BHP, Canada’s Lundin to buy copper miner Filo for $4.5b

The news: Resources giant BHP and Canada’s Lundin Mining have agreed to buy Toronto-listed explorer Filo Corp, gaining access to two South American copper projects.

The numbers: BHP and Lundin will jointly pay C$4.1 billion ($4.5 billion) for Filo, representing a 12.2% premium to the Canadian miner's closing price on Monday. BHP’s share of the transaction is expected to be $3.2 billion in cash. The Australian miner will pay another USD690 million to Lundin in exchange for the company adding its Josemaria copper project in Chile into the deal. BHP shares were trading 1.2% lower at $41.57 after the announcement.

The context: BHP and Lundin said they will form a 50/50 joint venture to hold and develop both the Josemaria project as well as Filo’s Filo Del Sol copper project in neighbouring Argentina, moving to advance a potentially significant new copper province in the region. BHP CEO Mike Henry said the deal would extend his company’s relationship with Lundin and deliver promising copper projects.

“This transaction aligns with BHP’s strategy to acquire attractive early-stage copper projects and enter into strategic partnerships with parties where complementary skills and experience can deliver long-term economic and social value,” he said in a statement.