Hummingbird (HUM ) has announced encouraging results of the Dugbe Gold Project Feasibility Study (FS). The study of the Southern Liberia extraction site was prepared by Pasofino, which has a 49% interest in the project. Hummingbird owns the remaining 51%.
The study reveals solid pre-tax net present value (NVP) of US$690m and a pre-tax 26.35% internal rate of return for the site, assuming a base gold price of $1700/oz. Capital payback has been estimated at an impressive 3.5 years from start of production, with a low All In Sustaining Cost (AISC) profile of US$1,005/oz and pre-production capital requirement of $397m.
The study reveled a long Life of Mine (LOM) of 14 years, yielding 2.27Moz (millions of ounces) of gold over that lifespan. Average production is estimated at 200,000oz for the first five years of production. Additionally, the study revealed 2.76Moz of mineral reserves and 67 thousand oz of inferred mineral resources within the FS pit.
Power cost has been estimated at a relatively efficient US$0.175/kWh using liquid natural gas and solar, with further efficiency that could be unlocked by using more renewable sources. The site is 76km from the Port of Greenville with a repaired and upgraded road connecting the two.
The study set metallurgical recovery at 83%, which is subject to future increase should capital expenditures reduce and gold prices rise. A 2% increase would add $52M of NVP. Ian Stalker, CEO of Pasofino, expects capital expenditures to be lower in the future, commenting:
"I am extremely pleased with the outcome of the FS, particularly given the current environment of higher raw material, capital and energy costs as a result of inflation and other global dislocations. We are truly in the 'eye of the storm' on Capex estimations and hence it is reasonable to expect going forward to the FEED Phase that as world-wide business conditions settle down significant savings can be made against this Capital Estimate that will naturally enhance overall Project economics. The Dugbe Gold Project is now a significant, viable and economically robust gold project, with substantial exploration upside potential to improve upon the already large 4Moz Resources base."
Dan Betts, CEO of Hummingbird, commented: "We are delighted to receive the results from the robust FS that has been conducted by Pasofino. The FS has been conducted to a high standard and has seen a complete remodelling of the Resource base, to now showcase a significant 2.76Moz Reserve base, long LOM of 14 years with upside given the material exploration potential available and a low AISC profile of USD1,005/oz to underpin a gold mine of material value."
The study has met the requirements enabling Pasofino to earn its 49% interest in the project. Pasofino and Hummingbird retain the right to consolidate ownership by transferring Hummingbird's 51% stake to Pasofino.
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