Appointment of Mining Contractor for Yanfolila

RNS Number : 9005S

Hummingbird Resources PLC

29 December 2016

 

Ticker: HUM / Index: AIM / Sector: Mining

Hummingbird Resources plc ("Hummingbird" or "the Company")

Appointment of Mining Contractor for Yanfolila Gold Project

Hummingbird Resources (AIM: HUM), is pleased to announce that it has appointed African Mining Services ("AMS"), a subsidiary of ASX listed Ausdrill Limited, as its mining contractor at the Company's Yanfolila Gold Project in Mali, where mine construction is currently underway ahead of its first gold pour, expected to occur in 2017.

Dan Betts, CEO of Hummingbird Resources, said: "Appointing AMS as our mining contractor is another major milestone for Hummingbird and represents the single largest contract the Company will award.  AMS has an excellent reputation for high quality work with an exemplary health and safety record. The team also boasts over 25 years' experience operating in West Africa.  I am delighted to embark on this partnership with AMS as we look forward to the commencement of mining at Yanfolila."

Ron Sayers, Managing Director of Ausdrill, said: "We look forward to working with Hummingbird to achieve its goal of developing the Yanfolila Gold Project, and running it as an efficient, low cost, high grade open pit mining operation.  Ausdrill's 25 years' experience working in the West African gold sector means we have the track record and know-how to ensure the delivery of a safe and profitable mining operation."

Further Information

Hummingbird has appointed AMS for an initial three year period with an option for the Company to extend the contract by a further year of mining at the Yanfolila Gold Project.  The total value of the contract is expected to be approximately US$112m over three years.   The pricing represents a circa 5% improvement for the Company as well as increased flexibility and transparency when compared to Hummingbird's Definitive Feasibility Study ("DFS"), released by the company in February 2016.  As the largest contract the Company will enter into for the development of the Yanfolila Gold Project, these changes represent significant benefits to the Company.  

AMS anticipates incurring capital expenditure of approximately US$38m for the acquisition of new equipment and that it will employ approximately 450 personnel (the majority of which will be local) for this contract. 

Mining operations at Yanfolila will be carried out using conventional drill and blast, and load and haul mining methods from two deposits initially.  Mining is due to commence in Q3 2017 with first gold pour due by the end of Q4 2017.

Additionally, as a result of the improved terms the Company has negotiated with AMS, the Company has also extended the termination date of the subscription agreement with Lindine Inc which was entered into on 1 June 2016.  The agreement now states that the due date of the undertaking to pay in respect of its interest in 16,103,425 shares shall be amended to the earlier of the date of transfer of the shares, and 30 June 2017; and the amount payable be adjusted to be the lower of 22 pence per share, and the five business day VWAP prior to the date of transfer of shares.

Yanfolila is the Company's most advanced asset, which boasts impressive economics and production fundamentals.  132,000oz gold is targeted for its first full year of production, which would deliver around US$70 million of free cash flow at a US$1,250/oz gold price.  On its initial eight-year mine life, Yanfolila has an IRR of 60% and an NPV of US$162 million at US$1,250 gold price, making it one of the highest margin undeveloped gold projects in Africa.  All in sustaining cash costs of US$695 per ounce places it in the lowest quartile of African producers, and well placed to operate profitably in a lower gold price environment.  Yanfolila is fully funded to production and commitments to date represent nearly 30% of the project capex and it remains on budget and schedule.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

**ENDS**

For further information, please visit www.hummingbirdresources.co.uk or contact: 

Daniel Betts Thomas Hill Robert Monro	Hummingbird Resources plc	Tel: [phone]
James Spinney Ritchie Balmer James Bellman	Strand Hanson Limited Nominated & Financial Adviser	Tel: [phone]
Jon Belliss	Beaufort Securities Limited Broker	Tel: [phone]
Lottie Brocklehurst Susie Geliher	St Brides Partners Ltd Financial PR/IR	Tel: [phone]

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 4,000km² highly prospective exploration ground in Mali and Liberia and is constantly evaluating new quality assets.

 

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