KEY POINTS
- Filo shareholders approve the acquisition by BHP and Lundin, moving the $4.1 billion deal forward.
- The joint venture will include Filo del Sol and the Josemaría project, aiming for cost efficiencies.
- BHP and Lundin’s joint venture will focus on developing major copper and gold mining operations in Latin America.
Shareholders of Filo Corp. have overwhelmingly approved the company’s acquisition by mining giants BHP Group and Lundin Mining, moving one of the year’s biggest mining deals closer to completion.
The transaction, which will see BHP and Lundin jointly acquire Filo and its flagship copper asset Filo del Sol for approximately C$4.1 billion, was approved by 99.9 percent of votes cast during a special shareholders meeting held on Thursday.
The deal is now subject to further approvals from regulatory bodies and the Ontario Superior Court of Justice.
Key copper and gold projects included in the deal
The acquisition agreement, which was outlined in July, involves the formation of a 50/50 joint venture between BHP and Lundin to develop the Filo del Sol project. Located in the copper-rich Atacama Desert on the border between Argentina and Chile, Filo del Sol is set to become a major copper production site.
A pre-feasibility study indicates the project has a 13-year mine life, with an expected annual production of 66,000 tonnes of copper, 168,000 ounces of gold, and 9.26 million ounces of silver. The after-tax net present value (NPV) of the project, discounted at 8 percent, stands at $1.31 billion with an internal rate of return (IRR) of 20 percent.
Additionally, the joint venture will include Lundin’s large-scale Josemaría project in San Juan, Argentina, located about 9 km from the Chilean border.
Josemaría, currently in the feasibility stage, is expected to yield an average of 136,000 tonnes of copper, 231,000 ounces of gold, and 1.16 million ounces of silver annually over its 19-year mine life. According to Mining.com, the project has an NPV of $1.53 billion and an IRR of 15.4 percent.
BHP has committed to pay a larger share for Filo’s acquisition since Lundin already owns the Josemaría project. BHP currently holds a 5 percent stake in Filo, acquired in 2022, while Lundin owns 32 percent.
Upon completion, Filo shareholders will receive approximately 11 percent ownership in Lundin on a fully diluted basis.
Mining sector consolidation continues
BHP CEO Mike Henry has previously stated that combining both projects under a joint venture is aimed at cutting costs and increasing production efficiencies. This deal is part of a broader strategy by major mining companies to consolidate assets and optimize operations, especially in Latin America’s mineral-rich regions.
The combined projects are expected to become a significant copper and gold hub, leveraging the strategic location along the Atacama Desert, a well-known region for some of the world’s richest mineral deposits.
Copper is a critical component in renewable energy technologies, and demand is forecast to grow significantly in the coming years as the world transitions to greener energy solutions.
Meanwhile, at market open on Friday, Filo’s shares were trading 1 percent lower at C$32.31, valuing the company at C$4.3 billion. Over the past 52 weeks, the stock has traded in a range between C$16.42 and C$33.00.
