BHP and Lundin Mining Team Up to Acquire Filo for C$4.5 Billion

Following rumors of a potential joint bid, BHP (ASX:BHP,LSE:BHP,NYSE:BHP) and Lundin Mining (TSX:LUN,OTC Pink:LUNMF) have entered into an agreement to acquire Filo (TSX:FIL,OTCQX:FLMMF) for C$4.5 billion.

The acquisition will see BHP and Lundin Mining form a 50/50 joint venture that will include the Filo del Sol project, owned by Filo, and Lundin Mining's Josemaria project. Both are located in Argentina near the Chilean border.

“Our copper-gold-silver exploration success at Filo has been unmatched since spinning the Company out in 2016, and now is the right moment to hand the project off to its next stewards to maximize the potential of this remarkable discovery,” said Filo President and CEO Jamie Beck in a Tuesday (July 30) press release.

"Since their initial investment in Filo in 2022, BHP has proven to be a fantastic partner who has shared in our vision of the potential at Filo del Sol. That vision began in 2002 when this property was first acquired by the Lundin Family who had the conviction and perseverance to advance the project over the next two decades,” he added.

The consolidation is expected to create a significant operational footprint in the Vicuña district while taking advantage of recently passed legislation in Argentina that supports projects entering the development phase.

BHP and Lundin Mining's acquisition of Filo will involve a mix of cash and Lundin Mining shares, amounting to consideration of C$33 per Filo share. Filo shareholders will be able to receive C$33 in cash per Filo share that they own, 2.3578 Lundin Mining shares per Filo share that they own or a combination of cash and shares, subject to proration.

Total cash consideration will be capped at about C$2,767 million, and total share consideration will be capped at around 92.1 million Lundin Mining shares. According to the companies, the agreement represents a premium of 32.2 percent over the unaffected 30 day volume-weighted average price of Filo shares as of July 11.

Filo, BHP and Lundin Mining have also entered into a subscription agreement for a private placement. Each purchaser will subscribe for 3,484,848 Filo shares at an issue price of C$33 each, raising approximately C$115 million.

The amalgam is designed to maximize the potential of the Filo del Sol project, and will offer Filo shareholders continued exposure to the project's future growth. The integration of Filo del Sol with the Josemaria project is anticipated to strengthen the joint venture's overall position in the copper-gold sector.

The deal is expected to close in 2025's first quarter, assuming closing conditions are satisfied.

Shares of Filo closed 8.77 percent higher on the TSX on Tuesday. The company is up 53 percent year-to-date.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.