REG - Hummingbird Res. - Q2 2022 Operational & Trading Update

Hummingbird ResourcesAnnouncement

21/07/2022 07:00

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RNS Number : 2171T  Hummingbird Resources PLC  21 July 2022

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

21 July 2022

Hummingbird Resources plc

("Hummingbird" or the "Company")

Q2 2022 Operational and Trading Update

"Operational trends improving"

Hummingbird Resources plc (AIM: HUM) provides an operational update for the
second quarter of 2022 ("Q2 2022").

An interview with senior management discussing the operational and trading
update can be viewed here.
(https://www.voxmarkets.co.uk/articles/hummingbird-resources-q2-operational-trading-update-01d976d)

Further, an updated drone and timelapse camera video detailing the
construction progress at the Kouroussa gold mine in Guinea can be viewed here.
(https://www.hummingbirdresources.co.uk/media/#corporate-videos)

Q2 2022 updates:

§ Quarter production: Q2 2022 production increased 29% from Q1 2022 to
20,013 ounces ("oz") of gold (Q1 2022: 15,548oz), with improved mining rates
(+26%), processing plant throughput (+20%) and mill feed grade (+9%) achieved
during the quarter

§ All-in Sustaining Cost ("AISC"): AISC reduced by 17% from Q1 2022 to
US$1,859 per oz (Q1 2022: US$2,235 per oz) primarily due to improved
quarterly production. Inflationary pressures are being felt, especially from
fuel and consumables, in common with the global mining industry. However, the
Company expects a continual improvement in the AISC profile from current
levels for the remainder of the year

§ Gold sold: 20,490 oz of gold ("Au") sold in Q2 2022 at an average
realised price of US$1,851 per oz (Q1 2022: 15,179 oz at an average
realised price of US$1,871). The Company held 2,418 oz of gold inventory
on 30 June 2022, valued at c.US$4.3 million

§ Kouroussa, Guinea: During the quarter, construction at Kouroussa advanced
into the important civil works phase of the build process. The build remains
on time and on budget to meet the scheduled first gold pour by the end of Q2
2023 (see video link above for more detailed visuals on the construction
progress)

§ Dugbe, Liberia: The Dugbe final feasibility study results were released on
13 June 2022 by our joint venture partners Pasofino Gold Ltd ("Pasofino")
showcasing a sizeable gold mining project of 2.76 million of ounces ("Moz") of
gold in Reserves (4.01Moz Resources) and strong project economics including a
pre-tax NPV(5%) of US$690 million (US$530 million post-tax), 26.35% IRR
(23.6% post-tax), and a life of mine ("LOM") of 14 years, producing 200,000 oz
per annum in the first five years. As noted in the June release, the Company
is currently conducting a strategic review of its options to best realise the
maximum value of Dugbe for all stakeholders

§ Updated Company Reserves and Resources(1): Updated Company Reserves and
Resources Estimate statements for each of the Company's three gold
assets were released during the quarter. Company Reserves increased
materially to 4.13Moz of Au from 1.12Moz as reported in November 2021 and
Resources increasing 8% to 7.28Moz of Au from the previous statement

Outlook:

§ Guidance: The Company maintains its 2022 guidance of 87,000 - 97,000 oz of
gold, forecasting improved H2 production versus H1 2022 levels, in line with
our start of year guidance expectations and our current mine plan. Due to
ongoing inflationary cost pressures, especially from fuel and consumables, the
full year AISC guidance of US$1,300 - US$1,450 per oz will be re-assessed at
the end of Q3 and a further update provided at that time

Dan Betts, CEO of Hummingbird, commented:

"For the second quarter we saw production improvements at Yanfolila; ongoing
construction progress at Kouroussa with major civil works taking shape towards
first gold pour the end of Q2 2023; release of our updated Company Reserves
and Resources statements showcasing LOM extensions providing real long-term
value for the Company, coupled with a major milestone being achieved with the
release of the feasibility study on Dugbe by our joint venture partners
Pasofino.

Despite macro conditions from inflationary pressures being seen across the
board, we remain focussed on maintaining an improving production profile
through H2 2022 at Yanfolila, which should compensate for most of these
pressures, coupled with ongoing optimisation and cost reduction strategies
being implemented at Yanfolila.

The second half of 2022 is also a critical stage in the development of our
second gold mine at Kouroussa in Guinea, which remains on track and budget for
first gold pour by the end of Q2 2023. The release of the updated Reserves and
Resources in Q2 demonstrates the significant open pit grades at this project,
which is a cornerstone of our growth strategy through bringing into
production, diversifying our asset base and generating strong future cashflows
for the Company.

Finally, in H2 2022, we will work with our partners at Pasofino to conduct a
strategic review of Dugbe, Liberia to better understand our options to
maximise shareholder value from this rare and valuable asset."

