A Partnership Model To Develop High Grade Gold Mines

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 to production.

A JV free carry model to create value

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 currently has two JV partners providing a cumulative c.US$7m investment: US$5m for the development of the historic Gubong Gold Mine in South Korea and an estimated US$2m (funding to a production decision) for the advancement of the Batangas Gold Project in the Philippines. With committed development capital at the project level, the Company has free carries to production/mine construction, which reduces the 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 South East 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.

Bringing historic gold mines with high return potential back into production

Bluebird primarily targets mining projects in South Korea – low CAPEX, high grade mines where production can be recommenced quickly and existing resources can be expanded to facilitate long term, high value returns.

The Gubong Gold Mine and Kochang Gold & Silver Mine have an estimated cumulative 1.5 million oz (‘Moz’) Au. Results of a Scoping Study showed excellent initial validation of the projects’ economic potential.  At US$1,750 gold price, for production from two operations with cumulative c.400Ktpa VAT leach processing, delivers a 111% Post Tax Internal Rate of Return (‘IRR’), a US$181m net present value (‘NPV’) at a 10% discount rate, a US$50m per annum average free cash flow generation and a US$630 per oz All in Sustaining Cost (‘AISC’). Payback period is less than 2.5 years.

For full results see https://bluebirdmv.com/initial-scoping-study-at-south-korean-gold-projects

Both mines were closed in the 1970s due to long term depressed gold prices impacting production economics. The high-grade nature of the projects, the simple geology, meaning the utilisation of modern mining techniques can greatly improve economic recoveries, and the scale of the untapped ore bodies, translates into high IRRs and returns on investment, making both mines extremely exciting opportunities.

The team’s strategy provides significant advantages over exploration projects in that they are developing and not searching for ounces. Advantages include:

Dramatic reduction in exploration costs

Economics in terms of gold price at closure are known

Historic production rates and grade are known

Refurbishment involves significantly less CAPEX than new development

New mining techniques and equipment impact costs significantly

The Closure of a Mine

Primarily 3 reasons why underground mines close

Accidents that impact mine health and safety

Social events including strike action as well as government interference or war

Long term depressed gold prices impacting production economics

Rarely, if ever, Due To Exhausted Resource

The advantage of re-opening a mine

Reopening historic high grade gold mines provides significant advantages over exploration projects including:

Defined/existing geological data dramatically reduces exploration costs & increases understanding of geology, grade trend and ore body geometry

Refurbishment involves far less capital outlay than a new development (up to US$20,000 per metre for sinking a shaft) and reduces timeline to production

Existing infrastructure all already in place

Mining economics are more easily quantifiable

New mining techniques and equipment utilises old high-grade ore as well as new ounces

Ability to define new ounces as mines generally close due to gold price/economics and not lack of minable oz grade

The team has decades of experience creating value through identifying and reopening high grade historically producing mines