Hummingbird Regulatory News (HUM)

NOT FOR DISTRIBUTION OR DISSEMINATION INTO THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES

Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector: Mining

2 June 2016

Hummingbird Resources plc ("Hummingbird Resources" or the "Company")

Placing and Subscription to raise approximately £45.8 million

and

Notice of General Meeting 

Hummingbird Resources plc (AIM: HUM), the West African gold company, is pleased to announce it has raised approximately £45.8 million (approximately US$67 million), for the construction at the Yanfolila Gold Project in Mali ("Yanfolila" or the "Project"').

Highlights

· Raised an aggregate c.£45.8 million (c.US$67 million) through the placing of 103,698,254 shares at 22 pence per share ("Placing") and the subscription for approximately 104,694,697 shares (subject to adjustment as described in footnote 1 below) at 22 pence per share ("Subscription"), subject to shareholder approval 

· Funds will be used to complete detailed engineering, order long lead items and to commence construction of the Yanfolila Gold Mine

· As announced previously, the Definitive Feasibility Study and Optimised Mine Plan show the Yanfolila Gold Project to offer:

o 132,000oz gold in first full year's production with LoM average production of 107,000oz pa

o IRR of 60% and an NPV of US$162 million at US$1,250 gold price

o AISC of US$695/oz - which is expected to be in the lowest quartile of African producers

o Significant upside from over 1Moz of gold inventory outside of the current mine plan within the mining permit

o High-grade potential identified at the Gonka deposit, 5km from the Yanfolila plant

o Total Project Capex of c. US$80 million

· Balance of financing anticipated to come from an appropriate debt facility for which the Company has received a number of expressions of interest

· Overallotment option to raise up to an additional £6.9 million (c.US$10 million) through the issue of up to 31,260,000 shares at 22 pence per share, subject to shareholder approval

· Issue of the shares under the Placing (the "Placing Shares") and Subscription (the "Subscription Shares") is conditional, inter alia, on approval from shareholders at a General Meeting to be held on 20 June 2016

Dan Betts, Managing Director of Hummingbird Resources, said: 

"We are now in a position to commence full-scale construction in order to bring Yanfolila, one of the highest margin undeveloped gold projects in Africa, to production. This equity placement enables Hummingbird to move immediately into detailed engineering with a clear timeline to production. The Company will now have a strong balance sheet and is positioned to negotiate the best possible debt terms for our shareholders.

"The Company will now make a number of key hires to strengthen the team. We look forward to making further announcements as we start delivering significant milestones at Yanfolila. Yanfolila will produce over US$70m of free cash flow in its first full year of steady state production.

"I would like to take this opportunity to thank our existing and new shareholders who have participated in the placing. The Company is 100% focussed on delivering returns to our shareholders, through the development of Yanfolila and in the longer-term by building a gold company focussed on low cost, high margin production."

Summary of Placing and Subscription

The Board of Hummingbird is delighted to report that the Company has secured the equity financing, subject to the approval of shareholders, necessary to pursue the development of the Yanfolila Gold Project in Mali (the "Yanfolila Project"). If approved at the General Meeting, the total equity finance to be raised will be between approximately £45.8 million (approximately US$67m) and approximately £52.7 million (approximately US$77m), as described below. The balance of the financing required to allow the Company to fully fund the construction of the Yanfolila Project and to refinance the outstanding bridge loan to Taurus Mining Finance Fund LP is anticipated to come from an appropriate debt facility for which the Company has received a number of expressions of interest.

The Company has secured placees and subscribers under the Placing and Subscription respectively for a total of 208,392,9511 new Ordinary Shares at a price of 22 pence per Ordinary Share, raising gross proceeds (before commissions and expenses) of approximately £45.8 million (approximately US$67m). In addition, a further 31,260,000 shares may be issued, pursuant to an overallotment option (the "Overallotment Option"), subject to additional demand being received from eligible investors and to prevailing market conditions. If exercised in full, the Overallotment Option will raise approximately a further £6.9 million (approximately US$10m). The Overallotment Option will be available to eligible placees on terms and conditions which are substantially the same as those applicable to the Placing Shares.

