Bullet briefing — BHP, Lundin to buy Filo, Cameco releases Q2 results

BHP, Lundin Mining to acquire Filo

M&A activity was in the air this week as BHP (ASX:BHP,LSE:BHP,NYSE:BHP) and Lundin Mining (TSX:LUN,OTC Pink:LUNMF) teamed up to acquire Filo (TSX:FIL,OTCQX:FLMMF) in a C$4.5 billion agreement.

Under the deal, BHP and Lundin will form a 50/50 joint venture that will include the Filo del Sol copper-gold-silver project, owned by Filo, and Lundin's Josemaria copper-gold project. Both are located in Argentina near the Chilean border.

In the wake of the announcement, Rio Tinto's (ASX:RIO,LSE:RIO,NYSE:RIO) CEO said in a media call that the company would consider making a large copper acquisition, but is wary of overpaying in today's hot market.

"We are constantly looking for other opportunities. On the other hand, it is a bit of a heated market, so that's not an easy market to just buy yourself into. While we are looking we are also saying, we are not prepared to pay those prices" — Jakob Stausholm, Rio Tinto

Cameco releases “strong” Q2 results

Major uranium miner Cameco (TSX:CCO,NYSE:CCJ) released its second quarter results this week, describing its operational performance as "strong" and saying its financial results are in line with its outlook for 2024.

The company reported net Q2 earnings of C$36 million, adjusted net earnings of C$62 million and adjusted EBITDA of C$337 million. Meanwhile, Cameco delivered 6.2 million pounds during the quarter and 13.5 million pounds year-to-date. Cameco still plans to deliver 32 million to 34 million pounds for the full year.

Perhaps more anticipated than Cameco's results was commentary on its operations in Kazakhstan and outlook for the sector. Output from the company's Inkai joint venture with Kazatomprom was lower in both Q2 and H1 due to challenges obtaining sulfuric acid, with 2024 output of 8.3 million pounds said to be "tentative."

Cameco also commented on amendments to Kazakhstan's tax code, saying its preliminary conclusions show that it would push production costs in the country up to levels seen at its operations in Northern Saskatchewan.

"The days of easy and cheap pounds out of Central Asia are essentially over. The global cost curve is going up, and we are going to need to see sustained higher prices" — Grant Isaac, Cameco

Although the company's outlook on the uranium market remains strong, investors didn't respond favorably to this week's release, with Cameco's share price closing the period down close to 16 percent.

It wasn't helped by news that Kazatomprom has increased its 2024 production guidance by 5 percent.