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Gold & silver

Bluebird Merchant says prospective lender has completed due diligence at Korean mines

The group said the financing, if successful, is expected to be received by the end of July

Bluebird Merchant Ventures PLC (LON:BMV), the Korea-focused gold group, said due diligence has been completed by its prospective lender and finance terms should be confirmed shortly.

In March, the AIM-listed junior entered into a legally binding agreement with the South Korean lender over a US$5mln loan to be repaid from future gold production.

The financing, if successful, is expected to be received by the end of July, though Bluebird added that while it is optimistic there is still no guarantee it will receive the funding.

If it does, Bluebird expects initial mining to commence in six months and gold production three months later.

The cost of the initial production phase to the joint venture is US$2.2 mln with the company being responsible for 50% of the joint venture costs.

Over a three year period, gold production is expected to rise from 10,000 to 30,000 ounces per annum with this expansion funded from cashflow.

Bluebird added that an exercise of warrants at 1.3p has raised £50,000, which has been used towards the repayment of the £200,000 loan announced on March 26.

The group's share price has almost tripled since news of the loan agreement on March 26 and rose 1% in early trade on Tuesday to 4.05p.

The mining company is re-opening two former working mines in Korea - Kochang and Gubong.

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