Xstrata Copper has signed an agreement with Exco Resources to acquire the E1 and Monakoff copper tenements in north west Queensland, Australia, for A$175m ($186.6m) to expand production at its Ernest Henry Mining operation.

Located close to the Ernest Henry Mining processing facilities, the E1 and Monakoff tenements contain open pit copper mineral resources with completed feasibility studies.

Xstrata Copper north Queensland division chief operating officer Steve Kruijff said that subject to the transaction completing and the necessary government approvals, the company expects initial production from the E1 and Monakoff projects to commence in the second half of 2012.

The E1 and Monakoff deposits have a combined JORC compliant resource of 52.1 million tonnes grading 0.77% Cu and 0.23g/t gold at a cut-off grade of 0.3% copper for E1 and 0.5% copper for Monakoff.

This represents 401,000 tonnes of contained copper metal and 384,000 ounces of contained gold metal, the company said.