Southern Gold’s bid to reopen a number of high-grade gold mines in South Korea has received a major boost, with early investigation by an international joint venture partner providing some very encouraging results.
The ASX listed gold explorer and producer owns a number of historic mines in South Korea that were abandoned in the 1970s when the gold price ranged from just US$40 up to US$140 an ounce.
The company is farming out a 50% stake in three projects to London-listed Bluebird Merchant Ventures, a specialist in Asian resource development.
The most recent addition to the joint venture is the Kochang underground mine, about 130kms southeast of the much larger Gubong project in the west of the Korean Peninsula.
The Kochang deal was sealed just five weeks ago and Bluebird is already making rapid progress. In an update to the London Stock Exchange this week, the company said it had dewatered the mine and gained access to 3km of tunnels, nearly half of which were ore drives.
Bluebird has also been able to access three stoping horizons.
The company statement said: “At Kochang progress in exploring the mine has been swift and the findings extremely encouraging. This can be attributed to the predominantly excellent state that the excavations are in after 38 years since the mine closed.”
“The team have also seen a considerable quantity of broken ore that had been left behind prior to closure. There are at least three separate veins with stoping on each one. Many ore pillars have also been observed.”
"Survey work with detailed mapping and sampling has commenced and will enable the company to quantify the tonnage available for processing. The samples will provide the material to carry out metallurgical test work in order to define a process flow for recovery.”
Bluebird is also continuing work at the Gubong project, where an independent report published in January found there was potentially more than 1 million ounces of gold still to be mined.
The company is spending US$500,000 on each project and will produce reports in the September quarter on the feasibility of reopening the Gubong and Kochang mines. The capex target for both projects is just US$10 million.
Bluebird CEO, Colin Patterson, said: “I am pleased with the rapid progress at Kochang and the excellent ground conditions that we are seeing inside the mine. As we start to quantify the broken ore left behind as well undertake metallurgical work the economics of this cheap resource will become clear.
“At Gubong, we continue to make excellent progress along the path towards reopening the mine. Based on what we have seen thus far I am confident that both Gubong and Kochang have the potential to be profitable mining operations.”
Southern Gold is in an enviable position as it is already a dividend-paying gold producer via its stake in the Cannon gold mine near Kalgoorlie.
It has $4.5 million cash in the bank and is free carried through much of the work in South Korea by Bluebird.
