TIDMHUM
RNS Number : 2171T
Hummingbird Resources PLC
21 July 2022
Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector:
Mining
21 July 2022
Hummingbird Resources plc
( "Hummingbird" or the "Company")
Q2 2022 Operational and Trading Update
"Operational trends improving"
Hummingbird Resources plc (AIM: HUM) provides an operational
update for the second quarter of 2022 ("Q2 2022").
An interview with senior management discussing the operational
and trading update can be viewed here.
Further, an updated drone and timelapse camera video detailing
the construction progress at the Kouroussa gold mine in Guinea can
be viewed here.
Q2 2022 updates:
-- Quarter production: Q2 2022 production increased 29% from Q1
2022 to 20,013 ounces ("oz") of gold (Q1 2022: 15,548oz), with
improved mining rates (+26%), processing plant throughput (+20%)
and mill feed grade (+9%) achieved during the quarter
-- All-in Sustaining Cost ("AISC"): AISC reduced by 17% from Q1
2022 to US$1,859 per oz (Q1 2022: US$2,235 per oz) primarily due to
improved quarterly production. Inflationary pressures are being
felt, especially from fuel and consumables, in common with the
global mining industry. However, the Company expects a continual
improvement in the AISC profile from current levels for the
remainder of the year
-- Gold sold: 20,490 oz of gold ("Au") sold in Q2 2022 at an
average realised price of US$1,851 per oz (Q1 2022: 15,179 oz at an
average realised price of US$1,871). The Company held 2,418 oz of
gold inventory on 30 June 2022, valued at c.US$4.3 million
-- Kouroussa, Guinea: During the quarter, construction at
Kouroussa advanced into the important civil works phase of the
build process. The build remains on time and on budget to meet the
scheduled first gold pour by the end of Q2 2023 (see video link
above for more detailed visuals on the construction progress)
-- Dugbe, Liberia : The Dugbe final feasibility study results
were released on 13 June 2022 by our joint venture partners
Pasofino Gold Ltd ("Pasofino") showcasing a sizeable gold mining
project of 2.76 million of ounces ("Moz") of gold in Reserves
(4.01Moz Resources) and strong project economics including a
pre-tax NPV(5%) of US$690 million (US$530 million post-tax), 26.35%
IRR (23.6% post-tax), and a life of mine ("LOM") of 14 years,
producing 200,000 oz per annum in the first five years . As noted
in the June release, the Company is currently conducting a
strategic review of its options to best realise the maximum value
of Dugbe for all stakeholders
-- Updated Company Reserves and Resources(1) : Updated Company
Reserves and Resources Estimate statements for each of the
Company's three gold assets were released during the quarter.
Company Reserves increased materially to 4.13Moz of Au from 1.12Moz
as reported in November 2021 and Resources increasing 8% to 7.28Moz
of Au from the previous statement
Outlook:
-- Guidance: The Company maintains its 2022 guidance of 87,000 -
97,000 oz of gold, forecasting improved H2 production versus H1
2022 levels, in line with our start of year guidance expectations
and our current mine plan. Due to ongoing inflationary cost
pressures, especially from fuel and consumables, the full year AISC
guidance of US$1,300 - US$1,450 per oz will be re-assessed at the
end of Q3 and a further update provided at that time
Dan Betts, CEO of Hummingbird, commented:
"For the second quarter we saw production improvements at
Yanfolila; ongoing construction progress at Kouroussa with major
civil works taking shape towards first gold pour the end of Q2
2023; release of our updated Company Reserves and Resources
statements showcasing LOM extensions providing real long-term value
for the Company, coupled with a major milestone being achieved with
the release of the feasibility study on Dugbe by our joint venture
partners Pasofino.
Despite macro conditions from inflationary pressures being seen
across the board, we remain focussed on maintaining an improving
production profile through H2 2022 at Yanfolila, which should
compensate for most of these pressures, coupled with ongoing
optimisation and cost reduction strategies being implemented at
Yanfolila.
