on just that silver as it's difficult to expand the silver portfolio and that prompts looking at gold?

Yes. I'm going to say something that's obvious, but good silver assets are discovered. The San Jose mine was a discovery. The Escobal mine, every mine is a discovery, of course, but very difficult to go and buy a good silver mine. Usually, those are discovered, right? And discovery is a process. So that's why it's a metal that attracts so much attention. So there are not a lot of good quality silver assets out there. So our commitment is we're committed to silver, as I said in the presentation, but our bigger commitment is to put together a portfolio of quality assets that can perform throughout the precious metals price cycle, right? We're not just going to bring silver assets into the portfolio because they have a silver name attached to them and are not constructive on margins for the business. We want assets that are constructive on margins [indiscernible], right?

Your next question is coming from Mark Magarian.

Jorge, congratulations. Very exciting stuff. My question is just touching on something that -- it's already been touched on a few times. I just wanted to fine-point on it. So on Slide 17, you got the -- you've got a free cash flow chart here showing from '21 to '23, including the Séguéla, I'm not sure if I'm pronouncing that right, CapEx. And so this is -- this implies to me that the initial plan is a self-funded free cash flow approach to the CapEx for this, i.e. not debt or equity funding or anything else. Is that right? Am I reading this correctly?

I think we can say that -- I mean, we don't see any reasons for any sort of equity funding. What we can say is that coming out of this transaction, we will certainly seek to reposition our balance sheet and set up our capital structure in a way that allows us to capture opportunities to lower the cost of capital given the new scale of the business. And as I said previously, I mean, we are comfortable that given the internal resources of the pro forma company, funding the construction of Séguéla will be well within our means.

Your next question is coming from Ryan Walker.

Obviously, lots have been answered. So just a couple of quick ones for me. Going back to previous question, just on the timing of the deal. From the Roxgold perspective, why now when you've got the positive momentum with the Séguéla feasibility, Boussoura kind of starting to emerge and Yaramoko just chugging along like a train?

Sure, Ryan. I mean, it's -- look, it's a good question. And I think you're right. I mean, momentum for us has been very positive of late, sort of largely, I think, driven from a combination of the resource and reserve update that we had last year at Yaramoko. To go back to Jorge's earlier comments, I mean, when they came -- when his team came and visited the mine at the start of the feasibility study, it had a 7-year mine life, I think, in our feasibility study, and it has a 7-year mine life today. So it's going about being that really good underground mine that can sort of keep maintaining its reserves. Séguéla has obviously been an out of the box success for us. No question about that, and it continues, I think, to go from strength to strengthen and I think the potential is still very great. And Boussoura, whilst early days, is certainly becoming interesting and starting to get a little [indiscernible] a little more attention and certainly very positive in our outlook for it. I think when I look at the timing and it's -- it is a long-term business that we're in, and you can't necessarily make strategic -- you can't make strategic changes on turning on a dime. So you sort of set your strategy in place, and then you look to pursue that. And we've always maintained really a dual-track strategy, one of which is to build out our own sort of organic growth pipeline, which we've been busy doing. And the second one is to maintain sort of an independent but positive outlook towards potentially combining with another group. I mean, we have -- we engage with our shareholders on a regular basis. And I think it's fair to say that we've had fairly strong feedback in recent times that a potential combination might be a positive way to go for some of our shareholders. And look, we take that on board. We're not there, and we're not sort of resistant to listening to our shareholders. So we take that onboard and we put that in our mix. It's not necessarily the sole reason for doing something, but it is a big thing. It's an important consideration. So I think that's important for us to note at this juncture. And I think if you are looking at potentially combining the business into a larger company, you want to do that from a position of strength where you have momentum, and that's where we are. So that's -- I think that's positive. And look, I think we have -- over the journey, we've had discussions, as you would suspect. I don't think that's a profound revelation for people on the call that we've had conversations with other groups. And we've talked to other people who are in the region and things like that. And generally, we're found not to put too fine a point on it, but our asset quality was probably outmatching what was on offer from other counterparts. And with Fortuna and Jorge and his team and Fortuna, what you see is a strongly positioned growing company in its own right. It doesn't need to do something, but wants to do something to take the next step, and that for us felt right. And that was the right time from our own purposes and the right counterparty to deliver, I think, what would be ultimately a long-term extremely successful story. So hopefully, it was a long answer to your question. I'm sorry about that Ryan, but hopefully, just to give you a little bit of the background of the dynamic of why we are here today and extremely happy to be here, and we think that we have found a very strong match for ourselves going forward.

There are no further questions from the line. I'd like to pass the line back to Jorge for closing remarks.

I want to thank all the participants this morning. And we look forward to continued dialogue with our shareholders. Thank you.

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.