Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
1
GROUP INFORMATION
Directors
Jonathan Morley-Kirk
Non-Executive Chairman
Clive Sinclair-Poulton
Non-Executive Director
Carli Human
BVI Resident Director
Charles Barclay
Executive Director
Aidan Bishop
Executive Director
Colin Patterson
Executive Director
Registered
Office
Harney Westwood & Riegels
Craigmuir Chambers
PO Box 71, Road Town
Tortola VG1110
Auditor
PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
UK
Lawyers
Legal Insight LLC
401, Nonhyeon-dong, M building
612 Nonhyeon-ro
Gangnam-gu, Seoul
South Korea
Registrars
Computershare Investor Services (BVI) Limited
Woodbourne Hall, Road Town
Tortola
British Virgin Islands
Depositary
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS13 8AE
UK
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
2
CONTENTS
1. Chairman’s Report
3
2. Chief Executive’s Comment
4
3. Directors’ Report
6
4. Strategic Report
4.1
Business Model and Strategy
15
4.2
South Korea Gold Project
15
4.3
Philippines Overview – Batangas Gold Project
17
4.4
Funding
18
5. Financial Statements
5.1
Independent Auditor’s Report to the Members of the Company
20
5.2
Consolidated Income Statement
25
5.3
Consolidated Statement of Comprehensive Income
26
5.4
Consolidated Statement of Financial Position
27
5.5
Consolidated Statement of Changes in Equity
28
5.6
Consolidated Cash Flow Statement
29
5.7
Notes to the Financial Statements
30
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
3
1. CHAIRMAN’S REPORT
Since my last report we have continued to make headway in all three of our projects, the Kochang
Gold and Silver Mine (“Kochang”) and Gubong Gold Mine (“Gubong”) in South Korea, and the
Batangas Gold Project (“Batangas”) in the Philippines.
In South Korea, the lifting of pandemic restrictions was most welcome and with normality returning,
our main aim during the period was to get back in country and progress our plans of bringing the
high grade Kochang and Gubong historic mines back into production. We immediately re-engaged
with all stakeholders and then focused largely on securing the outstanding permits, licences, and
other legal requirements to meet on-going local regulations for the two projects. Extraction permits
at both mines have been secured and applications made for Mountain Temporary Use Permits
(“MTUPs”) to allow commencement of surface work at the two historic mines. The value of the two
projects was highlighted in the publication of a Scoping Study which included a post-tax NPV of USD
181 million, free cash of USD 50 million per annum, an IRR of 111% and a USD 630 per oz All in
Sustaining Cost (“AISC”), giving us a huge amount of confidence in the economic potential our
projects. Interestingly this was conducted on a USD 1,750 per oz gold price.
The Company’s latest announcement re the requirement for further information for the grantin of
the MTUP at Kochang was frustrating for the Board, in particular as we were advised by our lawyers
and permitting consultants that all legal requirements had been covered in our c.800-page
submission. The request for greater detail with regards to measures to reduce the risk of
environmental impact and to conduct a successful wider community consultation will be carried out
and whilst there can obviously be no guarantee (refer note 23 of the audited financial statements),
the Company remains expectant that the MTUPs will be granted. Due to the requests for further
information at Kochang, we have now sought an extension of the MTUP application in process at
Gubong to ensure that the above issues are taken into account.
In the Philippines we signed an agreement with a large local company, whose owners have decades
of experience in mining, to develop the high grade Batangas project (refer note 23 of the audited
financial statements). We had previously written down the Project due to the previous government’s
stance on mining; but with the changing of government, resource development is very much in
vogue. The JV covers the entire Batangas Project area, which has a total JORC compliant resource of
440,000 ounces, including a maiden ore reserve of 128,000 ounces (including silver credits).
Exploration expenditure to the tune of c.USD 20 million has been invested. The community
consultation is already underway, and we anticipate further news on this and an update from our
partners re. progress.
The Company successfully raised GBP 230,000 in the year ended 2022 and a further GBP 1,215,000
through our newly appointed broker SI Capital (refer note 23 of the audited financial statements).
Together with this and the good progress made re-establishing the projects, the Company is in a
better place than at the end of 2021. However, a great deal needs to be done during 2023 to make
up for the lost time and achieving our objectives of advancing our South Korean and Philippine
projects.
Jonathan Morley-Kirk
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
4
Chairman
25 April 2023
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
5
2. CHIEF EXECUTIVE’S COMMENT
The Bluebird Merchant Ventures Ltd (“BMV”) team has made progress in getting the South Korean
projects back on track. We have been busy with all aspects of the projects needed to get them to the
next stage of development.
We remain focussed on bringing Kochang and Gubong back into production, which cumulatively
have an estimated +1.5Moz gold resource. Ahead of bringing Gubong, the larger of the two mines,
back into production with a medium-term target of c.60Koz Au pa, our aim has been to undertake
relatively inexpensive proof-of-concept production at Kochang. This is aimed at providing confidence
in the key parameters of the mining operation including grade, recovery, production and processing,
and community and government support. Once complete, the plan remains for production to be
ramped up to an initial 5Koz Au pa and 12Koz Au pa thereafter. The Scoping underpinned our
confidence in the projects and increased our understanding of their viability. The team has
successfully brought numerous historic mines back into production which is where our expertise lies.
Indeed, I maintain that there isn’t a better team in the world to achieve our objectives.
The operational team has made numerous trips to South Korea in order to facilitate the
advancement of the Projects and conducted resource modelling and desk stop studies to better
understand the project parameters. The immediate community at Kochang has been highly
supportive and eager for us to commence work as soon as the necessary permits are finalised as
they recognise the benefits the development of a mine will bring.
As mentioned by the Chairman, our next step is to get the TMUPs granted for both mines and
remain expectant of the necessary permissions to allow us to commence construction. As Kochang is
the simpler of the two projects we made the strategic decision to focus on getting this project into
production first before tackling the larger and more lucrative Gubong, which is ultimately projected
to be “the company maker”. We remain committed to the potential of both projects.
Beyond South Korea, the main exciting new development this year was the resurrection of Batangas,
which had been previously written to zero due to uncertain policy and sentiment towards mining.
With the election of the new government there is renewed support for mining. To this end we
negotiated a farm-in agreement with a Philippine family company who can earn a 60% interest upon
bringing the project to a production decision along with securing all the key permissions in order to
progress to production (refer note 23 of the audited financial statements). They understand the
governmental dynamics and we believe that this will contribute significantly to the development
potential of Batangas.
The Batangas project area contains a current total JORC compliant resource of 440,000 ounces,
including a maiden ore reserve of 128,000 ounces (including silver credits). The main focus of the JV
is Lobo, which is a highly prospective underground mining operation. The mineral resources are
associated with a linear, steeply dipping, epithermal lode with high grade 'shoots' of mineralisation,
similar to Medusa Mining's Philippine project. It has an initial Probable JORC Compliant Ore Reserves
of 171,000 tons at 6.6 g/t for 36,000 ounces of gold excluding silver credits based primarily on the
South West Breccia ('SWB') area of the licences, which can be mined in the first 18 months of any
operation. There is an Indicated resource of 82,000 oz au that is perceived as easily convertible.
Additionally, the Lobo licence area has multiple epithermal and high-grade targets already identified
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
6
for resource expansion with 14km of identified mineralised structures. This translates into excellent
resource upgrade potential which our JV partners have already recognised. The team will remain
highly supportive and will assist where possible in bringing the project to fruition.
Finally, I wish to thank our team who have helped to reduce the draw down on funds by making
huge sacrifices and taking little or no renumeration for the work they have done to achieve our
objectives. I’d also like to thank shareholders for their support and all our advisors as we look to
develop our portfolio for the benefit of all stakeholders.
Colin Patterson
Chief Executive Officer
25 April 2023
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
7
3. DIRECTORS’ REPORT
The Directors present their report together with the audited financial statements of the Group for
the year ended 31 December 2022.
The Company
The Company’s principal activity is to bring old gold mines back to life by using the management
team’s global experience in re-opening old mines to unlock hidden value.
The Company’s Ordinary Shares were admitted to listing on the London Stock Exchange in 2016, on
the Official List pursuant to Chapters 14 of the Listing Rules, which sets out the requirements for the
Standard Listing segment of the Main Market of the London Stock Exchange.
The Group
The Group consists of the companies and ownership structure as outlined in note 24 of the audited
financial statements.
Results and Dividends
The Company has set out its results in the audited financial statements, and notes, and show a loss
of USD 1,485,806 for the year (year to 31 December 2021 showed a show a profit of USD 7,530,988
for the year with an operating loss of USD 770,099 exclusive of the gain on acquisition of joint
ventures of USD 8,301,087 – refer note 12 of the audited financial statements).
The Directors do not recommend the payment of a dividend for the year ended 31 December 2022
(2021: Nil).
Future Developments
The Group’s future developments are outlined in the Strategic Report section.
Principal Risks and Uncertainties
The Group operates in an uncertain environment and is subject to a number of risk factors. The
Directors consider the following risk factors to be of particular relevance to the Group’s activities
although it should be noted that this list is not exhaustive and that other risk factors not presently
known or currently deemed immaterial may apply.
Detailed Development, Mining and other risks for the South Korean projects are detailed from page
25 of the June 2019 Prospectus (refer http://www.bluebirdmv.com/wp-content/uploads/bsk-pdf-
manager/254922_Project_Olympic_-_Prospectus_FINAL_13-06-2019_14.pdf).
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
8
South Korea Projects
Whilst the Company has received extraction permits to mine Gubong and Kochang, the Company
requires Mountain Temporary Use Permits (MTUPs) in order to allow development and mining.
Whilst the Company is expectant that the MTUPs will be granted, there can be no guarantee that
they will. Should the MTUPs not be granted then the Company will have various legal remedies that
it can pursue but the outcome cannot be guaranteed.
Batangas Project
The Company has entered into an agreement with a local Philippine company, with a view to
represent the mine with the potential for underground mining and to secure the key permissions
necessary to enable production. Whilst there is renewed optimism around mining in the Philippines
there can be no guarantee that the permissions will be received. Should the permissions not be
received the Company will review appeal options and legal remedies with its local partner.
Key Personnel
The Company has a small team in South Korea. Loss of key personnel could negatively impact the
Group and cause further delays in progressing the projects. The Company will look to recruit and
train capable successors as part of the Korean project team.
