Hummingbird Resources PLC — Annual Report 2015

Apr 14, 2016

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RNS Number : 1305V

Hummingbird Resources PLC

14 April 2016

Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector: Mining

14 April 2016

Hummingbird Resources plc ('Hummingbird' or 'the Company')

Final Results

Hummingbird Resources plc (AIM: HUM), the West African focused gold development company, is pleased to announce its final audited results for the period ended 31 December 2015.

Operational Highlights (includes post period highlights)

·   Significant progress made in the development of the 2.2Moz Yanfolila Gold Project, Mali, ahead of first gold pour targeted for 2017

o Optimisation study highlighted increased size, extended life of mine and robust economics since acquisition in July 2014

o Grade control orientation drilling completed - results showed a consistent increase in grade from a section of the first year mining pit at Komana East

o Gross maiden Probable Reserves of 6.82Mt @ 3.03 g/t for 665,600oz Au representing a 20% increase from the in-pit Mineral Resource in the Optimisation Study

o Plant earthworks completed ahead of full-scale mine construction on completion of financing

o Definitive Feasibility Study ("DFS") published in January 2016

o Optimised mine plan in February 2016 shows (US$1,250 gold, 8% discount)

§ US$162m NPV8

§ 60% IRR

§ AISC US$695/oz

§ 132,000oz produced in first full year of production

§ 107,000oz average production per year over Life of Mine ("LoM")

§ First full year unleveraged cash flow of US$74million

o Probable Ore Reserves of 709,800oz @ 3.14g/t and Total Mineral Inventory of 2.2Moz @ 2.4g/t (including non-code compliant mineral inventory)

o Desktop  Study on the Gonka deposit located 5km south of Yanfolila adds US$24m to the NPV8 and 169k oz gold to the mine life

·     On-going development of the 4.2Moz Dugbe Gold Project in Liberia

o Signed a Hydro-Electric Collaboration Agreement with IFC InfraVentures and Aldwych International for development of Hydro-Electric Power ("HEP") Plant in April 2015

o Preliminary assessment demonstrated a range of options for the development of a sustainable and low-cost source of hydroelectric power for Dugbe and south-east Liberian region

o Signed a 25 year Mineral Development Agreement ("MDA") with the Government of Liberia for development of Dugbe post-period end

o Hydro-electric power pre-feasibility study near completion with potential to significantly reduce Project operating costs

o Clear exploration upside with a large under-explored land package

Financial Highlights

·    Raised US$4.5 million through a Placing and Open Offer with new and existing shareholders with director participation to advance the Yanfolila Gold Project  in March 2015

·     Raised a further US$6.3 million in June 2015 through placing following strong demand

·    Sale of Asheba Licence in Ghana in June 2015 to receive 10% of the total share capital of Taoudeni Resources and a discovery bonus of US$1/oz

·     Taurus extended bridge facility by US$5 million to US$15 million for continued development work

o  Post period Taurus extended the term of the bridge facility to 8 September 2016

·     Cash of US$7m at period end

**ENDS**

For further information please visit the Hummingbird website www.hummingbirdresources.co.uk or contact:

Daniel Betts Thomas Hill Robert Monro	Hummingbird Resources plc	Tel: +44 (0) 203 416 3560
Charlie Cryer Samantha Harrison	RFC Ambrian Ltd Nominated Adviser and Joint Broker	Tel: +44 (0) 203 440 6800
Jon Belliss	Beaufort Securities Limited Joint Broker	Tel: +44 (0) 20 7382 8300
Lottie Brocklehurst Susie Geliher Hugo de Salis	St Brides Partners Ltd Financial PR/IR	Tel: +44 (0) 20 7236 1177

About Hummingbird Resources Plc

Notes to Editors

Hummingbird Resources (AIM: HUM) is building a leading gold production, development and exploration company.  The Company has two core gold projects, the near-term production Yanfolila Gold Project in Mali and the Dugbe Gold Project in Liberia.  Its current focus is on bringing Yanfolila, which has a Probable Reserve of 709,800oz @ 3.14g/t and total Resources of 1.8Moz of gold and an additional 390,700oz of non-compliant exploration potential.  The high grade gold project has the potential to turn a profit in a varying gold price environment and will allow for quick returns with low operating costs. 

The 4.2Moz Dugbe Gold Project in Liberia provides Hummingbird with excellent development upside.  An optimisation of the DFS is on-going whilst Yanfolila is brought to production in the near-term.  Additionally, the Company has 4,000km2 highly prospective exploration ground in Mali and Liberia and is constantly evaluating new quality assets.

