Scorpion Minerals Ltd (ASX:SCN) has secured $2 million in funding through a binding option agreement with Andel Resources Pty Ltd to support development of the Old Prospect gold tenements within its Pharos Gold Project in Western Australia’s Murchison region.
Under the agreement, Andel will pay Scorpion a non-refundable $2 million option fee within 21 business days for a 12-month exclusive option to enter into a Right-to-Mine agreement over Old Prospect.
As part of the funding terms, Scorpion will issue Andel 30 million unlisted options in 3 tranches of 10 million each, all exercisable at $0.05, with expiry dates of six months, 12 months and 24 months from issue.
Pathway to first production
The agreement means Scorpion is now “substantially funded” to first production.
CEO Michael Fotios said the agreement was a “major milestone” and a catalyst to move Scorpion from explorer toward miner with the support of an experienced and well-funded partner.
We are energised to advance a comprehensive work program at Old Prospect that targets both near-term value and long-term resource growth. Planned activities include infill and extension RC drilling along the Old Prospect–Middle Bore trend, targeted diamond drilling to test down-plunge mineralisation and retrieve geotechnical and metallurgical samples, and follow-up with ~1,500m of regional RC drilling. Complementary studies and enabling work, open-pit optimisation, mining studies and lodgement of a mining proposal, detailed geological mapping, a 50m-line spaced airborne magnetic survey and integrated lithostructural interpretation, will underpin resource definition and de-risk our development pathway," Fotios said.
If Andel exercises the option, it will procure, manage and fund mining, haulage and processing activities at Old Prospect.
The proposed Right-to-Mine agreement includes a profit-sharing structure under which gold profits, after royalties and cost reimbursement, would be split 50/50 between Scorpion and Andel.
Planned use of funds
Scorpion plans to use the funding to progress Old Prospect mining studies, including updated open-pit optimisation and scoping work, as well as infill and extension RC drilling along the Old Prospect–Middle Bore trend.
The company also plans diamond drilling to test down-plunge mineralisation and collect samples for geotechnical and metallurgical work, about 1,500 metres of follow-up regional RC drilling, detailed mapping, an airborne magnetic survey and lithostructural interpretation.