Hummingbird Resources has signed a Letter of Intent regarding a potential earn-in to a 50% interest in the Kobada gold project in Mali owned by African Gold Group Inc (AGG) and initial investment into AGG. Highlights:

• Potential to create a high-grade concentrate at Kobada to be trucked to Yanfolila for processing to add an additional 50,000 oz/y gold annum to Yanfolila
• Kobada has 2.2 Moz Measured, Indicated and Inferred Gold Resource (including 511,000 oz of Reserves)
• Initial investment in AGG of C$3.6 million for approximately 9.9%
• 120-day exclusivity period for due diligence
• During exclusivity period Hummingbird has the right to increase shareholding in AGG to 19.2% for a further consideration of C$4.4 million and to manage the DFS on the project funded by AGG
•  On completion of the DFS Hummingbird has the right to acquire 50% interest in Kobada through funding capex of the project
• Hummingbird to receive 70% of cashflows until capex recovered.

Dan Betts, CEO of Hummingbird, commented: “Based on the due diligence we have completed to date we believe we will be able to truck a high-grade concentrate to the Yanfolila processing plant from Kobada. This high-grade concentrate would have a material increase to our annual production rates and could add up to an additional 50,000 oz/y to our existing average life of mine production of 107,000 oz.

“The Yanfolila gold mine currently has a 7.5 year mine life based on reserves and we have over 1 Moz gold in resources that we will look to convert to reserves and extend this mine life once in production. This deal with AGG gives us a path to 150,000 oz/y production within three years from now combined with the organic extension of mine life from existing resources extending it well beyond 10 years.  This could significantly improve the production profile of Yanfolila and materially improve the mine’s NPV.

“We are extremely excited about the optionality the deal provides Hummingbird and working with the management of AGG who have a strong track record of creating shareholder value within the industry.”

Stephan Theron, CEO of AGG, commented: “This transaction with Hummingbird is significant for AGG as it validates the intrinsic value of the Kobada gold project and fast tracks the planned development program. Hummingbird provides us the financial capacity to develop Kobada and we are also gaining a partner with operational presence in Mali. Kobada provides Hummingbird the ability to further increase production output at Yanfolila mine. The partnership is a win-win for both groups.  We look forward to working with the Hummingbird team on this transaction.”