TIDMHUM
RNS Number : 0128W
Hummingbird Resources PLC
07 December 2023
Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector:
Mining
7 December 2023
Hummingbird Resources pl c
("Hummingbird", the "Group" or the "Company")
Corporate strategy update, equity placement & TVR
Hummingbird (AIM: HUM) is pleased to announce a corporate
strategy update and an underwritten equity placement, part of which
is subject to, inter alia, shareholder approval.
Highlights
-- Hummingbird is undertaking an equity placement of up to US$30
million (the "Placement") at a price of 11.2625 pence per
Subscription Share (the "Placement Price"), underwritten by a
partially conditional US$25 million investment by the Company's
largest shareholder and strategic investor CIG SA ("CIG"), to
accelerate its growth strategy, increase exploration, and
strengthen its balance sheet to provide capital support for the
Group's operations.
-- In addition to the Placement, the Company will offer
shareholders the opportunity to subscribe for shares at the same
price as the Placement through an open offer to be launched in due
course (the "Open Offer").
-- Hummingbird is in the process of converting its 51% interest
in the Dugbe Gold Project, Liberia (the "Project"), into a 51%
controlling shareholding interest in TSX-V listed Pasofino Gold
Limited ("Pasofino"). The conversion simplifies the ownership
structure of the Project, providing clear visibility and control to
facilitate more efficient decision-making and project
advancement.
-- The Group intends to enter into a near term revenue
protection strategy through a gold price cost collar over a portion
of the Company's production for the first three quarters of FY-2024
in the order of c.60,000 ounces ("oz"), as the Company materially
deleverages its balance sheet .
-- Yanfolila remains on track to meet its FY-2023 production
guidance of 80,000 - 90,000 oz with AISC under US$1,500 per oz and
the ramp-up at Kouroussa continues to progress towards full scale
commercial production in early FY-2024.
-- The Company is on track to produce c.200,000 oz in FY-2024.
Formal FY-2024 Group production and AISC guidance will be provided
at the Q4-2023 operational and trading update, expected at the end
of January FY-2024.
Dan Betts, CEO of Hummingbird, commented:
"Today's announcement of an equity placement, corner-stoned by
CIG demonstrates the ongoing support for Hummingbird to implement
our growth strategy. The Placement strengthens our balance sheet,
increases our exploration activities, and advances the Dugbe Gold
Project, through the soon to be controlling interest we have now
established in Pasofino. The revenue protection strategy also locks
a portion of our FY-2024 gold production as we move to materially
deleverage and strengthen our balance sheet.
With the ramp-up of Kouroussa progressing, we are set to reach
full commercial production in early FY-2024, and remain on track to
be a c.200,000 oz per year gold producer next year."
Yacouba Sare, Managing Director of CIG SA, commented:
"Our strategic investment is an endorsement of Hummingbird's
strategy for growth to a be multi-asset, multi-jurisdictional gold
producer. With a strengthened balance sheet, accelerated
exploration plans and the soon to be controlling interest in
Pasofino, we believe the Company is well on its way to achieving
its near and longer term growth ambitions."
Management interview and Webcasts
An interview with Dan Betts, CEO and Interim Chairman on this
release is available on the Company's website - Media - Hummingbird
Resources Plc .
Additionally, the Company plans to hold a webcast via the
Investor Meet Company platform following the release of the
Circular. The Company invites attendees to pre-send questions to
the Company via IR@hummingbirdresources.co.uk .
Equity Placement
The Company is undertaking an equity placement of up to US$30
million, subject to, inter alia, shareholder approval, comprised of
a partially conditional US$25 million investment by CIG (the "CIG
Investment") and up to US$5 million from other investors. The
Placement involves the issue of up to 210,491,795 new ordinary
shares of GBP0.01 of the Company ("Ordinary Shares") (the
"Subscription Shares") split across two tranches:
-- A firm first tranche of US$5.5 million, which involves the
issue of 38,576,805 Subscription Shares (the "First Tranche
Shares"), including the issue of 35,057,991 Subscription Shares to
CIG, which will result in a CIG holding of 29.9% in the Company,
and;
-- A conditional second tranche, subject to, inter alia,
shareholder approval, of up to US$24.5 million, which involves the
issue of up to approximately 171,914,990 Subscription Shares (the
"Second Tranche Shares"), which, before the effect of the below
mentioned Open Offer, is expected to see CIG establish a holding of
up to c.43% in the Company.
The placement price is 11.2625 pence per Subscription Share (the
"Subscription Price").
In addition, the Company will offer shareholders the opportunity
to subscribe for new Ordinary Shares at the Subscription Price
through an open offer to be launched in due course (the "Open
Offer"). Further details, including how qualifying shareholders can
participate in the Open Offer, will be provided in the coming weeks
with the publication of a shareholder circular containing full
details of the Placement (the "Circular").
