Modern Mining January 2017

MINING News

Hummingbird appoints mining contractor for Yanfolila

price. On its initial eight-year mine life, Yanfolila has an IRR of 60 % and an NPV of US$162 million at a US$1 250 gold price, making it – says Hummingbird – one of the highest margin undeveloped gold projects in Africa. All in sustaining cash costs of US$695 per ounce place it in the lowest quartile of African producers, and well placed to operate profitably in a lower gold price environment. Yanfolila is fully funded to production and commitments to date rep- resent nearly 30 % of the project capex. According to Hummingbird, the project is currently on budget and schedule. There is also considerable upside at Yanfolila, with over 1 Moz of gold outside of the mine plan but within the permit as well as the Gonka deposit (5 km south of the Yanfolila plant), which – based on the desktop study undertaken by DRA Projects (as announced in February 2016) – can add a further US$24 million to the NPV alone. Yanfolila is now reported to be a hive of activity with good progress beingmade on the ground. A few short months ago, only earthworks had been completed and now, with civil works underway, the project is on track for steelwork to begin in the coming weeks. Hummingbird says that in December its executive team visited the factories in Europe which are presently construct- ing the ball mill and gearing and that its members were impressed by the excellent progress beingmade across all areas of this critical aspect of the plant development. 

A recent view of the Yanfolila site showing the start of construction operations. The first concrete pour was in October (photo: Hummingbird).

lion for the acquisition of new equipment and says it will employ around 450 person- nel (the majority of whom will be local) for this contract. Mining operations at Yanfolila will be carried out using conventional drill-and- blast and load-and-haul mining methods from two deposits initially. Mining is due to commence in Q3 2017 with the first gold pour due by the end of Q4 2017. Yanfolila is Hummingbird’s most advanced asset. Some 132 000 oz gold is targeted for its first full year of production, which would deliver around US$70 million of free cash flow at a US$1 250/oz gold

AIM-listed Hummingbird Resources has appointed African Mining Services (AMS), a subsidiary of ASX-listed Ausdrill Limited, as its mining contractor at the Yanfolila gold project in Mali, where mine construction is currently underway ahead of the first gold pour, expected to occur in late 2017. Comments Dan Betts, CEO of Hum­ mingbird Resources: “Appointing AMS as our mining contractor is another major milestone for Hummingbird and rep- resents the single largest contract the company will award. AMS has an excellent reputation for high quality work with an exemplary health and safety record. The team also boasts over 25 years’ experience operating in West Africa. I am delighted to embark on this partnership with AMS as we look forward to the commencement of mining at Yanfolila.” Hummingbird has appointed AMS for an initial three-year period with an option for the company to extend the contract by a further year of mining. The total value of the contract is expected to be approximately US$112 million over three years. The pricing represents a circa 5 % improvement for the company, as well as increased flexibility and transpar- ency, when compared to Hummingbird’s Definitive Feasibility Study (DFS), released in February 2016. AMS anticipates incurring capital expenditure of approximately US$38 mil-

Articulated haulers and excavators at work at Yanfolila (photo: Hummingbird).

6  MODERN MINING  January 2017