Scorpion Secures $2M Option with Andel for Old Prospect Development

Strategic Partnership Accelerates Development at Old Prospect

Scorpion Minerals Limited (ASX:SCN) has taken a decisive stride towards production with a $2 million option agreement signed with Andel Resources Pty Ltd, granting Andel the exclusive right to enter a Right to Mine (RTM) agreement for the Old Prospect tenements within the Pharos Gold Project in Western Australia's Murchison region. This deal effectively transforms Scorpion from an explorer into a mining operator with the backing of a well-funded partner possessing existing infrastructure.

Andel, a related party of Gylden Resources which owns the Kirkalocka Processing Plant, will manage and fund mining, haulage, and processing activities under a 50/50 profit-sharing arrangement. The Kirkalocka plant is conveniently located just 200 kilometres from Old Prospect, with most of the route sealed, providing a logistical advantage for ore processing. This arrangement allows Scorpion to substantially fund its pathway to first production without upfront capital expenditure on mining or processing facilities.

Option Terms and Profit Sharing Structure

Under the binding option agreement, Andel must pay Scorpion $2 million within 21 days for a 12-month exclusive option period to enter the RTM agreement. Upon payment, Scorpion will issue 30 million unlisted options to Andel, exercisable at $0.05 with staggered expiry dates over two years. The RTM agreement, contingent on due diligence, mining lease grants, and other approvals, will see Andel fund all mining activities at its own cost.

Profits from gold sales will be split with 40% paid to Scorpion, 40% to Andel, and 20% retained temporarily to smooth cash flow between campaigns. Andel will provide mining services through its related party SMS (WA) Holdings and toll milling via Gylden, ensuring operational control and integration across the value chain.

Exploration and Development Work to Support Production

Scorpion plans an aggressive work program at Old Prospect, including infill and extensional reverse circulation (RC) drilling along the Old Prospect–Middle Bore trend, diamond drilling to test down-plunge mineralisation and collect geotechnical and metallurgical samples, and approximately 1,500 metres of regional RC drilling. Complementary studies such as open-pit optimisation, mining studies, detailed geological mapping, and a 50-metre line spaced airborne magnetic survey will underpin resource definition and de-risk the development pathway.

This initiative builds on recent progress, including the mining lease application lodged in April 2026 and the strategic groundwork laid by previous drilling campaigns and resource updates. The Old Prospect deposit currently holds a combined JORC 2012 Indicated and Inferred Mineral Resource Estimate of 312,395 tonnes at 2.15 g/t gold for 21,632 ounces, with mineralisation open along strike and at depth. The option deal with Andel complements these advances and provides the financial and operational muscle to move towards production efficiently, reinforcing Scorpion’s commitment to unlocking value from the Pharos Project.

Scorpion CEO Michael Fotios described the agreement as a "major milestone" and a "catalyst to rapidly transform the Company from explorer to miner," highlighting the value of partnering with an experienced and financially robust operator. This deal also aligns with the company’s broader strategy to leverage existing infrastructure and regional synergies to accelerate project development.

Geographical and Project Context

The Old Prospect tenements lie within the highly prospective Big Bell–Dalgaranga shear corridor, a known corridor for gold mineralisation in the Murchison region. The proximity to the Kirkalocka Processing Plant, owned by Gylden Resources and operated by Andel, is a strategic advantage that reduces capital intensity and operational risk. This relationship builds on prior strategic MOUs and partnerships Scorpion has established to access processing facilities and advance its tenements, as seen in recent strategic partnership announcements and mining lease application updates.

Looking beyond Old Prospect, Scorpion’s broader Pharos Project covers approximately 924 square kilometres and includes other mineral prospects such as Mt Mulcahy, which hosts a substantial copper-zinc-cobalt-silver-gold resource. This diversification offers optionality for the company as it advances Old Prospect towards production.