Rio Tinto expands PNG exploration partnership with LCL

Rio Tinto takes on a second PNG exploration program

LCL Resources Limited (ASX:LCL) now has Rio Tinto funding exploration across two Papua New Guinea projects, a significant shift in the junior explorer’s risk profile. Under a binding term sheet signed after quarter end, Rio Tinto may earn up to 80% of the Liamu Project by sole funding work on the Dada gold-copper porphyry discovery and Ubei epithermal target.

“Location of the Liamu (Dada) and Ubei areas comprising EL2432, PNG.”

The initial earn-in requires at least A$6 million of exploration spending, including 3,000 metres of reverse circulation and/or diamond drilling, to secure a 51% interest. Rio Tinto can pursue a further 29% by funding up to another A$40 million, or by defining a JORC-compliant resource containing at least 1 million tonnes of copper or copper equivalent and completing a scoping study. LCL will operate during the farm-in and may receive a management fee of up to 10% of exploration expenditure. The arrangement follows the Liamu farm-in agreement, under which Rio Tinto’s initial work was described as targeting undrilled ground around Dada while it assessed Ubei.

Undrilled targets carry the Liamu opportunity

Dada is supported by a 600-metre by 400-metre historical soil and pit anomaly exceeding 0.1 grams per tonne gold. Trenching has returned intervals including 96 metres at 0.41g/t gold, 33 metres at 0.31g/t gold and 0.12% copper, and 19 metres at 0.43g/t gold and 0.16% copper. The intrusion thought to drive the system has not been identified, and neither Dada nor Ubei has been drill tested.

“Dada trench and pit geochemical results, showing the extent of gold mineralisation (>0.1g/t Au) and stockwork-hosted trench intercepts.”

“Ubei IP chargeability anomaly (200m depth slice) with historical and recent surface rock chip gold assays.”

Caption and image © Lcl Resources Limited. From “Quarterly Activities/Appendix 5B Cash Flow Report”, 30 Oct 2026.

Ubei presents a different style of exploration risk and potential. Its Puma vein has produced historical rock-chip results of up to 367.7g/t gold and 4.29% copper, while LCL’s 2025 fieldwork returned grab samples grading up to 7.95g/t gold, 0.51% copper and 31g/t silver. A strong induced-polarisation chargeability anomaly sits at an interpreted depth of about 200 metres beneath the high-grade surface samples. Rio Tinto will review the case for further technical work during the first 12 months; if it does not proceed, LCL and Rio Tinto will discuss whether LCL can fund the work, potentially outside the farm-in.

Ono survey sets up the next round of targets

At Ono, LCL completed a three-week airborne magnetic and radiometric survey covering the project’s roughly 60-kilometre geophysical trend. The final program comprised 5,598 line kilometres, flown on 100-metre line spacing with 1,000-metre tie lines. The company says the data should help map magnetic intrusions and possible alteration linked to porphyry systems, but the information is still being processed.

“Ono Project: map showing planned coverage of high-resolution airborne data over existing magnetic (TMI) image of the Ono trend in Kusi and Kau Creek exploration licences.”

“Extent of recent soil sampling survey to the south of the Kusi gold resource together with conceptual Kusi pit outline (red shading) and historical magnetic geophysical survey…”

Caption and image © Lcl Resources Limited. From “Quarterly Activities/Appendix 5B Cash Flow Report”, 30 Oct 2026.

The survey follows the Kau Creek licence grant, which consolidated LCL’s tenure over the Ono trend and triggered a A$200,000 payment from Rio Tinto. LCL also collected 386 soil, 129 rock and 95 stream sediment samples south of the Kusi resource, with assays expected in the December 2026 quarter. Final airborne data, interpretation and field validation will precede decisions on further exploration and drilling.

Cash position leaves exploration largely partner-funded

LCL ended September with A$7.76 million in cash and no debt, compared with A$7.63 million at the start of the quarter. Rio Tinto funding, management fees and the Kau Creek milestone payment contributed A$1.222 million during the period, while LCL spent A$823,000 on exploration and evaluation, including joint-venture activity funded by Rio Tinto. On the company’s Appendix 5B calculation, cash represented about seven quarters of funding based on relevant quarterly outgoings of A$1.068 million.

The main uncertainty is now execution rather than a shortage of proposed work. The Liamu term sheet remains subject to PNG ministerial approval, registration and other conditions, with either party able to terminate if those conditions are not satisfied or waived by 30 September 2027. Meanwhile, the value of both projects still rests on targets that have yet to be tested by drilling, making the next assay releases, survey interpretation and regulatory progress more consequential than the headline earn-in percentages.