Lundin to buy Rio Tinto’s nickel-copper project in Michigan

Canadian base metal miner Lundin Mining Corp yesterday agreed to buy Rio Tinto's under construction nickel-copper project in Michigan, for $325 million.

The Toronto-based company will buy Rio Tinto Eagle Mine, LLC, which owns the high grade Eagle nickel / copper underground mine located in northern Michigan in the US.

The agreed purchase price is approximately $325 million, comprising of a $250 million purchase amount plus project expenditures of approximately $75 million, payable in cash.

The Eagle Mine, located in Marquette County in the Upper Peninsula of Michigan, is a high grade nickel / copper deposit with estimated reserves of 5.18 million tonnes at 2.93 per cent nickel and 2.49 per cent copper.

The mine is expected to produce on average approximately 17,000 tonnes per annum of nickel and 17,000 tonnes per annum of copper, with gold, cobalt, platinum and palladium by-products over the current life of mine of approximately 8 years.

Project construction is more than 50 per cent complete with initial production expected to commence in Q4 2014.

The assets being acquired comprise the in-development Eagle nickel-copper underground mine, the historic Humboldt mill site and mineral, water, access and surface rights around the mine.

''The Eagle mine represents a very unique opportunity to acquire a high-grade project which is under construction and expected to begin generating significant levels of metal production and cash flow prior to the end of next year,'' said, Lundin CEO, Paul Conibear.

The deal, which is subject to regulatory approvals, is expected to be completed in July 2013.

Lundin is a diversified base metals mining company with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel.

It also holds a development project pipeline which includes expansion projects at its Zinkgruvan and Neves-Corvo mines along with 24.75 per cent stake in Tenke Fungurume copper / cobalt project in the Democratic Republic of Congo  and in the Kokkola cobalt refinery located in Finland.