Hummingbird Resources (HUM ) believes that “the foundations are set” for 2021 to be a strong year for the business as it looks to capitalise on several organic growth opportunities ahead.

In its 4Q20 update, the gold production, development and exploration company acknowledged the challenges posed by the COVID-19 pandemic in 2020 but highlighted that it finished the period “in a solid net cash balance sheet position with a strong internal growth pipeline.”

It recorded a net cash positive position of c.$1.5m at 31 December 2020 with all current bank loans scheduled to be fully repaid in 2Q21. Cash came to c.$11m (c.$9m 3Q20) with total bank debt of c.$13m, reduced by c.$6m during 4Q, and gold inventory value of around $4m.

By October 2020, the mining group had drilled over 21,509m, making it 95% through the budgeted $5m 2020 drilling and exploration programme with ‘encouraging results’ to date. 

The Group’s initial technical assessment of the Kouroussa Gold Project in Guinea, in terms of exploration and mineral resource growth potential, has shown ‘upside potential’ to date.

Hummingbird has drilled over 4,535m drilled from 14 holes in 2020 at Komana East Underground ('KEUG') with infill drilling ongoing during 1Q21. Drilling has successfully confirmed continuity and ‘gives confidence for the potential of an underground mine beneath current operating pit Komana East ("KE") at around 3 g/t,’ the Group noted.

"Hummingbird ends the year in a solid net cash balance sheet position, with a strong internal growth pipeline including the development of Kouroussa and the exciting 2021 exploration and drilling campaign at Yanfolila ahead of us,” said CEO, Dan Betts.

Outlook

The Company has outlined a 2021 production guidance of 100,000 - 110,000oz of gold, with All in Sustaining Cash Cost ("AISC") of US$1,250 - 1,350/oz on gold sold. Hummingbird detailed that its production profile is to be weighted towards the second half of the year.

A Mali development capex of c.$7m is planned for 2021, focusing on the Gonka, Sanioumale West ('SW') and Komana East Underground (KEUG) deposits for future production, including haul roads to Sanioumale East (SE) and SW which are under construction.

The Group’s Mali exploration and mine life extension budget has doubled to c.$10m. which will cover SE drilling and permitting ‘to increase the confidence of current geology and expand on the existing resources of ~62,000oz’ as well as support the plans to finalise all KEUG drilling and permitting requirements with a view to be in production by 2022.

Updated Company mineral resources estimate models are to be released at the end of Q1 and are expected to be updated annually to capture progress of each years' programmes.

He added, “The Company's pre-development plans at Kouroussa continue, with our confidence of the exploration and mineral resource growth potential increasing the more work we do on the project. Additionally, we are excited about the progress at our Dugbe Gold project in Liberia with earn-in partners Pasofino.”

Betts said, “I believe the foundations are set for 2021 to be a strong year for the Company as we capitalise on the organic growth opportunities ahead of us and continue to progress towards our goal of being a multi-asset, multi-jurisdiction producing resources company.” while outlining “a more modest 2021 production outlook”, which the business believes is achievable and will establish a solid footing for the Company as it generates around $70 million of project level EBITDA at current gold prices.

Investors will undoubtedly be pleased with the operational progress made during FY20, which certainly ‘sets the scene’ for an extremely productive FY21 across the project portfolio. An important financial milestone for investors to look out for will be the final repayment of bank loans in 2Q21 to position the company for debt free growth in FY21. Shares in Hummingbird have increased by nearly 40% since the beginning of April 2020 however, shares were trading 9.52% lower this morning at 28.5p following the announcement.

Reasons to Follow HUM 

  • Strong underlying geological indications at Yanfolila, Kouroussa and Dugbe with more drilled expected to drive resources and production higher 
  • Hummingbird has put a strong management team in place since 2015 with expertise in mining commodity markets and in-region experience of West Africa who have a track record of delivering projects on time and on budget 
  • Significant growth potential of this multi-asset and multi jurisdiction mining company with appetite to expand the number of projects going 
  • Lots of positive news events expected in FY21

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