Private group says to buy idle MMG nickel mine in Australia

SYDNEY, April 15 (Reuters) - An Australian private company has agreed to buy the long-idle Avebury nickel mine in Tasmania from China's MMG Ltd (Other OTC: MMLTF - news) for A$40 million ($37.65 million), saying operations were again profitable as global nickel prices rise.

In 2009, the mine was shut as the cost of producing a pound of nickel exceeded the going price at the London Metal Exchange. This week, the LME three-month nickel price hit a 14-month high of $17,917 a tonne, or $8.12 a pound.

Nickel has staged a near-uninterrupted rise since January after the Indonesian government banned exports of nickel ore, cutting off a key supply source for Chinese steelmakers.

The private company, QCG Resources, said it had entered into a binding agreement with MMG and would be making an initial payment of A$1.75 million within 15 days of signing a formal agreement.

"Internal studies conducted by QCG and its advisors as part of the due diligence process show the project in its current form is economic at current nickel prices," QCG Chairman Doug Daws said.

Talks were underway to secure the funds for the full purchase price, which includes a A$33.25 million closing payment and A$5 million in two stages on the first 20,000 tonnes of production, according to QCG.

The mine is capable of producing 7,000 tonnes of nickel in concentrate annually and holds a supply agreement with Chinese nickel refining company Jinchuan Group for all it can ship. ($1 = 1.0623 Australian Dollars) (Reporting by James Regan; Editing by Ryan Woo)