OZ Minerals Ltd. and privately held Red Tiger Resources Ltd. entered into a heads of agreement to drill new copper and gold targets some 30 kilometers northwest of Oz Minerals' Carrapateena copper-gold project in South Australia, according to a Dec. 22 release.

Previous drilling at the Intercept Hill targets show iron oxide copper-gold mineralization similar to Carrapateena and existing mines in Prominent Hill and BHP Billiton Group's Olympic Dam mine. The drilling program will look at existing data, and the company is expected remain within its exploration cost guidance of between A$10 million and A$15 million, OZ Minerals CEO Andrew Cole said.

Red Tiger will initially drill four holes in the first phase, with initial funding of about A$1.2 million provided by OZ Minerals.

OZ Minerals can elect to spend a further A$2.8 million on exploration in the second phase to earn a 51% stake in the tenement. Upon completing the second phase, the companies will form a joint venture on the project.

OZ Minerals will also have the option to increase its stake to 75% by funding another A$5 million on exploration.

Earlier in December, the ASX-listed company increased the measured resource for the Carrapateena copper project by 46%.