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.

  • 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.

  • 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.

  • 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.

  • 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.

  • RISK WARNING & DISCLAIMER

    Bluebird Merchant Ventures is a research client of Align Research. Both Align Research & a Director of Align Research hold an interest in the shares of Bluebird Merchant Ventures. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/ 

    For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Dec 2020E 2021E 2022E 2023E
Revenues ($'000) - 5,950 12,750 22,950
Pre-tax ($'000) (1,950) 2,730 7,230 13,110
EPS (c) (0.52) 0.69 1.83 3.22
Source: Company accounts & Align Research

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