Hummingbird Resources was established as a gold explorer in West Africa by MD Dan Betts in late 2005. It has grown into a multi-project explorer and developer with significant interests in Liberia and Mali, become a near-term producer and boasts a portfolio with a 6 million ounce (oz) gold resource and 4,000 km2 of exploration ground. Hummingbird’s two core projects are the Yanfolila Gold Project in Mali and the Dugbe Gold Project in Liberia. Betts has worked tirelessly to produce valuable exploration in a previously unexplored environment in Liberia and to develop the Yanfolila project which was acquired from Gold Fields in 2014 to a smaller, higher-grade project.
“I set Hummingbird up to explore Eastern Liberia which was previously an unexplored region – it meant we had first-mover advantage and were able to secure a lot of prospective ground as we covered thousands of square kilometres in grass-roots exploration,” Betts said reflecting on the initial move into Liberia.
To Betts this was the most successful exploration in West Africa from 2010-12, the resource in Liberia went from 0.8 million/oz of gold to 4.2 million for USD$5-6/oz.
He said: “It’s a project that needs to be big, there’s a huge amount of ore there, it’s very consistent and when it’s built it will go on and on,” he said. “But it’s a project that needs a lot of capital to build and at the time, the market was changing, everyone was looking at cash flow, margins and reducing capital expenditure.”
Betts felt Hummingbird needed to acquire a higher-margin project which could provide near-term cashflow, and that’s when he set his sights on Yanfolila.
In a comparison between Yanfolila and Dugbe, Betts said: “Metallurgically and logistically in terms of comminution Dugbe is a project that will work. It’s more of a cost-based issue, whereas in Yanfolila the AISC is around $700/oz, in Liberia it’s more like $900/oz. It’s lower margin, higher capital expenditure and will be harder to fund – that’s why we’ve included Yanfolila in the company portfolio.
“In the short-term you have to look at how to make money in a tough environment and that means a smaller project with a higher margin and that’s what we have in Yanfolila.”
Since acquiring Yanfolila from Gold Fields Betts has gone about re-scoping the project to an efficient low-cost, high-grade mine. He believes it is now one of the highest-margin unbuilt gold projects in the whole of Africa.
The company announced a DFS for Yanfolila in January this year which showed significant economic improvements to an optimisation study carried out in March 2015.
Using a gold price of $1,250 Yanfolila has a net present value (NPV) of $142 million and an internal rate of return (IRR) of 55 per cent, approximately double the 2015 study results, highlighting the project’s strong margin with the AISC sitting at $720.
Backing up Betts’ claims of Yanfolila’s robustness the DFS shows that even with a drop in the gold price to $1,100 the project would still have an attractive IRR at 37 per cent, with NPV at $88m – and with a gold price as low as $1,000 there’s still an IRR in the mid-twenties.
“I believe the margin is there and the capital expenditure is pretty key. If Yanfolila can’t show a margin then there are very few projects that can,” said a confident Betts.
“The reserve grade is higher than the ones used in the DFS and so we anticipate further improvements on the original numbers. As that comes through in the mine plan and (with) the schedule the numbers will get even better,” enthused Betts.
Hummingbird have targeted production at Yanfolila for 2017 and Betts is confident that the project is on schedule.
“It’s only the start of 2016 and the build time is 12-14 months including the final detailed engineering on the minutiae of the project so we are very much on time and very much working with Taurus to get a fully funded solution,” said Betts.
Having planned in the due diligence stage for an oxide-only plant doing 850,000 tonnes a year at 60,000/oz, Hummingbird now has a project that will possibly produce double that in the first year. Betts attributes this to the different types of ore that can be processed, including fresh rock, “It’s a more robust, comprehensive mine that will go on for many years beyond the reserve life.”
Betts understands the vital contributions the contractors and suppliers have made in assisting Hummingbird to reach its current position. Of these he makes special mention saying, “Senet have done a great job on the engineering side of the project, DRA came in as a project manager and have also worked to a very high standard, CSA Global have worked well to get the reserves resources done and helped us deal with the Taurus due diligence process which was very rigorous – they have all provided crucial support and done a great job.”
Contractors will continue to play a role throughout the life of Yanfolila as Hummingbird send the contract mining tenders out to market. The tender has not yet been awarded although the DFS prices are based on real prices from tender documents Betts has received of which they are in late stage discussions on propositions.
The Yanfolila DFS is based on five pits at the project site, Komana East and Komana West over which there are reserves and 3 other pits with indicated resources. Hummingbird have announced an update on a further deposit, Gonka, located 5km south of the proposed plant.
Betts is elated at what the latest study shows for Gonka, “It’s going to be awesome. The point of Gonka is to show people the scale of the resource here – there’s a load more gold.
“We can backfill this into the mine schedule and by doing so even increase the size of the plant to 1.5 million tonnes a year, there will be enough gold.”
Further to that, Gonka has potential for underground mining below the pits and Betts is sure once it is developed it will go on for years.
Moving into 2016/17 Betts believes Hummingbird are in a strong position to complete the project “The project is fully funded, the DFS is complete and we are working with Taurus to conclude the financing of the project and that is the critical part. There’s nothing else to do, every day we are working on concluding the finance and drawing the money to complete the project,” he said.
“We are as advanced as we can be, we are on the critical path and we can’t really commit to any more. As soon as you start committing on long lead items you need to be financed all the way through. Wrapping that up is our focus at the moment.”