REG - Hummingbird Res. - Q4-2023 Operational and Trading Update

Hummingbird ResourcesAnnouncement

31/01/2024 07:00

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RNS Number : 4402B  Hummingbird Resources PLC  31 January 2024

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

 

31 January 2024

Hummingbird Resources plc

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

Q4-2023 Operational and Trading Update & FY-2024 Outlook

FY-2023 Guidance met, and strong FY-2024 outlook positions the Company for
significant deleveraging and growth.

Hummingbird (AIM: HUM) is pleased to announce a Group operational and trading
update for the fourth quarter ending 31 December 2023 ("Q4-2023") and provide
operation and AISC guidance for FY-2024.

Operational update

Yanfolila Mine, Mali

·      Yanfolila produced 14,419 ounces of gold ("oz") in Q4-2023, with
a total of 83,965 oz produced in FY-2023, meeting the Company's FY-2023
production guidance of 80,000 - 90,000 oz.

·      AISC on gold produced at Yanfolila totalled US$1,701 per oz in
Q4-2023, leading to a FY-2023 AISC of US$1,361 per oz (FY-2022: US$1,782 per
oz), meeting FY-2023 AISC guidance of under US$1,500/oz.

·      During the quarter, 12,952 oz of gold were sold at an average
realised price of US$1,946 per oz. At the end of FY-2023, 2,908 oz were held
in inventory valued at c.US$6.0 million.

Kouroussa Mine, Guinea

·      Kouroussa produced a total of 6,068 oz through H2-2023 following
first gold production in June 2023.

·      As previously announced, the ramp-up of Kouroussa encountered
challenges, primarily due to slower-than-expected mining fleet mobilisation
and commissioning, as well as delays in the recruitment and training of local
and national of mining personnel.

·      During Q4-2023, mining productivity increased and advanced
towards the higher-grade regions of the Koekoe deposit. The processing plant
continued to perform well and consistently operated at nameplate capacity,
running on a 24-hour basis through the quarter.

·      As announced on 21 December 2023, the ramp-up of production at
Kouroussa was impacted by a fire at Guinea's main fuel depot, leading to the
suspension of mining operations. As announced on 25 January 2024, following
delivery of fuel to the Kouroussa Gold Mine, mining operations restarted and
are expected to ramp up to full capacity levels over the coming weeks. The
Company remains on target to achieve commercial production within Q1-2024.

Corporate update

·      FY-2023 Lost Time Injury Frequency Rate ("LTIFR ") for the group
was 0.60 per million hours worked, below the 1.20 LTIFR target.

·      Group adjusted EBITDA of c.US$0.2 million for Q4-2023, resulting
in a cumulative adjusted EBITDA for FY-2023 of c.US$34.5 million.

·      The Company's near-term revenue protection scheme has been
finalised with 60,000 oz protected across the first three quarters of FY-2024
through forward pricing and cost collars, with an average floor price
of US$2,000 per oz and upside of up to US$2,150.

·      In Q4-2023 the Company announced a placement and open offer,
raising gross proceeds of US$28.1 million, of which US$5.5 million was
received by the Company pre year end, to strengthen the balance sheet and
advance growth initiatives. All resolutions were duly passed at the General
Meeting on 10 January 2024.

FY-2024 Outlook

·      Group production guidance for FY-2024 of 165,000 - 200,000 oz at
an AISC below US$1,500, which is weighted towards H2-2024 and is split as
follows.

o  Yanfolila: 75,000 - 85,000 oz at AISC below US$1,500 oz.

o  Kouroussa: 90,000 - 115,000 oz at AISC below US$1,500 per oz.

·      The Company remains focused on material balance sheet
deleveraging, which will commence in Q1-2024 with scheduled debt repayments of
c.US$77 million in FY-2024, c.US$61 million in FY-2025, and the remainder
c.US$15 million payable by the end of FY-2028.

·      In line with the exploration strategy outlined in Q4-2023, the
Company expects to spend c.US$5 million on exploration across both Yanfolila
and Kouroussa, targeting near mine resource and LOM growth.

Investor Presentation

The Company's senior management team will be holding an investor presentation
on 2 February 2024 at 14:30 GMT 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 IR@hummingbirdresources.co.uk.

