Bluebird Merchant Ventures Limited Kochang Permit Approval (9584W)
17 Diciembre 2019 - 01:00AM
UK Regulatory
TIDMBMV
RNS Number : 9584W
Bluebird Merchant Ventures Limited
17 December 2019
17 December 2019
Bluebird Merchant Ventures Ltd
(the "Company" or "Bluebird")
Kochang Permit Approval
Bluebird Merchant Ventures (EPIC: BMV), the Korean focused gold
development group, is pleased to announce that it has now
officially received a 'Permit to Develop' the Kochang mine.
Highlights:
-- Kochang Permit Approval
-- Low capex with initial gold production opportunity in 2020
-- Organic growth potential from 10,000 to 30,000 oz of gold per annum over 3 years
-- Non-dilutive debt funding discussions
The permit grants the holder the right to develop and operate a
mine for a period of 13 years. The only constraint on the permit
holder is the requirement to have production within 3 years. The
permit may be extended by a further 20 year period by application
18 months prior to the end of the permit term. There are no
government royalties in South Korea.
The grant of this permit by the South Gyeonsang Provincial
Authority means that Bluebird has now achieved a second major
milestone towards becoming the first foreign gold producer in South
Korea since Ivanhoe Mines in the 1990s. Together with the Gubong
permit, received on 8 November 2019, the Kochang permit provides a
solid base for the company to advance into production and then grow
in a substantially organic manner.
The two projects have differing qualities which give the company
much opportunity for flexibility. Whilst both mines operated in
similar timeframes and closed in the 1970's when the gold price was
still below USD 140 per ounce, Gubong, as the onetime second
largest gold mine in South Korea, was flat dipping with 9 veins
extending 500 metres below surface and known, through historical
exploration drilling, 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 120 kilometres in total length which indicates
the size of the opportunity.
On the other hand Kochang, is very shallow (only mined to 150
metres below surface on 1 vein). It has 3 identified steep veins
and has potential to expand operations to the southwest/northeast
along strike and to depth as well as exploiting the already mined
areas. Indeed, the vein system has been identified and mapped on
surface where no mining has ever taken place. The overall strike
length of the system is approximately 3 kilometres.
Both mines have geological systems which generally extend to
1500 metres in depth. Initial production from both of the mines
will come from sources which are the result of many years of
previous mining. Because gold grades vary across any mine it is
natural that some parts of a mine will return a profit at a
particular gold price and other areas will not. It is for this
reason that parts of the mine will remain unmined. In the case of
our two mines many areas were left unmined due to a much lower gold
price (<USD 140/oz). For this reason and because all the tunnels
necessary to extract this ore have been developed this is less
costly to mine than new areas. Neither of the mines were cleaned
out before they were closed so a substantial amount of broken ore
remains behind. This is very low cost production.
The Gubong and Kochang projects are a 50:50 contributing joint
venture with Southern Gold. The Joint Venture is managed by
Bluebird. Over the next 3 to 4 months, Bluebird will be entering
the heart of the Gubong mine where the original incline shaft
systems commenced. This will involve some community work and
dewatering which is merely draining the area and treating the water
before release. The system was trialed successfully at the
beginning of this year. Subsequent to this the tunnels will be
explored, sampled and surveyed in order to build up an inventory of
product.
From February, the projects will then progress to production
with initial mining commencing in 6 months and gold production some
3 months later. Both mines will continue to expand their mining
area and build up inventory whilst the process plant design is
completed and constructed. Estimated average cash cost per ounce
(C1 level) is USD 576 per ounce. This is based on both mines over
the initial 3 years. The cost of the initial production phase to
the joint venture is USD 2.2 million. Bluebird is actively having
discussions with regards to non-dilutive debt funding in order to
fund its 50% share of the required funding. Over a 3 year period
gold production will largely grow organically from 10,000 to 30,000
ounces per annum. A further USD 7 million capital will be injected
during this period, however the bulk of this will be injected from
cash flow from production.
Commencing next year, Bluebird will start an in-depth
feasibility to determine the optimum size for expansion beyond
2022. This will include on and near mine exploration, JORC resource
determination. The main targets for this program will be the
deepening of both mines.
Colin Patterson, CEO, commented:
"Despite getting our two permits faster than any other country I
know of it has been a lengthier process than we first anticipated.
This is now over and we are excited by the prospect of achieving
gold production in the coming year. We trust that our shareholders
will enjoy a revaluation of the company as we move forward."
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION EU 596/2014 ("MAR")
Enquiries:
Bluebird Merchant Ventures Ltd +44 (0) 7797 859986
Jonathan Morley-Kirk, Non-Executive
Chairman
www.bluebirdmv.com
@BluebirdIR
Notes to Editors
The Gubong mine was once the second largest producing gold mine
in South Korea until its closure in 1971 when gold prices were
US$40 per ounce. The mine consists of nine shallow dipping stacked
veins. Although production was mainly from vein number six, five
other veins were mined from 1928 until its closure. Over 17,000
metres of drilling was carried out over the years and there are
over 120 kilometres of existing underground development.
The Kochang mine is a gold-silver mine that operated between
1928 and 1975 and produced over five million ounces of silver at
over 1000 g/t and 110,000 ounces of gold at 19.6 g/t. This gold
production was mainly derived from the three main veins at the
North East end of the "Gold Mine" part of Kochang, with the
majority of the silver production from the "Silver Mine" some 2.5
kilometres to the south west. The mine closed in 1975 when the gold
price was USD 140 per ounce. Today the mine consists of three
steeply dipping veins. Bluebird has opened up three kilometres of
original development, taken over 400 samples and has confirmed
process viability by carrying out initial metallurgical test
work.
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END
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