Consideration for the Acquisition to
be $33.00 per share in a mix of cash
and Lundin Mining shares; concurrently, Filo announces a
C$115 Million Private Placement to
BHP and Lundin Mining in connection with the
Acquisition
VANCOUVER, BC, July 29,
2024 /CNW/ - Filo Corp. (TSX: FIL) (Nasdaq
First North Growth Market: FIL) (OTCQX: FLMMF) ("Filo", or the
"Company") is pleased to announce it has entered into a binding
agreement (the "Arrangement Agreement") with BHP ("BHP") and Lundin
Mining Corporation ("Lundin Mining", together with BHP, the
"Purchaser Parties") (TSX: LUN) (OMX: LUMI) whereby the Purchaser
Parties will acquire all of the outstanding common shares of Filo
that they do not already own (the "Filo Shares") through a plan of
arrangement (the "Transaction"). PDF Version
Concurrent with the Transaction, BHP and Lundin Mining will form
a Canadian joint venture ("JV") into which the Filo del Sol
copper-gold-silver project and the Josemaria copper-gold project
(currently 100% owned by Lundin Mining and located in the San Juan
Province of Argentina in the same
region as Filo del Sol) will be contributed, allowing for the joint
development of the Vicuña district. BHP and Lundin Mining
will each own a 50% interest in the JV following the
Transaction.
Highlights of the deal
- Crystalizes immediate value for Filo shareholders and delivers
a clear and credible path to developing Filo del Sol to its full
potential, backed by two of the world's leading copper miners;
- Consolidation of two key assets in the Vicuña district by the
JV creates a market-leading operational footprint in the district
and offers:
- Strong balance sheet capacity to fund future project
development;
- Potential to capture synergies and operational efficiencies;
and
- The ability for Filo del Sol to benefit from recently
passed legislation in Argentina
benefiting projects entering development;
- Filo shareholders that receive Lundin Mining shares will
maintain upside exposure to the JV, while also benefiting from:
- Jurisdictional and project risk diversification in a company
with diversified asset portfolio with long-life assets operating
globally;
- Exposure to strong and increasing cash flow generation and
dividends; and
- Enhanced market profile with greater share liquidity.
Under the terms of the Transaction, Filo
shareholders, excluding BHP and Lundin Mining, will receive total
consideration of approximately C$4.1
billion, representing C$33.00
per Filo Share, based on the 5-day
volume weighted average price of Lundin Mining shares as of today's
close on the TSX. Filo shareholders will be able to elect to
receive the consideration as either (i) C$33.00 in cash per Filo
Share or (ii) 2.3578 Lundin Mining shares per
Filo Share, or some combination of
cash and shares, subject to proration. The total cash consideration
will be subject to maximum cash consideration of approximately
C$2,767 million (representing 68.2%
of the aggregate total consideration). The total share
consideration will be subject to maximum share consideration of
92.1 million Lundin Mining Shares (representing 31.8% of the
aggregate total consideration). Shareholders that do not make an
election will be deemed to have elected to receive cash
consideration. The consideration represents a premium of 32.2% and
25.8% to the unaffected 30-day volume weighted average price and
the unaffected closing price, respectively, of the Filo Shares on
the TSX for the period ending July 11,
2024, being the day before press speculation of a
transaction. On closing of the Transaction, Filo shareholders are
expected to own approximately 11% of Lundin Mining, on a fully
diluted basis.
Jamie Beck,
President, CEO and Director of Filo said, "I'm very happy to
announce this transaction today, which delivers compelling value to
Filo's shareholders. The Transaction delivers a 17.4%
premium to the unaffected all time high for Filo's shareholders
while offering exposure to the future development of Filo del Sol
in addition to Lundin Mining's high-quality operating
portfolio. The total consideration represents
approximately C$924 million in value
above Filo's unaffected market capitalization on July 11, 2024."
Mr. Beck continued, "Our copper-gold-silver exploration
success at Filo has been unmatched since spinning the Company out
in 2016, and now is the right moment to hand the project off to its
next stewards to maximize the potential of this remarkable
discovery. Since their initial investment in Filo in 2022,
BHP has proven to be a fantastic partner who has shared in our
vision of the potential at Filo del Sol. That vision began in
2002 when this property was first acquired by the Lundin Family who
had the conviction and perseverance to advance the project over the
next two decades – characteristics I'm sure will continue under
Lundin Mining's ownership. It's not easy pulling together
three parties to an agreement like this. I'm excited to
combine Filo del Sol along with Josemaria into the JV,
consolidating two key assets in the Vicuña district in this joint
venture, whose partners have the financial strength, technical
expertise, and operational experience to advance Filo del Sol at
the pace and scale it deserves while committing to the highest ESG
practices globally."
