Bluebird Merchant Ventures Ltd /
EPIC: BMV.L / Market: FTSE / Sector: Mining
30 April 2024
Bluebird Merchant Ventures Ltd
('Bluebird' or 'the Company')
Final Results
Bluebird Merchant Ventures Ltd, a gold company
primarily focused on bringing historic mines back into production,
announces its Final Results for the 12-month period ended 31
December 2023.
Overview:
·
Developments across the high grade gold project portfolio
with the target being to become a producing entity in both South
Korea and the Philippines.
·
Farm-out model being implemented across portfolio:
o Local JV partner
secured with decades of mining experience in-country to develop the
Batangas Gold Project in the Philippines - recognised the potential
of the project and new governmental support for mining.
o Final stages of
negotiations being concluded to formalise the Company's
relationship with South Korean entity for partial farmout of Gubong
Gold Mine with announcement expected imminently.
o Evaluating
Farm-out for Kochang Gold and Silver Mine.
· JV
partner model underpins both Bluebird's and the local parties'
belief in the asset quality and potential deliverability of the
projects.
· In
South Korea a Scoping Study for the two projects indicated post-tax
NPV of USD181 million, free cash of USD50 million per annum, an IRR
of 111% and a USD630 per oz All in Sustaining Cost (USD1,750 per oz
gold price).
·
Bluebird provides investment exposure to c.1.8+ million oz Au
in stable jurisdictions backed by strong gold price environment
with a low-cost farm out model being implemented.
·
Anticipated increased news flow as projects get accelerated
on JV progressions.
CHAIRMAN'S
STATEMENT
The asset base of Bluebird Merchant Ventures
remains exciting. Our focus continues to be on advancing the
development of our high-grade precious metal projects, which
consists of the Kochang Gold and Silver Mine (Kochang) and Gubong
Gold Mine (Gubong) in South Korea, and the Batangas Gold Project
(Batangas) in the Philippines. We believe that you rarely find
investment exposure to c.1.5+ million oz Au in stable jurisdictions
and at the current valuation (refer Chief Executive's Comment for
detail).
Our objective of creating long term value for
shareholders by bringing our projects into production remains the
core proposition of the Board, and to this end, we have focussed on
a number of key areas to deliver this. Shareholders will be aware
there has been some progress, particularly in the Philippines, but
also frustrations as we negotiate the path to advance our two South
Korean projects, in particular the well documented applications for
the Mountain Temporary Use Permits (MTUP).
Our experiences in the Philippines have meant
that we have revaluated the way in which we operate. For Batangas,
a Joint Venture was secured with a local partner with decades of
experience in mining to advance the project to a production
decision. This agreement is based on the JV partner achieving
defined development goals in return for equity and provides us with
a free carry to production decision. Exploration expenditure to the
tune of c.USD 20 million has been invested to date and both parties
recognise the inherent value of the project. Section 4.3 of the
Strategic Report provides an outline of the 2019 write down to USD
nil and the Board's decision not to reverse this impairment to the
investment in associate in the current period.
The JV model has already reaped dividends as
highlighted by the receiving of the Certificate of Approval from
the Mines and Geosciences Bureau for a Two-Year Community
Development Plan. A drilling contractor has been engaged and
programme planned, although the JV partner has now reprioritised
this work with the completion of an Environmental Impact Study
(EIS) being the most important task to complete. Accordingly post
year end, a Philippine based consultant was appointed to conduct
the work, which has now commenced.
Our progress in the Philippines, compared to
the permitting delays in South Korea, where we are still waiting
for a decision from the Board of Audit and Inspection for Kochang
re the MTUP, prompted us to rethink our strategy to identify the
best development path for Gubong. Accordingly, we have been working
with an established South Korean entity, which better understands
the local, district and national geo-political environment to
ensure all stakeholders are happy with our development plans before
we resubmit the MTUP. With a positive working relationship and the
recognition of the scale of the mining potential at Gubong, both
parties are keen to formalise an agreement for the development of a
mine. It is envisaged that the JV model signed in the Philippines
will be the basis of an agreement in South Korea - ie, the JV
partner will supply capital for the delivery of development goals
in return for equity, giving Bluebird a free carry. These
negotiations are progressing well and if an agreement is signed, we
will look at a similar structure for Kochang.
