Rio Tinto (ASX, NYSE, LON: RIO) has increased its 2021 exploration budget for the Citadel copper-gold project, a joint venture with junior Antipa Minerals (ASX: AZY), in Western Australia’s Paterson Province.
The world’s second-largest miner has earmarked A$24.5 million (almost $19m) for this year, up from $A13.8 million ($10m) in 2020.
Rio has already solely funded more than A$25 million in the gold-copper project to date, lifting its stake from 51% to 65%.
Antipa, which is also carrying out exploration activities on the North Telfer project, located 40 km north of Newcrest’s Telfer copper-gold-silver mine, said drilling this year will be focused on the Calibre and Magnum deposits.
“The recent increase in the Citadel JV’s 2021 budget is a testament to the joint venture’s strong belief in the potential of this project,” Antipa managing director Roger Mason said in a media statement.
He noted this year’s exploration program will be the largest yet as it includes 6,000 to 7,000 metres of additional drilling.
Citadel hosts resources of 63.8 million tonnes at 0.8 grams per tonne gold and 0.2% copper for 1.6 million ounces of gold and 127,000 tonnes of copper.
The Calibre resource is due to be updated during the current quarter.
The project is just 45 km (28 miles) east of Rio’s Winu discovery, which has a resource of 503 million tonnes at 0.35% copper, 0.27gpt gold and 2.15gpt silver for 1.8 million tonnes of copper, 4.4 million ounces of gold and 35 million ounces of silver.
Rio Tinto has delayed first production from Winu by a year to 2024, but is still likely to ramp up drilling and early development work this year.
Antipa now has until the end of April to decide whether to contribute its 35% of Citadel expenditure. If it chooses not to contribute its share, Rio can earn a further 10% by spending another A$35 million ($27m) within three years.
Antipa also has Paterson Province joint ventures with Newcrest Mining (ASX: NCM), which holds 9.9% of the company, and IGO (ASX: IGO), which has a 4.9% stake.
Rio Tinto has been investing heavily in copper in the past two years as it believes the market will soon go into deficit amid expectations that bigger power grids around the world and an electric-vehicle boom will boost demand, while supplies will remain constrained.
In the past, analysts have questioned the mining giant’s ability to scale up its copper business quickly without making an expensive acquisition, especially after facing challenges at key assets.
Rio delayed first production from the $6.75 billion underground expansion of its Oyu Tolgoi copper-gold-silver mine in Mongolia. Originally scheduled for early 2020, it is now expected to churn out its first ore between May 2022 and June 2023.
The new deadline considers latest setbacks including covid-19 restrictions as well as a spat between the miner and its majority-owned Turquoise Hill Resources (TSX, NYSE: TRQ) over funding for the expansion of Oyu Tolgoi.
Demonstrating an increased interest in new discoveries, Rio Tinto invested in 2019 a further $302 million to advance its Resolution copper project in Arizona. It has also been advancing other copper projects such as Berenguela in south-eastern Peru while applying for exploration permits in northern Chile.