MANILA, Mar 29, 2010 (Dow Jones Commodities News via Comtex) -- Vale S.A. (VALE) and Australia's Royalco Resources Ltd. have signed an agreement to jointly explore the Gambang copper project in the northern Philippines, Royalco said Tuesday.

The $6.03 million agreement allows for substantial exploration over three years at Gambang, including drilling at the Cableway prospect, Royalco said in a statement.

Once exploration is completed, Vale can exercise an option to buy the Gambang tenement for $5 million with Royalco retaining a 1.3%-1.5% royalty on future production, it said.