Sign up Australia
Proactive Investors - Run By Investors For Investors
Why invest in HUM?
Hummingbird Resources plc: THE INVESTMENT CASE

Hummingbird building a gold production presence in Africa and on the London market

Hummingbird is one of the few miners in recent years that's actually been able to finance and build a significant gold mine
Hummingbird building a gold production presence in Africa and on the London market
INVESTMENT OVERVIEW: HUM The Big Picture
Profitable gold production is likely in a number of pricing scenarios

Core asset: the Yanfolila gold mine in Mali

In 2014 Hummingbird Resources PLC (LON:HUM) took over the Yanfolila gold project in Mali from Gold Fields (JSE:GFI), which in turn had taken it over from one-time London-listed junior Glencar.

Gold Fields, as one of the largest gold producing companies in the world, had concluded that on the whole the project was too small for it. But that hadn’t precluded it doing a lot of detailed investigations on viability, following up on the initial resource work that had been done by Glencar.

This work was then handed onto Hummingbird, which proceeded rapidly on to completing final economic studies, raising money and moving on into development.

Economic in a variety of gold price scenarios

According to the most up-to-date study conducted by Hummingbird, Yanfolila is capable of producing an after-tax internal rate of return of 60%, assuming a gold price of US$1,250, lower than where it is now.

That would be on the basis of life of a production scenario weighted towards the early years, but which over the life of the mine would produce at an average rate of 107,000 ounces per year.

However, if gold were to rise to US$1,400, the after-tax IRR rises to 77%. Similarly the NPV jumps from US$162 mln to US$216 mln.

Conversely though, if the gold price should fall to US$1,100, the project will still enjoy a 42% internal rate of return.

Mining underway

Hummingbird has now commenced mining at Yanfolila, although gold production is still some weeks away. That’s partly because the plant isn’t quite complete yet, and partly because the company is building up a planned stockpile of ore to allow for an orderly introduction into the process plant before the end of the year.

As it stands, Yanfolila is forecast to produce 132,000 ounces in its first year of production, at an average all-in sustaining cost over the life of the mine of US$695 per ounce.

Well-covered by brokers

In 2016, Beaufort Securities called Yanfolila “one of the best undeveloped gold projects in Africa”.

That analysis is only running out of date because Yanfolila is now producing, but the company is well-followed by other brokers, including Mirabaud,  SP Angel and Shore Capital, and that kind of coverage isn’t always easy to achieve for a junior miner.

But with the gold price on an upward trend, and gold companies known to re-rate significantly once they move from development into production, the reasons for the interest are pretty clear.

Chief executive in upbeat mood

“Commencement of mining activities at Yanfolila is a significant milestone for Hummingbird as we continue to bring the project closer to production by the end of this year,” said chief executive Dann Betts.

“Our contract mining partners, AMS, have mobilised a significant fleet to site and this commitment emphasises the momentum the project has gained throughout the year. As we enter the final months of construction we remain on time and budget for first gold by the end of 2017. We will look to build on the current momentum as we ramp up to full scale mining and production.”

 



Alastair_55b0a5ec88c28.jpg


Register here to be notified of future HUM Company articles
View full HUM profile View Profile

Hummingbird Resources plc Timeline

Related Articles

molten gold being poured
October 20 2017
Pan African hopes to be in production at Elikhulu in the final quarter of next year.
diamond-drill-350.jpg
July 27 2017
The company has transformed itself over the last three years through three major transactions
Lydian International aiming high with Amulsar in Armenia
September 14 2017
Construction began in the fourth quarter of 2016 and the group expects to pour its first gold in the middle of 2018

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2017

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use