REG - Bluebird Merchant - Interim Results

Bluebird Merchant VenturesAnnouncement

29/08/2023 07:00

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RNS Number : 5355K  Bluebird Merchant Ventures Limited  29 August 2023

Bluebird Merchant Ventures Ltd / EPIC: BMV.L / Market: FTSE / Sector: Mining

29 August 2023

Bluebird Merchant Ventures Ltd ('Bluebird' or 'the Company')

Interim Results

 

Bluebird Merchant Ventures Ltd, a gold company primarily focused on bringing
historic mines back into production, announces its Interim Results for the
six-month period ended 30 June 2023.

 

Overview:

·    Developments across the gold project portfolio to fulfil strategy to
become a producing entity in both South Korea and the Philippines.

·    Scoping Study for two Korean 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).

·    MTUP at Kochang referred to the Board of Audit and Inspection, Korea
for adjudication - all legal and regulatory requirements had been covered in
Bluebird's initial c.800-page submission.

·    JV partner identified to jointly develop Gubong Gold Project, the
larger of Bluebird's two South Korean gold projects - estimated to have in
excess of 1.3Moz Au.

·    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 mining environment.

·    Certificate of Approval from the Mines and Geosciences Bureau for its
Two-Year Community Development Plan granted for Batangas.

·    Raised GBP1,215,000 - this followed the raising of GBP230,000 in
December 2022.

·    Reduced overhang following long term shareholder and supporter
Catalyse Capital buying out Southern Gold's shareholding.

·    Company now debt free with all loans paid off and cash at bank - low
overheads with JV model and directors' salary sacrifice scheme in place until
MTUP grants.

 

CHAIRMAN'S STATEMENT

 

The six-month period under review, although not without its challenges, has
witnessed significant developments for your Company both in South Korea and
the Philippines as we look to become a gold producing entity and deliver long
term value for all stakeholders.

 

During the period, the Company published a Scoping Study highlighting the
potential of the Gubong Gold Mine ('Gubong') and Kochang Gold and Silver Mine
('Kochang') in South Korea, secured a local JV partner in the Philippines to
advance the Batangas Gold Project ('Batangas'), raised capital and cleared all
corporate debt.  However, as shareholders will be aware, the issuance of the
Mountain Temporary Use Permits ('MTUPs') for Gubong and Kochang has taken far
longer than anticipated, particularly in light of the fact that both projects
have already received extraction licences.

 

South Korea

The Gubong and Kochang licences remain first class assets and fit our model,
being low CAPEX, high grade opportunities where we believe production can be
recommenced quickly and existing resources can be expanded to facilitate long
term, high value returns. In February, the potential of the two projects was
highlighted in the publishing of the Scoping Study, which reported a 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. This was conducted on a USD1,750
per oz gold price against the current gold price of c. USD1,930 per oz.

 

However, in order to advance, the Company needs the grant of the MTUPs.
Throughout the period, the Board was focussed on the granting of these, which
are the last part of the legal requirements needed to commence bringing the
mines back into production. The Company's lawyers and permitting consultants
frequently reiterated their confidence in the likely granting of these MTUPs
and emphasised that all legal and regulatory requirements had been covered in
Bluebird's initial c.800-page submission.  Despite the supply of additional
information, including community engagement and clarity on environmental
impact, the issuance of the MTUP at Kochang was referred to the Board of Audit
and Inspection, Korea. Its adjudication is mandated to take 60 days, so is
scheduled for September.  However, as previously reported, this timeline is
not guaranteed and following advice from our legal advisors, it can often be
materially different from what is mandated.  When the Board receives an
official response, we will communicate this to the market.  It is extremely
frustrating that while the Company has support from the local landowners and
community, and the submission covered all the legal requirements, the granting
has not occurred. The Board remains confident but believe this has become
regionally political and therefore we welcome the audit procedure.

 

As a result of the above, we paused the submission for a MTUP at Gubong to
evaluate all permutations encountered at Kochang. The politicising of events
led us to the conclusion that there was a need for more South Korean
representation and accordingly we identified a local partner to look to
jointly develop the larger of our two projects. It recognises the scale and
potential of the asset, which we estimate to have in excess of 1.3Moz Au and
believe that it can both assist in the securing of the permit and the funding
of the development of the mine to production. Notably, a similar JV model has
been successful at Batangas in the Philippines where our partner has been
instrumental in securing the recently announced Certificate of Approval.

