ASX-listed junior LCL Resources has agreed a farm-in and joint venture agreement with Rio Tinto over its Ono project in Papua New Guinea (PNG), unlocking up to A$48-million in exploration funding as the major targets porphyry copper/gold discoveries.

Under the agreement, Rio Tinto can earn an initial 51% interest by sole funding at least A$8-million in exploration, including a minimum 4 000 m drilling programme, while also making staged cash payments of up to A$1.5-million to LCL.

The mining major may increase its stake to 80% by funding a further A$40-million in exploration or by defining a Joint Ore Reserve Committee-compliant mineral resource of at least 1.25-million tonnes of contained metal on a copper-equivalent basis and completing a scoping study.

“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. 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,” executive chairperson Chris van Wijk said.

The agreement follows more than a year of collaboration between the two companies on regional prospectivity across LCL’s PNG tenure, with Rio Tinto leveraging its extensive exploration database in the country.

Located about 150 km south of Lae in the Owen Stanley Metamorphic Belt, the Ono project hosts the Kusi gold skarn resource and is considered prospective for larger copper porphyry systems. The belt also hosts major deposits such as Hidden Valley and Wafi-Golpu.

LCL said existing mineralisation and high-grade base metal concentrations provide proof of concept for a potential large-scale porphyry system, with significant areas of the project still largely underexplored.

The company added that the transaction validates the project’s prospectivity following recent high-grade gold and silver results, while significantly strengthening its capacity to advance exploration.