BHP and Lundin Mining to acquire Filo Corp. for C$4.1bn and form JV for major copper projects

BHP and Lundin Mining Corporation have announced a strategic agreement to jointly acquire Filo Corp., with a total consideration of approximately CAD 4.1 billion. This major transaction also involves the formation of a 50/50 joint venture to advance the Filo del Sol and Josemaria copper projects, located in the Vicuña district spanning Argentina and Chile. This move represents a significant expansion in the copper mining sector and promises substantial developments in one of the world’s most promising copper districts.

Details of the Deal

BHP and Lundin Mining will jointly acquire 100% of Filo Corp. through a Canadian plan of arrangement. The total consideration for the acquisition is CAD 4.1 billion, which translates to CAD 33.00 per Filo Corp. share. This represents a 32.2% premium over Filo Corp.’s 30-day volume-weighted average price and a 12.2% premium over its last closing price. Shareholders of Filo Corp. will have the option to receive either cash, Lundin Mining shares, or a combination of both. BHP’s total cash payment for the proposed transaction is expected to be approximately USD 2.1 billion, while Lundin Mining will contribute both cash and shares.

The acquisition will be implemented through a court-approved plan under the Canada Business Corporations Act and requires approval from Filo Corp. shareholders. Key shareholders representing about 35% of Filo Corp.’s shares have already agreed to support the transaction.

BHP and Lundin Mining’s CAD 4.1 billion acquisition of Filo Corp. and joint venture for copper projects promises major developments in Argentina and Chile.

Formation of a Strategic Joint Venture

Upon completion of the acquisition, BHP and Lundin Mining will establish a 50/50 joint venture to develop the Filo del Sol and Josemaria projects. Lundin Mining will transfer a 50% stake in the Josemaria project to BHP for additional consideration. This joint venture aims to leverage the advanced stages of both projects to foster significant development, infrastructure sharing, and enhanced economic and social benefits for the region.

Strategic Rationale and Benefits

The consolidation of the Filo del Sol and Josemaria projects will enable scalable development options, with shared infrastructure and phased expansions. This consolidation positions the projects to meet growing global copper demands and contribute significantly to Argentina’s economy. For BHP, the acquisition aligns with its strategy to invest in early-stage copper projects and strengthen its presence in key jurisdictions. The partnership with Lundin Mining, which has extensive experience in Argentina, adds valuable local expertise.

Filo Corp. shareholders will benefit from an immediate premium on their investment and continued exposure to the district through Lundin Mining shares. The deal promises to unlock the full potential of the Filo del Sol project with the backing of two major mining firms.

Further Details and Timetable

The Filo Acquisition and the Josemaria Transaction are interdependent, with each transaction contingent on the completion of the other. The Filo Share Placement, involving both BHP and Lundin Mining investing CAD 57.5 million each, will provide interim financing to Filo Corp. This placement is expected to close on or before 12 August 2024. The final acquisition and joint venture are anticipated to be completed in the first quarter of 2025.

Advisors and Counsel

TD Securities Inc. is acting as the financial advisor to BHP, while Stikeman Elliott LLP is providing legal counsel.