Gold miner Newcrest will take a small stake in junior gold and copper explorer Frontier Resources and become its joint venture partner in Papua New Guinea.
Newcrest, Australia's biggest gold miner, has agreed to take a 2.3% interest in Frontier with the purchase of $750,000 worth of shares at 10.67 cents each, the two companies said in a statement on Tuesday.
Shares in Frontier closed up half a cent, or 4.76 per cent, at 11 cents after reaching in intraday high of 13 cents.
Newcrest shares backtracked 67 cents, or 2.06%, to $31.82.
The companies also said that Newcrest may earn a 60% interest in the Mt Andewa project on the island of New Britain by spending $15.25 million on exploration over four years.
Newcrest may also earn the same interest in Frontier's nearby Mt Schrader project by spending a further $4 million on exploration.
Newcrest has an option to acquire an additional 12% in Mt Andewa.
It can also choose to withdraw from the joint venture but first must spend at least $2.5 million on exploration over a period of about 18 months.
Frontier chairman Peter McNeil said the agreement was an endorsement of the potential of the Mt Andewa project.
“Frontier will benefit from Newcrest's expertise and capability in the ongoing efforts to unlock this potential,” McNeil said.
Newcrest executive general manager of minerals Colin Moorhead said the deal was in line with the miner's strategy of seeking early-stage entry into high-quality gold projects in the Asia Pacific region.
Newcrest's existing joint venture in PNG with South Africa's Harmony Gold Mining Company, the Wafi-Golpu project, is expected to underpin the company's production growth beyond 2015/16.
In 2008, Frontier's then main asset, the Kodu copper and gold project in PNG, was expropriated by the PNG government because it was near Kokoda Track.