ASX-listed LCL Resources (ASX: LCL) has secured up to CAD$48 million in exploration funding through a farm-in and joint venture with Rio Tinto (NYSE: RIO), targeting a major copper-gold discovery in Papua New Guinea.
Signed on Monday, the agreement allows Rio Tinto to earn an initial 51 per cent stake by funding at least CAD$8 million in exploration. This includes a minimum 4,000-metre drilling program. Additionally, Rio Tinto will make staged cash payments of up to CAD$1.5 million to LCL.
Furthermore, the major miner can increase its interest to 80 per cent under defined conditions. It must either invest an additional CAD$40 million in exploration or define a large mineral resource. The threshold stands at 1.25 million tonnes of contained metal on a copper-equivalent basis. Subsequently, Rio must also complete a scoping study.
LCL’s executive chair Chris van Wijk described the deal as transformative for the junior explorer. He said the partnership brings significant capital and technical expertise. Additionally, he noted that shareholders retain meaningful exposure to any discovery success.
The companies built this agreement after more than a year of collaboration in Papua New Guinea. Meanwhile, Rio Tinto applied its extensive regional exploration data during that process. This groundwork helped identify strong potential across LCL’s tenure.
The Ono project sits about 150 kilometres south of Lae in the Owen Stanley Metamorphic Belt. The area already hosts known deposits, including Hidden Valley and Wafi-Golpu. Consequently, explorers view the region as highly prospective for large copper porphyry systems.
LCL said the project contains the Kusi gold skarn resource and several high-grade zones. Additionally, early results show elevated gold, silver and base metal concentrations.
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Strong results are expected from partnership
However, much of the project remains underexplored. LCL believes this leaves room for significant discoveries with increased funding. Furthermore, the company said the deal validates Ono’s geological potential following recent drill results.
LCL Resources has defined a maiden inferred mineral resource at its Kusi skarn deposit, totalling 18.3 million tonnes grading 1.42 g/t gold for 831,000 ounces at a 0.5 g/t cutoff. Additionally, the estimate incorporates drilling completed over the past 24 months.
“The geology supports the existence of further shallow pods of mineralisation around the central Kusi intrusive centre as well as the possibility for deeper mineralisation within the Lower Limestone unit that is highlighted by the trench results over this unit to the south of the existing resource area,” according to van Wijk.
Furthermore, historical trenching southwest of Kusi returned strong multi-metal results, including 28 metres at 0.9 g/t gold and 21.6 g/t silver. Nearby samples also showed elevated lead and zinc, supporting broader mineralisation potential.
The partnership now positions Rio Tinto to lead exploration efforts at scale. Meanwhile, LCL maintains a stake in any future development upside.
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