Glass Earth Gold Ltd is combining with Ophir Gold Ltd to investigate a 640ha area in Central Otago.
Glass Earth is a New Zealand based mining company listed on a Toronto exchange and Ophir Gold is a private company.
Glass Earth said it has an option to acquire a 50 percent equity interest in Exploration Permit 40 427, known as the Ophir prospect, which is near its EP 40 870.
The transaction is a farm-in by Glass Earth into EP 40 427.
Glass Earth will fund an evaluation study of a deposit within the joint venture area and will be responsible for design and resource permitting and installation of processing plant if mining proceeds.
Ophir Gold will reimburse Glass Earth for its 50 percent share of any plant acquisition costs out of 50 percent of its net profits from any mining.
In March Glass Earth Gold reported a net full year loss of $C1.33 million ($NZ1.81 million) earlier this year. It has said it is conserving funds and has enough cash to carry it through to mid-2010.
It said in March that preliminary results from exploration in Central Otago were "very encouraging".
Gold has been produced from the Ophir prospect historically.
The evaluation study will examine the potential for open pit mining the near-surface oxidized ore zones and separating out the coarse gold by means of conventional crushing followed by a gravity separation process.