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Hummingbird's Yanfolila DFS enhances economics

Last updated: 10:17 18 Jan 2016 GMT, First published: 07:46 18 Jan 2016 GMT

Hummingbird's Yanfolila DFS enhances economics
Initial plant earthworks have been completed at the site in Mali...

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A new definitive feasibility study for the Yanfolila gold project in Mali significantly improves the economics of the open pit operation, said miner Hummingbird Resources (LON:HUM).

Using a gold price of US$1,250 per ounce, the net present value (NPV) is US$142mln -  almost double that of the optimisation study last March - of US$72mln.

At a gold price nearer where it is today, of US$1,100, the NPV is US$88mln.

The internal rate of return at US$1,100 gold is 37% compared to 35% in the March study last year.

The all-in-sustaining costs for the life-of-mine are also lowered - to US$720 per ounce at US$1,250 gold and US$713 an ounce at US$1,100 gold, compared to US$733 in the March study, underlining the low-cost of the operation.

Yanfolila has a probable reserve of 665,600 ounces at a grade of 3.03 grams per tonne (g/t) and total resources of 1.8 million ounces of gold with an additional 390,700 ounces of exploration potential. 

The project capex is put at US$79mln and a US$75 million debt facility has already been agreed with Taurus Mining, with initial plant earthworks having been completed.

The plan is to progressively mine five open pits, starting with Komana East and Komana West, and then progressing to Guirin West, Sanioumale East and Sanioumale West. 

Hummingbird is also mulling developing the high grade Gonka Resource, initially as an open pit, then moving underground.

The project processing plant will have a throughput capacity of 1.24 million tonnes a year, producing up to 121,000 ounces of the yellow metal each year.

Chief executive Dan Betts told investors  today: "We are delighted to see such an impressive improvement in Yanfolila's economics. 

"This is a major achievement for Hummingbird and I would like to take this opportunity to thank the team who have helped complete this study."

Asa Bridle, at broker Cantor, said: “The project has grown in size to an average production rate of over 100koz/year and retains its low cost profile and compelling IRR.

“However, the key question remains; when is the financing for the project going to be secured? Hopefully completion of this study will go some way to dealing with this, and the project can move forward.”

The broker repeated a ‘buy’ but keeps its target price under review.

Hummingbird shares added 2.04% to 12.5p.

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