REG - Bluebird Merchant - Q&A with CEO Colin Patterson

Bluebird Mining VenturesAnnouncement

29/12/2022 07:00

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RNS Number : 1363L  Bluebird Merchant Ventures Limited  29 December 2022

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

29 December 2022

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

Q&A with CEO Colin Patterson

 

Bluebird Merchant Ventures Ltd, a gold company primarily focused on bringing
historic mines back into production is pleased to provide a Q&A with CEO
Colin Patterson regarding its 100% owned, licensed, high grade narrow vein
mining projects, the Kochang Gold and Silver Mine and Gubong Gold Mine in
South Korea and the Batangas Gold Project in the Philippines.

 

Why are you so excited about the Kochang and Gubong Projects?

We own 100% of the Kochang and Gubong historic mines and there is a defined
route to low capex / low cost (estimated sub US$900 per oz) production with a
cumulative target of producing + 75,000oz Au per annum in the medium term and
100,000oz Au in the long term.  Both were closed in the 1970s when the gold
price was sub US$100 per oz, not because of lack of resources, and we believe
that with modern technology they have at least a recoverable c.1.5Moz Au.
First production is targeted for 2023 and we currently have a market cap of
c.£12m.

 

Why are you developing Kochang and Gubong?

Our investment criteria are based on finding historic mines that have the
following characteristics:

·    High grade ore - in our case extractable ore of c.6 g/t Au

·    Excellent data - we have Korea Resources Corporation ('KORES')
drilling and historic mining data which has been positively correlated and
added to by our team to understand the true geological potential of the
projects which have been 3D modelled

·    Resource potential - both projects have multiple ore bodies that are
open at depth and along strike which at Kochang is 2.5km of which 600m between
the two mining areas hasn't been touched. Gubong has a strike potential
greater than 2km and current depth to around 500m below surface, which is
currently 1km on dip

·    Excellent access - sealed roads lead up to both mines

·    Established infrastructure - power is readily available as well as
telecommunications, internet and towns nearby

·    Low capex and high margin - the metallurgy and processing routes are
extremely straight forward

Basically, both Kochang and Gubong fit our model perfectly and have even
exceeded expectations.

 

Do you have the experience to create value for shareholders?

We are not focussed on exploration but execution, with our experience gained
from bringing historic mines back into production and re-engineering poorly
operated mines.  If you look at our team's global track record, I really
believe there is no other group that has had as much experience and success in
this arena in building value and creating substantial return for investors. We
have a 100% success rate.

 

How much have the Board invested to date?

We are totally aligned with the success of BMV, having cumulatively invested
c.US$3.5m.  We are at all times looking to allocate cash into the projects
and keeping corporate overhead to a minimum, something that is often not the
case in the junior space.  We are trying to preserve the capital structure,
which was reflected in our latest raise and are talking to project financing
and resource streaming companies to allow us to fund mine development out of
production.

 

What are the major milestones with regards to bring Kochang into production in
2023?

We are expecting a big year in 2023.  The first step is the granting of the
Temporary Mountain Use Permits ('TMUP') for the projects, which is the final
major legislative step in the path to test production at Kochang.  We already
have a mining extraction licence in place.  As soon as the TMUP is granted,
we go into full operational mode on ground. This involves the finalising of
the excavator/machinery purchases, refurbishing the mine adit/entrance and the
commencement of ore stockpiling for toll treatment to produce proof of concept
gold.  This is expected to take in the region of 2-3 months.  Due to initial
work, metallurgical testing, and the fact that the mine has already produced,
we are confident this will be successful.  We will then head straight into
preparation for full mining and aim to complete the plant construction in 9-12
months targeting an initial c.10,000oz Au per annum.

 

Going forward, cash proceeds will contribute to ramping up gold production at
Kochang and commencing production at Gubong with a medium-term target of
75,000oz Au rising to a potential targeted 100,000oz per annum Au.

 

What is the significance of talking to streaming companies?

We have gold in the ground, a defined path to production and data that
supports our development path.  Once we have finalised the permits and
carried out the test mining/proof of concept, we are into the construction
phase.  A streaming agreement allows for security of construction finance as
the capital invested in mine construction is repaid from the profits of the
producing mine.  This cuts out any financing variability and ensures that we
can build a mine and demonstrate the potential we believe Kochang has without
equity dilution.

 

What are your confidence levels in being able to create value?

As mentioned, our team has delivered on multiple occasions in various
locations worldwide. Having exhaustively looked around the world, the Kochang
and Gubong opportunities came out at the top of the pile.  Our starting
operation at Kochang has the simpler operational map of the two.  We have a
high-level understanding of the geology, the grades, which range between 5.2
g/t to 6.6 g/t gold, and 27.3 g/t to 34.8 g/t silver, the metallurgy and a
supportive and strong infrastructural environment.  We estimate that in
today's terms the existing infrastructure would probably be worth c.US$5m.
Our plan is to initiate narrow vein long hole or Alimak raise mining for in
situ /unmined veins and a combination of scraping and industrial vacuums to
mine the gold bearing mud and broken rock in the early stages, which have
already been tested as having sufficient grade to be highly economic.  This
means both the OPEX and CAPEX being low which translates into high margins and
value for shareholders.

