Southern Gold Ltd (ASX:SAU), which holds 200 million shares in Bluebird Merchant Ventures Ltd (LSE:BMV), welcomes news that its investment is funded to advance to gold production in South Korea this year following an announcement to the London Stock Exchange last week.
BMV has secured a comprehensive funding package allowing it to advance to production in 2022 at the Kochang project, with its board agreeing to a 12-month commitment to lock in their respective shareholdings.
Show of support with standstill clause
Southern Gold, the company's largest shareholder, has demonstrated its support for the new funding package by indicating its agreement to a lock-in of its remaining shareholding in BMV for a minimum of 12 months. SAU’s board has also agreed to a lock-in of their respective shareholdings on the same terms, demonstrating their belief in the project economics.
Under the 12-month standstill clause, SAU will hold on to 150 million of its shares in BMV and has agreed to sell 50 million shares for approximately A$870,000 as a condition of the new investment package.
Southern Gold chairman Greg Boulton said: “This is exciting news for us as the major shareholder in BMV. The funding package and other action taken by BMV directors brings the Kochang project to realisation with on groundwork commencing in the next few months.
“Our focus remains on exploration for gold in South Korea with 17 staff and contractors working on highly prospective opportunities. We congratulate the BMV directors (on being) able to reignite mining plans after a very difficult COVID environment and the lack of funding in the past.”
BMV has also refinanced its existing debt on attractive terms, including interest at a fixed rate of 10%, with the loan repayable in a year’s time.
The search is now on for a UK-based executive who will be responsible for promoting the company and engaging with shareholders as it progresses to production.
Ushering in production
This new funding package will, subject to appropriate in-country progress in South Korea and share price performance, result in fresh equity subscriptions at 2 pence per share on the LSE, together with supplementary debt funding, and usher in production at the Kochang gold and silver mine.
BMV is updating the schedule of works, costings and timetable, with management planning an imminent visit to South Korea to kick off works following the relaxation of COVID travel restrictions.
Bluebird CEO Colin Patterson said: "After a lengthy hiatus due to the global pandemic which has caused substantial delays to our plans, Bluebird is now finally ready for action on the ground at its two 100%-owned projects.
“We are on the cusp of the beginning of a complete reboot of Bluebird's Korean opportunities at the right time in the gold price cycle given the global inflation outlook, supply restrictions and growing geopolitical tensions. Securing this additional financing package is the catalyst to propel us forward."