Hummingbird Resources pleased with fourth quarter performance

Hummingbird Resources updated the market on operations in its fourth quarter on Wednesday, recording a net cash positive position of $1.5m (£1.1m) at period end on 31 December.

The AIM-traded firm said its current bank loans were scheduled to be fully repaid in the second quarter of 2021.

It said it had cash of $11m at the end of the quarter, up from $9m three months prior, with total bank debt standing at $13m, down by $6m during the quarter, with a gold inventory value of about $4m.

The board reported a total recordable injury frequency rate of 0.82, exceeding its target of a rate lower than 2.5 for 2020.

A total of $2m was received from the Mali government as part payment for their acquisition of an additional 10% stake in Yanfolila, as announced on 2 February 2017.

On the production front, 22,012 ounces of gold was poured in the quarter, broadly in line with the 24,722 ounces poured in the third quarter, with full-year production for 2020 standing at 101,069 ounces of gold .

The company reported an all-in sustaining cash cost (AISC) on gold sold in the quarter of $1,496 per ounce, up from $1,283 per ounce in the third quarter, as its full-year AISC came in at $1,147 per ounce.

A total of 24,285 ounces of gold was sold in the fourth quarter, at an average realised price of $1,862 per ounce.

Looking ahead, Hummingbird issued 2021 production guidance of between 100,000 and 110,000 ounces of gold, with an AISC of $1,250 to $1,350 per ounce on gold sold.

Its production profile would be weighted towards the second half of the year, with part of the KE pit to be mined out in the period, and a focus to move to the Komana West pit, where higher grades were lower in the orebody and were not expected to be accessed until the late part of 2021.

Mali development capital expenditure of $7m was planned for 2021, focussing on the Gonka, SW and KEUG deposits for future production, including the haul roads to SE and SW currently under construction.

The company’s exploration and mine life extension budget in Mali was doubled to $10m, focussing on SE drilling and permitting to increase the confidence of current geology, and expand on the existing resources of around 62,000 ounces, as well as KEUG drilling and permitting requirements, to be finalised with a view to be in production by 2022.

It expected KEUG to contribute to the base load production profile for the firm at greater than three grams per tonne, with the mine life potential looking to be extended with the current year's exploration and drilling programmes.

The budget would also be used for SW follow-up drilling of high-grade zones identified in 2020, to further increase current resources of around 138,000 ounces, as well as initial green field exploration drilling at the Diaban target, and further metallurgical work at the Kabaya South deposit.

Updated company mineral resources estimate models would be released at the end of the first quarter, and were expected to be updated annually to capture the progress of each years' programmes.

Hummingbird was also undertaking pre-development, optimisation and exploration planning in Guinea, focussing on the ongoing pre-development work to de-risk and optimise the project, including completion of front-end engineering and design, and the contract tendering process.

Exploration planning was ongoing for programmes to increase confidence and the extent of the current resource base of around 1.18 million ounces at three grams per tonne.

A number of high-priority targets had been identified to focus on at the key deposits KK and KnK, the board said.

Finally, Hummingbird aid Junction Contract Mining was expected to be appointed as the mining contractor at Yanfolila in Mali, on similar terms to the current contractor, whose contract was ending this year.

“2020 has been a challenging year in which to operate and many of these logistical challenges remain,” said chief executive officer Dan Betts.

“However, Hummingbird ends the year in a solid net cash balance sheet position, with a strong internal growth pipeline including the development of Kouroussa and the exciting 2021 exploration and drilling campaign at Yanfolila ahead of us.

“We have a more modest 2021 production outlook which we believe is achievable and will establish a solid footing for the company as we generate circa $70m of project level EBITDA at current gold prices.”

Betts said its pre-development plans at Kouroussa continued, with its confidence of the exploration and mineral resource growth potential increasing the more work it did on the project.

“Additionally, we are excited about the progress at our Dugbe Gold project in Liberia with earn-in partners Pasofino.

“I believe the foundations are set for 2021 to be a strong year for the Company as we capitalise on the organic growth opportunities ahead of us and continue to progress towards our goal of being a multi-asset, multi-jurisdiction producing resources company.”

At 1304 GMT, shares in Hummingbird Resources were down 9.05% at 28.65p.