Updated Reserves for Yanfolila Gold Mine

RNS Number : 0631X

Hummingbird Resources PLC

17 December 2019

 

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

17 December 2019

Hummingbird Resources plc

Updated Reserves for Yanfolila Gold Mine

Hummingbird Resources plc ("Hummingbird" or the "Company") (AIM: HUM), is pleased to announce an update to its open pit Ore Reserves at the Yanfolila gold mine.  The Company intends to update shareholders with a 5 year mine plan based off these updated Ore Reserves and its 2020 guidance in early 2020.  Yanfolila currently consists of the Komana East & West, Gonka and Sanioumale West deposits in Reserve. 

Updated Reserves

·    7.9Mt of Reserve ore @ 2.66 g/t for c. 676,000 ozs gold

·    165,000 ozs added to pre-production Reserves

·    32% increase to Reserve base on 31^st Oct 2019

o  Over 199,000ozs processed since start-up to 31^st Oct 2019

·    Maiden Reserves at Gonka and Sanioumale West achieved

JORC classification	Tonnes (Mt)	Au (g/t)	Au in situ (koz)
Proved	0.4	1.65	20.6
Probable	7.5	2.72	655.4
Total	7.9	2.66	675.9

Dan Betts, CEO;

"I am pleased to provide an update on our open pit Ore Reserves; which shows a significant increase in Reserves from our pre-production inventory.  We have also identified first ore Reserves from Gonka open pit and Sanioumale West which is very pleasing.  Early in the New Year we will release a 5 year mine plan for Yanfolila, based on these Reserves.  It is our intention to then update this plan on a rolling basis as further reserves are defined.  Additionally, I am pleased that we are able to re-commence exploration drilling and study work in Q1 2020 with a renewed focus on ensuring the mine's long term future.

Q4 2019 has remained a strong quarter and we look forward to meeting our full year production guidance. This will be a great achievement for the team considering the first 4 months of the year and represents 8 solid consecutive months.  Over the course of 2020 we shall continue to aggressively de-leverage our debt position and strengthen our balance sheet with the anticipation of moving from a position of net debt to net cash.  Within 3 years of starting operations this is a significant milestone and will allow us to start to look to move the Company forward with cash generation and shareholder value being a key focus."

Further Information:

The Company requested CSA Global Pty Ltd (CSA Global), an ERM Group Company, to provide an updated Ore Reserve statement as at 31 October 2019 prepared by a Competent Person in accordance with the Australasian Code for Reporting of Exploration on Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition).

Deposit	Ore Reserves within pit designs nominated cut-off, including mine recovery and mine dilution
	Classification	kt	Au (g/t)	Contained Au (koz)
Komana West	Proved Probable	- 2,934	- 2.53	- 239.0
	Subtotal	2,934	2.53	239.0
Komana East	Proved Probable	- 2,852	- 3.0	- 275.2
	Subtotal	2,852	3.0	275.2
Sanioumale West	Proved Probable	- 879	- 2.23	- 63.0
	Subtotal	879	2.23	63.0
Gonka	Proved Probable	- 837	- 2.91	- 78.2
	Subtotal	837	2.91	78.2
Stockpiles	Proved Probable	388 -	1.65 -	20.6 -
	Subtotal	388	1.65	20.6
All Deposits	Proved Probable	388 7,502	1.65 2.72	20.6 655.4
	Subtotal	7,890	2.66	675.9

The last statement of Ore Reserves for the Yanfolila operations was issued with a reporting date of 24 February 2016. This Ore Reserve estimate then was 7.04 million tonnes (Mt) @ 3.14 g/t containing 709,800 ounces. Since that time, mining depletion, two new deposits and changes in operating costs, process recoveries and product prices have occurred and warrant a re-statement of Ore Reserves.

The Yanfolila mine is currently an open cut mining operation, with ore treatment by carbon-in-leach (CIL) methods. Pit optimisations have been carried out using a fixed gold price of US$1,300.  Whittle pit optimisation software was used to identify the preferred pit shell on which each of the pit designs were based.  The optimisations were run on four separate mining block models. On the basis of the approved pit designs and with the usage of several modifying factors, a total (Proved and Probable) Ore Reserve of 7.9 Mt has been estimated.

Qualified Person sign off

The information in this announcement that relates to mineral resource studies is based on information reviewed by Mr Murray Paterson who is a Member of AusIMM. Mr Paterson is an employee to the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Paterson consents to the inclusion in this document of the matters based on his information in the form and context in which it appears.

