Andel Resources has exercised its option to enter a binding Right to Mine Agreement with Reach Resources, committing to fully fund mining and processing at the Murchison South Gold Project in Western Australia.
- Andel exercises option to fund Murchison South
- Binding Right to Mine Agreement executed
- 50/50 net profit share on open-book basis
- Andel to fund pre-mining, mining, haulage, processing
- Conditions precedent include FIRB approval and agreements
Andel Formalises Commitment to Murchison South
Andel Resources has taken a decisive step from potential partner to active developer by exercising its option to enter into a binding Right to Mine Agreement with Reach Resources (ASX:RR1) for the Murchison South Gold Project. This move confirms Andel’s commitment to fully fund the project through to gold production, marking a significant milestone for Reach as it transitions from explorer to developer.
The agreement, which covers the Blue Heaven deposit (tenement M59/769), establishes a 50/50 share of net project profits between Reach and Andel on an open-book, at-cost basis. Andel’s subsidiary, Gylden Resources, operates the nearby Kirkalocka Mill, approximately 75 kilometres from Murchison South, and will process ore under a yet-to-be-finalised toll milling agreement; a key condition precedent to the RTM Agreement.
Funding and Project Development Strategy
Under the RTM Agreement, Andel will front the costs for all pre-mining activities, mining operations, haulage, and processing, with repayment structured through gold revenue. This arrangement alleviates upfront capital requirements for Reach, enabling it to focus on advancing the project while sharing profits equally with Andel.
CEO Jeremy Bower described the exercise of the option as a "landmark milestone," highlighting that Andel’s rigorous due diligence has paved the way for fast-tracking mining at Murchison South. Both companies are working through remaining conditions, including regulatory approvals and execution of ancillary agreements, alongside submission of the Mining Proposal to expedite commencement.
Remaining Conditions and Regulatory Approvals
Andel’s right to mine remains subject to several conditions precedent: approval from the Foreign Investment Review Board (FIRB) under the Foreign Acquisitions and Takeovers Act 1975, execution of project and ancillary agreements (including mining services and toll milling), and completion of an independent environmental baseline audit. These steps are critical to unlocking full operational control and ensuring compliance with regulatory and environmental standards.
Andel’s Chief Development Officer, Roderick Crowther, expressed optimism about both near-term open pit production and longer-term underground mining potential, reflecting confidence in the project's geological data and preliminary mine designs.
Project Scale and Resource Base
The Blue Heaven deposit hosts an estimated 80,000 ounces of gold at a 3.0 grams per tonne grade, combining indicated and inferred resources. This resource estimate, reported in April 2026, underpins the project’s economic potential and supports the fast-track development approach now underway.
Processing will be conducted at the Kirkalocka Mill, leveraging existing infrastructure to reduce capital expenditure and improve project economics. The proximity of the mill and the toll milling agreement are strategic advantages that Andel and Reach are keen to finalise.
Bottom Line?
The deal shifts Reach Resources firmly into development mode, but the timeline hinges on clearing regulatory and contractual hurdles.
Questions in the middle?
- When will FIRB approval and other conditions precedent be satisfied?
- How soon can mining and processing commence under the agreement?
- What are the long-term plans for underground mining at Murchison South?