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

Dan Betts, CEO of Hummingbird, commented:

"FY-2023 posed significant challenges for Hummingbird as it evolved into a
multi-asset, multi-jurisdictional gold company, welcoming Kouroussa into our
portfolio and maintained our dedication to responsible mining practices and
community engagement. Yanfolila demonstrated its resilience by producing
nearly 84 koz  of gold at an AISC of US$1,361/oz, meeting our FY-2023
guidance. Additionally, FY-2023 saw the commencement of the Komana East
underground mine development. This project is crucial in the future of
Yanfolila, and we are focused on delivering commercial production later this
year for a full year of production from FY-2025.

In the face of challenging conditions at Kouroussa, with delays in the
mobilisation and commissioning of the mining fleet and the suspension of
mining operations due to a fire at Guinea's main fuel depot, we successfully
completed construction on schedule and within budget and produced 6,068 ounces
in H2 2023. During the mining shutdown, our team has used this time diligently
to further optimise the ramp-up process and with fuel deliveries now
occurring, all equipment onsite and operations restarting, our focus remains
on reaching commercial production in Q1-2024.

Looking to FY-2024, our primary focus is on delivery, and we have set our
guidance in the range of 165,000 to 200,000 ounces, targeting Group AISCs at
below US$1,500. This broad range reflects the ramping up of Kouroussa, and we
anticipate refining this guidance later in the year once we have reached
consistent commercial production levels. In the upcoming fiscal year, our
strategic objectives include achieving the substantial increase in our Group
production profile, significantly reducing our net debt position, executing on
exploration programs to further extend LOM at both producing assets, and
delivering substantial value to our stakeholders through responsible mining
practices and strategic growth initiatives."

Yanfolila, Mali: Q4-2023 operational summary

                       Unit  Q4-2022                    Q1-2023                    Q2-2023                  Q3-2023                    Q4-2023    FY-2023
 Gold poured           oz           28,264                     27,262                    23,885             18,399                     14,419     83,965
 Mined BCMs            BCMs    1,303,770                  1,557,793                    592,360                1,775,723                1,878,181  5,804,057
 Ore mined             t          529,496                    647,869                   262,911                   171,959                266,361    1,349,101
 Ore processed         t          382,683                    366,622                   364,459                   339,333               312,045    1,382,459
 Avg. mill feed grade  g/t              2.45                       2.41                      2.21                      1.79            1.66       2.03
 Recovery              %     94.28%                     94.41%                     94.06%                   92.93%                     91.05%     93.10%
 Total Gold inventory  oz             2,057                     2,810                      1,831                     1,834              2,908      2,908

 

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.

·      At the close of Q4-2023, Yanfolila maintained a rolling 12-month
average LTIFR of 0.70 per million hours worked against our target rate of less
than 1.20 per million hours worked.

·      In Q4-2023, Yanfolila's gold production reached 14,419 ounces,
contributing to a total of 83,965 ounces for FY-2023, successfully meeting
guidance for FY-2023 gold production. Mining volumes rose to 1,878,181 BCMs,
mainly driven by the mining at the Sanioumale East ("SE") open pit deposit.

·      Ore processed in Q4-2023 totalled 319,845 tonnes, experiencing a
slight decline from Q3-2023 due to increased maintenance on the mill in late
November, affecting processing volumes.

·      Q4-2023 saw a reduction in average mill feed grade on Q3-2023 at
1.66 grammes a tonne ("g/t") and processing plant recovery of 91.05%. The
reductions over the quarter were driven by the shift in mining to SE and the
blending of marginal Run of Mine ("ROM") stockpiles with higher grade
material, whilst grades returned to Q3-2023 levels in December.

·      The ongoing development of the high grade Komana East Underground
("KEUG") Mine progressed well, with approximately 164.5 meters of advance by
the end of FY-2023. The Company, which is developing the project internally,
anticipates initial developmental ore in H1-2024 and reaching commercial
production later in the year.

