Hummingbird Resources (HUM) , an Africa-focused gold explorer, released an operational and trading update for Q2 2023 ended 30 June 2023, highlighting a strong quarter with promising results for gold production.

The company's operations at Kouroussa, Guinea, progressed rapidly during the period. The mine's ramp-up is on track, with processing plant availability currently at 68%. Kouroussa is Hummingbird's second operating gold asset in West Africa, expected to produce an average of 120,000 to 140,000 oz of gold in the first 3 years of commercial production, and an average of 100,000 oz per year over the current life of mine (LOM) at an AISC profile of c. US$1,000 per oz.

Hummingbird achieved first gold pour at Kouroussa on 8 June 2023 and regular production in July. The outlook for the asset is positive, with gold ounces poured scheduled to increase in the second half. The operation is set to achieve steady state production in Q4 2023, and projected to produce c. 30,000 oz of gold in H2 2023.

At Yanfolila, Hummingbird's other West African asset in Mali, performance continued to improve in Q2 on the back of a strong recovery in Q4 2022 and Q1 2023. Yanfolila produced 23,885 oz of gold in Q2, a 19% increase from the same period last year. H1 2023 saw an even larger year-on-year production increase of 44% to 51,147 oz. The mine also achieved a notable reduction in all-in sustaining costs (AISC) during the quarter, down 34% to US$1,234 per oz compared to Q2 2022, and down 42% in H1 2023 compared to H1 2022.

On the corporate front, Hummingbird experienced a material positive turnaround in adjusted EBITDA to US$15.5m in Q2 2023 and US$33.1m in H1 2023, compared to last year's negative adjusted EBITDA of US$2.3m in Q2 2022 and negative US$9.3m in H1 2022. Group loss time injury frequency rate (LTIFR) was 0.69 per million hours worked in Q2 2023, significantly under Hummingbird's target rate of <1.20. A strategic review of the company's third asset at Dugbe, Liberia is ongoing with joint venture partner Pasofino Gold.

In summary, following a strong H1 2023, Yanfolila is well positioned to meet its FY 2023 production guidance of 80,000-90,000 oz at an AISC of under US$1,500 per oz. The quarter rounded off a strong half that saw robust performance as demonstrated by more than 51,000 oz of gold produced at an AISC profile of US$1,170 per oz and company adjusted EBITDA of US$33m.

With Kouroussa now operational, Hummingbird's production has more than doubled to 200,000+ oz per year, transforming it into a multi-asset, multi-jurisdiction gold producer. Yanfolila is also performing in line with Hummingbird's mine plans, providing good revenue visibility during its ramp-up production phase.

Looking forward, Hummingbird's goal for H2 2023 is to fully ramp up production at Kouroussa, and keep steady quarterly production at Yanfolila, generating free cashflows from both assets. Further, the company is expected to to start implementing its exploration programme in H2 2023 to extend the life of both assets, and is also expecting a positive solution on Dugbe in Liberia.

A Definitive Feasibility Study (DFS) for Dugbe was completed by Pasofino Gold in June 2023. The DFS showcased a high pre-tax NPV of US$690m (US$530m post tax), a significant 2.76Moz reserve base, long life of mine of 14 years, with upside given material exploration potential available, and a low AISC profile of US$1,005 per oz.

With Yanfolila's performance materially improving and Kouroussa operational, Hummingbird is at a value inflection point. After a tripling of its reserves to 4.1Moz last year, the company has strong momentum into H2 2023 and beyond.

 

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