At the start of 2017, RGN spoke to Hummingbird Resources as the West Africa-focused gold miner began to accelerate its flagship low cost, high grade Yanfolila Gold Project in Mali. In little under a year, the AIM-listed outfit has accomplished a long list of undertakings that have taken the project off the ground, from construction and electrification of the plant, building the camp, commissioning of the mill, mobilisation of the mining fleet, local recruitment, training and much more. At the end of Q3, Hummingbird began mining operations at Yanfolila ahead of an anticipated first entry into production by year end. Managing director Daniel Betts talks RGN through Hummingbird’s busy year, explaining how he and his team have ensured the project will be delivered on time and on budget.
So often in these near-term developments it is the organisational strength of the managing team that dictates the overall strength of the project, and this notion was not lost on Betts when it came to assembling a senior management team.
“I think we have got the structure right in terms of Hummingbird having a VP for all the major disciplines be that the EPCM, the SHEC, operations, geology and some of those people have been with me for a long time,” says Betts.
For example, VP SHEC (safety, health, environment, consultancy) David Hebditch has worked with Betts for several years prior to his arrival on the Yanfolila project, including on the Dugbe Gold Project in Liberia, Hummingbird’s other major gold development in West Africa.
Another staunch member of the team is VP Operations William Cook who is responsible for the ongoing running and development of Hummingbird’s operational capability in Mali and Liberia, and has been with the company since the beginning.
However, the company has also brought in fresh blood such as Murray Paterson, VP Geology, Wayne Galea, VP EPCM and Shaun Bunn, Senior VP Project Delivery, who have each made significant overseeing contributions to the overall ramp-up in activities at Yanfolila over the last year.
The construction of a clearly-defined and compartmentalised management team has allowed the company to maintain a high degree of control over the many different elements of the project, meaning that no detail (however fine or glaring) has escaped the attentions of a Hummingbird supervisor.
This level of transparency in Hummingbird’s work has taken on even greater importance in recent months with the entry of the contract mining team African Mining Services (AMS) on to the project.
Overall, Betts believes the transition from construction of the plant to mobilisation of the mining fleet has been a smooth one, which is a testament to the disciplined overarching management structure already in place prior to the arrival of AMS.
“AMS are very professional, they know exactly what they are doing and run lots of mining operations in West Africa, but ultimately they are bringing in a $100 million mining fleet and it changes the dynamic of your team and the way you operate as a company massively.
“How we have integrated with AMS, managed the contact with them and ultimately worked together, is a major milestone for the company. We are currently getting through the strip, have accessed ore and the ROM pad has been completed.”
Over three million tonnes of material is currently being removed and transported during the initial process of top-fill strip mining to prepare the open pit ahead of first pour in December, a target which remains on track to the delight of Betts.
“I guess the proof in the pudding of our work is the fact that we are going to deliver on time and on budget and that’s a pretty rare feat so I’ve got to be happy.” After first pour in December, Yanfolila’s first year capacity will reach 132,000oz au, according to the project’s 2016 definitive feasibility study.
The DFS was followed up by an optimised new mine schedule outlining the financial metrics of the project, which revealed a low AISC of $695/oz and after-tax IRR of 60% at a $1,250 gold price. At this price Yanfolila will generate over $70 million of free cash flow a year.
As if these encouraging returns weren’t satisfying enough for Hummingbird, Yanfolila’s production profile is set to be further boosted over the next decade by the recent deal struck with African Gold Group for a conditional 50% interest in the nearby Kobada Gold Project.
The Kobada project has a measured, indicated and inferred gold resource of 2.2 million oz (Moz), including 511,000oz of reserves all within trucking distance to Yanfolila’s processing plant, which provides a tantalising scenario involving the transportation of concentrate.
“I think it is one of those rare things in life where it is a win-win,” proclaims Betts. “Kobada is a low grade deposit and would struggle to raise the capital to build that plant on its own.
“But, based on the current metrics we think we can beneficiate by concentrating that ore at site before trucking it to our Yanfolila mine and running it through our CIL circuit, which would take a lot of the capital costs out of building a standalone mine.
“Effectively overnight we’ve got an additional resource of 2.2 million ounces and we can show the world that Yanfolila is not a short-term project. If we can get it to 10 years and 150,000oz a year by bleeding in a higher concentrate feed, then we’ve got a very significant mine on our hands.”
Turning away from the Yanfolila project and towards Hummingbird’s exploration activity, the company struck a significant deal with fellow junior Cora Gold, which also has a presence in the Yanfolila Gold Belt across Mali and Senegal.
Ahead of Cora’s listing on the AIM, Hummingbird agreed to put some of its own exploration targets into Cora’s portfolio in return for 33% of the company’s shares.
“We had a fantastic portfolio of exploration licenses but just didn’t have the bandwidth or the budget to explore and they’ve just been sitting there for the last 18 months,” explains Betts.
“The period of stagnation was frustrating as we like to work our ground hard and give ourselves a chance at making the next big discovery.”
However, under a JV with Cora (a company Betts has known for a long time) the company has been able to free up its exploration bandwidth and funding. “From Hummingbird’s point of view this deal becomes an arms-length exploration incubator for us and I quite like the model to be honest.
“It lets us focus on growing a mining company, developing Yanfolila and Kobada but it also gives us access to exploration which is where Hummingbird came from and is the bedrock of the industry. We certainly want to be involved in exploration and I think this is a neat way to do this.”
As Hummingbird rapidly approaches entry into production at Yanfolila, maintains its position in Liberia at the Dugbe project and keeps its exploration targets open through the share ownership deal with Cora, Betts reflects on where he wants to take the firm in the coming years.
“My vision is to build the most profitable, efficient gold company I can build and that doesn’t need to be just in West Africa. This is to be driven by the quality of the resource and any differentiators our team can bring to the table to deliver those resources.”