The company has the exclusive option to explore the 1988 acre Mahar San project for one year, in exchange for funding all operating costs including an agreed drilling program

PanAust can acquire 63.75% of Metro’s interest if it spends $3 million on agreed exploration programs and reimburses $500,000 of Metro’s historical costs.

It may then acquire another 18.75% of Metro’s interest for a further $5 million in exploration spending, and the remaining 17.5% stake for $9.5 million.

PanAust Myanmar director Richard Taylor said Mahar San was close to three Myanmar exploration licences it was granted in the northern Sagaing region earlier this year.

“Subject to discussions with government and our partners, PanAust plans an initial scout drilling program in early 2017,” he said.

“On our existing tenements, we are well advanced on the initial phases of exploration and aim to have targets generated for follow-up before the end of the dry season in mid-2017.”

At the time of that deal, PanAust said it wanted to build its package of tenements to 1400 sq.km, ultimately carrying out geochemical sampling and mapping to identify drill targets by the end of 2016.

PanAust currently produces copper and gold from its Phu Kham project in Laos and is also working to develop the Frieda River copper gold project in Papua New Guinea and the Inca de Oro copper gold project in Chile.

The company was one of the ASX’s largest copper producers until its $1.1 billion takeover last year by China’s Guangdong Rising Asset Management.

Metro chairman Stephen Everett said PanAust would be an important funding participant and would bring a wealth of experience to the development and operation of projects in Southeast Asia.

Metro, which acquired the Myanmar stake in June, said the farm-out would allow it to focus on the development of its bauxite resources in Cape York.

It comes after Metro moved to compulsory acquisition of Gulf Alumina after lifting its offer to A62c for each Gulf share, or 52c plus one Metro share.

The company is working to combine their adjoining bauxite projects and is preparing a bankable feasibility study for the combine project it hopes will reflect a higher production rate and longer mine life.

Shares in Metro were unchanged at 15c in afternoon trade, valuing the group at $79.3 million.