PERTH (miningweekly.com) – ASX-listed explorer Argo Exploration has entered into a joint-venture (JV) deal with diversified miner Xstrata to fast-track the exploration of the Intercept Hill iron-oxide, copper/gold tenement, in South Australia.

The Swiss mining giant could earn a 75% stake in the project by spending A$16-million, Argo said in a statement on Tuesday.

Xstrata could earn up to 51% interest in the Intercept Hill project by spending A$4-million within three-and-a-half years. It could then earn a further 24% interest in the project by spending a further A$12-million within a further four years.

Xstrata would undertake all exploration carried out during the earn-in period, and would manage the JV.  The diversified miner had to meet a year's minimal expenditure of around A$600 000 during the initial earn-in period.

“The company is delighted to have received Xstrata Copper’s endorsement of the quality and potential of the Intercept Hill project,” said Argo MD Hugh Herbert.

He noted that the agreement recognised the project’s results to date, emphasised the ongoing potential of the ore deposit discovery, and ensured short-term drill testing of identified quality targets, at a time when junior explorers were finding it difficult to continue funding high-cost exploration of deep targets.

“The terms of the agreement underpins Argo’s plan to discover a new world-class deposit within the tenement and the magnitude of the potential resource, in the event of success through the JV, could deliver significant material value to Argo shareholders.”

Argo's share price jumped to A$0,11 a share, compared with an opening price of A$0,04 a share on the news of the JV deal with Xstrata.