Update on the Kouroussa Gold Mine

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 grade (g/t)	Indicated			Inferred			TOTAL
			Tonnes	Grade (g/t)	Ounces	Tonnes	Grade (g/t)	Ounces	Tonnes	Grade (g/t)	Ounces
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.

**ENDS**

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

Daniel Betts, CEO Thomas Hill, FD Anthony Kocken, COO Edward Montgomery, CSO & ESG	Hummingbird Resources plc	Tel: [phone]
James Spinney Ritchie Balmer	Strand Hanson Limited Nominated Adviser	Tel: [phone]
James Asensio Thomas Diehl	Canaccord Genuity Limited Broker	Tel: [phone]
Bobby Morse Augustine Chipungu James Husband	Buchanan Financial PR/IR	Tel:  [phone]

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.

 

END

 

 

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