Q2-2024 Operational and Trading Update and TVR

Hummingbird Resources PLC

09 August 2024

 

Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector: Mining

9 August 2024

Hummingbird Resources plc

("Hummingbird", "Group" or the "Company")

Q2-2024 Operational and Trading Update and TVR

Hummingbird (AIM: HUM) announces its operational and trading update for the second quarter ending 30 June 2024 ("Q2-2024").

Operational update

Group Production

·      Q2-2024 Group production totalled 19,855 ounces of gold ("oz") with a total of 42,722 oz produced in the first half of 2024 ("H1-2024").

Yanfolila Mine, Mali ("Yanfolila")

·      Yanfolila produced 12,065 oz of gold in Q2-2024 at an All-in Sustaining Cost ("AISC") of US$2,598 per oz. Performance was impacted by short-term mining challenges, driven by poor availability and utilisation of the mining fleet and the subsequent need to alter the mining sequencing, increasing waste stripping, particularly at the commencement of mining at the Gonka pit.

·      The Company is focused on improving ounce generation in Q3-2024 and has implemented several short-term focused initiatives to maximise the H2-2024 weighted production profile.

·      During the quarter, 12,457 oz of gold was sold at an average realised price of US$2,075 per oz.

Kouroussa Mine, Guinea ("Kouroussa")

·      Kouroussa production increased through Q2-2024 to 7,789 oz of gold, with operations progressively ramping up towards commercial production. During the quarter, 1,281,654 BCMs were mined at an average grade of 2.64 grams per ton ("g/t") (Q1-2024: 1.88 g/t) as operations mined higher-grade material at the Koekoe deposit.

·      Post-period, operational output has continued to improve with the mining operation reaching c.30,000 BCMs per day and the commissioning of the fresh rock plant increasing the blending of high-grade fresh ore feed into the plant, which continues to operate at or above design.

·      Through July, Kouroussa achieved average gold pours of c.1,200 oz per week, with approximately 4,800 oz produced during the month. Based on current progress, the Company expects to achieve commercial production in late Q3-2024.

Corporate update

·      The Group reported a Lost Time Injury Frequency Rate ("LTIFR") of 0.99 per million hours across 2.5 million hours worked in Q2-2024, ahead of its target of 1.20 LTIFR.

·      The Company recorded a Group adjusted EBITDA loss of US$13.5 million in Q2-2024, driven by reduced production from Yanfolila in the second quarter.

·      During the quarter, the Company secured a short-term loan of US$10 million from Nioko Resources, a wholly owned subsidiary of CIG SA, the Company's largest shareholder.

·      The Company is in the advanced stages of finalising a refinancing package with Coris Bank International to defer near term debt repayments on a portion of the existing facility to H2-2025. Further information will be provided in the coming days once finalised.

·      In addition to the refinancing package, the Company is progressing with several non-equity financing options to further strengthen its balance sheet as it reaches full operational capacity over the coming quarters.

FY-2024 Outlook

With progress at Kouroussa and performance at Yanfolila, the Company has updated its FY-2024 Group guidance to 115,000 - 145,000 oz at an AISC below US$1,500:

·      Yanfolila: Updated guidance to 65,000 - 75,000 oz at an AISC below US$1,600 per oz following a weaker H1-2024, focus on delivering on the H2-2024 weighted mine plan and operational initiatives currently being implemented.

·      Kouroussa: Reinstated guidance to 50,000 - 70,000 oz at an AISC below US$1,400 per oz, with refined guidance to be provided once operations reach commercial production.

Investor Presentation

The Company's senior management team will be holding an investor presentation today at 13:30 BST via the Investor Meet Company platform.

The event will cover the release and provide an opportunity for Q&A. The Company invites attendees to pre-send questions to the Company via [e-mail] or via the Investor Meet Company platform.

Webcast link: https://www.investormeetcompany.com/hummingbird-resources-plc/register-investor   

Dan Betts, CEO of Hummingbird, commented:

"Despite the significant challenges faced by the Company this quarter, much of the difficulty has stemmed from delays in ramping up operations at Kouroussa, compounded by nearly two months of lost production. These setbacks have had a considerable impact on both production and mine plans. However, it's crucial to understand that these issues are now behind us. We are currently working closely and effectively with Corica to achieve commercial production later this quarter. Since Corica's return in May, they have consistently improved fleet availability and utilisation, enabling the mine to shift the necessary volume of BCM to sustain operations. Consequently, we have begun accessing the fresh rock ore body, which contains the high-grade, undepleted gold essential for Kouroussa's ramp-up. The fresh rock crushing circuit is fully commissioned, and as more fresh material is processed; we are witnessing a steady increase in gold production.