CSA has reviewed and approved the contents of this announcement. 

Appendix A - JORC TABLE 1 Section 4

Criteria	JORC Code explanation	Commentary
Mineral Resource estimate for conversion to Ore Reserves	Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve. Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.	The Mineral Resource estimates for Komana West, Sanioumale West and Gonka have been prepared by Hummingbird Resources PLC (HUM) Resource Geologists and was reported as at 31 December 2018 by Mr Murray Paterson, a full-time employee of Trochilidae Resource Ltd (a wholly owned subsidiary of HUM). The Mineral Resource estimate for Komana East was reported by Mr Galen White of CSA Global Pty Ltd (CSA Global) as at 2 December 2015. The Mineral Resources reported are inclusive of the Ore Reserves.
Site visits	Comment on any site visits undertaken by the Competent Person and the outcome of those visits. If no site visits have been undertaken indicate why this is the case.	Mr Paul O'Callaghan, a full-time employee of CSA Global, visited the Yanfolila site between 7 July 2015 and 10 July 2015. He inspected the locations of the open pit mines, waste dump, transport corridors and process plant.
Study status	The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves. The Code requires that a study to at least Prefeasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.	The Ore Reserve reported is part of an operating and mature mining operation. The first gold pour occurred in December 2017. The work undertaken to date has addressed all material Modifying Factors required for the conversion of Mineral Resources to Ore Reserves and has shown that the mine plan is technically achievable and economically viable. The Ore Reserves have been based on parameters provided by HUM, from relevant technical studies and site-based mining and processing parameters.
Cut-off parameters	The basis of the cut-off grade(s) or quality parameters applied.	A marginal cut-off grade (MCOG) has been applied to each of the lithology codes, namely; oxide, transitional and fresh material. The MCOG is based on mine dilution, processing costs, plant recovery, gold price and selling costs. Indicated blocks within the pit design that have a gold grade greater than the MCOG satisfy their inclusion to be processed and thus can be included into Ore Reserves. This mirrors the Whittle process during the formation of the pit shell. Each of the deposits have varying MCOGs based primarily on haulage distance from the processing facility.
Mining factors or assumptions	The method and assumptions used as reported in the Prefeasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design). The choice, nature and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc. The assumptions made regarding geotechnical parameters (e.g. pit slopes, stope sizes, etc), grade control and pre-production drilling. The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate).	Input parameters for pit optimisation have been based on supplied revenue parameters, mining costs based on operating data and mineral processing and selling costs from site. The HUM corporate gold price was advised as US$1,300/oz. These input parameters were reviewed by CSA Global and considered appropriate. Resource Block Models were supplied by HUM and were converted to Mining Block Models by CSA Global. Pit shells were produced from within Whittle using agreed parameters. There were 18 separate pit designs completed from four Mining Block Models considered as suitable for Ore Reserve estimation. The Yanfolila deposits utilise a conventional open cut excavator and truck mining fleet. This mining fleet is considered suitable for this type of surface mining operation. Geotechnical analyses of the deposits have been undertaken by Mr Peter Gash of MineNet Consulting Mining Engineers. The overall pit slopes have been based on the lithology fields of oxide, transitional and fresh. Allowances have been made for the inclusion of haul roads, berm widths and batter angles, but this varies for each deposit dependent on lithological codes and geometry of the orebody. Oxide zones use 60° batter slopes and a mixture of 4.5 m and 6.0 m berms. Transitional and fresh zones use 75° and 80° batter slopes combined with 7.0 m berms (trans) and 5.0 m berms (fresh). The pit slopes are considered likely to be stable for the current pit designs. All walls in fresh rock should be protected by controlled blasting through pre-splitting techniques. The Mineral Resource models have been wholly provided and reviewed by HUM staff. The Mineral Resource Block Models were used for optimisation and mine planning after inclusion of additional attributes to become a Mining Model. The mining dilution has been set to 13% (or 1.13) for each deposit. This has been based on reconciliation data from site. The Ore Reserve is reported on a diluted Au grade. An ore loss factor of 5% (or 0.95) has been applied for each deposit. This has been based on site observations. A minimum mining width of approximately 20 m has been applied in the pit designs. Inferred Mineral Resources have not been included in the pit optimisations due to JORC Code (2012) requirements. Inferred material is assumed as waste material but is generally shown within the mining schedule as a separate line item. Mine infrastructure is utilised and is suitable for current mining methods.
