BHP has exercised its option to sign a farm-in agreement with Encounter Resources for the Elliott copper project in Australia’s Northern Territory (NT).

The two firms also signed a joint venture (JV) agreement to undertake an exploration programme, including seismic surveys and drilling.

Under the farm-in and JV agreement, BHP will spend $17m (A$22m) over a period of ten years.

In exchange, BHP will receive a 75% interest in the project.

Encounter Resources managing director Will Robinson said: “Copper sourced from sedimentary-hosted deposits is one of the fastest-growing sources of high-grade copper in the world. Encounter controls an extensive first-mover portfolio of copper projects in the Greater McArthur Superbasin in the NT.

“The potential for this region to host large sedimentary-hosted copper deposits is rapidly emerging and we are delighted to be teaming up with BHP to apply leading-edge technologies in the search for Tier 1 copper deposits at Elliott.

“The outcomes of the jointly designed validation program at Elliott have been illuminating and bolstered the potential for the discovery of large sedimentary-hosted copper deposits under shallow cover in the NT.”

Last year, BHP signed an agreement with Encounter to obtain the option to enter the JV upon completion of the jointly designed validation programme for the project.

Located at a major structural intersection on the southwestern margin of the Beetaloo Basin that targets sedimentary hosted copper, the Elliott project comprises seven tenements covering more than 4,500km².