Matsa Resources (ASX:MAT) has executed a binding mining services term sheet with Blue Cap Mining to mine the Devon Pit Gold Mine in Western Australia.
The mining services agreement includes mining, equipment, and personnel to be provided to Matsa.
Both companies will jointly fund Devon’s development. Blue Cap will provide deferred payment terms in respect of 50% of the progressive service fees for its mining services and Matsa funding the balance.
Blue Cap’s associated private equity arm Blue Capital Equities will also provide part of the project’s working capital requirements of up to $6 million.
Upon attaining positive cashflow, Blue Cap will receive its deferred service fees and after all costs, and will receive a 20% profit share, while Matsa will receive the remaining 80%.
Executive Chairman Paul Poli says Blue Cap provides experience, technical services, and operational skill sets that Devon requires.
“We expect initial siteworks, geotechnical and infill drilling, as well as dewatering to commence imminently,” Poli says.
This news comes after Matsa received results from a Feasibility Study for the Devon Pit which illustrates a potential project cash flow surplus of $59.8 million (pre-tax) over an 18-month period at a gold price of $4,250.
The gold spot price is currently about $4,882 (US$3,073.50), as of 10.30am AEDT.
As previously reported, the mine is expected to produce 340,000 tonnes @ 4.6 grams per tonne for 50,000 ounces, including 4,000 ounces of inferred resource, at an all-in sustaining cost of $2,829 per ounce.
The Devon Pit Gold Mine lies within the broader Lake Carey Gold Project which covers 449km2 within the Laverton tectonic zone in Western Australia.
Matsa Resources is a gold explorer and miner that operates south of Laverton in the northeastern Goldfields region of Western Australia. The company also has a landholding in Thailand, which is considered prospective for lithium and base metals.
Blue Cap Mining is focused on partnering with small and mid-tier miners to deliver a broad range of mining operations and support tailored to each unique environment.
Write to Aaliyah Rogan at Mining.com.au
Images: Matsa Resources