The second half of 2022 is also a critical stage in the
development of our second gold mine at Kouroussa in Guinea, which
remains on track and budget for first gold pour by the end of Q2
2023. The release of the updated Reserves and Resources in Q2
demonstrates the significant open pit grades at this project, which
is a cornerstone of our growth strategy through bringing into
production, diversifying our asset base and generating strong
future cashflows for the Company.
Finally, in H2 2022, we will work with our partners at Pasofino
to conduct a strategic review of Dugbe, Liberia to better
understand our options to maximise shareholder value from this rare
and valuable asset."
Operational Summary
Unit Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022
Gold poured oz 24,494 22,102 18,181 15,548 20,013
------ ---------- ---------- ---------- ---------- ----------
Mined BCMs bcms 2,672,788 2,095,935 1,920,311 2,164,253 2,726,205
------ ---------- ---------- ---------- ---------- ----------
Ore mined t 443,490 392,005 445,808 502,800 511,449
------ ---------- ---------- ---------- ---------- ----------
Ore processed t 391,652 326,020 341,936 298,925 357,837
------ ---------- ---------- ---------- ---------- ----------
Avg. mill
grade feed g/t 2.14 2.27 1.79 1.71 1.87
------ ---------- ---------- ---------- ---------- ----------
Recovery % 91.88% 91.95% 92.38% 95.39% 94.82%
------ ---------- ---------- ---------- ---------- ----------
Gold inventory
- incl SMO oz 1,972 2,769 2,246 2,557 2,418
------ ---------- ---------- ---------- ---------- ----------
Note: Ore mined includes high grade, low grade, and marginal
material. Ore processed is a blend based on preferential feed of
high-grade and low grade , with marginal ore added as an
incremental feed source
Yanfolila, Mali - Operational charts detailing improving trends:
quarterly production; mined BCMs; and average mill grade feed
(g/t)
-- Q2 2022 production of 20,013 oz was a 29% improvement from
the 15,548 oz recorded in Q1 2022. Additional excavator fleet
became operational during the quarter which led to improved mining
volumes and the ability to deliver on the mine plan, leading to
improved gold poured ounces
-- As noted in our Q1 2022 release, the Company was looking to
increase throughput at the mill in Q2, in particular by utilising
increasing oxide stockpiles from mining at the Sanioumale West
("SW") deposit. This took place, with ore processed at the mill
increasing c.20% quarter on quarter to 357,837 oz
-- Mill feed grade for Q2 2022 averaged 1.87 g/t, up +9% (Q1
2022: 1.71 g/t)
-- With improved mining rates and practices starting to take
place, the quantity and quality of ore on our run of mill ("ROM")
pad improved during the quarter, leading to improvements in mill
feed grade
-- Mined bank cubic meters ("BCM") totalled 2,726,205 in Q2 2022
versus 2,164,253 in Q1 2022, a c.26% improvement. This was driven
primarily by the additional excavator fleet that became operational
in the quarter
-- With BCM movements now more in line with our mine plan
forecasts, a key focus for H2 2022 is to better deliver on the mine
plan on a daily, weekly, and monthly basis running into
year-end
-- Processing plant recovery rates for Q2 2022 remained at very
good levels of 94.82% versus 95.39% in Q1 2022
-- The Company is forecasting improved H2 production versus H1
2022 levels, in line with our start of year guidance expectations
and our current mine plan primarily driven by more consistent
mining volume rates leading to better access to higher quality ore
at the right sequence to the mine plan; improved ROM pad
performance of quality and quantity of ore feed to the mill; and
ongoing consistent processing plant performance
-- As noted in our updated Company Reserves and Resources
statements, with Yanfolila Komana East underground ("KEUG")
Reserves increasing 75koz (+37% from the previous statement), to
total 278koz at 3.94 g/t, KEUG is expected be a key source of
high-grade ore, providing a c.40,000- 50,000 oz per annum
production profile for a minimum of +5-6 years once in production
(with KEUG LOM upside potential with further exploration drilling
