TIDMHUM
RNS Number : 7189O
Hummingbird Resources PLC
12 October 2021
12 October 2021
Hummingbird Resources plc
("Hummingbird" "Group" or the "Company")
Update on the Kouroussa Gold Mine
Details of Project economics, financing & construction
status
Hummingbird Resources plc (AIM: HUM) is pleased to provide an
update on the development of the high-grade Kouroussa Gold Mine
("Kouroussa" or "the Project") in Guinea.
The Company has secured a group level financing package from
Coris Bank International ("Coris Bank") to fully fund the Project
into production, along with internal cash flows.
Additionally, the Company has finalised all necessary
engineering and study work to provide capex and timeline estimates
together with project economics.
To view the RNS with illustrative maps and graphics, please use
this link:
http://www.rns-pdf.londonstockexchange.com/rns/7189O_1-2021-10-11.pdf
; and an investor media presentation by CEO, Dan Betts and COO,
Anthony Kocken, please use this link:
https://www.voxmarkets.co.uk/articles/hummingbird-discuss-developments-at-the-high-grade-low-cost-kouroussa-gold-project-31db13e
Summary Highlights:
-- Kouroussa is forecast to be a high-grade, low-cost mine which
will produce an average of between 120,000 and 140,000 ounces
("oz") for the first three years of production and average 100,000
oz over the life of mine ("LOM")
-- The LOM has increased to a minimum of seven years from the
original five year estimate at purchase of the Project based on the
optimised mine plan, and is forecast to produce at an average All
In Sustaining Cost ("AISC") in the range of US$900-US$1,000 per oz
throughout the LOM, with material upside potential through further
exploration drilling which is currently being planned
-- Industry leading project economics at today's gold price of $1,750 per oz*:
o IRR 71%
o NPV US$210 million
o Cumulative free cash of US$314 million
o Capex payback period of approximately two years post
commencement of production
-- Commencement of construction is to begin this quarter, Q4
2021, with first gold pour scheduled for the end of Q2 2023
-- Total Project capex of US$97.5 million for a one million
tonne per annum ("Mtpa") processing plant and establishment costs,
with an additional budget of US$10 million for pre-production
mining cost and US$7.5 million for contingencies
-- The Project is fully funded through internal cash flows and a
group financing facility from Coris Bank of US$100 million at a
fixed interest rate of 8.5% over four years
-- Key operational appointments and project construction
contracts have been negotiated and are set to be awarded to
internationally recognised partners
-- 16,000 meters ("m") of a 24,000m 2021 infill drilling
programme to upgrade confidence in the mineral resources at
Kouroussa has been completed, with the remaining meters will be
finalised on schedule in 2021
o Kouroussa's current mineral resources are 1.18 million ounces
("Moz") at >3 grams per tonne ("g/t") (625,600 oz indicated, and
552,700 oz inferred)
o The focus of the infill drill programme is to convert
resources to reserves. A maiden Kouroussa reserve on one of the key
deposits, Koekoe ('KK'), will be included in our updated Company
reserve statement to be released this quarter followed by a
subsequent Company resource and reserve update based on 2021
drilling due in H1 2022
-- Environmental, social and governance ("ESG") processes,
initiatives and infrastructure have been imbedded into the Project
design including amongst others:
o An updated environmental and social impact assessment ("ESIA")
study to ensure the Project delivers on leading ESG industry
standards and the World Gold Council ("WGC") responsible gold
mining principles ("RGMPs")
o Low carbon emission initiatives, including the final tendering
process, now financing is complete, for a +7 megawatt ("Mw") solar
power plant and energy saving waste heat recovery systems
o High level of local and in-country contractor and employee
utilisation
Dan Betts, CEO of Hummingbird, commented:
"The completion of the financing and the imminent commencement
of building Kouroussa marks the next phase of Hummingbird's
strategy to become a multi-mine, multi-jurisdiction gold producer.
Kouroussa is a low cost/high margin project which will more than
double Hummingbird's gold production, substantially improve future
cash flows and generate returns for all our stakeholders. With one
of the highest IRRs for a gold project in West Africa, and material
upside to extend LOM through further exploration within our
licences area yet to be fully explored, Kouroussa provides a strong
platform for our next phase of growth.
Kouroussa will be a key contributor in Guinea's journey to
becoming a leading gold producer in West Africa, following ongoing
gold discoveries in the Siguiri Basin, where the Project is
located.
The recent political events in Conakry have not impacted the
rapid progress of the development of Kouroussa, and we have taken
measures to ensure that our key priority of maintaining the safety
of our employees, contractors and operations remain intact.
Finally, I would like to personally thank Coris Bank and their
team for the long-standing commitment they have shown Hummingbird
and again for this financing package to support the Company in
building our next producing gold mine."
Notes from the highlights: * Project NPV's are based on a 10%
discount rate and both the NPV and IRR's are post tax. A full table
demonstrating a range of economic outcomes at different gold prices
is detailed below.
Further details on the Kouroussa development plans are included
below.
