Bluebird Merchant Ventures - Update
Potentially industry leading gold producer in South Korea now on the cusp of a 50,000oz pa net to Bluebird production profile
Bluebird Merchant Ventures is a South Korea-focused resources company which is bringing old gold mines back to life. It is far quicker and cheaper to rehabilitate old gold mines than fund exploration, mines where production was curtailed a couple of decades ago due to a low gold price (under US$140/oz). Recently, Bluebird gained a binding agreement for a US$5M gold streaming style deal to fund reopening its gold mines.
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Gold production set to begin in Q1 2021 with low costs of US$576/oz
Bluebird is expected to commence gold production in 2021 with a swift trajectory to 100,000oz pa (50,000oz pa net to BMV) by 2026. At attractively low operating costs of US$576/oz, this could be a big money spinner. All this in a country which has a highly pro-mining government.
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Fantastic timing as gold is forecast to hit US$3,000 in 18 months
There could be no better time to be a junior about to commence gold mining as experts reckon that the looming recession will be the deepest peak to trough decline in recent memory. Bank of America has recently published a report saying that gold could surge to this all-time high by the end of 2021 due to record bank balance sheets/government fiscal deficits.
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Proven model to smartly move the project up the valuation curve
Colin Patterson (CEO) and Charles Barclay (COO) have developed a cracking business model. In 2010, the Apex Mine (Philippines) was acquired for $7m, reinvigorated by the team and 2 years later received an offer for $180m from a major. Bluebird bears all the hallmarks of being Apex Mark II.
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50% Risked NPV at a 12% discount rate suggests upside of over 200%
We believe our NPV valuation is very conservative and initiate coverage of Bluebird with a target price of 12.63p and a Conviction Buy stance.
Bluebird Merchant Ventures is natural resource mining company. Co. is engaged in the Batangas Gold Project (BGP), where Co. has a farm-in option to acquire up to 50.1%. Co. is also engaged in the copper concentrates trading business, and acquisition and expansion of commodity trading. The BGP is a gold exploration asset located within the Philippines, approximately 120 kilometers south of the capital city of Manila. The BGP is located on the southwestern portion of Luzon Island. The BGP comprises approximately two granted Mineral Production Sharing Agreements covering over 21.8 square kilometers and approximately eight granted exploration permits covering over 137.7 square kilometers.
Align Research is a commissioned research company founded in November 2015 in order to provide the under-served smaller company space with high quality analysis. We have an initial focus on the natural resources sector, in which we see significant opportunities given the current once in a generation bear market, however all undervalued small caps (sub £100m) are considered by our team. Align was founded by industry professionals with decades of experience in the stock markets, headed up by highly qualified individuals from both fund management and analytical backgrounds.
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