Millrock Resources (CVE:MRO) said Thursday it has inked an exploration and option agreement concerning its Rainville exploration permits, which have been renamed Monsoon, with Inmet Mining Corporation (TSE:IMN).
Millrock holds gold and copper deposits in Alaska and Arizona. The company currently has twelve active exploration projects, consisting of eight gold-copper properties in Alaska, and four porphyry copper prospects in Arizona.
Monsoon is located southeast of the town of Safford, and south of the Morenzi mine in southeastern Arizona. The project consists of a large block of Arizona State Exploration permits.
Millrock said it has identified an area prospective for porphyry copper deposits. Regional geochemical surveys, geophysical surveys and geological modeling have led Millrock to believe there is "potential for discovery of valuable porphyry copper deposits hidden beneath overburden on the exploration permits."
Monsoon is positioned along the trend of the prolific Safford deposits, which are being actively developed by Freeport McMoran Copper & Gold.
Under the terms of the agreement announced Thursday, Inmet may earn a 70 percent interest in the project by incurring exploration expenditures totalling $4.5 million, and paying Millrock $400,000 by February 1, 2018.
If this option is exercised, a joint venture will form, and additional exploration and development costs will be shared by Millrock and Inmet on a pro-rata basis.
In the event that Millrock or Inmet dilutes to less than a 10 percent interest, an automatic conversion to a 2 percent net smelter return royalty will occur, Millrock said.
Millrock acquired the exploration permits through an agreement with private individual Michael Schaefer. The company can also maintain an option to purchase from the owner a 100 percent interest in the permits, by paying a total of $400,000 and issuing 500,000 Millrock common shares over a period of six years.
If all option payments are made, the property can be purchased for a total of $1.0 million.
A further $1.0 million will be paid to the owner in the event that Millrock prepares a report that describes an indicated mineral resource of 1,500,000 tons or more of contained copper on the property.
The cash payments to Schaefer will now be borne by Inmet, Millrock said, until such time as a joint venture is formed between Millrock and Inmet, after which cash payments will be made on a pro-rata basis.
Millrock will remain solely responsible for any share payments, it added.
The deal between Millrock and Inmet is subject to approval by the TSX Venture Exchange.
In late April, Millrock reported drill results from its San Jose copper project in the Safford District of southeast Arizona, and said it agreed on another drilling program at the site.
The four holes completed in this program were drilled in the northern part of Millrock's San Jose property, and targeted anomalies detected by airborne geophysical methods.
The company said that while weak mineralization was seen in one hole, porphyry-style alteration was found in two other holes, with geological observations indicating proximity to a porphyry deposit.
Inmet Mining has the option to earn a 70 percent interest in the San Jose project, with funding for the four holes drilled provided by Inment.
Earlier that month, Millrock also confirmed programs and budgets for two drilling programs in Alaska in 2012.
Work will be funded by Kinross and carried out by Millrock, and under the terms of the agreements, Kinross may earn up to a 75 percent interest in these projects.
With funding primarily coming from its joint venture partners, Millrock plans to carry out exploration programs with a total value of more than $10 million in 2012.
Shares for Millrock were up 4.26 percent at 25 cents.