VANCOUVER, BC, July 30, 2024 /PRNewswire/ -- (TSX: LUN) (Nasdaq
Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining"
or the "Company") and BHP have entered into a definitive
agreement (the "Arrangement Agreement") with Filo Corp. (TSX: FIL)
(Nasdaq First North Growth Market: FIL) (OTCQX:
FLMMF) ("Filo") to jointly acquire 100% of Filo's issued and
outstanding common shares (each, a "Filo
Share") not already owned by Lundin Mining and BHP pursuant
to a court-approved plan of arrangement (the "Filo Acquisition").
Under the terms of the Arrangement Agreement the offer implies a
value of C$33.00 per Filo Share, representing a premium of 32.2% to
Filo's unaffected 30-day volume weighted average price ("VWAP") up
to July 11, 2024.
Concurrently with the completion of the Filo Acquisition, Lundin
Mining and BHP will form a 50/50 joint venture (the "Joint
Venture") to hold the Filo del Sol project ("FDS") and Lundin
Mining's Josemaria project. BHP will pay Lundin Mining cash
consideration of US$690 million as
consideration for Lundin Mining contributing the Josemaria project
to the Joint Venture. The Joint Venture will create a long-term
partnership between Lundin Mining and BHP to jointly develop an
emerging copper district with world-class potential that could
support a globally ranked mining complex.
Jack Lundin, Lundin Mining
President and CEO, commented "This strategic transaction is the
key to unlocking the enormous value that the Vicuña District
represents. As we partner to acquire Filo del Sol, one of the
world's largest undeveloped copper-gold-silver deposits, with its
true size yet to be defined, we are very excited about the future
of the Company and our role in developing this region. Combined
with the Josemaria project, we are now positioned to create a
multi-generational mining district with significant synergies and
cost savings on a scale that has the potential to become one of the
largest of its kind. Importantly, we gain a valued partner in BHP
and together we aim to generate long-term value through combining
complementary skills and experiences, foundational to our near-term
goal of becoming a top-tier copper producer."
Strategic Rationale
District Development Opportunity of the Filo del Sol and
Josemaria Projects:
- Facilitates development optionality at a district scale:
The proximity of the FDS and the Josemaria projects allows for the
potential of infrastructure to be shared between the projects, with
greater economies of scale and increased optionality for staged
expansions, as well as the incorporation of future exploration as
the district matures.
- Accelerates development: Leverages the advanced stage of
engineering and permitting at the Josemaria project to progress and
study a combined FDS and Josemaria projects on a phased development
timeline that recognises improving investment conditions in
Argentina and the copper demands
of the global energy transition.
Alignment with Lundin Mining's Strategy:
- Secures an experienced partner for the development of the
Vicuña district: The partnership will benefit from BHP's
extensive global expertise in large-scale project development and
integrated district-scale operations.
- Maintains balance sheet strength: The cash impact to
Lundin Mining relating to the transaction is marginally positive
with Lundin Mining paying aggregate cash consideration to the Filo
shareholders of C$859 million
(US$620 million) and receiving cash
consideration of US$690 million from
BHP pursuant to the Josemaria Transaction (as defined below).
Lundin Mining will continue to fund Josemaria on a 100% basis up to
the end of the year, after which funding will be split 50/50 with
BHP, subject to certain adjustment mechanisms.
- Access to an emerging copper district with significant
potential: The large-scale, high-grade sulphide deposit at FDS
is one of the most significant copper discoveries globally in
recent decades.
The Benefits of the Filo Acquisition to Filo Shareholders
Include:
- Immediately crystallizes value at a compelling premium:
The Filo Acquisition provides Filo shareholders the opportunity to
realize immediate value from the discovery of FDS at a compelling
premium.
- Continued exposure to the district: The Filo Acquisition
provides a path to develop FDS to its full potential, backed by two
experienced copper miners. Filo shareholders will have the ability
to retain exposure to the district through common shares of Lundin
Mining (each, a "Lundin
Share").
Transaction Highlights
Filo Acquisition
BHP and Lundin Mining have agreed to jointly acquire Filo for
total consideration of approximately C$4.1
billion, or C$33.00 per Filo
Share. This represents a premium of 32.2% to Filo's
unaffected 30-day volume weighted average price up to July 11, 2024, and a premium of 12.2% to Filo's
last closing price on the TSX on July
29, 2024.
