Last checked at 15 Aug 2013 07:00
Hummingbird Resources plc
("Hummingbird" or the "Company") (AIM: HUM)
Final results for the year ended 31 May 2013
Hummingbird Resources plc, the Liberian gold development company with a 3.8 Moz Resource, announces its final audited results for the year ended 31 May 2013.
Highlights
Development:
· Publication of a robust Preliminary Economic Assessment on the Dugbe 1 Project
o NPV of US$337m
o IRR of 43%
o 125,000oz gold/year production for 20 year Life of Mine ("LOM")
o 20 years free cash of US$954m
o 2.41 strip ratio and US$759/oz Opex for first 5 years of LOM
· Building a World Class Development team to deliver the Detailed Feasibility Study ("DFS")
· Additions to a Highly Experienced 'Owners Team':
o Formation of the Technical Advisory Committee
o Nigel Walls appointed as Head of Project Development: Formerly a Director of Wardell Armstrong International Limited and COO then CEO at Ncondezi Coal Company Limited.
· 15,802m of infill drilling completed in 2013 to date on the Tuzon 2.05Moz NI 43-101 Inferred Resource, in order to improve confidence and categorisation.
Financial:
· Strengthened balance sheet with fully funded development programme:
o US$5m placement from the IFC
o US$15m Royalty agreement agreed with Anglo Pacific Group Plc
o US$14m cash at 31st May 2013 with the final US$5m royalty tranche pending
Post Period End
· Commencement of DFS
o ESIA studies are well under way with Hydrological drilling over July and August 2013
o Coffey Mining overseeing geotechnical drilling in July and August 2013
o MDM Engineering appointed to deliver the DFS
o DFS due for completion in Q3 2014 with first gold pour targeted for Q2 2016
Dan Betts, CEO of Hummingbird, said:
"During the rest of 2013 and as we move into 2014, Hummingbird is fully focused on executing its strategy of further advancing the Dugbe 1 Project and progressing it closer to production. The Company is fully funded for the next important stage of its growth and has the team in place to take the project to the conclusion of a DFS, at which stage the implementation of the first mine in South East Liberia can commence."
Enquiries:
Hummingbird Resources plc
Daniel Betts, Chief Executive Officer
Thomas Hill, Finance Director
Robert Monro, Head of Business Development +44 (0) 203 416 3560
Liberum Capital Limited
Nominated Adviser and Broker
Tom Fyson / Christopher Kololian +44 (0) 203 100 2222
FTI Consulting LLP
Financial PR
Ben Brewerton / Oliver Winters +44 (0) 207 831 3113
Chairman's Statement
It has certainly been a very turbulent 2013. The gold price started the year at satisfactory levels and was then pummelled down several hundred dollars in a day. Whatever the causes behind this unprecedented drop it only serves to remind us that we still live in "interesting times" and our response to this volatility has to be the delivery of a project, fit for purpose, yet designed to withstand any foreseeable gold price scenario. I said last year that the underlying conditions for a higher yet sustainable gold price were in place and whilst this year the first real signs of global economic green shoots are emerging, and with it a possible secular move out of the gold sector, I still feel the doomsayers talking gold back to below $800 per ounce are in cloud cuckoo land. The underlying problems in the global economy are still with us, and will remain so until such time as the authorities face up to the need for some serious fiscal medicine, and as such gold deserves a place in any well managed investment portfolio.
However, notwithstanding the current, well publicised sell off in the junior mining sector, over the past 12 months Hummingbird has continued to make excellent progress on all fronts, as we progress towards our stated near-term aim of bringing our Dugbe 1 Project into production in 2016. In the last year we successfully raised US$20m with two exceptional partners, which has guaranteed the necessary funding to complete our Detailed Feasibility Study. These important deals, at minimal dilution to existing equity holders, with the IFC and Anglo Pacific, ensure that we are funded through the current comprehensive work programme, to drive the Dugbe 1 Project forward to the completion of a DFS anticipated for Q3 2014, without the need to raise additional funds. This has insulated us from the market through these challenging times and sets us apart from many of the other juniors currently suffering significant funding shortfalls.
