Conditional Acquisition in Gold Project, Mali

RNS Number : 0160S

Hummingbird Resources PLC

27 September 2017

 

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

Hummingbird Resources plc

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

Conditional Acquisition of 50% Interest in Kobada Gold Project to Target an Increase in Annual Production at Yanfolila by +45% to +150,000oz per annum

Hummingbird Resources (AIM: HUM) is pleased to announce that it has signed a Letter of Intent ("LOI") regarding a potential earn-in to a 50% interest in the Kobada Gold Project ("Kobada") in Mali owned by African Gold Group Inc ("AGG") and initial investment into AGG (the "Transaction").

The Transaction is subject to certain conditions, including that binding agreements are entered into within 45 days.  

Highlights

·     Potential to create a high-grade concentrate at Kobada to be trucked to Yanfolila for processing to add an additional 50,000oz gold per annum to Yanfolila

·     Kobada has 2.2Moz Measured, Indicated and Inferred Gold Resource (including 511Koz of Reserves)

·     Initial investment in AGG of CAD$3.6m for approximately 9.9% (40,000,000 Units at CAD$0.09c/Unit (each Unit consisting of a share and a warrant at CAD$0.12 per share))

·     120-day exclusivity period for due diligence

·     During exclusivity period Hummingbird has the right to increase shareholding in AGG to 19.2% for a further consideration of CAD$4.4m at CAD$0.09c/share paid in Hummingbird shares and to manage the DFS on the Project funded by AGG

·     On completion of the DFS Hummingbird has the right to acquire 50% interest in Kobada through funding capex of the Project

·     Hummingbird to receive 70% of cashflows until capex recovered

Dan Betts, CEO of Hummingbird, commented: "Based on the due diligence we have completed to date we believe we will be able to truck a high-grade concentrate to the Yanfolila processing plant from Kobada.  This high-grade concentrate would have a material increase to our annual production rates and could add up to an additional 50,000oz per annum to our existing average life of mine production of 107,000oz. 

"The Yanfolila Gold Mine currently has a 7.5 year mine life based on reserves and we have over 1Moz gold in resources that we will look to convert to reserves and extend this mine life once in production.  This deal with AGG gives us a path to 150,000oz production per year within three years from now combined with the organic extension of mine life from existing resources extending it well beyond 10 years.  This could significantly improve the production profile of Yanfolila and materially improve the mine's NPV.

"We are extremely excited about the optionality the deal provides Hummingbird and working with the management of AGG who have a strong track record of creating shareholder value within the industry."

Stephan Theron, CEO of AGG, commented: "This transaction with Hummingbird is significant for AGG as it validates the intrinsic value of the Kobada gold Project and fast tracks the planned development program.  Hummingbird provides us the financial capacity to develop the Kobada Gold Project and we are also gaining a partner with operational presence in Mali. Kobada provides Hummingbird the ability to further increase production output at their Yanfolila mine. The partnership is a win-win for both groups.  We look forward to working with the Hummingbird team on this transaction."

Further Information

Subject to contract and satisfaction of various conditions and agreement of the parties including entering into binding agreements with AGG:

(a)  Hummingbird will acquire 40,000,000 units of AGG at a price of CAD$0.09 per Unit for gross proceeds to AGG of CAD$3,600,000.  Each Unit will consist of 1 share and 1 warrant priced at CAD$0.12.

(b) AGG shall grant Hummingbird exclusivity to undertake due diligence for a period of 120 days subject to certain conditions and extensions (the "Exclusivity Period"). 

(c)  Prior to the expiry of the Exclusivity Period Hummingbird will have the right to purchase an additional 48,888,888 AGG Shares at a price of CAD$0.09 per AGG Share for gross proceeds to AGG of CAD$4,400,000 payable in Hummingbird shares, and to appoint the Project Manager for the DFS on the Project to be funded by AGG.

(d) Subject to the DFS being acceptable to Hummingbird, Hummingbird shall fund 100% of the capital costs (the "Capex") required to build the mine and processing plant that may be required for the Project and will have the right to manage and operate the Project.

(e)  Hummingbird shall receive 70% of the net cashflows from the Project until such time as it has recovered the Capex, and 50% thereafter in line with its ownership of the Project.

**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]
Susie Geliher Megan Dennison	St Brides Partners Ltd Financial PR/IR	Tel: [phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

About Hummingbird Resources Plc

Notes to Editors

About Hummingbird Resources

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. 

About African Gold Group

African Gold Group (TSX V: AGG) is a Canadian exploration and development company with its focus on West Africa. African Gold Group is focused on the development of the Kobada Gold Project in Mali, a low capital and operating cost gold project with potential to produce more than 50,000 ounces of gold per annum.  For more information regarding African Gold Group visit the website at www.africangoldgroup.com.

 

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