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MINING | Hummingbird Resources
HUMMINGBIRD RESOURCES Fully traceable gold supply from drill bit to jeweller
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MINING | Hummingbird Resources
In its first year of full-scale production at the Yanfolila gold mine in Mali, Hummingbird Resources came through a challenging period to perform well within its 2019 gold output guidance range. The addition of a second ball mill allowed the AIM-listed miner to circumnavigate issues such as an unstable pit wall and damaged local infrastructure resulting from heavy rains. After successfully executing a remediation plan for the operation in 2019, it was no surprise that RGN found Hummingbird’s managing director Dan Betts in high spirits during an interview in Cape Town at the start of February. Joining in the conversation was Dan’s brother Charles, managing director of family refining and manufacturing business The Betts Group, who recently launched Single Mine Origin (SMO) – an initiative that provides a fully traceable chain of custody for gold production, starting with the gold produced at Yanfolila.
Resource Global Network Jacob Ambrose Willson: Dan, how pleasing was Hummingbird’s operational performance in 2019, especially given the challenges faced at the beginning of the year? Dan Betts: We’ve started this year in a lot better place than a year ago. At the beginning of 2019, our guidance was 110125,000 ounces, and we produced a total of 115,649 ounces over the course of the year. Considering the operational challenges we faced at the start of the year, hitting the middle of our guidance was a remarkable achievement and our strong progress was shown by Q4, which was the fourth consecutive quarter of rising producing and reduced costs. JAW: How significant was the addition of a second ball mill at Yanfolila in terms of improving throughput and lowering costs? DB: When we commissioned the second ball mill, it was a calculated risk as we had invested a significant sum of money and we were also experiencing operational issues at the time, so to maintain that plan was a big commitment. The new ball mill gives us that extra throughput, around 13% more, and provides us with more risk mitigation in terms of the grade profile and the different types of ores, blends and flexibility on weather. Without the new ball mill, it would’ve made a difficult period even more challenging. As with the plant, it was delivered on time and on budget, and it ramped up perfectly.
MINING | Hummingbird Resources
The ball mill is performing to full capacity
and we’ve been through a lot of people in this
and we are doing 200 tonnes an hour, day in
time and kept the good ones. We work with
day out. Technically it’s been a great success
a lot of contractors and consultants as well,
which is reflected in our strong operational
whether its Capital Drilling, Redis, or Imagri
progress of late.
in-country in Mali. You have to have internal discipline but you’ve also got to have good
JAW: Efficiency seems to be a hallmark
external people.
of Hummingbird. How does the company implement such efficient procedures
Our senior VP for project delivery, Shaun
where items are consistently delivered on
Bunn, has led both these areas and been
time and on budget?
invaluable to us in that regard. He came on board when we were finalising the feasibility
DB: It sounds like a cliché but it’s all about
study for Yanfolila and then led that project
people. It’s taken us 14 years to build a team,
and the ball mill project.
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YOUR PARTNER IN AFRICA We build and maintain complex processing plants in Africa.
We have a general manager on-site and then we have a development team which is led by Shaun, who look at ways to improve Yanfolila and future developments. They also look at other potential projects, undertake
Contact. chris.quainoo@redisgroup.com | +27 72 857 7889
due diligence and provide the checks and
www.redisgroup.com
balances so that the plant is optimised and everybody knows what’s going on. JAW: The introduction of SMO was another key development last year. Charlie, how long has this been in the pipeline and what inspired you to set up this kind of programme for ethical gold certification? RED_Half page ads.indd 1
2020/02/14 11:25
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MINING | Hummingbird Resources
Charlie Betts: It’s been in the pipeline
The idea is to try and create something
for several years, but it’s only been since
which has mass market capability. You can
Hummingbird was in production that we
make that provenance claim because we
could move SMO forward. The inspiration
are tracking gold all the way from mine to
is simply being exposed to the jewellery
the finished project which gets sent to the
trade as a family business, we see massively
jewelers. I think it’s an exciting opportunity.
increasing demand for provenance and it’s just not available.
DB: I also think our ability to control every stage of the supply chain from drill bit to high
There are a couple of options with Fairmined
end jeweler is unique. Charlie is looking at it
and Fairtrade Gold but there’s a huge
from the end user market, but from the other
premium associated with those. There’s
end of the market, the mining industry is so
also an element of mining corporates all
defensive and beaten up by its critics.
being tarnished with the same brush in the mind of jewelers. I’ve seen how beneficial a
The mining industry should be on the front
responsibly run mine can be to the local area
foot, saying we are industry leaders in all
where it’s operating.
these environmental, social, community and health initiatives. We go to places where there is no progressive sustainable
Resource Global Network Capital Drilling, a leading drilling and mining services provider in Africa, is proud to partner with Hummingbird Resources to deliver their complete drilling service, including horizontal dewatering, for their projects in Mali.
