Southern Gold, Bluebird granted permit for first major new mine in South Korea in over 15 years

Google Earth image drapped over the historical Gubong underground mine workings. (Image courtesy of Southern Gold.)

Australian explorer Southern Gold (ASX: SAU) and Asia-focused Bluebird Merchant Ventures (LON: BMW) reached on Wednesday a key milestone after the South Korean government granted the joint venture (JV) partners a permit to develop their Gubong gold mine.

The project, south of Seoul, will become the first major new gold operation to open in the country in over 15 years.

The last time South Korea granted a development license was to Ivanhoe Mines, in the late 1990s, for its Eunsan gold deposit.

Project consists of a number of historical underground mines within about 20km of each other, including the Gubong mine area itself, which was South Korea’s second largest gold operation until 1971, when it closed.

“Compared to other regulatory systems, such as we see in Australia, this is an extremely rapid approval process, taking less than one year since its initial submission,” Southern Gold managing director, Simon Mitchell, said in a statement.

“This bodes well to other future potential developments that will be in the company’s pipeline down the track,” he noted.

The project consists of a number of historical underground mines within about 20km of each other, including the Gubong mine area itself. That operation was South Korea’s largest gold producer from 1930-1943, during the Japanese occupation.

First production at the reopened Gubon is expected in 2020,

Southern Gold and Bluebird each hold a 50% equity interest in Singaporean company Gubong Project JV Co Ltd which in turn holds 100% of South Korean company Gubong Project Co Ltd.

A similar corporate JV arrangement is in place for the Kochang project, which is still in the approval process for its permit to develop.

Rising gold prices are making it much more attractive to reopen old mines instead of exploring for, and developing, new ones.

Gubon closed in 1971, when gold was trading at $40 an ounce. Kochang ended operations in 1975, when gold was at $140 an ounce. The metal was trading at $1,494 on Thursday early afternoon, up 16% this year after rising for the past four months.

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