Metallurgical factors or assumptions	The metallurgical process proposed and the appropriateness of that process to the style of mineralisation. Whether the metallurgical process is well-tested technology or novel in nature. The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied. Any assumptions or allowances made for deleterious elements. The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole. For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications?	Ore is processed through a two-stage crushing processing that blends oxide and fresh material within a carbon-in-leach (CIL) plant with a nominal capacity of 1.24 million tonnes per year (Mtpa). The Yanfolila plant has been in operation since 2017 and is suitable for this style of mineralisation. There is a Project currently in place to take the plant throughput to 1.4 Mtpa using a mixture of ore types. The CIL process plant is well tested technology and suited to the production of gold ores. Metallurgical testwork is carried out on a regular basis throughout the plant. A fixed plant recovery of 92% for all lithology types has been applied across the four deposits. This has been supplied by HUM and is understood to be a conservative figure based on site operating data. No allowances have been made for deleterious elements within the CIL process plant. Due to Yanfolila being operational and all deposits being within close proximity to each other, bulk samples are no longer required. Not applicable.
Environmental	The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.	The Yanfolila mine site has been operating since 2015 when primary earthworks were first undertaken in preparation for a first gold pour in December 2017. Yanfolila has all relevant operating licences and certifications. Waste rock characterisation studies have shown that the main parameter of interest is arsenic, which occurs naturally at elevated concentrations in groundwater within the Komana West area. There has been no discernible impact noted on the processing facility at Yanfolila. Studies by Schlumberger Water Services (SWS) indicate that any mobilisation of arsenic is manageable in normal run-of-mine scenario on the waste dumps. The mine closure plan for Yanfolila contains all pertinent information relating to closure requirements. Water management for the site, including water balances through all seasons, potential interconnectivity with the Sankarani River and the need for pit dewatering has been investigated and modelled by SWS. Key conclusions include that there is unlikely to be any significant hydraulic connectivity between the Sankarani River and the groundwater system in the Komana West pit area; dewatering of the saprock unit effectively underdrains the saprolite; flood protection should be included for the lowest elevation points of the western pit rim; significant volumes of water will require discharge to the environment, however much of this will only require basic conditioning to remove suspended solids in environment control dams. Ex-pit water from the pits is also used for plant raw water or for dust suppression. The Yanfolila plant was built with a cyanide detox circuit that allows less than 10 ppm WAD cyanide at the plant discharge end and less than 1 ppm at the tailings storage facility pond.
Infrastructure	The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided or accessed.	The Yanfolila mine site is an operating mine site with all mining, processing, road and accommodation infrastructure is in place and operational. Water supply will be from the Sankarani river take-off, pit dewatering and return from the tailings storage facility. A potable water treatment facility, sized at 5 m3/hr, is located in a high security area of the process plant. Accommodation has been based on personnel living both in the camp and locally. The camp allows for c. 220 people. Yanfolila employs around 1,100 people in total (inclusive of all contractors) with c. 270 directly employed by HUM. Of these, there are 95% of Malian descent with 37% being from the local villages. The operations include close to 5% of expatriates.
Costs	The derivation of, or assumptions made, regarding projected capital costs in the study. The methodology used to estimate operating costs. Allowances made for the content of deleterious elements. The derivation of assumptions made of metal or commodity price(s), for the principal minerals and co-products. The source of exchange rates used in the study. Derivation of transportation charges. The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc. The allowances made for royalties payable, both Government and private.	No capital costs have been allowed for within the cash flow model. The operating costs have been derived from a mixture of the HUM 2019 Operating Budget and the mining contractor's (AMS) detailed set of rates. All operating costs reflect the current costs on site. No allowances have been made for any deleterious elements. The corporate gold price for HUM is currently set at US$1,300/oz. This is considered a conservative price and is in line with World Bank future gold price predictions. All operating cost estimates have been based on US$. Transportation plays a very minor role in operating costs for gold bullion. Refining charges have been included within selling cost estimates. Selling costs, including royalties and refining costs have been set at around US$70/oz.
Revenue factors	The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc. The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products.	See comments above. For pits of less than two years mine life, it is general practise to choose a revenue factor of 1.00. This applies to both Gonka and Sanioumale West deposits. For pits of greater than two years mine life, the pit shell selected generally equates to the highest discounted cash flow (DCF).