Project Overview
The Kouroussa Gold Mine, acquired by Hummingbird in September
2020, is situated near the town of Kouroussa, in the south-eastern
area of the Republic of Guinea, located 570 kilometres ("km") east
of the capital of Guinea, Conakry. The Project is 170 km to the
east of Hummingbird's Yanfolila mine in Mali, and an approximate
five hours travel time by paved roads from Mali's capital,
Bamako.
In May 2021, Hummingbird was granted the mining licences for the
Project. The initial licences were issued for a period of 15 years,
as outlined in the Guinean mining code, with the option to renew
every five years with no limits on renewal terms.
Extensive drilling and exploration has already been undertaken
by the previous owners with a current resource base of 1.18 Moz at
>3g/t (625,600 oz indicated, and 552,700 oz inferred).
The Project, which has a similar metallurgical flow sheet and
process plant design to Yanfolila, allows Hummingbird to leverage
the construction and operational expertise gained to date and turns
it into a multi-asset gold producer with jurisdictional
diversification in line with the Company's growth strategy.
Project production profile and timeline
The Project will produce an average of 120,000-140,000 oz in
years one to three, with an average of 100,000 oz per annum over a
minimum seven-year LOM.
The Company believes this initial LOM can be increased
significantly through exploration in this highly prospective region
with exploration planning commenced (see further details below)
-- LOM ASIC is forecast to be between US$900-US$1,000 per oz
-- The Project construction will commence this quarter, Q4 2021,
with first gold pour anticipated to be at the end of Q2 2023
-- Commissioning to nameplate capacity is anticipated to be
completed within six months from first gold pour
Project capex and financing
Project capex summary
Capital Item Estimate (US$ millions) Notes
Processing plant 56.0 1mtpa CIL processing plant - (includes
fixed price element approx. 60% of total)
------------------------ --------------------------------------------
Tailing storage facility 10.5
------------------------ --------------------------------------------
Camp & related infrastructure 7.2
------------------------ --------------------------------------------
Mining establishment 8.3 Including pit dewatering infrastructure
------------------------ --------------------------------------------
Project management, support, and other
equipment 15.5
------------------------ --------------------------------------------
Total processing plant and establishment
costs 97.5
------------------------ --------------------------------------------
Pre-production mining costs 10 Potential for cash deferrals dependant on
mining contract
------------------------ --------------------------------------------
Contingencies 7.5
------------------------ --------------------------------------------
Total Project cost 115
------------------------ --------------------------------------------
Project Financing:
-- The Project is fully funded to production from internal
cash-flows and a group financing package of up to US$100 million
from Coris Bank. The financing package is split into three debt
tranches:
o First tranche of US$40 million to be drawn imminently ahead of
construction scheduled to begin soon after
o Second tranche of US$30 million to be drawn when further into
the construction phase, expected in 2022
o Third tranche of US$30 million is available for final capex
requirements and internal growth initiatives
-- The term of the loan is four years, being interest only for
the first 18 months on each debt tranche once drawn, at an 8.5%
fixed interest rate
-- The loan is based on a binding term sheet, with final loan
documentation being completed to allow the first debt tranche to be
drawn imminently
-- A capex payback period of approximately two years is forecast once in production
Project Economics:
At today's gold price, the Project demonstrates robust
economics. The table below illustrates the range of post-tax
project economics at varying gold prices over an initial seven-year
LOM:
Gold price (US$/oz) IRR NPV10% (US$ million) Cumulative Free Cash (US$ million)
1,350 34% 75 135
----- --------------------- -----------------------------------
1,500 49% 126 202
----- --------------------- -----------------------------------
1,750 71% 210 314
----- --------------------- -----------------------------------
2,000 93% 294 426
----- --------------------- -----------------------------------
2,350 123% 412 582
----- --------------------- -----------------------------------
Project drilling programme:
-- The Company continues to progress its Guinea exploration
programme focused on growing the quality and quantity of the
current resource base of 1.18 Moz at >3g/t (625,600 oz
indicated, 552,700 oz inferred) to extend the Project's LOM
potential (see table, maps and graphics below)
-- Significant exploration potential is known to exist at depth
at the key Koekoe ("KK") and Kinkine ("KnK") deposits and the
Company has identified several further high priority targets for
further exploration within the mining licenses area
-- 16,000 m of a 24,000 m infill drill programme to upgrade
confidence in the mineral resources at Kouroussa's KK deposit has
been completed ,with the remaining meters to be completed on
schedule in 2021
o The focus of the infill drill programme is to convert
resources to reserves
o A maiden Kouroussa reserve on the KK deposit will be included
in our updated Company reserve statement to be released this
quarter
o This will be followed by a subsequent Company resources and
reserve update based on 2021 drilling due H1 2022
-- Planning for future exploration drilling has begun to target
further resource growth for both open pit and underground
operations to extend on the current seven-year LOM
-- Further, the Company has progressed with the geotechnical and
geohydrology drilling programmes at KK and KnK, with confirmatory
