MINING giant Rio Tinto has backed junior explorer Tasman Resources' hopes of discovering the next Olympic Dam by agreeing to pay up to $92 million for a potential majority interest in its copper-gold project.
The Perth minnow said Rio would initially inject $10m into its Vulcan prospect in South Australia, which is 30km from BHP Billiton's giant Olympic Dam copper-gold-uranium mine.
Shares in Tasman soared on the news yesterday, closing the day 72.13 per cent higher at 10.5c.
Global miner Rio Tinto did not comment on the deal because the exploration agreement is immaterial to the mining giant.
"We have held this licence since 1998 and it has been a long haul and we have been working on it for some period of time," Tasman executive chairman Greg Solomon said.
"We have invested around $10m to get to this stage. Rio has undertaken significant due diligence on us. They sent geologists to examine the drill core and they have done a detailed review and analysis.
"Although we have only drilled an area about as big as a laptop computer, out of 12sq km, we have achieved a very high level of interest because of the nature of what we have hit."
The company has described the Vulcan asset as an iron-oxide associated copper-gold-uranium prospect of the same style and mineralisation as the adjoining Olympic Dam deposit, which BHP Billiton yesterday won environmental approval to extend.
"We had had some preliminary discussions with BHP and then about a month ago they approached us and we had further discussions with them," Mr Solomon said.
"But it would have been a very different scenario from BHP's point of view because they have got an enormous mine already, and while they were interested I don't think they would've come to any deal like the one that Rio came to, on the basis that Rio is looking to get into the area."
Rio has purchased the right to earn up to an 80 per cent interest in the project through a two-stage, farm-in arrangement, subject to a list of conditions.
If Rio goes ahead and spends $92m to earn its 80 per cent interest, Tasman will have the right to maintain its 20 per cent stake or offer to sell its holding to Rio.
"If we have some high-grade intersections in the next year, I have very little doubt that Rio Tinto will go forward and it will be a very, very serious step forward for Tasman," Mr Solomon said. "I'm very hopeful it will prove to be a company-maker." .
.
TAS Price at posting:
10.5¢ Sentiment: None Disclosure: Not Held
