Hummingbird Resources has appointed African Mining Services (AMS), a subsidiary of ASX listed Ausdrill Ltd, as its mining contractor at the company’s Yanfolila gold project in Mali, where mine construction is currently underway ahead of its first gold pour, expected to occur in 2017.
This is just one of dozens of projects to be covered in the first issue of 2017 of International Mining Project News (published fortnightly) – ask firstname.lastname@example.org for more information on a subscription.
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.”
Ron Sayers, Managing Director of Ausdrill, said: “We look forward to working with Hummingbird to achieve its goal of developing the Yanfolila gold project, and running it as an efficient, low cost, high grade open pit mining operation. Ausdrill’s 25 years’ experience working in the West African gold sector means we have the track record and know-how to ensure the delivery of a safe and profitable mining operation.”
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 at Yanfolila. The total value of the contract is expected to be approximately $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 DFS, released by the company in February 2016. As the largest contract the company will enter into for the development of the Yanfolila Gold Project, these changes represent significant benefits to the company.
AMS anticipates incurring capital expenditure of approximately $38 million for the acquisition of new equipment and that it will employ approximately 450 personnel (the majority of which 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 first gold pour due by the end of Q4 2017.
Additionally, as a result of the improved terms Hummingbird has negotiated with AMS, it has also extended the termination date of the subscription agreement with Lindine Inc which was entered into on 1 June 2016. The agreement now states that the due date of the undertaking to pay in respect of its interest in 16,103,425 shares shall be amended to the earlier of the date of transfer of the shares, and 30 June 2017.
Yanfolila is the company’s most advanced asset, which boasts impressive economics and production fundamentals, including 132,000 oz gold targeted for its first full year of production, which would deliver around $70 million of free cash flow at a $1,250/oz gold price. On its initial eight-year mine life, Yanfolila has an IRR of 60% and an NPV of $162 million at $1,250 gold price, making it one of the highest margin undeveloped gold projects in Africa. All in sustaining cash costs of $695/oz places 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 and it remains on budget and schedule.