Bluebird
Merchant Ventures Ltd / EPIC: BMV.L / Market: FTSE / Sector:
Mining
07 May
2024
Bluebird Merchant Ventures
Ltd
('Bluebird' or 'the
Company')
US$5 Million Farm-Out
Agreement for Gubong Gold Project in South Korea
A Transformative Free Carry
Structure to Advance c.1.3m oz High Grade Gold Mine to
Production
Bluebird Merchant Ventures Ltd, a
gold company primarily focused on bringing historic mines back into
production, is delighted to announce that it has signed a US$5
million Farm-out Agreement for its high grade Gubong Gold Project
('Gubong' or 'the Project') in South Korea ('the Agreement' or
'Farm-out').
Overview:
·
Staged US$5 million investment by a consortium of
South Korean businessman ('the consortium') to gain up to 60% of
Joint Venture company ('JV') established to develop Gubong to
production.
·
Agreement provides Bluebird with a free carry to
production at Gubong, previously South Korea's second largest gold
mine.
·
Agreement highlights the belief by both parties
that Gubong's c.1.3Moz Au can be advanced to production.
·
The consortium will provide JV management and
finance and as well as corporate and planning expertise at local,
district and governmental levels.
·
Bluebird technical services chargeable to the JV
at market rates
·
JV model successfully implemented in the
Philippines where the Batangas Gold Project ('Batangas') is being
advanced towards production with an EIS Study in progress (US$2
million investment).
·
Evaluating a similar JV agreement to develop the
Kochang Gold and Silver Mine in South Korea.
Bluebird CEO Colin Patterson said, "This US$5 million
investment is fantastic news for Bluebird on multiple levels as we
look to develop the high grade Gubong gold mine. We have been
working informally with our South Korean partners over the last
year to find the optimal development path for Gubong and this
agreement means we have a free carry on the Project to production.
We believe that our partner's willingness to enter into a formal
agreement and invest significant capital, currently more than our
market cap, emphasises that the right path has been identified and
that together we can bring Gubong into production. Importantly,
being South Korean nationals, its team better understand the local,
district and national geo-political environment and can ensure all
stakeholders are supportive while we will continue to provide the
technical knowledge to drive value.
"In the Philippines, we've found the JV model to be the best
fit, reducing risk and lessening our dependence on capital markets
for value delivery. Our recent investment secures a free carry on
the Gubong and Batangas high-grade gold projects, representing a
capital commitment of around US$7 million. With promising long-term
gold fundamentals, we look forward to providing regular updates on
our progress and creating value for all
involved."
Details
Gubong is the larger of two 100%
owned gold mining projects in South Korea. It was historically the second largest gold mine in South
Korea and the Korea Resources Corporation estimated 2.34Mt at some
6 g/t Au garnered from 57 drill holes over 17,715.3m. It is an
orogenic deposit, which typically have a depth of 2km compared to
the current depth of 500m. The Company believes it has a potential
resource of +1Moz Au in-situ, plus an estimated additional 300,000
oz Au from satellite ore bodies. Having completed extensive
analysis of the historic data, it aims to bring the Project into
production with a medium-term target of 60,000 oz Au per annum
rising to 100,000 oz Au.
Under the terms of the Agreement,
the South Korean's will form an SPV for the investment that will
facilitate Gubong's development, investing
up to US$5 million in return for a maximum 60% of the
Project. The South Korean
JV partner is a consortium of successful South Korean business professionals
with a broad range of expertise, including metal trading.
The Company has been working informally
with the consortium to assess the most favourable path to advance
Gubong, with the resultant JV structure considered the most optimal
option to achieve success.
The Farm-out is over three stages
with milestones needed to be achieved for the grant of equity in
the JV. In the first and second stages, the JV will aim to obtain
the relevant permits relating to bringing Gubong back into
production (such as the Mountain Temporary Use Permit - MTUP) and
once received prepare a Development Report, which details the
planned development of taking Gubong into production. In the third
stage, the JV will execute this report and carry out other
exploration and production related activities including but not
limited to sampling, drilling, trenching, dewatering, permitting,
mapping, surveys, technical studies (including the Development
Report, environmental studies, acquiring land, feasibility studies
and/or studies of resources and reserves) and governmental or local
stakeholder liaison.
The expenditure milestones by the
investor giving a total of 60% of the Project are as
follows:
·
Stage 1 Shares: US$250,000 or 3% of the
JV
·
Stage 2 Shares: US$750,000 or 9% of the
JV
·
Stage 3 Shares: US$4,000,000 or 48% of the
JV
The investor can also elect to
fast-track expenditure at its discretion.
