JOHANNESBURG (miningweekly.com) – West African gold explorer Hummingbird Resources has raised £3.5-million, before expenses, through the placing of 10.6-million new ordinary shares at 33p apiece, with the funds destined to advance its 1.8-million-ounce Yanfolila gold project, in Mali, to near-term production and for working capital purposes.
Application would be made to the LSE to have the shares admitted to trading on the Aim on June 30. Following Admission, the company would have a total of 105.3-million ordinary shares in issue.
Commenting on the announcement, CEO Dan Betts said the group received strong demand for the shares, particularly from the retail community.
“Having bolstered our cash balance, increased our retail following and potential liquidity, we are now in an even stronger position to deliver our first gold pour at Yanfolila in 2016 where plant earthworks are already under way,” he noted.
Hummingbird outlined in a report on Wednesday that recent technical studies had indicated “significant” potential for improved economics around the development of Yanfolila as an openpit mining operation.
It noted that gold grade control orientation drilling grids completed at the project’s Komana East target had confirmed and enhanced the previous geological understanding of this part of the deposit, which had increased the overall robustness of this resource.
This followed the completion of an optimisation study in March, which outlined the potential for the development of a one-million-ton-a-year openpit gold project with a net present value (NPV) of $72.4-million, an internal rate of return (IRR) of 35.1% and cash costs of $733/oz of gold for a 6.5 year life-of-mine (LoM) production and average yearly output of 79 000 oz.
According to the miner, the optimisation study indicated the potential to improve the IRR by 15%, the NPV by $20-million, first-year production by 32 000 oz, free cash by 5%, LoM production by 8% and LoM grade by 2%, while also improving the payback period to two years.
“The company has been highly active over the last two months at Yanfolila with a programme of technical derisking studies and start of plant earthworks which are ahead of schedule at this time.
“We are extremely pleased with the results of these programmes to date and look forward to updating the Yanfolila financial model in the coming weeks and seeing further significant economic improvements from within it as we look to develop and build a leading West African gold mining operation,” said Betts.
Since the completion of the study, Hummingbird had started initial earthworks, which comprised the excavation, placement and compaction of fill materials of over 80 000 m3 for the construction of the process plant terrace; the plant infrastructure terrace; the change house and security facility areas; the power plant terrace; the in-plant roads; and the storm event pond.
The current status of progress was 75% complete against a targeted 55%, said the company.
“The objective of this work, which is targeted to take eight weeks, is to complete the preparation of level compacted areas at the Yanfolila plant site for use by the civil contractor to place structural concrete equipment foundations and slabs and to allow the overall construction schedule to be maintained,” it noted in an update.
Hummingbird had, meanwhile, also completed a project derisking programme, which included drilling at Komana West, resource sensitivity analysis at Komana East, analysis of risk to achieve expected gold production in years one and two, additional geotechnical studies, detailed design of the tailings management facility, detailed plant engineering, preparation and initial engagement for land acquisition and a full reassessment of the overall mine plan.
This, the company held, had led to “significant” improvements to the project and, together with a detailed review of the mine and processing schedule, had simplified the mining plan to the initial two pits – Komana East and Komana West – from the five pits previously envisaged.
“This, in turn, should accelerate the gold production schedule, with the remaining pits to be brought on later to extend the life of the project.
“The full findings of the derisking programme, which are in the process of being finalised, could have significant implications and materially improve the economics of the Yanfolila project,” said the company.
Owing to the significance of these improvements to the mine plan and schedule, in particular through the simplification to starting with two pits rather than five pits and the increased grades in earlier years, Hummingbird said it was working closely with Taurus Funds Management to advance $75-million in funding.