Hummingbird expands gold mining potential with £11.8m Mali acquisition

BIRMINGHAM-registered gold exploration firm, Hummingbird Resources, is on the verge of expanding its African interests with the US$20m (£11.8m) acquisition of gold fields in Mali.

Hummingbird, whose main operation is centred on Liberia, said it had entered into a conditional sale and purchase agreement with the wholly owned subsidiaries of Gold Fields Ltd to acquire all of its mining and exploration interests in Mali.
The Yanfolila Project, as the area is known, has a current mineral inventory of 1.8Moz of gold at 2.8g/t.

It said the $20m would be payable in Hummingbird ordinary shares issued at 56p per share and the deal equates to an EV/oz acquisition cost of $11 per managed ounce.

The company’s business case for the Yanfolila Project aims to deliver the first gold production by the end of 2015.

Dan Betts, managing director of Hummingbird said: “This acquisition will transform Hummingbird from a single-project company into a multi-project, near-term producer.  

“Hummingbird’s strategy has always been to create a mid-tier gold company that has a portfolio of assets encompassing exploration, development and production and this is a major step to fulfill that ambition.  

“We believe Gold Fields’ decision to accept Hummingbird shares as consideration for the acquisition underlines the potential of the Yanfolila Project, our portfolio in Liberia and their confidence in our ability to bring both projects into production.”  

He said the Yanfolila Project provided the firm with a fast, simple and low cost route to production which it expected to begin next year at an initial rate of 80koz per annum.  

“The expected cash flow from this project will allow us to continue to optimise the development of our ‘company-making’ Dugbe 1 Project in Liberia and open up a number of further funding opportunities,” he added.

“The difficult market for the mining sector has allowed us to acquire an attractive and highly profitable asset which we intend to ‘right-size’ and bring into production within 18 months.  The project has excellent grade with low capex and opex, and has been acquired at what we feel is a very attractive valuation of $11 per managed oz of resource which compares favourably to recent transactions.
 
“We believe this deal to be transformational for the company and look forward to bringing both projects into production.”