Under the deal, Faraday would acquire 100 percent of the San Manuel property. The site is adjacent to Faraday’s Copper Creek project in Pinal County, Arizona.
San Manuel includes the San Manuel and Kalamazoo legacy deposits, the former mill site, closed tailings facilities and surrounding land owned by BHP, along with associated mineral rights, quarries and associated assets.
The mine operated as one of the largest underground copper mines in the United States between 1955 and 1999, producing more than 4.5 million tons of copper. Faraday would assume all environmental and closure obligations associated with the property.
Located approximately 50 miles northeast of Tucson and approximately 12 miles from San Manuel, Copper Creek is a 100 percent owned porphyry copper project with an updated mineral resource estimate and preliminary economic assessment released in 2023.
The deposit remains open in all directions and hosts both breccia-hosted and vein-like mineralization. Faraday says significant research gains remain, with less than 15 percent of known breccia occurrences having been tested.
The proposed consolidation would add approximately 27,000 hectares of private land and access to existing regional infrastructure. Faraday has also outlined a phased development concept that will prioritize copper cathode production, followed by open pit sulphides and later underground operations.
If completed, the transaction would see Faraday issue ordinary shares to BHP, equivalent to a 30 percent stake in the company on a fully diluted basis at closing. BHP would also receive the usual investor rights as long as it retains a minimum share.
“This agreement presents the opportunity for a transformative acquisition as it seeks to consolidate two adjacent and complementary assets in the heart of Arizona’s copper corridor at a time when sourcing critical minerals within the U.S. is essential,” said CEO and President Paul Harbidge.
“The combined project has the potential to become a multi-generational copper district that supplies copper from America while providing significant economic opportunities to local communities.”
For BHP, the deal would convert a legacy of the past into a strategic equity position in a junior developer focused on the US copper supply.
The LOI also includes a six-month exclusivity period and a financing participation clause under which BHP has agreed to subscribe to 30 percent of any Faraday share raise over the next 24 months, up to a maximum of $20 million.
Separately, Faraday recently released a non-brokered private placement of up to C$100 million, with a price of C$4.20 per share.
Strategic investors including the Lundin Family Trusts and BHP plan to participate.
Proceeds will primarily be used to advance copper projects in Pinal County, including costs associated with the planned acquisition of San Manuel.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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