Inflation/High Energy Costs
High energy costs and/or high inflation could impact on future production costs and thus
profitability of the South Korean projects and any future projects. The Company will mitigate this risk
through continuing to actively monitor cash flows and ensure that only value adding expenditure is
incurred.
Gold Price
Mining projects rely on being able to operate where the cost of extraction and processing of ore is
less than the gold price. Although the project economics in South Korea and Batangas are expected
to achieve significant profit margin any significant fall in the gold price may negatively impact the
project. The Company will look to mitigate any potential downside through a review of hedging
options once the projects are in production.
Funding Risk
Whilst the Company has funding to progress its projects, further funding will be required in the
future in order to scale up production. Whilst the Directors are confident that further funding will be
available when required, there can be no guarantee of such. The Directors will focus on effective
cash flow management to allow the Company to meet on-going commitments until this funding can
be secured.
COVID-19
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
9
The easing of COVID-19 restrictions will facilitate the Group’s planned development programmes in
South Korea 2023 – however, challenges will remain for some time due to on-going logistical
challenges and supply chain constraints impacting the availability of mining personnel, equipment
and materials. The Company will look to lock-in medium term contracts to mitigate against supply
chain risks as the projects move into the construction and production phases.
Going Concern
At the year end the Group had net current liabilities of USD 932,821, exclusive of fair value liabilities
of USD 612,829 in the year (2021, USD 776,886 exclusive of USD 285,888 of non-cash/fair value
liabilities). After year end, the Company settled USD 648,158 of loans outstanding at 31 December
2022 and announced receiving funding of GBP 1,215,000 (refer note 23 of the audited financial
statements).
Based on the current plans and financial projections, the Group’s current cash resources and funding
available are sufficient to enable the Group to meet its recurring commitments for the following
twelve months, but not its forecasted expenditure which includes notable costs to progress the
South Korean projects. Whilst the directors acknowledge that the group will need to raise further
finance to meet its forecasted expenditure over the next 12 months, the Company has received a
debt financing offer which would cover the projected capital costs, however the Company will only
consider this offer closer to the time that the funds are required, and are thereby confident that
sufficient funding will be able to be raised.
The Directors continue to adopt the going concern basis of accounting in preparing the financial
statements but note that the auditors make reference to going concern by way of a material
uncertainty over the ability of the Company and the Group to fund the recurring and projected
expenditure (refer note 2 of the audited financial statements).
Key Performance Indicators
Permitting
Achieving the MTUPs at Kochang and Gubong. Whilst this was not achieved in the year ended 31
December 2022 (refer note 23 of the audited financial statements), the Directors are expectant of
them being granted.
‘Proof of Concept’ at Kochang.
Upon receipt of the MTUP at Kochang the Company intends to commence a ‘proof of concept’ at
Kochang which entails producing a very limited amount of gold to demonstrate that the mine can be
successfully reopened and demonstrate that the grades and recovery are within the expected range
used in the inhouse feasibility study.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
10
Company Directors
Position
Appointed
Audit
Committee
Remuneration
Committee
Health &
Safety
Committee
J. Morley-Kirk
Non-Exec. Chairman
Mar-14
Chair
Member
Member
C. Sinclair-Poulton
Non-Exec. Director
Sep-15
Member
Chair
Chair
C. Human*
BVI Resident
Director
Aug-22
-
-
-
C. Barclay
Executive
Mar-17
-
-
Member
A. Bishop
Executive
Mar-14
-
-
-
C. Patterson
Executive
Sep-15
-
-
-
* Appointed from Harneys to assist the Company with the difficulties of opening a BVI bank account
Shareholdings and warrants held by Directors and other Persons Discharging Managerial
Responsibilities (“PDMR”) are outlined in notes 20 and 16 respectively of the audited financial
statements.
Auditors
The Board appointed PKF Littlejohn LLP as auditors of the Company in August 2020. They have
expressed their willingness to continue in office and a resolution to reappoint them will be proposed
at the Annual General Meeting.
Internal Control
The Directors acknowledge they are responsible for the Group’s system of internal control and for
reviewing the effectiveness of these systems. The risk management process and systems of internal
control are designed to manage rather than eliminate the risk of the Group failing to achieve its
strategic objectives. It should be recognised that such systems can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Group has well established procedures which are considered adequate given the size, and stage,
of the business.
The Group is at an early stage in its development and directors and senior management are involved
directly in approving all significant investment and expenditure decisions across the Group.
Audit Committee
The Audit Committee, which comprises two Non- Executive Directors, Jonathan Morley-Kirk and
Clive Sinclair-Poulton, is responsible for ensuring that the financial performance of the Group is
properly monitored and reported upon and that any such reports are understood by the Board. The
Committee meets formally at least twice each year.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
11
Health, Safety and Environment Committee
The Group is committed to providing a safe, healthy and sustainable environment for all its
employees, contractors, visitors and neighbours. The Group strives actively to identify and manage
the potential direct and indirect effects of all its activities and reviews this at Board level through its
HS&E Committee.
Remuneration Committee
The remuneration of the Executive Directors is fixed by the Remuneration Committee, which
comprises two Non-Executive Directors and is chaired by Clive Sinclair-Poulton. The Remuneration
Committee is responsible for reviewing and determining the Company policy on executive
remuneration and the allocation of long-term incentives to executives and employees. The
remuneration of Non-Executive Directors is determined by the Board. In setting remuneration levels,
the Group seeks to provide appropriate reward for the skill and time commitment required in order
to retain the right caliber of Director at an appropriate cost to the Group.
The remuneration paid to, or receivable by, Directors in respect of 2022 and 2021 in relation to the
period of their appointment as Director are:
Payable in Cash (USD)
Payable in Equity (USD)
in the year
to 31-Dec-22
in the year
to 31-Dec-21
in the year
to 31-Dec-22
in the year
to 31-Dec-21
Executive Directors
C. Barclay
20,790
-
50,666
48,579
A. Bishop*
9,344
-
21,822
34,145
C. Patterson*
-
-
77,969
40,649
Non-Executive Directors
J. Morley-Kirk
4,109
-
29,883
37,767
C. Sinclair-Poulton*
6,767
-
17,707
27,192
Total
41,010
-
198,047
188,332
* Equity is issued to an associated party
All Directors remuneration relates to short-term employee benefits. The amounts noted as payable
in equity to September 2021 were issued as equity during the December 2021 Prospectus and
amounts from October 2021 to December 2022 are held as Unissued Share Capital at year-end (refer
note 20 of the audited financial statements).
Share Capital
At 31 December 2022 the issued share capital of the Company stood at 651,615,042 – with
29,299,254 new shares having been issued during the year (as outlined in note 20 of the audited
financial statements).
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
12
Substantial Shareholders
Substantial shareholders are outlined in note 20 of the audited financial statements.
Director and PDMR shareholdings are outlined in note 20 of the audited financial statements.
Employees
The Group has a policy of equal opportunities throughout the organisation. Employees benefit from
regular communication both informally and formally regarding Company issues.
Directors Indemnity Insurance
The Company has purchased Directors and Officers insurance cover on behalf of the Directors
indemnifying them against certain liabilities which may be incurred by them in relation to the Group.
Sustainability Report
Overview
The Board of Directors is committed to producing gold with a leading Environment, Social and
Governance approach (“ESG”) embedded throughout the process, from sustainable extraction and
safe, clean water and waste disposal to enhancing the opportunities for the communities in which
we operate.
The Board of Directors will enhance reporting, including compliance with the 4 key pillars of the
Taskforce on Climate-related Financial Disclosures’ recommendations (being, Governance, Strategy,
Risk Management and Metrics and Targets), as the Korean projects are brought into production
when the climate-related impacts of the Group’s activities will be able to be effectively monitored.
In the interim, the Company’s ESG commitments are as outlined below and the Board of Directors
are pleased to note that there have been no reported issued of non-compliance in 2022 or to the
date of this Report.
Environmental
The Board of Directors recognises the importance of understanding the environmental impact of our
activities and will operate at the highest possible environmental standards across all aspects of our
business.
Commitments:
Limit our own carbon emissions in our operations through, wherever possible, the use of
renewable energy as our primary source of energy and aiming for low carbon emission sources of
energy for low carbon emissions
Meet the highest environmental standards, ensuring biodiversity and ecosystems (land and
water) are protected from extraction to transportation
Manage our water usage, mitigate against loss of water and ensure the effective treatment of
hazardous waste
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
13
Report transparently and keep all our stakeholders updated on our performance
Social
The Company will aim to play a positive social role in all the locations we operate in and will provide
a safe and secure operational environment for all those who work with us.
Commitments:
Create trusted relationships with local people where we will listen to and address their concerns
Invest directly into the local economy
Support our colleagues to create an inclusive and safe work environment
Ensure effective anti-corruption policies are maintained and embraced by all elements of our
team and supply chain
Corporate Governance
The Company is incorporated in the British Virgin Islands. The Company is not required to comply
with the provisions of the UK Corporate Governance Code. The Directors have responsibility for the
overall corporate governance of the Company and recognise the need for appropriate standards of
behaviour and accountability.
The Board will ensure that a sound corporate governance policy, involving a transparent set of
procedures, is embraced to ensure that the needs of all the Company’s stakeholders, internal and
external, are taken into account.
The Directors are committed to the principles underlying best practice in corporate governance and
have regard to certain principles outlined in the UK Corporate Governance Code to the extent they
considered appropriate for the Company given its size, early stage of operations and complexities.
Health & Safety
Commitment:
We will identify, evaluate and manage hazards and risks associated with our operations and will
promote a safe working environment for all involved
Events after the Reporting Date
The events after 31 December 2022 are detailed in note 23 of the audited financial statements.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable laws and regulations. The Directors have prepared the financial
statements for each financial period which present fairly the state of affairs of the Group and the
profit or loss of the Group for that period.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
14
The Directors have chosen to use the UK-adopted International Accounting Standards (“UK-adopted
IAS”) in preparing the Group’s financial statements.
International Accounting Standard 1 requires that financial statements present fairly for each
financial period the company’s financial position, financial performance and cash flows. This requires
the faithful presentation of the effects of transactions, other events and conditions in accordance
with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the
International Accounting Standards Board’s “Framework for the preparation and presentation of
financial statements”. In virtually all circumstances, a fair presentation will be achieved by
compliance with all applicable International Financial Reporting Standards.