metallurgical test drilling completed earlier this year
Current Kouroussa Mineral Resource Estimate summary table - May
2020
Mineral Resource Estimate for the Kouroussa Deposit - as at May 2020
Deposit Type Cut-off Indicated Inferred TOTAL
grade
(g/t)
------------- --------- ---------------------------- ---------------------------- -------------------------------
Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces
(g/t) (g/t) (g/t)
------------- --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Koekoe Open Pit 0.5 3,816,000 3.96 486,000 3,523,000 2.99 338,000 7,339,000 3.49 824,000
------------- --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Underground 3.5 3,000 5.19 1,000 94,000 6.86 21,000 97,000 6.80 22,000
------------------------ --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Bag Farm
-
Junction Open Pit 0.5 - - - 1,743,000 1.59 89,000 1,743,000 1.59 89,000
------------- --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
X-Vein Open Pit 0.5 - - - 354,000 7.33 83,000 354,000 7.33 83,000
------------- --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Kinkine Open Pit 0.43 1,883,900 2.20 133,300 63,200 1.60 3,300 1,947,100 2.18 136,600
------------- --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Underground 1.25 96,500 1.70 5,300 324,400 1.76 17,700 420,900 1.75 23,000
------------------------ --------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Open Pit Variable 5,699,900 3.38 619,300 5,683,200 2.81 513,300 11,383,100 3.09 1,132,600
--------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Underground Variable 99,500 1.97 6,300 418,400 2.93 39,400 517,900 2.74 45,700
--------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Total Kouroussa 5,799,400 3.36 625,600 6,101,600 2.82 552,700 11,901,000 3.08 1,178,300
--------- ---------- ------ -------- ---------- ------ -------- ----------- ------ ----------
Note: Refer to 8 June 2020 release for more mineral resource
reporting details on individual Kouroussa deposits
Project development progress:
The Company's dedicated Kouroussa project development team has
finalised key pre-development workstreams to ensure the Project is
construction ready including:
-- ESG processes, initiatives and infrastructure have been
imbedded into the Project design, including amongst others:
o Final tendering for a +7Mw solar power plant and waste heat
recovery systems to ensure a low carbon emissions project
o Human Resources ("HR") local and regional hiring policies
o Community and government liaison programmes
o Local and in-country contractor utilisation where possible
-- Further, an updated ESIA has been completed to ensure the
Project complies with leading international ESG standards and is in
line with the WGC RGMPs requirements
-- Infrastructure designs have been finalised, including:
offices; workshops; medical stations; access control, and the mine
camp
-- Process plant design and flow sheet for a 1Mtpa Carbon in
Leach plant have been completed (see flow sheet design below)
-- Tailings storage facility ("TSF") detailed design, studies and location analysis
-- Key construction and engineering contracts are being
finalised with Soutex and WACOM, who have worked together on
previous projects in West Africa:
o Soutex, an engineering firm based in Quebec City in Canada,
have designed the processing plant. Soutex specialise in mineral
processing plants and have been involved in several recent projects
in West Africa
o WACOM will perform the civil and structural design of the
process plant along with the fabrication and construction. WACOM is
well known to Hummingbird as they constructed Hummingbird's
Yanfolila plant on time and on budget when formerly known as
IMAGRI
o WACOM have a large fabrication and machining workshop in
Bamako, Mali where most of the structural steel, plate work and
tanks will be fabricated and transported by road to Kouroussa. This
will ensure both low cost and timely sequenced arrival of
fabricated components for plant construction
-- Final negotiations are being completed with leading mining
contractors, which are expected to complete soon now that Project
funding has been secured
-- Key Project hires have been completed such as: head of
Project management; head of security; ESG manager; exploration team
(numbering 16) and head of HR; with a Kouroussa organisation
structure complete and ready to be implemented
-- Overall security planning and upgrading initiatives are
underway, including: additional security fencing and systems around
camp; recruitment of security personnel; and a permanent onsite
Guinea .
Qualified Person sign off
Murray Paterson has reviewed the technical information contained
within this announcement in his capacity as a Qualified Person, as
required under the AIM Rules for Companies. Murray Paterson is the
chief geologist for the Company and is a member of good standing
with the Australasian Institute of Mining and Metallurgy (MAusIMM),
with 25 years of experience.
**S**
For further information, please visit
www.hummingbirdresources.co.uk or contact
Daniel Betts, Hummingbird Resources Tel: +44 (0) 20 7409
CEO plc 6660
Thomas Hill, FD
Anthony Kocken,
COO
Edward Montgomery,
CSO & ESG
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
Thomas Diehl Broker 8000
-------------------------- ---------------------
Bobby Morse Buchanan Tel: +44 (0) 20 7466
Augustine Chipungu Financial PR/IR 5000
James Husband
-------------------------- ---------------------
Notes to Editors:
Hummingbird Resources (AIM: HUM) is a leading multi-asset,
multi-jurisdiction gold production, development and exploration
Company and member of the World Gold Council ('WGC'). 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. The Company currently
has two core gold projects, the Yanfolila Gold Mine in Mali and the
recently acquired Kouroussa Gold Project in Guinea. 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.
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