Yanfolila also experienced a challenging quarter. However, our FY-2024 mine plan was always heavily weighted toward the second half of the year, and that remains unchanged. In view of the challenges faced at Yanfolila in the second quarter, we are implementing strategic initiatives to optimise production and expect to see significant improvements in the coming months.

The delays have undoubtedly placed significant pressure on our balance sheet and liquidity, and I am deeply grateful for the continued support of our partners. We are in advanced stages of finalising the refinancing of a portion of our debt with Coris to provide us additional financial flexibility. We have also explored several non-equity financing options to strengthen the balance sheet without diluting shareholder value, ensuring additional resilience if needed. With gold prices high and production increasing at Kouroussa, Hummingbird is positioned to rapidly deleverage the balance sheet in the coming quarters. Our primary focus remains on delivering value to our shareholders through enhanced production and operational efficiency."

Yanfolila, Mali: Q2-2024 operational summary

	Unit	Q2-2023	Q3-2023	Q4-2023	Q1-2024	Q2-2024
Gold poured	oz	23,885	18,399	14,419	16,999	12,065
Mined BCMs	BCMs	592,360	1,775,723	1,878,181	1,549,607	1,536,256
Ore mined	t	262,911	171,959	266,361	169,195	167,657
Avg. mined grade	g/t	2.72	3.09	2.39	2.47	2.08
Ore processed	t	364,459	339,333	312,045	344,510	331,910
Avg. mill feed grade	g/t	2.21	1.79	1.66	1.61	1.31
Recovery	%	94.06%	92.93%	91.05%	92.41%	92.66%
Group Gold inventory	oz	1,831	1,834	2,908	1,652	74

Note: Ore mined includes high grade, low grade, and marginal material. Ore processed is a blend based on preferential feed of high grade and low grade, with marginal ore added as an incremental feed source.

·      In Q2-2024, Yanfolila achieved a rolling 12-month LTIFR of 0.68, meeting its safety target of below 1.20.

·      Yanfolila produced 12,065 ounces of gold in Q2-2024, marking a decrease from Q1-2024. This reduction is primarily due to a shift in mine sequencing as part of the long-term mine plan. During this period, lower tonnages of higher-grade ore were mined, resulting in increased reliance on lower-grade stockpile material to meet processing throughput requirements. This temporary adjustment was necessary to increase waste stripping and prepare access to higher-grade ore zones in future quarters.

·      Total BCMs slightly decreased to 1,536,256 BCMs in Q2-2024 from 1,549,607 BCMs in Q1-2024. The volume of ore mined also saw a slight reduction, with 167,657 tonnes mined at an average grade of 2.08 g/t in Q2-2024 compared to 169,195 tonnes at 2.47 g/t in Q1-2024. Despite the grades being within expected ranges, ore volumes were notably impacted by excavator efficiency at the Sanioumale East ("SE") pit driven by availability and spatial constraints. Looking ahead to H2-2024, the Company anticipates increased ore volumes as access improves at SE and mining operations at Gonka, which commenced ore extraction in August following waste stripping through the quarter.

·      In Q2-2024, 331,910 tonnes of ore were processed with an average mill feed grade of 1.31 g/t. Plant recovery rates remained stable at 92.66%. To maintain processing throughput, the ore mined in Q2-2024 was blended with a higher proportion of low-grade and marginal waste material, resulting in a reduced mill feed grade. As ore mining volumes increase in H2-2024, the Company expects a significant improvement in throughput grades and, consequently, ounce production.

·      The Company has implemented several short-term initiatives to improve gold production efficiency. Strategic initiatives to address and mitigate operational challenges and maximise production include:

o  Mine Plan Optimisation: Implemented mine design optimisation and scheduling strategies to maximise ore extraction from the resource models, targeting high-grade ore.

o  Excavator Fleet Enhancement: Utilising additional excavators with further equipment from Bamako being evaluated.

o  Mill Optimisation: Reviewed and optimised mill set points following recent refurbishment, targeting an operational throughput of over 180 tph.

·      Through Q2-2024, development of the Komana East Underground ("KEUG") Mine continued, with 170 meters ('m') completed in Q2-2024, leading to a total of 780 m of development now completed.

Yanfolila ESG:

·      Through Q2-2024, the Company continued its focus on investing within the local communities.

o  Ongoing Community Investment: In Q2 2024, the Company maintained its strong commitment to local community investment and successfully conducted 370 stakeholder engagements and 24 group meetings, reinforcing community relations.

o  Significant Infrastructure Developments: Made notable progress on key community projects, including health centre construction, maternity extensions, and road rehabilitation.

o  Extensive Training and Health Programmes: Executed comprehensive training initiatives with 270 inductions and 172 first aid trainings, and effectively carried out community health campaigns and medical support.

