Chart Analysis
RR1 Daily Timeframe Chart as of 18 May 2026
Reach Resources (ASX: RR1) Signs Binding Option for 50/50 Profit Share Mining Deal at 80,000oz Blue Heaven Gold Deposit — Andel Pays A$2M Upfront and Funds All Mining Costs
Reach Resources doesn't need to raise another dollar to get Blue Heaven into production — if Andel exercises its option. Under a binding option agreement, Andel Resources has an exclusive 180-day window to enter a Right to Mine and Milling Agreement for the Blue Heaven deposit (80,000 oz at 3.0 g/t Au) at the Murchison South Gold Project in Western Australia. Andel will fully fund all mining, haulage, and processing costs upfront — recovering them from gold revenue before splitting net profits 50/50 with Reach on an at-cost, open-book basis. Ore goes to Andel's Kirkalocka Mill (~75 km away). In return, Andel pays a non-refundable A$2 million option fee and subscribes for 100 million Reach shares (~9.4%) at $0.009. The stock moved +30% to $0.013 on 18 May 2026.
How the Deal Works — Andel Funds Everything, Reach Gets Half the Profit
| Component | Detail |
|---|---|
| Operator | Andel Resources (funds and manages all mining/processing) |
| Mining Services | SMS (WA) Holdings (Andel subsidiary) |
| Processing | Kirkalocka Mill, ~75 km from site (Gylden Resources, Andel subsidiary) |
| Cost Recovery | Andel recovers all costs from gold revenue first |
| Profit Split | 50/50 net profits (at cost, open-book, auditable) |
| Reach Oversight | Site representative up to 5 days per 7-day period; monthly meetings |
| Tenements Covered | M59/769 (Blue Heaven) only — Reach retains M59/786 and M59/790 |
| Term | 4 years 9 months (subject to extension) |
| Security | Andel receives security interest over tenements and project bank account |
The at-cost, open-book structure with annual independent benchmarking and Reach audit rights is designed to protect against cost inflation. However, Andel controls all operational decisions, mine sequencing, and cost management — Reach's influence is limited to oversight, not execution. Mining services and milling are both provided by Andel group companies, creating a related-party cost structure that the open-book provisions are intended to govern.
The Blue Heaven Resource — 80,000oz, 56% Indicated
| Classification | Tonnes (kt) | Grade (g/t Au) | Ounces |
|---|---|---|---|
| Indicated | 530 | 2.6 | 45,000 |
| Inferred | 314 | 3.5 | 35,000 |
| Total | 844 | 3.0 | 80,000 |
The open-pit resource is constrained within an A$4,500/oz optimised pit shell above a 0.5 g/t cut-off. The Indicated component (56%) provides reasonable confidence for mine planning, though the higher-grade Inferred material (3.5 g/t) at depth introduces grade uncertainty. The resource was announced 9 April 2026.
Risks & Considerations
The RTMM is not yet effective — it requires Andel to exercise the option within 180 days after satisfying conditions including FIRB approval, due diligence, and execution of toll milling and mining services agreements. If conditions are not met, the option lapses (the A$2M fee is non-refundable regardless). The 50/50 profit share significantly reduces Reach's net economic interest compared to self-funded mining — the actual margin per ounce depends on Andel's cost base, which Reach can audit but does not control.
The security interest over tenements and the project bank account introduces complexity if the arrangement is terminated or disputes arise. At sub-2-cent levels, the +30% move represents an absolute change of $0.003, where minimal order flow can produce significant percentage moves. The placement at $0.009 is at a 10% discount to the pre-announcement close.
Key Dates & Timeline
| Date | Event |
|---|---|
| 9 April 2026 | Blue Heaven MRE — 844kt @ 3.0 g/t Au for 80,000 oz |
| 18 May 2026 | Binding option agreement announced; stock moved +30% |
| Within 21 days | A$2M option fee + A$900K placement payable |
| 180-day option period | Andel due diligence, FIRB, conditions precedent |
| TBC | Option exercise and RTMM commencement |
Price Data
- Previous Close: $0.010
- Close Price (18 May 2026): $0.013
- Change (18 May 2026): +30.0%
- 52-Week Range: $0.007 – $0.018
Notable Price Levels
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$0.016 — intraday high on announcement day, rejected 19% to close at $0.013. The stock gave back nearly half its intraday gains, with sellers emerging above $0.015. This was the session ceiling where buying momentum was absorbed.
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$0.013 — announcement-day close. At this level, Reach's market capitalisation is approximately A$14 million — roughly A$175 per resource ounce, though the 50/50 profit share means Reach's effective economic interest is half that on any ounces mined under the RTMM.
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$0.009 — Andel's placement price and the institutional cost basis for 100 million shares (~9.4% of post-placement capital). Below this level, Andel is underwater on its equity participation and the deal's financial logic for the counterparty is challenged.
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$0.007 — 52-week low. A return here would reverse the entire Blue Heaven MRE and Andel partnership narrative, pricing Reach at its most pessimistic 12-month valuation.
Summary
Reach Resources has granted Andel Resources an exclusive 180-day option to enter a Right to Mine and Milling Agreement for the Blue Heaven gold deposit (80,000 oz at 3.0 g/t Au) in Western Australia — under which Andel fully funds all mining, haulage, and processing costs at the Kirkalocka Mill, with a 50/50 share of net profits on an at-cost, open-book basis. Andel pays a non-refundable A$2 million option fee and subscribes for ~9.4% of Reach's shares at $0.009. The stock moved +30% to $0.013 on 18 May 2026 after fading from a $0.016 intraday high. The RTMM is not yet effective — Andel must exercise the option after satisfying conditions including FIRB approval and due diligence. The agreement covers Blue Heaven (M59/769) only, with Reach retaining flexibility over its other Murchison South tenements and granting Andel a security interest over the Blue Heaven tenements and project bank account.
This article is for informational purposes only and does not constitute financial advice. Market Flow does not recommend buying or selling any securities. Past performance is not indicative of future results. Readers should conduct their own independent research and consult a licensed financial adviser before making any investment decisions. This content is published in accordance with ASX Market Rules and is not a financial product recommendation.
