TIDMHUM
RNS Number : 6692Z
Hummingbird Resources PLC
14 January 2020
Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector:
Mining
Hummingbird Resources plc
("Hummingbird" or the "Company")
Q4 2019 Production Results and Operational Update
Hummingbird (AIM:HUM) is pleased to announce preliminary
production results for the fourth quarter ("Q4") and twelve months
ended 31 December 2019 at its Yanfolila Gold Mine in Mali.
Hummingbird is pleased to announce that it has achieved its 2019
full-year production guidance of 110-125,000 ozs, having produced
115,649 ozs in the year.
Yanfolila Operational Highlights
-- Production increase, and associated cost decrease, for the fourth consecutive quarter
-- 33,892 ozs of gold poured in Q4 2019 (30,484 ozs in Q3 2019)
-- US$839/oz AISC in Q4 2019 (US$849/oz AISC in Q3 2019)
-- Average grade of 2.91 g/t in Q4 2019 (3.23 g/t in Q3 2019)
-- 31,278 ozs of gold sold in Q4 2019 at an average price of US$1,452/oz
Corporate highlights at 31 December 2019
-- Cash of US$9m (US$16m at end of Q3 2019)
-- 2,900 ozs of gold inventory on hand worth approx. US$5m at current prices
-- Bank debt of US$40m at the end of the FY 2019, with US$5m
repaid in the quarter (US$45m at end of Q3 2019) in line with
deleveraging plan
Outlook
-- 2020 guidance is to be set later this month alongside the
release of the updated rolling mine plan incorporating the new open
pit reserves
-- Targeting net cash position in H2 2020
-- Debt free by the end H1 2021
Dan Betts, CEO of Hummingbird, commented:
"I am pleased to report another quarter of improved operational
performance with both production increasing and AISC decreasing for
the fourth consecutive quarter, resulting in the Company achieving
mid guidance for full-year production. After the well documented
challenges earlier in the year this is a considerable achievement
and I am extremely proud of the team for the way they have
delivered on the production plan, ending the year on a high.
We continue to focus on financial discipline to further improve
cash flow generation and strengthen the balance sheet. We will
continue to deleverage aggressively, paying down our outstanding
debt and target a position of net cash in H2 2020, as we continue
our focus on increasing shareholder value.
We are positive in our outlook for 2020 and look forward to
releasing our 2020 guidance with an updated rolling mine plan
incorporating the new open pit reserves. We will also add further
detail on our plan to develop the considerable opportunities within
the Yanfolila licenses via targeted exploration and developing
underground studies."
Yanfolila Gold Mine
Q4 2019 Q3 2019 Q2 2019 Q1 2019 FY 2019 FY 2018
Gold poured
(Ounces) 33,892 30,484 27,466 23,807 115,649 91,620
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
Ore mined
(Tonnes) 680,178 400,823 390,552 262,317 1,733,870 1,130,990
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
Ore processed
(Tonnes) 367,788 308,269 296,264 281,337 1,253,658 1,092,485
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
Avg. grade
mill feed
(g/t) 2.91 3.23 2.86 2.46 2.88 2.77
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
Recovery (%) 93.10 93.48 94.23 93.88 93.67 95.48
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
Gold sales
(Ounces) 31,278 30,373 27,701 23,333 112,686 91,546
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
AISC (US$/oz) 839 849 998 1,297 976 1,087
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
Average gold
sale price
(US$/oz) 1,452 1,422 1,311 1,296 1,376 1,271
------------------- ------------------- ------------------- ------------------- --------------------- ---------------------
The Company met full-year guidance with 115,649 ounces poured.
The Company delivered its strongest operational quarter to date,
enabling both production to increase and associated costs to
decrease for the fourth consecutive quarter.
Debt repayment and financial discipline
The Company had US$40m debt outstanding to Coris Bank at the end
of Q4 2019, reduced from US$45m at end of Q3 2019. The debt is
being repaid on a 'straight line' basis delivering a swift
deleveraging for the Company. All bank debt is due to be fully
repaid by the end of H1 2021. In addition, the Company has
continued to strengthen its balance sheet including reducing trade
and other payables.
Safety
Providing a safe working environment for all our employees,
consultants and contractors remains at the heart of our operations.
Having improved our safety records throughout 2019 we now strive to
continue this trend.
Measure Q1 2019 Q2 2019 Q3 2019 Q4 2019
3-month average
LTIFR 2.52 1.24 0 1.25
-------- -------- ------- -------
Project average
LTIFR 2.60 2.43 1.23 1.25
-------- -------- ------- -------
All safety frequency rates are reported per 1,000,000 hours
Community Development
Hummingbird continues to support a wide range of community
development projects, and notable developments in the quarter
include:
-- Construction of 22 latrines in the communities as part of our sanitation projects.
-- Arranged for a micro-finance company (Nyessiguiso) to open in
the community in order to promote savings and giving out small
loans for the population in order to carry out small projects
-- Six water boreholes equipped with storage facilities in the
villages of Bandiougoufara, Fougatie, Kona, Kabaya, and Soloba
-- Four new market garden installations in Soloba, Bandiougoufara, Kona, and Fougatie.