 

What is the significance of the Batangas Gold Project in the Philippines and
what should we look forward to in 2023?

Batangas is a high-grade underground operation in the Philippines that was our
original asset when we listed.  It was written off three years ago when the
previous government essentially became non supportive of mining projects.
However, with the recent political changes, Batangas is very much back in
play.  Lobo is the primary area which already has an Indicated resource 82Koz
Au and 36Koz Au excluding silver credits ready to be mined in the first 18
months of production. Furthermore, beyond the upside at the Lobo target, there
are multiple targets surrounding the project to increase the resources
significantly.  Batangas' potential has been recognised by a local company
with strong credentials and experience in mining in the Philippine -
negotiations are now at an advanced stage having progressed to the final
drafting of the necessary legal agreements.  Given our focus is on South
Korea, we believe a structure whereby the partner earns-in is the most
beneficial for stakeholders. I understand that there is frustration with the
finalisation of the legal documents having not yet been concluded, but I
strongly believe we are nearly there, and we should be getting some positive
news out shortly.

 

How do you differ from other junior exploration / development companies?

BMV is a developer of historic high grade gold mines.  We don't go through
the long and very expensive and uncertain process of exploration to prove up
the potential of a resource, as we already know it's in the ground, and we
believe, in our case, in excess of 1.5Moz Au.  We have huge advantages over
primary exploration to de-risk our projects and increase the chances of
success.  Essentially defined/existing geological data dramatically reduces
exploration cost, refurbishment involves far less capital outlay than a new
development, existing infrastructure is in place, mining economics are more
easily quantifiable and new mining techniques and processing equipment can
process old high-grade ore as well as new ounces optimising the economics.
It basically becomes execution risk and with the team we have, where as a
group we have yet to fail in reopening high grade historically producing
mines, I think genuinely we are a pretty good bet.

 

Are there any plans for a merger or joint venture with another mining company?

We have an asset base that would be attractive to companies that are looking
to increase both their in-ground oz and potential production profile.  We are
actively considering all alternatives to increase shareholder value and if
there is a suitable likeminded mining company that was a good fit to our
development plans, we would certainly evaluate ways that we could move
forward.

 

How do the I value BMV?

I think the best way it to look at the sum of the parts slide in our
presentation
https://bluebirdmv.com/wp-content/uploads/2022/09/BMV-Presentaion-2022.pdf
(https://bluebirdmv.com/wp-content/uploads/2022/09/BMV-Presentaion-2022.pdf)
.  This articulates what we have, i.e. over + 1.5Moz Au, plenty of upside and
a defined path to production of c.10-15Koz Au in the short term and c.75Koz Au
in the medium term.  It also demonstrates the deal with Southern Gold to
acquire 100% of the South Korean projects.  Interestingly, an independent
expert determined that the value of its 50% interest was US$11.05m, valuing
100% at US$22.1m.  With Batangas placed in the mix, I think we can safely say
that there is value in #BMV.L at the current market cap of c.£13m.

 

Why should I invest in Bluebird Merchant Ventures?

We have 2 x low CAPEX, high grade mines with extensive and proven historic
data and easily upgradable resources.  An estimated 1.5Moz Au in ground and a
medium-term production target of 75Koz p.a with the potential to increase to
100Koz Au p.a.  We have a rapid and defined route to production and early
cash flow on projects with excellent infrastructure in a supportive
jurisdiction.  There is further upside from the Batangas high-grade
exploration/development project and a proven execution team and board which
has invested in excess of US$3.5m to date.  Finally, 2023 will be a high
impact news flow heavy year, where we hope our true value will be recognised.

 

Finally, I'd like to thank shareholders for their patience and support, and I
look forward with excitement to the year ahead and wish everyone a Happy New
Year.

 

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 by email: colin@bluebirdmv.com

 

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 + 100,000oz + Au per annum.
Additionally, the Company has the highly prospective Batangas Gold Exploration
Project in the Philippines, which has a resource of 440,000oz Au of which
128,000oz Au is a reserve, and has had c.US$20m invested in it to date.  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 1.5Moz 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 110,000oz of gold and 5.9Moz 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 250m
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 current non JORC estimate 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 flat 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 120 km in total
length which indicates the size of the opportunity. The Korea Resources
Corporation ('KORES') estimated 2.34M tonnes at some 6 g/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 potential resource of +1Moz Au in-situ, plus
an estimated additional 300,000oz Au from satellite ore bodies.

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