Southern Gold (ASX:SAU) JV (AIM:BMV) Bluebird Merchant Ventures – Gubong Gold Project, South Korea

Excellent recovery results from preliminary metallurgical test work for the Gubong Gold Project, South Korea.

• Southern Gold joint venture partner Bluebird Merchant Ventures Ltd has
completed preliminary metallurgical test work at the Gubong project.
• The work has indicated excellent gold recovery using vat leach processes
with potential for further improvements through gravity recovery.
• Desktop study results suggest that a low capital and operating cost processing facility may be possible.

Southern Gold Ltd (“Southern Gold”) advises that its development partner, London Stock Exchange-listed Bluebird Merchant Ventures Ltd (“Bluebird”), has completed its initial metallurgical test work program for the Gubong Gold Project in the Republic
of Korea.

Bluebird is currently investing a total of US$1 million in the advancement of the historic Gubong and Kochang Gold Mines principally by defining a development framework to advance the projects on a capital cost of less than US$10 million. See
Southern Gold ASX release dated 27 March 2017 for further details. @SouthernGoldASX 

Bluebird Metallurgical Testwork

Bluebird metallurgical testing carried out on a Gubong oxide gold ore sample obtained from the upper levels of the old workings used a simple process known as vat leaching that yielded recoveries of more than 90%.

The evaluation considered conventional leach, carbon-in-leach (‘CIL’) and carbon-in-pulp (‘CIP’) processes that are considered suitable for this type of gold mineralisation. The preliminary test work indicated the vat leach system would provide equivalent
recoveries to the other methods but at a lower capital and operating cost.

Vat leaching is a well-known and cost-effective processing route, whereby crushed or uncrushed ore is placed in a series of containment known as vats and irrigated with a solution to recover the desired metal into solution. The process may be highly
mechanised, reducing the cost of labour and there is no requirement for milling (reduction of ore in size to a powder) thereby greatly reducing power consumption. @bluebirdIR 

Southern Gold Managing Director, Mr Simon Mitchell: “While these initial metallurgical test work results are very encouraging it is important to bear in mind that they are of a very preliminary nature. Much work remains to be done to
characterise the Gubong deposit, the ore type and its response to different processing methods, but these first stage results are providing the project with a low-risk pathway to production where capital intensity and operating costs can be kept very
low. Southern Gold looks forward to the Report on Feasibility due in July 2018.”

Bluebird Merchant (AIM:BMV) Colin Patterson Executive Director & Chief Executive Officer: Feb 27, 2018

Southern Gold Managing Director, Mr Simon Mitchell take:

A journey through South Korea to ground-check a number of our regional targets threw up some unexpectedly promising results thanks to some road builders. While on our latest trip, we were driving through a highway cutting when we saw an
orange-brown feature that looked suspiciously like an ore body that the cutting had
It appeared conducive to gold and silver mineralisation, which could mean our already bright prospects in the underexplored Ring of Fire country are much lustrous than we had thought.

Indeed, our closer examination revealed three veins 1m to 3m wide, containing bluish silver sulfosalts and sulphides with the structure. Pending assay results, we expect the epithermal structure to contain high grades of both gold and silver.

Now we know how Lang Hancock felt when he saw the first of the Pilbara’s massive iron ore deposits when he flew over them in 1952 after bad weather forced his plane to fly at low altitude.

But how could anyone miss such an obvious geological feature visible to passing traffic in a country as populous as South Korea?

As with Lang Hancock, the answer is you have to know what to look for: the non-geologist road builders understandably were more concerned about completing the highway than finding bonanza gold grades.

The serendipitous discovery has prompted us to apply for a number of additional permits in the belief the structure reflects much broader mineralisation.

“This has the potential to be a significant discovery,” says our CEO Simon Mitchell.

To deter copycats, he is coy about the exact location of the tenements in question.Mitchell says South Korea hosts some of the best epithermal structures – shallow deposits formed by volcanic activity that are renowned for rich gold and silver grades.

Yet despite being part of the Ring of Fire, South Korea has been sparsely explored for the past three decades.

“Some people in Australia would give their right arm for opportunities like this,” Mitchell says. “Korea is a time capsule. We are looking at things no one has looked at for a long time.”

“In the past 30 years, our understanding of the geology has progressed and we are looking at it with new technical understanding.”

In the meantime, work is continuing apace at our existing South Korean ventures, both in conjunction with our joint venture partners Bluebird Merchant Ventures (BMV) and off our own bat.

In the March quarter, we were granted tenure at our two fully owned exploration projects in the country’s south-west: Aphae and Hampyeong.

A historic mine, Aphae produced 115kg of gold in the 1940s before being mothballed because of low prices. Following mullock samples of up to 6.8 grams a tonne of gold, we expect to test walk-up targets in the next few weeks.

While Aphae is a relatively small project, we have identified the site as having the potential for a mineralised system much bigger than initially thought.

Hampyeong is a newly discovered site with kilometre-scale epithermal quartz veins, including two zones grading up to 13.4g/t gold and 27.7g/t gold. We are currently testing walk-up drill targets in areas that have never been troubled by a
drill bit.
Meanwhile, BMV is actively assessing the viability of reopening our key joint venture projects: the underground Gubong and Kochang mines.

Investors can expect further news this year on these redevelopment plans, expected to be possible at a combined capital cost of less than $US10m.

As the first foreign explorer in South Korea, Southern Gold has the first-mover advantage of close and long-standing relations with key government people. We make a point of employing Korean locals on the ground to stress that we are in the
country for the long run.
As Mitchell says: “We have Korean staff, visibility on the ground and we are doing the work.”



Bluebird Merchant Ventures* (BMV LN) 3.10p, Mkt cap £6.7m – Metallurgical test at Gubong continue to yield >90% gold recoveries
(Bluebird is earning into a 50:50 JV with Southern Gold Ltd at Gubong and Kochang)
BUY – Target Price 12.8p

• Bluebird continues to report good recovery rates on metallurgical test work being done on ore from underground at the Gubong gold mine in South Korea.
• The latest tests involve vat leaching of the ore giving 90% recoveries with gold recovery rates of up to 97%.
• Once the ore is vat leached it may then be used for back-filling areas of the mine or sold as an aggregate material.
• The team are also working on enhanced gravity separation which so far appears to yield gold recoveries of 70% of the gold into just 3% of the rock mass.
• This effectively increased the grade to be processed with the remaining lower grade material stockpiled for later processing.
• Further work is also being done on the old tailings material from the Gubong gold mine with results indicating a >90% recovery rate on a grade of 1.1g/t.
• The cost of processing this material is low given the low cost of recovering the material from the historic tailings.

*SP Angel act as a broker to Bluebird Merchant Ventures


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