As we reported two weeks ago, BHP (ASX:BHP) has gone ahead with a deal with Canada’s Lundin Mining to take control of two South American copper projects.
The two companies will jointly take over developer Filo Corp for C$4.5 billion (US$3.25 billion), via the Canadian version of Australia’s scheme of arrangement. BHP and Lundin will form a 50-50 joint venture to hold both the Filo del Sol and Josemaria projects around the Argentine-Chile border.
BHP and Lundin have offered C$33 per Filo share. Under the deal, BHP is expected to pay a total of $2.1 billion in cash.
The Lundin family holds a 32% stake in copper miner Filo Corp, while BHP holds a 6% stake in Filo. The company is focused on building the Filo del Sol project on the Chile-Argentina border.
Reuters reported in mid-July that a joint bid was coming, with Lundin looking to merge its Josemaria project with the partly controlled Filo del Sol. This is now happening, and it means BHP has given up on trying to buy Anglo American and rejected suggestions from some banks that it should bid for the large Canadian copper and zinc miner, Teck.
BHP is already the world’s single largest copper miner thanks to its huge Escondida mine in Chile, as well as its Spence mine, also in Chile. BHP has a share of the Antamina copper zinc mine in Peru (with Teck and Glencore).
BHP also controls the massive Olympic Dam copper, gold, uranium, and silver mine in South Australia, as well as the Carapateena and Prominent Hill mines acquired in the takeover of OZ Minerals, and the increasingly prospective Oak Dam deposit southeast of Olympic Dam.
Besides putting Anglo American behind it, BHP has also moved on from the $4 billion-plus write-down and loss on closing its WA Nickel business, placing it on a care and maintenance basis for at least the next three years.
Filo owns 100% of the FDS (Filo del Sol) deposit, 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 mineralization to over 5 kilometers, with multiple reported high-grade copper drill intercepts.
Lundin Mining owns 100% of the Josemaria project, an advanced-stage copper project located approximately 10 kilometers from FDS in San Juan Province, Argentina. A feasibility study for the Josemaria project was completed in November 2020, and an Environmental and Social Impact Assessment was approved by the Mining Authority of San Juan, Argentina, in April 2022. The Josemaria project features favorable topography for the placement of infrastructure for the district, with expansion potential.
The total contained copper, gold, and silver are estimated to be 3.2 billion pounds of copper; 4.6 million ounces of gold; and 160.4 million ounces of silver on an indicated basis. Inferred reserves were put at 1.3 billion pounds of copper; 2.1 million ounces of gold; and 50.3 million ounces of silver.
It was described as having a 13-year life in February 2023, with a development cost of US$1.8 billion (but more now given the rise in mining industry costs).