Hummingbird upbeat on operations at Yanfolila

Hummingbird Resources updated the market on its operations and trading for the first quarter at the Yanfolila Gold Mine in Mali on Thursday, reporting 30,282 ounces of gold poured for the period, down from 33,892 ounces in the fourth quarter.

The AIM-traded firm said its all-in sustaining costs were $875 per ounce for the three months, rising from $839 per ounce in the final quarter of 2019.

It sold 24,575 ounces of gold in the first quarter, at an average price of$1,568 per ounce.

Hummingbird said its 2020 exploration programme was “well-established”, with more than 1,200 metres of drilling completed so far.

The company’s total recordable injury frequency rate stood at 2.3 for the period, meeting its target of under 2.5.

On the corporate front, the company’s liquid assets, being cash and gold, stood at $25m at the end of the quarter, up from $14m at the end of 2019.

Cash totalled $8m, down from $9m, while the firm had 11,000 ounces of gold inventory to hand, worth about $17m at the 31 March gold price, up from 2,900 ounces at the end of the fourth quarter.

Bank debt stood at $34m, with the repayment of $6m plus interest reported in the current quarter, down from $40m at end of 2019.

Looking at the ongoing Covid-19 coronavirus pandemic, Hummingbird said it had experienced “no material impact” to production from the outbreak thus far.

It said it had risk mitigation in place, including the establishment of a Covid-19 taskforce, as well as the implementation of a “robust” set of procedures to minimise the potential impact of Covid-19.

The board said it was continuing to support its local communities, including donating to the Mali government’s Covid-19 fund.

Supply chains and logistics for people, supplies and parts remained stressed, the company said, as well as being continually changing, which required “close attention”.

The firm noted that it had a CFA 5.5bn ($10m) overdraft facility with Coris Bank in place, to assist with any short-term liquidity challenges.

Looking at the rest of the year, Hummingbird said it was maintaining its 2020 production guidance of between 110,000 and 125,000 ounces.

The firm said it was on track for its targeted net cash position in the second half, with zero debt by the end of the first half of 2021, and added that its exploration programme was ongoing, targeting an improved mine plan.

“I am pleased to report another solid quarter, despite the challenging operating environment caused by the global Covid-19 pandemic, in which the company achieved its production targets for the first quarter,” said chief executive officer Dan Betts.

“The challenges posed by COVID-19 are extraordinary, dynamic and will undoubtedly affect us as they will every person and business imaginable.

“Whilst it is not possible to see the full implications at this stage, it seems inevitable we will encounter cost pressures, just like other businesses, in our dealing with this unprecedented event.”

Betts said he was “especially impressed” at how the company’s team had pulled together along with its business partners, local communities and wider stakeholders to “act decisively” and protect the health and safety of everyone working at site and ensuring business continuity.

“We continue to work closely with the government of Mali and have donated to its Covid-19 fund, as well as directly supporting the local communities at Yanfolila by funding additional medical staff and equipment to the Bougoudale Community Health Centre and Yanfolila Health Centre.

“We also continue to supply SMO (Single Mine Origin) gold for production of physical investment gold products to meet the recent increase in demand.”

Alongside maintaining production, Betts said Hummingbird remained committed to advancing its key medium and long term objectives of rapidly deleveraging and strengthening its balance sheet, while continuing to explore and develop the considerable resource upside opportunities at Yanfolila.

“Exploration recommenced in the first quarter as planned, with an initial focus on advancing the underground potential at Komana East.

“The first drill holes have intersected mineralisation in the anticipated areas and so we are optimistic that we should be able to add economically viable resources (and thus mine life) to the mine plan.

“This represents a significant next step in unlocking the potential underneath the Komana East pit.”

At 1046 BST, shares in Hummingbird Resources were up 1.53% at 26.5p.