Lundin Mining (TSX: T.LUN, Stock Forum) after Wednesday’s close announced that it has entered into a definitive agreement with Rio Tinto Nickel Company, a subsidiary of Rio Tinto plc, to purchase its 100% ownership stake in Rio Tinto Eagle Mine, LLC, which owns the Eagle nickel/copper underground mine in northern Michigan.
The purchase price of approximately US$325 million consists of US$250 million in cash plus project expenditures from January 1, 2013, until transaction closing of approximately $75 million, also payable in cash.
Project construction of the Eagle Mine is slightly more than 50% complete with initial production expected to begin in Q4 2014. Annual production over the first three full years (2015 - 2017) is expected to average approximately 23,000 tonnes of nickel and 20,000 tonnes of copper per year, with additional by-product credits of precious metals and cobalt that is expected to bring the costs in at about $2 per pound of nickel.