Kouroussa, Guinea: Q2-2024 operational summary

	Unit	Q1-2024	Q2-2024
Gold poured	oz	5,868	7,789
Mined BCMs	BCMs	1,119,449	1,281,654
Ore mined	t	125,972	213,926
Average Mined Grade	g/t	1.88	2.64
Ore processed	t	182,505	234,706
Avg. mill feed grade	g/t	1.08	1.17
Recovery	%	91.96%	93.76%

Note: Ore mined includes high grade, low grade, and marginal material. Ore processed is a blend based on preferential feed of high grade and low grade, with marginal ore added as an incremental feed source.

·      Through Q2-2024, Kouroussa maintained its strong safety record, achieving a rolling 12-month LTIFR of 0.00, meeting its safety target of below 1.20. Unfortunately, post-quarter, a serious accident occurred at Kouroussa, where one employee lost their life. The Company and relevant authorities are conducting a thorough investigation into the event, ensuring all necessary measures are taken to prevent future incidents.

·      Kouroussa production increased to 7,789 oz of gold in Q2-2024. Production ramped-up following the remobilisation of Corica's fleets and improved operational performance.

·      1,281,654 BCMs were mined at an average grade of 2.64 g/t in Q2-2024, up from 1.88 g/t in Q1-2024. The operations were impacted by the previously announced delay in ramp-up operations through to mid-May when Corica operations recommenced. With Corica's on-site mining performance significantly improved in line to the new operational plan as the operation progressed through the transitional ore into the high-grade material.

·      Throughout Q2-2024, the processing plant continued to operate at its designed capacity, processing 234,706 tonnes at a grade of 1.17 g/t with recoveries of c.93.76% achieved. The lower grade processed vs mined was due to the significant blending of low grade and marginalised waste material to compensate for impact of the Corica suspension and ramp-up of mining on ore volumes. The Company expects an improvement in milled grade through Q3-2024.

·      Since the restart of operations, Corica have continually met expectations under the agreed operational plan with movement reaching c.30,000 BCMs per day. Post-period, despite the onset of the rainy season, mining operations have continued to ramp up and output has continued to improve. Through July, Kouroussa mined 683,066 BCMs at an average grade of 2.70 g/t, resulting in the production of c.4,800 oz during the month at an average of c.1,200 oz per week.

·      Based on the current rate of progress, the Company expects to achieve commercial production in late Q3-2024.

Kouroussa ESG:

·      Through the quarter, operations have continued to provide value to local communities and enhancing overall well-being:

o  Community and Environmental Education: Launched radio communication initiatives to educate local populations on environmental protection. Conducted awareness sessions to highlight the value of environmental conservation to the communities of Kouroussa.

o  Healthcare Support: Successfully commissioned a borehole at the Kouroussa hospital, ensuring a reliable water supply and delivered essential medical equipment for emergency, maternity, and paediatric care in collaboration with local authorities.

o  Sanitation Improvement: Continued the construction of twelve latrines at the Kouroussa market in collaboration with local authorities. This project aims to improve community health and support income-generating activities for the municipality of Kouroussa.

Dugbe, Liberia

·      In Q2-2024 Pasofino Gold Limited ("Pasofino") completed its diamond core drilling programme at the Bukon Jedeh 'gold camp' within the Dugbe Gold Project, Liberia.

·      Work is progressing on optimising the 2022 Feasibility Study, focusing on power usage and metallurgical recovery rates and is expected to be completed later this year.

Q2-2024 Financial update

	Unit	Q2-2023	Q3-2023	Q4-2023	Q1-2024	Q2-2024
Yanfolila Gold Mine, Mali
Gold sales	oz	24,770	18,550	12,952	18,230	12,457
Avg. gold sale price	$/oz	$1,981	$1,918	$1,946	$2,030	$2,075
Operating cash costs	$m	$30.0	$30.5	$19.5	$31.7	$31.2
AISC on gold sold	$/oz	$1,234	$1,651	$1,508	$1,753	$2,598
Group Financial Performance
Group Adjusted EBITDA	$m	$15.5	$1.2	$2.7	$4.6	($13.5)
Net bank (debt) / cash	$m	($122.8)	($123.0)	($140.4)	($138.8)	($153.5)
Net bank (debt) / cash inc gold inventory value	$m	($119.3)	($119.5)	($134.4)	($135.1)	($150.1)

Note: The Company notes a number of small non-material accounting adjustments have been made across the previous two quarters which does not impact year to date performance.

