Xstrata Agrees to Buy Canada’s LionOre

International mining company Xstrata PLC has agreed to buy Canada’s LionOre Mining International Ltd. for $4 billion, the companies said Monday.

Xstrata said LionOre would extend the geographic reach of its nickel operations into Western Australia, South Africa and Botswana. It also has a gold mine in Western Australia.

LionOre plans to boost nickel production by about 40 percent by 2008, Xstrata Chief Executive Mick Davis said.

Xstrata’s $15.94-a-share offer represents a 5.8 premium over the closing $15.10 share price on the Toronto Stock Exchange Friday and a 16.5 percent premium over the volume weighted average price over the past 30 trading days.

LionOre shares rose $1.55, or 10.29 percent, to close at $16.62 Monday. Xstrata closed down $9.85, or 0.19 percent, at $ 5,069.37 on the London Stock Exchange.

Xstrata already has the recommendation of LionOre’s board and agreements from shareholders owning 19 percent of LionOre shares, the company said.

Xstrata is the world’s fourth-largest nickel producer by output, after Australia’s BHP Billiton PLC, Russia’s OAO Norilsk Nickel and Brazil’s Companhia Vale do Rio Doce.