Lundin, BHP to acquire Filo in $4.1 billion deal
Lundin Mining Corp. [LUN-TSX; LUMI-Sweden] and BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK] have struck a deal to acquire Filo Mining Corp. [FIL-TSXV, NASDAQ First North] via a court-approved plan of arrangement that is valued at $33 per Filo share or $4.1 billion.
Lundin Family Trusts currently own a 33% stake in Filo Mining, while BHP holds 6.0%.
Filo’s key asset is the 100%-owned Filo del Sol (FDS) project, a high-sulphidation epithermal copper-gold-silver deposit associated with one or more large porphyry gold systems. Filo del Sol is located in the Andes Mountains, 140 kilometres southeast of the Chilean city of Copiapo, and is ranked as one of the world’s largest undeveloped copper-silver-gold deposits.
Lundin Mining owns 100% of the Josemaria project, an advanced-stage copper project located approximately 10 kilometres from FDS in San Juan Province, Argentina.
Concurrently with the completion of the Filo acquisition, Lundin Mining and BHP will form a 50/50 joint venture to hold the FDS project and Lundin’s Josemaria project. In return, BHP will pay Lundin US$690 million in cash. The joint venture will create a long-term partnership between Lundin Mining and BHP to jointly develop an emerging copper district with world class potential that could support a globally-ranked mining complex.
Lundin Mining President and CEO Jack Lundin said the deal positions Lundin and BHP to create a multi-generational mining district with significant synergies and cost savings on a scale that has the potential to become one of the world’s largest of its kind.
Details of the arrangement were announced after the close of trading on July 29, 2024 when Filo shares closed at $29.42. The shares currently trade in a 52-week range of $31.14 and $16.42. Lundin Mining closed at $14.24 and trades in a 52-week range of $17.97 and $8.18.
Under the agreement, Filo shareholders may choose to receive in exchange for each Filo share $33 in cash, 2.3578 Lundin shares or any combination of both, subject to a cap of $2.7 billion in cash or 92.1 million Lundin shares. In the event that the aggregate amount of the cash or share considerations elected by all Filo shareholders exceeds the respective limits, the consideration will be prorated, and Filo shareholders will receive the other form of consideration for the balance of their Filo shares.
In connection with the Filo acquisition, BHP and Lundin have each agreed to subscribe for 1.74 million Filo shares at $33 per share for proceeds of $115 million that will be used to provide interim financing for Filo, financed equally by BHP and Lundin.
Filo del Sol was the subject of a pre-feasibility study in 2023 that is based on proven and probable reserves of 259.1 million tonnes, grading 0.39% copper, 0.33 g/t gold, 15.1 g/t silver, or 2.2 billion pounds of copper, 2.7 million ounces of gold and 126 million ounces of silver.
The prefeasibility study envisaged annual production of approximately 67,000 tonnes of copper (including copper as a precipitate), 159,000 ounces of gold and 8.6 million ounces of silver at a cost of US$1.23 per pound of copper equivalent.