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(Sharecast News) - Hummingbird Resources updated the market on the development of the high-grade Kouroussa Gold Mine in Guinea on Tuesday, reporting that it had secured a group-level financing package from Coris Bank International to fully fund the project into production, along with internal cash flows.
The AIM-traded firm said it had also finalised all necessary engineering and study work to provide capital expenditure and timeline estimates, together with project economics.
It said Kouroussa was forecast to be a high-grade, low-cost mine which would produce an average of between 120,000 and 140,000 ounces for the first three years of production, and an average of 100,000 ounces over the life-of-mine.
The life-of-mine had increased to a minimum of seven years from the original five-year estimate at purchase based on the optimised mine plan, with the mine forecast to produce at an average all-in sustaining cost (AISC) in the range of $900 to $1,000 per ounce throughout the life-of-mine, with "material upside potential" through further exploration drilling, which was currently being planned.
Hummingbird said the project economics at today's gold price of $1,750 per ounce were for an internal rate of return of 71%, a net present value of $210m, cumulative free cash of $314m, and a capital expenditure payback period of about two years after the start of production.
The commencement of construction was set to begin in the current, fourth quarter, with first gold pour scheduled for the end of the second quarter of 2023.
Total project capital expenditure would be $97.5m for a one million tonnes-per-annum processing plant and establishment costs, with an additional budget of $10m for pre-production mining costs and $7.5m for contingencies.
The project was fully funded through internal cash flows and a group financing facility from Coris Bank of $100m, at a fixed interest rate of 8.5% over four years.
Key operational appointments and project construction contracts had been negotiated, the board said, and were set to be awarded to "internationally-recognised" partners.
Hummingbird said 16,000 metres of a 24,000 metre 2021 infill drilling programme to upgrade confidence in the mineral resources at Kouroussa had been completed, with the remaining metres to be finalised on schedule in 2021.
Kouroussa's current mineral resources were 1.18 million ounces at more than three grams per tonne, of which 625,600 ounces were indicated, and 552,700 ounces were inferred.
The focus of the infill drill programme was to convert resources to reserves, with a maiden Kouroussa reserve on one of the key deposits, Koekoe, to be included in its updated company reserve statement this quarter, followed by a subsequent company resource and reserve update based on 2021 drilling due in the first half of 2022.
"The completion of the financing and the imminent commencement of building Kouroussa marks the next phase of Hummingbird's strategy to become a multi-mine, multi-jurisdiction gold producer," said chief executive officer Dan Betts.
"Kouroussa is a low cost/high margin project which will more than double Hummingbird's gold production, substantially improve future cash flows and generate returns for all our stakeholders.
"With one of the highest IRRs for a gold project in West Africa, and material upside to extend life-of-mine through further exploration within our licences area yet to be fully explored, Kouroussa provides a strong platform for our next phase of growth."
Betts said Kouroussa would be a "key contributor" in Guinea's journey to becoming a "leading" gold producer in West Africa, following ongoing gold discoveries in the Siguiri Basin, where the project is located.
"The recent political events in Conakry have not impacted the rapid progress of the development of Kouroussa, and we have taken measures to ensure that our key priority of maintaining the safety of our employees, contractors and operations remain intact.
"Finally, I would like to personally thank Coris Bank and their team for the long-standing commitment they have shown Hummingbird and again for this financing package to support the company in building our next producing gold mine."
At 0941 BST, shares in Hummingbird Resources were up 14.11% at 20.83p.
25 Apr 2024 20:57
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