Matsa Resources Ltd. entered into an agreement for AngloGold Ashanti Ltd.'s AngloGold Ashanti AU Ltd. to purchase ore from its Red October gold mine in Western Australia for up to 5 years.

The ore will be processed in a 3.8-million-tonne mill at AngloGold's Sunrise Dam gold mine in Western Australia, about 60 kilometers from Red October, which gives it access to a nearby milling solution for its first stage production ore for a further 4.5 years.

Matsa will be responsible for mining and transporting the ore to Sunrise Dam. AngloGold will take possession of the ore once it is delivered.

The company said May 20 that the agreement provides it with a long-term processing option for Red October ore at a relatively low capital cost.

The first delivery of ore to Sunrise Dam is expected by the end of June.

Executive Chairman Paul Poli said Matsa had delivered ore from its Fortitude and Red Dog gold mines, which was successfully processed at Sunrise Dam.

In February, the company started the initial seven-month underground mining operations at Red October.