Chairman's Statement

Great strides have been made by the Company in the last financial year resulting in us emerging as a near-term gold producer with two significant projects where we continue to unlock value.  In the context of an extremely difficult macro environment for the mining sector, Hummingbird has been able to increase its shareholder base, grow its resources, achieve maiden reserves, significantly improve technical studies as well as gain a 25 year MDA in Liberia to add to the 30 year mining agreement already in place in Mali.  Individually these are all significant achievements but collectively truly mark it out as a year of outperformance. 

The Company is well placed to come out of the downturn in the gold sector in much better health than it went into it.  With over 6Moz of gold and a robust mine ready to build in Mali, Hummingbird is well positioned to take advantage of an industry recovery and return to a positive market.  With an all-in cost of production of under US$700/oz in Mali, our Yanfolila Project will be one of the lowest cost producers in the market.

At Yanfolila I am very pleased that the Company has delivered since the last year end, the initial Optimisation Study in March 2015, DFS in January 2016 and the Optimised Mine Plan announced in February 2016.  These studies have seen the Project grow significantly from an average of 79,000oz/year production to 107,000oz/year with a post-tax IRR growth from 35% to 60% (using a US$1,250 gold price).  As a result we are now developing one of the highest margin gold projects in Africa.  These numbers alone show progress made since acquiring the Project from Gold Fields in 2014 and demonstrates clearly the future profitability at Yanfolila in the near-term. 

Whilst our current focus is on bringing Yanfolila into production in the near-term, the Dugbe Gold Project in Liberia, with over 4Moz gold and a 20 year mine life, remains a compelling project that should not be overlooked, especially as the gold price ticks back up. We are therefore continuing to optimise the Dugbe Gold Project and are working with different consultants to do this.  Liberia now has its first commercially operating gold mine and the environment to work and develop there continues to improve.  The hydro power pre-feasibility study is progressing well and we look forward to sharing the results of this work once they are completed.  During the period Hummingbird signed a 25 year MDA with the Liberian Government and the President which now waits to be passed into law by the Legislature.

The Company continues an active Sustainability (Corporate Social Responsibility ("CSR") programme.  Supporting local communities in healthcare and education and helping to train them in new skills will leave a lasting legacy as well as enable greater local employment in the short term. 

I would like to take this opportunity to thank all of our staff and consultants.  Without their hard work and diligence we would not have been able to achieve the great progress we have made this year. 

We remain extremely grateful for the support of our shareholders and all of our stakeholders.  We are focused on our vision to build a mid-tier gold company. We look forward to your continued support as we execute our strategy into a rising market. 

Russell King

Non-executive Chairman

13 April 2016

CEO's Statement

Hummingbird has made material advancements to both the Dugbe Gold Project in Liberia and the Yanfolila Gold Project in Mali during this period. In Mali the Company now boasts a fully permitted, robust, high margin gold project with a completed DFS that shows a Life of mine AISC under US$695/oz and a reserve grade of 3.14g/t; at US$1,250 gold price the IRR is 60% and these numbers mark Yanfolila as a stand out project.  Hummingbird has grown to hold 6.4Moz gold under management. Both projects are covered with 25+ year mining agreements, therefore giving us the security of tenure and around 4,000km2 of land holding on two highly prospective gold belts in West Africa.  We are extremely proud of the strides we have made this year on the ground, but as significant shareholders we remain frustrated that the value of our endeavour is yet to be fully realised. The macro markets which ultimately govern the value of the sector are highly cyclical and we are building a company that will be in the top quartile in terms of the quality of its assets and its delivery, and so best suited to take advantages of changes in the tide.

Yanfolila Gold Project:

In January 2016 we delivered a DFS on the Project that we updated with an optimised mine plan and schedule in February 2016 to include the increased gold Reserves.  Using a US$1,250 gold price the Project delivers US$162m NPV8 and 60% IRR, and with a US$1,100 gold price the Project has a US$109m NPV8 and 42% IRR.  The all-in cost of production ("ASIC") for the life of the mine of US$695/oz is one of the lowest in the industry.  These results make this project one of the highest margin undeveloped gold projects in Africa today. 

Yanfolila will progressively mine five open pits over an eight year mine life through traditional gravity and carbon-in-leach ("CIL") processing.  On top of this there is a scoping study level report, outside of the mine plan, on a sixth deposit, Gonka, which has both open-pit and underground mining potential.  The Project also has over 1Moz of gold outside of the current mine plan, but within the mining permit area.  There also remains a large amount of upside to further develop Yanfolila from its initial mine plan on top of the significant exploration potential.