 

Batangas

We remain extremely positive about the development potential of this
high-grade project in the Philippines. This was our original listing asset,
whose development was placed on hold due to a deterioration of political
support for mining in the Philippines.  With the election of President Marcos
in June 2022, this situation has ameliorated translating into the project
being primed for development.  Accordingly, we signed a JV with a Philippine
company, which has decades of mining experience in-country and recognised the
potential of the project.

 

The JV covers the entire Batangas Project area, which has a total JORC
compliant resource of 440,000 ounces, including a maiden ore reserve of
128,000 ounces (including silver credits), although work will initially focus
on the Lobo area, implementing the necessary work with a view to advancing it
to construction. Lobo has a JORC Compliant Ore Reserves of 171,000 tons at 6.6
g/t for 36,000 oz Au, an 82,000 oz Au inferred resource plus multiple
epithermal and high-grade targets identified over 14km of identified
mineralised structures. Grades include high-grade surface trench intersections
of 8.35m @ 18.4 g/t Au, 2.6m @ 28.6 g/t Au and 3m @ 22.2 g/t Au.

 

The JV structure provides Bluebird with a free carry to a production decision
at Lobo in return for 60% of the project equity. To provide context in terms
of value, on top of the identified ounces and expansion potential, exploration
expenditure to the tune of c.USD20 million has been invested across the
Batangas licence to date.  In the initial prospectus, the Company had an
option to farm into 51% of the project and will now have a free carry to
construction decision and maintain a 40% interest.

 

Since signing the JV, we have received the Certificate of Approval from the
Mines and Geosciences Bureau for its Two-Year Community Development Plan. This
represents a significant step forward and underlines the importance of the
Company's local development partner in navigating the regulatory environment
to allow the Lobo underground mine to be advanced to a production decision.
Importantly, the Company already has two 25-year Mineral Production Sharing
Agreements covering this area.

 

The next steps for the JV partner include a new drilling campaign to increase
the resource, the development of an underground mine plan, and the application
for an Environmental Compliance Certificate.  We are working closely with our
partners to achieve these objectives, generate consistent news and advance to
a decision to mine as quickly as possible.

 

Corporate

Early in the period we raised GBP1,215,000 through SI Capital via a placing
and subscription for 60,750,000 New Ordinary Shares at 2 pence per share.
This followed the raising of GBP230,000 in December 2022. The capital raise
was to fully fund proof-of-concept production at Kochang but, with the delays
with permitting, we took the decision to pay down our existing loans to become
debt free.

They Directors remain significant shareholders of the business owning a
cumulative 166,176,351 shares in the Company.

 

The Company recognises the importance of cash preservation and being
responsible custodians of our assets, to protect the capital structure of the
Company where possible. Accordingly, the Board has taken measures to reduce
spend and again the directors' renumeration will be taken in equity which
means cash overheads are low. Therefore, with a free carry in the Philippines
too, we don't envisage having to return to the market anytime soon.
Additionally, on granting of licences in South Korea, multiple financing
opportunities should be available; it is just about deciding which is in the
best interest of shareholders.

 

More recently Catalyse Capital Ltd ('Catalyse'), a long running and supportive
shareholder of Bluebird, has agreed to acquire Southern Gold Limited's
('Southern Gold') 122.5 million shares in the Company.  The Board believes
that the share purchase by Catalyse, that recognises the true potential of the
Company's South Korean and Filipino gold projects, will remove a significant
perceived 'overhang' in the trading of Bluebird's shares. Southern Gold's
selling, caused by their strategic shift away from gold and into critical
metals, has undoubtedly affected our share price, and to ameliorate the
Southern Gold situation is good news for Bluebird and will allow investors to
focus on the inherent value of our three-project portfolio.

 

Conclusion

The sum of the parts of the business, three high grade gold projects, an
estimated 1.5m oz Au in South Korea, close to 450,000 oz Au in the Philippines
where we have a free carry to a production decision, defined paths to
production, supportive local partners, a heavily invested management, cash,
and no debt, are not reflected in our current price. We await progress on all
three projects and believe that by the time I report next, we will have full
clarity on our potential as we look to build value and reward shareholders for
their patience.

 

Jonathan Morley-Kirk

Chairman

 

The Interim Financial Report can be downloaded in PDF format from the
following link:

 http://www.rns-pdf.londonstockexchange.com/rns/5355K_1-2023-8-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5355K_1-2023-8-28.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:

Colin
Patterson
Bluebird Merchant Ventures Ltd               Email:
colin@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.

 

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.

 

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.

 

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.

 

 

 

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