TIDMHUM
RNS Number : 3008L
Hummingbird Resources PLC
18 July 2017
Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector:
Mining
Hummingbird Resources plc ("Hummingbird Resources" or
"Hummingbird" or "the Company")
Quarterly Review
Commencement of Pre-Production Mining due in Q3
Hummingbird Resources (AIM: HUM) is pleased to announce a review
of activities during Q2 2017, including the advancement of mine
construction at the Yanfolila Gold Project in Mali ("Yanfolila" or
"the Project").
Highlights:
Operational
-- Continued advancement of the 1.2Mtpa Yanfolila mine ahead of
targeted first gold pour by the end of 2017
-- Construction remains on schedule and on budget with several
aspects of development now completed:
Area Progress completed
---------------------- -------------------
Process Design 100%
---------------------- -------------------
Detailed Engineering 100%
---------------------- -------------------
Procurement and
Delivery 88%
---------------------- -------------------
Construction 56%
---------------------- -------------------
Committed Capex 73%
---------------------- -------------------
Commissioning 0%
---------------------- -------------------
-- Arrival of ball mill to site - significant milestone achieved
in mine development which de-risks the delivery of Yanfolila's
critical path
-- African Mining Services ("AMS") contract fleet on site and
assisting with Tailings Storage Facility ("TSF") construction
alongside Malian civil contractor Inter Mining Services ahead of
AMS commencing pre-production mining in Q3 2017
-- 90% of Capex committed on the process plant construction
Corporate
-- Increased ownership in the Project to 80% from 75% following
the Company's acquisition from La Petite Mine d'Or SARL ("LPMDO")
of its 5% interest in the Project for US$1 million
-- Hummingbird also successfully negotiated the acquisition of
the 1% royalty LPMDO had over the Project for a further US$1
million
-- Total consideration of US$2 million to be paid in shares on 31 March 2018
-- US$60 million debt facility entered into with Coris Bank International Group in April 2017
-- US$35 million balance drawn from debt facility with Coris
Bank International - facility is now fully drawn down having drawn
an initial US$25 million in April 2017
-- Company's cash balance on 17 July 2017 was approximately US$70 million
Please click on the following link to see recent pictures and
videos of construction: http://hummingbirdresources.co.uk/gallery/.
This will continue to be updated regularly.
Dan Betts, CEO of Hummingbird, commented:
"The construction of the Yanfolila Gold Project continues at
pace. We currently have over 700 people on site and the
construction team has recently completed 500,000 Lost Time Incident
("LTI") free hours which is a significant achievement.
"The Project remains on time and on budget and the team remains
highly motivated as we enter the final phases of construction and
mobilisation for mining begins.
"During Q2 we acquired a further 5% interest in Yanfolila and
bought out a 1% royalty on the Project for a settlement of US$2m of
Hummingbird shares to be settled in March 2018. This will allow us
to retain more of the cashflows from Yanfolila for the benefit of
shareholders. Based on our Reserves alone this is estimated to add
at least US$10 million to the cashflows attributable to
Hummingbird.
"Additionally, we entered into a loan agreement with Coris Bank
International who are a supportive and knowledgeable lender. We
have subsequently drawn the whole US$60 million loan in order to
bring any financing risk to an absolute minimum. At a US$1,250 gold
price we anticipate, based on the final Project study, free
cashflows of around US$70 million in our first full year of
production. We are very excited about keeping the market and our
shareholders abreast of developments over this very busy Q3
period."
Further Information:
Construction Update
Progress continues to be made across all areas of construction
at the Yanfolila Gold Project.
Construction of the CIL tanks are now complete. The completion
of the CIL tanks has allowed other work fronts to progress rapidly,
for example the tank agitators and tank-top steel are also now
installed, again opening up more mechanical work fronts. The ball
mill arrived on site on time and preparation is in place for its
installation. This was the longest lead item on the Project and its
arrival materially de-risked the construction timeline.
Construction of the crushing circuit is ongoing with the conveyor
system starting to arrive on site. Pre-assembly of the arrived
conveyor sections has started and their erection is expected to
start imminently.
A significant portion of the rest of the plant and equipment is
now on site and installation of this equipment has started.
AMS has mobilised to site and is currently working on the TSF
before commencing pre-production mining. Initial pre-production
mining is due to start in Q3 2017.
A second round of grade control drilling was completed at the
Komana East pit in advance of mining. 2,057m of drilling was
completed over 11 days. This drilling was targeting zones where the
mineralisation was not closed off either in the hanging wall or
footwall of the main mineralisation.
Aggreko, the appointed power provider, will be mobilising to
site in Q3 2017 to provide around 6MW of power from the
commencement of commissioning. Construction power is currently
provided through a 1.6MW generator. As previously announced Zen
continue to provide fuel on site and the main fuel facility is
currently being built to allow for greater fuel storage
capacity.
Hiring of key personnel continues and the Company has been
pleased with the quality of applicants as it builds up its capacity
to move from construction into operations when commissioning
starts.
