TIDMHUM
RNS Number : 0160S
Hummingbird Resources PLC
27 September 2017
Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector:
Mining
Hummingbird Resources plc
("Hummingbird Resources" or "Hummingbird" or "the Company")
Conditional Acquisition of 50% Interest in Kobada Gold Project
to Target an Increase in Annual Production at Yanfolila by +45% to
+150,000oz per annum
Hummingbird Resources (AIM: HUM) is pleased to announce that it
has signed a Letter of Intent ("LOI") regarding a potential earn-in
to a 50% interest in the Kobada Gold Project ("Kobada") in Mali
owned by African Gold Group Inc ("AGG") and initial investment into
AGG (the "Transaction").
The Transaction is subject to certain conditions, including that
binding agreements are entered into within 45 days.
Highlights
-- Potential to create a high-grade concentrate at Kobada to be
trucked to Yanfolila for processing to add an additional 50,000oz
gold per annum to Yanfolila
-- Kobada has 2.2Moz Measured, Indicated and Inferred Gold
Resource (including 511Koz of Reserves)
-- Initial investment in AGG of CAD$3.6m for approximately 9.9%
(40,000,000 Units at CAD$0.09c/Unit (each Unit consisting of a
share and a warrant at CAD$0.12 per share))
-- 120-day exclusivity period for due diligence
-- During exclusivity period Hummingbird has the right to
increase shareholding in AGG to 19.2% for a further consideration
of CAD$4.4m at CAD$0.09c/share paid in Hummingbird shares and to
manage the DFS on the Project funded by AGG
-- On completion of the DFS Hummingbird has the right to acquire
50% interest in Kobada through funding capex of the Project
-- Hummingbird to receive 70% of cashflows until capex recovered
Dan Betts, CEO of Hummingbird, commented: "Based on the due
diligence we have completed to date we believe we will be able to
truck a high-grade concentrate to the Yanfolila processing plant
from Kobada. This high-grade concentrate would have a material
increase to our annual production rates and could add up to an
additional 50,000oz per annum to our existing average life of mine
production of 107,000oz.
"The Yanfolila Gold Mine currently has a 7.5 year mine life
based on reserves and we have over 1Moz gold in resources that we
will look to convert to reserves and extend this mine life once in
production. This deal with AGG gives us a path to 150,000oz
production per year within three years from now combined with the
organic extension of mine life from existing resources extending it
well beyond 10 years. This could significantly improve the
production profile of Yanfolila and materially improve the mine's
NPV.
"We are extremely excited about the optionality the deal
provides Hummingbird and working with the management of AGG who
have a strong track record of creating shareholder value within the
industry."
Stephan Theron, CEO of AGG, commented: "This transaction with
Hummingbird is significant for AGG as it validates the intrinsic
value of the Kobada gold Project and fast tracks the planned
development program. Hummingbird provides us the financial capacity
to develop the Kobada Gold Project and we are also gaining a
partner with operational presence in Mali. Kobada provides
Hummingbird the ability to further increase production output at
their Yanfolila mine. The partnership is a win-win for both groups.
We look forward to working with the Hummingbird team on this
transaction."
Further Information
Subject to contract and satisfaction of various conditions and
agreement of the parties including entering into binding agreements
with AGG:
(a) Hummingbird will acquire 40,000,000 units of AGG at a price
of CAD$0.09 per Unit for gross proceeds to AGG of CAD$3,600,000.
Each Unit will consist of 1 share and 1 warrant priced at
CAD$0.12.
(b) AGG shall grant Hummingbird exclusivity to undertake due
diligence for a period of 120 days subject to certain conditions
and extensions (the "Exclusivity Period").
(c) Prior to the expiry of the Exclusivity Period Hummingbird
will have the right to purchase an additional 48,888,888 AGG Shares
at a price of CAD$0.09 per AGG Share for gross proceeds to AGG of
CAD$4,400,000 payable in Hummingbird shares, and to appoint the
Project Manager for the DFS on the Project to be funded by AGG.
(d) Subject to the DFS being acceptable to Hummingbird,
Hummingbird shall fund 100% of the capital costs (the "Capex")
required to build the mine and processing plant that may be
required for the Project and will have the right to manage and
operate the Project.
(e) Hummingbird shall receive 70% of the net cashflows from the
Project until such time as it has recovered the Capex, and 50%
thereafter in line with its ownership of the Project.
**ENDS**
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
Susie Geliher St Brides Partners Tel: +44 (0) 20
Megan Dennison 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
About Hummingbird Resources
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.
About African Gold Group
African Gold Group (TSX V: AGG) is a Canadian exploration and
development company with its focus on West Africa. African Gold
Group is focused on the development of the Kobada Gold Project in
Mali, a low capital and operating cost gold project with potential
to produce more than 50,000 ounces of gold per annum. For more
information regarding African Gold Group visit the website at
www.africangoldgroup.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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