BHP could spend up to $22 million exploring Encounter Resources’ Elliott copper project in the Northern Territory, having finalised a joint venture arrangement.
Encounter, which owns several gold and copper projects, made the announcement on Friday, a day after BHP produced first ore from its $4.7 billion South Flank operation in Western Australia’s Pilbara region.
Encounter said BHP had exercised its right to form a farm-in and JV agreement with the company, following the completion of a jointly designed and funded validation program at the Elliott project.
Managing director Will Robinson said results from the program were illuminating and bolstered the potential for the discovery of large sedimentary hosted copper deposits under shallow cover.
He said copper sourced from sedimentary hosted deposits was one of the fastest growing sources of high-grade copper.
Under the farm-in deal, BHP could earn a 75 per cent interest in Elliott if it spent $22 million on exploration within a 10-year period.
BHP would also have the right to manage the 4,200 square kilometre project, which is located 200km north of Tenant Creek at a major structural intersection south-west of the Beetaloo Basin.
It was the first project secured by Encounter in the NT, which is also home to the company’s Jessica, Brunchilly, Carrara, Playford, Sandover, Oval and Edge copper projects. Together, these cover 21,500 square kilometres.
“Encounter controls an extensive first mover portfolio of copper projects in the Greater McArthur Superbasin in the NT,” Mr Robinson said.
“The potential for this region to host large sedimentary hosted copper deposits is rapidly emerging, and we are delighted to be teaming up with BHP to apply leading edge technologies in the search for tier-one copper deposits at Elliot.”
Encounter has planned an extensive exploration program at Elliott, which includes seismic surveys and drilling.
The company also has a farm-in arrangement with IGO, which could sole-fund $15 million in exploration to earn a 70 per cent JV interest in Encounter's Yeneena copper-cobalt project, in WA.
Encounter emerged from a trading halt this morning, with its shares up 22 per cent at 12:32pm AEST to trade at 16 cents.