given mineralisation remains open at depth)
-- With the 2022 KEUG Reserves now complete, the Company is
finalising its detailed analysis of the KEUG deposit in terms of
economics, mining and when to incorporate it into the future mine
plans at Yanfolila, with more details of these plans to be
highlighted once finalised
-- Further, in early July, the Economic Community of West
African States ("ECOWAS") lifted economic and financial sanctions
imposed on Mali, after its military rulers proposed a 24-month
transition to democracy and published a new electoral law
-- This is a positive for our Yanfolila operations as it allows
for the removal of restrictions that have been imposed on the
movement of goods and people across borders and international
banking capabilities in particular. Importantly, with the lifting
of sanctions, offsetting of VAT recoverable against taxes payable
has recommenced, expecting to be a net cash benefit
Kouroussa, Guinea
During the quarter, considerable progress was made on
constructing Kouroussa, with the scheduled timeline and budget
remaining on track to achieve the first gold pour by the end of Q2
2023. Key updates included:
-- Major civil works are well underway including: processing
plant CIL tanks construction advancing to plan; the permanent mine
camp cement foundations and related infrastructure underway; and a
ccess roads and related infrastructure such as river crossing
culverts being completed
-- Power (including important solar plant and heat recovery
system initiatives) and mining contractor contracts are expected to
be awarded during Q3 2022
-- The concrete batch plant, rebar bending store and laboratory
facilities became operational in Q1 2022, with cement manufacturing
output increasing for general, processing plant, and mine camp
foundation works that are occurring
-- With the updated Company's Reserves and Resources statements
now completed, our geology team are doing a more detailed review of
future exploration drilling campaigns to be initiated with the
focus to increase Kouroussa's overall Resources and Reserves and
ultimately LOM
-- Community engagement remains a key feature of all
workstreams, with the community projects and livelihood initiatives
to start H2 2022 including: water supply infrastructure; local
community hospital infrastructure improvements and medical
supplies; market gardens; and Shea butter manufacturing
training
Dugbe, Liberia
-- The results of the Dugbe Gold Project FS, prepared by the
Company's earn-in partner Pasofino, were released on 13 June 2022.
This was a key milestone for the Company, taking Dugbe from an
exploration asset to an economically viable and sizeable gold
mining project
-- The FS results showcased 2.76Moz in Reserves (4.01Moz
Resources) and strong project economics including: Pre-tax NPV(5%)
of US$690 million (US$530 million post-tax), 26.35% IRR (23.6%
post-tax); a 3.5-year capex payback period once in production; and
a 14-year LOM, producing 200,000 oz per annum in the first five
years at a low AISC profile of US$1,005/oz
-- The Company is currently conducting a strategic review of its
options to best realise the maximum value of Dugbe for all
stakeholders
Financial Summary:
Unit Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022
Gold sales oz 24,790 22,255 18,489 15,179 20,490
------- -------- -------- -------- -------- --------
Avg. gold sale
price $/oz $1,802 $1,782 $1,782 $1,871 $1,851
------- -------- -------- -------- -------- --------
Operating cash
costs $'000 $33,986 $33,472 $32,486 $32,177 $38,253
------- -------- -------- -------- -------- --------
AISC on gold
sold $/oz $1,386 $1,520 $1,803 $2,235 $1,859
------- -------- -------- -------- -------- --------
Net (debt)
/ cash $'m $9.0 ($5.9) ($25.0) ($47.4) ($64.4)
------- -------- -------- -------- -------- --------
Net (debt)
/ cash inc
gold inventory
value $'m $12.4 ($1.0) ($21.0) ($42.4) ($60.1)
------- -------- -------- -------- -------- --------
-- Q2 2022 AISC improved 17% from Q1 2022 levels at US$1,859 per
oz, versus US$2,235 per oz in Q1 2022 primarily due to the improved