Financial Overview:

·      Q2-2024 AISC on gold sold totalled $2,598 per oz, driven by the low ounce production at Yanfolila. Kouroussa and Group AISC figures will be provided once Kouroussa reaches commercial production.

·      The Group recorded an adjusted EBITDA loss for Q2-2024 of $13.5 million, driven by low production.

·      As of the end of Q2-2024, the Company held a net bank debt position of approximately $153.5 million (approximately $150.1 million including cash and gold inventory value). For the period-end:

o  Gross bank debt of approximately $153.9 million.

o  Cash at bank of approximately $0.4 million.

o  Gold inventory value of approximately $3.4 million.

·      The Company is in the advanced stages of finalising a comprehensive refinancing package with Coris Bank International. This arrangement is centred around deferring near-term debt repayments on a portion of the existing facility, extending the repayment period to the second half of 2025. Further details will be provided in the coming days once the agreement has been finalised.

·      Additionally, the Company is actively exploring and progressing with several non-equity financing options. These initiatives are aimed at further strengthening the Company's balance sheet and are designed to provide the necessary capital to support the Company's operational optimisation. The focus on non-equity financing underscores the Company's commitment to minimising shareholder value dilution.

Issuance of new Ordinary Shares to WACOM Group:

·      Further to the Company's announcement on 16 December 2021, as part of the incentive package worth up to US$2.6 million, Hummingbird is in the process of issuing 6,342,857 new ordinary shares of 1 penny each in the Company ("Ordinary Shares") to WACOM Group (the "Incentive Shares"). This issuance is in recognition of WACOM's delivery of the civil and structural design, fabrication, and construction of the processing plant at the Kouroussa Gold Mine, which was completed on schedule and within budget.

·      The Incentive Shares issued to WACOM are valued at US$1.85 million, based on an agreed price of £0.22 per share. This incentive was aimed to align WACOM's interests with those of Hummingbird, promoting the successful completion of the Kouroussa Gold Mine and enhancing shareholder value.

Nioko Resources Share Subscription:

·      In accordance with pre-emption rights under its shareholder agreement, Nioko, a wholly owned subsidiary of CIG SA, has subscribed for 4,567,874 new Ordinary Shares in Hummingbird at a negotiated subscription price of £0.085 per share for a total cash subscription of c.US$0.5 million (the "Subscription Shares"). Following the issuance of the Subscription Shares, Nioko's shareholding will be 339,233,148 Ordinary Shares, which maintains its holding at 41.87% of the Company's total voting rights following the issuance of the new Ordinary Shares to WACOM Group and Nioko.

Admission and Total Voting Rights

Application has been made to the London Stock Exchange for the admission of the 6,342,857 Incentive Shares and 4,567,874 Subscription Shares to trading on AIM ("Admission"), which is expected to take effect on or around 13 August 2024.

The Incentive Shares and Subscription Shares will be issued fully paid and will rank pari passu in all respects with the Company's existing Ordinary Shares.

Following Admission, the Company's issued share capital will consist of 810,285,389 Ordinary Shares, all with voting rights. The Company currently does not hold shares in treasury. The total number of voting rights in the Company following Admission is therefore 810,285,389, which may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure Guidance and Transparency Rules.

**ENDS**

Notes to Editors:

Hummingbird Resources plc (AIM: HUM) is a leading multi-asset, multi-jurisdiction gold producing Company, member of the World Gold Council and founding member of Single Mine Origin (www.singlemineorigin.com). The Company currently has two core gold projects, the operational Yanfolila Gold Mine in Mali, and the Kouroussa Gold Mine in Guinea, which will more than double current gold production once at commercial production. Further, the Company has a controlling interest in the Dugbe Gold Project in Liberia that is being developed by joint venture partners, Pasofino Gold Limited. The final feasibility results on Dugbe showcase 2.76Moz in Reserves and strong economics such as a 3.5-year capex payback period once in production, and a 14-year life of mine at a low AISC profile. 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.

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

Daniel Betts, CEO Thomas Hill, FD Edward Montgomery, CD	Hummingbird Resources plc	Tel: [phone]
James Spinney Ritchie Balmer	Strand Hanson Limited Nominated Adviser	Tel: [phone]
James Asensio Charlie Hammond	Canaccord Genuity Limited Broker	Tel: [phone]
Bobby Morse Oonagh Reidy George Pope	Buchanan Financial PR/IR	Tel:  [phone] Email: [e-mail]

 

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