A fair presentation also requires the Directors to:
select consistently and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
make judgements and accounting estimates that are reasonable and prudent;
provide additional disclosures when compliance with the specific requirements in UK-adopted IAS
is insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial performance;
state that the Group has complied with UK-adopted IAS, subject to any material departures
disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the company will continue in business.
The Directors are also required to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on the Stock Exchange.
The Directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Group, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of fraud and other irregularities and for the
preparation of financial statements.
Financial information is published on the Group’s website. The maintenance and integrity of this
website is the responsibility of the Directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no responsibility for any
changes that may occur to the financial statements after they are presented initially on the web-site.
Legislation in the British Virgin Islands governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ Responsibilities Pursuant to DTR4
In compliance with the Listing Rules of the London Stock Exchange, the Directors confirm to the best
of their knowledge:
The Group financial statements have been prepared in accordance with UK-adopted IAS and give
a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
15
The annual report includes a fair review of the development and performance of the business
and the financial position of the Group, together with a description of the principal risks and
uncertainties that they face.
This Directors’ Report was approved by the Board of Directors on 25 April 2023 and is signed on its
behalf.
By Order of the Board
Jonathan Morley-Kirk
Chairman
25 April 2023
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
16
4. STRATEGIC REPORT
The Directors have voluntarily disclosed the Strategic Report for the year ended 31 December 2022
although it is not required under BVI regulations.
4.1 Business Model and Strategy
The Group is a project developer and targets Asian mining projects that may be brought into
production within 24 to 30 months of funding and the securing of all mining permits. Many
opportunities are presented in the form of old underground gold mines which can be re-opened, a
process with which the Company’s Management team has substantial experience (refer
https://bluebirdmv.com/corporate/).
Such projects offer significant advantages over “normal greenfield” exploration projects in that they:
cut out the major exploration costs;
the economics in terms of gold price at closure are known;
past production in the form of tonnes and grade are known;
to a large extent the existing development needs refurbishment which is far cheaper than new
development; and
the overall cost to reopen is far cheaper per ounce than new ounces at the same grade of a new
mine.
4.2 South Korea Gold Projects
South Korea is a modern, industrialised economy, a representative democracy and has substantial
infrastructure advantages, in many respects, superior to western jurisdictions. South Korea is an
investment-grade country with Moodys and Standard & Poors ratings of Aa2 and AA respectively (:
and telecommunications are also placed conveniently nearby.
History
Gubong was South Korea’s second largest gold producer historically and the largest during 1930-
1943, during the Japanese occupation. It still retains substantial remnant ore between mined blocks
and excellent exploration potential. Mine data indicates good potential for mine re-commissioning
and the possibility of relatively early cash flow.
There is a dearth of information considering the age of the mine and there is anecdotal evidence
that the information relating to gold production is understated as there was little government
control over the Japanese mining companies.
The Korean Resources Corporation (KORES) estimate of remaining resources at Gubong is 2.34M
tonnes at 7.34g/t. There are no declared JORC resource estimates currently at Gubong.
The immediate Gubong project area hosts five historical underground mines with the largest being
the Gubong mine which exploited high grade quartz veins hosted in gneissic granite and mined to a
vertical depth of approximately 500 metres.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
17
Historic underground sampling results of the deeper levels of Vein 6, the main vein exploited at
Gubong, gives an arithmetic uncut average of 30.6 g/t gold from 146 values. Exploratory core drilling
below the now abandoned mine workings from one of five holes returned 27.9 g/t gold and 25 g/t
silver over 1.6 metres downhole from 845.2 metres. This demonstration of the persistence with
depth of the most developed mineralised structure supports the prospectivity of the property for
auriferous shoots with considerable depth continuity.
Interestingly, Vein 6 was found as a blind vein in the hanging wall during mine development work on
the other veins. This suggests substantial gold resources may be found in parallel vein systems that
do not outcrop in the area.
Work at Gubong
The Group has undertaken on-going care and maintenance work and community relations in the
year to 31 December 2022. The Company filed an application for a Mountain Temporary Use Permit
(MTUP) in December 2022.
4.2.2 The Kochang Project
General Information on Kochang
The Kochang Mine began operations in 1928 with production records starting in 1938 with the
Nippon Mining Co, which mined the project until 1942. Production restarted in 1961 and was fairly
constant until 1975.
The workings extend over 1.2-1.5 km (2.5 km including the silver shaft area) from south west to
north east and extend down dip to about 120 m below surface. The workings exploit 5-7 veins
striking 050
o
with a dip of 50-70 north west. There seem to have been 4 shafts (north shaft, south
shaft, main shaft and silver shaft). The gold and silver mines have been worked as separate mines in
the past but recent work suggests that they are part of the same deposit and that resources may
extend between them.
Following the last year of recorded production in 1975, exploratory level development was carried
out in 1981 and 1990. Korean underground plans dated 1990 show the results of the sampling of
quartz veins along portions of the gold mine at Kochang. In aggregate, a total of 104 underground
samples are depicted with gold results ranging from 0.4 g/t up to 102.6 g/t for sample widths
ranging from 0.03 metres to 0.6 metres in thickness. The length weighted average value of all the
underground samples is 17.05 g/t gold over 0.2 metres. There are no declared JORC resource
estimates currently at Kochang.
Of further interest is a particularly well mineralised 120 metre length of Vein 3 at the southern end
of the prospecting drive on 245RL which gave a length weighted average value of 57.27 g/t gold over
a 0.29 metre width: indicating the presence of higher grade ore shoots at Kochang. Bonanza grades
were reportedly mined from upper levels of the north shaft vein.
In 1984, four inclined core holes were drilled at Kochang, but their coordinates are generally
unknown. Each hole intersected narrow quartz veins. Two of the holes were sampled for assay over
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
18
intersections of interest. One drill hole 84-2 was collared in a new deposit called the Sanpo Mine at
238 RL, azimuth of 225 and dip 70. Of the nine results reported, Hole 84-2 gave two intersections
above 1 g/t gold in one hole. The intersections were 10.6 g/t gold and 12 g/t silver over 0.6 metres
from 26.9 metres and 17.6 g/t gold and 4 g/t silver over 2.5 metres from 63.0 metres respectively.
At 97.6 metres a 2.4m vein gave trace gold and 1,763 g/t silver.
This drill hole opens up a “new” parallel mineralised structure of up to 2.5m wide to be explored and
the possibility of other as yet unknown structures related to the same hydrothermal fluid source and
regional structures.
Work at Kochang
The Group has undertaken on-going care and maintenance work and community relations in the
year to 31 December 2022. The Company filed an application for a Mountain Temporary Use Permit
(MTUP) in December 2022. In April 2023, the Company announced that despite all legal obligations
being covered this has been delayed due to local politics (refer note 23 of the audited financial
statements).
4.3. Philippines Overview – Batangas Gold Project
The outlook for the Philippine mining industry has continued to improve during the year. The
Company applied for a two-year extension of the Exploration Period of the Mineral Production
Sharing Agreement (“MPSA”) due to improving sentiment in the Philippines, which was granted on
21 September 2022. The Company has subsequently entered into an agreement with a local
Philippine company, with a view to represent the mine with the potential for underground mining
and to secure the key permissions necessary to enable production (refer note 23 of the audited
financial statements).
The Company acquired the project from ASX Listed Red Mountain Mining Limited in November 2016
based on the highlights of a Pre-Feasibility Study (PFS) published by Red Mountain Mining Limited
that declared a Maiden Ore Reserve of 128,000oz of gold (including silver credits) including
100,000oz of high-grade gold at 4.2g/t.
The acquisition cost allocated to the project was USD 2,137,855. The Batangas asset was fully
impaired in the period ended 31 December 2019 as the Board considered it appropriate to continue
to follow IFRS and to write the investment in Batangas down to zero in the financial statements. This
will be reviewed on an on-going basis by the Board as the projects are further developed.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
19
Batangas Gold Project Mineral Resource JORC 2012
Deposit
Resource
Classification
Tonnes
Au g/t
Au Oz
Ag g/t
Ag Oz
Kay Tanda West
Indicated
1,421,000
2.1
96,000
9.2
421,000
Inferred
229,000
2.3
17,000
2.1
15,000
Total
1,650,000
2.1
113,000
11.3
436,000
Kay Tanda Main
Indicated
1,161,000
1.9
70,000
1.4
50,000
Inferred
2,775,000
2.0
180,000
1.2
109,000
Total
3,936,000
2.0
250,000
2.6
159,000
Archangel MPSA
Total
5,586,000
2.0
363,000
3.3
595,000
South West Breccia
Indicated
214,000
6.4
44,000
1.8
12,600
Inferred
7,000
2.3
1,000
1.9
400
Total
221,000
6.3
45,000
1.8
13,000
Japanese Tunnel
Indicated
26,000
3.3
3,000
5.9
5,000
Inferred
7,000
2.3
1,000
5.7
1,000
Total
33,000
3.0
4,000
5.7
6,000
West Drift (> 2g/t)
Indicated
145,000
4.2
14,000
4.7
22,000
Inferred
205,000
2.4
19,000
4.3
28,000
Total
350,000
3.0
33,000
4.4
50,000
Lobo MPSA
Total
604,000
4.2
82,000
3.6
69,000
Batangas Gold Project
Indicated
2,968,000
2.4
227,000
5.4
511,000
Inferred
3,222,000
2.1
218,000
1.5
154,000
Total
6,190,000
2.2
445,000
3.3
665,000
Batangas Gold Project Ore Reserves JORC 2012
Deposit
Ore
Reserve
Category
Tonnes
Au
g/t
Au Oz
Ag g/t
Ag Oz
Au Eq
g/t
Au Eq
Oz
Archangel
MPSA
Probable
1,225,000
2.1
86,000
10.0
403,000
2.3
91,000
Lobo MPSA
Probable
186,000
6.2
37,000
2.2
13,000
6.2
37,000
Total Batangas
Project
Probable
1,441,000
2.6
123,000
9.0
416,000
2.8
128,000
The Pre-Feasibility Study was announced by Red Mountain Mining Limited (refer:
https://www.rscmme.com/report/Red_Mountain_Mining_Ltd_Batangas__15-6-2016).
4.4 Funding
The Company funded its activities during the period by the drawdown of a loan of USD 282,000
(refer note 16.3 of the audited financial statements) and a share placing of USD 352,613 – inclusive
of USD 183,528 received on 05 January 2023 due to the extended bank closure over the New Year
period.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
20
The Company continued to benefit from Directors and the Management team continuing to agree to
take salary sacrifice shares rather than cash payments during the year.
