Bluebird
Merchant Ventures Ltd / EPIC: BMV.L / Market: FTSE / Sector:
Mining
18 July 2024
Bluebird Merchant Ventures
Ltd
('Bluebird' or 'the
Company')
US$2 Million Farm-Out
Agreement for Kochang Gold & Silver Project in South
Korea
Transformational free carry
JV model with local partners now implemented across all three high
grade gold projects bringing total investment of c.US$9
million
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$2
million Farm-out Agreement for the high grade Kochang Gold &
Silver Project ('Kochang' or 'the Project') in South Korea ('the
Agreement' or 'Farm-out') to fully fund bringing it back into
production.
Overview:
·
Staged US$2 million investment by its local JV
partner provides Bluebird with a free carry to bring the historic
Kochang mine back into production and
organically grow the production profile.
·
Kochang is the smaller of the Company's high grade
historic mines and has a high margin production target of 12-15,000
oz Au per annum.
·
Estimated initial production can be started
between 6-9 months following relevant permitting with the initial
plan being to process via a toll treatment agreement.
·
The JV partner, which has already committed US$5
million to develop the Gubong Mine, will provide JV management and
finance and as well as corporate and planning expertise at local,
district and governmental levels, while Bluebird will provide
technical assistance chargeable to the JV at market
rates.
· BMV's technical director Graeme Fulton recently visited both
Gubong and Kochang and, following meetings with the local partners,
is preparing a new updated development plan for both
projects.
·
A Scoping Study for Kochang and Gubong 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 on
a US$1,750/oz Au price.
·
Bluebird now has c.US$9 million committed to
develop its three high grade gold mines in South Korea and the
Philippines against a current market cap of £11m.
·
The Company recently announced a restructuring of
the Board to lower its cost base and reflect the now fully
implemented free carry JV model.
Bluebird Executive director and Interim CEO Aidan Bishop
said, "The signing of a US$2 million investment to take the
previously producing Kochang Gold and Silver Mine to production is
fantastic news. This is the final JV structure to be
implemented in the Company's portfolio, providing a free carry on
all three of our high-grade projects. Funding is crucial for junior
resource companies and the fact that we have managed to secure
c.US$9 million to develop our cumulative estimated 1.8m oz Au, is
truly exciting for all stakeholders as we look to bring our
portfolio into production.
"Kochang has significant historic data and a non JORC estimate
550-700Kt grading between 5.2-6.6 g/t Au and 27.3-34.8 g/t Ag and
its 2.5km strike is open at depth and laterally. Once the
MTUP has been secured, the intention is to fast track the Project
to production at c.12-15koz Au pa, with trial mining expected to
take between 6-to-9 months via processing ore in another Korean
facility, providing cash flow for all parties. Importantly,
local contractors have already been contacted to provide quotations
to undertake work to rehabilitate the Kochang adit to safely
prepare for commercial operations. This action is supported
by our local partners.
"These are exciting times for all stakeholders. We have three
exciting projects, local partners and JV funding in place, defined
development paths, a lean structure and a highly positive gold
price environment. I look forward to regularly updating all
shareholders as we develop our multi project precious metal
portfolio, as we look to become a producing entity with a
cumulative production target in excess of 100,000 oz Au per
annum."
Details
Kochang is recognised as the easier
of Bluebird's two projects in South Korea to bring into
production. It is an 8.3 sq km epithermal high grade vein
deposit with a c.2.5km strike of which 600m between the two mines
has not been exploited. It produced c.110,000 oz Au (19.6g/t) and
5.9Moz Ag (1,000g/t) from 1961-1975 and has a Non JORC estimate
550-700Kt, grading between 5.2-6.6 g/t Au and 27.3-34.8 g/t Ag. The
team has an estimated production target of c.10-15koz pa and
believes there is significant potential to expand operations
laterally and at depth as well as exploit already mined
areas.
Under the terms of the Agreement,
the South Korean's will form an SPV for the investment that will
facilitate Kochang's development, investing
up to US$2 million in return for a maximum 60% of the
Project. The South Korean
JV partner already has a JV agreement with
the Company to invest US$5 million for the development of Gubong
(see RNS dated 07.05.2024). The partner is a
consortium of successful South Korean business
professionals with a broad range of expertise, including metal
trading.
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 Kochang 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 Kochang into production. In the third
stage, the JV will focus on implementing the Development Report or
carrying out more exploration work to further define the orebody at
the Kochang Project. For instance, along the 2.5km strike
length, there is 600m between the two historic mining areas that
has not yet been exploited. The expenditure during Stage 2 and 3
must be sufficient to meet the minimum work commitments for the
permits for the Kochang Project for that period.
