The Candelaria/Ojos operations is said to host recoverable reserves of 4 billion pounds of copper and 1.1 million ounces of gold as of 31 December 2013.
For the first nine months of 2014, consolidated production totaled 246 million pounds of copper and 62,000oz of gold.
The company plans to use the proceeds to clear debt. It expects to generate about $450m after-tax gain in fourth quarter of 2014.
Under the deal, Freeport-McMoRan is entitled to receive $200m, calculated as 5% of net copper revenues in any annual period over five years if copper price exceeds $4 per pound.
Lundin Mining president and CEO Paul Conibear said: "The completion of the Candelaria acquisition adds another cornerstone asset to the company that will deliver excellent value to shareholders and contribute significantly to growth in production, cash flow and earnings.
"We look forward to establishing an excellent reputation in Chile over many years to come as we work closely with our new employees and stakeholders at Candelaria in order to unlock additional value from this high quality asset."
