PERTH (miningweekly.com) – Mining major Anglo American has entered into a joint venture (JV) agreement with ASX-listed Highlands Pacific over its Star Mountain copper project, in Papua New Guinea.

Under the term of the nonbinding letter of intent, Anglo American would pay $10-million, in two tranches, to Highlands. The first payment was due on the execution of a definitive farm-in agreement, while the second payment was due 12 months later.

Anglo American could earn a 15% interest in the Star Mountain project by spending $25-million on exploration over a four-year period, from the date of executing a farm-in agreement.

The mining major would be entitled to increase this shareholding to 51% upon the declaration of a Joint Ore Reserves Committee-compliant resource estimate of about three-million tonnes of contained copper equivalent, within five years of executing the agreement.

Anglo American could move to an 80% interest in the JV by completing and sole funding a bankable feasibility study (BFS) for the Star Mountain project within 15 years of the execution of the farm-in agreement.

Furthermore, Anglo American would provide Highlands with up to $150-million in project development funding as a deferred free-carry following the completion of the BFS, while Highlands would continue to manage the project.

However, Anglo American would have the right to take over management of the project once it has invested $25-million in project expenditure.

Highlands MD John Gooding said on Monday that the Australian company had identified a prospective and large area of porphyry-style copper/gold mineralisation, which the company believed had excellent potential.

“It is refreshing and encouraging that Anglo American, one of the world’s largest mining companies, acknowledges the significance of our exploration to date. Its involvement will advance the project to the next stage of development by providing the financial and technical capabilities that will enable Highlands to unlock the potential of Star Mountain.

The Star Mountain tenements cover some 515 km² of project area and are located 20 km from the Ok Tedi mine. Highlands has identified 17 copper/gold targets to date, and has drilled six of these.