Category: Canada

Lundin Mining and BHP Investments Canada (BHP) have completed their joint acquisition of Filo, a mining company listed on the Toronto Stock Exchange, for C$4bn ($2.78bn).

This deal grants both companies a 50% stake in Filo and its FDS copper project in the Atacama region of Chile.

When the deal was announced in July last year, BHP made a payment of C$2bn in cash for the Filo acquisition, equating to C$33 per Filo share. Lundin Mining’s contribution features $C877.8m in cash and 94.1 million of Lundin Mining shares.

Prior to the completion of the acquisition, Lundin Mining owned 100% of the Josemaria copper project in the Vicuña district of Argentina. Now, BHP has bought a 50% stake in Josemaria from Lundin Mining for $690m.

The two companies have also established a 50:50 JV called Vicuña Corp, which includes FDS and Josemaria.

Operating independently from BHP and Lundin Mining, the JV company is responsible for managing these projects.

The close proximity of the FDS and Josemaria projects enables greater economies of scale, enhanced flexibility for staged expansions and the integration of future exploration as the district develops.

Lundin Mining president and CEO Jack Lundin said: “Thanks to the strong collaboration between BHP and Lundin Mining, today we announce the formation of the newly formed Joint Arrangement, Vicuña Corp., and now enter an exciting new chapter of growth that has the potential to transform Lundin Mining into a top-tier copper producer.

“Vicuña’s newly formed team, with support from its board that is comprised equally of both Lundin Mining and BHP representatives, will work towards several key milestones during the year.

“Vicuña is targeting a mineral resource estimate for both the Filo del Sol and Josemaria deposits within the first half of 2025. This resource estimate will form the basis of an integrated technical report, which will outline the development plan for the phased construction of the district.” 

Total capital expenditure for the joint arrangement is forecast at $312m on a 100% basis for this year.

The future workplan for the JV will focus on a range of activities including FDS drilling, FDS mineral resource estimation and a Josemaria mineral resource estimation update.

It will also cover mine planning, metallurgy, hydrology wells and studies, the initiation of access road construction, and exploration at the Cumbre Verde target.

At the same time, engineering studies and trade-off analysis will be conducted in preparation for future permitting, along with the preparation of a technical report detailing an integrated project.

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Good morning, this is investment reporter Tim Shufelt, and today we’re wading into the torrent of news surrounding trade, tariffs and Donald Trump. In less than a week, the U.S. president-elect returns to the White House with a stockpile of grievances and promises of belligerence toward allies and trading partners, Canada perhaps chief among them. We’ll take a closer look at how the country is bracing itself for turmoil. But first:

In the news

Donald Trump’s proposed tariffs could cost Ontario 500,000 jobs, Premier Doug Ford warns

Barrick Gold Corp. has suspended operations in Mali after $245-million worth of gold seized by military junta

Canada’s telecommunications and television complaints watchdog saw complaints surge 38 per cent over the course of a year (with Rogers responsible for nearly a quarter of overall complaints)

Pizza Nova allegedly paid delivery drivers as little as $6 an hour after systematically misclassifying them as independent contractors, a class action lawsuit claims

On our radar

• Statistics Canada reports manufacturing sales data, wholesale trade data and new motor vehicle sales data
• On the housing front, we’ll get the numbers on existing home sales and the MLS Home Price Index
• The U.S will release its Consumer Price Index inflation report for December
• Earnings include JPMorgan Chase & Co. and Goldman Sachs Group Inc., which both recently exited the Net-Zero Banking Alliance intended to encourage climate change efforts at major financial institutions. Earnings are also coming from Citigroup Inc. and Wells Fargo & Co.

In focus

How a trade war with the U.S. is shaping up

Canada got a full dose of Trump’s hostile approach to trade during his first term. Now, hostilities are set to resume when he is sworn in for the second time on Monday. His threat of Day One tariffs of 25 per cent on all Canadian imports set off a crisis of uncertain proportions. That’s because one is never sure what Trump means literally and what amounts to tactical bluster. The threats to Canadian sovereignty have further muddied the waters as to what exactly Canada needs to be prepared to defend against.

Alberta Premier Danielle Smith, after visiting Trump’s home in Florida last weekend, urged Canadians to brace for the impact of trade tariffs starting next week, including on oil and gas destined for the U.S. market.

The battle lines

Over the past week, prime ministers past, present and possibly future have weighed in on the tensions growing between the two countries, with each espousing a different approach to navigating the grave risk to Canada’s economy that Trump could represent.

• Jean Chrétien insisted on the need for offence and called on Canada’s politicians to show some “spine and toughness.” Pressure the Americans to control the illegal guns crossing the border, he said. Assert our jurisdiction over the Northwest Passage. And reduce our economic vulnerability to the U.S. by eliminating provincial trade barriers, while banding together with others in Trump’s crosshairs, such as Mexico and the European Union. “The whole point is not to wait in dread for Donald Trump’s next blow. It’s to build a country and an international community that can withstand those blows.”
• Stephen Harper took issue with how Trump characterizes its trade deficit as “subsidizing” Canada, when that deficit is largely the result of the U.S. buying so much Canadian oil and gas. And since we sell it at a discount to market value, it’s actually Canada subsidizing the U.S., he said. “Maybe Canadians, if Trump feels this way, should be looking at selling their oil and gas to other people.”
• Prime Minister Justin Trudeau’s resignation announcement may have undermined his own leadership, but he’s still in office at a moment of potential economic crisis, at least until the Liberal Party chooses his successor. Lately, he’s been emphasizing the mutual benefits of the Canada-U.S. relationship, including the free trade deal his government negotiated with the first Trump administration. “No American wants to pay 25 per cent more for electricity or oil and gas coming in from Canada. That’s something I think people need to pay a little more attention to.”
• Conservative Leader Pierre Poilievre said Americans need to be reminded of the value of its close trade relationship with Canada. And the cost of tariffs should be made explicit to union workers and business leaders south of the border, he said. “We need to put Canada first by locking arms with American economic allies on the ground that will put pressure on Washington to do the right thing.”

