BHP To Unlock South American Copper Riches: Partners With Lundin For Filo Acquisition

BHP Group Limited BHP shares are trading lower today. The company and Lundin Mining Corp. LUNMF have agreed to jointly acquire all outstanding shares of Filo Corp. FLMMF for a total consideration of about C$4.1 billion, or C$33.00 per Filo share. 

The offer represents a 32.2% premium over Filo Corp.’s 30-day volume-weighted average price on the TSX as of July 11, 2024, the day before transaction rumors surfaced, and a 12.2% premium over the company’s last closing price on July 29, 2024.

BHP’s total cash payment for the proposed transaction is projected to be around $2.1 billion.

As part of the Filo acquisition, BHP and Lundin Mining will also purchase 3.48 million common shares of Filo at C$33.00 per share, totaling C$115 million in gross proceeds. This share placement is intended to provide interim financing to Filo.

Upon completion of the acquisition, BHP and Lundin Mining will each hold a 50% stake in Filo Corp. and the FDS project.

Filo shareholders can elect to receive cash, Lundin Mining shares, or a combination of both. BHP will contribute approximately C$1.908 billion ($1.377 billion) in cash, while Lundin Mining will provide around C$859 million in cash and C$1.289 billion in Lundin Mining shares.

BHP and Lundin Mining will also establish a 50/50 joint venture to manage the FDS and Josemaria projects in the Vicuña district of Argentina and Chile. Lundin Mining owns 100% of the Josemaria project.

Additionally, BHP will buy a 50% stake in the Josemaria project from Lundin Mining for around $690 million, subject to adjustments.

The company anticipates closing the deal in the first quarter of 2025, pending satisfaction of all closing conditions.

Read: Time Runs Out For BHP Deal: $49-Billion Acquisition Of Anglo American Proves Too Complex To Solve

Mike Henry, BHP’s Chief Executive Officer, said, “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.” 

Read: BHP To Temporarily Shut Down Western Australia Nickel Operations: Details

This month, BHP reported second-quarter copper production of 504.9 Kt (+6% Y/Y), led by growth at Escondida (+6% Y/Y), Copper South Australia (+17% Y/Y), and Antamina (+5% Y/Y).

Investors can gain exposure to the stock via Exchange Traded Concepts Trust Optica Rare Earths & Critical Materials ETF CRIT and VanEck Natural Resources ETF HAP.

Also Read: BHP’s Escondida Mine Faces Potential Strike Over Contract Dispute: Report

Price Action: BHP shares are down 2.47% at $53.65 premarket at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock

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