This Strategic Report was approved by the Board of Directors on 25 April 2023 and is signed on its
behalf.
By Order of the Board
Jonathan Morley-Kirk
Chairman
25 April 2023
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
21
5. FINANCIAL STATEMENTS
5.1 Independent Auditor’s Report to the Members of the Company
Opinion
We have audited the financial statements of Bluebird Merchant Ventures Ltd (the ‘Group’) for the
year ended 31 December 2022 which comprise the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial
Position, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement
and notes to the financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK-adopted
international accounting standards.
In our opinion, the financial statements:
give a true and fair view of the state of the Group’s affairs as at 31 December 2022 and of its
loss for the year then ended; and
have been properly prepared in accordance with UK-adopted international accounting
standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent
of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which indicates that the Group incurred a
loss of $1,485,806 in the year ended 31 December 2022, as of that date the Group’s current
liabilities exceeded its current assets by $1,545,650 and the Group will be required to raise further
finance, equity and/or debt, in order to fund its forecasted expenditure over the next twelve
months. As stated in note 2, these events or conditions, along with the other matters as set forth in
note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of
the directors’ assessment of the Group’s ability to continue to adopt the going concern basis of
accounting included reviewing and challenging cashflow forecasts prepared by management
covering the going concern period and the related key assumptions, stress testing forecasts and
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
22
ascertaining the Group’s current financial position and discussing their strategies regarding future
fund raises.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and
qualitative thresholds for materiality determine the scope of our audit and the nature, timing and
extent of our audit procedures. Materiality for the consolidated financial statements was set as
$400,000 (2021: $400,000) based upon 2% of gross assets (2021: 2% of gross assets). Materiality has
been based upon gross assets due to the significant value of the Consolidated Statement of Financial
Position and the number of identified risks in relation to the Consolidated Statement of Financial
Position relative to the Consolidated Statement of Comprehensive Income. Performance materiality
and the triviality threshold for the consolidated financial statements was set at $300,000 (2021:
$300,000) and $20,000 (2021: $20,000) respectively due to our accumulated knowledge of the
Group, the number of significant risks identified and their assessed risk. We also agreed to report to
the Audit Committee any other differences below that threshold that we believe warranted
reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular we looked at areas involving significant accounting estimates
and judgements by the directors and considered future events that are inherently uncertain, such as
the recoverable value of the mines under development asset. We also addressed the risk of
management override of internal controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.
A full scope audit was performed on the complete financial information of all seven components of
the Group.
Of the seven reporting components of the Group, one is located in the British Virgin Islands and two
in each of South Korea, Philippines and Singapore. PKF Littlejohn LLP audited the ultimate parent
company, situated in the British Virgin Islands, and all other reporting components. The Engagement
Partner conducted audit work in the United Kingdom but interacted regularly with the management
team in the Philippines during all stages of the audit and was responsible for the scope and direction
of the audit process. This, in conjunction with additional procedures performed, gave us appropriate
evidence for our opinion on the Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) we identified, including those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
23
directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Material
uncertainty related to going concern section we have determined the matters described below to be
the key audit matters to be communicated in our report.
Key Audit Matter
How our scope addressed this matter
Carrying value of mines under
development
As at 31 December 2022, the carrying
value of mines under development was
$19,816k (Note 12). This asset arose from
the acquisition of the previous joint
venture companies, Gubong and Kochang
in the previous year.
Given the value, the fact that the Group
have yet to enter into production and the
estimation uncertainty, there is a risk that
this asset may be materially impaired.
Our work included but was not limited to:
Obtaining the directors’ impairment assessment
and reviewing and discussing with the directors;
and
Challenging the key inputs and assumptions.
The directors’ recoverable value assessment, which
included the use of discounted cashflow forecasts
and independent third-party valuations of the
subsidiaries and their underlying assets, were found
to be reasonable with no impairment indicators
noted.
However, management had expected to receive
Mountain Temporary Use Permits to enable the
Group to commence ground work for proof of
concept mining at Kochang and early development
work at Gubong. These have yet to be obtained and
should they and other required production licences
not be obtained then the mines may not be fully
developed and thus the carrying value of mines
under development may not be recovered in full..
Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
24
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below:
We obtained an understanding of the Group and the sector in which it operates to identify laws
and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through discussions with
management, independent research and our accumulated knowledge and experience of the
industry.
We determined the principal laws and regulations relevant to the Group in this regard to be
those arising from the LSE Main Market listing rules and BVI Business Companies Act.
We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the Group with those laws and regulations. These procedures
included, but were not limited to:
o Discussions with management regarding compliance with laws and regulations by the Group;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
We also identified the risks of material misstatement of the financial statements due to fraud.
We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from
management override of controls that there was potential for management bias in relation to the
impairment of mines under development assets and we addressed this by challenging the
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
25
assumptions and judgements made by management when auditing that significant accounting
estimate.
As in all of our audits, we addressed the risk of fraud arising from management override of
controls by performing audit procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of
business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance
with regulation. This risk increases the more that compliance with a law or regulation is removed
from the events and transactions reflected in the financial statements, as we will be less likely to
become aware of instances of non-compliance. The risk is also greater regarding irregularities
occurring due to fraud rather than error, as fraud involves intentional concealment, forgery,
collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with our
engagement letter dated 1 March 2023. Our audit work has been undertaken so that we might state
to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Joseph Archer (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
25 April 2023
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
26
5.2 Consolidated Income Statement
For the year ended 31 December 2022
Note
12 months
to 31-Dec-22
(USD)
12 months
to 31-Dec-21
(USD)
Administrative expenses
(908,220 )
(656,295 )
Farm-in costs
Operating loss
6
(908,220 )
(650,681 )
Gain on acquisition of joint ventures
12
Finance expense
9
(577,586 )
(83,000 )
Share of loss of joint ventures
12
(36,418 )
(Loss)/profit before taxation
(1,485,806 )
Income tax expense
10
(Loss)/profit for the year
(1,485,806 )
Earnings per share:
Basic earnings per share (USD cents per share)
20
(0.0023 )
Diluted earnings per share (USD cents per share)
20
(0.0023 )
The above results relate entirely to continuing operations.
The accompanying accounting policies and notes form an integral part of these financial statements.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
27
5.3 Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
12 months to
31-Dec-22
(USD)
12 months to
31-Dec-21
(USD)
(Loss)/profit for the year
(1,485,806 )
Exchange difference on translating foreign operations*
(6,580 )
(99,249 )
Total comprehensive income for the year
(1,492,386 )
*
Items that may be reclassified to profit or loss
The accompanying accounting policies and notes form an integral part of these financial statements.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
28
5.4 Consolidated Statement of Financial Position
For the year ended 31 December 2022
Note
31-Dec-22
(USD)
31-Dec-21
(USD)
Non-current assets
Mines under development
12
Current assets
Trade and other receivables
13
Cash and cash equivalents
14
Current liabilities
Trade and other payables
15
(195,666 )
(223,059 )
Other financial liabilities
16
(1,001,458 )
(779,081 )
Derivative financial instruments
16
(612,829 )
(285,888 )
(1,809,953 )
(1,288,028 )
Net Assets
Equity
Issued share capital
20
Unissued share capital
20
Other reserves
18
Retained earnings
(3,687,999 )
(2,202,193 )
Total Equity
The accompanying accounting policies and notes form an integral part of these financial statements.
These financial statements were approved and signed on behalf of the Board of Directors.
Jonathan Morley-Kirk Colin Patterson
Chairman Chief Executive Officer
25 April 2023 25 April 2023
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
29
5.5 Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Note
Issued Share
Capital
(USD)
Unissued
Share Capital
(USD)
Retained
Earnings
(USD)
Other
Reserves
(USD)
Total
Equity
(USD)
At 31-Dec-20
(9,733,181 )
Profit for the year
-
-
-
Other comprehensive income for the period
-
-
-
(99,249 )
(99,249 )
Total comprehensive income
-
-
(99,249 )
Shares issued/to be issued (net of expenses)
20
(759,154 )
-
-
Total transactions with owners
(759,154 )
-
-
At 31-Dec-21
(2,202,193 )
Loss for the year
-
-
(1,485,806 )
-
(1,485,806 )
Other comprehensive income for the period
-
-
-
(6,580 )
(6,580 )
Total comprehensive income
-
-
(1,485,806 )
(6,580 )
(1,492,386 )
Shares issued/to be issued (net of expenses)
20
-
-
Total transactions with owners
-
-
At 31-Dec-22
(3,687,999 )
The accompanying accounting policies and notes form an integral part of these financial statements.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
30
5.6 Consolidated Cash Flow Statement
For the year ended 31 December 2022
Note
12 months to
31-Dec-22
(USD)
12 months to
31-Dec-21
(USD)
Cash flows from operating activities
Cash paid to suppliers and employees
(559,997 )
(401,453 )
Net cash used in operating activities
(559,997 )
(401,453 )
Cash flows from investing activities
Loans to joint ventures
(101,600 )
Cash acquired on acquisition
Net cash used in investing activities
(55,171 )
Cash flows from financing activities
Cash received for shares
20
Cash received from loans
16
Net cash from financing activities
Net (decrease)/increase in cash
(130,758 )
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
The accompanying accounting policies and notes form an integral part of these financial statements.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
31
5.7 Notes to the Financial Statements
For the year ended 31 December 2022
1. Basis of Preparation and Adoption of International Financial Reporting Standards (IFRS)
The Group financial statements consolidate those of the Company and of its subsidiaries and have
been prepared in accordance with UK-adopted IAS.
The consolidated financial statements are prepared on the historical cost basis or the fair value basis
where the fair valuing of relevant assets and liabilities has been applied.
Certain amounts included in the consolidated financial statements involve the use of judgement
and/or estimation. Judgements, estimations and sources of estimation uncertainty are discussed in
note 3.
New and amended standards which are effective for these financial statements
No new standards, amendments or interpretations, effective for the first time for the financial year
beginning on or after 1 January 2022 have had a material impact on the Group.
Standards in issue but not yet effective
Those standards, amendments and interpretations which have been recently issued or revised and
are mandatory for the Group's accounting periods beginning on or after 1 January 2022 or later are
not expected to have a material impact on the Group.
