Millrock Resources has signed an option agreement with Vale Exploration in a bid to discover large-scale copper-gold porphyry deposits in target zones of the AUDN project in Alaska.

Under the terms of the option agreement, Vale may earn a 65% interest by spending $3.5m for exploration work on the project over a three-year period and by paying Millrock $200,000.

Upon earning its initial interest, Vale has the option to carry the full cost of further exploration and development until a feasibility study has been completed.

It can thereby earn an additional 10% interest for a total 75% joint venture interest.

If a joint venture party dilutes below a 10% interest, its stake would convert to a net smelter return royalty of 2% on gold, silver, platinum, palladium and rhodium and 1% on all other metals.

Millrock Resources and Vale Exploration intend to carry out geophysical and geochemical surveys at the AUDN project in 2012.