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MINING | Hummingbird Resources
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For Dan Betts, managing director of Hummingbird Resources, trying to describe the company’s achievements in the first quarter of 2018 without using superlatives is a difficult proposition. The West Africa-focused miner achieved first production from the Yanfolila Gold Mine in Mali back in December 2017, before earmarking the first three months of 2018 as a key ramp-up period for its flagship project. Low and behold, in a Q1 production update Hummingbird announced that the mine had reached nameplate capacity, thus completing the company’s journey from construction of the mine to full commercial production. Hummingbird’s MD talks to RGN about 2018 production targets at Yanfolila, along with further exploration plans and development opportunities. Over the last three months, Hummingbird has rapidly progressed from a developer under pressure to deliver on time and on budget, to a cash generative gold producer. “It’s a complete change in the time and our situation in the business as we’ve got the cash flow. Its totally transformational and a
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MINING | Hummingbird Resources
“We want to show the market and any potential investors that we are not just going to - having become a cash generative business - get dizzy with cash flow and go off doing different things� Dan Betts, managing director
Resource Global Network huge milestone,” remarks Betts. While it has undoubtedly been an exciting period for the company, this transition has presented a whole new set of challenges to the team, who have had to ensure that every single small component is taken care of for the operation to run smoothly. “To do that in three months, which is a pretty short amount of time in the mining industry, I think is amazing and hats off to the team, overall they’ve done a fantastic job.” The next challenge for Hummingbird at Yanfolila is to maintain current production levels for the rest of the year and meet the overall production guidance for the mine that was set at between 105,000 ounces (oz) and 115,000 oz of gold. While Betts wishes not to belittle the difficulty of achieving this target – remember sustained gold production is dependent on a number of circumstances and Hummingbird is relatively new to the game – he feels that overcoming challenges is nothing new for the company. “I think we have to be diligent. We have built a fantastic operating team, the new manager is extremely experienced and has brought a lot of steady leadership and organisation to the operating team, making sure our maintenance schedule is proactive and not reactive.” Beyond the 2018 production guidance for Yanfolila, Hummingbird has also devised a
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BRINGING MORE TO MINING
Resource Global Network 96
TIMELAPSE VIDEO YANFOLILA GOLD MINE
detailed exploration plan for the surrounding
misleading according to Betts, as the gold has
area which should further cement the future
already been discovered by Hummingbird’s
of the operation beyond its current seven-
predecessor, and so the MD prefers to use
year mine life.
the term ‘Resource conversion’.
The project is located within the highly
“What we need to do is go to those Resources
prospective Yanfolila Greenstone Belt, which
that we inherited from Gold Fields - we have
has been subject to lots of previous mining
over 1 million ounces of gold in Resource
activity down the years, most notably by
outside of the mine plan - and we need to put
Yanfolila’s former owner Gold Fields.
more drill holes into it, understand it better
Low hanging fruit
and convert those Resources into Reserves to extend the mine life and extend the
In fact, Hummingbird actually inherited
profitability of the business – that is the low
a significant gold resource outside of
hanging fruit.”
the current mine plan, and it is for this reason that the company has identified an
This year, Hummingbird will proceed with this
exploration strategy for 2018 that focuses on
Resource conversion by setting up its own
‘low hanging fruit’.
data base and inventory of Resources, before converting them into Reserves. “I think it’s
However, the word exploration is somewhat
the most intelligent way to add value to the
MINING | Hummingbird Resources
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business, but we will only do it in a disciplined Nonetheless, Hummingbird is not solely way,” reveals Betts.
predicated on Yanfolila and the associated Resource conversion in the surrounding area.
“We want to show the market and any
It has a significant asset in Liberia called the
potential investors that we are not just
Dugbe Gold Project and also a material stake
going to - having become a cash generative
in fellow West African explorer, Cora Gold.
business - get dizzy with cash flow and go off doing different things.”
In fact, Cora Gold was created when Hummingbird teamed up with a private
Clearly for Betts and Hummingbird, the
company and agreed to hand over some of
name of the game is discipline and as
its West African exploration assets to the
such the company has pledged to spend
consequent business, in return for a 50%
no more than 15% of free cash flow on its
share in Cora, diluted to 34% post the IPO
exploration programme at Yanfolila each
fund raise.
year. This should amount to at least US$8 million, enough to add significant value to
Arms’-length exploration
the business while conforming to the highly-
Betts has previously commented on
regimented mantra.
the attractiveness of this ‘arms’-length exploration incubator’ model Hummingbird
MINING | Hummingbird Resources
has with Cora and it seems like the relationship is about to bear fruits, judging by the stellar results of a maiden drilling campaign in Southern Mali. Cora’s Tekeledougou drilling programme identified two gold zones: Woyoni, with 56 metres at 2.2 g/t Au, including 22 metres at 4.86 g/t Au and Kouroudian, with 17 metres at 6.8 g/t Au including 1 metre at 102 g/t Au. “If there is any continuity there and they can build a resource base, it’s only 8 km from our plant so it could be a monumental winwin for both of us. They can effectively save themselves the huge CAPEX of building a mine and can be fast-tracked into cash flow by running through our mill.
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“We know them well, we trust the management team, and we have great faith in Jon Forster and his skills as an exploration geologist. Overall, we are totally supportive; Hummingbird’s representatives sit on the board and we are totally behind them, so good luck to them.� All things considered, Hummingbird has significant growth plans for Mali over the coming years and fortunately has been blessed with a pro-mining government that is also highly cooperative and considerate towards foreign investors. Working with a wholeheartedly supportive regime has become even more coveted when considering the recent plight of foreign mining companies in countries such as Tanzania and the Democratic Republic of Congo, where outfits have been subject to
MINING | Hummingbird Resources
hasty unilateral action during the last 12
together and the only way that works is if
months.
communities believe in what you are doing.
While Mali is in the process of resolving a
“This is reflected in the tangible actions
$100 million VAT dispute with Randgold
you take in their villages and communities,
Resources, the government has reassured
and we’ve made a significant positive
Hummingbird and its fellow miners that there contribution, which we will continue to do. will be no knee jerk reaction and it remains
Where we’ve made the greatest impact is
fully supportive of mining developments in
within local healthcare, having run successful
the country, according to Betts.
projects regarding malnutrition-awareness, health and hygiene education and premature
Hummingbird has also been very conscious
birthing issues, to name but a few.
of the role it plays within the communities that it operates in right from the beginning
“In particular, our relationship with Critical
of its time in West Africa and has tried to
Care International, who have been managing
commit in a meaningful way to improving
our health care response, has been
living standards and quality of life.
exceptional. The tangible evidence is that they’ve been saving dozens and dozens of
“We are a guest in their communities and the only way to succeed is if everyone works
lives so I’m really proud of that,” beams Betts.
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Brave new world
“We are also looking to explore and extend
To conclude, Hummingbird has taken its
the mine life, but we are really focusing on
first steps into the challenging sphere of
making the operation absolutely hum, if you’ll
running a full-scale commercial gold mine,
pardon the pun.
after progressing from explorer and mine developer to producer at Yanfolila in rapid
“That’s the first and foremost priority
time.
this year. If you get that right you have unbelievably strong cash flows, and we are
Therefore, in acknowledgement of the
clearly under-valued based on those cash
challenges faced by a typical African gold
flows, and you have optionality in terms of
company in the first three to six months
exploration internally and M&A.”
of production, Betts reveals that the main priority for Hummingbird over the next 12 months is consolidation.
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Published by Anderson Murray Media Ltd
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