With an optimal structure in place, we believe
we can develop the assets and drive value for shareholders. I would
like to thank you for your patience but can assure you we have been
doing all we can to make progress. The in-ground value of the
portfolio remains constant and something we remain focussed on
realising. The Board believes the sum of the parts are not
reflected in the share price, despite the delays we have
experienced in South Korea.
The value of Gubong and Kochang were
highlighted in the publication of a Scoping Study, which included a
post-tax NPV of USD 181 million, free cash of USD 50 million per
annum, an IRR of 111% and a USD 630 per oz All in Sustaining Cost
(AISC), giving us a huge amount of confidence in the economic
potential our projects. With regards to Batangas, the value of the
Lobo project area with 82,000 oz Au Inferred on just one of nine
targets and 14km of strike essentially translates into no
attributable value.
On a macro scale, the gold price environment is
also positive, with many commentators highlighting that
ever-increasing government debt is underpinning the long-term
fundamentals for gold as an asset class. Worth noting is that the
current gold price of c.USD 2,100 per oz is a significant premium
to our scoping study, which was conducted on a USD 1,750 per oz
gold price.
Corporate
The Directors continue to only draw down
minimal fees to preserve cash and now own a cumulative 166,176,351
shares in the Company (23.3%). As mentioned, we have farmed
out Batangas giving us a free carry to a production decision, and
we are looking to do the same in South Korea to reduce our
corporate overhead.
Early in the year, we raised GBP 1.2 million
via a placing and subscription for 60,750,000 new Ordinary Shares
at 2 GB pence per share brokered by SI Capital. While the funds
were raised to fully fund proof-of-concept production at Kochang,
following the delays in obtaining the necessary mining permit to
move towards production we took the decision to pay down our
existing loans to become debt free.
Conclusion
We look forward to replicating the approach
undertaken in the Philippines to advance our South Korean projects
with limited capital outlay in tandem with local partners who
better understand the on-ground environment and can foster positive
relationships at all levels. With an estimated 1.5 million oz Au,
extensive data from established institutions, and extraction
permits in place, these projects remain highly prospective. We are
confident that once we overcome the current obstacles, we can
accelerate swiftly the projects' path to development and begin to
enjoy the fruits of our efforts.
Jonathan Morley-Kirk
Chairman
CHIEF
EXECUTIVE'S COMMENT
With the general operations and corporate
issues covered in the Chairman's report, including the delays in
the progression of our South Korean projects, I want to take this
opportunity to remind shareholders why we are here, provide an
update on each asset and outline what we are trying to
achieve.
The original listing asset was Batangas, but
its development was put on hold due to a change in Government in
the Philippines with the investment in the project being written
down to USD nil in 2019. As a result, we identified other projects,
Gubong and Kochang in South Korea, with significant potential that
could benefit from our years of experience in bringing gold mines
back into production and generate high returns for
investors.
Gubong remains a company maker. It was
historically the second largest gold mine in South Korea and the
Korea Resources Corporation estimated 2.34 million tonnes at some 6
g/t Au garnered from 57 drill holes over 17,715 metres. It is an
orogenic deposit, which typically have a depth of 2km compared to
the current depth of 500m. We believe it has a potential resource
of +1 million oz Au in-situ, plus an estimated additional 300,000
oz Au from satellite ore bodies. Having completed extensive
analysis of the historic data, we aim to bring this project into
production with a medium-term target of 60,000 oz Au per annum
rising to 100,000 oz Au. Being high grade and low cost, an
estimated sub USD 700 AISC, the margins are attractive.
Kochang, the smaller of the two projects, has a
current non JORC estimate of 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. This hydrothermal deposit shows very
high grades over a strike length of approximately 2.5km. With an
initial 116,000 oz Au already defined and given an expected
ultimate production level of 60,000 tonnes per annum, a mine life
of 10 years is estimated with an initial annual yield c.10,000 oz
per annum. With the grant of the MTUP, we believe that this can be
fast-tracked to production and early cashflow, which would fund
future development and contribute to developing Gubong. However, as
the Chairman has already iterated, the grant of permits is held up
with the relevant authorities as it has been throughout the
reporting period. We still expect a positive resolution but feel a
resolution may be accelerated with a local partner in place;
accordingly, we are in discussions with a potential partner in this
regard.
