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Rio Narcea three-month trading

Lundin Mining has announced a friendly deal to take overRio Narcea Gold Mines for$820 million, the companies announcedWednesday.

Vancouver-based Lundin will pay $5 a share for each of the outstanding shares of Rio Narcea, which closed Wednesday with a gain of 30 cents at $5.12 on the TSX. Lundin shares rose $1.83 to finish at $15.24.

"This transaction is in line with our corporate goals to grow the company, increase value for our shareholders and establish ourselves as the next major global mining house in the base metals sector," said Lundin CEO Karl-Axel Waplan, in a statement.

"The acquisition will add production, cash flow, resources, and synergistic assets to the Lundin Mining portfolio while introducing nickel to the Lundin Mining commodity mix," he said.

Rio Narcea's nickel assets include its rich Aguablanca nickel mine in Spain. Lundin has severalbase metalmines in western Europe.

Nickel prices have almost tripled in the past year and are near record highs. Nickel miners have been struggling to keep up with the soaring demand for the metal, which is a key ingredient in stainless steel.

As part of the deal, Lundin will spin offRio Narcea's Tasiast gold minein Mauritania to Red Back Mining Inc. for $225 million US in cash. Red Back will alsoassume $42.5 million US in debt related to the Tasiast mine.

This is Lundin's second major deal in the last six months. In Novemberit merged with Vancouver-basedEuroZinc Mining in an all-stock deal thatcreated a diversified copper, zinc and lead producer with a market value of $3.3 billion.