Back in August Faraday Copper had a special shareholder meeting to vote on the issuance of stock to BHP for the acquisition of the San Manuel mine and associated properties. Below is the circular sent to shareholders in July, one month before the meeting.
Most of the information in the circular was known or expected, like BHP transferring all environmental liabilities to Faraday and BHP taking 32.5% of issued and outstanding shares of Faraday. But there were some interesting and disturbing stipulations for this acquisition .
Once the deal is completed BHP will also have an exclusive right to purchase 30% of the offtake of both mines. Ok… not a big deal.
But this one! This one doesn’t seem right. There is a water supply agreement. That agreement basically states Faraday Copper gets first dibs on water needed for operation but BHP gets the excess water and Faraday will transport that water to BHP at cost.
Below is the text of the “Water Supply Agreement” from page 15 of the circular. The “Buyer” is Faraday and the “Vendor” is BHP.
The Company Parties and the Vendor will enter into the Water Supply Agreement at closing of the Acquisition, pursuant to which the Vendor will, subject to the terms thereof, be granted the right by the Company Parties to receive all water from the water claims and lands comprising the Acquired Assets that is reasonably available in excess of the Buyer’s Water Needs (“Excess Water”), with Excess Water determined by the Board, acting in good faith, in accordance with an annual rolling five-year plan process. For this purpose, “Buyer’s Water Needs” means the estimated quantity of water from the water claims and lands comprising the Acquired Assets that is reasonably anticipated to be used for the Buyer’s exploration, development, mining and mineral processing operations and for meeting any sustainability obligations at the San Manuel Site and Copper Creek Project. The Vendor will reimburse the Buyer for the Vendor’s equitable, pro rata share of the Buyer’s documented direct and indirect costs of delivering the Excess Water, at no markup. The Water Supply Agreement will have an indefinite term and may be terminated by the Vendor on 90 days’ notice.
Mind you that this document is filed in Canada, so the real companies are named, not some shell LLCs created to be considered an American company. So in black and white this documents that a foreign company operating in the US will pump as much water from Arizona aquifers as they need and then transport “excess” to another foreign company operating in the US.
Hmmm, We wonder why BHP needs all that water. Could it be for Resolution, their joint venture mine in Superior.
Is BHP giving a final gut punch to the community on their way out of town?
Stay classy BHP
Comments are closed