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Reach Resources Limited (ASX:RR1) has entered a binding option agreement with Andel Resources Pty Ltd to fully finance mining and processing at its Murchison South Gold Project in Western Australia. The deal includes a $2 million non-refundable option fee, with Andel’s subsidiary Gylden Resources set to process ore at the Kirkalocka Mill under a 50/50 net profit share. Concurrently, Reach bolstered its financial position by raising approximately $6.05 million during the June 2026 quarter through multiple capital initiatives.
Key Highlights
- Reach Resources Limited (ASX:RR1) secured a binding option agreement granting Andel Resources mining and milling rights over the Blue Heaven deposit at Murchison South.
- Andel will upfront fund all pre-mining, mining, haulage, and processing expenses, repaid via a 50/50 net profit share from gold revenues.
- Reach received a $2 million non-refundable option fee on 5 June 2026 and $900,000 from Andel’s strategic share placement, making Andel a ~9.4% shareholder.
- The Blue Heaven Mineral Resource Estimate rose by 30% to 80,000 ounces of gold at an enhanced grade of 3.0g/t Au, with metallurgical recovery at 95%.
- Total funding of approximately $6.05 million was raised in the quarter, including $3.15 million from a rights issue and shortfall placement, plus $800,000 from the sale of non-core assets to Delta Lithium.
- Andel has 180 days to complete due diligence before the Right to Mine and Milling Agreement becomes unconditional and effective.
Binding Option Agreement Enables Fully Funded Development at Murchison South
On 18 May 2026, Reach Resources announced a binding option agreement with Andel Resources Pty Ltd, establishing a fully funded pathway to production at its flagship Murchison South Gold Project in Western Australia. The agreement grants Andel an exclusive option to enter into a Right to Mine and Milling (RTMM) Agreement for the Blue Heaven deposit within Mining Lease M59/769 near Payne’s Find. This milestone removes the need for Reach to self-fund development and mining, transferring capital intensity to Andel while allowing Reach to retain significant upside through profit sharing.
Under the agreement, Andel paid Reach a $2 million non-refundable option fee on 5 June 2026 and subscribed for 100,000,000 ordinary shares at $0.009 per share, raising $900,000. These funds support mining approvals and development activities to accelerate production at Murchison South. Andel has 180 days from the agreement date to complete due diligence. Upon due diligence completion or waiver and exercise of the option, the RTMM Agreement becomes unconditional and effective, defining the operational and commercial framework for mining and processing Blue Heaven.
Kirkalocka Mill Processing Infrastructure Supports Ore Treatment Within 75 Kilometres
The RTMM Agreement stipulates that Andel’s subsidiary, Gylden Resources Pty Ltd, will process ore from Murchison South at the Kirkalocka Mill, approximately 75 kilometres from the mining site. This proximity eliminates long-haul transport, creating an integrated supply chain from mining to processing. Gylden Resources will operate the mill on an at-cost, open-book basis, ensuring transparency and cost control.
The commercial terms establish a 50/50 net profit share between Reach and Andel. Andel will fully fund all upfront pre-mining, mining, haulage, and processing costs, which will be repaid from gold revenues. This structure allows Reach to benefit economically without capital or operational risk, while Andel earns a return through profit participation. The agreement also allows flexibility for Reach to include additional tenements M59/786 and M59/790 in the arrangement or manage them independently.
Blue Heaven Mineral Resource Estimate Grows 30% to 80,000 Ounces
On 9 April 2026, Reach announced an updated Mineral Resource Estimate (MRE) for Blue Heaven, showing a 30% increase to 80,000 ounces of gold at an improved grade of 3.0 grams per tonne. Completed by Mining Plus and based on 5,200 metres of reverse circulation drilling in late 2025, the resource totals 844,000 tonnes at 3.0g/t Au from surface, with 45,000 ounces classified as Indicated at 2.6g/t and 35,000 ounces as Inferred at 3.5g/t.
The deposit remains open along strike and at depth, indicating potential for further expansion. The Resource Pit Envelope Economic pit shell (RPEEE) lies within Mining Lease M59/769, adjacent to the Great Northern Highway, providing logistical advantages. Metallurgical testing shows a 95% gold recovery rate, supporting strong processing characteristics and economic viability. The combined increase in resource size, grade, and recovery enhances the project’s development prospects.