Operational Summary

                            Unit  Q2 2021    Q3 2021    Q4 2021    Q1 2022    Q2 2022
 Gold poured                oz    24,494     22,102     18,181     15,548     20,013
 Mined BCMs                 bcms  2,672,788  2,095,935  1,920,311  2,164,253  2,726,205
 Ore mined                  t     443,490    392,005    445,808    502,800    511,449
 Ore processed              t     391,652    326,020    341,936    298,925    357,837
 Avg. mill grade feed       g/t   2.14       2.27       1.79       1.71       1.87
 Recovery                   %     91.88%     91.95%     92.38%     95.39%     94.82%
 Gold inventory - incl SMO  oz    1,972      2,769      2,246      2,557      2,418

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

 

Yanfolila, Mali - Operational charts detailing improving trends: quarterly
production; mined BCMs; and average mill grade feed (g/t)

§ Q2 2022 production of 20,013 oz was a 29% improvement from the 15,548 oz
recorded in Q1 2022. Additional excavator fleet became operational during the
quarter which led to improved mining volumes and the ability to deliver on the
mine plan, leading to improved gold poured ounces

§ As noted in our Q1 2022 release, the Company was looking to increase
throughput at the mill in Q2, in particular by utilising increasing oxide
stockpiles from mining at the Sanioumale West ("SW") deposit. This took place,
with ore processed at the mill increasing c.20% quarter on quarter to 357,837
oz

§ Mill feed grade for Q2 2022 averaged 1.87 g/t, up +9% (Q1 2022: 1.71 g/t)
 

§ With improved mining rates and practices starting to take place, the
quantity and quality of ore on our run of mill ("ROM") pad improved during the
quarter, leading to improvements in mill feed grade

§ Mined bank cubic meters ("BCM") totalled 2,726,205 in Q2 2022 versus
2,164,253 in Q1 2022, a c.26% improvement. This was driven primarily by the
additional excavator fleet that became operational in the quarter

§ With BCM movements now more in line with our mine plan forecasts, a key
focus for H2 2022 is to better deliver on the mine plan on a daily, weekly,
and monthly basis running into year-end

§ Processing plant recovery rates for Q2 2022 remained at very good levels of
94.82% versus 95.39% in Q1 2022

§ The Company is forecasting improved H2 production versus H1 2022 levels, in
line with our start of year guidance expectations and our current mine plan
primarily driven by more consistent mining volume rates leading to better
access to higher quality ore at the right sequence to the mine plan; improved
ROM pad performance of quality and quantity of ore feed to the mill; and
ongoing consistent processing plant performance

§ As noted in our updated Company Reserves and Resources statements, with
Yanfolila Komana East underground ("KEUG") Reserves increasing 75koz (+37%
from the previous statement), to total 278koz at 3.94 g/t, KEUG is expected be
a key source of high-grade ore, providing a c.40,000- 50,000 oz per annum
production profile for a minimum of +5-6 years once in production (with KEUG
LOM upside potential with further exploration drilling given mineralisation
remains open at depth)

§ With the 2022 KEUG Reserves now complete, the Company is finalising its
detailed analysis of the KEUG deposit in terms of economics, mining and when
to incorporate it into the future mine plans at Yanfolila, with more details
of these plans to be highlighted once finalised

§ Further, in early July, the Economic Community of West African States
("ECOWAS") lifted economic and financial sanctions imposed on Mali, after its
military rulers proposed a 24-month transition to democracy and published a
new electoral law

§ This is a positive for our Yanfolila operations as it allows for the
removal of restrictions that have been imposed on the movement of goods and
people across borders and international banking capabilities in particular.
Importantly, with the lifting of sanctions, offsetting of VAT recoverable
against taxes payable has recommenced, expecting to be a net cash benefit

Kouroussa, Guinea

During the quarter, considerable progress was made on constructing Kouroussa,
with the scheduled timeline and budget remaining on track to achieve the
first gold pour by the end of Q2 2023. Key updates included:

§ Major civil works are well underway including: processing plant CIL tanks
construction advancing to plan; the permanent mine camp cement foundations and
related infrastructure underway; and access roads and related infrastructure
such as river crossing culverts being completed

§ Power (including important solar plant and heat recovery system
initiatives) and mining contractor contracts are expected to be awarded during
Q3 2022

§ The concrete batch plant, rebar bending store and laboratory facilities
became operational in Q1 2022, with cement manufacturing output increasing for
general, processing plant, and mine camp foundation works that are occurring

§ With the updated Company's Reserves and Resources statements now completed,
our geology team are doing a more detailed review of future exploration
drilling campaigns to be initiated with the focus to increase Kouroussa's
overall Resources and Reserves and ultimately LOM

§ Community engagement remains a key feature of all workstreams, with the
community projects and livelihood initiatives to start H2 2022 including:
water supply infrastructure; local community hospital infrastructure
improvements and medical supplies; market gardens; and Shea butter
manufacturing training