Bluebird shall not be required to
contribute to the costs of the JV/Gubong development up to the
completion of Stage 3, providing the Company with a free carry to
production.
Both parties realise the potential
of Gubong with the Farm-Out representing a major endorsement of the
Project's potential and underpins the joint belief that the
relevant permits will be obtained, and that the mine has strong
potential to be a bought back into production. The value of Gubong
and the Kochang Gold and Silver mine, the smaller of the Company's
South Korean projects, was highlighted in a Scoping Study, which
included a post-tax NPV of US$181 million, free cash of US$50
million per annum, an IRR of 111% and a US$630 per oz All in
Sustaining Cost ("AISC"). The study was conducted on a USS1,750 per
oz Au price compared to the current price of c.US$2,300 per
oz.
**ENDS**
For
further information please visit https://bluebirdmv.com or
contact:
Aidan Bishop
Bluebird Merchant Ventures Ltd
Email: aidan@bluebirmv.com
Nick Emerson
SI Capital
Tel:
01483413500
About Bluebird
Bluebird Merchant Ventures Ltd
(BMV.L) is a London listed South Korea-focused resources company
centred on bringing historically producing gold mines back into
production. The Company, led by a team of proven mine
rehabilitation experts, currently has two 100% owned licensed high
grade narrow vein mining projects, the Kochang Gold and Silver
Project ('Kochang') and the Gubong Gold Project ('Gubong'), which
each have a defined route to low cost/ low capex production with a
cumulative target of producing 100,000 oz + Au per
annum.
The management team has invested
cUS$2 million personally into the Company and believe, following
analysis of historic production and exploration data, as well as
extensive sampling, geological, geophysical, and engineering
studies, there is potential for in excess of 1.5 million oz of
mineable gold in its Korean projects alone.
Kochang is an epithermal vein
deposit with parallel vertical ore bodies covering 8.3 sq km that
reportedly produced 110,000 oz of gold and 5.9 million oz of silver
between 1961 and 1975. Consisting of a gold and silver mine,
there are currently four main veins and several parallel subsidiary
veins vein which have been identified, as well as a newly
identified cross-cutting vein. Historic drilling indicates the
veins continue to depth below the current 150m mine and mapping
shows the veins on surface providing potential above and below the
old workings. The veins extend to the NE providing a strike length
of 2.5km with 600m between the two mines not exploited. There
is potential to expand operations to the southwest/northeast and to
depth, as well as exploit the already mined areas. The total
resource potential is between 550,000 and 700,000 tonnes, with a
range of grades between 5.2 g/t to 6.6 g/t gold, and 27.3 g/t to
34.8 g/t silver. Following the granting of a Mountain Use
permit, there is an estimated 6-to-9-month development time to
trial mining.
Gubong, which was historically the
second largest gold mine in South Korea has 9 granted tenements
covering c.25 sq km. Gubong is moderately dipping with 9
veins extending 500m below surface and known to extend at least a
further 250m. However, the production opportunity for Bluebird
prior to looking at deepening the mine is the 25 levels already
developed with all the remnants and unmined areas left by the
original miners. The 25 levels extend over 120km in total
length which indicates the size of the opportunity. The Korea
Resources Corporation ('KORES') estimated 2.34M tonnes at some
7.3g/t Au garnered from 57 drill holes over 17,715.3 metres.
With additional sampling, mapping, pit modelling and grade
analysis, plus the fact that Gubong is an orogenic deposit, which
typically have a depth of 2km compared to the current depth of
500m, the Board believe it has a geological potential of 1 million
+ oz Au in-situ, plus an estimated additional 300,000 oz Au from
satellite ore bodies.
Additionally, the Company has the
highly prospective Batangas Gold Exploration Project in the
Philippines, where it has an agreement with a Philippine company,
whose owners have decades of experience in mining, to develop the
Project. The JV covers the entire Batangas Project area,
which has a current JORC compliant resource of 440,000 ounces,
including a maiden ore reserve of 128,000 ounces (including silver
credits). Exploration expenditure to the tune of c.$20m has already
been invested. Work is focused on completing exploration and
environmental work programmes initially targeting the high-grade
Lobo area, although there is excellent exploration potential across
the licence with high-grade targets already identified and 14km of
identified mineralised structures. The staged agreement is
based on the JV partner achieving defined development goals and
provides Bluebird with a free carry on the development of Batangas
with a view to advancing to construction.