First major new gold mine to open in South Korea in over 15 years

Australian gold explorer Southern Gold Ltd’s development partner in South Korea, LSE-listed Bluebird Merchant Ventures Ltd, continues to make good progress at both the Gubong and Kochang gold projects in South Korea. Bluebird completed the report on the feasibility of reopening the Gubong project in late July, as part of its final requirement to the commencement of the JV. Bluebird is the operator of the JV with equity interests being 50% each and future costs shared on that basis. The partners will now advance the Gubong mine by the engagement of all stakeholders over the next four to five months with necessary approvals obtained within this period, including the grant of a ‘Permit to Develop’.

Bluebird is also anticipating completing the pre-conditions for the formation of the Kochang JV by the end of October. Metallurgical test work is currently being undertaken with results and a subsequent report on the feasibility of re-starting gold mining at Kochang submitted to Southern Gold by the end of October.

Southern Gold Managing Director, Simon Mitchell: “We are very pleased with the progress being made by Bluebird and, with the increased activity levels at Gubong over the coming year, we should see the first major new gold mine open in South Korea in over 15 years. Bluebird brings extensive experience and management expertise to these projects and once through the permitting phase we anticipate Gubong will develop rapidly as dewatering progresses.

“At Kochang we anticipate the formation of the second joint venture to be completed in October and a second potential mining front to advance in 2019. I see the Kochang project as potentially complimenting the development proposal at Gubong rather than competing with it and there is a lot of information being extracted from each project that is applicable in our understanding of the other.

“With first gold pour by the end of next year I think the joint venture will surprise investors with the speed of these developments.”

Bluebird expect physical activity to ramp up during this pre-development phase with the emphasis of opening new areas of the Gubong mine over the December quarter. Suitable sites will also be evaluated for the positioning of the process plant and other infrastructure in consultation with the community.

Bluebird is targeting the commencement of gold production in the December quarter of 2019 with gold production levels progressively increasing over a five-year period. Estimated capital costs are significantly lower because most of the development infrastructure is already in place and only requires progressive dewatering as the mine reactivates from the top down. Current early capital cost estimates suggest a total of less than $5 million (on a 100% basis) is required to bring Gubong into production.

At Kochang, significant channel sampling and easy access to the old workings have advanced the project more quickly than Gubong but development timeframes are pending the report on feasibility. Part of this process will involve establishing diamond drilling platforms from underground to enable the estimation of Mineral Resources defined in accordance with the 2012 JORC Code and allow a life of mine schedule and mine design to be completed.

Bluebird has also recently appointed personnel into two key positions. Joseph Lee has been selected as the President of the Joint Venture company. He has spent the last five years in the Korean mining sector managing relations with government, corporate and community stakeholders for Southern Gold Korea and its predecessor companies.

Graeme Fulton, who joined Bluebird in April 2017, has been appointed as General Manager – Gubong Project. He has been involved in the mining industry for more than 30 years including as a Mining Engineer and General Manager having worked in New Zealand, Canada, Malaysia, Papua New Guinea, Vietnam, South Africa and Australia. He has expertise in geological modelling and evaluation, resource and reserve definition, mine design and scheduling, feasibility studies and due diligence.