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- Matsa Resources (MAT) is entering a joint venture (JV) with Linden Gold Alliance to advance the Devon project into production
- This arrangement follows an unsuccessful sale and purchase agreement for the Red October and Devon pits which lie within Matsa’s Lake Carey gold project in WA
- Under the JV, Linden will pay Matsa $4 million in cash with Matsa to be free carried by Linden for all costs while retaining a 100 per cent ownership in Lake Carey
- The companies will split the profits and Linden will be responsible for completing a definitive feasibility study by the end of August 2023 for mining to begin by the end of June 2024
- MAT shares are up 2.63 per cent to trade at 3.9 cents each at 2:56 pm AEDT
Matsa Resources (MAT) has executed an indicative term sheet with Linden Gold Alliance to advance the Devon project in Western Australia.
The companies entered a sale and purchase agreement (SPA) in December last year for the sale of the Red October and Devon pits and associated tenements within Matsa’s broader Lake Carey project.
At the end of last month, however, it was announced that Linden Gold Alliance hadn’t met certain conditions and so the SPA couldn’t be completed.
Over the last few days, Matsa and Linden agreed to form a joint venture (JV), allowing Matsa to retain 100 per cent of all tenements in the SPA.
The non-binding term sheet will see the companies form an unincorporated JV with the profits to be equally split.
Once the JV has been formed, Linden will pay Matsa $4 million in cash and Matsa will be free carried by Linden for all development costs, debt financing and operating working capital.
Linden will become manager of the JV and will need to complete a definitive feasibility study by August 31, 2023. Then, mining is targeted to begin by June 30, 2024.
If Liden doesn’t meet the deadlines, the JV will be terminated and the $4 million upfront payment isn’t refundable.
Matsa Executive Chair Paul Poli said this is an “excellent outcome” for Matsa.
“When the sale couldn’t be completed as contemplated under the SPA, working out a strong outcome for Matsa was imperative,” Mr Poli said.
“The JV allows Matsa to retain 100 per cent ownership of its Lake Carey gold project, provides early cashflow via the $4 million upfront payment and a profit share in the Devon pit all at no cost to Matsa.”
Matsa Resources said there’s still potential to finalise a separate deal with Linden for the Red October mine.
MAT shares were up 2.63 per cent to trade at 3.9 cents each at 2:56 pm AEDT.
