Intercept Says Rio Tinto In Farm-In Deal On Bauxite Project

Rio Tinto PLC (RIO) has agreed to buy its way into a bauxite project on Melville Island, north of Darwin, junior exploration company Intercept Minerals Ltd. (IZM.AU) said Friday.

Rio will pay 50,000 Australian dollars (US$48,480) when a formal agreement is signed and then A$5 million over four years to earn a 75% interest in the project, Intercept said in a statement.

"They [Rio] have the technical and financial resources to progress the project and a proven track record in negotiating access to aboriginal land," said Sam Randazzo, chairman of Intercept, adding the deal would also allow his company to remain focused on its Ianna gold project in northwest Guyana.

The agreement with Rio is subject to several conditions, including Intercept receiving an exploration license for the 1,431 square-kilometer tenement.

Australia is the world's largest producer of bauxite, from which alumina and aluminum are produced.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]