10th Jul 2015 07:56
LONDON (Alliance News) - Hummingbird Resources PLC Friday said it has signed a 25 year mineral development agreement for the Dugbe gold project in Liberia, which hosts the country's largest gold deposit.
The miner signed the agreement with the government of Liberia and it is expected to be signed by the president of the country, Ellen Johnson Sirleaf, "shortly". The agreement also has an option to extend the deal beyond 25 years by mutual consent.
Under the agreement, Hummingbird will pay a 3% royalty on gold production and pay an income tax rate of 25%. However, Hummingbird will benefit from tax credits for historic exploration expenditures and have its fuel duty cut by 50%, or by 75% for the first five years if the gold price tumbles below USD1,500 per ounce.
Gold was trading at around USD1163 per ounce on Thursday, and has not traded above USD1,500 since April 2013.
The government will have a 10% carried interest in Dugbe, and Hummingbird will also set up a community development fund.
"The mining development agreement gives us the security of tenure and right to mine for at least the next 25 years, and we look forward to continuing our long and enduring partnership to work with the government of Liberia to develop Liberia's largest gold deposit," said Chief Executive Dan Betts.
The Dugbe project in Liberia currently has a potential to produce 4.2 million ounces of gold, but Hummingbird believes the project is currently too big to progress, and is instead focused on the Yanfolia gold project in Mali, which will be its springboard to develop Dugbe.
Hummingbird shares were up 4.5% to 32.38 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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