Dugbe, Liberia

§ The results of the Dugbe Gold Project FS, prepared by the Company's earn-in
partner Pasofino, were released on 13 June 2022. This was a key milestone for
the Company, taking Dugbe from an exploration asset to an economically viable
and sizeable gold mining project

§ The FS results showcased 2.76Moz in Reserves (4.01Moz Resources) and strong
project economics including: Pre-tax NPV(5%) of US$690 million (US$530
million post-tax), 26.35% IRR (23.6% post-tax); a 3.5-year capex payback
period once in production; and a 14-year LOM, producing 200,000 oz per annum
in the first five years at a low AISC profile of US$1,005/oz

§ The Company is currently conducting a strategic review of its options to
best realise the maximum value of Dugbe for all stakeholders

Financial Summary:

                                             Unit   Q2 2021  Q3 2021  Q4 2021  Q1 2022  Q2 2022
 Gold sales                                  oz     24,790   22,255   18,489   15,179   20,490
 Avg. gold sale price                        $/oz   $1,802   $1,782   $1,782   $1,871   $1,851
 Operating cash costs                        $'000  $33,986  $33,472  $32,486  $32,177  $38,253
 AISC on gold sold                           $/oz   $1,386   $1,520   $1,803   $2,235   $1,859
 Net (debt) / cash                           $'m    $9.0     ($5.9)   ($25.0)  ($47.4)  ($64.4)
 Net (debt) / cash inc gold inventory value  $'m    $12.4    ($1.0)   ($21.0)  ($42.4)  ($60.1)

§ Q2 2022 AISC improved 17% from Q1 2022 levels at US$1,859 per oz, versus
US$2,235 per oz in Q1 2022 primarily due to the improved quarterly production

§ As seen with the Q2 AISC profile, with production improvements forecast for
the H2 2022, the AISC profile is also scheduled to improve. As noted in our
highlights above, due to ongoing inflationary cost pressures, especially from
fuel and consumables, the full year AISC guidance of US$1,300 - US$1,450 per
oz will be re-assessed at the end of Q3 and a further update provided at that
time

§ As noted above, with sanctions lifted on Mali in early July, offsetting of
VAT recoverable against taxes payable has recommenced, expected to be a net
cash benefit

§ Net debt position c.US$64.4 million end of Q2 2022 (c.US$60.1
million including gold inventory value), with c.US$23 million debt remaining
available from Coris Bank International ("Coris Bank") expected to be drawn
during Q3/Q4 2022 for the Kouroussa construction purposes. Further, the
Company retains an overdraft facility with Coris Bank of c.US$20 million

§ With improved H2 2022 production and AISC profile forecast at Yanfolila,
the Company's cash flow generation is expected to also improve

ESG Q2 2022 updates include:

§ The external assurance audit begun in Q2 for the year 3 World Gold Council
("WGC") responsible gold mining principles ("RGMPs") requirements. A dedicated
Hummingbird ESG team and external consultants are in place to achieve a
positive assurance audit report outcome, expected in Q4 this year

§ As noted above, at Kouroussa, community engagement remains a key feature of
all workstreams, with the rolling out of initial community projects and
livelihood initiatives to start H2 2022: including: water supply
infrastructure; local community hospital infrastructure improvements and
medical supplies; market gardens; and Shea butter manufacturing training

§ Further at Kouroussa we expect to be awarding the power contract soon,
which will include carbon emission reduction technologies that will lower the
overall carbon footprint of the mine including: A +7Mwh solar plant and heat
recover generator units at the processing plant

§ At Dugbe, Liberia the Environmental and Social Impact Assessment ("ESIA")
study is expected to be finalised by our joint venture partners, Pasofino in
Q3 2022

Footnote 1 - All Company Reserves and Resources are shown on a 100% basis.
Hummingbird will retain a controlling interest in Dugbe of 51%

 

**ENDS**

Notes to Editors:

Hummingbird Resources plc (AIM: HUM) is a leading multi-asset,
multi-jurisdiction gold production, development and exploration 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 when production,
scheduled for first gold pour end of Q2 2023. 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. 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, 14-year life of
mine at a low AISC profile of US$1,005/oz. 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 www.hummingbirdresources.co.uk
(http://www.hummingbirdresources.co.uk/)  or contact:

 Daniel Betts, CEO                  Hummingbird Resources plc  Tel: +44 (0) 20 7409 6660

 Thomas Hill, FD

 Anthony Köcken, COO

 Edward Montgomery, CSO & ESG
 James Spinney                      Strand Hanson Limited      Tel: +44 (0) 20 7409 3494

 Ritchie Balmer                     Nominated Adviser

 James Asensio                      Canaccord Genuity Limited  Tel: +44 (0) 20 7523 8000

 Gordon Hamilton                    Broker
 Bobby Morse                        Buchanan                   Tel:  +44 (0) 20 7466 5000

 Ariadna Peretz                     Financial PR/IR            Email: HUM@buchanan.uk.com (mailto:HUM@buchanan.uk.com)

 George Cleary

 

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