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Hummingbird Resources Ltd: THE INVESTMENT CASE

Hummingbird secures US$55mln debt funding to complete Mali gold mine

The money is being provided in two tranches by Tarsus Mining Finance Fund, which specialises in bankrolling development projects such as Yanfolila.
Hummingbird secures US$55mln debt funding to complete Mali gold mine
INVESTMENT OVERVIEW: HUM The Big Picture
Work is already underway on the ground.

Hummingbird Resources PLC (LON:HUM) has secured US$55mln of debt funding required to complete its Yanfolila gold mine in Mali. 

The money is being provided in two tranches by Tarsus Mining Finance Fund, which specialises in bankrolling development projects such as Yanfolila.

A total of US$45mln will come in the form of a senior secured facility paying a 9% coupon from draw-down and 7.75% after the work is complete.

There’ also a US$10mln overrun facility with an interest rate of 11% on funds borrowed.

Taurus has agreed to increase a bridge loan facility, currently for US$15mln, to US$25mln, which will remain in place until early April.

Hummingbird said the lender will receive a 0.75% revenue royalty, capped at 2mln ounces of gold

Investors have already contributed US$71mln to the creation of the new mine, which is targeted to go into production late next year.

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

Mine construction began in October.

"We have previously stated that conclusion of its debt discussions and completion of the project’s financing should be a good catalyst for HUM’s share price.  Hence on the back of today’s news we reiterate our buy recommendation,” said analyst Asa Bridle of broker Cantor Fitzgerald.

The analyst reckons the stock, up 54% in the year to date, is worth 32p. It is currently changing hands for 19.3p.

Broker buzzing

“We have previously stated that conclusion of its debt discussions and completion of the project’s financing should be a good catalyst for HUM’s share price.  Hence on the back of today’s news we reiterate our buy recommendation,” said analyst Asa Bridle of broker Cantor Fitzgerald.

The analyst reckons the stock, up 54% in the year to date, is worth 32p. It is currently changing hands for 19.3p.
Mali mine in depth

Yanfolila remains one of the best projects among the UK-listed junior mining sector, according to resource-focused ‘house’ RFC Ambrian.

In a definitive study in February, 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.

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