The remaining 20 per cent stake in the mines will continue to be owned by Sumitomo Metal Mining Co., Ltd and Sumitomo Corp.
The Toronto-based mining company says the acquisition will capitalize on long-term copper production from the northern region of Chile.
"The acquisition of Candelaria is a unique opportunity to acquire a large scale, high quality copper operation with strong cash flows in an excellent mining jurisdiction," said Lundin president and CEO, Paul Conibear.
"Candelaria is a well run, renowned asset with superb infrastructure and an experienced operating team. This transaction further enhances our company by providing increased operational and geographic diversification, using a balanced financing structure which allows us to maintain a strong balance sheet going forward."
The company says it is funding the purchase with US$1 billion of new senior secured debt, approximately US$600 million in equity financing.
The remaining funds will be financed with the sale of 68 per cent of Candelaria's gold and silver production to Franco-Nevada Corporation for an upfront payment of US$648 million.
The acquisition is subject to regulatory approvals, and is expected to close in the fourth quarter of 2014.
Lundin Mining has operations in Portugal, Sweden, Spain and the U.S. in producing copper, zinc, lead and nickel. It also owns stakes in copper and cobalt mines in the Democratic Republic of Congo and in Kokkola, Finland.