LCL Resources (ASX:LCL) executed a binding earn-in and joint venture agreement with Rio Tinto (ASX:RIO) unit Rio Tinto Exploration (PNG), for Rio Tinto to earn-in to LCL's Ono project in Papua New Guinea, according to a Monday Australian bourse filing.

Under the agreement, Rio Tinto may earn an initial 51% stake in the Ono project via sole funding of a minimum of AU$8 million in exploration expenditure, which must include at least 4,000 meters of drilling.

It can increase its stake in the project to 80% by sole funding further exploration expenditure of AU$40 million, or defining a mineral resource of at least 1.25 million tonnes of contained metals on a copper-equivalent basis, and completing a scoping study.

Rio Tinto will make total cash payments of up to AU$1.5 million to LCL, payable in stages linked to defined milestones.

If LCL's participating stake drops below 10%, Rio Tinto has the right to buy the residual interest for fair market value or convert this interest to a 1% net smelter royalty, payable for the first 10 years of production from the project.

Rio Tinto's shares slid 1% in recent trading on Monday, while those of LCL jumped 23%.