Filo shareholders may choose to receive in exchange for each
Filo Share: C$33.00 in cash, 2.3578 Lundin Shares or any
combination thereof, subject to an aggregate cap of C$2,767
million in cash and 92.1 million Lundin Shares (the "Maximum
Shares"). In the event that the aggregate amount of the cash
consideration or share consideration elected by all Filo
shareholders exceeds the respective limits, the consideration will
be pro-rated and Filo shareholders will receive the other form of
consideration for the balance of their Filo Shares. Any cash
payments for Filo Shares traded on Nasdaq First North Growth Market
will be paid in Swedish kronor in accordance with Euroclear Sweden
principles. On closing of the Filo Acquisition, existing
shareholders of Lundin Mining and Filo are expected to own
approximately 89% and 11% of Lundin Mining, respectively.
Lundin Mining's share of the consideration for the Filo
Acquisition is approximately C$2,148
million (US$1,550 million),
consisting of up to C$859 million in cash and C$1,289 million in Lundin Shares.
The Filo Acquisition will be implemented by a court-approved
plan of arrangement under the Canada Business Corporations Act and
will require approval by Filo shareholders in accordance with
applicable Canadian corporate and securities laws.
Each of the directors and senior officers and certain other
shareholders of Filo, representing in aggregate approximately 35%
of the issued and outstanding Filo Shares, have entered into voting
support agreements and have agreed to vote in favour of the Filo
Acquisition unless the Arrangement Agreement is terminated.
In connection with the Filo Acquisition, BHP and Lundin Mining
have each agreed to subscribe for 1,742,424 Filo Shares at a price
of C$33.00 per share for aggregate
gross proceeds of up to approximately C$115
million (the "Filo Share Placement") to provide interim
financing to Filo, funded equally by BHP and Lundin Mining. The
Filo Share Placement is not contingent on the closing of the Filo
Acquisition or the Josemaria Transaction (as defined below).
On closing of the Filo Acquisition, Lundin Mining and BHP will
each own 50% of Filo and the FDS project.
Formation of the Joint Venture
BHP and Lundin Mining have agreed to form the Joint Venture
concurrently with the closing of the Filo Acquisition. Each of BHP
and Lundin Mining would hold a 50% interest in the Joint Venture.
Under the Joint Venture, the projects will be developed in
accordance with sound mining principles consistent with
international industry standards to deliver economic and social
value.
BHP will pay US$690 million in
cash to Lundin Mining, subject to certain adjustments, as
consideration for Lundin Mining contributing the Josemaria project
to the Joint Venture (the "Josemaria Transaction").
Lundin Mining and BHP will each contribute their respective
interests in Filo and Lundin Mining will contribute the Josemaria
project to the Joint Venture.
Transaction details
The Filo Acquisition, Josemaria Transaction and formation of the
Joint Venture are inter-conditional, whereby completion of each
transaction is dependent on completion of each of the other
transactions.
Filo Acquisition
BHP Investments Canada Inc., a wholly owned subsidiary of BHP
Group Limited, and Lundin Mining have entered the Arrangement
Agreement with Filo. The Arrangement Agreement includes customary
deal-protection measures, including non-solicitation provisions
that apply to Filo (subject to customary "fiduciary out"
provisions), a right for BHP and Lundin Mining to match an
unsolicited superior competing proposal to acquire Filo, a
termination payment of C$135 million
payable by Filo (half payable to Lundin Mining and half payable to
BHP) in certain circumstances and a reverse termination payment of
C$135 million payable by Lundin
Mining and BHP to Filo in certain circumstances. In addition
to the approval of Filo shareholders, the Filo Acquisition is also
subject to the receipt of court approval, regulatory approvals
including the approval by the TSX, and the admission to trading of
the new Lundin Mining Shares and other customary closing conditions
for transactions of this nature.
The Filo Acquisition, the Josemaria Transaction, the Filo Share
Placement and the entering into of the Arrangement Agreement has
been unanimously approved by the Board of Directors of Lundin
Mining (excluding certain Directors who abstained from voting). A
special committee of independent Directors of Lundin Mining
unanimously recommended that the Board of Directors of Lundin
Mining approve the Filo Acquisition, the Josemaria Transaction, the
Filo Share Placement and the entering into of the Arrangement
Agreement. Lundin Mining will prepare documentation as required
under the EU Prospectus Regulation. Lundin Mining shareholder
approval is not required for the Filo Acquisition, the Josemaria
Transaction or the Filo Share Placement.
