Hummingbird Resources PLC — Interim / Quarterly Report 2019

Aug 23, 2019

National Storage Mechanism | Additional information

You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.

RNS Number : 9999J

Hummingbird Resources PLC

23 August 2019

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

Hummingbird Resources plc

("Hummingbird" or the "Company")

Unaudited Interim Results for Period Ended 30 June 2019

Hummingbird Resources (AIM: HUM), is pleased to announce its unaudited results for the six months ended 30 June 2019 (the "Period"). The Yanfolila Gold Mine ("Yanfolila"), Hummingbird's principal asset, showed continued improvement during the first six months of 2019, producing 51,273 ounces of gold, with production increasing and costs decreasing through the first half of the year.

OPERATIONAL AND FINANCIAL HIGHLIGHTS

·      Increasing quarter on quarter production in line with achieving annual production guidance

·      25-year MDA signed with the Government of Liberia over a land package of approximately 2,000km2, which includes the Company's 4.2Moz Dugbe Gold Project

·      51,034ozs of gold sold at an average price of US$1,304/oz

·      Average grade of ore processed of 2.66g/t

·      653kt of ore mined and plant recovery of 94.06%

·      US$67.1m of revenue in period (H1 2018: US$66.6m) with total all in sustaining costs1 ('AISC') of US$1,135/oz (includes Q1 AISC of US$1,297/oz and Q2 AISC of US$998/oz)

·      EBITDA2 of US$9.9m for the Period

·      Pre-tax loss US$5.8m for the Period

·      Cash of US$8m and net debt of US$43m at end of Period, keeping the Company on track for forecasted positive net cash position during 2020

·      3,500ozs of gold inventory worth approx. US$5m at end of Period

·      Undrawn US$10m overdraft facility in place

·      Construction of second ball mill at Yanfolila completed at the end of the Period, increasing throughput capacity by circa. 20%, ahead of schedule and under budget

OUTLOOK

·      110-125,000ozs production guidance maintained for 2019 with increased plant throughput planned in H2 2019 due to positive impact of the second ball mill

·      Targeting circa 130,000ozs annual production from 2020, +20% increase from DFS

·      Underground mining studies ongoing targeted at improving LOM economics

Dan Betts, CEO of Hummingbird, commented:

''Hummingbird's first half year results demonstrate a period of real progress for the group. The Yanfolila mine delivered continual improvements in the Period, with AISC falling from over US$1,200/oz in Q1 to under US$1,000/oz in Q2. The successful construction of the second ball mill and the additional throughput means we can anticipate lowering costs per ounce and increasing production through the remainder of the year.

Our focus has always been on responsible mining; maximising efficiency levels and delivering value. With improved economies of scale expected to come from the second ball mill together with our continuingly improving understanding of the Yanfolila orebody, we are in a stronger position. Our focus is firmly on ensuring stable, reliable and efficient production at Yanfolila.

The increasing gold price has also meant that our Dugbe project in Liberia looks increasingly attractive and provides added opportunity and optionality in the Company's portfolio.  Beyond our current guidance for this year, we are targeting production of around 130,000 ounces of gold per year from 2020 at Yanfolila, a circa. 20% increase from our feasibility study. We plan to continue our recent positive momentum into to the second half of the year and thank everyone who has continued to support us to this point."

1All-in sustaining cash costs ("AISC") is calculated as all direct mine operating costs (including mine based general and administration costs but excluding depreciation and amortisation), plus sustaining capital expenditures divided by ounces of gold sold.

2 Earnings before interest, tax, depreciation and amortisation, effect of impairment charges, foreign currency translation gains/losses and other non-recurring expense adjustments but including IFRS 16 lease payments.

**ENDS**

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

Daniel Betts, CEO Thomas Hill, FD Robert Monro, IR	Hummingbird Resources plc	Tel: +44 (0) 20 7409 6660
James Spinney Ritchie Balmer James Bellman	Strand Hanson Limited Nominated Adviser	Tel: +44 (0) 20 7409 3494
Ed Montgomery James Asensio	Canaccord Genuity Limited Broker	Tel: +44 (0) 20 7523 8000
Gordon Poole Owen Roberts Ollie Head	Camarco Financial PR/IR	Tel: +44 (0) 20 3 757 4980

Notes to Editors:

Hummingbird Resources (AIM: HUM) is a leading gold production, development and exploration company.  The Company has two core gold projects, the Yanfolila Gold Mine in Mali and the Dugbe Gold Project in Liberia.  Yanfolila produced its first gold pour on time and budget in December 2017.  Yanfolila held pre-production Probable Reserves of 710,535oz @ 3.14g/t, total Resources (inclusive of Reserves) of 2Moz of gold.  The Dugbe Gold Project has Resources currently totalling 4.2Moz of gold and a completed NI 43-101 compliant PEA on the project showing a 29% IRR and US$186m NPV at a US$1,300 gold price.

