Matsa Resources (ASX:MAT) executed a binding mining services term sheet with Blue Cap Mining to mine the Devon pit gold mine in Western Australia, according to a Friday Australian bourse filing.

Blue Cap will develop, manage, and operate the mine on an open-book cost basis together with Matsa. Both firms expect to immediately start the preliminary and early mining works.

The firms will jointly fund the development of the project with Blue Cap providing deferred payment terms regarding 50% of the progressive service fees for its mining services up to a maximum of AU$6 million, while Matsa will fund the balance.

Blue Cap, upon attaining positive cash flow, will receive its deferred service fees, and after all costs, the firms will split the profits on a basis of 80% for Matsa and 20% for Blue Cap.