Rothschild & Co has provided a fairness opinion to the Board
of Directors of Lundin Mining and Morgan Stanley Canada Ltd. has
provided a fairness opinion to the Lundin Mining special committee,
each stating that, as of the date of such opinion, and based upon
and subject to the assumptions, limitations and qualifications
stated in such opinion, (i) the consideration to be paid by Lundin
Mining for its effective interest in the Filo Shares pursuant to
the Filo Acquisition is fair, from a financial point of view, to
Lundin Mining; (ii) the consideration to be received by Lundin
Mining pursuant to the Josemaria Transaction is fair, from a
financial point of view, to Lundin Mining; and (iii) in the
aggregate, the consideration to be paid by Lundin Mining for its
effective interest in the Filo Shares pursuant to the Filo
Acquisition and the consideration to be received by Lundin Mining
pursuant to the Josemaria Transaction is fair, from a financial
point of view, to Lundin Mining.
BMO Capital Markets has provided a fairness opinion to the Board
of Directors of Filo and National Bank Financial has provided a
fairness opinion to the Filo special committee, each stating that,
as of the date of such opinion, and based upon and subject to the
assumptions, limitations and qualifications stated in such opinion,
that the consideration to be received by Filo shareholders pursuant
to the Filo Acquisition is fair, from a financial point of view, to
Filo shareholders.
None of the securities to be issued pursuant to the Transaction
have been or will be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any state
securities laws, and any securities issuable in the Filo
Acquisition are anticipated to be issued in reliance upon the
available exemption from such registration requirements pursuant to
Section 3(a)(10) of the U.S. Securities Act and applicable
exemptions under state securities laws. This news release does not
constitute an offer to sell or the solicitation of an offer to buy
any securities.
Filo Share Placement
The Filo Share Placement will be funded equally by BHP
(approximately C$57.5 million) and
Lundin Mining (approximately C$57.5
million). On closing of the Filo Share Placement, BHP
and Lundin Mining will own approximately 7.1% and 1.7%,
respectively, of the issued and outstanding Filo Shares.
The Filo Share Placement is not conditional on completion of the
Filo Acquisition and is expected to complete on or before
August 12, 2024.
Filo intends to use the proceeds from the Filo Share Placement
to fund ongoing exploration and general working capital
expenses.
Joint Venture and Josemaria Transaction
The Josemaria Transaction is subject to the receipt of
regulatory approvals and other customary closing conditions for
transactions of this nature.
BHP and Lundin Mining have executed a term sheet which will form
the basis for negotiation of the definitive Joint Venture
agreement. BHP and Lundin Mining expect to enter into the Joint
Venture agreement by completion of the Filo Acquisition.
Indicative timetable
Closing is expected to occur in the first quarter of 2025
subject to satisfaction of the conditions to closing.
Advisors and Counsel
In connection with the Filo Acquisition and the Josemaria
Transaction, Lundin Mining has retained Rothschild & Co as
financial advisor, Cassels Brock
& Blackwell LLP and Sullivan & Cromwell LLP as legal
counsel. Morgan Stanley Canada Limited is acting as financial
advisor and Fasken Martineau DuMoulin LLP is acting as legal
counsel to the special committee of the Lundin Mining Board of
Directors.
In connection with the Filo Acquisition and the Josemaria
Transaction, BHP has retained TD Securities as financial advisor
and Stikeman Elliot LLP as legal counsel.
In connection with the Filo Acquisition, Filo has retained BMO
Capital Markets as financial advisor and Blake, Cassels &
Graydon LLP as legal counsel. National Bank Financial is providing
a fixed fee fairness opinion to the Filo special committee and the
Filo Board of Directors.
Filo del Sol and Josemaria Project Highlights
Filo owns 100% of the FDS deposit, which is an advanced-stage
copper exploration project located along the border of the
San Juan Province in Argentina and the Atacama Region of
Chile. Filo has continued to
expand FDS, extending the strike length of mineralisation to over 5
kilometres, with multiple reported high grade copper drill
intercepts.
