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Grade control drilling ahead of initial mining at Hummingbird’s (LON:HUM) 1.8 million ounce Yanfolila gold project in Mali has delivered a strong indication that the overall grade in the pit might improve.
Around 1,000 metres of drilling was undertaken over a 40 metre long panel at 5x5 metre intervals and to a depth of 30 metres.
The result was an average grade of 5.24 grams of gold per tonne of ore, compared to the 3.12 grams that the company has modelled in its economic studies.
If that higher grade can be replicated across the pit, it’s likely to have a positive impact financially, although Hummingbird cautions at this stage that more work needs to be done before the drilling can be relied upon for economic purposes.
Nonetheless, it’s a significant fillip for Hummingbird as it presses ahead with construction at Yanfolila, with first gold still scheduled for next year.
The company can now reckon on a high grade zone containing 12,200 tonnes of ore grading 7.7 grams gold as mining gets going, which will certainly help ease the transition from construction to production.
Chief executive Dan Betts called the results from the drilling “excellent news”, arguing that if the higher grades were continuous throughout the pit it would create “significant economic upside".
Cantor Fitzgerald repeated a 'buy' and targets 99p based on the net present values of the Yanfolila and Dugbe projects and in-ground resource metrics drawn from HUM's peer group of West African gold development companies.
"Away from the drilling, plant earthworks are continuing at the project as the company works towards its target of first production in 2016," noted analyst Asa Bridle.
Investec added: "A positive development for the company that is looking to start production next year from Yanfolila."
Hummingbird shares added 2.36% to 32.5p.