Hummingbird Resources (LON:HUM) is well placed to come out of the downturn in the gold sector in much better health than it went into it, believes chairman Russell King.
The gold group is in talks over a financing package for its flagship 2.2mln oz Yanfolila project in Mali, with first pour targeted for 2017.
A US$15mln bridging loan with Taurus Funds management was recently extended until September following an optimisation study in February.
The study has strengthened its hand over a finance deal, chief executive Dan Betts added.
“We stand in a far stronger position to gain the best possible financing package for the Yanfolila gold project.
“We are currently working through these options and hope to be updating the market on our progress in the near future.”
The study indicated all-in costs of production of under US$700/oz, making it potentially one of the lowest cost producers in the market, he said.
At a gold price of US$1,100 and based life of mine costs under US$695/oz, 107,000 ounces per year production and a reserve grade of 3.14g/t the value was US$109mln.
Dugbe, Hummingbird’s project in Liberia with 4mln oz and a 20 year mine life, also remains a compelling project said King.
Losses for the year to December were US$4.6mln (US$3.4mln).
Broker Cantor Fitzgerald said the results today summarised the work undertaken by Hummingbird at Yanfolila.
If it is successful in arranging finance for the mine, the share price should increase significantly believes the broker but if not a sale of either the project or company is an option.
“Takeover premiums in the sector remain attractive,” it added, keeping its 37p price target.
Shares were 23.25p today.
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