Both deals show that these important partners share our positive view of the Dugbe 1 Project, and with the IFC we have an excellent partner to progress through the necessary studies. We look forward to their valuable support, in particular ensuring that Hummingbird adheres to the IFC's rigorous performance standards that promote sustainability together with social and environmental responsibility across all of our business operations.
Our comprehensive Preliminary Economic Assessment published in April 2013 confirmed that the Dugbe 1 Project is both achievable and economically viable, even if the current lower gold price trend continues into 2016 when we foresee the Company moving into production.
Additionally Hummingbird has strengthened its operational team to reflect the changing focus as we move into the development phase so that we possess all of the technical skills internally to drive the Project forward and to work constructively with our world-class team of DFS consultants. Together with our consultants and the internal Technical Advisory Committee, I am certain we have the right team in place to achieve the best results for all our stakeholders.
Hummingbird is unique. We are proud of our track record of achieving what we said we would do when we listed on AIM in 2010, being able to add world class skills to our team as we have progressed from exploration into the development phase; evolving our strategy as appropriate, but always remaining true to our ultimate objective of creating long term shareholder value through becoming a significant gold exploration and production company, in a completely new part of the West African Shield.
I would like to thank my fellow Board members for their diligence this past twelve months, to Dan, Will, Tom, Dave and all of our staff for their hard work and dedication as well. Whilst this year has been challenging, the year ahead is unlikely to be any easier but we are extremely fortunate to have in place the team we do. I am confident the fruits of their hard work will soon be realised and we will hopefully be reporting back next year with a positive outlook for the Detailed Feasibility Study.
Ian Cockerill
Chairman
CEO's Statement
A year passes quickly, and in next year's annual report I hope to write that we are putting the finishing touches to a positive DFS for the Dugbe 1 Project and construction of the Dugbe 1 mine is shortly due to commence. The following year I hope to write that Hummingbird is on the verge of its first gold pour and becoming a producer. We are progressing rapidly.
The highlight of this last year has been the release of an extremely positive PEA on our Dugbe 1 Project which shows the potential for a robust and profitable gold mine with an NPV of US$337m, IRR of 43% and free cash of almost US$50m per annum over the 20 year life of mine producing 125,000 oz/year.
Whilst the future of the Company is promising, we cannot ignore the adversity the gold sector is facing today. Writing this statement is not the easiest task I have ever had to tackle. On the face of it the obvious facts are disappointing. Mirroring the fall in the price of gold, and in line with many of our peers, our share price has lost nearly 80% of its value over the 12 month period. As a significant shareholder myself, I am acutely aware of what is being felt, not just by us but by our shareholders and by the whole sector. Many of Hummingbird's directors and employees have bought shares in the Company demonstrating their commitment and belief in what we are achieving. Despite the current market conditions we remain very much on track to achieve our stated goals and ambitions.
Gold may be out of favour at the moment, but given the continued uncertainty in the world and gold's enduring nature as a long term store of value it is likely to remain an important part of any person's or country's balanced investment portfolio.
Likewise gold stocks may be out of favour, but gold is still around US$1,300 an ounce, a price at which the IRR of the Dugbe 1 Project is an attractive 30%. This remains an exciting project and it is important to remember that the current project economics are based merely on the gold we have identified to date. Excluding the potential for further gold discoveries, it is a compelling investment proposition for a company with a current market capitalisation of around £20m.
In terms of timing we now find ourselves in a strong position:
- We were the first gold company to enter South East Liberia
- We raised the money for our DFS through non-conventional methods prior to completing a PEA, with minimal shareholder dilution showing our commitment to preserving equity value however possible
- We are now undertaking a DFS when few others are in a position, financially, to do so. This means that we have access to the best advisors and consultants. Contracts and timeframes are more competitive than at any time in recent memory, which means that there has not been a better opportunity to move forward with development projects for a long time. While the sector is going through a period of retrenchment and introspection, we will have taken the business forward and continued to build value for shareholders, which I believe will set us apart from the crowd when the tide and sentiment turns.