CIG is conditionally subscribing for up to 142,522,475 of the
Second Tranche Shares subject to, inter alia, the granting of a
Rule 9 waiver by The Panel on Takeovers and Mergers (the "Panel"),
to be approved by shareholders independent of CIG, of the
obligations that would otherwise fall upon CIG pursuant to Rule 9
of The City Code on Takeovers and Mergers to make an offer for the
entire issued share capital of the Company as a result of the
potential issue of the Second Tranche Shares to CIG, which will
lead to its interest in the Company increasing to over 30 per cent,
and potentially up to approximately 43 per cent. dependent on the
level of acceptances for the Open Offer. Further details on the
Rule 9 waiver will be set out in the Circular.
The First Tranche Shares are expected to be admitted to trading
on AIM on 12 December 2023. Conditional upon, inter alia,
shareholder approval being granted at the General Meeting for the
issue of the Second Tranche Shares, the Second Tranche Shares will
be admitted to trading on AIM as soon as practicable following the
General Meeting.
The Company intends to publish the Circular shortly, which will
include a notice of General Meeting, and a further announcement
will be made as and when appropriate.
Use of proceeds
The Company will allocate the net proceeds to strengthen the
balance sheet of the business and advance multiple growth
initiatives as part of the Company's growth strategy. These
initiatives encompass exploration activities at both the Yanfolila
and Kouroussa Gold Mines, as well as maximising the value of the
Dugbe Gold Project.
Hummingbird intends to utilise the proceeds of the Placement as
follows:
-- Exploration Activities: c.US$5 million of the funds will be
directed towards increased exploration activities at the Yanfolila
and Kouroussa Gold Mines.
o Hummingbird's exploration team has developed a comprehensive
exploration plan from FY-2024 onwards, focused on high-probability
targets aimed at increasing Resources to Reserves for the Group,
thereby extending the Life of Mine ("LOM") at both operating
assets.
-- Dugbe Gold Project Advancement : c.US$2 million of the
proceeds will be dedicated to progressing the Dugbe Gold Project in
Liberia, bringing this highly valuable asset closer to
production.
o The funds will be used to optimise the 2022 Definitive
Feasibility Study ("DFS") through FY-2024 and further progress the
Project. Hummingbird and Pasofino have identified several
opportunities to maximise the value of Dugbe and reduce the overall
project capex profile, including the optimisation of power usage,
improvements to the metallurgical recovery rates and additional
exploration activities.
-- Balance Sheet Strengthening : The remainder of the proceeds
will be used to strengthen the Company's balance sheet through
deleveraging and operational initiatives.
o The funds will be allocated to provide additional capital
support for the Group as it completes operational initiatives at
Yanfolila including, the Komana East Underground operation, and the
ramp up of Kouroussa to commercial production in early FY-2024, as
well as supporting the deleveraging of the balance sheet.
Conversion of the Ownership of the Dugbe Gold Project
Following the exercise of Pasofino Gold Limited's ("Pasofino" -
TSXV: VEIN) option, Hummingbird will, upon approval of its Personal
Information Form by the TSX Venture Exchange ("TSXV"), convert its
51% interest in the Dugbe Gold Project into a 51% controlling
shareholding interest in Pasofino. The conversion simplifies the
ownership structure of the Project, providing clear visibility and
control over one of West Africa's largest undeveloped gold projects
and facilitating more efficient decision-making and project
advancement.
With a pre-tax and post-tax NPV5% (at US$1,700/oz gold price) of
US$690 million and USD524 million respectively (Pre-tax NPV5% at
US$1,850/oz of US$920 million), 4.0 million oz in Resources and 2.8
million oz in Reserves, and a production profile of 200,000 oz for
the first 5 years of the fourteen years LOM, Dugbe is a strategic
asset with significant value upside for Hummingbird's shareholders.
For the next 12 months, the Company plans to optimise the Dugbe
Definitive Feasibility Study ("DFS") completed by Pasofino to
maximise value and progress the Project towards construction. (Full
details of the DFS can be found - www.pasofinogold.com),
The conversion is being undertaken pursuant to Pasofino's
exercise of its right under an Option Agreement entered in 2020 to
acquire Hummingbird's 51% interest in the issued and outstanding
shares of Hummingbird Resources (Liberia) Inc. ("HBL"), which holds
the interest in Dugbe, and all shareholder loans made by
Hummingbird to HBL (the "Dugbe Interest"). This transaction will
result in Pasofino becoming the sole owner of the Dugbe Gold
Project, subject to the 10% carried interest of the Government of
Liberia, and be classified as a subsidiary of Hummingbird.
In consideration for the ownership conversion, Pasofino will
issue 54,027,783 new common shares to Hummingbird, granting the
Company a 51% shareholding interest in Pasofino, and consequently
establishing Hummingbird as a "control person" under the TSXV
policies. Pasofino's shareholders approved Hummingbird control
person status at the annual general and special meeting held on
August 23, 2023. Closing remains subject to the TSXV approving
Hummingbird's personal information form, which approval is expected
in the near-term.
