SINGAPORE Rio Tinto Plc has agreed to sell its Eagle nickel-copper project in Michigans Upper Peninsula to Lundin Mining Corp. for $325 million.
The deal, which is subject to regulatory approval, is expected to close in the third quarter, the London-based miner said.
The Eagle project includes a high-grade underground nickel-copper mine and mill. Construction started in June 2010 and is about 55-percent complete, Rio Tinto said.
"The sale of Eagle demonstrates our renewed focus and discipline in the way we allocate capital," Rio Tinto chief financial officer Chris Lynch said. "We are making good progress on a number of other potential divestments."
The miner plans to cut costs by more than $5 billion by the end of 2014 and is looking to offload additional noncore assets, including its Pacific Aluminium unit (amm.com, Feb. 28).
Separately, Lundin Mining said that initial production is expected to start at the Eagle project in the fourth quarter of 2014.
Production over the first three full years is expected to average about 23,000 tonnes of nickel and 20,000 tonnes of copper annually, with additional by-product credits of precious metals and cobalt, and average cash costs of $2 per pound of nickel.
"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," Paul Conibear, president and chief executive officer of Toronto-based Lundin, said.
A version of this article was first published by AMM sister publication Metal Bulletin.