2. Going Concern
In common practice with many junior mining companies, the Group raises equity funds for its
activities in share placements. When necessary it also raises loan funding from related and third
parties.
At the year end the Group had net current liabilities of USD 1,197,124, exclusive of fair value
liabilities of USD 612,829 in the year (2021, USD 776,886 exclusive of USD 285,888 of non-cash/fair
value liabilities). After year end, the Company settled USD 648,158 of loans outstanding at 31
December 2022 and announced funding of GBP 1,215,000 (refer note 23 of the audited financial
statements).
Based on the current plans and financial projections, the Group’s current cash resources and funding
available are sufficient to enable the Group to meet its recurring commitments for the following
twelve months, but not its forecasted expenditure which includes notable costs to progress the
South Korean projects . Whilst the directors acknowledge that the group will need to raise further
finance to meet its forecasted expenditure over the next 12 months, the Company has received a
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
32
debt financing offer which would cover the projected capital costs, however the Company will only
consider this offer closer to the time that the funds are required, and are thereby confident that
sufficient funding will be able to be raised.
3. Judgements in Applying Accounting Policies and Sources of Estimation Uncertainty
Certain amounts included in the financial statements involve the use of judgement and/or
estimation. These are based on management’s best knowledge of the relevant facts and
circumstances, having regard to prior experience. However, judgements and estimations regarding
the future are a key source of uncertainty and actual results may differ from the amounts included in
the financial statements. Information about judgements and estimation is contained in the
3.1 Mineral Resources and Ore Reserves
Quantification of Mineral Resources requires a judgement on the reasonable prospects for eventual
economic extraction. Quantification of Ore Reserves requires a judgement on whether Mineral
Resources are economically mineable. These judgements are based on assessment of mining,
metallurgical, economic, marketing, legal, environmental, social and governmental factors involved.
These factors are a source of uncertainty and changes could result in an increase or decrease in
Mineral Resources and Ore Reserves (refer note 12 of the audited financial statements and sections
4.2 and 4.3 of the Strategic Report).
3.2 Recoverable value of mine under development
Consideration of impairment indicators for mining projects requires significant judgements and
estimates when assessing the available technical, financial and licencing information. At each period
end, the Directors carry out this process for each project taking into account all available information
to develop an expected recoverable value of the mines under development assets, which is
compared to the carrying value of the mine under development assets.
The Directors considered the projects’ developments since the date of this report. The Company
undertook an impairment review of the Korean projects and see no adverse factors that suggest that
the recoverable value of these assets has fallen below their carrying values. The Directors have
assessed the recoverable value of the assets by reviewing valuations reports and discounted
cashflow forecasts prepared, over six years with a discount rate of 15%, in respect of the two
projects. The Director's further believe that they will obtain the required funding, be able to
complete the construction of the mines and that they will generate the funds forecasted in the
discounted cashflow forecasts.
3.3 Valuation of share warrants
Share warrants issued by the Company are fair valued when granted and warrants, which are
classified as financial liabilities are revalued at each reporting date. This requires the Group to
determine an appropriate valuation methodology, which they have determined to be the Black-
Scholes option pricing model. The use of this model requires the determination of a number of key
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
33
assumptions which can have a significant effect on the valuation (refer note 16 of the audited
financial statements).
4. Accounting Policies
4.1 Consolidation
The Group financial statements consolidate the results of the Company and its subsidiary
undertakings using the acquisition accounting method. On acquisition of a subsidiary, all of the
subsidiary’s identifiable assets and liabilities which exist at the date of acquisition are recorded at
their fair values reflecting their condition on that date. The results of subsidiary undertakings
acquired are included from the date of acquisition. In the event of the sale of a subsidiary, the
subsidiary results are consolidated up to the date of completion of the sale.
Subsidiaries are all those entities over which the parent has control. Control exists if the parent is
exposed, or has rights, to variable returns from its involvement with the subsidiary and has the
ability to affect those returns through its power over the subsidiary.
The costs of acquisition are recognised in the income statement. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date irrespective of the extent of any non-controlling interest.
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of the
net assets of the subsidiary acquired, the difference is recognised directly in the income statement
as a gain.
Transactions, balances and unrealised gains and losses on transactions between Group companies
are eliminated, unless the unrealised loss provides evidence of an impairment of the asset
transferred.
Investments in associates and jointly controlled entities are accounted for using the equity method
of accounting and are initially recognised at cost. The Group’s share of its associates’ post-
acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition
movements in reserves is recognised in other comprehensive income. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment. When the
Group’s share of losses exceeds its interest in an equity-accounted investee the carrying amount of
the investment, including any other unsecured receivables, is reduced to zero, and the recognition of
further losses is discontinued, unless the Group has incurred obligations or made payments on
behalf of the investee.
Accounting policies of equity-accounted investees have been changed where necessary to ensure
consistency with the policies adopted by the Group. Dilution gains and losses arising in investments
in equity-accounted investees are recognised in profit or loss.
The Group discontinues the use of the equity method from the date when the investment ceases to
be an associate or when the investment is classified as held for sale. When the Group retains an
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
34
interest in the former associate or joint venture and the retained interest is a financial asset, the
Group measures the retained interest at fair value at that date and the fair value is regarded as its
fair value on initial recognition. The difference between the carry amount of the associate at the
date the equity method was discontinued, and the fair value of any retained interest and any
proceeds from disposing of a part interest in the associate is included in the determination of the
gain or loss on disposal. In addition, the Group accounts for all amounts previously recognised in
other comprehensive income in relation to that associate on the same basis as would be required if
that associate had directly disposed of the related assets of liabilities.
When the Group reduces its ownership interest in an associate but the Group continues to use the
equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had
previously been recognised in other comprehensive income relating to that reduction in ownership
interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets
or liabilities.
The difference between the fair value of the consideration to acquire the South Korean subsidiaries
and the fair value of the subsidiaries net assets was taken to mines under development (refer note
12 of the audited financial statements).
4.2 Investment in Associates
Associate companies are companies in which the group has significant influence generally though
holding, directly or indirectly, 20% or more of the voting power of the Group. Investments in
associates are accounted for in the financial statements by applying the equity method of
accounting whereby the investment is initially recorded at cost and adjusted thereafter for the post-
acquisition change in the Group’s share of net assets of the associate company. In addition, the
Group’s share of the profit or loss of the associate company is included in the Group’s profit or loss.
4.3 Segmental reporting
An operating segment is a component of the Group engaged in exploration or production activity
that is regularly reviewed by the Chief Operating Decision Maker (CODM) for the purposes of
allocating resources and assessing financial performance. The CODM is considered to be the Board
of Directors. The Group’s operating segments are determined on a geographical basis being the
British Virgin Islands, South Korea and the Philippines (refer note 5 of the audited financial
statements).
4.4 Foreign currency translation
Functional and presentational currency
The functional currencies of the entities within the Group are the US dollar (for the Company and
the Singaporean companies), Philippine peso (for the Philippine companies) and the Korean won (for
the Korean companies) as the currencies which most affects each company’s costs and financing.
The Group’s presentational currency is the US dollar.
Transactions and balances
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
35
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation at reporting period end exchange rates of
monetary assets and liabilities denominated in foreign currencies, are recognised in the income
statement.
On consolidation, the assets and liabilities of the Group’s overseas operations that do not have a US
dollar functional currency, are translated at exchange rates prevailing at the balance sheet date.
Income and expense items are translated at the average exchange rate for the period. Exchange
differences arising on the net investment in subsidiaries are recognised in other comprehensive
income.
4.5 Financial instruments
Financial assets and liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
De-recognition of financial instruments occurs when the rights to receive cash flows from the
investments expire or are transferred and substantially all of the risks and rewards of ownership
have been transferred. An assessment for impairment is undertaken where there is objective
evidence that a financial asset or a group of financial assets is impaired.
Financial assets
Financial assets are subsequently recognised at amortised cost under IFRS 9 if it meets both the hold
to collect and contractual cash flow characteristics tests. A financial asset is measured at fair value
through other comprehensive income if the financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
If neither of the above classifications are met the asset is classified as fair value through the profit
and loss or unless management elect to do so provided the classification eliminates or significantly
reduces a measurement or recognition inconsistency.
A financial asset that is not carried at fair value through profit or loss is assessed at each reporting
date to determine a loss allowance for expected credit losses. If the credit risk on a financial
instrument has increased significantly since initial recognition, the loss allowance is equal to the
lifetime expected credit losses. If the credit risk has not increased significantly, the loss allowance is
equal to the twelve month expected credit losses.
The expected credit losses are measured in a way that reflects the unbiased and probability
weighted amount that is determined by evaluating a range of possible outcomes; the time value of
money and reasonable and supportable information that is available about past events, current
conditions and forecasts of future economic conditions.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
36
Financial liabilities include loans and trade and other payables. In the statement of financial position
these items are included within Non-current liabilities and Current liabilities. Financial liabilities are
recognised when the Group becomes a party to the contractual agreements giving rise to the
liability. Interest related charges are recognised as an expense in Finance costs in the income
statement unless they meet the criteria of being attributable to the funding of construction of a
qualifying asset, in which case the finance costs are capitalised.
Borrowings, including the loan notes, are initially recognised at fair value, net of transaction costs
incurred. They are subsequently stated at amortised cost with any difference between the proceeds
(net of transaction costs) and the redemption value recognised in profit or loss over the period of
the borrowings using the effective interest rate method.
When a loan is converted into equity the gain or loss arising, being the difference between the
carrying amount of the liability extinguished and the fair value of the equity issued, is recognised in
the Income Statement.
See separate accounting policies below in respect of accounting for warrants.
Trade and other payables and loans are recognised initially at their fair value and subsequently
measured at amortised costs using the effective interest rate, less settlement payments.
4.6 Cash and cash equivalents
Cash and cash equivalents are defined as cash on hand, demand deposits and short term highly
liquid investments and are measured at cost which is deemed to be fair value as they have short-
term maturities.
4.7 Share capital and unissued share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not
meet the definition of a financial liability. The Company’s ordinary shares are classified as equity and
have no par value. Costs directly associated with the issue of shares are charged to share capital.
Where the Company has a contractual right to issue a fixed number of shares to settle a fixed
liability it recognises unissued share capital pending the issue of shares.
