BHP Group and Canada’s Lundin Mining Corporation have announced a $4.53 billion deal to acquire Canadian company Filo Corp, aimed at advancing the significant Filo del Sol copper project in Argentina.
As part of this deal, BHP and Lundin will also establish a 50:50 joint venture (JV) to develop the Josemaria project in Chile, which is wholly owned by Lundin. This JV will focus on the emerging Vicuña copper district, setting the stage for a long-term partnership between the two companies.
Strategic alignment
BHP CEO Mike Henry emphasized that this acquisition aligns with BHP’s strategy to invest in early-stage copper projects. “This transaction builds on our multi-year relationship with the Lundin Group, enhancing our understanding of the Vicuña district’s resource potential and development pathways for Filo del Sol and Josemaria,” Henry said. He added that the JV aims to transform the Vicuña district into a major economic contributor to Argentina for decades and bolster Canada’s mining sector.
Shareholder consideration
The acquisition offer values Filo Corp at approximately $36.44 per share, representing a 12.2% premium over the company’s last closing price on the Toronto Stock Exchange. Filo Corp shareholders will have the option to receive their consideration in cash, Lundin Mining shares, or a combination of both.
BHP will contribute about $2.1 billion in cash, while Lundin will provide $1.3 billion in cash and $1.41 billion in shares. The acquisition will be executed through a court-approved plan of arrangement under the Canada Business Corporations Act and requires Filo Corp shareholder approval.
Interim financing
BHP and Lundin will each subscribe to 3.48 million Filo Corp shares at $36.44 each, raising a total of $126 million for interim financing to support Filo Corp. Upon completion of the acquisition, both companies will each hold a 50% stake in Filo Corp and the Filo del Sol project.
Filo Corp’s board has unanimously recommended that shareholders approve the acquisition, citing the opportunity to realize immediate value from Filo del Sol at an attractive premium.
Joint venture details
Following the acquisition, BHP and Lundin will form a JV to develop the Filo del Sol and Josemaria projects in line with international industry standards. Under the JV agreement, BHP will acquire a 50% stake in Josemaria from Lundin for approximately $1.05 billion, subject to adjustments. Both companies will contribute their respective interests in Filo Corp and the Josemaria project to the joint venture.
Project background
Filo del Sol is an advanced copper exploration project straddling the border between Argentina’s San Juan Province and Chile’s Atacama region. In March 2022, BHP acquired an initial 5% equity stake in Filo Corp following the discovery of the project’s high-grade Aurora Zone. The two companies later formed a joint advisory committee to collaborate on exploration and development strategies.
Filo Corp has since expanded Filo del Sol, extending mineralization to over 5 kilometers with multiple drill intercepts exceeding 1% copper equivalent.
Josemaria project
Lundin Mining, a diversified base metals mining company, acquired the advanced Josemaria copper-gold-silver project in April 2022 through its Argentine subsidiary, Desarrollo de Prospectos Mineros. The project is located approximately 10 kilometers from Filo del Sol. The Mining Authority of San Juan has approved a feasibility study and environmental social impact assessment for Josemaria, which plans for a large-scale open-pit mining operation extracting over 1 billion tonnes of ore over 19 years.
