Bluebird has completed a report on the feasibility of re-opening the historical mine which confirms low upfront capital costs.
Southern Gold managing director Simon Mitchell said: “The report on the feasibility of re-opening Gubong is a substantive document and a lot of work has gone into its development.
“I appreciate the hard work undertaken here by the Bluebird team and I think this document will serve as a solid foundation for future work as we build our knowledge base in each area.
“While the report has not been completed to a JORC standard, it has been prepared by highly experienced technical personnel very familiar with the mine re-development scenario at Gubong.”
Joint venture to be formed
The report is the required catalyst for the formation of a formal 50:50 joint venture between Southern Gold and Bluebird over the Gubong project with the latter to be the JV operator.
In the coming months, Southern Gold will establish a Korean-based operating entity.
Bluebird is confident that the mooted re-opening of the old gold mine will facilitate substantial immediate mining development with access to initial low-cost ore that can be cost-effectively and quickly processed after a small scalable trial plant has been established.
BMV has indicated that the project could advance to production late in 2019 and look to then progressively expand production over the next five years.
Mitchell said: “From my perspective, the report confirms two key things, firstly, that the project can be developed very quickly and that, secondly, the low capital intensity of the redevelopment may be even lower than first targeted.
“The report provides confidence that the Gubong mine can be re-opened and recommissioned, with production late in 2019.”
Gubong mine closed in 1971 predominantly due to the low gold price at the time combined with the mine getting deeper, low capex investment in infrastructure and the intensive manual mining method.
As quoted in Korean Government reports, the mine had a historical production of 430,000 ounces of gold and 110,000 ounces of silver over an intermittent production period from 1926-1971.