4.8 Income taxes
Current income tax liabilities comprise those obligations to fiscal authorities in the countries in
which the Group carries out operations and where it generates its profits. They are calculated
according to the tax rates and tax laws applicable to the financial period and the country to which
they relate. All changes to current tax assets and liabilities are recognised as a component of the tax
charge in the income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This
involves the comparison of the carrying amount of assets and liabilities in the consolidated financial
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
37
statements with their respective tax bases. However, deferred tax is not provided on the initial
recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects taxable or accounting profit.
Deferred tax liabilities are provided for in full; deferred tax assets are recognised when there is
sufficient probability of utilisation. Deferred tax assets and liabilities are calculated at tax rates that
are expected to apply to their respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
There are no deferred tax assets or liabilities in the Group’s statement of financial position.
4.9 Provisions, contingent liabilities and contingent assets
Other provisions are recognised when the present obligations arising from legal or constructive
commitment, resulting from past events, will probably lead to an outflow of economic resources
from the Group which can be estimated reliably. Provisions are measured at the present value of the
estimated expenditure required to settle the present obligation, based on the most reliable evidence
available at the balance sheet date. All provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
4.10 Share based payments
The Group operates equity settled share based compensation plans, which may be settled in cash
under certain circumstances. All employee services received in exchange for the grant of any share
based compensation are measured at their fair values. These are indirectly determined by reference
to the share based award. Their value is appraised at the grant date and excludes the impact of any
non-market vesting conditions. The Black-Scholes model is used to measure the fair value.
All share based compensation is ultimately recognised as an expense in profit and loss with a
corresponding credit to retained earnings, net of deferred tax where applicable. Where share based
compensation is to be cash settled, such as certain share based bonus awards, the corresponding
credit is made to accruals or cash. The Company may have certain share option schemes that may be
settled in cash at the absolute discretion of the Board.
If any equity settled share-based awards are ultimately settled in cash, then the amount of payment
equal to the fair value of the equity instruments that would otherwise have been issued is accounted
for as a repurchase of an equity interest and is deducted from equity. Any excess over this amount is
recognised as an expense.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to vest. Non-market
vesting conditions are included in assumptions about the number of options that are expected to
become exercisable. Estimates are subsequently revised if there is any indication that the number of
share options expected to vest differs from previous estimates. No adjustment to the expense
recognised in prior periods is made if fewer share options are ultimately exercised than originally
granted.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
38
Upon exercise of share options, the proceeds received, net of any directly attributable transaction
costs, up to the nominal value of the shares issued, are allocated to share capital with any excess
being recorded in share premium.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
39
4.11 Exploration and evaluation expenditures
The Group applies the successful efforts method of accounting for natural resource assets, having
regard to the requirements of IFRS 6 ‘Exploration for and Evaluation of Mineral Resources’. Costs
incurred prior to obtaining the legal rights to explore an area are expensed immediately to the
Statement of Comprehensive Income.
All licence acquisitions, exploration and evaluation costs are capitalised, a share of administration
costs is capitalised insofar as they relate to exploration, evaluation and development activities.
These costs are written off unless commercial reserves have been established or the determination
process has not been completed and there are no indications of impairment. If a project is deemed
commercial all of the attributable costs are transferred into Property, Plant and Equipment. These
costs are then depreciated from the commencement of production on a unit of production basis.
4.12 Impairment of exploration and evaluation assets
Whenever events or changes in circumstance indicate that the carrying amount of an asset may not
be recoverable an asset is reviewed for impairment. An asset’s carrying value is written down to its
estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if
that is less than the asset’s carrying amount.
Impairment reviews for exploration and evaluation assets are carried out on a project by project
basis, with each project representing a potential single cash generating unit.
An impairment review is undertaken at least each balance sheet date or when indicators of
impairment arise such as:
● unexpected geological occurrences that render the resource uneconomic;
● title to the asset is compromised;
● variations in mineral prices that render the project uneconomic;
● substantive expenditure on further exploration and evaluation of mineral resources is
neither budgeted nor planned; and
● the period for which the Group has the right to explore has expired and is not expected
to be renewed.
A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised. If
that is the case, the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in the Statement of Comprehensive Income unless the asset is carried at revalued
amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the
depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less
any residual value, on a systematic basis over its remaining useful life.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
40
4.13 Mine development costs
Once the decision has been taken to develop a mine the costs that are considered to be directly
attributable to the development are capitalised and reviewed for impairment each year. When
assessing this asset for impairment, management estimate the recoverable value of the asset, being
the higher of the assessed value in use or the assessed fair value less costs to sell. The higher of the
two is then compared to the carrying value of the asset.
4.14 Warrants
Warrants instruments are classified as derivative financial liabilities as the functional currency of the
Company is USD and the exercise price is GBP. They are carried in the consolidated statement of
financial position at fair value with changes in fair value recognised in the consolidated statement of
comprehensive income.
4.15 Fair value measurement hierarchy
The Group classifies its financial liabilities measured at fair value using a fair value hierarchy that
reflects the significance of the inputs used in making the fair value measurement.
The fair value hierarchy has the following levels:
● Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
● Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (level 2);
● Inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (Level 3).
The level in the fair value hierarchy within the financial liability is determined on the basis of the
lowest level input that is significant to the fair value measurement.
5. Segmental Reporting
5.1 Income Statement
For the year ended 31 December 2022
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Administrative costs
(694,576)
(2,613)
(211,031)
(908,220)
Finance expense
(577,586)
-
-
(577,586)
Loss for the period
(1,272,162)
(2,613)
(211,031)
(1,485,806)
Other comprehensive income
-
(62,598)
56,018
(6,580)
Total comprehensive income for
the year
(1,272,162)
(65,211)
(155,013)
(1,492,386)
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
41
5.2 Statement of Financial Position
For the year ended 31 December 2022
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Mines under development
-
-
19,816,088
19,816,088
Trade and other receivables
217,595
-
10,798
228,393
Cash and cash equivalents
29,718
302
5,890
35,910
Total Assets
247,313
302
19,832,776
20,080,391
Trade and other payables
(116,647)
(79,019)
-
(195,666)
Other financial liabilities
(648,158)
-
(353,300)
(1,001,458)
Derivative financial instruments
(612,829)
-
-
(612,829)
Net (liabilities)/assets
(1,130,321)
(78,717)
19,479,476
18,270,438
5.3 Income Statement
For the year ended 31 December 2021
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Administrative costs
(633,176)
(23,119)
-
(656,295)
Farm-in (costs)/income
-
-
5,614
5,614
Finance expense
(83,000)
-
-
(83,000)
Gain on acquisition of joint ventures*
8,301,087
-
-
8,301,087
Share of loss from associate
-
-
(36,418)
(36,418)
Profit/(loss) for the period
7,584,911
(23,119)
(30,804)
7,530,988
Other comprehensive income
-
(6,267)
(92,982)
(99,249)
Total comprehensive income for
the year
7,584,911
(29,386)
(123,786)
7,431,739
* Refer note 12 of the audited financial statements
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
42
5.4 Statement of Financial Position
For the year ended 31 December 2021
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Mines under development*
-
-
19,816,088
19,816,088
Trade and other receivables
42,392
-
16,214
58,606
Cash and cash equivalents
157,377
9,291
-
166,668
Total Assets
199,769
9,291
19,832,302
20,041,362
Trade and other payables
(104,079)
(97,448)
(21,532)
(223,059)
Other financial liabilities
(425,781)
-
(353,300)
(779,081)
Derivative financial instruments
(285,888)
-
-
(285,888)
Net (liabilities)/assets
(615,979)
(88,157)
19,457,470
18,753,334
* Refer note 12 of the audited financial statements
6. Loss for the Period Before Tax
12 months to
31-Dec-22
(USD)
12 months to
31-Dec-21
(USD)
Loss for the period has been arrived at after charging
the following under administrative expenses:
Auditors’ remuneration – current period
42,500
40,000
Directors’ remuneration – Company
Staff costs – Group
Prospectus costs
Share based payments
239,057
146,291
-
269,951
188,332
107,193
89,149
2,686
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
43
7. Remuneration of Key Management Personnel
In accordance with IAS 24 – Related Party transactions, key management personnel, including all
Executive and Non-Executive Directors, are those persons having authority and responsibility for
planning, directing and controlling the activities of the Group.
12 months to 31-Dec-22
12 months to 31-Dec-21
Payable
in Cash
(USD)
Payable
in Equity
(USD)
Total
(USD)
Payable
in Cash
(USD)
Payable
in Equity
(USD)
Total
(USD)
Directors remuneration
41,010
198,047
239,057
-
188,332
188,332
Key management
personnel
12,237
99,336
111,573
21,850
65,858
87,708
Other staff costs
34,718
-
34,718
19,485
-
19,485
Total remuneration
87,965
297,383
385,348
41,335
254,190
295,525
Details of the Directors remuneration is shown under the Remuneration Committee section of the
Director’s Report.
All amounts shown relate to short term employee benefits and there are no payments made for
other long term benefits, termination benefits or share based benefits.
Directors and key management personnel agreed to take fees between May 2019 and September
2021 as equity, which was issued in June 2021 and December 2021 (refer note 20 of the audited
financial statements). Amounts payable for the period from October 2021 to December 2022 have
not been issued and are represented by unissued share capital (refer note 20 of the audited financial
statements).
8. Average Number of Employees
12 months to
31-Dec-22
(USD)
12 months to
31-Dec-21
(USD)
Directors
6
5
Management and Administration
2
2
Mining, Processing and Exploration staff
1
1
9
8
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
44
9. Finance Expense/(Gain)
12 months to
31-Dec-22
(USD)
12 months to
31-Dec-21
(USD)
Loan interest and loan financing fees
Fair value movement
250,646
326,940
-
83,000
577,586
83,000
10. Taxation
The Group contains entities with tax losses and deductible temporary differences for which no
deferred tax asset is recognised. A deferred tax asset has not been recognised within some of the
Group entities where the entities in which those losses and allowances have been generated either
do not have forecast taxable profits in the near future or the losses have restrictions whereby their
utilisation is considered to be unlikely.
The Company is taxed at the standard rate of income tax for British Virgin Island companies which is
0%. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The tax charge for the period can be reconciled to the loss per the income statement as follows:
12 months to
31-Dec-22
12 months to
31-Dec-21
Profit/(loss) before taxation
Corporation
Tax
Rate
(USD)
Corporation
Tax
Rate
(USD)
BVI
0.0%
(1,272,162)
0.0%
(716,176)
Philippines
25.0%
(2,613)
25.0%
(23,119)
South Korea
25.0%
(211,031)
25.0%
(30,804)
Tax gain/(losses) carried forward not
recognised as a deferred tax asset
3.6%
(1,485,806)
1.8%
(770,099)
No disallowable expenses were incurred in 2022 (2021: USD nil). There were no non-taxable gains in
2022 (2021: USD 8,301,087 gain on acquisition of joint venture).
