Rio Tinto-Lundin mark Eagle Mine purchase

HUMBOLDT – With the sounds of heavy construction equipment rumbling and beeping in the background, about 200 invited guests attended a ceremony in Humboldt Township Thursday commemorating Rio Tinto’s “handing over” the Eagle Mine and Humboldt Mill to new Toronto-based owner Lundin Mining Corp.

The ceremony was held under a tent at the mill, in a parking lot outside the local administrative offices for the Eagle Mine project. The crowd included employees and local officials and residents who have supported the Eagle Mine project.

Past Eagle Mine President Adam Burley – who is leaving Marquette County for a new Rio Tinto post in Salt Lake City – presented Lundin officials with a piece of polished ore from the mine, symbolizing the ownership transfer.

“The main message I want to get across is one of thanks and appreciation for the (Eagle) team support and the community support over these years and I also want to get across a message of pride,” Burley said. “Rio Tinto is proud of what we’ve achieved at Eagle. We do think we’ve raised the benchmark on industry standards and urge the community to share in that pride because they are the ones that have shaped the direction to a very large extent.”

Last week, Rio Tinto and Lundin officials announced the $325 million sale of the Eagle Mine to Lundin had been finalized and that Lundin was now assuming day-to-day management of the mill and the copper and nickel mine in Michigamme Township.

The transaction included sale of the underground mine, mill and the mineral, water, access and surface rights around the mine. Lundin will spend another $400 million through 2014 to bring the mine and mill into production. Total capital expenditure for the Eagle project is estimated at $770 million. Rio Tinto workers at the mine will transition to working for Lundin.

“This is very important for us,” said Lundin President and CEO Paul Conibear. “Adding a mine like this to our asset base is really formative for our future.”

Conibear said Lundin has mines in Portugal, Sweden and Spain.

“But in the last couple of years we’ve closed a couple mines that came to end of their mine life. So we’ve been looking very actively for two years now to rejuvenate our asset base to bring on a high-quality new base metals mine,” Conibear said. “We’ve actually been tracking this one since June of 2010. We started serious dialogue with Rio Tinto earlier this year.”

Conibear said the Eagle Mine acquisition was made looking to the future.

“It’s pretty tough when you announce an acquisition when metal prices are at maybe a 5-year low, obviously, some of your shareholders going, ‘Is that really the right time,'” Conibear said. “In everything we do we take a long term viewyou need to be patient, you need to be confident in what your industry is and invest with a long term perspective and that’s why we’re here.”

State 109th Dist. Rep. John Kivela, D-Marquette, discussed the change in ownership.

“Unfortunately in Michigan we hear too many of the bad stories, bad things that are happening in the state, this is a good story and I’m glad we’re here to celebrate it,” Kivela told the crowd. “Adam and the folks from Rio, thank you for your commitment to the community. Thanks for providing opportunities for Michiganders to employ themselves. Thanks for running a safe, clean, environmentally sound operation. That means a lot to the folks here. To our good friends from Canada, welcome to the community. Thank you for your investment. Thank you for taking a chance in Michigan and in the United States in this operation and I wish you all the best.”

Marquette County Board Chairman Gerald Corkin said the county has supported the mining project, in the face of criticism from some, because of the jobs it provides for people in Marquette County, allowing them to make a living.

Humboldt Township Supervisor Joseph Derocha agreed with Corkin.

“There’s not a whole lot of companies in our community that are going to spend $400 million, provide local jobs,” Derocha said. “We like to see the commitment of Lundin for local hire, local contractors-putting people to work. That’s what makes the world go around.”

Lundin officials said the project ramp-up is proceeding well with construction on the mill and mine sites. Overall, more than 50 percent of construction is completed.

Approximately 100 construction workers are on site.

“Where we need to head to here to accomplish our schedule goals is getting up to probably 350 people on construction before year end,” Conibear said. “And building our team up in stages on the Eagle operating team to about 220 or so, somewhere between 200 and 300 people, well ahead of coming into operation in the fourth quarter of next year.”

The company said earthworks, concrete installation and steel erection are under way at the mill. The contract for the building the mine’s coarse ore storage facility has been awarded and the contractor is moving forward.

Lundin officials said all vendors are mobilized and new delivery dates are being finalized. Most equipment has been ordered and is expected to be delivered to the site prior to the end of the year.

The mining company is exploring opportunities to accelerate the construction schedule and begin production sooner if possible.

Lundin Senior Vice President Projects Paul McRae said the company plans to get as much construction done at the mill before winter arrives. During the winter months, work will continue inside the heated structure and will resume outdoors when spring returns.

Lundin’s website states the expected life of the mine is eight years, with potential growth from several exploration targets having been identified in close proximity to the Eagle Mine.

About 2,000 tons of ore per day will be processed by conventional crushing, grinding and flotation to produce separate nickel and copper concentrates.

The mine is expected to produce about 23,000 tons of nickel and 20,000 tons of copper each year.

John Pepin can be reached at 906-228-2500, ext. 206.