Faraday Copper Corp. announced it has entered into a definitive purchase and sale agreement with a wholly owned subsidiary of BHP Group Limited (“BHP”) in respect of the previously announced transaction whereby Faraday will acquire from BHP the San Manuel property “San Manuel”, adjacent to Faraday’s Copper Creek project “Copper Creek”, located in Arizona, USA.
Paul Harbidge, President and CEO, commented, “This is a transformational acquisition for Faraday. Combining San Manuel with our Copper Creek project, with the support of the Lundin Group and BHP as strategic shareholders, positions us well to become one of the largest undeveloped copper districts in the U.S. with a path to development and near-term copper production.”
Under the terms of the Agreement, Faraday will acquire 100% of the San Manuel property. As consideration for the Transaction, Faraday will issue to BHP common shares of Faraday equivalent to a 30% interest in the issued and outstanding common shares on a fully diluted basis as of the date of closing. Including shares issued to BHP from its participation in the C$100 million private placement in March 2026, BHP is expected to hold approximately 138 million common shares after the closing of the Transaction. In addition, BHP will be granted customary investor rights pursuant to an investor rights agreement, provided it maintains a minimum shareholding requirement.
The Agreement contemplates that on the closing of the Transaction, BHP will transfer all of its interest in San Manuel, which comprise the legacy San Manuel Copper Mine (including the San Manuel and Kalamazoo deposits, the San Manuel plant site and closed tailings storage facilities and surrounding BHP-owned land, and all related mineral estate interests), the Black Hills Quarry and the Camp Grant Quarry, and related rights and assets. As consideration for the purchase, Faraday will assume all liabilities, including all environmental and closure liabilities, related to San Manuel and will issue the Consideration to BHP. Faraday has also agreed to certain operational and other post-closing covenants covering customary international industry, environmental and stakeholder engagement standards.
The Agreement further contemplates that, concurrently with the Closing, Faraday and BHP will enter into, among other things, an offtake rights agreement, a water supply agreement and an investor rights agreement. The investor rights agreement will provide BHP with, among other rights and entitlements, board nomination rights, equity participation rights, and registration rights and will impose certain obligations on BHP including customary standstill, voting and transfer restrictions.
The Agreement provides for customary deal protection, including non‑solicitation covenants, a “fiduciary out” permitting Faraday to consider and accept a superior proposal, matching rights in favour of BHP, and the payment of a US$12 million termination fee in certain circumstances.
Faraday intends to convene a special meeting of its shareholders to seek approval of the Transaction. The Meeting is expected to be held in August 2026. Faraday shareholders of record as of a date to be determined by the Board of Directors will be entitled to receive notice of, and vote at, the Meeting.
Approval of the Transaction will require the affirmative vote of a simple majority of the votes cast by disinterested Faraday shareholders present in person or represented by proxy at the Meeting. A management information circular containing detailed information about the Transaction, including a copy of the Agreement and the fairness opinion of TD Securities Inc., will be prepared and mailed to Faraday shareholders in advance of the Meeting and filed under Faraday’s profile on SEDAR+. Faraday shareholders are urged to read these and other relevant materials when they become available.
Completion of the Transaction is subject to the satisfaction (or waiver, where applicable) of customary closing conditions for a transaction of this nature, including approval by disinterested Faraday shareholders, receipt of Toronto Stock Exchange approval, other required regulatory approvals and the fulfillment of certain closing deliverables by the parties.
Subject to the receipt of all necessary approvals, the Transaction is expected to be completed by the end of the third quarter of 2026.
After consultation with its financial and legal advisors and receiving the unanimous recommendation of the independent directors of Faraday, the Board of Directors of Faraday has unanimously approved entering into the Agreement. The Board of Directors of Faraday unanimously recommends that Faraday shareholders vote in favour of the Transaction.
TD Securities Inc. has provided a fairness opinion to the Faraday Board of Directors to the effect that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Consideration to be paid by Faraday pursuant to the Transaction is fair, from a financial point of view, to Faraday.
Concurrently with the execution of the Agreement, BHP entered into voting and support agreements with certain securityholders of Faraday, including each of the directors and officers of Faraday. Pursuant to the Voting Support Agreements, each supporting securityholder has agreed, subject to the terms thereof, to vote their Common Shares in favour of the Approval Resolution at the Meeting. The supporting securityholders party to the Voting Support Agreements hold, in aggregate, Common Shares representing approximately 21.88% of the issued and outstanding Common Shares as of the date hereof.
The San Manuel Mine, comprising the San Manuel and Kalamazoo deposits, operated as a combined underground block cave and openpit mine. The combined operation was one of the largest underground mines in the USA during its operation, generating over 4.5 million tonnes of copper between 1955 and 1999 based on publicly available historical production records. Historical copper production was predominantly from underground sulphide material feeding a concentrator, while notable cathode production was achieved later in the mine’s operational period by mining and processing of oxide material, including in-situ recovery. A significant historical resource and historical reserve3 remained at closure, which are not compliant under the current standards of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators.
The mineralization at San Manuel and Kalamazoo is well-understood. Sulphide mineralization occurs within Laramide porphyry intrusives and the surrounding Oracle granite. Supergene (oxide) mineralization formed later during tectonic extension. The Kalamazoo deposit is the downthrown extension of mineralization which was offset along the San Manuel fault.
The project is a 100% owned, large copper deposit, located ~80 road km northeast of Tucson, Arizona, and ~19 km northeast of San Manuel, Arizona. The resource area is ~3 km in length and is open in all directions.
The property hosts an early halo vein style porphyry copper deposit with high-grade, near-surface, breccia-hosted mineralization. Both mineralization types form the basis of the current Mineral Resource Estimate prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum standards. Copper is the primary commodity, with molybdenum, silver and gold present in varying amounts associated with both types of mineralization.
On May 3, 2023, Faraday announced an updated MRE and Preliminary Economic Assessment for the project, with a technical report titled “Copper Creek Project NI 43-101 Technical Report and Preliminary Economic Assessment” filed on SEDAR+ on June 13, 2023.
With a total of over 257,000 metres of recent and historical drilling and modest past production, significant exploration upside remains. There are over 320 known breccia occurrences mapped at the surface, of which less than 15% have been drill tested and only 17 are included in the 2023 MRE.
The current work program is focused on resource, geotechnical and hydrogeological drilling, environmental data gathering, and stakeholder outreach.
TD Securities Inc. is engaged as financial advisor to Faraday. McCarthy Tétrault LLP and Dorsey & Whitney LLP are acting as legal counsel to Faraday.
The scientific and technical information contained in this news release has been reviewed and approved by Faraday’s VP Geology, Dr. Thomas Bissig, P. Geo., and VP, Technical Services, Zach Allwright, P.Eng., each of whom are considered a Qualified Person under NI 43-101.
