Southern Gold’s London Stock Exchange-listed partner tasked with reviving the Kochang underground gold mine in South Korea has reported some spectacular gold grades from broken rock left behind when the mine shut back in 1975.
Bluebird Merchant Ventures, an Asian-focused mining expert that is earning a 50% interest in Kochang, reported grades of up to 17.4 g/t gold in grab samples from 38 locations over 1,300 metres of the old mine’s two main levels.
The average grade across all 3-5kg samples collected, made without any selectivity, was an impressive average of 2.86 g/t gold and exceeded the partners expectations.
The decision by the historic operator to drill, blast and then walk away from ore with these kinds of grades is confounding in today’s market, however when the mine closed, the gold price was only US$140 an ounce.
Whatever the exact circumstances behind that decision in 1975, Southern Gold and Bluebird look set to benefit from it some four decades later. Bluebird highlighted the benefit of having the gold ore already mined, saying the total operating costs to process the broken rock could be as low as just US$60/tonne.
The results from the latest sampling program show Kochang is a perfect fit for Southern Gold’s organic funding model, which is essentially about making sure that projects can pay their own way in underwriting the company’s expansion.
Southern already has an ongoing revenue stream from the underground Cannon Gold Mine east of Kalgoorlie, which helped to bankroll the expansion into South Korea in 2016.
Bluebird also reported results from what is effectively an ore sorting trial in South Korea. The company went back to eight of the sample locations, which had an average grade of only 1.69 g/t and selectively picked or “sorted” the ore. This produced a three-fold increase in the average grade to 5.12 g/t.
This raises some tantalising possibilities, given the growing sophistication of automated ore sorting techniques that use x-rays and lasers to achieve the same kind of results as hand picking.
Bluebird’s COO, Charles Barclay, said: “We are delighted with results from this initial program at Kochang and the grades that we have seen. Although the engineers and geologists are yet to accurately determine the tonnes of broken rock/ore that is remaining, it is worth noting that for every 1,000 tonnes of sorted rock delivered for metallurgical treatment at a conservative grade of say 4g/t gold, recovery of 85% and total operating cost of approximately $60/t, the Company could expect to make an operating profit of around US$750 per ounce of gold recovered at a gold price of US$1300/oz.
“The current economic climate for gold mining, combined with our higher than expected grades, provides us with great confidence as we progress further with our underground sampling program. We look forward to providing further updates in due course.”
A new market update is expected next week from the underground sampling of high grade gold veins at Kochang.
Kochang is one of three gold projects in which Bluebird is earning up to a 50% stake from Southern Gold, with the largest being the historical Gubong mine. The UK company is expected to deliver a feasibility study by July 2018 on re-opening Gubong targeting a low capital cost of less than US$10 million.