11. Investments in Associates – Egerton Gold Philippines Inc
Summarised financial information in respect of the Group’s associate interest in Egerton Gold
Philippines Inc is set out below. The summarised information represents amounts shown in Egerton
Gold Philippines Inc’s financial statements, as adjusted for differences in accounting policies.
Amounts have been translated in accordance with the Group’s accounting policy on foreign currency
translation.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
45
A summary of the Balance Sheet of Egerton Gold Philippines Inc is shown below:
31-Dec-22
(USD)
31-Dec-21
(USD)
Non-current assets
Deferred exploration costs
17,267,843
18,828,382
Current liabilities
Trade and other payables
(17,649,720)
(19,220,319)
Net liabilities
(381,877)
(391,937)
Equity
Issued Capital
122,244
122,387
Retained Earnings
(504,121)
(514,324)
Total Equity
(381,877)
(391,937)
Variances from 31 December 2021 to 31 December 2022 relate to FX differences
Losses for the year ended 31 December 2022 were USD Nil (2021: USD Nil). As outlined in the
Directors Report, the Batangas asset was fully impaired in the period ended 31 December 2019. This
impairment will be reviewed on an on-going basis by the Board as the projects are further
developed.
12. Mines Under Development
31 Dec 2022
(USD)
31 Dec 2021
(USD)
Mines under development at start of year
19,816,088
-
Consideration paid to Southern Gold Limited
-
10,000,000
Company’s 50% Joint Venture Interest
-
10,000,000
Total consideration
-
20,000,000
Less fair value of net assets:
Non-current assets
-
(2,535,532)
Current assets (other receivables)
-
(64,302)
Current liabilities
-
-
Fair value uplift to mines under development on acquisition
-
17,400,166
Mines under development before acquisition of joint ventures
-
2,415,922
Mines under development at end of year
19,816,088
19,816,088
The mines under development asset fair value uplift arose from the execution of an agreement the
Company announced on 29 June 2021 to increase the Group’s ownership to 100% in the Gubong and
Geochang gold mines via the acquisition of Southern Gold Limited’s 50% Joint Venture Interest in the
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
46
South Korean gold projects, which were acquired as the Company, through its pre-feasibility studies,
demonstrated value in the projects for the Company’s shareholders.
The total consideration was paid to Southern Gold Limited by the issuance of 200 million BMV shares
at GBP 3.6p per share (USD 5.0 cents).
The Joint Venture Interest in the South Korean gold projects was revalued prior to acquisition to the
consideration required to acquire the joint ventures, which generated a gain on acquisition of USD
8.3 million and the recording of mines under development totalling USD 19.8 million at 31 December
2021.
There has been no addition in the year ended 31 December 2022 due to COVID-19 disruptions and
operational delays (refer note 23 of the audited financial statements).
13. Trade and Other Receivables
31-Dec-22
(USD)
31-Dec-21
(USD)
Other receivables*
197,355
19,244
Prepayments
31,038
39,362
228,933
58,606
* Includes USD 183,528 cash received on 05 January 2023 in relation to shares issued in December 2022
14. Cash and Cash Equivalents
31-Dec-22
(USD)
31-Dec-21
(USD)
Cash at bank
35,910
166,668
15. Trade and Other Payables
31-Dec-22
(USD)
31-Dec-21
(USD)
Trade and other payables
153,666
183,059
Accruals
42,000
40,000
195,666
223,059
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
47
16. Other Financial Liabilities
16.1 Other Financial Liabilities
31-Dec-22
(USD)
31-Dec-21
(USD)
Loan notes issued to non-related parties
648,158
425,781
Funds received from Korean consortium
353,300
353,300
1,001,458
779,081
The loans to non-related parties (USD 648,158) were repaid in full after 31 December 2022 (refer
note 23 of the audited financial statements).
16.2 Derivative financial instruments
31-Dec-22
(USD)
31-Dec-21
(USD)
Derivative financial instruments – warrants
612,829
285,888
612,829
285,888
The warrants issued by the Company are detailed in note 16.5 of the audited financial statements.
16.3 Loans
In April 2022, the Company entered into short-term loan arrangements with a non-related party for
USD 500,000 to meet the Company’s short-term working capital requirements – of which USD
282,000 was drawn down in the year. The loan carries a 10.0% per annum coupon and 15,280,000
warrants at 2.50 GB pence were issued – these were re-issued as 19,100,000 warrants at 2.00 GB
pence at the December 2022 share placing. Upon signing the loan facility agreement 5,000,000
shares were issued at an agreed price of GBP 2.0 pence in lieu of a loan arrangement fee. The loan
was repaid in April 2023.
In September 2021, the Company entered into short-term loan arrangements with a non-related
party for GBP 500,000 to meet the Company’s short-term working capital requirements – of which
GBP 300,000 was drawn down in the year. The loan carries a 7.5% per annum coupon and 9,464,916
warrants at 3.962 GB pence were issued. The loan was re-negotiated in May 2022 and the warrants
were re-issued at 2.50 GB pence in addition to 10,000,000 warrants at 2.50 GB pence and – these
were both re-issued at 2.00 GB pence at the December 2022 share placing. Upon signing the loan
facility agreement, 1,000,000 shares were issued at an agreed price of GBP 2.0 pence in lieu of a loan
arrangement fee. The loan was repaid in April 2023.
The Group has a loan with Auric Network, a cryptocurrency organisation that operates in South
Korea, with a balance of USD 353,300 at 31 December 2022 (2021, USD 353,300). This funding is in
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
48
the form of a prepayment of gold to be repaid upon production at a 20% discount to the gold price
at the time of delivery.
16.4 Reconciliation of Liabilities arising from Financing Activities
For the year ended 31 December 2022
Current
Other
Financial
Liabilities
(USD)
Derivative
financial
instruments
(USD)
Total
(USD)
At 31 December 2020
176,700
202,889
379,589
Cash Flows
550,456
-
550,456
Non-cash flows:
Loan charges and interest
51,925
-
51,925
Fair Value Changes
-
82,999
82,999
At 31 December 2021
779,081
285,888
1,064,969
Cash Flows
282,000
-
282,000
Debt conversion
(65,000)
-
(65,000)
Non-cash flows:
Loan charges and interest
5,377
-
5,377
Fair Value Changes
-
326,941
326,941
At 31 December 2022
1,001,458
612,829
1,614,287
16.5 Share Warrants – Fair Value
The fair value of the warrants is derived from the Black-Scholes model on the parameters noted and
is represented by the following table:
31-Dec-22
31-Dec-21
Number
(USD)
Number
(USD)
Issued in April 2016 and outstanding
5,757,924
46,646
5,757,924
79,497
Issued in period ended 31 December 2020
and outstanding
-
-
2,692,307
53,935
Issued in period ended 31 December 2021
and outstanding
9,464,916
96,214
9,464,916
152,456
Issued in period ended 31 December 2022
and outstanding
48,100,000
469,969
-
-
Warrants – issued
63,322,840
612,829
17,915,147
285,888
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
49
The warrants were fair valued using a Black Scholes model, based on the following parameters – risk free rate 2.4% (2021, 1.3%), volatility of 88% for 3
years (2021, 99%) and 80% for 1 year (2021, 84%).
16.6 Share Warrants – Issued
Warrants issued and warrants to be issued denominated in Sterling are classified as derivative financial instruments carried at fair value through profit and
loss. There were 48,100,000 warrants issued during the financial year (2021, 9,464,916).
1.30p
2.00p
2.50p
3.50p
3.962p
5.75p
Outstanding at 31 December 2020
2,692,307
-
-
-
-
5,757,924
Issued in 2021
-
-
-
-
9,464,916
-
Converted in 2021
-
-
-
-
-
-
Lapsed in 2021
-
-
-
-
-
-
Outstanding at 31 December 2021
2,692,307
-
-
-
9,464,916
5,757,924
Issued in 2022
-
-
34,100,000
14,000,000
-
-
Converted in 2022
(2,692,307)
-
-
-
-
-
Lapsed in 2022
-
-
-
-
-
-
Re-negotiated in 2022
-
38,564,916
(29,100,000)
-
(9,464,916)
-
Outstanding at 31 December 2022
-
38,564,916
5,000,000
14,000,000
-
5,757,924
Exercisable at 31 December 2022
-
38,564,916
5,000,000
14,000,000
-
5,757,924
The re-negotiated warrants relate to shot-terms loans (refer note 16.3 of the audited financial statements). The 5,000,000 warrants at 2.50p were issued as
an incentive for a non-related consultant engaged by the Company to lead its Investor Relations efforts. The 14,000,000 warrants at 3.50p were issued as
part of the share placing arrangements in December 2022. The 5,757,924 warrants at 5.75p were issued to a related party of Colin Patterson in the April
2016 prospectus.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
50
17. Financial Instruments
17.1 Financial Assets measured at Amortised Cost
31-Dec-22
(USD)
31-Dec-21
(USD)
Trade and other receivables
197,355
19,244
Cash and cash equivalents
35,910
166,668
233,265
185,912
17.2 Financial Liabilities measured at Amortised Cost
31-Dec-22
(USD)
31-Dec-21
(USD)
Trade and other payables – current
195,666
223,059
Other financial liabilities
1,001,458
779,081
1,197,124
1,002,140
17.3 Derivative financial instruments measured at Fair Value
31-Dec-22
(USD)
31-Dec-21
(USD)
Derivative financial instruments – warrants
612,829
285,888
612,829
285,888
17.4 Fair Values
The fair values of the Group’s cash, trade and other receivables and trade and other payables are
considered equal to their book value.
Other financial liabilities are initially measured at fair value and subsequently at amortised cost. The
fair values of the Group’s other financial liabilities are considered equal to the book values as the
effect of discounting on these financial instruments is not considered to be material.
The warrants are classified as Level 3 financial instrument as certain inputs to the Black-Scholes
valuation model are not based on observable market data.