Whilst the current market is undoubtedly extremely challenging for all concerned, it actually presents what may be looked back upon as the greatest buying opportunity of a generation and hopefully in the course of this report we will convince our shareholders, both old and new, that Hummingbird is one of the best placed companies to ride out the storm and capitalise on that opportunity.
Financing
During the year under review Hummingbird successfully arranged US$20m of funding via a US$5m strategic investment from the IFC, part of the World Bank, and through a $15m royalty agreement with Anglo Pacific Group plc. These agreements mean that the Company is fully funded through to the end of the DFS and importantly were achieved with minimal dilution to shareholders. Given the current situation many junior exploration and development companies find themselves in with a chronic lack of funds in a unsupportive market, we believe the funding achieved this year not only sets us apart from many of our peers but also provides significant endorsement for Hummingbird's Dugbe 1 Project.
These funding streams provide significant benefits to Hummingbird above and beyond the capital. In the case of the IFC this investment marked their first in the Liberian mining sector. The IFC are respected globally by governments and investors alike: their support provides reassurance to our investors and the host country that Hummingbird's activities will be conducted at the very cutting edge of social and environmental best practices, and it acts as a security blanket that the Company has the support of a major global financial institution working with ourselves and the Liberian government to bring this project to fruition.
Preliminary Economic Assessment
In Q3 2012 we commenced our PEA which was completed and released to the market in April 2013. The PEA was conducted by Wardell Armstrong International Limited (WAI) with assistance from a number of other internationally recognised consulting firms.
The purpose of the PEA was to assess the potential economic viability of the gold we have already discovered in the Dugbe 1 Project. Because we wanted to be as thorough as possible in our understanding of the potential for the Dugbe 1 Project, the level of work was extremely comprehensive for this stage of project.
Highlights
o NPV of US$337m with an IRR of 43% assuming a 10% discount factor and US$1,500 gold
o Over first five years 1.4 g/t ore mined at US$759/oz cost
o Capex of US$212m for 3.5Mtpa plant producing 125,000oz gold
o Free cash of US$954m over 20 year LOM
The Dugbe 1 Project
The publication of the PEA formally marked the transition of Hummingbird from an exploration company to an exploration and development company.
The PEA showed, as seen above, that the Dugbe 1 Project is based on a robust Resource producing solid financial returns.
Capitalising on the successful PEA and the fact that we have funding in place, we have been able to commence progression towards a DFS resulting in the following key appointments:
- Appointment of MDM as lead consultant on the DFS
- SRK appointed to carry out Resource and Reserve estimations together with mining optimisations
- Coffey Mining appointed for the geotechnical studies
- AMEC have been appointed to carry out the Environmental & Social Impact Assessment
- Hummingbird has built an 'owners team' headed by Nigel Walls a former director of WAI and COO then CEO of Ncondezi Coal
- Technical Advisory Committee was formed with Mike Skead, current VP Project Evaluation at Dundee Resources, Mark Calderwood, former CEO of Perseus Mining and Dave Pelham, Non-Executive Director of Hummingbird
I would like to take this opportunity to thank Dave Pelham for his immense contribution to the Company over the last five years as he moves from Technical Director to Non-Executive Director. Dave first worked for Hummingbird as a consultant before spending the last five years as the Company's Technical Director. Dave has led the geological team from grass roots exploration to where we stand today with a 3.8Moz gold Resource, a positive PEA and DFS well under way. It goes without saying that Hummingbird has benefited immensely from Dave's experience during his time as Technical Director and we look forward to continuing to benefit from it as he transitions to Non-Executive Director.