Mali is Africa's third largest gold producer and our experience of operating there has been extremely positive.  With both mining and environmental permits in place Yanfolila is fully permitted and ready to build. 

Dugbe Gold Project:

At the Dugbe Gold Project in Liberia we are continually improving the existing technical work completed to date.  In 2013 we completed a PEA which showed, at a US$1,300 gold price, a post-tax IRR of 29% and NPV10 of US$186m.  Since this study we have been looking at ways to optimise this based on the current gold price environment. In Liberia, over 40% of our operating costs are the cost of generating our own power and we have been conducting extensive studies in this area of the business. We are well progressed towards delivering a hydro-electric power pre-feasibility study in partnership with Knight Piésold and funded by IFC InfraVentures ("IFC"). We believe this will show the potential to significantly reduce production costs at the project.

Liberia now has its first commercially operating gold mine and the post Ebola environment makes it an ever increasingly positive place to operate.  That, combined with a renewed confidence in gold, makes Dugbe a very exciting prospect with almost unlimited exploration upside. The tightening in the gold market has understandably meant that the spotlight has to be on near term cash flows and higher grade reserves and therefore cash margins at the Yanfolila Project; but the Dugbe Project is a sleeping giant which we are very excited to continue progressing. 

Financing:

As I write this at the beginning of April 2016 we have extended the term of the US$15m bridge facility for Yanfolila with Taurus Funds Management to 8 September 2016.  With the vastly improved economics on the back of the Optimised Mine Plan of February 2016, in comparison to the Optimisation Study of March 2015, 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.  As at 31 December 2015, the Company had a cash position of US$7m. 

Conclusion:

I would like to echo Russell's comments and thank all of our hard working employees and consultants.  Without their efforts our projects would not have been able to develop at the same pace or to the same quality as they have.  As a result we have been able to report the material growth in the Yanfolila economics demonstrated by its IRR increasing from 35% to 60% from studies carried out between last year's report and this one.   

A lot of hard work will be needed to turn Hummingbird into a gold producing company in the near-term and we are ready and excited for the challenge ahead.  So far we have managed to significantly grow our resources and improve our technical studies, as well as successfully recruit the talent to bolster our world-class team to turn Hummingbird Resources from an explorer into a developer. During the development phase we will continue to recruit for the future as we transform into a producer.  Although the market has produced a gloomy backdrop we believe that Hummingbird is well positioned to develop into a high margin gold producer. We look forward to your support as we deliver on this plan. 

Dan Betts

CEO

13 April 2016

Consolidated Income Statement

For the year ended 31 December 2015

	12 months to 31 Dec 2015 $'000	7 months to 31 Dec 2014 $'000
Continuing operations
Revenue	-	-
Share based payments	(436)	(119)
Other administrative expenses	(3,913)	(3,067)
Administrative expenses	(4,349)	(3,186)
Finance income	84	104
Finance expense	(244)	(268)
Share of joint venture loss	(54)	(32)
Loss before tax	(4,563)	(3,382)
Tax	-	-
Loss for the period attributable to equity holders of the parent	(4,563)	(3,382)
Loss per ordinary share
Basic and diluted  ($ cents)	(4.64)	(4.27)

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2015

		12 months to 31 Dec 2015 $'000	7 months to 31 Dec 2014 $'000
Loss for the period		(4,563)	(3,382)
Other comprehensive income
Exchange translation differences on foreign operations		-	-
Total comprehensive loss for the period attributable to equity holders of the parent		(4,563)	(3,382)

Consolidated Balance Sheet

As at 31 December 2015

	31 Dec 2015 $'000	31 Dec 2014 $'000
Assets
Non-current assets
Intangible exploration and evaluation assets	62,089	86,827
Property, plant and equipment	38,106	749
Investment in joint venture	-	54
	100,195	87,630
Current assets
Trade and other receivables	2,179	870
Cash and cash equivalents	7,220	8,536
	9,399	9,406
Total assets	109,594	97,036
Liabilities
Current liabilities
Trade and other payables	5,977	4,317
Other financial liabilities	15,000	15,050
Borrowings	14,965	-
Non-current liabilities
Borrowings	-	9,793
Total liabilities	35,942	29,160
Net assets	73,652	67,876
Equity
Share capital	1,723	1,385
Share premium	81,428	71,627
Retained earnings	(9,499)	(5,136)
Equity attributable to equity holders of the parent	73,652	67,876

