Bluebird Merchant Ventures Ltd (LON:BMV) has said it is reviewing the economic model for production scenarios at its Gubong and Kochang in South Korea.
In a statement, the company said the project financials were originally determined based on a gold price of US$1,200 per ounce, but with the current gold price in the high US$1,600s, the initial models will be significantly enhanced.
Although they will be not be included in cash flow projections, it added, there are a number of subsidies available to the company which will have a significant impact on capital costs. These include on-mine exploration drilling programs, subsidised capital development for main access ways, productivity initiatives involving facilities and equipment and vertical shaft construction for ventilation.
The company also noted that there are a range of subsidies related to mine support, water discharge, monitoring and safety equipment. In addition to all the subsidies, which range from 40%-60% of direct costs, there is substantial assistance offered for environmental initiatives, it added.
The Gubong mine was once the second-largest producing gold mine in South Korea until its closure in 1971 when gold prices were US$40 per ounce.
The Kochang mine is a gold-silver mine that operated between 1928 and 1975 and produced over five million ounces of silver and 110,000 ounces of gold.