Exploration
As well as transitioning to a developer during the year we have also made inroads on the exploration front as well. Arguably the most significant of these programmes was a 17,000 line km airborne magnetic and radiometric survey that was flown over the 2,000km2 Dugbe Shear Zone licence area. This is the largest of its kind ever in Liberia and we believe it will lead us to many new targets once the full interpretation has been received. The results, which are due imminently, should greatly enhance our understanding of the regional geology across the shear zone and will hopefully help us identify a large number of potential targets which we will be able to actively explore. We will also be able to re-rank the prospectivity of all of our exploration targets by incorporating this new magnetic and radiometric geophysical data into our existing data which will be a significant step forward.
Outlook
During the rest of 2013 and as we move forward into 2014, Hummingbird is fully focused on executing its strategy of further advancing the Dugbe 1 Project and progressing it closer to production. The Company is fully funded for the next important stage of its growth and it has the team in place to take the project to the conclusion of a DFS, at which stage the implementation of the first mine in South East Liberia can commence.
Hummingbird is a rare breed - a gold explorer, a project developer, a company which is funded through to DFS, with an ambitious management team and a highly experienced advisory committee and board. Since its formation, the Company has a track record of delivery and of finding an alternative to the equity markets when and if necessary to preserve long-term equity value for shareholders. The darkest hour comes just before dawn, and I think that we have a great deal to look forward to. I would like to especially thank the whole Hummingbird team for their loyalty and dedication through this time and I look forward to an exciting year ahead.
Dan Betts
CEO
Consolidated Income Statement
For the year ended 31 May 2013
Notes |
2013 $'000 |
2012 $'000 | |
Continuing operations | |||
Revenue | - | - | |
Profit on deemed disposal | - | 588 | |
Share-based payments | (679) | (1,139) | |
Other administrative expenses | (2,786) | (3,147) | |
Administrative expenses | (3,465) | (3,698) | |
Finance income | 463 | 263 | |
Finance expense | (145) | (674) | |
Share of joint venture loss | (225) | (46) | |
Loss before tax | (3,372) | (4,155) | |
Tax | - | - | |
Loss for the year attributable to equity holders of the parent | (3,372) | (4,155) | |
Loss per ordinary share | |||
Basic and diluted ($ cents) | 3 | (6.13) | (7.78) |
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2013
2013 $'000 |
2012 $'000 | ||
Loss for the year | (3,372) | (4,155) | |
Other comprehensive income | |||
Exchange translation differences on foreign operations | - | - | |
Total comprehensive loss for the year attributable to equity holders of the parent | (3,372) | (4,155) |
Consolidated Balance Sheet
As at 31 May 2013
2013 $'000 | 2012 $'000 | ||
Assets | |||
Non-current assets | |||
Intangible exploration and evaluation assets | 46,589 | 32,522 | |
Property, plant and equipment | 607 | 1,363 | |
Investment in joint venture | 711 | 936 | |
47,907 | 34,821 | ||
Current assets | |||
Trade and other receivables | 753 | 851 | |
Amounts due from joint venture | - | 35 | |
Cash and cash equivalents | 13,692 | 15,503 | |
14,445 | 16,389 | ||
Total assets | 62,352 | 51,210 | |
Liabilities | |||
Current liabilities | |||
Trade and other payables | 2,564 | 2,602 | |
Other financial liabilities | 10,049 | - | |
Amounts due to joint venture | 382 | 1,139 | |
Total liabilities | 12,995 | 3,741 | |
Net assets | 49,357 | 47,469 | |
Equity | |||
Share capital | 908 | 855 | |
Share premium | 46,355 | 41,922 | |
Retained earnings | 2,094 | 4,692 | |
Equity attributable to equity holders of the parent | 49,357 | 47,469 |
Consolidated Statement of Cash Flows
For the year ended 31 May 2013