Consolidated Statement of Cash Flows

For the year ended 31 December 2015

	12 months to 31 Dec 2015 $'000		7 months to 31 Dec 2014 $'000
Net cash outflow from operating activities	(4,639)		(3,319)
Investing activities
Purchases of intangible exploration and evaluation assets	(3,761)		(7,252)
Purchase of Mine development	(6,651)		-
Additions of property, plant and equipment	(78)		-
Interest received	38		12
Cash and cash equivalents in subsidiaries acquired	-		200
Net cash used in investing activities	(10,452)		(7,040)
Financing activities
Net proceeds from issue of shares	10,139		2,808
Loan interest paid	(1,070)		(350)
Financial liabilities issued net of issue costs	4,950		9,722
Net cash from financing activities	14,019		12,180
Net (decrease) / increase cash and cash equivalents	(1,072)		1,821
Effect of foreign exchange rate changes	(244)		(268)
Cash and cash equivalents at beginning of period	8,536		6,983
Cash and cash equivalents at end of period	7,220		8,536

Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

	Share capital $'000	Share premium $'000	Retained earnings $'000	Total $'000
As at 1 June 2014	953	48,135	(1,892)	47,196
Comprehensive loss for the period:
Loss for the period	-	-	(3,382)	(3,382)
Total comprehensive loss for the period	-	-	(3,382)	(3,382)
Transactions with owners in their capacity as owners
Issue of shares net of costs	432	23,492	-	23,924
Total transactions with owners in their capacity as owners	432	23,492	-	23,924
Share based payments	-	-	138	138
As at 31 December 2014	1,385	71,627	(5,136)	67,876
Comprehensive loss for the year:
Loss for the year	-	-	(4,563)	(4,563)
Total comprehensive loss for the year	-	-	(4,563)	(4,563)
Transactions with owners in their capacity as owners
Issue of shares net of costs	338	9,801	-	10,139
Total transactions with owners in their capacity as owners	338	9,801	-	10,139
Share based payments	-	-	200	200
As at 31 December 2015	1,723	81,428	(9,499)	73,652

Notes to the Consolidated Financial Statements

For the year ended 31 December 2015

1             General information

Hummingbird Resources PLC, is incorporated in England and Wales under the Companies Act. The address of the registered office is 49-63 Spencer Street, Hockley, Birmingham, West Midlands, B18 6DE.

The nature of the Group's operations and its principal activities are the exploration, evaluation and development of mineral exploration targets, principally gold, focused exclusively in West Africa.

2             Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs) as issued by the International Accounting Standards Board ("IASB") and as adopted by the EU and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Intangible exploration and evaluation ("E&E") assets related to each exploration licence/prospect are carried forward, until the existence (or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on a cost pool basis and any impairment loss is recognised in the income statement. The carrying value, after any impairment loss, of the relevant E&E assets is then reclassified as Mine Development assets. During the year US$35,880,000 E&E assets were reclassified as Mine Development assets within property, plant, and equipment.

The functional currency of all companies in the Group is United States Dollar ("$"). The financial statements are presented in thousands of United States dollars ('$'000').  For reference the period-end exchange rate from Sterling to $ was $1.4802 (2014: $1.5532).

3             Loss per Ordinary Share

Basic loss per ordinary share is calculated by dividing the net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of Ordinary shares outstanding during the year.

The calculation of the basic and diluted loss per share is based on the following data:

	12 months to 31 Dec 2015  $'000		7 months to 31 Dec 2014  $'000
Losses Loss for the purposes of basic loss per share being net loss attributable to equity holders of the parent	(4,563)		(3,382)
Number of shares	31 Dec 2015 Number		31 Dec 2014 Number
Weighted average number of ordinary shares for the purposes of basic loss per share	98,306,165		79,266,208
Loss per ordinary share	12 months to 31 Dec 2015 $ cents		7 months to 31 Dec 2014 $ cents
Basic and diluted		(4.64)	(4.27)

At the balance sheet date there were 7,315,158 (2014: 7,376,158) potentially dilutive ordinary shares. Potentially dilutive ordinary shares include share options issued to employees and Directors, warrants issued to the IFC and the conditional acquisition of the 20% interest in the Joe Village licence, which the Group did not previously own. At 31 December 2015 the potential ordinary shares are anti-dilutive and therefore there is no difference between basic and diluted loss per share.

4             Availability of Accounts

The audited Annual Report and Financial Statements for the year ended 31 December 2015 and notice of AGM will shortly be sent to shareholders and published at: www.hummingbirdresources.co.uk 

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR EAKLDFFLKEFF

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