Under the MoU with China Nonferrous Metal Industry's Foreign Engineering and Construction Co (NFC), the two parties will form a framework for cooperation to establish the cost and program for delivery of the project.
The two are aiming to enter into formal agreements to appoint NFC as principal contractor under an engineering, procurement and construction lump sum turnkey contract.
NFC will also organise at least 70% of the project development costs, with financing to come from Chinese banks.
While a definitive feasibility study is not due to be completed until the end of the year, the project has estimated capital costs of around $US1.6 billion ($A1.62 billion).
The massive project will have a mine life of 20 years and initially process at a rate of 25 million tonnes per annum before expanding to 50Mtpa from open pits.
Yandera has current resources of 4.9 billion pounds of copper and 176 million pounds of molybdenum, as well as gold, silver and rhenium.
Marengo is aiming for a late 2013/early 2014 start-up at the project.
The company will aim to have formal agreements in place with NFC by November next year, to allow construction to begin in the first half of 2012.
NFC was introduced to Marengo by its Perth-based joint venture partner Arccon Engineering.
Marengo is listed in Australia, Toronto and Port Moresby.
The company requested a trading halt last week in Australia after its shares jumped from 17c to 25c over several days.