Rio Tinto has pulled out of the Ernest Henry South project in north west Queensland, following disappointing from drilling results from Red Fox Resources in February.
The farm-in agreement between Rio Tinto subsidiary Rio Tinto Exploration and Red Fox Resources was worth $3.5 million.
Rio Tinto Exploration was able to earn a 51 per cent interest in the project if it spent $1.5 million over three years.
The drilling program in October and November 2020 involved reverse circulation drilling on several targets.
All targets were within 20 kilometres of Glencore’s Ernest Henry copper-gold mine which has a mineral resource of more than one million ounces of gold.
The best results from the Red Fox drilling program were 980 parts per million (ppm) of copper and 0.11ppm of gold.
Drilling was undertaken in the area following a regional magneto-telluric survey released in 2017 by the Geological Survey of Queensland.
The survey was released on the same day Rio Tinto Exploration entered into the farm-in agreement.
The survey was 75 per cent funded by the Queensland Government’s Collaborative Exploration Initiative (CEI), which provided up to $124,000 for a ground-based electrical geophysical survey.
The fifth round of the CEI is currently under review as scores of exploration companies wait to hear if they’ll share in the initiative’s $2.5 million.
Over the last 14 years, the CEI has provided $10 million to mineral explorers across Queensland.
Rio Tinto’s withdrawal from the farm-in agreement will become effective from June 10, as Red Fox discusses how to proceed with the underachieving project.
Red Fox is a subsidiary of Chase Mining Corporation which owns 40 per cent of the junior exploration company.