The Issue Price of 22 pence per Ordinary Share represents a discount of approximately 13 per cent. to the closing price of 25.25 pence per Ordinary Share on 1 June 2016 (being the last practical date prior to the announcement of the Placing).

The Placing and Subscription are conditional, inter alia, upon the Company obtaining the approval of the shareholders at the General Meeting to grant the Directors the authority to allot the Placing Shares and Subscription Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares and the Subscription Shares. The Placing and the Subscription are also conditional on admission of the Placing Shares and Subscription Shares to trading on AIM ("Admission"). The Company has received irrevocable undertakings to vote in favour of the resolutions in respect to approximately 30.6 per cent. of the existing ordinary shares from certain shareholders. The Directors have unanimously recommended that shareholders vote in favour of the resolutions to be proposed at the General Meeting, as they intend to do in respect of their beneficial interests amounting to, in aggregate, 8,067,963 ordinary shares, representing approximately 7.5 per cent. of the existing ordinary shares.

Background to and reasons for the Placing and Subscription

The Company recently announced the results of a Definitive Feasibility Study ("DFS") and an Optimised Mine Plan for the Yanfolila Project. These studies showed the Yanfolila Project to be an extremely attractive gold project offering an IRR, at an assumed gold price of US$1,250 per ounce, of approximately 60 per cent. and a NPV8% of approximately US$162 million from estimated initial investment requirements of approximately US$79.4 million to construct the mine, including detailed engineering and design and a further US$8.5 million in pre-production working capital. The Directors believe that this places the Yanfolila Project as one of the world's highest return undeveloped gold projects. In addition to the rapid payback on initial capital, substantial upside potential beyond the current mine plan exists from known resources not currently in the mine plan and further prospectivity in the concession area and beyond.

In order to progress the Yanfolila Project and bring it into production, the Company is proposing to raise between approximately £45.8 million (US$67m) and £52.7 million (US$77m) (before commissions and expenses) through the issue of up to 239,652,9511 new ordinary shares with certain institutional and other investors. The net proceeds of the Placing and Subscription will be applied towards the detailed engineering and construction of the Yanfolila Project, and for general corporate purposes. The balance of the funding requirement required for construction and to repay the outstanding bridge facility with Taurus Mining Finance Fund LP is expected to be obtained from an appropriate debt facility. In addition, certain potential contractors have expressed an interest in providing vendor financing to the Yanfolila Project. The Company is in discussions with potential debt providers and contractors as it seeks to optimise the overall funding arrangements and will update the market at the appropriate time.

Following the completion of the Placing and Subscription, the Company intends to commence the detailed engineering ahead of the commencement of full construction. The construction period is anticipated to be around 12 months following the completion of detailed engineering.

Current trading

Following the publication of the DFS and Optimised Mine Plan in early 2016, the Company has sought to curtail any significant expenditures until funding is in place to progress with the development of the Yanfolila Project.

In the first quarter of 2016, the Company expended approximately US$3.0m against a budget of US$3.4m. The Company's group cash balance as at 30 April 2016 was approximately US$3.9m.

The Placing and the Subscription

The Placing

103,698,254 shares have been placed with placees at an issue price of 22 pence per share to raise gross proceeds of £22.8 million (approximately US$33 million).

The issue price of 22 pence per share represents a discount of approximately 13 per cent. to the closing price of 25.25 pence per Ordinary Share on 1 June 2016 (being the last practical date prior to the announcement of the Placing).

The Placing (other than the Overallotment Option) is conditional, inter alia, on the approval of shareholders at the General Meeting of the Company to be held on 20 June 2016 and upon Admission, which is expected to occur on 21 June 2016.

In addition, and subject to additional demand being received from eligible investors and to prevailing market conditions, the Company may issue up to an additional 31,260,000 shares pursuant to the Overallotment Option. The Overallotment Option, which is conditional, inter alia, on the approval shareholders at the General Meeting, is equivalent to up to approximately 15 per cent. of the aggregate of the Placing Shares and Subscription Shares excluding the Overallotment Option.

