Berenberg cuts target price on Hummingbird Resources

Hummingbird has released fourth-quarter production of 22,000 from its Yanfolila mine in Mali, taking production for the year to 101,000 and missing consensus estimates of 25,700 ounces and 105,000, respectively.

Gold sold during the quarter was 24.2m ounces at an average received price of $1,862 per ounce but weaker production drove up all-in sustaining costs for the quarter to USD1,496/oz, above our expectation of USD1,162/oz.

The German bank also noted that tonnes processed in the fourth quarter were in line at 359,000 but with a miss on grade at 2.03 grams per tonne, versus 2.5g, caused by grade reconciliation issues.

"We have a concern that this issue could have negative read-through for the broader resource," said the analysts.

As a result of the update, Berenberg retained a 'buy' recommendation on the stock despite Hummingbird facing both operational challenges associated with its Yanfolila site and logistical issues in Mali following the coup in August.

"The key upcoming catalysts should be delivering on guidance at Yanfolila and delivering on the permitting and financing package for the new Kouroussa project in Guinea that could double group production," added Berenberg.