12th Jun 2014 11:44
LONDON (Alliance News) - Hummingbird Resources PLC Thursday said it has entered into a deal with Gold Fields Ltd to acquire all of Gold Fields' mining and exploration interests in Mali for USD20 million in shares.
The gold and silver mining company said the conditional sale and purchase agreement would give it the Yanfolila Project in Mali, which has a current mineral inventory of 1.8 million ounces of gold at 2.8 grams per tonne of gold.
In return, the company said it would provide Gold Fields with USD20 million worth of Hummingbird shares issued at a price of 56 pence per share, which would make Gold Fields its largest shareholder with 26.3% of the enlarged share capital of Hummingbird.
Hummingbird Resources shares were up 8.1% to 57.00 pence, putting it among the top AIM ALL-Share risers on Thursday.
Gold Fields' Yanfolila management team will join Hummingbird upon completion of the deal, and Hummingbird said it has received preliminary expressions of interest from a number of parties to fund the Yanfolila Project through construction.
Hummingbird said its plan for the Yanfolila site is to deliver first gold production by the end of 2015 at an estimated all-in sustaining cost of USD700 per ounce, with 80,000 ounces targeted in first year production.
The company said it expects a project independent rate of return at 53% and payback in under two years, based on a gold price of USD1,250.
Hummingbird said the project is fully permitted, with a 30-year mining licence granted and has significant exploration potential with over 3,200 square kilometres of exploration ground.
The company said that upon completion of the acquisition, its total gold inventory will be 6 million ounces of gold, and it will have 5,000 square kilometres of exploration areas, along with a production pipeline of over 200,000 ounces per year.
"The Yanfolila Project provides us with a fast, simple and low-cost route to production which we expect to commence next year at an initial rate of 80,000 ounce per annum. The expected cash flow from this project will allow us to continue to optimise the development of our 'company-making' Dugbe 1 Project in Liberia and open up a number of further funding opportunities," Hummingbird Managing Director Dan Betts said in a statement.
By Tom McIvor; [email protected]; @TomMcIvor1
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