What’s at stake

Considering the U.S. consumes nearly 80 per cent of Canada’s exports, it’s hard to overstate the potential economic shock that is now on the table. A few years ago, the Bank of Canada modelled a trade war similar to the one Trump has floated: 25-per-cent tariffs on all trading partners, with the cost of retaliation factored in. It estimated the blow to Canadian GDP would be around 6 per cent. Except for the temporary COVID-19 shutdown, that’s worse than any previous recession Canada has suffered, according to a note published by National Bank.

The Canadian labour market would be hit hard in such a scenario. Ontario Premier Doug Ford estimated that Trump’s tariffs would cost the province as much as 500,000 jobs.

In some respects, the tariffs are already having an effect. Some Canadian lumber producers have warned their U.S. customers of a 25-per-cent price increase, despite Trump’s assurances that the burden of tariffs falls on foreign exporters. Trump also dismissed the importance of Canada as a softwood lumber supplier. “We don’t need their lumber,” he said. “We have massive fields of lumber.”

Canada’s cards to play

The U.S. has no better customer in the world than Canada, Tony Keller writes. Over the past year, Canada has bought nearly half-a-trillion dollars of U.S. exports. Last year, Michigan sent 42 per cent of its exports to this country. For Pennsylvania, it was 27 per cent. Politicians and business leaders in those states would surely bristle at the idea of tariffs on their cross-border shipments, should Canada choose to respond with tariffs of its own. None of this would be lost on Trump’s inner circle.

Furthermore, Canada is useful to the U.S. in rivalling the industrial power of China: “To have less trade with an adversary, there must be more trade with friends,” Keller writes.

But in politics, as in life, if diplomacy fails, there’s always retaliation. To that end, Foreign Affairs Minister Mélanie Joly has refused to rule out restricting energy exports to the U.S., which currently relies on Canada for half of its imported oil.

Charted

A stock market palate cleanser

Canada has spent the past year being thoroughly shamed for its economic flaws, but for companies listed on the Toronto Stock Exchange, productivity is on the rise. Since the depths of the COVID-19 pandemic, sales per employee for companies in the S&P/TSX Composite Index are up by about 20 per cent.

Bookmarked

On our reading list

All work: The prospect of a career shift is exciting, but transitioning can be a process. Here’s how to make the leap successfully

No play: Play Airlines is pulling out of Canada less than two years after entering the market

Makes Jack: Jack Daniels’ parent Brown-Forman cutting work force and closing barrel-making plant

A dull boy: Rocky Mountain Bicycles’ creditor-protection filing highlights industry’s woes since the pandemic

Morning update

Global markets edged higher ahead of U.S. consumer price data that could shift the monetary policy outlook, while investors eyed whether big-bank earnings would match sky-high expectations. Wall Street futures and TSX futures pointed higher.

Overseas, the pan-European STOXX 600 was up 0.76 per cent in morning trading. Britain’s FTSE 100 rose 0.81 per cent, Germany’s DAX gained 0.63 per cent and France’s CAC 40 climbed 0.63 per cent.

In Asia, Japan’s Nikkei closed 0.08 per cent lower, while Hong Kong’s Hang Seng advanced 0.32 per cent.

The Canadian dollar traded at 69.70 U.S. cents.

TSX-V-listed Anfield Energy has confirmed that its proposed plan of arrangement with TSX-listed IsoEnergy, announced in October, had been terminated, and that it had secured C$26.5-million in financing to advance its projects

The termination follows IsoEnergy’s decision not to extend the arrangement beyond the December 31 outside date.

Anfield on Tuesday announced a C$15-million equity financing agreement with Uranium Energy Corp (UEC) under which UEC will acquire 107 142 857 shares at C$0.14 a share. The financing, along with an additional $8-million from its existing credit facility with Extract Advisors, provides Anfield with about C$26.5-million to support its operational and strategic goals.

These funds would enable Anfield to advance its Shootaring mill reactivation plan, engage with the state of Utah for a radioactive materials licence upgrade, complete Velvet-Wood’s plan of operations, and update Slick Rock’s uranium and vanadium resource estimate.

The financing will also facilitate Anfield’s aim to list its shares on a senior US stock exchange.

“The company has evaluated its options with regard to moving Anfield towards uranium and vanadium production and, as confirmed by the board of directors, we see compelling value in the premium-priced C$15-million UEC strategic equity financing,” said Anfield CEO Corey Dias.

Anfield confirmed it would repay IsoEnergy’s C$6-million promissory note and indemnity for up to $3-million in principal with proceeds from the equity financing and credit facility.

IsoEnergy CEO Philip Williams commented on the termination, stating, “While the Anfield acquisition would have complemented our US portfolio, we remain confident in the strength of our existing global portfolio to deliver on our strategy of becoming a leading diversified uranium company in Tier 1 jurisdictions.”

With funding secured, Anfield plans to accelerate progress on its key uranium and vanadium projects, including permitting, resource upgrades, and reactivation initiatives, strengthening its foothold in the nuclear energy market.