HUMMINGBIRD Resources said its Kouroussa gold mine in Guinea would be ramped up to “commercial production” from the third quarter after the mine’s contractor agreed to resume activities ahead of dispute resolution talks.
Corica stopped operating at Kouroussa in March, claiming it was owed $27m. Hummingbird responded that it withheld the amount in terms of an underperformance clause in its contract with Corica.
Commenting on the resumption of mining at Kouroussa, Hummingbird CEO Daniel Betts said he was hopeful “for constructive discussions to resolve and rebase our relationship with Corica”.
Whatever the outcome, the interruption at Kouroussa is at an especially awkward time for Hummingbird. It last year committed to reducing debt $123m over three years after raising $55m with Coris Bank International. Of this debt target some $77m was targeted for repayment by the end of 2024.
The market took a sunny view of today’s annoucement. Shares in Hummingbird gained roughly 14% in early London trade. The stock is down about 36% over the last 12 months.
It remains to be seen how damaging the downtime at Kouroussa is to Hummingbird’s production targets, revised in January to 165,000 to 200,000 oz, (from 200,000 oz) as well as its balance sheet. The company will at least have near record gold prices to support it once it rebuilds production. Kouroussa has a nameplate production of 120,000 oz with the balance of production from Yanfolila in Mali.
Hummingbird said shareholder CIG had agreed to provide $10m in short-term debt. The CIG loan will be provided in tranches at 14% interest. The loan currently needs to be repaid in September but Hummingbird said it could be extended by mutual agreement.
Hummingbird is also due to have discussions with Coris Bank “surrounding the migiation of the financial impacts of the delays suspension in operation”.
Said Betts: “Corica’s return to work will allow Hummingbird to increase the mining of the higher grade material and accelerate our plans to reach our 200,000 oz production profile over the coming months. The momentum this brings reiterates our confidence in the strong future ahead for the Kouroussa project.”
