Home » Hummingbird Shares Surge as Guinea Gold Mine Negotiations Progress

Hummingbird Shares Surge as Guinea Gold Mine Negotiations Progress

Kouroussa Mine Closer to Commercial Production, Boosts Investor Confidence

by Ikeoluwa Ogungbangbe

Shares of Hummingbird Resources (AIM: HUM) surged by 17% in early London trading after the company announced progress in negotiations with its main contractor at the Kouroussa gold mine in Guinea. The Africa-focused miner is nearing a resolution to the dispute that halted operations in March, raising investor confidence in the potential for resumed activities and upcoming commercial production.

In March, operations at the Kouroussa mine were suspended when Corica Mining Services ceased work, citing breaches of contract by Hummingbird. The contractor claimed it was owed $27 million for completed work, allegations that Hummingbird contested, pointing to Corica’s failure to meet agreed-upon performance targets.

Despite these challenges, Hummingbird expressed optimism about the constructive discussions underway aimed at resolving the dispute and getting Corica back on site to fulfill their contractual obligations. According to Hummingbird’s CEO, Dan Betts, the company has issued a Step-In Notice to Corica as a measure to mitigate the impact of the temporary work stoppage.

Parallel to these negotiations, Hummingbird is actively working to restart and escalate mining activities at Kouroussa, targeting the initiation of commercial production at the earliest opportunity. Before the dispute, the miner had projected the commencement of commercial operations by the end of March, which would mark Kouroussa as Hummingbird’s second active mine. Further demonstrating commitment to progress, Hummingbird has expanded its partnership with ETASI, a trusted operator with whom it has previously collaborated, to accelerate the production ramp-up. This strategic move is poised to enhance the company’s production capabilities significantly.

Kouroussa’s potential was highlighted last June when the first gold was poured at the site. Projections for the mine indicate an output of 120,000 to 140,000 ounces of gold annually for the first three years, with a subsequent average of 100,000 ounces per year over an initial seven-year lifespan. To support its operations and strategic plans, Hummingbird secured a $55 million loan from Coris Bank in September and committed to reducing its debt by $122.8 million over three years. This financial strategy includes a significant debt repayment of $77 million scheduled by the end of the current year.

In a recent funding initiative, Hummingbird raised $30 million, primarily through a share placement that averaged 11.26 pence per share. Notably, the placement saw significant participation from CIG, an investment bank holding a 45% share in Hummingbird. In light of soaring bullion prices, which recently reached near all-time highs, Hummingbird also decided to hedge 30,000 ounces of its gold production, approximately 15% of its total output. This financial maneuver aims to stabilize revenue amidst the fluctuating gold market, where prices stood at $2,375 per ounce as of Tuesday, a slight decrease from Monday’s $2,382 but still significantly higher than previous weeks.

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