ALTHOUGH construction is incomplete, Rio Tinto has struck a deal with Lundin Mining to offload its Eagle mine project for US$325 million.
The Michigan-based project is roughly 55 per cent complete and includes a high grade underground nickel-copper mine and mill.
Lundin chief executive Paul Conibear said the purchase represented a unique opportunity to acquire a low-risk, high-return project.
“The acquisition of the Eagle Mine its ideally within Lundin Mining’s asset base and is the result of the disciplined approach we have been focussed on for some time to acquire high-quality, advanced stage assets in low-risk, mining-oriented jurisdictions,” he said.
“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.”
Rio Tinto chief financial officer Chris Lynch said the transaction would be completed in the third quarter of 2013 and was still subject to regulatory approval.
“The sale of Eagle demonstrates our renewed focus and discipline in the way we allocate capital,” he said.
“We are making good progress on a number of other potential divestments as part of our goal to achieve proceeds from divesting non-core assets.
“We believe Eagle will have a sound future under its new ownership, given Lundin’s commitment to the development of the project.
“Rio Tinto will continue to manage Eagle to the highest safety and environmental standards during the transition of the new owner.”
The sale continues the company policy of fat-trimming following the appointment of Sam Walsh as chief executive.
The company has been under pressure to slash costs and offload assets since recording a loss in the last financial year.