Bearing in mind the situation in South Korea,
our portfolio approach is beginning to pay dividends as we advance
Batangas in tandem with our JV partner. Under the terms of the
agreement, an initial 25% of the project was granted to
Alpha-Diggers Inc (Alpha), a newly formed special purpose vehicle
established to manage the advancement of Batangas to construction.
Alpha is charged with completing exploration and environmental work
programmes targeting the high-grade Lobo area of the project, which
includes additional drilling to increase the resource and a
redesign of the mine plan for underground mining. The Bluebird team
is actively working with its partners providing input and execution
advice on the relevant development paths. On completion of this and
the submission of the Declaration of Mining Project Feasibility
(DMPF) application, Alpha will receive a further 15% in the
Project, raising its holding to 40%. The DMPF and an Environmental
Compliance Certificate (ECC) are the last major prerequisites for
developing a gold mine at Batangas and on approval and granting,
Alpha will receive a further 20% of Batangas, raising its holding
to 60%.
The entire Batangas project area has a total
JORC compliant resource of 440,000 ounces, including a maiden ore
reserve of 128,000 ounces (including silver credits). The
high-grade Lobo area is now the focus due to its abundance of data,
high prospectivity and two 25-year Mineral Production Sharing
Agreements.
Lobo 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 licences, which 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, Lobo has multiple epithermal and
high-grade targets already identified for resource expansion with
14km of identified mineralised structures. In particular, testing
of the footwall lode at the SWB extension, produced results
including 2.1m @14.4g/t Au and 3m @12.1g/t, and West Drift, already
has an Indicated and Inferred resource of 350,000t @ 3 g/t Au and
high-grade surface trench intersections yielded 8.35m @ 18.4 g/t
Au, 2.6m @ 28.6 g/t Au and 3m @ 22.2 g/t Au.
Five key targets identified within 14km strike
on five parallel epithermal lode structures include Camo, where
major flexure "look-a-like" target to SWB exist; Signal, where
exceptionally high grade rock chip samples at surface lead into an
area of preserved high silver-copper-gold in silica cap at an
analogous position to SWB; Pica the centre of the porphyry system
at Lobo where previous high grade epithermal vein intersections
above porphyry Cu-Au zone, are open in all directions; and Ulupong
where strong soil anomalies and high-grade surface trenching
results indicate gold zone exposed for 3km strike of structural
corridor.
The EIS study is now underway at Lobo, which,
as a key component of the application for the ECC, is considered
the priority by our partners. The planned drilling campaign will be
completed as the EIS work progresses. The Directors note that
as work is on-going and the Company will only seek to either apply
for a further two year extension or it will make application for
the MPSA to enter the Commercial Operation phase at the end of
September 2024, it is prudent not to reverse the impairment
previously recognised against the investment in the associate in
the year ended 31 December 2023.
Looking ahead, we remain focussed on the
advancement of the portfolio. We understand the geological
prospectivity of all our projects but are cognisant that we need
the right structure to progress. This has been achieved in the
Philippines and we believe we are close to achieving this in South
Korea, which we anticipate will assist greatly in the unlocking of
the inherent value of our projects. We look forward to
updating shareholders on our progress as the year
advances.
Colin Patterson
Chief Executive Officer
The Annual Financial Report can be
downloaded in PDF format from the following link: http://www.rns-pdf.londonstockexchange.com/rns/4783M_1-2024-4-29.pdf
This announcement contains inside information
for the purposes of article 7 of the market abuse regulation EU
596/2014 ("MAR").
**ENDS**
For further information please visit
https://bluebirdmv.com or contact:
Aidan
Bishop
Bluebird Merchant Ventures
Ltd
Email: aidan@bluebirdmv.com
Nick Emmerson
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.
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 a number of 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.
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.