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Hummingbird Resources provides 4Q21 operational update

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Global Mining Review,

Hummingbird Resources plc has provided an operational update for 4Q21 and its outlook for FY22.

4Q21 updates

  • 18 181 oz of gold poured at Yanfolila in 4Q21.
    • FY21 production of 87 558 oz, in line with the revised guidance range of 84 000 – 89 000 oz.
  • 18 489 oz gold (Au) sold in 4Q21 at an average realised price of US$1782/oz.
  • 2246 oz Au inventory at 31 December 2021, valued at approximately US$4.1 million.
  • AISC of US$1803/oz for 4Q21.
    • FY21 AISC of US$1536 oz, in line with revised guidance of US$1490 – US$1590/oz.
  • Company reserves were updated, increasing to 1.12 million oz at 3.03 g/t, including:
  • Yanfolila, Mali to 705 800 oz at 2.57 g/t.
  • A maiden reserve for Kouroussa, Guinea of 408 900 oz at 4.38 g/t.
  • The company successfully received an externally audited assurance report for the World Gold Council (WGC) Responsible Gold Mining Principles (RGMPs) conformance for year two implementation and progress towards full conformance in 2022.

FY22 guidance:

  • FY22 production guidance of 87 000 – 97 000 oz Au, with an AISC of US$1300 – US$1450/oz Au.
    • 1Q22 is forecast to be a lower production quarter versus the remaining quarters of 2022, with a ramp up from 2Q22 expected, driven primarily by an additional five excavators becoming increasingly operational during 1Q22.
    • Further operational improvement measures at Yanfolila have been undertaken to ensure 2022 guidance forecasts are met.

Operational updates

Yanfolila, Mali

  • Operations have underperformed since September 2021, primarily due to our mining contractor's excavator fleet not meeting the contracted mining rates. The reduction in material movements have led to a lower grade profile primarily due to lower grade sections of the orebody accessed during this period. Mitigation measures that have been undertaken include:
    • Adding five additional excavators to the current fleet, with the expectation that all will be fully operational during 1Q22.
    • Reinforcing our contract miners maintenance team to improve overall mining fleet performance.
    • Implementing several other operational workstreams at site, with the key focus to improve: production performance and predictability; mill grade feed profile; and departmental cost disciple.
  • During the quarter, approximately 12 800 m of drilling assays were analysed from the Sanioumale West (SW) and greenfield deposits, Kama and Diaban, highlighting significant grade and depth at the SW deposit and the potential to establish new greenfield resources as detailed in the 20 December 2021 release.

Kouroussa, Guinea

  • December 2021 saw the increased mobilisation of equipment and personnel on site to enable construction, which began in early January as detailed in the 10 January 2022 release. Civil engineering work is scheduled to commence this quarter and the company remains on track for first gold pour by the end of 2Q23.
  • To fund construction, in late December 2021, the company drew the second of three tranches available from the company financing facility provided by Coris Bank International.
  • In 4Q21 and in early January 2022, the company released approximately 7700 m of infill drilling results, with multiple high-grade intercepts received, including extremely encouraging results such as a 55 m intercept at 35.72 g/t, strengthening the company’s knowledge base and confidence in the Kouroussa asset which is situated in the highly prospective Siguiri region.

Dugbe, Liberia

  • Earn-in partner Pasofino Gold Ltd updated Dugbe’s mineral resources estimates (MRE) in 4Q21, totalling 4 million oz, with 3.4 million oz in the measured and indicated category, and remains on track to deliver a definitively feasibly study (DFS) in 2Q22. The company notes the investment in Pasofino in 4Q21 by the ESAN group from Turkey.

Dan Betts, CEO of Hummingbird, commented: “Throughout 2021, the company has made significant steps towards our strategic goal of becoming a multi-asset, multi jurisdiction gold producer. Construction at Kouroussa is ramping up and is on schedule for first gold by the end of 2Q23 – taking the company to being a +200 000 oz Au producer. The feasibility study at Dugbe is coming together as per the schedule and we are expecting robust and attractive economics which will provide additional optionality for our portfolio of assets. Further, we saw our company reserves increase, adding mine life at Yanfolila, including maiden underground reserves and importantly adding maiden reserves at Kouroussa. We expect that trend to continue when our updated company resources and reserves statement is released in 2Q22.

