GlencoreXstrata agreed on Friday to offload its 80 per cent stake in the undeveloped Frieda River mine in Papua New Guinea to Australian miner PanAust.
Under the agreement copper and gold miner PanAust will pay $US25 million when the transaction closes and a second instalment of $50 million due to be paid on December 31, 2015.
PanAust is also set to acquire a 7.5 per cent share in Highlands Pacific, a minority partner in the PNG project, for a sum of $US4.7 million.
Glencore will also receive a 2 per cent net smelter return royalty on PanAust’s interest in the project to a total aggregate amount of $US50 million, however this remains conditional on the development of the project.
The sale of GlencoreXstrata’s majority stake in the copper deposit is subject to regulatory approvals.
Located on the border of the Sandaun and East Sepik provinces in PNG, the Frieda River Project is one of the largest undeveloped copper and gold deposits in the world.
PanAust estimates the site has the potential to produce 100,000 tonnes of copper and 160,000 ounces of gold by-products annually.