“Despite the headline numbers of a lower production than we would’ve liked, I actually think Yanfolila’s come a long way in terms of us overcoming operational challenges and setting up the mine for a better place in the future,” Hummingbird Resources CEO Dan Betts tells RGN after an unpredictably challenging 2020, not just for the West Africa-based gold producer but for all companies around the world. Having said that, logistical issues across Africa heightened by the COVID-19 pandemic were felt acutely by Hummingbird (particularly in the second quarter of 2020), on top of the impact of the worldwide public health crisis.
Hummingbird also watched a military coup unfold in Mali – the host country of its flagship Yanfolila Gold Project. Thankfully, the political transition brought no disruption to Yanfolila’s gold output, but it served as a reminder of the jurisdictional risk involved with operating in Africa. But, it was the border closure issues associated with COVID-19 that were more detrimental to Hummingbird’s production profile last year (2020 output totalled 101,069 ounces of gold, compared to the forecasted 110–125,000 ounces at the start of the year), with various supply chain holdups necessitating changes to the mine plan at Yanfolila.
In spite of all these impediments to growth last year, long-term CEO Betts points to significant developments made by the company outside of the Yanfolila mine, namely the acquisition of the Kouroussa Gold Project in Guinea from junior explorer Cassidy Gold Corp in June 2020, and the advancement of the Dugbe Gold Project in Liberia, following an earn-in arrangement with TSXV-listed Pasofino Gold.
“Those developments, coupled with the aggressive exploration we completed at Yanfolila to extend the mine life and move it towards underground mining, demonstrate that there are a lot of exciting things happening, and a lot of growth and value to be unlocked from here,” he says.
At the end of March 2021, Hummingbird announced the discovery of new resources at Yanfolila following exploration drilling work in 2020, which was the first year that the company had committed to a sustained exploration campaign at the mine.
The US$5 million drill campaign focused on three main targets: Resource growth at the underground section of Komana East – which has provided the main open pits for the mine to date – and two deposits further North which haven’t been mined yet called Sanioumale East and Sanioumale West.
At Sanioumale West, the infill drilling added 26,200 ounces of gold to the total mineral resource estimate of 164,200 ounces, a moderate increase by all accounts. However, the big upside came at Sanioumale East, where over 150,000 ounces were discovered during the drill programme.
“The Sanioumale East deposit is now over 200,000 ounces and open in every direction with some really stunning intersections. We’re drilling there now aggressively, and I think that could prove to be a very exciting source of future feed for the mine.”
Meanwhile, the Komana East Underground development is being dubbed as the long-term future mine life of Yanfolila, after the drilling provided evidence that the main pit remains open at depth. Hummingbird is currently working through all economic valuations and optimisation studies for the underground operation.
“As the Komana East pit gets deeper, narrower and the strip ratio goes up, it’s becoming increasingly certain that the continued orebodies will sustain underground mining,” Betts says. “So it’s now about optimising how we do that.
“When you get into underground mining, you’re not going to have a 10-year mine life, you’re going to prove it up as you go. But I think these orebodies should go on and on and sustain a base load feed for the mill for many years to come.”
Shifting over to Guinea and the Kouroussa project, the immediate priority for Hummingbird is to finalise the mining licence with the government before it can start in earnest on the ground. Having said that, the firm has started detailed FEED and trade-off studies for the flowsheet modelling of the proposed operation.
“All that detailed work is being locked down as we speak: the footprint for the mine, the land acquisition plans, social engagement projects and the exploration. For me, exploration is most important because this project has stunning grades and I think we can build a relatively cheap and effective plant based on our experience at Yanfolila.”
Kouroussa and Yanfolila share several similarities in terms of the scale of both projects, the metallurgical flowsheets and process plant design, while Hummingbird can extract synergies in maintenance services and product component supply given that Guinea and Mali share a malleable trading border.
Exploration planning has also commenced on several high priority targets at Kouroussa in order to increase the current resource base of 1.18 million ounces at over 3 g/t. “If we start the exploration now and build on that story as we’re developing the project to extend the mine life, all we’re really doing is creating value,” Betts reiterates.
Partnering with Pasofino
Over at the Dugbe Gold Project in Liberia – Hummingbird’s original West African asset – Betts is suitably impressed with the work being completed by partner Pasofino Gold, who acquired Hummingbird’s former partner, ARX Resources, on the project in September 2020.
Pasofino agreed to continue the terms of the existing earn-in agreement, which will see the company undertake a mutually agreed exploration programme at Dugbe and complete a definitive feasibility study for a 49% interest in the project, with Hummingbird maintaining the 51% controlling stake.
During the first six months of the partnership, Pasofino has focused on organising logistics around the Dugbe project in order to get exploration up and running. This has involved rebuilding roads, bridges and the mining camps.
“The Dugbe project is in a remote area of Eastern Liberia, albeit very close to a port as the crow flies. That logistical work has been completed and they’ve now got four rigs at site and are motoring away with exploration work and getting good results which are starting to come out to the market.
“I think everyone wrote Dugbe off, and it’s obviously got a place in our heart given that is where we started. The guys at Pasofino are very professional, competent and have a great track record of building value in assets, either through developing or selling them. I think there’s a real opportunity for Hummingbird shareholders to attain some value here that’s not seen in the share price.”
Another source of constant pride at Hummingbird centres on the altruistic work it accomplishes in the local environment and communities in the Sikasso region where Yanfolila is located. In 2020, the company threw itself into COVID-related relief and assistance measures while maintaining its regular ESG-focused work programmes.
Hummingbird commenced a new tree planting initiative across the Yanfolila site, which involved the rehabilitation of over 8,000 trees. However, Betts believes the biggest success story in the community is the market gardens project.
“We have overseen the employment of over 800 women in self-sustaining work at these market gardens where they are selling produce to us and into the communities. These individuals now see this as a way of earning a livelihood that can endure long after the mine is finished.”
Betts is also keen to highlight Hummingbird’s pioneering Single Mine Origin (SMO) gold initiative. SMO provides a way of tracing gold from source at a responsible mine that complies with international best practice principles – such as the World Gold Council’s RGMPs or IFC Performance Standards – all the way through to refinery and the manufacturing process into the jewellery industry.
He explains how the consumer of SMO-certified gold will be able to scan a QR code on the product which details the exact journey the gold has taken from the Yanfolila mine all the way to their finger, in the case of a ring.
“If we can help roll that out, I think it can help promote the whole mining industry, because the mining industry is awesome in the ESG work it does in remote communities, yet often hides its credentials under a bushel because people like to slam mining.
“Mining is not sustainable, you dig a resource out the ground and it’s gone, but it’s how you do this in a way that improves the livelihoods of the communities and environment where the mine is. I fundamentally believe mining can do that in a way no other industry can. Hopefully with SMO gold we can showcase that to the retail world and it then becomes a retail-led initiative.”
Despite seeing a weaker gold price so far in 2021, and hence a lower share price in line with the market correction, Betts has plenty of reasons to be optimistic given Hummingbird is on track with regards to building a multi-asset gold company in West Africa.
“The plan was always to find a gold project, build a gold project and use the cash flow from the gold project to build a gold company. It’s never a straight road, there’s always going to be hiccups and we’ve got the scars to prove it now.
“But I think we are getting better and better and that gives us the platform to grow. We’ve got the second project and an organic growth pipeline in the region, which has tremendous opportunities; lots of gold, lots of discoveries.”
Strategically, Hummingbird has never been in a better place, Betts proclaims. The company will pay off all outstanding debt later this year and it has made exploration progress at Yanfolila, while making solid advances its other gold projects in Guinea and Liberia.