Matsa Resources (ASX:MAT) has executed a binding mining services term sheet with Blue Cap Mining to advance operations at the Devon Pit Gold Mine, part of Matsa's Lake Carey Gold Project in Western Australia.
According to Matsa's feasibility study, Devon has the potential to generate a pre-tax cash flow surplus of $59.8 million over 18 months at a gold price of $4,250 per ounce.
Under the agreement, Blue Cap Mining, an experienced open-pit mining operator, will develop, manage, and operate the mine on an open-book cost basis, earning a 20% profit share in collaboration with Matsa.
Blue Cap Mining's private equity arm, Blue Capital Equities, will provide up to $6 million in working capital for the project.
Blue Cap Mining will also offer deferred payment terms, covering 50% of service fees up to $6 million, with repayments commencing once Devon achieves positive cash flow.
A preferred processing option for Devon ore has been identified, with final agreements currently in progress.
Matsa and Blue Cap Mining plan to commence preliminary site works, including geotechnical drilling and dewatering, immediately.
Matsa Executive Chairman Paul Poli welcomed the partnership, commented, "Not only does Blue Cap provide the experience, technical services and operational skill sets that the project requires but they have also committed to partially funding mining operations and entering into a profit sharing arrangement whereby Blue Cap are just as invested as Matsa and generate the highest return from the project."