In addition to Hummingbird's production and development assets, the Company also has an exploration footprint of ~4,000km2 and is a shareholder in AIM listed Cora Gold, which is advancing a portfolio of prospects in Mali and Senegal.

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2019

		Unaudited 30 June	Unaudited 30 June	Audited 31 December
Continuing operations	Notes	2019 $'000	2018 $'000	2018 $'000
Revenue		67,148	66,614	116,539
Production costs		(44,900)	(38,260)	(88,157)
Amortisation and depreciation		(17,896)	(14,655)	(19,881)
Royalties and taxes		(2,098)	(2,609)	(3,942)
Cost of sales		(64,894)	(55,524)	(111,980)
Gross profit		2,254	11,090	4,559
Share based payments		(764)	(420)	338
Other administrative expenses		(4,876)	(4,239)	(9,834)
Operating (loss)/profit		(3,386)	6,431	(4,937)
Finance income		1,034	2,106	4,797
Finance expense		(3,474)	(4,869)	(9,119)
Share of associate loss		(62)	(142)	(235)
Share of joint venture loss		-	-	(2)
Impairment of associate		-	-	(2,044)
Reversals in impairment of financial assets		12	-	88
Losses on financial assets measured at fair value		(2)	-	(198)
(Loss)/profit before tax		(5,878)	3,526	(11,650)
Tax		(666)	(915)	(1,163)
(Loss)/profit for the period/year		(6,544)	2,611	(12,813)

Attributable to:
Equity holders of the parent		(5,235)	1,648	(10,250)
Non-controlling interests		(1,309)	963	(2,563)
Loss for the year		(6,544)	2,611	(12,813)

(Loss)/earnings per share (attributable to equity holders of the parent)
Basic ($ cents)	4	(1.482)	0.48	(2.93)
Diluted ($ cents)	4	(1.482)	0.44	(2.93)

Consolidated Statement of Financial Position

As at 30 June 2019

		Unaudited 30 June	Unaudited 30 June	Audited 31 December
		2019	2018 (restated)	2018
	Notes	$'000	$'000	$'000
Assets
Non-current assets
Intangible exploration and evaluation assets		72,667	63,971	69,171
Intangible assets software		319	174	118
Property, plant and equipment		139,390	136,176	140,723
Right of use assets		19,088	-	-
Investment in associates and joint ventures		675	3,668	1,528
		232,139	203,989	211,540
Current assets
Inventory		12,153	8,219	13,807
Trade and other receivables		13,954	11,628	13,316
Unrestricted cash and cash equivalents		3,994	41,918	17,320
Restricted cash and cash equivalents		4,187	4,302	4,210
		34,288	66,067	48,653
Total assets		266,427	270,056	260,193
Liabilities
Non-current liabilities
Borrowings		29,959	43,265	40,819
Lease liability		5,791	-	-
Provisions		13,700	12,756	13,541
		49,450	56,021	54,360
Current liabilities
Trade and other payables		42,704	33,084	39,787
Lease liability		13,351	-	-
Other financial liabilities		15,062	15,974	15,319
Borrowings		21,306	18,945	20,112
		92,423	68,003	75,218
Total liabilities		141,873	124,024	129,578
Net assets		124,554	146,032	130,615
Equity
Share capital		5,295	5,260	5,271
Share premium		-	150,846	-
Retained earnings		119,341	(14,827)	124,117
Equity attributable to equity holders of the parent		124,636	141,279	129,388
Non-controlling interest		(82)	4,753	1,227
Total equity		124,554	146,032	130,615

