Junior explorer Matsa Resources (ASX:MAT) has scrapped a joint venture (JV) arrangement with unlisted miner Linden Gold Alliance following months of disputes between the companies.
Matsa, which has a $14.27 million market capitalisation, says the two businesses have signed a non-binding deal to terminate their Mine Management and Profit Sharing JV regarding the Devon Pit Gold Mine in Western Australia within 14 days.
Under the terms of the agreement, Matsa will retain full ownership of the Devon Pit mine, and Linden will be granted a net profit share to a maximum of $4 million, payable from future mining operations or the future sale of the mine.
This net profit share is based on Matsa paying Linden 50% of the quarterly net profits from Devon Pit mining operations once the project has been brought into production.
The profit share figure matches the $4 million pre-payment made by Linden to Matsa upon the signing of the JV back in December 2022.
Once a binding deal is signed within the next 14 days, Matsa and Linden will formally terminate the JV and drop all liabilities and claims against each other that have arisen over the past several months.
The issues began in May 2023 when Matsa reported that Linden failed to meet a milestone obligation under the JV arrangement regarding a toll mill or ore purchase agreement to treat the Devon Pit ore that was supposed to have been negotiated by 31 March.
While this deadline was subsequently extended, Matsa in July alleged that Linden continued to miss milestone deadlines and had failed to implement budgets and programmes as obligated as the manager of the JV.
Further to all this, at the forefront of the issues between the two companies lay a Definitive Feasibility Study (DFS) for the Devon Pit project released by Linden in early September.
The DFS, according to Linden, highlighted the ‘robust economics’ for the project, with free cashflow of $32 million over 14 months and all-in sustaining costs (AISC) of between $1,775 per ounce and $1,782 per ounce for a pre-tax project internal rate of return (IRR) of some 380%.
However, Matsa claimed on 8 September it never approved the outcomes or public disclosure of the DFS and that its board made ‘no representation regarding the accuracy of the study’.
Under the JV arrangement with Linden, the DFS, which was due on 31 August, needed to be ‘of a standard suitable to be submitted to a financier as the basis for lending of funds’.
Following Linden’s public release of the DFS, Matsa reviewed the figures with its technical advisers and raised ‘a number of concerns’ regarding the study that the company claims Linden did not address.
As such, Matsa determined that the DFS from Linden did not satisfy the requirements of the JV arrangement.
What followed was two months of dispute discussions between the two entities, culminating in today’s non-binding termination of the JV arrangement.
The Devon mine forms part of Matsa’s Lake Carey Gold Project in Western Australia’s Laverton tectonic zone. The project is also home to the Red October mine, the Fortitude Stage 2 mine, and the Fortitude North prospect.
Matsa Resources had roughly $1.9 million cash and cash equivalents at hand on 30 September, according to its latest quarterly report.
Write to Joshua Smith at Mining.com.au
Images: Matsa Resources