2013 $'000 |
2012 $'000 | ||
Net cash outflow from operating activities | (3,822) | (2,201) | |
Investing activities | |||
Purchases of intangible exploration and evaluation assets | (12,458) | (13,391) | |
Purchases of property, plant and equipment | (85) | (593) | |
Interest received | 150 | 208 | |
Net cash used in investing activities | (12,393) | (13,776) | |
Financing activities | |||
Net proceeds from issue of shares | 4,486 | 42 | |
Proceeds from warrants issued | 355 | - | |
Financial liabilities issued net of issue costs | 9,708 | - | |
Net cash from financing activities | 14,549 | 42 | |
Net decrease cash and cash equivalents | (1,666) | (15,935) | |
Effect of foreign exchange rate changes | (145) | (674) | |
Cash and cash equivalents at beginning of year | 15,503 | 32,112 | |
Cash and cash equivalents at end of year | 13,692 | 15,503 | |
Consolidated Statement of Changes in Equity
For the year ended 31 May 2013
| Share capital $'000 | Share premium $'000 | Retained earnings $'000 | Total $'000 |
As at 1 June 2011 | 854 | 41,881 | 7,490 | 50,225 |
Comprehensive loss for the year:- | ||||
Loss for the year | - | - | (4,155) | (4,155) |
Total comprehensive loss for the year | - | - | (4,155) | (4,155) |
Transactions with owners in their capacity as owners:- | ||||
Issue of shares | 1 | 41 | - | 42 |
Total Transactions with owners in their capacity as owners | 1 | 41 | - | 42 |
Share based payments | - | - | 1,357 | 1,357 |
As at 1 June 2012 | 855 | 41,922 | 4,692 | 47,469 |
Comprehensive loss for the year:- | ||||
Loss for the year | - | - | (3,372) | (3,372) |
Total comprehensive loss for the year | - | - | (3,372) | (3,372) |
Transactions with owners in their capacity as owners:- | ||||
Issue of shares | 53 | 4,433 | - | 4,486 |
Total Transactions with owners in their capacity as owners | 53 | 4,433 | - | 4,486 |
Share based payments | - | - | 774 | 774 |
As at 31 May 2013 | 908 | 46,355 | 2,094 | 49,357 |
Notes to the Consolidated Financial Statements
For the year ended 31 May 2013
1 GENERAL INFORMATION
Hummingbird Resources plc (the 'Company'), is incorporated in England and Wales under the Companies Act. The address of the registered office is 49-63 Spencer Street, Hockley, Birmingham, West Midlands, B18 6DE.
The nature of the Group's operations and its principal activities is the exploration, evaluation and development of mineral exploration targets, principally gold, focused exclusively in Liberia.
2 BASIS OF PREPARATION
The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union ('EU') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 May 2013 or 31 May 2012 but is derived from those accounts. The auditor's report on those financial statements was unqualified and did not contain a reference, to which the auditors drew attention by way of emphasis and did not contain a statement under s498 (2) - (3) of Companies Act 2006.
3 LOSS PER ORDINARY SHARE
Basic loss per Ordinary share is calculated by dividing the net loss for the year attributable to Ordinary equity holders of the parent by the weighted average number of Ordinary shares outstanding during the year.
The calculation of the basic and diluted loss per share is based on the following data:
2013 $'000 | 2012 $'000 | |
Losses Loss for the purposes of basic loss per share being net loss attributable to equity holders of the parent |
(3,372) |
(4,155) |
Number of shares | 2013 Number | 2012 Number |
Weighted average number of Ordinary shares for the purposes of basic loss per share | 55,000,447 | 53,367,031 |
Loss per Ordinary share | 2013 $ cents | 2012 $ cents |
Basic and diluted | (6.13) | (7.78) |
At the balance sheet date there were 6,474,658 (2012: 4,369,255) potentially dilutive ordinary shares. In 2013 the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated.
4 AVAILABILITY OF ACCOUNTS
The audited Annual Report and Financial Statements for the 12 months ended 31 May 2013 and notice of AGM will shortly be sent to shareholders and published at:
www.hummingbirdresources.co.uk