Reach Resources (ASX:RR1) Limited said Andel Resources exercised its option and executed a binding Right to Mine agreement on 18 August 2026 for the Blue Heaven mining lease, M59/769, at the Murchison South gold project near Payne's Find in Western Australia. The company's quarterly report to 30 September 2026 said the deal is still subject to conditions precedent.

How the agreement works

Under the structure described by Reach, Andel funds pre-mining, mining, haulage and processing upfront and recovers those costs from gold revenue. Net project profits are then shared equally on an at-cost, open-book basis. Ore is intended to be treated at the Kirkalocka mill, about 75 kilometres away and operated by Gylden Resources, an Andel subsidiary. The toll milling agreement has yet to be agreed.

Three conditions remain outstanding: Foreign Investment Review Board approval, execution of the mining services, toll milling and ancillary agreements, and an independent environmental baseline audit. In parallel, Reach is working on submission of its Mining Proposal. The mine plan is a conceptual three-pit open cut with the north-west pit as the proposed starter. The company stressed that the pit shells are conceptual only, are not based on a scoping, pre-feasibility or feasibility study and are not a production target.

Grade control and step-out drilling

Reach completed 163 reverse circulation holes, about 4,236 metres, on a 10 metre by 10 metre grid covering the first five mining benches of the north-west pit. Assays have been received for about 75 per cent of the program, with nine holes returning intervals above 5 grams per tonne gold. The remaining 40 holes are expected in November 2026.

Best intercepts included 7 metres at 7.5 grams per tonne from 20 metres (including 2 metres at 24.6 grams per tonne), 15 metres at 2.2 grams per tonne from 2 metres, and 24 metres at 1.2 grams per tonne from 7 metres. These are drilling results rather than a resource or reserve.

A separate step-out program of about 24 holes and roughly 2,000 metres began on 16 September 2026. It targets strike extensions of the Primrose Shear and undrilled old workings south-east of the proposed pits, with the aim of growing the resource and building feedstock for the Kirkalocka plant.

Tenement additions

After quarter end, Reach agreed to acquire three prospecting licences adjoining the Pansy Pit and Shamrock deposits. For P59/2210 it will pay $25,000 in cash plus 2,509,008 shares, and for P59/2408 and P59/2411 it will pay $20,000 plus 1,427,612 shares. The shares will be issued under its Listing Rule 7.1 capacity on completion. The company said the licences provide a corridor to realign Maranalgo Road, which could allow a larger and deeper Pansy pit, although any such expansion depends on Reach electing to develop it. First-pass mapping and rock chip sampling are planned.

Cash position and other holdings

Cash was $5.054 million at 30 September 2026, down from $6.531 million, made up of $2.054 million in bank balances and $3.0 million in call deposits. Operating outflow was $590,000 and investing outflow $887,000, including $885,000 on exploration and evaluation. There was no financing, borrowing or undrawn facility. Reach calculates about 3.43 quarters of funding at the current rate, and further equity or financing may be needed.

The company also holds a strategic stake in Delta Lithium and an investment in REEcycle Inc., on which it spent nothing in the quarter. Deferred consideration from the earlier Albury Heath sale is up to $400,000 plus $200,000 in cash or Westgold shares, subject to milestones.

Next steps

The company points to the remaining grade control assays in November, satisfaction of the three conditions, the Mining Proposal and toll milling negotiations, and completion of the tenement transfers. Reach cautions that outcomes may differ materially from those described.