Yanfolila ESG:

·      Across FY-2023, the Company placed a large focus on investing
within the local communities, with several initiatives completed including.

o  SE village resettlement: In Q2-2023, the Company successfully completed
the SE village resettlement, on budget and ahead of schedule. This completion
enabled the Company to initiate operations on the SE deposit earlier than
originally planned. The resettlement effort saw over forty families relocated
successfully and was completed under the guidance of West African specialist
consultants Environmental and Social Development Company ("ESDCO").

o  Educational infrastructure enhancement: Under its educational program, the
Company undertook the construction and rehabilitation of school
infrastructure. This encompassed the construction of three classrooms and the
refurbishment of teachers' housing and classrooms, contributing to the
improvement of educational facilities.

o  Water infrastructure construction: The Company continued to invest in the
construction of water infrastructure, aiming to enhance water access for
approximately 1,000 people in the local region.

o  Economic development training initiatives: The Company implemented
training initiatives focused on economic development, covering diverse areas
such as market gardens, poultry and fish farming, and the establishment of
workshops for honey and Shea butter production. These initiatives are designed
to empower the local community economically and foster sustainable
development.

o  Community health initiatives: Hummingbird actively combated malaria
through education, training, intra-domiciliary spraying, and the distribution
of mosquito nets, emphasising a comprehensive approach to disease prevention.

Kouroussa, Guinea: Q4-2023 operational summary

·      In 2023, Kouroussa achieved a LTIFR of 0.40 across 2,449,755
hours worked, well below the targeted objective of 1.20, and surpassed several
safety milestones.

·      At the end of FY-2023, Kouroussa had produced a total of 6,068
oz, above updated expectations of c.5,000 oz. This was achieved through
processing existing low-grade stockpiles and additional selective mining
activity in late December 2023.

·      As previously noted, Kouroussa encountered challenges during the
ramp-up of production, particularly experiencing lower-than-planned mining
productivity rates due, delays in mining equipment mobilisation and
commissioning, the slower-than-expected recruitment and training of local and
national personnel and impacts of seasonal weather conditions. This resulted
in reduced volumes and a delay in mining the high-grade material at the
initial key deposit, Koekoe.

·      During November and into December, mining productivity saw an
upward trend, approaching the targeted BCM movement rates and progressing
towards the higher-grade regions of the Koekoe deposit.

·      As previously announced, a fire at the primary fuel depot in
Conakry, Guinea, led to the temporary suspension of mining operations at
Kouroussa, with the processing plant remaining in operation, processing
existing stockpiles and limited material mined. As announced on 25 January
2024, fuel had been successfully delivered to the Kouroussa Gold Mine in
recent days, leading to the resumption of mining operations on-site. The
company plans to gradually increase production to reach full capacity levels
in the coming weeks.

·      Throughout the suspension of mining operations, the company has
undertaken several initiatives to enhance ramp-up performance. These
initiatives include grade control drilling and dewatering of the operation.
Additionally, extra training has been conducted for employees at the Kouroussa
Mine. The Company maintains its focus on achieving full commercial production
within Q1-2024.

Kouroussa ESG:

·      Throughout FY-2023, the Company successfully implemented social
responsibility initiatives as well as engaging in various local initiatives,
underscoring efforts the Company's commitment to strong community engagement
and development. These included:

o  Investment in Local Communities: The Company committed resources to
support local communities, encompassing the maintenance of local religious
buildings and investment in the regional educational system. Notably, 500
school kits were distributed to local schools, and first aid training was
provided to both regional students and local youth.

o  Sustainability and Healthcare Focus: Demonstrating a commitment to
sustainability and healthcare, the Company continued its investment in local
water infrastructure. This involved drilling six boreholes to supply fresh
water to six local communities. Additionally, ongoing training and
certification in health impact assessment were provided to contribute to
community well-being.

o  Environmental Responsibility at Kouroussa Mine: The Company remains
steadfast in its commitment to environmentally responsible operations. The
in-house environmental team conducted comprehensive monitoring of air, noise,
dust, vibration, and water quality. Furthermore, efforts towards the ongoing
reforestation of the urban forest of Kouroussa align with the Company's
participation in the conservation of the regional ecosystem.

o  Community Engagement Programs: The Company sustained its engagement with
local communities through diverse programs. Initiatives included the
establishment of women's market gardens across the region, fostering economic
empowerment. Furthermore, a vocational three-year training program was
initiated to equip local youths with skills relevant to mining-related trades,
contributing to their long-term development.

