Rio Tinto plc
), recently agreed to sell its Eagle project to the Canadian
company, Lundin Mining Corporation, for a total sum of $325.0
million, payable in cash. The sale is expected to take place in
the third quarter of 2013, subject to various regulatory
The total purchase price comprises $250.0 million for the
mine, added to the total expenditure incurred on the mine since
Jan 1, this year.
The nickel-copper mine and the Humboldt mill offered for sale
are both situated in the Michigan based Upper Peninsula region of
the United States. The Eagle project was started in mid June of
2010, following the receipt of environmental approvals by Rio
Tinto. The initial plan was to invest $469.0 million in the
development of the mine, which was expected to start production
in late 2013. At that point of time, Eagle was supposed to be the
only primary nickel mine in the Unites States, which offered
significant growth potential in the region.
Rio Tinto has completed roughly 55% of the construction and
the Eagle mine is now expected to start production in the fourth
quarter of 2014.
Lundin will be required to spend around $400.0 million more to
prepare the mine for production. It is expected that the mine
will produce around 17,000 tonnes of nickel and copper each per
annum for the next 8 years with the production of other
by-products such as gold, platinum, cobalt and palladium.
This divestiture is seen as a measure by Rio Tinto to hive off
all of its non-core assets in order to focus more on the core
profitable assets. Rio Tinto also aims to strengthen its balance
sheet in the process. Moreover, the acquisition is helpful to
Lundin because of the company's strategy to acquire high quality
Rio Tinto currently carries a Zacks Rank #4 (Sell). However,
there are other mining stocks worth a watch; which include
Golden Minerals Company
Hi-Crush Partners LP
Alliance Resource Partners LP
), each carrying a Zacks Rank #2 (Buy).
ALLIANCE RES (ARLP): Free Stock Analysis
GOLDEN MINERALS (AUMN): Free Stock Analysis
HI-CRUSH PTNRS (HCLP): Free Stock Analysis
RIO TINTO-ADR (RIO): Free Stock Analysis
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