Reach Resources (ASX:RR1) is advancing its Murchison South Gold Project to production as partner Andel Resources has exercised its option and completed due diligence.
Andel has formally entered into the right to mine (RTM) agreement for the 80,000-ounce gold project located in Western Australia’s Murchison Goldfields Region, confirming its commitment to fund Murchison South through to production.
Under the RTM agreement, Reach and Andel will share net project profits on a 50/50 basis using an at-cost and open-book structure. Andel will fully fund pre-mining activities, mining, haulage, and processing costs upfront, with repayment from gold revenue.
The agreement covers mining lease M59/769, known as Blue Heaven, which hosts an 844,000-tonne mineral resource estimate grading 3.00 grams per tonne gold (Au) for 80,000 ounces.
The resource comprises 530,000 tonnes of indicated material at 2.60g/t Au for 45,000 ounces and 314,000 tonnes of inferred material at 3.50g/t Au for 35,000 ounces.
Kirkalocka Mill, operated by Andel subsidiary Gylden Resources and located 75km from Murchison South, will process ore from Reach’s project under a toll milling agreement to be finalised as a condition precedent.
Reach’s chief executive Jeremy Bower says this update marks Reach’s transition from explorer to developer, marking a ‘landmark’ milestone for the company.
Andel Chief Development Officer Roderick Crowther says Andel is ‘excited’ by the opportunities presented by Murchison South.
“Having reviewed the geological database for Murchison South, conducted pit optimisations and preliminary mine designs, we are excited by both the near-term production potential from open pit operations and the longer-term upside to the project, including underground mining,” Crowther says.
Reach notes four conditions precedent remain before mining can commence, which include Foreign Investment Review Board approval for Andel’s security interests; execution of necessary project and ancillary agreements; and completion of an independent environmental baseline audit with costs shared equally between the parties.
The parties will work in parallel to satisfy these conditions while submitting the mining proposal to commence operations.
Reach notes it retains exposure to strategic investments including REEcycle following the divestment of its non-core lithium assets.
Reach Resources is now focused on advancing its flagship Murchison South Project near Payne’s Find, WA.
Write to Paula Fabe at Mining.com.au
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