Blue Cap Mining (BCM) is set to carry out mining services at Matsa Resources’ Devon Pit gold mine in the Laverton region of Western Australia.
Under the mining services agreement, BCM will provide mining, equipment and personnel related with transport, energy, civil, earthmoving and other services to Matsa for Devon at an open book basis cost.
Other terms of the larger binding term sheet include Matsa and BCM jointly funding Devon’s development.
BCM will provide deferred payment terms associated with 50 per cent of the progressive service fees for Devon’s working capital requirements, paying up to $6 million maximum while Matsa will fund the balance.
Once positive cashflow is attained, BCM will receive its deferred service fees and following all costs, Matsa will receive 80 per cent of Devon’s profits and BCM will receive 20 per cent.
“We are delighted with the appointment of Blue Cap as the mining contractor for the Devon Pit gold mine,” Matsa executive chairman Paul Poli said.
“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.”
A preferred processing option for ore produced from Devon has been chosen, with final form documents currently advancing to facilitate processing.
“I look forward to working with the Blue Cap team once again having previously worked together at our highly successful Red Dog open-cut mine,” Poli said.
“We expect initial siteworks, geotechnical and infill drilling as well as dewatering to commence imminently.”
Located within Matsa’s Lake Carey gold project, Devon currently has an ore reserve estimate of 309,000 tonnes at 4.59 grams per tonne of gold for 46,000 ounces.
Devon’s feasibility study revealed the mine is set to deliver almost $60 million in cash flow surplus (pre-tax) over its 18-month mine life.