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Junior miner LCL Resources (ASX:LCL) has executed a binding earn-in and joint venture agreement with global mining giant Rio Tinto for the Ono project in Papua New Guinea.
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Under the agreement, Rio Tinto will make total cash payments of up to $1.5 million to LCL, payable in stages linked to defined milestones.
In return, Rio Tinto may earn an initial 51% interest in the Ono project by sole funding a minimum of $8 million in exploration expenditure, which the agreement states must include at least 4,000 metres of drilling.
The mining giant may increase its interest in Ono to 80% by sole funding further exploration expenditure of $40 million or defining a JORC-compliant mineral resource of at least 1.25 million tonnes of contained metals on a copper-equivalent basis and completing a scoping study on that mineral resource.
LCL executive chairman, Chris van Wijk, said the transaction provides substantial exploration funding, validating the prospectivity of the Ono project following recent high‐grade gold and silver results
“This transaction is a transformational step for LCL. Partnering with Rio Tinto brings world-class exploration capability and substantial funding to the Ono Project, enabling a level of exploration activity that would not otherwise be possible for a company of our size,” he explained today.
“Importantly, the structure allows LCL shareholders to retain significant exposure to exploration success and any potential discoveries funded by Rio Tinto. We look forward to watching the Ono project develop alongside one of the world’s leading miners.”
Mr van Wijk revealed LCL has been collaborating with Rio for more than a year on regional fertility and prospectivity of the company’s tenements in PNG, a process which ultimately resulted in the farm-in agreement.
Rio Tinto has a lengthy mining history in PNG, actively exploring for copper porphyries in the nation for many years and has accumulated an extensive database with which they assess regional opportunities.
Mr van Wijk said Ono has many features in common with recognised copper porphyry systems in PNG.
“The existing gold skarn resource at Ono, combined with high‐grade base metal concentrations in the lower limestone unit, provides important proof of concept that there is potential for a larger copper porphyry exploration target within the project area.
“The copper porphyry prospectivity, with significant areas of the project area having had very limited exploration, has attracted the interest of Rio Tinto to the Ono project,” he told shareholders.
Ono is located around 150 kilometres south of the port of Lae in the Owen Stanley Metamorphic Belt – the same belt that hosts the Hidden Valley gold mine and the Wafi-Golpu copper/gold project.
LCL is up +7.69% to 0.7cps today.
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