Rio Tinto Ltd (ASX: RIO) has teamed up with junior explorer Legacy Minerals Holdings Ltd (ASX: LGM) to search for copper and gold in New South Wales, under a $25 million deal announced on Monday.
Rio subsidiary Rio Tinto Exploration Ltd will fund up to $25 million in exploration costs at Legacy's Thomson Project, in return for a joint venture interest of up to 80%.
Legacy Minerals said on Monday that the Thomson Project was in one of the most underexplored geological regions in Australia, and shared similar characteristics with other major intrusion related copper gold (IRCG) districts such as the Paterson Province in Western Australia.
The company said the area showed potential for discoveries:
Extensive hydrothermal alteration and mineralisation observed in drill core at geophysical anomalies across the project support the potential of the district to host a large IRCG system.
Image source: Getty Images
Rio to invest in stages
Under the deal, Rio will have the option to initially fund a minimum of $400,000 worth of exploration within six months, as well as make a $50,000 cash payment to Legacy.
Following the decision to farm-in to the project, Rio can then earn a 75% interest in the joint venture by sole-funding $5 million worth of exploration within five years, including a minimum of 3000m of drilling.
Rio can then increase its interest to 80% by sole-funding a further $20 million of exploration within a further five years, including at least 7000m of drilling, or the definition of a resource of at least 500,000 tonnes of contained copper.
Big opportunity for Legacy
Legacy Managing Director Christopher Byrne said the partnership was an exciting development for the company.
It further supports our belief, through the work completed by our exploration team to date, that this underexplored province has the potential to host world-class intrusion-related copper-gold systems. Securing one of the world's largest mining companies as a partner on the Thomson Project is of huge significance. It allows Legacy Minerals to leverage Rio Tinto's global expertise in discovery, development and its knowledge of intrusion-related copper and gold systems through its discovery of the Winu deposit in 2017.
Mr Byrne said the agreement with Rio had the potential to accelerate the pace of discovery at the Thomson Project and create significant value for shareholders.
The Thomson Project is located west of Bourke and covers 5500 sq km.
Legacy said the target basement rocks are covered by younger sediments, which were interpreted to be 80m to 280m thick.
Historically, this cover has partly deterred previous exploration companies and has limited the recognition of the … mineral potential. Importantly, historical work indicates that this cover sequence is generally amenable to the use of various geophysical techniques to assess properties of the underlying basement rocks, with a number of the key geophysical targeting methods such as magnetics and gravity, providing highly useful and important data sets.
Legacy Minerals was valued at $46.2 million at the close of trade on Friday.