Capital Raising Totals Approximately $6.05 Million Before Costs
During the June 2026 quarter, Reach strengthened its balance sheet by raising approximately $6.05 million before costs from multiple sources. A non-renounceable rights issue on 28 April 2026 offered eligible shareholders 2 shares for every 5 held at $0.009 per share, raising about $0.83 million. The entire shortfall of 258,010,927 shares was placed on 12 June 2026 for $2.32 million, bringing total rights issue proceeds to $3.15 million.
Additionally, Reach received the $2 million non-refundable option fee from Andel on 5 June 2026 and $900,000 from Andel’s strategic placement of 100,000,000 shares. Andel also subscribed for 25,543,111 shortfall shares under the rights issue, resulting in an approximate 9.48% shareholding in Reach. These combined proceeds provide capital to advance mining approvals, development, and operational readiness for production at Murchison South.
Non-Core Asset Sale Generates $800,000 and Ends Joint Venture Obligations
On 16 June 2026, Reach announced it received $800,000 from selling non-core assets previously held under a joint venture with Electrostate Malinda Pty Ltd, a subsidiary of Delta Lithium (ASX:DLI). The consideration included $400,000 in cash and $400,000 in fully paid Delta Lithium shares, based on a 30-day volume-weighted average price prior to execution. Cash and 1,826,484 shares were received and allotted on 22 June 2026.
This divestment simplifies Reach’s portfolio by removing future expenditure and holding costs related to non-core tenements. The joint venture with Delta Lithium was terminated, releasing both parties from obligations. This allows Reach to concentrate capital and management on advancing Murchison South while maintaining exposure to Delta Lithium through its shareholding. The transaction reflects disciplined capital allocation and strategic focus.
REEcycle Holdings Set for Nasdaq Listing After Business Combination
Reach holds about 4.9% of REEcycle Holdings Inc, which announced on 2 June 2026 a definitive Business Combination Agreement with Hall Chadwick Acquisition Corp (Nasdaq:HCACU). The deal values REEcycle at US$400 million equity, with the combined entity expected to have at least US$40 million in unrestricted cash at closing. Reach was not involved in negotiating the agreement.
Following completion, REEcycle is expected to list on Nasdaq, subject to regulatory approvals and shareholder votes. Reach’s stake provides exposure to the rare earth element recycling sector, focused on recovering critical materials. The listing could offer liquidity and valuation recognition for Reach’s minority interest, though Reach is not active in REEcycle’s operations or strategy.
180-Day Due Diligence Period Before Agreement Becomes Effective
The binding option agreement grants Andel 180 days from execution to complete due diligence on Murchison South. The RTMM Agreement becomes unconditional only after due diligence completion or waiver and Andel’s exercise of the option. This protects both parties by allowing Andel to verify project viability before commitment, while assuring Reach that funding will follow once conditions are met.
Details of the RTMM terms and conditions precedent are outlined in Reach’s 18 May 2026 company update. The 180-day period defines the timeframe for Andel’s technical, financial, and legal assessments. Upon completion and option exercise, the RTMM Agreement activates Andel’s funding obligations for pre-mining and mining, marking a critical milestone toward funded development at Murchison South.
Strategic Location and Secure Tenure at Murchison South Gold Project
The Murchison South Gold Project is near Payne’s Find, Western Australia, close to established infrastructure and regional mining operations. The Blue Heaven deposit lies within granted Mining Lease M59/769 adjacent to the Great Northern Highway, offering logistical advantages for transport and access. The granted lease secures tenure, reducing development risks and supporting financing and partnerships.
Located in a historically productive gold region, the project benefits from mining services, regulatory frameworks, and transport infrastructure. Proximity to the Kirkalocka Mill, operated by Andel’s Gylden Resources, creates an integrated supply chain minimizing transport costs. The RPEEE pit shell fits within the mining lease, supporting feasibility and development. These factors significantly de-risk the path to production.
Quarterly Funding Strengthens Balance Sheet for Project Advancement
Reach’s June 2026 quarter funding activities raised approximately $6.05 million before costs, enhancing its balance sheet to advance Murchison South toward production. The rights issue generated $3.15 million, Andel’s strategic placement added $900,000, the non-refundable option fee contributed $2 million, and the non-core asset sale yielded $800,000. These sources fund mining approvals, development, and operational readiness, while Andel’s funding arrangement covers mining and processing costs with repayment from gold revenue.
This funding strategy reflects management’s focus on de-risking development and avoiding self-funding full-scale mining. Partnering with Andel aligns incentives and establishes a clear operational and commercial path to production. The diverse capital sources demonstrate investor confidence and provide flexibility to support ancillary activities and respond to opportunities during Andel’s due diligence and project progression.
