Lundin paying up to $78 million for 80% stake in Spanish copper mine

Europe-focused Lundin Mining has cut a deal for an 80% stake in a copper mine in northern Spain.

The agreement with two undisclosed Spanish private companies gives Toronto-based Lundin (TSX:LUN) the option of paying up to US$78 million (60 million euros) for an 80% interest in the Touro copper project, consisting of 205 mining claims in the northwest province of La Coruña.

The deal sets out three separate payment milestones: $13 millon to exercise the option; $39 million upon a decision to begin mine construction; and $26 million on the start of commercial production. The option is exercisable until Oct. 1 2012 pending completion of due diligence, including step-out drilling and other technical work.

If the mine goes forward, it will be Lundin's second copper operation in Spain after Aguablanca, a nickel-copper mine about 80 kilometres from Seville. Lundin also has mines in Sweden, Ireland, Portugal and, outside of Europe, the Tenke Fungurume copper-cobalt mine in the DRC, which it operates with Freeport-McMoRan.

"We believe the project has the potential to be rapidly advanced and we are well on our way to making a decision on the option, having mobilized several drill rigs onto the property earlier this year," said Lundin President and CEO Paul Conibear. "In addition to easy access to known mineral resources exposed in three pre-existing open pits, much of the copper mineralization within the Touro property is nearly flat lying, at or near surface."

The Touro mine operated in the 1970s and 80s with a 6500 tpd concentrator but was shut down in 1986 when copper prices took a dive. The property has not been explored since. Lundin said it plans to start drilling with the intention of completing an NI-43101 resource estimate. Historical resources are pegged at 196 million tonnes graded 0.39% Cu.