The expenditure milestones by the
investor giving a total of 60% of the Project are as
follows:
·
Stage 1 Shares: US$100,000 or 3% of the
JV
·
Stage 2 Shares: US$400,000 or 9% of the
JV
·
Stage 3 Shares: US$1,500,000 or 48% of the
JV
Bluebird shall not be required to
contribute to the costs of the JV/Kochang development up to the
completion of Stage 3, providing the Company with a free carry to
production.
The investment is contingent on the
outcome of the review being conducted by the Korean Board of Audit
and Inspection ('KBAI') re the application and grant of a MTUP in
respect of the Kochang Project. The Korean Mining Registration
Office ('MRO') has already agreed to extend the Kochang Licence
until the KBAI review is complete. Following the granting of a
MTUP, there is an estimated 6-to-9-month development time to
mining. Technical Director Graham Fulton has recently been on
the ground to review the optimal development path. As part of this,
he assessed the adit rehabilitation work which would be classified
as Qualifying Expenditure and ensure the extension of the permits
regardless of the outcome of the KBAI review. Importantly the local
partner has indicated a willingness to commence work at the Project
prior to an issuance of a MTUP.
The two parties already have a
working relationship having signed a US$5 million Farm-out for the
Gubong Mine. The potential of the two previously producing
gold mines is recognised by both parties who intend to cooperate to
expedite the relevant permitting, carry out the relevant
Feasibility Studies and bring the projects back into production.
The value of Gubong and the Kochang Gold and Silver mine 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 Au.
**ENDS**
For
further information please visit https://bluebirdmv.com or
contact:
Jonathan Morely
Kirk Bluebird Merchant Ventures Ltd
Email: jmk@bluebirdmv.com
Nick Emerson
SI Capital
Tel:
01483413500
About Bluebird
London listed Bluebird Merchant
Ventures Ltd is focused on developing high grade, low capex gold
projects. With a cumulative estimated 1.8M oz Au across three
projects, including two historic mines in South Korea and a
development project in the Philippines, the Company looks to JV its
assets with local partners to provide free carry structures to
advance its assets to production.
Bluebird recognised the most
effective strategy to develop projects in South Korea and the
Philippines involved adopting a Joint Venture model; by securing
local partners with in-country operational knowledge and investment
capital at the project level, assets can be advanced to production
on a de-risked basis.
The Company has three JV's providing
a cumulative c.US$9m investment: US$5m for the development of the
historic Gubong Gold Mine and US$2m for the Kochang Gold and Silver
Mine, in South Korea and c.US$2m (funding to a production decision)
for the Batangas Gold Project in the Philippines. With committed
development capital at the project level, the Company has free
carries to production/mine construction on all its projects, which
reduces its reliance on the international capital
markets.
Bluebird continues to provide
technical assistance to these projects, utilising its
internationally experienced mining team, which has a track record
of bringing gold projects into production across Southeast
Asia. Both JV parties recognise each sides competencies and
the mutual belief that together they can bring the projects into
production and generate significant value for all
stakeholders. Importantly
the management team has
personally invested cUS$2 million into the Company, highlighting
their belief in the quality of the portfolio.
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.
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.
Batangas is a 1,160-hectare licence
with a 25-year Mineral Production Sharing Agreement ('MPSA')
granted. The Project has a current JORC compliant resource of
440,000 ounces, including a maiden ore reserve of 128,000 ounces
(including silver credits) as well as multiple additional targets
providing extensive resource upside. 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 1,164-hectares Lobo
licence. This has an initial Probable JORC Compliant Ore
Reserves of 171,000 tons at 6.6 g/t for 36,000 ounces of gold
excluding silver credits based primarily on the South West Breccia
('SWB') area of the licence that can be mined in the first 18
months of any operation. There is an Indicated resource of
82,000 oz Au that is perceived as easily convertible.
Additionally, the area has multiple epithermal and high-grade
targets already identified for resource expansion with 15km of
identified mineralised structures with results across the nine
identified targets yielding excellent results. These include
2.1m @14.4g/t Au and 3m at 12.1g/t at West Drift, which already has
an Indicated and Inferred resource of 350,000t at 3 g/t Au, 8.35m
at 18.3 g/t Au and 6.0m at 31.2 g/t Au located immediately west of
the SWB Extension, 19m surface channel sample with intersections of
19m grading 9.8 g/t Au at Ulupong and trenching at Limestone Target
yielded 3.5m at 25.9 g/t Au including 1.5m at 56.8 g/t
Au.