Filo Corp

Aug 7, 2024
Filo Announces Closing of C$115 Million Private Placement

VANCOUVER, BC, Aug. 7, 2024 /CNW/ - Filo Corp. (TSX: FIL) (Nasdaq First North Growth Market: FIL) (OTCQX: FLMMF) ("Filo" or the "Company") is pleased to announce that it has closed its previously announced private placement of 3,484,848 common shares in the capital of the Company (the "Filo Shares") issued at a price of C$33.00 per share for gross proceeds of C$114,999,984.00 (the "Private Placement"). The Private Placement was made pursuant to subscription agreements entered into between Filo and each of BHP ("BHP") and Lundin Mining Corporation (TSX: LUN) (Nasdaq Stockholm: LUMI) ("Lundin Mining", and together with BHP, the "Purchaser Parties"). Upon completion of the Private Placement, each of BHP's and Lundin's equity interest in the Company has increased by approximately 1.3%, resulting in each of them now owning, directly or indirectly, approximately 7.1% and 1.7%, respectively, and the Company now has 134,685,648 Filo Shares issued and outstanding. The Private Placement entails a dilution of approximately 2.6% of the number of shares and votes in the Company (calculated as the number of newly issued Filo Shares divided by the total number of Filo Shares after the Private Placement). PDF Version

The Private Placement was previously announced concurrently with Filo announcing that it had entered into a binding arrangement agreement with the Purchaser Parties whereby the Purchaser Parties will acquire all of the outstanding Filo Shares that they do not already own (the "Transaction").

The net proceeds of the Private Placement will be used for exploration 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 Filo Shares issued under the Private Placement to the Purchaser Parties will be subject to a hold period expiring on December 8, 2024. The Private Placement remains subject to the final approval of the Toronto Stock Exchange.

   On July 29, 2024, the Company announced that it has entered into a binding arrangement agreement (the "Arrangement Agreement") with BHP Investments Canada Inc. ("BHP") and Lundin Mining Corporation ("Lundin Mining", and together with BHP, the "Purchaser Parties") whereby the Purchaser Parties will acquire all of the outstanding common shares of Filo that they do not already own through a plan of arrangement (the "Transaction") for total consideration of Canadian dollars ("$CAD") 4.1 billion ($CAD 33.00/share) through a combination of cash and Lundin Mining shares. The Transaction is expected to be completed in the first quarter of 2025, subject to the satisfaction of closing conditions. Concurrent with entering into the Arrangement Agreement, Filo and each of the Purchaser Parties (or their affiliates) entered into a subscription agreement pursuant to which they subscribed for 3,484,848 Filo Shares at an issue price of $CAD 33.00 per Filo Share, or approximately $CAD 115.0 million in the aggregate (the "Concurrent Private Placement"). The Concurrent Private Placement was not conditional on completion of the Transaction and was completed on August 7, 2024. Please refer to the Company press release dated July 29, 2024 for more information;
   Assay results announced for hole FSDH114, which intersected 1,460.0m at 0.45% CuEq from 92.0m including 26.0m at 1.22% CuEq from 1,176.0m, confirming the northern expansion of the Bonita Zone first seen with hole FSDH108, leaving the deposit open to the north and confirming a minimum width of 600m in this area;
   Assay results announced for hole FSDH112, which intersected 1,036.0m at 0.65% CuEq from 96.0m including 472.5m at 1.02% CuEq from 659.5m, expanding the high-grade zone first drilled in the Bonita Zone with FSDH091 and suggests it may be contiguous with the Aurora Zone over 900m to the southwest;
   In May 2024, notice was provided to the Company by NGEx Minerals Ltd. ("NGEx") and Lundin Mining Corporation ("Lundin Mining") to jointly buy-back two thirds of the existing 3% Net Smelter Royalties ("NSR") attached to three mineral claims (Nacimiento 1, Nacimiento 2, and Vicuña 4) in San Juan Province, Argentina which cover NGEx's Lunahuasi and Lundin Mining's Cumbre Verde copper-gold-silver projects. In consideration for the joint repurchase, the Company received gross cash consideration of $2.0 million. Following completion of the transaction, the Company retains a 1% NSR over the claims; and
   The Company temporarily halted drilling operations during the second quarter of 2024 due to poor weather conditions which prevented safe operations. The Company has demobilized all non-essential personnel from site and triggered standby provisions with drilling-related contractors. Drilling is expected to recommence in the third quarter of 2024.

2024 Drilling and Assay Results

Drilling and assay results disclosed by the Company during and subsequent to the six months ended June 30, 2024 are summarized in Appendix 1 to this news release.

Outlook

Drilling activities are expected to recommence at the Filo del Sol Project during the third quarter of 2024. The Company and its drilling-related contractors are working closely to monitor the weather and plan for remobilization to site. A small team are currently at site, performing road maintenance and site inspection activities, to ensure coordinated remobilization of site personnel and contractors.

As a result of the shutdown of the drilling program, the Company is now expecting to drill between 30,000 and 35,000 metres during 2024, down from the original target of 40,000m. The focus of the 2024 program will remain exploration and resource growth with multiple step-out targets in all directions from zones of known mineralization, including both the Bonita and Aurora Zones. The Company continues to maintain a strong focus on improving drill productivity through a variety of initiatives.

Data collected from the current campaign is being used to develop a comprehensive geological model which will guide further exploration. The Company is continuing preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social baseline programs in support of future project permitting.

The Company's plans and timelines are subject to equipment and staff availability, along with being able to operate safely and effectively and in accordance with the Company's health and safety protocols.

Selected Financial Information

Effective January 1, 2024, the Company changed the functional currencies of its parent and subsidiary companies (see table below) to United States dollars ("$USD"). The Company also changed its presentation currency from $CAD to $USD. The changes were enacted to reflect changes in the composition of the Company's contracts and monetary outlays being predominantly denominated in $USD. The change in functional currencies is being recognized prospectively. The change in presentation currency requires retrospective restatement of all prior periods presented in the financial statements. The amounts reported in the statement of financial position as at January 1, 2023 (derived from the consolidated statement of financial position as at December 31, 2022; not presented herein) and December 31, 2023 have been restated in $USD based on the closing exchange rates on December 31, 2022 and December 31, 2023, respectively. The statements of comprehensive loss, cash flows and changes in equity for the three and six months ended June 30, 2023 have been restated in $USD based on the average exchange rate for the three and six months ended June 30, 2023.

filocorp.com/news/filo-reports-q2-2024-results-122647/