Territory Uranium has signed an agreement with Panoramic Resources (PAN) that allows PAN to take a majority stake in its Bluebush copper-gold project in the Northern Territory of Australia by funding exploration at the mine.

Under the agreement, PAN has the option to spend $3m over three years to gain a 51% stake in the project, with an initial commitment of $0.5m within the first year.

PAN can earn up to 60% by investing $6m within five years and up to 80% by completing a feasibility study or spending $9m in seven years, Territory Uranium said.

PAN has agreed to initially fund Territory Uranium’s drilling-based exploration to test a series of geophysical and geologically defined targets, thought to be iron oxide copper gold-style systems.

The drilling will also test the major district scale Bluebush combined gravity and magnetic anomaly, which is similar to the anomaly that lead to the discovery of the Olympic Dam ore body, Territory Uranium said.

The drilling is scheduled to begin in the first quarter of the 2009-10 fiscal year.