Consolidated Statement of Cash Flows

For the six months ended 30 June 2019

			Unaudited    30     June	Unaudited      30      June	Audited    31    December
			2019	2018	2018
	Notes		$'000	$'000	$'000
Operating activities
(Loss)/profit before tax			(5,878)	3,526	(11,650)
Adjustments for:
Amortisation and depreciation			18,056	14,713	20,006
Share based payments			890	420	(338)
Finance income			(1,034)	(2,106)	(4,797)
Finance expense			3,784	4,869	9,119
Share of associate loss			62	(142)	235
Share of joint venture loss			-	-	2
Impairment of associate			-	-	2,044
Profit on disposal of subsidiaries			-	150	-
Reversals in impairment of financial assets			(12)	-	(88)
Losses on financial assets measured at fair value			2	-	198
Operating cash flows before movements in working capital			15,870	21,430	14,731
Decrease/(increase) in inventories			1,654	(3,327)	(8,915)
(Increase)/decrease in receivables			(628)	1,365	1,624
(Decrease)/increase in payables			(145)	15,289	10,694
Net cash inflow from operating activities			16,751	34,757	18,134
Investing activities
Purchases of exploration and evaluation assets			(1,183)	(720)	(5,922)
Purchase of intangible assets			(201)	(25)	-
Purchases of property, plant and equipment			(9,870)	(22,430)	(20,070)
Purchase of shares in other companies			-	(105)	(105)
Loans provided			-	-	(2,000)
Interest received			146	102	181
Net cash used in investing activities			(11,108)	(23,178)	(27,916)
Financing activities
Exercise of warrants			-	-	36
Loan interest paid			(2,235)	(3,650)	(5,871)
Loans repaid			(9,849)	(1,341)	(10,911)
Lease repayments			(5,968)	-	-
Loans received			-	-	9,168
Net cash used in financing activities			(18,052)	(4,991)	(7,578)
Net decrease in cash and cash equivalents			(12,409)	6,588	(17,360)
Effect of foreign exchange rate changes			(940)	(988)	(1,730)
Cash and cash equivalents at beginning of year			21,530	40,620	40,620
Cash and cash equivalents at end of year			8,181	46,220	21,530

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2019

	Share capital $'000	Share premium $'000	Other reserves $'000	Retained earnings $'000	Total equity attributable to the parent $'000	Non-controlling interest $'000	Total $'000
As at 1 January 2018	5,176	148,930	2,000	(15,500)	140,606	4,171	144,777
Aggregate adjustments on adoption of IFRS 9	-	-	-	(1,522)	(1,522)	(381)	(1,903)
Balance at 1 January 2018 as restated	5,176	148,930	2,000	(17,022)	139,084	3,790	142,874
Profit for the period	-	-	-	1,648	1,648	963	2,611
Total comprehensive loss for the period	-	-	-	1,648	1,648	963	2,611
Acquisition of minority interests	84	1,916	(2,000)	-	-	-	-
Share based payments	-	-	-	547	547	-	547
As at 30 June 2018	5,260	150,846	-	(14,827)	141,279	4,753	146,032
As at 1 January 2018	5,176	148,930	2,000	(15,500)	140,606	4,171	144,777
Aggregate adjustments on adoption of IFRS 9	-	-	-	(1,522)	(1,522)	(381)	(1,903)
Balance at 1 January 2018 as restated	5,176	148,930	2,000	(17,022)	139,084	3,790	142,874
Loss for the year	-	-	-	(10,250)	(10,250)	(2,563)	(12,813)
Total comprehensive loss for the year	-	-	-	(10,250)	(10,250)	(2,563)	(12,813)
Acquisition of minority interests	84	1,916	(2,000)	-	-	-	-
Exercise of warrants	11	25	-	-	36	-	36
Total transactions with owners in their capacity as owners	95	1,941	(2,000)	-	36	-	36
Share based payments	-	-	-	518	518	-	518
Cancellation of share premium	-	(150,871)	-	150,871	-	-	-
As at 31 December 2018	5,271	-	-	124,117	129,388	1,227	130,615

As at 1 January 2019	5,271	-	-	124,117	129,388	1,227	130,615
Comprehensive loss for the year:
Loss for the period	-	-	-	(5,235)	(5,235)	(1,309)	(6,544)
Total comprehensive loss for the period	-	-	-	(5,235)	(5,235)	(1,309)	(6,544)
Share based payments	24	-	-	459	483	-	483
As at 30 June 2019	5,295	-	-	119,341	124,636	(82)	124,554

1.              General information

Hummingbird Resources PLC is a public limited company with securities traded on the AIM market of the London Stock Exchange. It is incorporated and domiciled in the United Kingdom and has a registered office at 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, development, and operating of mineral projects, principally gold, focused currently in West Africa.

2.              Adoption of new and revised standards

The interim financial statements have been drawn up based on accounting policies consistent with those applied in the financial statements for the year ended 31 December 2018. IFRS 16 'Leases' (outlined below), was adopted effective 1 January 2019, and this has a material impact on the interim financial statements of the group (as outlined below).

IFRS 16                                       (effective 1 January 2019)                 Leases

Initial application of IFRS 16 'Leases'

IFRS 16 introduces a single lease accounting model. This standard requires lessees to account for all leases under a single on balance sheet model. Under the new standard, a lessee is required to recognise all lease assets and liabilities on the balance sheet; recognise amortisation of leased assets and interest on lease liabilities over the lease term; and separately present the principal amount of cash paid and interest in the cash flow statement. The requirements of IFRS 16 extend to certain service contracts, such as mining contractors in which the contractor provides services and the use of assets, which may impact the Group.

The Group has applied IFRS 16 'Leases' effective 1 January 2019, with no retrospective adjustments required.

