SHARES in Hummingbird Resources hit their lowest ever level after the UK-listed company announced it had delayed commercial production from Kouroussa, a gold mine in Guinea.
Production at Kouroussa ran into problems earlier this month following a dispute with the mine’s main mining contractor Corica. Hummingbird said on Thursday it was in discussions with Corica as well as “other stakeholders” in the West African country.
As yet, however, there was no sign of a resolution with the result that the first quarter start date for commercial production would not be met.
Shares in Hummingbird fell just over 3% in early London trade. The company is currently capitalised at £43.97m, equal to a price of 5.50 pence per share.
Shares in the company halved in value since the middle of March as Hummingbird said it was talking to Coris Bank International about the impact on cash flow of lower-than-guided production from Kouroussa.
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.
However, 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.
Commenting today, Hummingbird said: “Discussions are focused on various scenarios and initiatives, with the company confident of reaching a constructive resolution in the near term”. A supporting contractor continued to operate including processing of stockpiled ore.
“Resolution to the current situation will allow the upcoming blast to proceed, which is expected to provide access to higher-grade ore necessary to achieve commercial production,” said Hummingbird.
Prior to a “contractual issue” Hummingbird said Corica had failed to meet mining contract volumes owing to delays in mining equipment mobilisation, commissioning and “overall operating performance”. But Corica responded by saying it stopped work after the non-payment of $27m and the failure of Hummingbird to provide a deed of guarantee honouring contractual obligations.