Details of the Transaction
The Transaction, which is not subject to any financing
conditions, will be carried out by way of a court-approved plan of
arrangement under the Canada Business Corporations Act and
will require approval by (1) 66⅔% of the votes cast by Filo
shareholders, and (2) a simple majority of the votes cast by Filo
shareholders, excluding votes from certain shareholders, as
required under Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions at a
special meeting expected to be held to consider the Transaction. In
addition to approval by Filo shareholders, the Transaction is also
subject to the receipt of court approval, regulatory approvals
including 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. Lundin Mining will prepare
documentation as required under the EU Prospectus Regulation and
Lundin Mining shareholder approval is not required. The Transaction
is expected to be completed in the first quarter of 2025, subject
to the satisfaction of closing conditions.
The Swedish Securities Council (Sw. Aktiemarknadsnämnden)
has granted Filo, BHP and Lundin Mining relief from the
obligation to comply with the requirements of Section VI of the
Swedish Takeover Rules for Certain Trading Platforms in connection
with the Transaction.
The Arrangement Agreement provides for
customary deal-protection provisions, including a non-solicitation
covenant on the part of Filo and a right for the Purchaser Parties
to match any Superior Proposal (as defined in the Arrangement
Agreement). The Arrangement Agreement includes a termination fee of
C$135 million, payable by Filo, under
certain circumstances (including if the Arrangement Agreement is
terminated by Filo in respect of a Superior Proposal) and a reverse
termination fee of C$135 million, payable by the Purchaser
Parties, under certain circumstances. The directors and officers of
Filo, in addition to certain securityholders, including Nemesia
S.à.r.l, a private company controlled by a Trust settled by the
late Adolf H. Lundin, owning in
aggregate approximately 35% of Filo's voting securities have
entered into voting support agreements pursuant to which
they have agreed to vote all the securities they own or control in
favour of the Transaction.
Filo Board of Directors and Special Committee
Recommendations
A special committee comprised of independent directors of Filo
(the "Special Committee") unanimously recommended the Transaction
to the board of directors of the Company (the "Filo Board"). The
Filo Board has evaluated the Arrangement Agreement with the
Company's management and legal and financial advisors and,
following the receipt and review of the unanimous recommendation
from the Special Committee, the Filo Board unanimously (subject to
certain directors declaring a conflict and abstaining from voting
on the matter) determined that the Transaction is in the best
interest of the Company, approved the Transaction and recommended
that the Company's shareholders vote in favour of the Transaction,
all subject to the terms and conditions contained in the
Arrangement Agreement.
Each of BMO Capital Markets and National Bank Financial have
provided an opinion to the Special Committee and Filo Board stating
that, as of the date of such opinions and based upon and subject to
various assumptions, limitations and qualifications therein, the
consideration to be received by the Filo shareholders pursuant to
the Arrangement Agreement is fair, from a financial point of view,
to such shareholders, excluding the Purchaser Parties.
Further details regarding the terms of the Transaction are set
out in the Arrangement Agreement, which will be publicly filed by
Filo under its profile at www.sedarplus.ca. Additional information
regarding the terms of the Arrangement Agreement, the background to
the Transaction, the rationale for the recommendations made by the
Special Committee and the Filo Board and how Filo shareholders can
participate in and vote at the special meeting to be held to
consider the Transaction, will be provided in the management
information circular for the special meeting which will be mailed
to shareholders and also filed at www.sedarplus.ca. Shareholders
are urged to read these and other relevant materials when they
become available.
Concurrent Private Placement
Concurrent with entering into the Arrangement
Agreement, Filo and each of the Purchaser Parties entered into a
subscription agreement pursuant to which each of the Purchaser
Parties will subscribe for 3,484,848 Filo Shares at an issue price
of C$33.00 per Filo Share, or approximately C$115 million in the aggregate (the "Concurrent
Private Placement"). Upon completion of the Concurrent Private
Placement, BHP and Lundin Mining will hold approximately 7.1% and
1.7% of the total issued and outstanding Filo Shares, respectively.
