CHAIRMAN’S STATEMENT
The highlight of the first six months of the year was the successful farm out of the high grade Gubong Gold Mine (‘Gubong’ or ‘the Project’) in South Korea. The staged US$5 million investment, by a consortium of South Korean businessman with whom we have been working with for some time, provided Bluebird with a free carry to first production in return for up to 60% of the Project, previously the country’s second largest gold mine.
In addition to a significant capital injection, which is non-dilutive at the top co level, the agreement highlights the belief by both parties that the c.1.3Moz Au Gubong Mine can be brought into production. As the gold price indicates, there is increased appetite for investment in bullion, with significant buying coming from Asia. There is also regional recognition that exposure to gold can be garnered through the participation directly in mining projects, which can only be good news for companies such as Bluebird and the sector. With the gold pricing environment positive and many forecasts pointing to increases, some beyond US$ 3,500 per oz, we envisage further interest in our activities.
With our documented issues with permitting on-going, the Board recognised that the optimal structure to advance its projects was via Joint Ventures with local partners, who can provide an increased understanding of operating in-country as well as corporate and planning expertise at local, district and governmental levels. This model was successfully implemented in the Philippines last year at the Batangas Gold Project where a c.US$2 million investment commitment was signed. As a result, the work required for the submission for the grant of a Declaration of Mining Project Feasibility for an operating gold mine at the Lobo high-grade gold mining target has commenced, as has the work programme for Environmental Impact Study. This forms the core of the environmental baseline studies needed to be conducted in line with the requirements for the issuance of an Environmental Compliance Certificate.
Post the period end, we also signed a JV agreement to develop the Kochang Gold and Silver Mine in South Korea. The Board believes that at Kochang, initial modular production can be started between 6 to 9 months following the receival of the relevant permitting, with the initial plan being to process via a toll treatment agreement. We await the outcome of the Board of Audit and Inspection process, which despite being informed that this was a relatively short process, it is frustratingly still on-going.
The US$2 million staged investment with the same consortium of local businessman which invested in Gubong means that all three of our projects are now under JV. In essence, the Company has c.US$9 million committed to develop its projects, which have an estimated cumulative 1.8Moz Au and is on a free carry structure, greatly reducing its reliance on the capital markets.
To reflect this funded business model, the Board has also been restructured. Executive Director Charles Barclay and Non-executive Director Clive Sinclair-Poulton stepped down, and Colin Patterson moved to Non-executive Director. Aidan Bishop, who was instrumental in signing the JVs with the Company’s South Korean and Filipino partners, is interim CEO and I remain as Non-executive Chairman.
To fund the business going forward, we have entered into a binding term sheet to provide a loan facility of up to £350,000 with Catalyse Capital Ltd, a long running and supportive shareholder of Bluebird, as well as nominated co investees. The loan structure allows for us to receive capital without having to utilise the equity capital markets, where we believe a potential funding would be at a significant discount to the current price and therefore unnecessarily dilutive. Concurrently the Company is also conducting an equity raise (“the Placing”), at a price of 1p per share through a book building exercise that will conclude on 4 October 2024. The Placing has an attached one-for-one warrant with an exercise price of 1.25p per share and a 12 month life. Any net cash sums raised in the Placing will be netted on a pro rata basis against the loan capital to be drawn, reducing the total loan commitment. For full details please see the Financing announcement also released today.
Looking ahead, Bluebird’s strategy remains focused on developing its multi-project precious metal portfolio, with the goal of becoming a producer achieving a cumulative annual production target of over 100,000 ounces of gold. To this end, we continue to regularly engage with our local partners to ascertain the optimal paths for development of all three projects. We believe that with our current structure we have a significantly increased chance of navigating the planning and development processes. Our technical team has been on the ground in South Korea, increasing our understanding of the opportunities at both Kochang and Gubong, and we hope to publish further updates on the projects in Q4 2024.
Finally, I would like to thank everyone involved with the Company, including our partners, for their dedication and hard work, as well as our shareholders for their continued support. Together, we aim to deliver value for all stakeholders.