BHP and Lundin Mining have agreed to jointly acquire 100% of Filo, owner of the Filo del Sol copper project, through a Canadian plan of arrangement.
BHP and Lundin Mining have also agreed to form a 50/50 joint venture to hold the FDS and Josemaria projects, located in the Vicuña district of Argentina and Chile; Lundin Mining already wholly owns the Josemaria project. The transaction price tag is US$1.2 billion cash.
The JV, the group said, will establish a long-term partnership between BHP and Lundin Mining to jointly develop an emerging copper district with world-class potential.
The Filo acquisition will be implemented by a court-approved plan of arrangement under the Canada Business Corporations Act and will require approval by Filo shareholders in accordance with applicable Canadian corporate and securities laws. The Filo board of directors has unanimously recommended that shareholders vote in favor of acquisition.
Consolidating the FDS and Josemaria projects, the companies said, facilitates development optionality at a district scale, as the proximity of the FDS and Josemaria projects allows for infrastructure to be shared between the projects, with greater economies of scale and increased optionality for staged expansions, as well as the incorporation of future exploration as the district matures. It also accelerates development as it leverages the advanced stage of engineering and permitting at the Josemaria project to progress the combined FDS and Josemaria projects on a phased development timeline that recognises improving investment conditions in Argentina and the copper demands of the global energy transition.
The benefits of the proposed transaction to BHP include:
- Aligned with BHP’s copper growth strategy: The transactions align with BHP’s strategy to acquire early-stage copper projects as one of the levers to increase its exposure to future facing commodities.
- Access to an emerging copper district with significant potential: The large-scale, high-grade sulphide deposit at the FDS project is considered to represent one of the most significant copper discoveries globally in recent decades.
- Entry to a highly prospective jurisdiction with an experienced partner: Establishment of BHP’s presence in Argentina would be supported by the Lundin Group which has over 30 years of experience operating in the country.
The benefits of the proposed transaction to Filo include:
- Immediately crystallises value at a compelling premium: The Filo Acquisition provides Filo Corp. shareholders the opportunity to realise immediate value from the discovery of FDS at a compelling premium.
- Continued exposure to the district: The Proposed Transaction provides a path to develop FDS to its full potential, backed by two experienced copper miners. Filo Corp. shareholders would have the ability to retain exposure to the district through shares in Lundin Mining.
“The proposed transaction builds on a multi-year relationship between BHP and the Lundin Group of companies through which we have developed a strong understanding of the resource potential of the Vicuña district and the possible pathways for development of the Filo del Sol and Josemaria projects,” said BHP CEO Mike Henry.
“This transaction aligns with BHP’s strategy to acquire attractive early-stage copper projects and enter into strategic partnerships with parties where complementary skills and experience can deliver long-term economic and social value.
The joint venture with Lundin Mining will advance the development of the Vicuña district, which offers the potential to become a major contributor to the economy of Argentina for decades to come. At the same time, by partnering with Lundin Mining, BHP is continuing to invest in the growth of a robust mining sector in Canada.”
Filo owns 100% of FDS, which is an advanced-stage copper exploration project located along the border of the San Juan Province in Argentina and the Atacama Region of Chile. BHP acquired an initial 5% equity interest in Filo in March 2022, following the discovery of the high-grade Aurora Zone at FDS.
BHP and Filo subsequently formed a joint advisory committee to share expertise, exploration concepts and discuss future project development. Since then, Filo Corp. has continued to expand FDS, extending the strike length of mineralisation to over 5 kilometres, with multiple reported drill intercepts over 1,000 metres grading more than 1.0% copper equivalent.
Lundin Mining, a diversified Canadian base metals mining company with operations and projects in Argentina, Brazil, Chile, Portugal, Sweden and the United States of America, primarily produces copper, zinc, gold and nickel.
Source: BHP