At date of adoption on 1 January 2019, the financial impact of applying IFRS 16 is set out below:

	Right of use assets $'000	Lease liability $'000	Net asset impact $'000
Adoption of IFRS16 - Leases	24,959	(24,959)	-
Recognition of assets and liabilities at 1 January 2019 under IFRS 16	24,959	(24,959)	-

As previously announced in the 31 December 2018 annual report, the Group adopted IFRS 9 on 1 January 2018. Following this adoption, all the Group's financial assets at 1 January 2018 which were previously classified as loans and receivables under IAS 39 and are now classified as assets at amortised cost under IFRS 9.

Following this adoption, the 30 June 2018 interim financial statements have been restated. The financial impact of applying IFRS 9 (at 1 January 2018) is set out below:

	IAS 39 Loans and receivables $'000	IFRS 9 Financial assets at amortised cost $'000	Total $'000
Loss allowance at 1 January 2018 under IAS 39	-	-	-
Loss allowance on transition to IFRS 9	-	1,903	1,903
Loss allowance at 1 January 2018 under IFRS 9	-	1,903	1,903

			Total $'000
Net assets, as previously reported at 1 January 2018			144,777
Loss allowance on transition to IFRS 9			(1,903)
Net assets, as restated at 1 January 2018			142,874

3.              Significant accounting policies

Basis of preparation

The consolidated interim financial information has been prepared using policies based on International Financial Reporting Standards issued by the International Accounting Standards Board ("IASB") as adopted by the European Union, which are expected to be applied in the Group's financial statements for the period ended 31 December 2019.

The consolidated interim financial information for the period 1 January 2019 to 30 June 2019 is unaudited, does not include all the information required for full financial statements and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2018.  In the opinion of the Directors the consolidated interim financial information for the period represents fairly the financial position, results from operation and cash flows for the period in conformity with generally accepted accounting principles consistently applied. The consolidated interim financial information incorporates comparative figures for the interim period 1 January 2018 to 30 June 2018 and the audited financial year to 31 December 2018.  As permitted, the Group has chosen not to adopt IAS34 'Interim Financial Reporting'.

The annual financial statements of Hummingbird Resources plc are prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union.  The Group's consolidated annual financial statements for the year ended 31 December 2018, have been filed with the Registrar of Companies and are available on the Company's website www.hummingbirdresources.co.uk. The auditor's report on those financial statements although unqualified, contained an emphasis of matter paragraph in respect of risks surrounding the going concern assumption of the Company at that date.

4.              (Loss)/earnings per ordinary share

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

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

	Unaudited six months ended 30 June 2019 $'000	Unaudited six months ended 30 June 2018 $'000		Audited year ended 31 December 2018 $'000
(Loss)/Profit (Loss)/profit for the purposes of basic (loss)/earnings per share being net (loss)/profit attributable to equity holders of the parent	(5,235)	1,648		(10,250)
Number of shares	30 June 2019 Number		30 June 2018 Number		31 December 2018 Number
Weighted average number of ordinary shares for the purposes of basic loss per share	353,253,897		346,841,464		349,510,437
(Loss)/earnings per ordinary share	30 June 2019 $ cents		30 June  2018 $ cents		31 December 2018  $ cents
Basic	(1.48)		0.48		(2.93)
Diluted	(1.48)		0.44		(2.93)

At 30 June 2019 there were 25,761,011potentially dilutive ordinary shares. Potentially dilutive ordinary shares include share options issued to employees and directors, warrants issued and the conditional acquisition of the 20% interest in the Joe Village licence. For period ended 30 June 2019 and year ended 31 December 2018, because there is a reduction in loss per share resulting from the assumption that the share options and warrants are exercised, the latter are anti-dilutive and are ignored in the computation of diluted (loss)/earnings per share and therefore there is no difference between basic and diluted loss per share.

5.              Contingent liabilities

In January 2018 the Company was served with a Particulars of Claim by Taurus Funds Management Pty Ltd, Taurus Mining Finance Fund LP and Taurus Mining Finance Annex Fund LP, in relation to alleged breach of contract on termination of a Mandate for finance. Damages sought by the claimants are just under US$10 million.  The Company has received strong legal advice that the claim will be successfully defended, and therefore no provision has been made. If, however ultimate resolution of the claim differs from the Company's assessment, a material adjustment to the financial position and results could arise.

6.              Share capital

Authorised share capital

As permitted by the Companies Act 2006, the Company does not have an authorised share capital.

	Unaudited six months ended 30 June 2019 Number	Unaudited six months ended 30 June 2018 Number		Audited year ended 31 December 2018 Number
Issued and fully paid Ordinary shares of £0.01 each	353,688,201	350,938,603		351,826,899
Issued and fully paid	30 June 2019 $'000		30 June 2018 $'000		31 December 2018 $'000
Ordinary shares of £0.01 each	5,295		5,260		5,271

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR UURARKSAWUUR