THE mining contractor at the centre of a row with Hummingbird Resources said on Wednesday it had not been paid by the gold producer which had also failed to provide a deed of guarantee as per their contract.
Abidjan-based Corica Mining Services, which has been in business for 22 years, said it suspended works at Hummingbird’s Kouroussa mine in Guinea after the non-payment of $27m. A deed of guarantee ensures parties honour their contractual obligations.
“Each of these substantial breaches of the contract gives rise to a separate and express right for Corica to suspend work at Kouroussa,” said the contractor. It would resume works at Kouroussa if the deed and outstanding monies were paid within 28 days.
“Corica assure that this measure remains conditional and reversible,” it said. “Corica has over two decades of history in contracting with major clients and is proud to have had zero litigation to this date.”
Corica was currently operating at mines in West Africa owned by Resolute Mining, Endeavour Mining, and Barrick Gold, according to its website.
Hummingbird later on Wednesday disputed Corica’s claims saying it “… categorically disagrees with the highly misleading statements made by Corica and completely rejects its portrayal of the situation”. It pointed specifically to the $27m Corica claims it is owed and said monies withheld were contractually allowed for in line with underperformance clauses.
The dispute has knocked 25% off Hummingbird’s share price today. It is currently hovering above the October 2022 all-time low of 5.44 pence a share – a level that Hummingbird CEO Daniel Betts said in an interview with Miningmx had priced the company for failure.
Mining began at Kouroussa on or about September 15, 2022. Corica said it gave notice it would suspend operations on March 17.
Hummingbird announced its dispute with Corica on Tuesday saying the contractor had committed “a breach of its mining contract” amid contractual disputes. Hummingbird also said previously Corica had failed to meet mining contract volumes owing to delays in mining equipment mobilisation, commissioning and “overall operating performance”.
Hummingbird had given Corica until Tuesday (March 19) to resume mining at Kouroussa failing which it could resume mining itself or work with alternative mining contractors and equipment suppliers to reach full mining.
The UK-listed gold producer also intended to hold discussions with its primary lender Coris Bank International regarding the potential implications of the suspension of work at Kouroussa situation on cash flows for the group.
Hummingbird agreed a $55m loan with Coris Bank in September in which it pledged to cut $122.8m in debt over three years starting with a $77m debt repayment by the end of this year.
But this turns on meeting production guidance of between 165,000 to 200,000 oz (downgraded from 200,000 oz in 2023) which in turn anticipates the $120m Kouroussa mine being at full steam of around 120,000 oz/year. The balance of Hummingbird’s production would be from the 75,000 to 80,000 oz/year Yanfolila gold mine in Mali.
Hummingbird added in its rebuttal statement today it was “seeking to engage with Corica and in discussions other stakeholders, including additional mining contractors, to find a resolution to the current issues and to fully restart the operations at Kouroussa as soon as possible”.