The Subscription

In addition to the Placing, under the Subscription 104,694,697 new shares in the Company have been subscribed for by certain investors at the issue price of 22 pence per share to raise gross proceeds of £23.0 million (approximately US$34m).

The Subscription is conditional, inter alia, on the approval of shareholders at the General Meeting of the Company to be held on 20 June 2016 and upon Admission. It is expected that Admission will occur on 21 June 2016. The 31,103,425 new ordinary shares to be issued to Lindine Inc. will be issued against an undertaking to either pay US$10,000,000 (i) to a mining contractor nominated by the Company for pre-mining and construction works and / or mining activities required for the Yanfolila Project, or (ii) to the Company on or before 31 December 2016, whichever is earlier.

Directors' intentions and irrevocable undertakings

The Directors intend to vote in favour of each of the resolutions to be put before shareholders at the General Meeting in respect of their aggregate beneficial interest in respect of 8,067,963 shares, representing approximately 7.5 per cent. of the current share capital of the Company.

Dan Betts, Managing Director and Thomas Hill, Finance Director, have agreed to participate in the Placing and will subscribe for 315,000 Placing Shares and 40,000 Placing Shares respectively.

In addition, certain existing shareholders have irrevocably committed to vote in favour of each of the recurrent solutions in respect of their entire existing shareholdings representing approximately 30.6 per cent. of the current share capital.

Shareholders following Admission

Following completion of the Placing and Subscription and excluding any shares to be issued under the Overallotment Option, the Company expects the following shareholders to hold notifiable interests in the Company: 

The Placing Agreement and Subscription Agreements

The Placing Agreement

Pursuant to the terms of the placing agreement signed on 2 June 2016 (the "Placing Agreement"), RFC Ambrian Limited ("RFC Ambrian") and Beaufort Securities Limited ("Beaufort"), as agents for the Company, have conditionally agreed to use their reasonable endeavours to place the Placing Shares on a non-underwritten basis at the issue price of 22 pence per share.

The Placing Agreement contains certain warranties from the Company in favour of RFC Ambrian and Beaufort in relation to, inter alia, certain matters relating to the Company and its business. In addition, the Company has agreed to indemnify RFC Ambrian and Beaufort in relation to certain liabilities they may incur in respect of the Placing. RFC Ambrian and Beaufort have the right to terminate the Placing Agreement in certain circumstances prior to Admission including, without limitation, in the event of a material breach of the Company to comply in any material respect with its obligations under the Placing Agreement, the occurrence of a force majeure event or a material adverse change in the financial conditions or publicly disclosed business plans and intentions of the Group. Under the terms of the Placing Agreement the Company has agreed to pay RFC Ambrian and Beaufort a corporate finance advisory fee and commissions based on the number of shares placed under the Placing.

The Placing Agreement provides for an Overallotment Option pursuant to which up to 31,260,000 new Ordinary Shares may be issued subject to additional demand being received from eligible investors and to prevailing market conditions.

The Overallotment Option is available until the close of business on 13 June 2016 and the number of shares to be issued pursuant to the Overallotment Option, if any, will be announced by the Company after that time. Any shares issued pursuant to the exercise of the Overallotment Option will be issued at the issue price of 22 pence per share and on terms and conditions which are substantially the same as those applicable to the Placing Shares and Admission is expected to occur simultaneously with the Placing Shares. The net proceeds received by the Company pursuant to the exercise of the Overallotment Option will be used to progress the Yanfolila Project and for general corporate purposes. Investors eligible to participate in the Overallotment Option include, in general terms, professional clients, high net worth bodies corporate and certified sophisticated investors as described in articles 19(5), 49(2), or 50 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. Eligible investors interested in participating in the Overallotment Option should contact RFC Ambrian at the contact details given below.