17.5 Liquidity Risk
The Group monitors constantly the cash outflows from day to day business and monitors long term
liabilities to ensure that liquidity is maintained. Trade liabilities of USD 195,666 are due on demand,
loans from the Korean consortium of USD 353,300 are due to be repaid from gold production by the
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
51
Company and short-terms loans that were re-paid in April 2023 (refer note 23 of the audited
financial statements).
As disclosed in the going concern statement in note 2, the Company actively addresses the
requirement to manage the Group’s cash balances as well as to raise new financing to fund mining
development activities. This is an area which receives considerable focus from the Board and
management on a daily basis.
17.6 Credit Risk
Credit risk refers to the risk that a counterparty will default on, and not pay, its contractual
obligations resulting in a financial loss to the Group. In order to minimise this risk, the Group
endeavours only to deal with companies which are demonstrably creditworthy and this, together
with the aggregate financial exposure, is continuously monitored.
Credit risk on cash and cash equivalents is considered to be acceptable as the counterparties are
either substantial banks with high credit ratings or with whom the Group has offsetting debt
arrangements.
Trade and other receivables have been recorded at cost and are in accordance with contractual
arrangements.
17.7 Interest rate risk
At the balance sheet date, the Group does not have any long-term variable rate borrowings.
17.8 Foreign currency risk
The Group’s cash at bank balance consisted of the following currency holdings:
31-Dec-22
(USD)
31-Dec-21
(USD)
US Dollars
623
6,511
Sterling
29,095
150,866
Philippine Pesos
302
9,291
Korean Won
5,890
-
35,910
166,668
The Group is exposed to transaction foreign exchange risk due to transactions not being matched in
the same currency. This is managed, where possible and material, by the Group retaining monies
received in various currencies in order to pay for expected liabilities in that currency. The Group
currently has no currency hedging in place.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
52
The Group’s exposure to financial assets and financial liabilities is as shown in the following tables:
Financial Assets
31-Dec-22
(USD)
31-Dec-21
(USD)
US Dollars
6,760
25,755
Sterling
209,515
150,866
Philippine Pesos
302
9,291
Korean Won
16,688
-
233,265
185,912
Financial Liabilities – Current
31-Dec-22
(USD)
31-Dec-21
(USD)
US Dollars
864,478
401,855
Sterling
866,456
788,726
Philippine Pesos
79,019
97,447
1,809,953
1,288,028
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with
respect to the Philippines Peso and Sterling, but these are not significant as most of the transactions
are in USD. However, the Group’s management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly.
18. Capital Management
The Group’s capital management objectives are to ensure that the Group’s ability to continue as a
going concern, and to provide an adequate return to shareholders. The Group manages the capital
structure through a process of constant review and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may issue new shares, adjust dividends paid to shareholders,
return capital to shareholders, or seek additional debt finance.
The nature of the Group’s equity reserves is:
● Reserves – cumulative gains and losses on translating the net assets of overseas operations to the
presentation currency, and share based payments for the acquisition of joint venture
participation rights;
● Unissued share capital – this reflects the value of equity that management has agreed to issue for
settlement of remuneration, liabilities and funding provided;
● The cost of investment in the joint ventures at fair value on the date of signing the formal joint
venture agreement – being, USD 1,330,080 at the Company’s share price of GBP 2.56 pence on
17 August 2018;
● Retained surplus/accumulated losses – comprise the Group’s cumulative accounting profits and
losses since inception.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
53
19. Share Based Payments
31-Dec-22
31-Dec-21
Number
Number
Issued share – non-related parties
9,103,679
-
Unissued share – non-related parties*
-
103,679
9,103,679
103,679
* Shares were issued in the year ended 31 December 2022 upon receipt of CREST details by the Company
Shares issued to non-related parties in the year represent shares issued in lieu of finance costs and
other operating costs incurred in the year. These totalled USD 260,266 (2021, 2,686).
20. Share Capital
20.1 Issued Share Capital
31-Dec-22
31-Dec-21
Number
USD
Number
USD
Opening Balance
622,315,788
19,584,044
397,647,406
8,670,780
Shares issued in the period*
19,566,5732
438,354
-
-
Share based payments
9,103,679
262,952
-
-
Southern Gold Limited
-
-
200,000,000
10,000,000
Salary sacrifice
628,843
28,108
24,668,382
913,264
Closing Balance
651,615,042
20,313,458
622,315,788
19,584,044
* Includes USD 183,528 cash received on 05 January 2023 in relation to shares issued in December 2022 plus non-cash
conversions of USD 149,093 less USD 13,396 moved to unissued share capital at year end
The shares have no par value.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
54
Issued share capital at 31 December 2022 is represented by:
31-Dec-22
31-Dec-21
Number
%
Number
%
Aidan Bishop*
67,455,536
10.4%
66,955,536
10.8%
Charles Barclay
15,791,813
2.4%
15,791,813
2.5%
Jonathan Morley-Kirk
5,306,253
0.8%
4,806,253
0.8%
Colin Patterson*
74,805,973
11.5%
73,501,973
11.8%
Clive Sinclair-Poulton*
2,316,776
0.4%
1,816,776
0.3%
Graeme Fulton
6,330,989
1.0%
5,830,989
0.9%
Stuart Kemp
11,471,619
1.8%
10,971,619
1.8%
Total PDMR
183,478,959
28.2%
179,674,959
28.9%
International Gold PTE Limited**
150,000,000
23.0%
200,000,000
32.1%
Momentum Resources Limited
34,209,117
5.3%
34,209,117
5.5%
Other
283,926,966
43.5%
208,431,712
33.5%
Total Non-PDMR
393,136,083
71.8%
442,640,829
71.1%
Total Issued Shares
651,615,042
100.0%
622,315,788
100.0%
* Issued to a related party
** 100% subsidiary of Southern Gold Limited
20.2 Unissued Share Capital
31-Dec-22
31-Dec-21
Number
USD
Number
USD
Salary Sacrifice
12,610,169
301,201
714,325
31,835
Share based payments
-
-
103,679
2,686
December 2022 share placing
500,000
13,396
-
-
13,110,169
314,597
818,004
34,521
Directors and key management personnel agreed to take all fees between May 2019 and September
2021 as equity, which was issued in June 2021 and December 2021.
The unissued share capital balance at 31 December 2022 represents amounts due to directors and
key management personnel for the period from October 2021 to December 2022. The unissued
shares relating to the December 2022 share placing were issued in February 2023 when the relevant
CREST details were received by the Company.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
55
20.3 Earnings Per Share
12 months to
31-Dec-22
(USD)
12 months to
31-Dec-21
(USD)
Basic earnings per share
(0.0023)
0.0172
Profit/(loss) used to calculate basic earnings per share
(1,485,806)
7,530,988
Weighted average number of shares used in calculating
basic earnings per share
634,315,476
438,244,730
Diluted earnings per share
(0.0023)
0.0168
Profit/(loss) used to calculate diluted earnings per share
(1,485,806)
7,530,988
Weighted average number of shares used in calculating
diluted and earnings per share
634,315,476
449,529,235
Basic profit/loss per share is calculated by dividing the loss attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding and shares to be issued during the
period.
Dilutive profit/loss per share is calculated by dividing the loss attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding, shares to be issued and warrants
issued during the period.
20.4 Substantial Shareholders (unaudited)
At 31 December 2022 the following had notified the Company of disclosable interests in 5% or more
of the nominal value of the Company’s shares.
Number
%
International Gold PTE Limited (Southern Gold Limited)
150,000,000
23.0%
Rene Nominees (IOM) Limited
126,849,621
19.5%
Fiske Nominees Limited
95,720,437
14.7%
Hargreaves Lansdown (Nominees) Limited
52,413,333
8.0%
Interactive Investor Services Nominees Limited
45,241,533
6.9%
The Directors are of the view that at 31 December 2022, and the date of the signing of this Annual
Report, that there is no ultimate controlling party.
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
56
21. Related Party Transactions
21.1 Amounts Due to Related Parties
There are no amounts due to related parties at 31 December 2022 or 31 December 2021 as
Directors and key management personnel agreed to take fees as equity (refer notes 7 and 20 of the
audited financial statements).
21.1 Other Related Party Transactions
Directors Remuneration and Key Management Personnel (refer note 7 of the audited financial
statements).
Issued and unissued share capital (refer note 20 of the audited financial statements).
A related party assisted the Company with banking transactions during the year ended 31 December
2022.
22. Capital Commitments
At 31 December 2022 the Group had entered into no contractual commitments for the acquisition of
property, plant and equipment.
The Group has an office lease with an end date of August 2023 – at 31 December 2022 no amounts
are payable in respect of the lease.
23. Events After the Reporting Date
On 07 February 2023, the Company announced it has signed an agreement with a Philippine
company, whose owners have decades of experience in mining, to develop the high grade Batangas
Gold Project in the Philippines.
On 06 March 2023, the Company announced that it has raised GBP 1,215,000 in equity funding at
2.0 GB pence per share. 37,750,000 new shares were admitted to trading and 23,000,000 shares
were transferred by Momentum Resources Ltd to the new investors as part of the Pledged Share
Pool agreed by the Directors.
On 17 April 2023, the Company announced an update on the Mountain Temporary Use Permits for
the Korean projects, which noted that despite all legal obligations being covered these have been
delayed. The Company further announced that that had it agreed to repay USD 648,158 of the loans
due at 31 December 2022 (refer note 16.3 of the audited financial statements).
Bluebird Merchant Ventures Ltd
Annual Financial Report 2022
57
24. Shares in Group Undertakings
During the period the subsidiaries and associate of the Company, including those indirectly held by
the Company, are shown in the following table:
Country of
Percentage of
Ordinary Share
Capital Held
Name of Entity
Nature of Business
Registration
2022
2021
MRL Gold Inc
Batangas Gold Project
Philippines
100%
100%
Egerton Gold Philippines Inc
Batangas Gold Project
Philippines
40%
40%
Gubong Project JV Co PTE Ltd*
South Korea Gold Projects
Singapore
100%
100%
Kochang Project JV Co PTE Ltd**
South Korea Gold Projects
Singapore
100%
100%
* Gubong Project JV Co PTE Ltd is the 100% holder of the South Korea registered Gubong Project Co Ltd (note 11)
** Kochang Project JV Co PTE Ltd is the 100% holder of the South Korea registered Geochang Project Co Ltd (note 11)
The Company acquired the other 50% of the South Korean companies in June 2021 from Southern
Gold Limited (refer note 12 of audited financial statements).