TORONTO, ONTARIO -- (Marketwired) -- 06/12/13 -- Lundin Mining Corporation (TSX: LUN)(OMX: LUMI) ("Lundin Mining" or the "Company") is pleased to announce that it has entered into a definitive agreement with Rio Tinto Nickel Company, a subsidiary of Rio Tinto plc ("Rio Tinto") to purchase its 100% ownership stake in Rio Tinto Eagle Mine, LLC, which owns the high grade Eagle nickel/copper underground mine located in northern Michigan, U.S.A. The agreed purchase price is approximately US$325 million, consisting of a US$250 million purchase amount plus project expenditures from January 1, 2013 until transaction closing of approximately $75 million, payable in cash, and subject to customary adjustments.
Paul Conibear, President and CEO commented, "The acquisition of the Eagle Mine fits ideally within Lundin Mining's asset base and is the result of the disciplined approach we have been focused on for some time to acquire high quality, advanced stage assets in low risk, mining oriented jurisdictions. 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. Northern Michigan has an outstanding iron ore, gold and base metals mining history and consequently excellent regional power, road and rail infrastructure, with extensive mining expertise within local communities to support and staff Eagle Mine."
The Eagle Mine is located in Marquette County in the Upper Peninsula of Michigan. Project construction is slightly more than 50% complete with initial production expected to commence 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 annum, with additional by-product credits of precious metals and cobalt. Due to the high nickel grades and strong by-product credits, C1 cash costs for the first three years are expected to average approximately $2.00/lb nickel, thereby strongly positioning the asset in the lowest quartile of the nickel producer cost curve.
Key Investment Highlights
-- High grade nickel/copper deposit in a low-risk jurisdiction-- High quality nickel and copper concentrates with low technical and processing risk-- Project construction is just over 50% completed-- Production expected to commence Q4 2014-- Expected to be lowest quartile cost nickel producer-- Short payback period and strong cash flows-- Exploration upside with potential for increase in resources
Eagle Mine Overview
The Eagle Mine is a high grade nickel/copper deposit with Probable Ore Reserves estimated in accordance with JORC of 5.18 million tonnes at 2.93% nickel and 2.49% copper anticipated to produce on average approximately 17,000 tonnes per annum nickel and 17,000 tonnes per annum copper, with gold, cobalt, platinum and palladium by-products over the current life of mine of approximately 8 years. In close proximity to the Eagle Mine deposit, several exploration targets have been identified. Exploration efforts will be advanced in this highly prospective area of interest to identify additional resources.