18th Jan 2016 09:59
LONDON (Alliance News) - Hummingbird Resources PLC on Monday said the definitive feasibility study for the Yanfolia gold project in Mali has significantly improved the project's economics and potential value.
The study builds on the optimisation study completed on the project back in March 2015, with the new study showing significant improvements.
The net present value of the project is now thought to be USD142.0 million compared to the USD72.0 million estimate back in March, with the internal rate of return rising to 55% from 35%.
The new study suggests the gold project will extract 727,000 ounces of gold from 8.8 million tonnes of ore at a grade of 2.77 grammes per tonne, compared to the March study that suggested the project would extract 513,000 ounces from 6.4 million tonnes of ore at a grade of 2.64 grammes per tonne.
Yanfolia will now produce 121,000 ounces in the first year of production alone, rising from the previous 100,000 ounce estimate, with the average annual production rate over the life of the mine rising to 102,000 ounces from 79,000 ounces.
Importantly, those significant improvements do not seem to be coming at much extra cost, with the new study suggesting Hummingbird will need USD79.0 million in capital expenditure, which is only a smidgen above the previous USD72.0 million estimate.
The cash costs of the project also look favourable in the new study, rising to USD645 per ounce from the previous USD641 per ounce estimate. However, all-in sustaining costs have fallen to USD720 from USD733 per ounce - suggesting a very healthy margin even at current gold prices.
The figures from both the new definitive feasibility study and the optimisation study back in March last year are based on a gold price of USD1,250 per ounce, well above the current gold price, which stood at USD1,090 per ounce Monday morning.
Hummingbird also released a definitive feasibility study for Yanfolia based on a gold price of USD1,100 per ounce - much closer to current spot prices.
Under that price assumption, all the production, cash costs and capital expenditure forecasts remain the same, but the net present value of the project falls to USD88.0 million and the internal rate of return drops to 37%.
Hummingbird shares were trading flat at 12.25 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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