McEwen Copper, a subsidiary of McEwen Mining (TSX: MUX; NYSE: MUX), has inked a deal with Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) that gives the global miner an option to become a majority joint venture partner in the Elder Creek project, in Nevada.
To exercise the option, Rio's subsidiary Kennecott Exploration would have to invest US$18 million over a maximum of seven years. After that the two companies would form an unincorporated joint venture where Kennecott would be the largest partner and project operator.
Elder Creek is an early-stage copper-gold porphyry project, located about 9 km from SSR Mining's Marigold mine complex in northern Nevada.
It consists of 577 unpatented mining claims in Nevada, which is prospective for porphyry copper mineralization and well placed in a district hosting several large copper and gold mines, including Marigold, Lone Tree and Phoenix.
McEwen holds a 1.25% net smelter return royalty on all the claims that comprise the Elder Creek property.
The company also owns the Los Azules copper project in San Juan, Argentina. This is an advanced large-scale porphyry copper exploration project located in the Andean Cordillera copper belt, about 90 km north of Glencore's El Pach??n project and near the border with Chile.
Last week, McEwen Mining subsidiary McEwen Copper received a US$25-million investment from Rio Tinto earmarked for Los Azules.
McEwen shares were trading at $4.13 on Monday morning in Toronto. The company completed a 10-for-1 share consolidation in July. It has a market cap of $195 million.