Dugbe, Liberia

·      The recent conversion of the Company's 51% interest in the Dugbe
Gold Project into a 51% interest in Pasofino simplifies the ownership
structure, enabling efficient decision-making and project advancement.

·      In January 2024, Pasofino announced a non-brokered private
placement totalling approximately US$2.33 million, inclusive of a US$2 million
investment by Hummingbird. This investment increases Hummingbird's
shareholding in Pasofino to 53%.

·      Working closely with the Pasofino team, Hummingbird is outlining
the next steps for the Dugbe Gold Project and will provide updates in due
course.

Exploration Summary

·      As previously announced, following exploration conducted during
FY-2023, the Company has developed comprehensive exploration plans for FY-2024
onwards. These plans are designed to systematically expand the Resource bases
at both the Yanfolila and Kouroussa operations, with the goal to increase the
Reserve bases and extend LOM at both operating assets.

·      Further details on the Company exploration plans can be found -
polaris.brighterir.com/public/hummingbird/news/rns/story/r7ln1vx
(https://polaris.brighterir.com/public/hummingbird/news/rns/story/r7ln1vx)

Financial update

                                                  Unit  Q4-2022      Q1-2023             Q2-2023             Q3-2023             Q4-2023   FY-2023
 Yanfolila Gold Mine, Mali
 Gold sales                                       oz    27,860             26,380              24,770             18,550         12,952    82,652
 Avg. gold sale price                             $/oz    $1,726           $1,878        $1,981              $1,918              1,946     1,928
 Operating cash costs                             $m      $34.6          $29.0               $29.0               $30.5           $22.0     $111.6
 AISC on gold sold                                $/oz  $1,248             $1,109              $1,234              $1,651        $1,701    $1,361
 Group Financial Performance
 Adjusted EBITDA                                  $m       $11.2        $17.6            $15.5               $1.2                $0.2      $34.5
 Net bank (debt) / cash                           $m    ($128.7)     ($110.8)            ($122.8)            ($123.0)            ($140.4)  ($140.4)
 Net bank (debt) / cash inc gold inventory value  $m    ($125.0)     ($105.2)            ($119.3)            ($119.5)            ($134.3)  ($134.3)

·      Q4-2023 AISC on gold sold at Yanfolila totalled US$1,701 per oz,
leading to a FY-2024 AISC of US$1,361. The decrease in AISC during Q4-2023 was
in line with the progression of the mining at the SE deposit.

·      During the quarter, a total of 12,952 oz of gold was sold at an
average realised price of US$1,946 per oz.

·      The Company has fully implemented its near-term revenue
protection strategy over a portion of the Company's production for the first
three quarters of FY-2024 in the order of 60,000 oz, with forward pricing and
cost collars, with an average floor price of US$2,000 per oz and upside of
up to US$2,150.

·      Group adjusted EBITDA of c.US$0.2 million for Q4-2023 due to
reduced gold sales, resulting in total adjusted EBITDA for FY-2023 of
c.US$34.5 million.

·      During the quarter, the Company announced a conditional
placement, accompanied by an open offer, which closed raising a total of
US$28.1 million, with US$5.5m received by the Company, and the balance
following the subsequent approved at a General Meeting held on the 10 January
2024. The Company will use the net proceeds to strengthen the balance sheet of
the business and advance multiple growth initiatives as part of the Company's
growth strategy.

·      As of the end of FY-2023, the Company held a net bank debt
position of c.US$140.4 million (c.US$134.3 million including gold inventory
value). For the year end:

o  Gross bank debt of c.US$148.3 million.

o  Cash at bank of c.US$7.9 million (inclusive of the abovementioned
US$5.5m).

o  Gold inventory value of c.US$6.0 million.

**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
(http://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
(https://www.hummingbirdresources.co.uk/)  or contact:

 

 

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

 Thomas Hill, FD

 Edward Montgomery, CD
 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

 Ana Ercegovic           Broker
 Bobby Morse             Buchanan                   Tel:  +44 (0) 20 7466 5000

 Oonagh Reidy            Financial PR/IR            Email: HUM@buchanan.uk.com (mailto:HUM@buchanan.uk.com)

 George Pope

 

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