Market assessment	The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future. A customer and competitor analysis along with the identification of likely market windows for the product. Price and volume forecasts and the basis for these forecasts. For industrial minerals the customer specification, testing and acceptance requirements prio to a supply contract.	The World Bank has forecast gold prices as remaining between US$1,300/oz to US$1,360/oz from 2019 to 2030. This is outlined in their Commodity Markets Outlook published in April 2019. China and Russia are believed to be behind recent strong gold purchases pushing the current prices to beyond US$1,300/oz.
Economic	The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc. NPV ranges and sensitivity to variations in the significant assumptions and inputs.	Cost inputs have been derived from operating site data and signed mining contracts. A cash flow model has been produced that shows a positive DCF and sufficient cash flow margin. The discount rate applied is 10%. The cash flow model has been based on operating costs only with no allowance for capital costs, taxes, depreciation and head office expenses. NPV ranges and sensitivity to key parameters have not been included in the Ore Reserve estimation process.
Social	The status of agreements with key stakeholders and matters leading to social licence to operate.	All required permits and licenses for the project have been approved and are in place.
Other	To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves: • Any identified material naturally occurring risks. • The status of material legal agreements and marketing arrangements. • The status of governmental agreements and approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Prefeasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.	The Project is located adjacent to the Sankarani River. Water studies indicate that hydraulic connectivity between the river and local groundwater is unlikely. Modelling of 1:100-year flood levels indicates a free board of 1.5 m; however, a waste rock flood berm is suggested along the lower topographic sections of the Komana West pit rim. The site experiences high rainfall throughout the wet season. Handling issues may occur with saprolite materials. Testwork is being undertaken to assess this issue. Mine and project design has included allowances for suitable drainage and water storage and production delays due to wet weather. All material legal and marketing agreements are in place and accounted for. All government approvals, licences, regulatory agreements and bonds necessary to operate the Yanfolila mine site are in place. The Ore Reserves stated are located on active mining leases.
Classification	The basis for the classification of the Ore Reserves into varying confidence categories. Whether the result appropriately reflects the Competent Person's view of the deposit. The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).	The Mineral Resources have been based on in-situ Au cut-off grades ranging from 0.96 g/t to 1.12 g/t within the designed open pits and below the surveyed end of year topography surfaces (as at 31 October 2019). The grades have been modified by the application of suitable modifying factors and have been classified as Probable, based on the Indicated classification of the Mineral Resource estimate. The level of work undertaken through pit optimisation studies and pit designing is considered sufficient for the classification of Probable Ore Reserves. Mr Paul O'Callaghan, the Competent Person for this Ore Reserve estimation, has reviewed the work undertaken to date and considers that it is sufficiently detailed and relevant to each of the deposits to allow those Ore Reserves derived from the Indicated Mineral Resources to be classified as Probable. There are no Measured Mineral Resources within any of the Mineral Resource Block Models. However, the stockpiles at Yanfolila, which have been surveyed and grade adjusted as at 31 October 2019 are taken to be Measured and therefore are placed into Proved Reserves.
Audits or reviews	The results of any audits or reviews of Ore Reserve estimates.	This Ore Reserve has been prepared and reviewed by Mr Paul O'Callaghan, Competent Person for Ore Reserves in 2019 in conjunction with key staff from HUM.
Discussion of relative accuracy/ confidence	Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate. The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used. Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserve viability, or for which there are remaining areas of uncertainty at the current study stage. It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.	The Competent Person deems that the methodology applied to arrive at the Ore Reserve estimate for Yanfolila is appropriate and defendable. The overall accuracy of the cost estimate used in the estimation of these Ore Reserves is considered to be ±15%. The cost estimates have been derived from actual site operating data, so the global accuracy is considered very robust. The statement relates to global estimates of a mine scale. Confidence in the application of the modifying factors is appropriate for the estimate. Ore will be blended from several deposits before treatment in the processing plant.

**ENDS**

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

Daniel Betts, CEO Thomas Hill, FD Douglas Ross, IR	Hummingbird Resources plc	Tel: [phone]
James Spinney Ritchie Balmer James Bellman	Strand Hanson Limited Nominated Adviser	Tel: [phone]
Edward Montgomery James Asensio	Canaccord Genuity Limited Broker	Tel: [phone]
Gordon Poole Owen Roberts Ollie Head	Camarco Financial PR/IR	Tel: [phone]

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 29% IRR and US$186m NPV at a US$1,300 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.

 

END

 

 

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