PERTH (miningweekly.com) – ASX-listed Panoramic Resources has signed a consolidation agreement with the Canadian exploration arm of mining major Rio Tinto over platinum group metal (PGM) assets, in Ontario, Canada.

The consolidation would include Panoramic’s Thunder Bay North project, and Rio’s Escape Lake project, which is surrounded on all sides by the Thunder Bay project.

Under the terms of the consolidation agreement, Rio would have the option to spend up to C$20.25-million over the next five-and-a-half years to acquire a 70% interest in the Thunder Bay North project. If the diversified miner took up the spending, Panoramic would acquire a 30% stake in Escape Lake.

The expenditure would be conducted in three phases, with Rio expected to spend its first C$250 000 to generate exploration targets. The two companies would jointly carry out a detailed review of all existing data to develop exploration targets on the consolidated property, while sharing exploration expertise and techniques.

In the second phase of spending, Rio could elect to earn a 70% interest in the Thunder Bay North project by sole-funding C$20-million of expenditure over a five-year period. The mining giant would be required to spend a minimum of C$5-million before it can withdraw from the earn-in option.

During this period, Rio would be responsible for managing the consolidated property and ensuring that the tenements are kept in good standing.

Once Rio has earned its 70% interest in the Thunder Bird North project, Panoramic would acquire a 30% interest in Escape Lake, and a contributing joint venture would be established on a 70:30 basis.

Panoramic told shareholders on Wednesday that the agreement with Rio provided a strong vote of confidence in the future of the Thunder Bay North project, while also giving Panoramic a 30% interest in an adjacent exploration licence.

“The transaction allows Panoramic to simplify its project development portfolio while continuing to have exposure to any exploration success at Thunder Bay North, without the present need to allocate existing financial resources to the project,” the company said.

The deal would also allow Panoramic to focus its resources on its core nickel business, as well as advance its other PGM and gold projects.