quarterly production
-- As seen with the Q2 AISC profile, with production
improvements forecast for the H2 2022, the AISC profile is also
scheduled to improve. As noted in our highlights above, due to
ongoing inflationary cost pressures, especially from fuel and
consumables, the full year AISC guidance of US$1,300 - US$1,450 per
oz will be re-assessed at the end of Q3 and a further update
provided at that time
-- As noted above, with sanctions lifted on Mali in early July,
offsetting of VAT recoverable against taxes payable has
recommenced, expected to be a net cash benefit
-- Net debt position c.US$64.4 million end of Q2 2022 (c.US$60.1
million including gold inventory value), with c.US$23 million debt
remaining available from Coris Bank International ("Coris Bank")
expected to be drawn during Q3/Q4 2022 for the Kouroussa
construction purposes. Further, the Company retains an overdraft
facility with Coris Bank of c.US$20 million
-- With improved H2 2022 production and AISC profile forecast at
Yanfolila, the Company's cash flow generation is expected to also
improve
ESG Q2 2022 updates include:
-- The external assurance audit begun in Q2 for the year 3 World
Gold Council ("WGC") responsible gold mining principles ("RGMPs")
requirements. A dedicated Hummingbird ESG team and external
consultants are in place to achieve a positive assurance audit
report outcome, expected in Q4 this year
-- As noted above, at Kouroussa, community engagement remains a
key feature of all workstreams, with the rolling out of initial
community projects and livelihood initiatives to start H2 2022:
including: water supply infrastructure; local community hospital
infrastructure improvements and medical supplies; market gardens;
and Shea butter manufacturing training
-- Further at Kouroussa we expect to be awarding the power
contract soon, which will include carbon emission reduction
technologies that will lower the overall carbon footprint of the
mine including: A +7Mwh solar plant and heat recover generator
units at the processing plant
-- At Dugbe, Liberia the Environmental and Social Impact
Assessment ("ESIA") study is expected to be finalised by our joint
venture partners, Pasofino in Q3 2022
Footnote 1 - All Company Reserves and Resources are shown on a
100% basis. Hummingbird will retain a controlling interest in Dugbe
of 51%
**ENDS**
Notes to Editors:
Hummingbird Resources plc (AIM: HUM) is a leading multi-asset,
multi-jurisdiction gold production, development and exploration
Company, member of the World Gold Council and founding member of
Single Mine Origin (www.singlemineorigin.com). The Company
currently has two core gold projects, the operational Yanfolila
Gold Mine in Mali, and the Kouroussa Gold Mine in Guinea, which
will more than double current gold production when production,
scheduled for first gold pour end of Q2 2023. Further, the Company
has a controlling interest in the Dugbe Gold Project in Liberia
that is being developed by Pasofino Gold Limited through an earn-in
agreement. The final feasibility results on Dugbe showcase 2.76Moz
in Reserves and strong economics such as a 3.5-year capex payback
period once in production, 14-year life of mine at a low AISC
profile of US$1,005/oz. Our vision is to continue to grow our asset
base, producing profitable ounces, while central to all we do being
our Environmental, Social & Governance ("ESG") policies and
practices.
For further information please visit www.hummingbirdresources.co.uk or contact:
Daniel Betts, Hummingbird Resources Tel: +44 (0) 20
CEO plc 7409 6660
Thomas Hill,
FD
Anthony Köcken,
COO
Edward Montgomery,
CSO & ESG
James Spinney Strand Hanson Limited Tel: +44 (0) 20
Ritchie Balmer Nominated Adviser 7409 3494
---------------------- ----------------------------
James Asensio Canaccord Genuity Tel: +44 (0) 20
Gordon Hamilton Limited 7523 8000
Broker
---------------------- ----------------------------
Bobby Morse Buchanan Tel: +44 (0) 20
Ariadna Peretz Financial PR/IR 7466 5000
George Cleary Email: HUM@buchanan.uk.com
---------------------- ----------------------------
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