Gold plays Reach and Scorpion strike deals with WA mill operator Andel
What's the deal? Two ASX-listed gold explorers — Reach Resources and Scorpion Minerals — have signed binding option agreements with Andel Resources, which operates the Kirkalocka Mill in Western Australia's Murchison Goldfields. Both deals follow the same template: Andel funds mining, haulage, and processing costs upfront, then gets repaid from gold revenue.
Reach's agreement covers its 80,000oz Murchison South gold project. Andel will fully fund pre-mining activities, and the two companies will split net profits equally after cost recovery. Reach receives a non-refundable $2M option fee and Andel will subscribe for shares representing about 9.4% of Reach's issued capital at 0.9c per share.
Scorpion's deal centres on the Old Prospect tenements within its Pharos gold project, which holds a JORC resource of 21,600oz of contained gold. Andel will pay Scorpion a $2M option fee — valid for one year — and Scorpion will issue Andel 30 million unlisted options exercisable at 5c.
Separately, Ariana Resources raised US$19.5M ($27.33M) by selling a 13.6% stake in Türkiye's Zenit Madencilik San, retaining a 9.9% holding valued at roughly US$14.2M. Proceeds will fund the feasibility study at its 1.1Moz Dokwe gold project in Zimbabwe.
Why now? Gold prices have been on a sustained run, making previously marginal deposits economically attractive. For mill operators like Andel, locking in ore feed agreements secures throughput for the Kirkalocka plant. For junior explorers short on capital, the structure — where the mill owner bankrolls extraction — removes the need for dilutive equity raises.
What could go wrong? These agreements hinge on final approvals and due diligence periods. If permitting stalls or metallurgical results disappoint at scale, neither deal may convert into active mining. The 50/50 profit split also means Reach and Scorpion capture less upside if gold prices spike further — the trade-off for carrying zero upfront cost risk.
For Ariana, the sale of its Zenit stake provides near-term cash but reduces its exposure to two producing mines. If Zenit outperforms, Ariana's remaining 9.9% interest limits its upside.
The signal: With Scorpion Minerals still at an early growth stage and Reach seeking to monetise an 80,000oz resource without a dilutive capital raise, both deals underscore how junior explorers are increasingly outsourcing the capital-intensive mine-to-mill chain to established operators. As gold prices keep marginal ounces in the money, mill owners with spare capacity — like Andel at Kirkalocka — hold growing leverage to lock in ore feed on profit-share terms that suit both sides.
Read more: stockhead.com.au
