Modern Mining

AIM-listed Hummingbird Resources has appointed African Mining Services (AMS), a subsidiary of ASX-listed Ausdrill Limited, as its mining contractor at the Yanfolila gold project in Mali, where mine construction is currently underway ahead of the first gold pour, expected to occur in 2017.

YanfolilaA recent view of the Yanfolila site showing the start of construction operations (Photo: Hummingbird).

Comments Dan Betts, CEO of Hummingbird Resources: “Appointing AMS as our mining contractor is another major milestone for Hummingbird and represents the single largest contract the company will award. AMS has an excellent reputation for high quality work with an exemplary health and safety record. The team also boasts over 25 years’ experience operating in West Africa. I am delighted to embark on this partnership with AMS as we look forward to the commencement of mining at Yanfolila.”

Hummingbird has appointed AMS for an initial three-year period with an option for the company to extend the contract by a further year of mining. The total value of the contract is expected to be approximately US$112 million over three years. The pricing represents a circa 5 % improvement for the company, as well as increased flexibility and transparency, when compared to Hummingbird’s Definitive Feasibility Study (DFS), released in February 2016.

AMS anticipates incurring capital expenditure of approximately US$38 million for the acquisition of new equipment and says it will employ around 450 personnel (the majority of whom will be local) for this contract.

Mining operations at Yanfolila will be carried out using conventional drill-and-blast and load-and-haul mining methods from two deposits initially. Mining is due to commence in Q3 2017 with the first gold pour due by the end of Q4 2017.

Yanfolila is Hummingbird’s most advanced asset. Some 132 000 oz gold is targeted for its first full year of production, which would deliver around US$70 million of free cash flow at a US$1 250/oz gold price. On its initial eight-year mine life, Yanfolila has an IRR of 60 % and an NPV of US$162 million at a US$1 250 gold price, making it – says Hummingbird – one of the highest margin undeveloped gold projects in Africa.

All in sustaining cash costs of US$695 per ounce place it in the lowest quartile of African producers, and well placed to operate profitably in a lower gold price environment. Yanfolila is fully funded to production and commitments to date represent nearly 30 % of the project capex. According to Hummingbird, the project is currently on budget and schedule.

Contact Modern Mining

Title: Editor
Name: Arthur Tassell
Email: mining@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

Title: Advertising Manager
Name: Bennie Venter
Email: benniev@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

 
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