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development and we provide it. What other
paradigm to just trying to build a mine, it’s
industry does that?
about doing it the right way. This idea could have some really strong momentum behind
If you were to go and build a billion dollar
it in time.
infrastructure development in Cape Town, are you also going to build a school and create
JAW: How big are your ambitions for SMO?
an environmental offset initiative? No other
It’s currently only served by the Yanfolila
industry does it. We pay all our taxes and we
mine, but do you intend to broaden it to
reinvest with massive commitments in the
other gold mines in the region?
local communities. CB: The opportunity for SMO is massive. In If we can use something like SMO to highlight
terms of the supply side, our ambitions are
and showcase all the good that responsibly
very big and not limited to West Africa. It’s still
run mining companies do, then the end user
a work in progress but the provenance claim
can be proud of it and it becomes a virtuous
is watertight, it’s quite easy to lock that down
circle. This process educates the industry
in terms of segregation because of the access
and the end users and you are both putting
we have. I think the responsibility claim can
pressure on each other to do the right thing.
now be developed further following the
I’m really excited about it. It adds a different
publication of the Responsible Gold Mining
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MINING | Hummingbird Resources Principles (RGMPs). If we bring in another project, which is the intention, utilising the RGMPs will clarify the assessment of such a project as a responsible source. DB: The vision, for want of a grander word, is to create an accreditation standard that every responsible miner in the world wants to be a part of, and every responsible jeweler in the world wants to be a part of. It’s limitless in its potential. Only a tiny percentage of gold utilised in the jewellery or investment sectors has a traceable source of origin and having the reassurance of detailed provenance not only attracts a substantial price premium but also gives consumers the peace of mind that it has been responsibly sourced and is doing good. We feel this is a trend that is only going in one direction. JAW: Having attended the World Gold Council’s session on its RGMPs here in Cape Town, will Hummingbird be complying with these principles? DB: Absolutely. I think the development of the SMO piece is very strategic and central to Hummingbird. I think that ESG investing across the world, from the retail buyer in jewellery to the investor in BlackRock, is a tidal wave that is not going away. Whilst this may be a box ticking exercise for some, we have an opportunity to make it real and to be the next generation mining company that is at the forefront of this. We want to put all our effort into it.
“Some of the women told me the they never want to return to art to see an initiat Dan Betts, Hummingbird R
e market gardening is fantastic and tisanal mining. It’s really rewarding tive like this work” Resources managing director
Resource Global Network CB: From the SMO side, there is a proliferation of different standards that companies can hold themselves up to. The RGMPs look effective in bringing all the existing standards together and the selfcertification for SMO was based on their principles. At the session we begun to learn about the assurance process and the implementation of that, and that is something that Hummingbird will have to look at. We want to avoid adding massive cost into the supply chain, because we want to make it available to the mass market without having to charge a large premium. JAW: Staying with the ESG theme, what new programmes and initiatives have commenced during the last year in the communities surrounding the Yanfolila mine? DB: In the last 12 months, despite being focused on operational issues, the two main priorities in this area have been community health, where there has been a lot of work on child malnutrition and malaria education, and market gardens. We’ve built six market gardens where we have provided water, seedstock and land for artisanal miners that have been displaced. We’ve educated them on how to farm and then we buy the produce. The next step will be to look at putting in solar powered
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MINING | Hummingbird Resources
cold storage units, so they can store the
JAW: Looking forward, what is
vegetables and sell them on the open market. Hummingbird’s strategy for extending the We also built a chicken farm and buy the
life of the Yanfolila mine?
meat from them. DB: We’ve just announced that we are The idea is that after the mine is gone, we will
recommencing exploration activities at
have built a lasting legacy and they will have
Yanfolila, which is a three-staged strategy.
a sustainable industry. I visited the market
We are looking at underground studies at
gardens recently and saw first-hand the
Komana East, we’re looking at converting
hundreds of mostly women who have taken
resources to reserves, and we’re looking at
up gardening roles. Some of the women told
greenfield exploration, which we haven’t
me the market gardening is fantastic and
done since we bought the project. It’s exciting
they never want to return to artisanal mining.
to be able to recommit funds to encourage
It’s really rewarding to see an initiative like
organic growth. We have significant Indicated
this work. The pride they have in what they
Resources which we are looking to convert to
are doing is amazing. We’ve got market
ore Reserves to further augment our 5-year
gardens, and we have also built a hospital
rolling mine plan. There are also potential
and a school.
M&A opportunities in the region and lots of companies that we could look to JV with and
Resource Global Network
add mine life. We’ve got five years of reserves
here and we need a partner to develop
as the base case and we are looking to then
it. We want to breathe life back into this
add to and improve it.
project which the market currently places no value on, particularly following our focus on
JAW: What is the current development
building and ramping up Yanfolila in Mali.
plan for the company’s Dugbe Gold Project in Liberia?
Just to put some basic numbers around the Dugbe project, at a $1,600 gold price, if you
DB: We’ve signed a non-binding term sheet
took $200 an ounce out of the ASIC (which we
with ARX Resources Limited, where if they
believe is possible with newly available lower
deliver $30 million to invest in the project,
cost power options) and if you increase the
we will evaluate an earn-in agreement with
resource by a couple million ounces, you’ve
them. They can earn up to 50% of the project
got an NPV of almost $1 billion, and that’s
if they commit to exploration and complete a
worth zero in Hummingbird’s share price.
definitive feasibility study (DFS). We haven’t sold this project. We are just Whilst it’s non-binding, the idea is that
trying to unlock the significant value we see
Hummingbird will be undiluted until the
there and want to do that with a partner
delivery of a DFS. We have a massive project
MINING | Hummingbird Resources
Resource Global Network who also sees the considerable exploration potential to grow the resource and take it to DFS. On completion we can then decide whether to sell or build it ourselves, depending on what is the best way to take it forward. JAW: Outline what the main company targets are in 2020 from a corporate and operational perspective? DB: We aim to continue improving operational performance, to build the Hummingbird team and make sure everything is working seamlessly. We want to increase the mine life at Yanfolila, organically or inorganically. We also want to look at the wider picture and how to grow Hummingbird through potential M&A transactions. At a minimum we aim to be debt free by 2021, at which point we will evaluate how we return value to shareholders. Leveraging the decade plus of experience we have of building a team with the skills to explore, build and operate a mine affords us a unique opportunity to create a bigger future for Hummingbird and build a multiasset producing gold company.
AIM:HUM
b a r j
Published by Anderson Murray Media Ltd
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