PanAust plans to pursue a dramatically scaled-back development option for the giant Frieda River copper-gold project in the Papua New Guinea highlands after striking a deal to take control of the asset from Glencore Xstrata .

Brisbane-based PanAust has agreed to pay an initial $US25 million ($26.4 million) to acquire an 80 per cent stake in Frieda River, which is one of the world’s largest undeveloped copper and gold deposits. Another $US50 million payment is due at the end of 2015. Glencore Xstrata will also retain a 2 per cent net smelter return royalty on PanAust’s share of any production from the project, capped at a total amount of $US50 million.