“Clearly, this progress has been overshadowed by the operational underperformance of Yanfolila in recent months. Whilst the operation has been beset by a number of extraneous challenges, the overwhelming root cause for this performance has been the under performance of the contract mining fleet at site and the timeframes involved with bringing in extra capacity. As such, we are putting significant focus on improving productivity and predictability at the Yanfolila with several optimisation and mitigation workstream in train. These plans have been actioned and are largely in place with our forward looking 2022 guidance accommodating these challenges.

“Following the release of our maiden underground reserves at Yanfolila, we see significant potential in the Komana East Underground, underpinning Yanfolila's future production profile, with higher grade ore for many years to come. Our team is currently finalising analysis of the optimal development route to then put into our future mine plans. We are considering options to accelerate the development of the underground project in order to bring the delivery of higher-grade ore forward.

“As we saw in 2021, this year we will once again further our environmental, social and governance (ESG) initiatives. This includes the implementation of energy efficiency programmes at Kouroussa and the continuing establishment of Single Mine Origin (SMO) as an industry platform for fully traceable precious metals to responsibly operated mines. I believe that all of these actions will be key to delivering material long term shareholder value."

Anthony Köcken, COO of Hummingbird, added: "As we move into 2022, we are focused on critical operational areas at both Yanfolila and Kouroussa. At Yanfolila, these include amongst others: overall better performance of the excavator fleet, which is in progress with additional fleet ordered and becoming operational; optimisation of geological control and ore management; wet weather planning and mitigation measures; finalising underground analysis to then implement into our future mine plans; and line management control improvements across each of the operational departments. We are confident these measures and others will lead to an overall improvement in production, cost management and performance predictability at Yanfoliila.

“For Kouroussa, the project has moved from the mobilisation phase to breaking ground. We have commenced construction and key contracts for power generation and mining are at advanced stages of discussion and finalisation. Our key focus for Kouroussa remains to maintain our diligent approach to timelines, CAPEX management, positive community engagement and an overall quality build process.”

Operational update

Post period updates for Yanfolila, Mali

Since September 2021, the operation of Yanfolila has underperformed primarily due to our mining contractor excavator fleet not meeting contracted mining rates. The company has worked with the contractor to set in place mitigation, including the following:

  • The company has secured five excavators to be added to the current fleet, with the first excavator delivered and operating. Two further excavators are now on site and being assembled to be operational as soon as practical and the final two are expected to be delivered and operational by the end of 1Q22. The current ECOWAS sanctions are not currently expected to impact this timeline.
  • Reinforcing the contract miners maintenance team, with the goal to improve overall mining fleet performance.
  • Implementing several other operational workstreams at site with the key focus to improve: production performance and predictability; mill grade feed profile; and departmental cost disciple, which includes:
    • Drill and blast improvements to minimise metal loss and dilution via increased technical controls and optimised fragmentation.
    • Cost and efficiency drive, including optimisation of mill grinding media, review on all discretionary spending and regular departmental cost reviews.
    • Planning and tactical improvements: Full review of mine planning and geological control and ore management programmes at a technical and execution level.
    • Processing and sampling improvements: Independent reviews completed and improvement programmes in progress.
    • Mining contractor review: Additional equipment maintenance capacity on site as noted above in 1Q22.
    • Security upgrades: In progress at Yanfolila and Kouroussa.
    • Increased community engagement and investment in long term sustainable initiatives in line with the WGC RGMPs.

Furthermore, during 1Q22 a longer than normal plant maintenance programme has been planned, primarily to replace mill bearings, during which other plant maintenance is being scheduled with the objective of reducing downtime later in the year.

Given the above build-up of excavator availability and plant shut down, we anticipate that quarterly production for 1Q22 to be lower vs the remaining quarters of 2022, with a ramp up in 2Q22 and subsequent quarters driven primarily by the five additional excavators becoming increasingly operational, coupled with operational improvement strategies as detailed above gaining traction.