The Concurrent Private Placement entails a dilution of
approximately 2.7% of the number of shares and votes in the Company
(calculated as the number of newly issued shares divided by the
total number of shares in the Company after the Concurrent Private
Placement). Through the Concurrent Private Placement, the number of
shares and votes in the Company will increase by 3,484,848 from
131,200,800 to 134,685,648. The proceeds from the Concurrent
Private Placement will be used by Filo to fund the development of
the Filo del Sol project, general working capital expenses and
general and administration expenses for the period between
announcement and closing of the Transaction, in accordance with
Filo's budget. The Concurrent Private Placement is not conditional
on completion of the Transaction and is expected to complete on or
before August 12, 2024.
Advisors and Counsel
BMO Capital Markets is acting as financial advisor to Filo and
National Bank Financial is providing a fixed fee fairness opinion
to the Special Committee and the Filo Board. Blake, Cassels &
Graydon LLP is acting as legal advisors to the Company.
Stikeman Elliott LLP is acting as legal advisors to BHP.
Cassels Brock & Blackwell LLP
and Sullivan & Cromwell LLP are acting as legal advisors to
Lundin Mining.
About Filo Corp.
Filo is a Canadian exploration and development company focused
on advancing its 100% owned Filo del Sol copper-gold-silver deposit
located in San Juan Province, Argentina and adjacent Region III,
Chile. The
Company's shares are listed on the TSX and Nasdaq First North Growth Market
under the trading symbol "FIL", and on the OTCQX
under the symbol "FLMMF". Filo is a member of the Lundin Group of
Companies.
Additional Information
The Company's certified adviser on the Nasdaq First North Growth
Market is Aktieinvest FK AB, +46 8 506 51703,
rutger.ahlerup@aktieinvest.se.
The information contained in this news release was accurate at
the time of dissemination, but may be
superseded by subsequent news release(s).
This press release contains inside information
that Filo Corp. is required to make public pursuant to the EU
Market Abuse Regulation. The information was submitted for
publication by the contact persons below on July 29, 2024 at 7:30pm
EDT.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release includes certain "forward-looking
information" and "forward-looking statements" (collectively
"forward-looking information") within the meaning of applicable
securities legislation. All statements, other than statements of
historical fact, included herein may be forward-looking
statements, including, without limitation, statements relating to
the consummation and timing of the Transaction; the consummation of
the Concurrent Private Placement; the satisfaction of the
conditions precedent to the Transaction; the strengths,
characteristics and potential of Lundin Mining post-Transaction;
timing, receipt and anticipated effects of court and regulatory
approvals; the impact of the Transaction on employees and local
stakeholders; and discussion of future plans, projects, objectives,
estimates and forecasts and the timing related thereto.
Forward-looking information is frequently, but not always,
identified by words such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible", and similar
expressions, or statements that events, conditions, or results
"will", "may", "could", or "should" occur or be achieved. These
forward-looking statements may also include statements regarding
perceived merit of properties; exploration plans and budgets;
mineral reserves and resource estimates; work programs; capital
expenditures; timelines; strategic plans; market prices for
precious and base metals; or other statements that are not
statements of fact. In addition, statements relating to "mineral
resources" and "mineral reserves" are deemed to be forward-looking
information, as they involve the implied assessment, based on
certain estimates and assumptions that the mineral resources and
mineral reserves described can be profitably produced in the
future.
Forward-looking information involves various risks and
uncertainties. There can be no assurance that such information will
prove to be accurate, and actual results and future events could
differ materially from those anticipated in such information.
Important factors that could cause actual results to differ
materially from the Company's expectations include failure to
receive the required court and regulatory approvals to effect the
Transaction; changes in laws, regulations and government practices;
the potential of a third party making a superior proposal to the
Transaction; risks pertaining to the outbreak of the global
pandemics; government regulation of mining operations;
environmental risks; and other risks and uncertainties disclosed in
the Company's periodic filings with Canadian securities regulators
and in other Company reports and documents filed with applicable
securities regulatory authorities from time to time, including the
Company's Annual Information Form available under the Company's
profile at www.sedarplus.ca. In addition, these statements involve
assumptions made with regards to the Company's ability to develop
the Filo del Sol project and to achieve the results outlined
in the Technical Report; the ability to raise the capital required
to fund construction and development of the Filo del Sol project;
and the results and impact of future exploration at the Filo del
Sol project. The Company's forward-looking information reflects the
beliefs, opinions, and projections on the date the statements are
made. The Company assumes no obligation to update the
forward-looking information or beliefs, opinions, projections, or
other factors, should they change, except as required by law.
SOURCE Filo Corp.