Interest in Yanfolila Gold Project
When the Company acquired the Project the Government of Mali
("GoM") had a 10% free carried interest and LPMDO had a 5% interest
in the Project. The GoM also had the right to acquire an additional
10% interest in the Project that it exercised in February 2017 for
US$11 million, taking its stake to 20%.
Hummingbird has agreed to take up its option with LPMDO to
acquire its 5% interest in the Project for US$1 million bringing
the Company's interest in Yanfolila to 80%. In addition the Company
has negotiated the acquisition of the 1% royalty LPMDO had over the
Project for a further US$1 million. The 3% royalty to the GoM over
the Project remains.
The consideration of US$2 million due to LPMDO will be satisfied
though the issue of 6,197,353 ordinary 1p shares in Hummingbird
which are expected to be issued on 31 March 2018.
Debt Facility with Coris Bank International
In April, the Company's subsidiary, SMK, entered into a senior
secured term debt facility with Coris Bank International, one of
the largest and fastest growing banks in West Africa. This new
facility of up to US$60 million replaces the funding line
previously anticipated with Taurus Mining Finance Management
("Taurus") to provide the Company with sufficient working capital
to complete the mine build at Yanfolila at a lower cost and without
any royalty commitment, which will result in a material saving for
Hummingbird over the life of the mine. Following an initial draw
down of CFA15.5 billion (approximately US$25 million) in April, the
Company drew the balance of the debt facility (approximately US$35
million) post period end in July 2017.
Additionally the Company has also extended the termination date
of the subscription agreement with Lindine Inc which was entered
into on 1 June 2016 to 31 December 2017 and that the amount payable
shall revert to the original 22p per share. The amount of shares
currently outstanding to be paid for is 8,103,425 shares.
Yanfolila Exploration
The Company re-iterates the statement it made in its Q1 Update
released on 24 April 2017 that it has reviewed all of its
exploration potential on its mining permit and has created an
outline plan to exploit that potential. Once Yanfolila is in
production, the Company is looking forward to entering into a more
active exploration programme with the specific focus on achieving a
10+ year Reserve mine life in the short term. Currently
Hummingbird's Resources have been converting to Reserves at around
a 50% rate so the Company looks forward to doing further work on
the 1+Moz of Resources not currently in Reserves as well as other
discoveries at a pre-Resource stage (noting there is no guarantee
the conversion rate will remain the same). These targets include
the Gonka deposit where the results of the scoping study published
in early 2016 showed the potential for mining ore at grades of over
4.5g/t with a significant potential increase to the NPV.
Liberia update
The Company's 4.2 million ounce Dugbe Gold Project in Liberia
("Dugbe") offers a large-scale development opportunity for
Hummingbird as demonstrated in the 2013 Preliminary Economic
Assessment which showed viable economics of developing a 20 year
gold mining project with initial gold production of 125,000 ounces
per annum, an NPV of US$186 million, and IRR of 29% using a
US$1,300/oz gold price. Signing a Mineral Development Agreement
with the Government of Liberia in July 2015 gave the Company
security of tenure for at least the next 25 years, allowing
Hummingbird to focus on bringing Yanfolila to production whilst
retaining access to the long-term potential of Dugbe. As
Hummingbird approaches the production stage at Yanfolila and with
the gold price looking increasingly favourable, the options to
realise the significant latent value locked up within Dugbe should
increase.
**S**
For further information, please visit
www.hummingbirdresources.co.uk or contact:
Daniel Betts Hummingbird Resources Tel: +44 (0)20
Thomas Hill plc 3416 3560
Robert Monro
James Spinney Strand Hanson Limited Tel: +44 (0) 20
Ritchie Balmer Nominated & Financial 7409 3494
James Bellman Adviser
Jon Belliss Beaufort Securities Tel: +44 (0) 20
Limited 7382 8300
Broker
Lottie Brocklehurst St Brides Partners Tel: +44 (0) 20
Susie Geliher Ltd 7236 1177
Financial PR/IR
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
About Hummingbird Resources Plc
Notes to Editors
Hummingbird Resources (AIM: HUM) is building a leading gold
production, development and exploration company. The Company has
two core gold projects, the near-term production Yanfolila Gold
Project in Mali and the Dugbe Gold Project in Liberia. It is
currently building Yanfolila targeting first production by end of
2017, which has a Probable Reserve of 709,800oz @ 3.14g/t and total
Resources of 1.8Moz of gold and an additional 390,700oz of
non-compliant exploration potential. The high-grade gold project
has low operating costs of US$695/oz AISC with 132,000oz of first
full year's production.
The 4.2Moz Dugbe Gold Project in Liberia provides Hummingbird
with excellent development upside. An optimisation of the DFS is
on-going whilst Yanfolila is brought to production in the
near-term. Additionally, the Company has 4,000km(2) highly
prospective exploration ground in Mali and Liberia and is
constantly evaluating new quality assets.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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