Lastly, in relation to the underground mining potential at Yanfolila, the company is currently finalising its analysis of the optimal development route to then put into its future mine plans. It is increasingly encouraged about the viability of a low CAPEX, low AISC (sub US$1000 oz), long life, baseload production profile underground mine at Yanfolila.

Kouroussa, Guinea

Post the update on 10 January 2022 detailing the commencement of construction at Kouroussa, the company has further progressed the development with key updates including:

  • Key contracts for power generation and mining are at advanced stages of discussion and nearing finalisation.
  • Groundwork clearing progress is continuing and the company remains on schedule to commence civil works this quarter.
  • The scheduled timeline remains on track to achieve first gold pour by the end of 2Q23.

Dugbe, Liberia

In 4Q21, the company's earn-in partner, Pasofino Gold, released an updated MRE for the Dugbe Gold Mine in Liberia in 4Q21, totalling 4 million oz, including 3.4 million oz of measured and indicated resources. Further, during the quarter, Pasofino announced the completion of a non-brokered private placement of up to US$5.5 million to finalise the DFS, including the investment by the ESAN group in Turkey. The DFS remains on track to be completed in 2Q22.

Drilling and exploration

In 4Q21, company reserves were updated for Yanfolila, Mali (705 800 oz at 2.57 g/t and included a maiden reserve for Kouroussa, Guinea (408 900 oz at 4.38 g/t), with total company reserves increasing to 1.12 million oz at 3.03 g/t.

End of the quarter, the company completed is extensive drilling campaign of 68 000 m at Yanfolila, Mali and Kouroussa, Guinea, as did our earn in partners Pasofino at Dugbe, Liberia.

2022 guidance

Forecasting 2022 production guidance of 87 000 – 97 000 oz Au, with an AISC range of US$1300 – US$1450/oz Au, noting the following:

  • The 2022 mine plan has been developed with a lowered average daily mining volume rate than previous years to reduce the pressure on the company’s mining contractor, who faced challenges meeting the 2021 contracted mining volume rates.
  • As detailed above, 1Q22 is forecast to be a lower production quarter vs the remaining quarters of 2022, with a ramp up from 2Q22 expected, driven primarily by an additional five excavators becoming increasingly operational during 1Q22. Furthermore, the company continues to implement several operational improvement programmes in 2022, with the overall goal to provide improved production performance and predictability; mill grade feed profile; and departmental cost disciple at Yanfolila in order to meet its 2022 guidance forecasts.
  • AISC guidance has been set at US$1300 – US$1450/oz Au, with the prime driver to achieve a lower AISC profile being improved production at Yanfolila, and improved departmental cost disciple, which is a key focus area for the onsite teams.
  • Exploration spend for 2022 is guided to be lower than spent in 2021 at US$2 million. The key focus for the geology team 1H22 is to analyse and incorporate the extensive drilling completed in 2021 into the updated company resources and reserves statement due in 2Q22, whilst assessing potential targets and future exploration programmes. In 2H22, Hummingbird will review its exploration spend in the light of operational and financial performance.

ESG 2022 summary plans

Key focus of the ESG team for 2022 is to achieve the year three WGC RGMPs limited assurance audit report, expected to be completed in 4Q022. Further details of some key ESG initiatives for 2022 include:

  • COVID-19: Maintain diligence and protocols in order to minimise health risks to the company’s employees, contractors and local communities and impacts from COVID-19 on the operations in general.
  • Hummingbird Tree Initiative: Planting of ~10 000 trees from the company's locally supported village nursery programmes was completed at Yanfolila as part of the company's yearly ~20-ha. rehabilitation programme and to be maintained into 2022. This programme is also being considered for implementation at Kouroussa.
  • Finalise the Sanioumale East village resettlement plan at Yanfolila.
  • Community programmes: Maintain and continue to improve our community programmes at Yanfolila and embed similar programmes into Kouroussa such as: garden markets; poultry farm support; water infrastructure improvements; honey manufacturing business education; local school education support amongst others.
  • Energy efficiency: Deliver on low carbon emission initiatives including a +7 MW solar power plant and energy saving waste heat recovery systems at Kouroussa.
  • Dugbe, Liberia: The DFS to include an internationally recognised and independent high standard environmental and social impact assessment study.

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