Improved Technical Studies at Yanfolila Gold

Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector: Mining

 17 June 2015

Hummingbird Resources plc ('Hummingbird' or 'the Company')

Improved Technical Studies at Yanfolila Gold Project, Mali

Hummingbird Resources plc (AIM: HUM), the multi-project gold company, is pleased to announce a positive operational update to its 1.8 million ounce Yanfolila Gold Project in Mali ("Yanfolila" or "the Project") which it is advancing to near-term gold production. To view the release with maps please click on the following link.http://www.rns-pdf.londonstockexchange.com/rns/3688Q_-2015-6-16.pdf 

Highlights

· Technical Studies completed indicate significant potential for improved economics of developing Yanfolila as an open-pit mining operation.

· Significant growth in recovered gold from Komana East and West pits due to improved pit designs and mine scheduling:

· Improved pit slopes of the Komana East and Komana West deposits since the Optimisation Study:

· Gold grade control orientation drilling grids completed at Komana East and West deposits. Full interpretation to follow but initial results include:

· Komana East:

o 40m orientation grid over starter pit area in south of deposit

o 35 holes for 1,004.13 metres at 5m x 5m spacing covering 30 vertical metres (3 benches)

o Best intersections include:

§ 8m @ 11.29 g/t Au in hole KEGRC0002

§ 11m @ 8.22 g/t Au in hole KEGRC0006

· Komana West:

o 50m orientation grid over starter pit area in south of deposit

o 62 holes for 2,459.00 metres at 5m x 5m spacing covering 30 vertical metres (3 benches)

o Best intersections include:

§ 3m @ 17.34 g/t Au in hole KWGRC0036

§ 6m @ 9.12 g/t Au in hole KWGRC0060

· Plant earthworks are progressing well with 75% completion of the contract by SFTP against a planned 55% completion by this time.

· Due to success of geotechnical and resource work since the Optimisation Study in March 2015 Hummingbird is now focussed on an initial two pit mine plan at Komana East and West to simplify the mining process in early years of debt repayment with a further three pits (Sanioumale East and West and Guiren West) to be brought into the mine plan in due course, giving further upside, an extended life of mine and increased production and ounces;

o More ounces due to be mined from the Komana East and West pits than was previously mined from five pits.

Photographs of the earthworks progress at Yanfolila are available on the Company's website, http://www.hummingbirdresources.co.uk/gallery/.

Dan Betts, CEO of Hummingbird Resources, said: "The Company has been highly active over the last two months at Yanfolila with a programme of technical de-risking studies and commencement of plant earthworks which are ahead of schedule at this time. The technical de-risking studies show the significant potential for material economic improvement of the open-pit mining operation. We are extremely pleased with the results of these programmes to date and look forward to updating the Yanfolila financial model in the coming weeks and seeing further significant economic improvements from within it as we look to develop and build a leading West African gold mining operation."

Project Overview and Initial Plant Earthworks

Yanfolila has a current 1.8Moz gold inventory based on multiple high grade pits, averaging 2.8g/t Au. The Project, which is fully permitted, is located in the prospective Sikasso Region, 40km to the west of the town of Yanfolila, and benefits from established infrastructure.

Hummingbird completed an Optimisation Study in March 2015. The study highlighted the robust economics for the Project, underpinning its potential as a low cost, high grade open pit gold project processing 1Mtpa of ore. A NPV8 of US$72.4M, IRR of 35.1% and low all in cash costs of US$733 per ounce of gold for a 6.5 year LOM production and average annual production of 79,000 ounces was demonstrated in the Optimisation Study.

Since the completion of the Optimisation Study in March 2015, the Company commenced initial earthworks consisting of the excavation, placement, and compaction of fill materials of over 80,000 cubic metres. This work being undertaken consists of constructing the process plant terrace; plant infrastructure terrace; including reagent storage and handling; change house and security facility areas; power plant terrace; in plant roads; and storm event pond. The current status of progress is 75% complete against a targeted 55%.

The objective of this work, which is targeted to take eight weeks, is to complete the preparation of level compacted areas at the Yanfolila plant site for use by the civil contractor to place structural concrete equipment foundations and slabs and to allow the overall construction schedule to be maintained.

Project De-risking Programme

At the time of announcing the Optimisation Study, the Company identified a number of areas where there was potential to significantly improve the Project's confidence. Since then the Company has conducted a work programme to investigate these, as well as to further de-risk the Project. This work programme included confirmatory drilling at Komana West, resource sensitivity analysis at Komana East (north), analysis of risk to achieve expected gold production in years one and two, additional geotechnical studies, detailed design of the tailings management facility, detailed plant engineering, preparation and initial engagement for land acquisition and a full reassessment of the overall mine plan.

Results of Confirmatory Drilling at Komana West

Hummingbird conducted a confirmatory drill programme at Komana West in order to check the geological continuity in a key area of the deposit. A total of 11 holes were drilled for 1,328 metres.

The results of this programme confirmed and enhanced the previous geological understanding of this part of the deposit, which has increased the overall robustness of this resource. The full results are included in Table 1, and an updated Mineral Resource Estimate is in the process of being prepared.

De-risking Programme Results

Confirmatory drilling and the geotechnical work on the pit slopes have led to significant improvements to the Project. This, together with a detailed review of the mine and processing schedule, has simplified the mining plan to initially two pits (Komana East and Komana West) from the five pits previously envisaged. This in-turn should accelerate the gold production schedule with the remaining pits to be brought on later to extend the life of the Project.

Potential Implications of the De-risking Programme

The full findings of the de-risking programme (which are in the process of being finalised), could have significant implications and materially improve the economics of the Yanfolila Project.

Due to the significance of these improvements to the mine plan and schedule, in particular through the simplification from starting with two pits rather than five pits and the increased grades in earlier years, we are working closely with Taurus Funds Management to advance the US$75M funding arrangements as quickly as possible and with our engineering contractors to reconfigure the process flow sheet to accommodate these changes, which may include bringing forward comminution and elution capacity.

Taking the financial model from the Optimisation Study as a basis, when the improved geotechnical parameters and production schedule are included within the Optimisation Study financial model it indicates a possible improvement of;

· IRR by c.15%

· NPV by c.US$20M

· Year 1 Production by c.32,000oz

· Free cash by c.5%

· Payback of c.2 years

· LOM production by c.8%

· LOM grade by c.2%

Until these and other potential improvements have been fully quantified within an updated financial model with all relevant parameters updated there can be no certainty if these potential improvements to the economics will materialise. Once the financial model has been fully updated we expect to provide a further update. Note the above bullet points are management estimates and cannot be relied upon.

Competent Persons Statement

The information in this document that relates to Drilling Results is based on information reviewed by Mr Mark Fleming who is a Fellow of the Australian Institute of Geoscientists. Mr Fleming is a consultant to the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Fleming consents to the inclusion in this document of the matters based on his information in the form and context in which it appears.

Table 1 Drilling results at Komana East and West deposits: