Rio Tinto partner says yet to make big copper find at Western Australia site

MELBOURNE (Reuters) - Exploration at one of Rio Tinto's <RIO.L> <RIO.AX> sites in the state of Western Australia that has been touted as potentially rich in copper has so far failed to find any economic veins of ore, the miner's partner in the project said on Tuesday.

Antipa Minerals <AZY.AX> lodged a series of exploration updates with the Australian Securities Exchange on Tuesday including one covering its Citadel project with Rio in the state's Paterson region.

Antipa noted "weak mineralisation" in the Folly target area that is part of that project, adding that at this stage there was "no follow-up envisaged". It said that no follow-up was warranted at the MB1 target area either.

However, it said it was still exploring around the Calibre deposit, with the results of an aerial electromagnetic survey still pending.

Rio declined to comment.

"The grades are low - they didn't come up with any really high-grade intersections," said Warren Edney at broker Ballieu Holst in Melbourne.

"It doesn't kill the story ... this is not all of Rio's ground. It means that Rio would be prioritising their own work programme."

In the past year, Rio has boosted its exploration holdings tenfold in the Paterson, beyond its shared ground with Antipa as miners step up exploration to secure growth.

Rio's interest in the area, which already hosts one of Australia's largest copper and gold mines - Newcrest's <NCM.AX> Telfur, has sparked a stampede into adjacent lots by other explorers, who see Rio's aggressive activity as an indicator of a highly-promising find.

Under the terms of its deal with Antipa, Rio Tinto will make escalating payments to the explorer of up to A$60 million (34 million pounds) to reach a stake of up to 75 percent in the joint venture. If it completes the current stage to April 2020, Rio would have a 51-percent joint venture interest.

"At a quick glance, the drill results show that the grade isn't high enough to be economic," said a mining engineer, declining to be identified due to the sensitivity of the topic.

"It's still early days, but if this is where they are focussing and those are the kind of results they are getting, it's nothing to write home about. Particularly if you're Rio."

(Reporting by Melanie Burton; Editing by Joseph Radford)