Minerals explorer Alderan Resources (ASX: AL8) has entered into an earn-in and joint venture agreement with US-based Rio Tinto subsidiary Kennecott over its flagship Frisco copper-gold-zinc-silver project in Utah.
The earn-in provides Kennecott with the option to spend up to $44 million on exploration to earn a maximum 70% project-level interest in Frisco over three stages, with a minimum of $1.47m to be spent within the first 18 months.
During this time, Kennecott will be required to maintain Frisco in good standing and meet all required annual claim and lease fees, which will count towards its expenditure requirements.
Kennecott will also have the right to form a joint venture – and become manager – at any time after the initial earn-in stage.
As joint venture manager, the company will receive management fees of 5% through the construction phase of the project and 2% during the operational and reclamation phase.
At any time after the initial exploration expenditure requirement is met, Kennecott may elect to withdraw from the project with no interest earned and no further rights and obligations.
Alderan managing director Peter Williams said the agreement with Kennecott will provide a source of funding and exploration expertise to unlock Frisco’s potential and enable Alderan to pursue lower-cost exploration opportunities within new and existing projects.
“Having Kennecott as a partner in the exploration of Frisco is a validation of the project’s prospectivity and a major step forward in unlocking the potential of the area,” he said.
The Frisco project is located within Utah’s Pioche-Marysvale Igneous Belt, which Alderan believes to be a vastly underexplored mineral district with potential for multiple copper-gold porphyry discoveries.
The project is surrounded by numerous historical mines including the Cactus breccia pipe-hosted copper-gold-silver deposit, the Imperial skarn-hosted copper-zinc deposit, and the Horn silver mine which has previously produced high-grade lead-zinc-silver.
Frisco is part of the three major, sub-parallel, polymetallic mineral belts of mid-Tertiary age which contain most of Utah’s base and precious metal occurrences.
These include the rich Bingham Canyon porphyry deposit, which Kennecott has been mining for more than 110 years during which time it has produced more than 3 billion tonnes of ore.
In May, Alderan identified the White Mountain epithermal gold target, 10 kilometres southwest of Frisco, and the Tourmaline Breccias targets in the project’s north central region, as the focus of a major drilling effort this year.
At midday, shares in Alderan Resources were down 2.56% to $0.038.