In order to affect the ownership conversion, Hummingbird,
Pasofino, and its wholly-owned subsidiary, ARX Resources Limited,
are entering into a share exchange agreement ( " Share Exchange
Agreement " ), effective upon the Personal Information Form filed
by Hummingbird being approved by the TSXV The Share Exchange
Agreement mandates that Pasofino and Hummingbird enter into an
investor rights agreement ("Investor Rights Agreement"), pursuant
to which the Company is entitled to appoint three members to the
board of Pasofino, of which two members have been appointed and the
third member will be appointed in due course.
In this regard, in liaison with the Company, Pasofino will
appoint Dan Betts (Non-executive Chairman), Stephen Dattels
(Non-executive Deputy Chairman), and Thomas Hill (Non-executive
Director) to the Board, effective as of the closing, in addition to
two of the existing directors - Sava Sahin and Robert Metcalfe, who
will continue as directors of the Board. These directors will serve
on the Board until they seek re-election at the next annual meeting
of Pasofino's shareholders.
Further details can be found in the announcement by Pasofino via
the following link: www.pasofinogold.com/news
CIG Investment Details
CIG will be issued 35,057,991 First Tranche Shares and up to a
further 142,522,475 Second Tranche Shares, subject to, inter alia,
shareholder approval. In total, it is expected that CIG will be
issued up to 177,580,466 Subscription Shares and will have a
holding of up to approximately 43% per cent in the Company's share
capital as enlarged by the issuance of the Subscription Shares, and
prior to the effect of the Open Offer.
The terms of the CIG Investment are set out in an investment
agreement entered between CIG and the Company and include:
-- An undertaking by CIG that it will not (save in limited
circumstances) dispose of the Subscription Shares for a period of
12 months from the date of admission of the First Tranche Shares
(in the case of the First Tranche Shares) or 12 months from the
date of admission of the Second Tranche Shares (in the case of the
Second Tranche Shares); and
-- The granting to CIG of a pre-emption right in relation to
further equity issues by the Company while it holds 20% or more of
the Ordinary Shares.
As noted in the Company's 7 February 2023 announcement, CIG is
party to a relationship agreement with the Company and the
Company's nominated adviser, Strand Hanson Limited, which imposes
certain obligations on CIG in its position as a substantial
shareholder (as defined under the AIM Rules) in the Company to
ensure that the Company will at all times be capable of carrying on
its business independently of CIG and the members of its group. The
relationship agreement remains in force for so long as CIG's
holding remains at 10% or above. Under the terms of the CIG
Investment agreement, CIG has also agreed not to make an offer for
the Company without the recommendation of the Company's board, for
so long as its holding is at 15% or more, subject to limited
exceptions.
Related Party Transaction
CIG is classified as a Substantial Shareholder of the Company
pursuant to the AIM Rules for Companies (the "AIM Rules"). The
Company entering into the CIG Investment is accordingly classified
as a related party transaction pursuant to the AIM Rules. In this
regard, the directors of the Company confirm, having consulted with
the Company's nominated adviser, Strand Hanson Limited, that they
consider that the terms of the CIG Investment to be fair and
reasonable insofar as its shareholders are concerned.
Admission and Total Voting Rights
Application has been made to the LSE for the admission of the
38,576,805 First Tranche Shares , which is expected to take effect
on or around 12 December 2023. ("Admission").
Following Admission (of the First Tranche Shares), the Company's
issued share capital will consist of 640,495,504 Ordinary Shares,
all with voting rights. The Company currently does not hold shares
in treasury. The total number of voting rights in the Company
following Admission is therefore 640,495,504, which may be used by
shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in the Company under the FCA's
Disclosure Guidance and Transparency Rules.
A further announcement will be made in respect of the admission
of the Second Tranche Shares.
(1) CIG is controlled by the same principal as the Company's primary lending bank .
**ENDS**
Notes to Editors:
Hummingbird Resources plc (AIM: HUM) is a leading multi-asset,
multi-jurisdiction gold producing 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 once at commercial production. Further, the Company
has a controlling interest in the Dugbe Gold Project in Liberia
that is being developed by joint venture partners, Pasofino Gold
Limited. 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, and a 14-year life of mine at a low AISC
profile. 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 hummingbirdresources.co.uk or contact:
Daniel Betts, Hummingbird Resources Tel: +44 (0) 20 7409
CEO plc 6660
Thomas Hill,
FD
Edward Montgomery,
CD
James Spinney Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer Nominated Adviser 3494
-------------------------- ----------------------------
James Asensio Canaccord Genuity Limited Tel: +44 (0) 20 7523
Broker 8000
-------------------------- ----------------------------
Bobby Morse Buchanan Tel: +44 (0) 20 7466
Oonagh Reidy Financial PR/IR 5000
George Pope Email: HUM@buchanan.uk.com
-------------------------- ----------------------------
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