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 five
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 end 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.