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Hummingbird Resources Ltd: THE INVESTMENT CASE

Hummingbird secures new US60mln loan facility through switch of provider

The money is now being provided by Coris Bank, one of the largest and fastest growing lenders in West Africa.
Hummingbird secures new US60mln loan facility through switch of provider
INVESTMENT OVERVIEW: HUM The Big Picture
Work is already underway on the ground.

Hummingbird Resources PLC (LON:HUM) has switched a key debt provider for its Yanfolila gold mine in Mali.

The money is now being provided by Coris Bank, one of the largest and fastest growing lenders in West Africa.

Hummingbird had been in negotiations with the Taurus Mining Finance Fund, which provided a US$25mln bridge loan to begin the development of Yanfolila, which is scheduled to pour its first gold by the end of year.

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Four year term

The company has now borrowed US$60mln with Coris over four years at an interest rate of 9% with a 12-month capital deferral.

Crucially, there is no royalty or hedging involved and the company will draw down US$25mln immediately.

Hummingbird said the Coris agreement reduces the cost of the debt and “maintains flexibility” for growth and development.

"Importantly the terms of the loan with Coris Bank International are more flexible than the previous arrangement and much better aligned with our strategy of growth,” said chief executive Dan Betts.

WATCH: Our last chat with boss Dan Betts

 

New facility tops up existing finance

Investors have already contributed US$71mln to the construction of the new mine.

It is expected to churn out 132,000 ounces of the yellow metal in the first 12 months.

Mine construction began in October 2016 with first gold pour scheduled for the end of 2017.

 

Broker upbeat after new deal

Broker Cantor Fitzgerald said the key point of the lender switch was that the new funds are available to support the completion of the mine build over the remainder of the year.

Coris Bank was founded in 2008 in Burkina Faso and is focused on West Africa with operations in five other countries in the region. Its balance sheet is reported to stand at approximately US$1.5bn.

The broker has a 32p price target, which it said was based solely on Yanfolila  and allows nothing for the Dugbe project in Liberia and exploration ground in Mali.

 

1.8mln defined ounces

In a definitive study, total resources at Yanfolila were defined at 1.8mln ounces of gold with an additional 390,700 ounces of exploration potential.

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

The high grade Gonka resource is in addition to this and would be worked initially as an open pit, then underground.

The processing plant will have a throughput capacity of 1.24 mln tonnes a year.

 

Dugbe do

The company’s other major asset is the Dugbe Gold Project in Liberia. Weighing in at 4.2mln ounces, it is the country’s largest gold deposit.

Recently a study suggested the cost of mining the deposit could drop significantly from an all-in sustaining US$900 an ounce with the addition of a hydro-electric facility to generate the power for the processing facility.

Shares were 25.8p valuing Hummingbird at £87mln.

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