Chinalco Yunnan Copper Resources Ltd. (CYU.AU) said Thursday it has agreed to buy mining giant Xstrata PLC's (XTA.LN) early-stage Humito copper exploration project in northern Chile.

The agreement calls for Chinalco Yunnan to commit to minimum spending and drilling each year for five years, after which it will buy 100% of the project while Xstrata's copper subsidiary will retain a 3% net smelter royalty.

"We aim to drill this property after completing initial drill programs on our Candelabro, Caramasa and Palmani targets further north in Chile," said Jason Beckton, managing director of Chinalco Yunnan.