ASX listed gold producer Southern Gold says that JV partner Bluebird Merchant Ventures has completed very positive preliminary metallurgical test work on the Kochang gold project, located in South Korea.
Using simple gravity separation techniques on ore composites of vein materials from the historical underground mine, Bluebird was able to recover up to 80% of the gold and around 60% of the silver metal at a coarse grind size.
The results are considered encouraging because the processing involved no beneficiation or enhancement through regrinding and recycling.
According to management, follow up test work will look at refining the gravity separation approach, although results to date suggest that the Kochang ores will not require a complicated extraction technique, indicating a low CAPEX option for a processing facility on-site.
The results mean that the partners could potentially look forward to generating an early cash flow from the proposed Kochang operation, based on gravity recoveries only, rather than a high CAPEX cyanidation leaching circuit being required up front.
Southern Gold Managing Director Simon Mitchell said: “This result continues to highlight the straightforward nature of the Kochang project metallurgy and the potential for achieving high recoveries from a small, low capital-intensive mining operation.”
“While these results from (Bluebird) are somewhat preliminary and yet to be definitively characterised in the context of a project development scenario, they are nevertheless very encouraging and strongly reinforce the belief that the lower capital cost development scenario can be delivered and delivered relatively quickly.”
The company said that the farm-in and JV agreement with Bluebird is close to being formalised for Kochang, with the final metallurgical testing and delivery of a report into the feasibility of restarting the operation from Bluebird nearing completion.
Once all final conditions have been met, the costs of the operation will then be shared equally between Southern Gold and Bluebird.
Southern Gold recently provided an insight into the initial potential of its Kochang underground project, outlining an exploration target of between 500,000 and 700,000 tonnes with a grade range between 5g/t and 7g/t gold and 27g/t to 35g/t silver.
3D modelling of the mineralised vein systems at the historic, mothballed mine, highlighted multiple quartz vein sets with a continuity of more than 900 metres of strike.
Back in May, Southern Gold reported significant gold and silver assays from a due diligence underground channel sampling program over at least 1.3km of quartz veining and breccias for the Kochang project.
The best channel samples returned gold grades at more than 2 ounces to the tonne, including 0.24m @ 65.8g/t gold and 170g/t silver and 0.18m @ 69.2g/t gold and 80g/t silver.
The generation of the new exploration target for Kochang came after an exhaustive review of historical plans, mine production statistics and sample and drilling data compiled by Bluebird.
Southern Gold says that the main ore system is still open along strike at Kochang, with the location of mapped veins often just closed off at the extremities of existing underground workings.
The historical mine workings only extend a short distance underground and there is plenty of blue sky potential at further depth the company said.
The JV partners are also working towards the redevelopment of the Gubong mine – located 140km to the northwest of Kochang – with Bluebird acting as the operator at both mines.
The larger Gubong mine project is already under a 50/50 JV agreement between the partners and is also an historical, abandoned underground gold and silver mine.
