Merged Quadra FNX eyeing deals with Vale, Xstrata

* Could pursue joint ventures, contract mining deals

* Quadra takeover of FNX closed last month

By Cameron French

TORONTO, June 8 (Reuters) - Quadra FNX Mining QUX.TO may seek joint ventures or agreements with Vale (VALE5.SA) and Xstrata (XTA.L) to mine small-sized deposits in the mineral-rich Sudbury, Ontario, region, the chief executive of the newly created company said on Tuesday.

Speaking just two weeks after the company was created by the merger of Quadra Mining and FNX Mining, CEO Paul Blythe said Quadra FNX would be eager to lend its expertise in mining small orebodies to its neighbors.

Vale and Xstrata entered the Sudbury nickel camp in 2006 when they bought Canada's Inco and Falconbridge, respectively.

However, the drop in metal prices since then has highlighted the dwindling supply of large-scale deposits and the high costs needed to develop new mines in the area, which has been mined for over a century.

FNX originally got into Sudbury by buying up former Inco mines nearly 10 years ago. It has since reopened two old properties and developed two new ones, pursuing smaller, high-grade copper deposits that Inco bypassed in its pursuit of nickel.

"I don't think Xstrata or Vale are currently entirely happy with their positions in the camp," Blythe said at the RBC Global Mining and Materials conference in Toronto.

"I'm hopeful that we can help them with the skills that we've got ... Certainly the first priority is start a dialogue with them."

He didn't elaborate on what type of deals were likely, but Quadra FNX spokesman David Constable said joint ventures were a possibility, while another option would be Quadra FNX contracting to do mine work for Vale or Xstrata.

"We do think we could possibility add value in Sudbury in either role, so we will pursue possible additional business opportunities in Sudbury," Constable said in an email, adding: "There is no guarantee suitable opportunities will be available."

Quadra, which has spend the last several years developing open-pit copper mines in the United States and Chile, acquired FNX last month in an all-stock deal worth just over C$1 billion ($952 million). The combined company currently processes its Sudbury ore at Vale facilities.

The company's shares rose 5 Canadian cents to C$11.50 on the Toronto Stock Exchange.

($1=$1.05 Canadian) (Reporting by Cameron French; editing by Rob Wilson)