17th Oct 2014 09:01
LONDON (Alliance News) - Hummingbird Resources PLC Friday reported a wider loss for the year, as it focused on bringing its Yanfolia project in Mali into production in 2016 and after its operations in Liberia were put on hold due to its focus on the Mali project and due to the Ebola outbreak.
The company does not currently generate any revenue, and reported a wider pretax loss for the 2014 financial year ended May 31, to USD4.5 million from USD3.4 million a year earlier. The loss widened due to an increase in administrative expenses, totalling USD4 million from USD3.4 million in 2013, and its share of a joint venture loss totalling USD625,000, compared with a USD225,000 loss a year earlier.
As at May 31, the company had a cash balance of USD7 million.
"The year has not been kind to junior gold miners operating in West Africa, but rather than sit and lick our wounds we have instead grasped the opportunities and in the process fast-tracked the company towards first production by 2016," said Chief Executive Dan Betts.
In July, Hummingbird acquired the Yanfolila project in Mali for USD20 million in shares. The asset is 18 months away from production and the high grade mine is capable of turning a profit in a varying gold price environment and will allow for quick returns with low operating costs, it said in a statement.
Yanfolila currently has 1.8 million ounces of gold over several deposits at an average grade of 2.8 grammes per tonne of gold. The project will be funded by its USD75 million debt facility with Taurus Funds Management announced earlier in the year.
"The company will continue to consider other such value-adding opportunities created by the current market," said Chairman David Cockerill.
"This acquisition, combined with our existing resources in Liberia, means we now have an inventory of over 6 million ounces of gold... Across both Mali and Liberia. This impressive portfolio, coupled with a clear, funded path to initial production, is paving the way for Hummingbird to evolve into a substantial West African gold player," he added.
Work at its Liberian assets has been limited due to the focus on the lower cost Yanfolia project and the outbreak of the Ebola virus, it said. It has also reassessed its Dugbe-1 asset in Liberia, with further exploration in the area being considered. The site has "huge opportunities to improve the project's cash flows by scheduling in low strip shallow ore from other deposits," it said.
"The Ebola virus is having a devastating impact on Liberia at this current time. With our focus at Yanfolila in Mali at present this is not impacting the company's progress at this time," said Betts.
"Hummingbird remains committed to Liberia and the development of the Dugbe-1 project... Make no mistake about it, we still see Liberia as a company-making project. Not only do we have an existing resource of 4.2 million ounces but we have almost limitless potential to expand that resource." he added.
Following the results, Cockerill said he is resigning from the company. "Having chaired Hummingbird for the past five years we [the board] have decided that it is the right time for me to stand down as Chairman... [I will] remain involved in Hummingbird in an advisory capacity," he said. The company have not released any information on Cockerill's replacement.
"Our mission is clear: to build the pre-eminent next generation gold company by aggressively developing our own projects despite the current market, and continuing to evaluate any other quality projects which become available," said Betts.
"It would appear that the industry bottomed out over the course of the year and there have been encouraging signs of recovery since the year end. While this trend is welcome, and despite recent progress made by the company, our market valuation, like our peers remains unsatisfactory," said Cockerill.
Hummingbird shares were down 1.7% to 36.60 pence per share Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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