Lundin Mining owns 100% of the Josemaria project, which is an
advanced stage copper project, located approximately 10 kilometres
from FDS in San Juan Province,
Argentina. A feasibility study for
the Josemaria project was completed in November 2020 and an Environmental Social Impact
Assessment was approved by the Mining Authority of San Juan, Argentina in April
2022. The Josemaria project features favourable topography
for the placement of infrastructure for the district, with
expansion potential.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining
company with operations and projects in Argentina, Brazil, Chile, Portugal, Sweden and the
United States of America, primarily producing copper, zinc,
gold and nickel.
The information in this news release is information that Lundin
Mining is required to make public under the EU Market Abuse
Regulation. The information was submitted for publication, through
the agency of the contact persons set out below on July 29, 2024 at 16:30
PDT.
Analyst and Investor Webcast and Conference Call:
The Company will hold a telephone conference call and webcast at
[06:00 PDT, 9:00 EDT, 15:00
CET] on Tuesday, July 30, 2024
to discuss the highlights of the transaction. Conference call
details are provided below. Please dial in 15 minutes prior to the
call start to ensure placement into the conference on time.
- Call-in number for the conference call (North America): [+1 289 514 5100]
- Call-in number for the conference call (North America Toll
Free): [+1 800 717 1738]
- Call-in number for the conference call (UK): [+44 203 428
1383]
- Call-in number for the conference call (UK): [+61 2 8017
1385]
To view the live webcast presentation, please log on using this
direct link:
https://onlinexperiences.com/Launch/QReg/ShowUUID=06B69F41-AAB0-44CF-A9E5-C6B8778E1A84&LangLocaleID=1033
The presentation slideshow will also be available in PDF format
on the Lundin Mining website www.lundinmining.com before the
conference call. A replay of the telephone conference will be
available after the completion of the call.
Call-in numbers for the replay are (North America): [+1 888 660 6264]. The
passcode for the replay is: [64144]
A replay of the webcast will be available by clicking on the
[direct link] above.
Cautionary Statement on Forward-Looking
Information
Certain of the statements made and information contained
herein are "forward-looking information" within the meaning of
applicable Canadian securities laws. All statements other than
statements of historical facts included in this document constitute
forward-looking information, including but not limited to
statements regarding the Company's plans, prospects and business
strategies; the completion of the acquisition of Filo and the
timing thereof; the establishment and operation of a new joint
venture with BHP; the realization of synergies in the Vicuña
district; the identification of additional value creation
opportunities; the Company's guidance on the timing and amount of
future production and its expectations regarding the results of
operations; expected costs; permitting requirements and timelines;
the results of any Preliminary Economic Assessment, Pre-Feasibility
Study, Feasibility Study, or Mineral Resource and Mineral Reserve
estimations, the Company's ability to comply with contractual and
permitting or other regulatory requirements; anticipated
exploration and development activities at the Company's projects;
expansion projects and the realization of additional value; the
Company's integration of acquisitions and expansions and any
anticipated benefits thereof; the Company's ability to become a top
tier copper producer; and expectations for other economic,
business, and/or competitive factors. Words such as "believe",
"expect", "anticipate", "contemplate", "target", "plan", "goal",
"aim", "intend", "continue", "budget", "estimate", "may", "will",
"can", "could", "should", "schedule" and similar expressions
identify forward-looking information.
Forward-looking information is necessarily based upon various
estimates and assumptions including, without limitation, the
expectations and beliefs of management, including that the Company
can access financing, appropriate equipment and sufficient labour;
assumed and future price of copper, zinc, nickel, gold and other
metals; anticipated costs; ability to achieve goals and identify
and realize opportunities; the prompt and effective integration of
acquisitions, including the completion of each of the acquisition
of Filo, the establishment of the joint venture with BHP and the
realization of synergies and economies of scale in connection
therewith; the prompt and effective integration of acquisitions;
that the political environment in which the Company operates will
continue to support the development and operation of mining
projects; and assumptions related to the factors set forth below.
