Hummingbird awards $112m Yanfolila mining contract to AMS

Yanfolila mine site during early stages of development.

UK-listed gold mining development firm, Hummingbird Resources, said it had appointed a $112m mining contract for its Yanfolila project in Mali to African Mining Services (AMS), a subsidiary of Australian-listed Ausdrill Ltd.

The contract, which is for three years with an option to extend to a fourth, will be Hummingbird’s largest contract for Yanfolila where plant construction has begun. First gold is scheduled to be poured in the fourth quarter of 2017.

“Appointing AMS as our mining contractor is another major milestone for Hummingbird,” said Daniel Betts, CEO of Hummingbird Resources in an announcement.

The pricing of the contract represented a 5% discount on the budgeted amount in the definitive feasibility study for Yanfolila.

AMS said it anticipated incurring $38m in capital expenditure, mainly on the acquisition of new equipment and that it will employ approximately 450 personnel (the majority of which will be local) for the contract.

“Mining operations at Yanfolila will be carried out using conventional drill and blast, and load and haul mining methods from two deposits initially,” said Hummingbird Resources in its announcement.

“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,” said Ron Sayers, MD of Ausdrill.

Hummingbird said previously that Yanfolila would produce 132,000 ounces of gold in its first full year of production (2018) and would deliver $70m in free cash flow assuming a gold price of $1,250/oz.

On its initial eight-year mine life, Yanfolila has an internal rate of return of 60% and an net present value of $162m which made it “… one of the highest margin undeveloped gold projects in Africa,” the company said.

All in sustaining cash costs of $695/oz were budgeted which placed the project in the lowest quartile of African producers. It would also operate profitably in a lower gold price environment, said Hummingbird.

“Yanfolila is fully funded to production and commitments to date represent nearly 30% of the project capex and it remains on budget and schedule,” it said.