Rio Tinto and Sumitomo Metal Mining (SMM) have signed a term sheet for a joint venture to deliver the Winu copper-gold project, located in the Great Sandy Desert region of Western Australia.

Under the Term Sheet, which includes exclusivity obligations to work towards a binding definitive agreement, Rio Tinto will continue to develop and operate Winu as managing partner and SMM will pay Rio Tinto $399 million for a 30% equity share of the project. This includes $195 million upfront and $204 million in deferred considerations contingent on milestones and adjustments to be agreed.

The parties have also entered into a letter of intent to develop a broader strategic partnership to work together to explore opportunities for commercial, technical and strategic collaboration across copper, other base metals and lithium.

The Winu project is an attractive low-risk, long-life copper-gold deposit discovered by Rio Tinto in 2017, that is highly prospective for expansion beyond the initial development ($438 million total investment to June 2024, including all exploration and project spend). It is located in proximity to Rio Tinto’s Pilbara iron ore assets.

The proposal conceptual footprint for Winu will require the clearing of up to 4,868 ha of native vegetation within a proposed 37,344 ha development envelope. The proposal involves but is not limited to an open pit that extends below the water table, ore processing facilities, ore and topsoil stockpiles, Waste Rock Landforms, Tailings Storage Facility, bore field(s) and associated infrastructure.

Concentrate will be transported by truck via the access road and Great Northern Highway to port by a third party for export. Doré (unrefined gold bar) is expected to be transported via the regular air charter.

Rio Tinto and SMM will now work to finalize definitive agreements for the Winu project joint venture in the first half of 2025, along with formalizing the broader strategic partnership. Rio Tinto will also continue to focus on its partnership with the Nyangumarta Traditional Owners, including progressing project agreement negotiations.

A pre-feasibility study for the Winu project with an initial development of processing capacity of up to 10 mtpa is expected to be completed in 2025, along with the submission of an Environmental Review Document under the EPA Environmental Impact Assessment process.

The closing of the transaction will be subject to obtaining any necessary consents and approvals, and the satisfaction of customary conditions.