The Subscription Agreements

The Company has entered into subscription agreements ("Subscription Agreements") with certain third parties. Each subscribers' subscription is conditional on, inter alia, the Placing Agreement becoming unconditional in all respects. The Subscription Agreements contain representations, warranties and covenants in favour of the subscriber which are customary for subscriptions of this nature. Save as set out below, the Subscription Agreements are substantially on the same terms.

Sapinda Asia Limited, a company incorporated in Hong Kong, has subscribed for Subscription Shares pursuant to an underwriting subscription of up to US$10 million in order to ensure that the aggregate gross proceeds raised pursuant to the Placing and Subscription amount to US$67,000,000. The underwriting subscription is conditional on, inter alia, the Company having raised aggregate gross proceeds pursuant to the Placing and Subscription of not less than US$57,000,000 and not more than US$67,000,000, and the Placing Agreement being entered into and becoming unconditional in all respects. The fees payable to Sapinda Asia Limited in respect of this underwriting arrangement are set out below.

Fees, Expenses and Transaction Warrants

The Company expects that financial advisory fees and expenses payable in connection with the Placing and Subscription will be approximately £1.8 million in cash (representing approximately 3.9 per cent. of the aggregate Placing and Subscription proceeds). In addition, the Company has granted warrants to subscribe for Ordinary Shares equivalent to 2.5% of the issued share capital as enlarged by the Placing and Subscription but excluding the Overallotment Option, on the basis of one share per warrant, and at an exercise price of 22 pence each, to Sapinda Asia Limited in relation to corporate finance advice and the provision of a standby underwriting facility of up to US$10 million in the Company. The grant of the warrants is conditional on completion of the Placing and Subscription. The warrants are transferable, are exercisable in whole or in part at any time before 31 December 2019, and are subject to customary market adjustment provisions.

Admission, settlement and dealings

Application will be made to the London Stock Exchange for the shares allotted under the Placing, the Subscription Shares and the Overallotment Option (assuming such Overallotment Option is exercised) to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in such shares will commence on 21 June 2016.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or applicable state securities laws, and may not be offered or sold to persons in the United States absent registration or an exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Advisers

RFC Ambrian acted as financial adviser and bookrunner and Beaufort Securities acted as joint-broker to the Company in connection with the financing. The Company also received financial advice from Natural Resources Global Partners. Gowling WLG (UK) LLP provided legal advice to the Company.

Footnote

1. Up to US$10m worth of the Subscription Shares, has been conditionally subscribed for by Sapinda Asia Limited via an underwriting subscription. The number of Subscription Shares for the purposes of this document has been calculated by reference to a US$:£ exchange rate of 1.4614. The final number of Subscription Shares to be subscribed for by Sapinda Asia Limited will be calculated by reference to a US$:£ exchange rate on the business day prior to Admission, and accordingly there may be an adjustment to the number of Subscription Shares. Any such adjustment will be notified by means of an announcement through a Regulatory Information Service.

2. A US$:£ exchange rate of 1.4614 has been used for the purposes of this press release.

**ENDS**

For further information please visit the Hummingbird website www.hummingbirdresources.co.uk or contact:

About Hummingbird Resources Plc

Notes to Editors

Hummingbird Resources (AIM: HUM) is building a leading gold production, development and exploration company. The Company has two core gold projects, the near-term production Yanfolila Gold Project in Mali and the Dugbe Gold Project in Liberia. Its current focus is on bringing Yanfolila, which has a Probable Reserve of 709,800oz @ 3.14g/t and total Resources of 1.8Moz of gold and an additional 390,700oz of non-compliant exploration potential. The high grade gold project has the potential to turn a profit in a varying gold price environment and will allow for quick returns with low operating costs.

The 4.2Moz Dugbe Gold Project in Liberia provides Hummingbird with excellent development upside. An optimisation of the DFS is on-going whilst Yanfolila is brought to production in the near-term. Additionally, the Company has 4,000km2 highly prospective exploration ground in Mali and Liberia and is constantly evaluating new quality assets.