Rio Tinto has struck a $US325 million cash deal with Lundin Mining to offload its Eagle project located in the Upper Peninsula of Michigan in the United States.
The nickel-copper mine sale is expected to be finalised in the third quarter of 2013, subject to regulatory approval.
Construction on the underground mine and mill commenced in June 2010 and is approximately 55 per cent complete.
Rio’s chief financial officer, Chris Lynch said the deal is inline with the company’s new cost cutting agenda.
“The sale of Eagle demonstrates our renewed focus and discipline in the way we allocate capital,” he said.
Reports emerged yesterday that Rio is moving closer towards finalising the sale of a number of its Queensland and New South Wales coal assets, including a 29 per cent stake in Coal and Allied.
“We are making good progress on a number of other potential divestments as part of our goal to achieve substantial proceeds from divesting non-core assets,” Lynch said.
Rio has previously said the Eagle project would create 500 construction jobs and more than 230 positions when in operation.
“We believe Eagle will have a sound future under its new ownership given Lundin’s commitment to the development of the project,” Lynch said.
Rio will continue to manage the project throughout the transition period.
Lundin will be the 100 per cent owner once the sale is finalised.
Paul Conibear, Lundin Mining chief executive said the project is a good fit with the company’s existing asset base.
“We have been focused on for some time to acquire high quality, advanced stage assets in low risk, mining oriented jurisdictions,” he said.
Conibear added he expects metal production to begin before the end of 2014.
Once online, Eagle’s estimated annual production for the first three years of mine life is estimated to be 23,000 tonnes of nickel and 20,000 tonnes of copper per annum.