While these factors and assumptions are considered reasonable by
Lundin Mining as at the date of this document in light of
management's experience and perception of current conditions and
expected developments, these statements are inherently subject to
significant business, economic and competitive uncertainties and
contingencies. Known and unknown factors could cause actual results
to differ materially from those projected in the forward-looking
information and undue reliance should not be placed on such
information. Such factors include, but are not limited to: global
financial conditions, market volatility and inflation, including
pricing and availability of key supplies and services; risks
inherent in mining including but not limited to risks to the
environment, industrial accidents, catastrophic equipment failures,
unusual or unexpected geological formations or unstable ground
conditions, and natural phenomena such as earthquakes, flooding or
unusually severe weather; uninsurable risks; volatility and
fluctuations in metal and commodity demand and prices; significant
reliance on assets in Chile;
reputation risks related to negative publicity with respect to the
Company or the mining industry in general; delays or the inability
to obtain, retain or comply with permits; risks relating to the
development of the Josemaria Project; health and safety laws and
regulations; risks associated with climate change; risks relating
to indebtedness; economic, political and social instability and
mining regime changes in the Company's operating jurisdictions,
including but not limited to those related to permitting and
approvals, nationalization or expropriation without fair
compensation, environmental and tailings management, labour, trade
relations, and transportation; inability to attract and retain
highly skilled employees; risks inherent in and/or associated with
operating in foreign countries and emerging markets, including with
respect to foreign exchange and capital controls; project financing
risks, liquidity risks and limited financial resources; health and
safety risks; compliance with environmental, unavailable or
inaccessible infrastructure, infrastructure failures, and risks
related to ageing infrastructure; changing taxation regimes; the
inability to effectively compete in the industry; risks associated
with acquisitions partnerships, including the completion of each of
the acquisition of Filo and the establishment of the joint venture
with BHP; expansions and and related integration efforts,
including the ability to achieve anticipated benefits,
unanticipated difficulties or expenditures relating to integration
and diversion of management time on integration; risks related to
mine closure activities, reclamation obligations, environmental
liabilities and closed and historical sites; reliance on key
personnel and reporting and oversight systems, as well as third
parties and consultants in foreign jurisdictions; information
technology and cybersecurity risks; risks associated with the
estimation of Mineral Resources and Mineral Reserves and the
geology, grade and continuity of mineral deposits including but not
limited to models relating thereto; actual ore mined and/or metal
recoveries varying from Mineral Resource and Mineral Reserve
estimates, estimates of grade, tonnage, dilution, mine plans and
metallurgical and other characteristics; ore processing efficiency;
community and stakeholder opposition; regulatory investigations,
enforcement, sanctions and/or related or other litigation;
financial projections, including estimates of future expenditures
and cash costs, and estimates of future production may not be
reliable; enforcing legal rights in foreign jurisdictions; risks
associated with the use of derivatives; risks relating to joint
ventures and operations; environmental and regulatory risks
associated with the structural stability of waste rock dumps or
tailings storage facilities; exchange rate fluctuations; compliance
with foreign laws; potential for the allegation of fraud and
corruption involving the Company, its customers, suppliers or
employees, or the allegation of improper or discriminatory
employment practices, or human rights violations; risks relating to
dilution; risks relating to payment of dividends; counterparty and
customer concentration risks; activist shareholders and proxy
solicitation matters; estimation of asset carrying values;
relationships with employees and contractors, and the potential for
and effects of labour disputes or other unanticipated difficulties
with or shortages of labour or interruptions in production;
conflicts of interest; existence of significant shareholders;
challenges or defects in title; internal controls; risks relating
to minor elements contained in concentrate products; the threat
associated with outbreaks of viruses and infectious diseases;
mining rates and rehabilitation projects; mill shut downs; and
other risks and uncertainties, including but not limited to those
described in the " Risks and Uncertainties" section of the
Company's MD&A for the three months ended March 31, 2024 and the "Risks and Uncertainties"
section of the Company's Annual Information Form for the year ended
December 31, 2023, which are
available on SEDAR+ at www.sedarplus.com under the Company's
profile.
All of the forward-looking information in this document are
qualified by these cautionary statements. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, forecasted or intended
and readers are cautioned that the foregoing list is not exhaustive
of all factors and assumptions which may have been used. Should one
or more of these risks and uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described in forward-looking information.
Accordingly, there can be no assurance that forward-looking
information will prove to be accurate and forward-looking
information is not a guarantee of future performance. Readers are
advised not to place undue reliance on forward-looking information.
The forward-looking information contained herein speaks only as of
the date of this document. The Company disclaims any intention or
obligation to update or revise forward‐looking
information or to explain any material difference between such and
subsequent actual events, except as required by applicable
law.
For further information, please contact: Stephen Williams, Vice President, Investor
Relations: +1 604 806 3074; Robert
Eriksson, Investor Relations Sweden: +46 8 440 54 50
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