Under the deal, Rio’s subsidiary Kennecott Exploration has the option to earn a 60% stake in the project by investing $18m over a maximum period of seven years.
Following this, the two companies will launch an unincorporated joint venture, in which Kennecott would own a majority stake and serve as project operator.
Located around 9km from SSR Mining’s Marigold mine complex in northern Nevada, the early-stage Elder Creek copper-gold porphyry project comprises 577 unpatented mining claims in Humboldt and Lander counties.
McEwen Mining owns a net smelter return royalty of 1.25% on all the claims that constitute the Elder Creek property.
The firm said the Elder Creek property has the potential for porphyry copper mineralisation due to its location in a district with several large copper and gold mines, including Marigold, Lone Tree and Phoenix.
McEwen Copper owns a 68% stake in McEwen Copper, which has a 100% interest in the Elder Creek project and the Los Azules copper project in San Juan, Argentina.
Earlier this month, Rio Tinto’s copper leaching technology venture, Nuton, invested $25m in McEwen Copper.
The investment in McEwen Copper is part of the third and final tranche of a previously announced placement offering, in which the McEwen subsidiary raised $81.85m.
The third tranche also included $1.85m from other investors.
McEwen Copper is currently advancing a copper project in Argentina and has partnered with Nuton to advance its understanding of the potential application of heap leach technology for its Los Azules project.
Nuton acquired 2.5 million common shares for $10 each in exchange for a 9.73% post-closing ownership.