-- Construction of soap production facilities in the village of Donsosso
-- First honey harvested from 10 Kenyan hives installed earlier
in the year, assisted by representatives of the Beekeepers'
Association of Mali with whom a partnership has been
established
-- Poultry project increasing productivity with 4,000kg of chicken meat sold
Gold sales and pricing strategy
The Company remains committed to operating as an unhedged gold
producer. However, as a single asset producer with approximately
US$30m of debt scheduled for repayment in the next 12 months, a
significant fall in the gold price could materially impact the
Group's ability to service debt and meet operating costs.
Accordingly, the Group has sought to insure against this risk by
investing in low cost put options at a strike price of US$1,350 per
ounce over 60,000 ounces of gold in H1 2020, to effectively place a
floor on the gold price without capping the exposure to the
upside.
All the gold dore produced from the Yanfolila mine is sold by
the Company's subsidiary Societe Des Mines De Komana SA ("SMK") on
an arms-length basis to Auramet International
(https://auramet.com/), who manage the gold sales process. Sales
prices are typically confirmed in advance of each regular shipment
to reduce the exposure to short term volatility in the gold price.
The gold dore is sold at a discount to the refined gold price which
approximates to the refining and transport costs that are borne by
Auramet International.
As part of the SMO gold initiative
(https://singlemineorigin.com/), a small proportion of the gold
produced from the Yanfolila mine and sold to Auramet is purchased
from Auramet, once refined at market prices by Hummingbird. This
segregated SMO gold is then sold to Stephen Betts and Sons Limited
either in the form of gold grain or investment coins at an
additional premium releasing extra value for Hummingbird. From
Stephen Betts and Sons Limited it is sold on to third party
customers (for example the 1 oz Hummingbird gold coin is available
at (https://bettsinvestments.co.uk/product/1oz-hummingbird/) and
Boodles
(https://www.boodles.com/corporate-responsibility/single-mine-origin-gold/).
Dugbe Gold Project
As previously announced, Hummingbird has continued to explore
numerous avenues in order to progress the exploration and
development potential of the Dugbe Gold Project in Liberia. We are
pleased to announce that, as part of this process, Hummingbird has
signed a non-binding memorandum of understanding with ARX Resources
Limited ("ARX"), a BVI incorporated company, whereby, subject to
certain conditions precedent, ARX will acquire the Dugbe project
and commit at least US$30m for further exploration to increase the
already substantial (4.2m oz, independently verified according to
the CIM Code) gold inventory and complete a Feasibility Study on
the Project. The 2013 PEA showed an NPV10 (post tax) of US$337
million at a US$1,500 gold price and a resource estimate that the
management of ARX strongly believe they can materially improve
upon.
The conditions precedent include but are not limited to the
satisfaction of all legal, government and regulatory approvals; the
approval of both Boards; the availability of at least US$30m of
liquid finance; an approved management team with the requisite
skills and experience to develop the project and satisfactory
shareholder protections, including various anti-dilutionary rights
for Hummingbird. As part of this deal, Hummingbird expects to
become a significant shareholder in ARX, have Board representation
and assist with the development and execution of all operating
plans. Further updates will be forthcoming if the ARX deal
progresses to a binding nature, of which there is no current
certainty.
**ENDS**
For further information please visit
www.hummingbirdresources.co.uk or contact:
Daniel Betts, Hummingbird Resources plc Tel: +44 (0) 20 7409
CEO 6660
Thomas Hill,
FD
Douglas Ross,
IR
James Spinney Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
James Bellman Nominated Adviser
-------------------------- ----------------------
Ed Montgomery Canaccord Genuity Limited Tel: +44 (0) 20 7523
James Asensio Broker 8000
-------------------------- ----------------------
Gordon Poole Camarco Tel: +44 (0) 20 3 757
Owen Roberts 4980
Ollie Head Financial PR/IR
-------------------------- ----------------------
Notes to Editors:
Hummingbird Resources (AIM: HUM) is a leading gold production,
development and exploration company. The Company has two core gold
projects, the Yanfolila Gold Mine in Mali and the Dugbe Gold
Project in Liberia. Yanfolila produced its first gold pour on time
and budget in December 2017. At 31 October 2019 Yanfolila has a
7.9Mt of Reserve ore @ 2.66 g/t for 676,000ozs gold. At 31 March
2019 Yanfolila had a total Resource base (inclusive of Reserves) of
28Mt of Ore @ 2.23 g/t for 2,005,300ozs gold. The Dugbe Gold
Project has Resources currently totaling 4.2Moz of gold and a
completed NI 43-101 compliant PEA on the project showing a 43% IRR
and US$337m NPV at a US$1,500 gold price.
In addition to Hummingbird's production and development assets,
the Company also has an exploration footprint of 4,000km2 and a
significant shareholder in AIM listed Cora Gold, which is advancing
a portfolio of prospects in Mali and Senegal.
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END
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