Hummingbird Resources Ltd (LON:HUM) — Maiden Reserves at Yanfolila and Project Update — The West African gold exploration and development company has announced Yanfolila Gold Project in Mali (“Yanfolila” or the “Project”). This represents a 20% increase from the in-pit Mineral Resource in the Optimisation Study. The Reserve Report is based on the Resources at the Komana East and West pits as these will be mined first (Phase 1). The Project has significant Resources at other nearby deposits including Guiren West, Gonka, Sanioumale East and Sanioumale West which will be mined at a later stage (Phase 2). The Company would also like to give an update to shareholders on the development of Yanfolila whilst it completes ongoing due diligence with Taurus Funds Management in advance of the full debt draw down.
Yanfolila Highlights
· Gross maiden Probable Reserves1 of 6.82Mt @ 3.03 g/t for 665,600oz Au
o Increase of 118,600oz Au from the in-pit Mineral Resource inventory reported in the March 2015 Optimisation Study mine plan of 547,000oz Au, with the grade increasing by 15%, using a US$1,100 pit shell
· 100% of in-pit Indicated Resources have converted into Reserves
o Plant throughput capacity increased to 1.24Mtpa from 1.0Mtpa (24% increase), benefits include:
§ Increased annual gold production for c120,000ozs in first full year of production
§ Ability to process all ore types including 1Mtpa of fresh ore
· Updated gross Mineral Resource2 of 1.8Moz Au @ 2.54 g/t
o Additionally there is a further 390,700ozs Au @ 1.92g/t of mineral inventory3 previously defined by Gold Fields Limited but as yet not converted to JORC or SAMREC compliant Mineral Resources
· Project economics are being updated and will be released in January 2016
· Project construction timeline remains unchanged at 12-15 months from main debt draw
Dan Betts, CEO of Hummingbird Resources Ltd, said: “Achieving a maiden Ore Reserve at Yanfolila is a significant milestone for the Company. With an increased gold grade of 3.03 g/t it confirms Yanfolila as a quality, high-grade, low cost project.
“We have increased the size of our processing plant to process up to 1.24Mtpa, as well as processing harder, fresh ore types. The ability to process greater volumes of fresh ore has allowed us to expand and deepen the open pits of our maiden Ore Reserve, resulting in more recoverable gold. Together with a more flexible operating plan it also gives us scope to further expand our Ore Reserves from our existing deposits. The 24% increase in throughput will also significantly enhance annual gold production.
“Additionally, the plant has been designed with the ability to further increase capacity to 1.5Mtpa. With so many Indicated ounces outside the mine plan at nearby deposits and high-grade underground potential at Gonka, the Company believes there remains significant production upside at Yanfolila. “We look forward to making further announcements on an updated mine schedule and Project economics once finalised.”
RFC Ambrian Comment: We consider this announcement to be very positive, with a 24% increase in the scale of the plant and a 20% increase in the gold contained in the maiden reserve compared to the material assumed to be mined in the optimisation study. We note the potential for additional defined code-compliant resources to be added to reserves in due course. We await the updated capex and operating cost guidance that is expected to be published in January before undertaking a revision of our valuation. We also note that the company and Taurus Funds Management continue to undertake due diligence on the project with a view to providing project debt for its development and we await further information on this.
Hummingbird Resources Ltd — Maiden Reserve at Yanfolila
Maiden reserve of 666,000oz at Yanfolila — Hummingbird Resources Ltd has announced a maiden reserve within two pits (Komana East and Komana West) at the Yanfolila Project in Mali of 666,000oz at an average grade of 3.03 g/t. This represents a 20% increase in contained gold and a 15% increase in grade compared with those incorporated in the optimisation study of March 2015. The announcement also presented a summary of the project’s code-compliant resources, which totalled 1.8Moz at a grade of 2.54 g/t.
Maintaining BUY rating and target price of 45p — The increase in the grade and the contained gold in the maiden reserve are positive with respect to the underlying value of the project, and the finalisation of the reserve helps to keep the Taurus due diligence process moving forwards. However, we will await further guidance on the project economics and funding before updating our valuation.
RFC Ambrian acts as Nomad and Broker to this company
