Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector: Mining

24 September 2024

Hummingbird Resources plc

("Hummingbird", the "Group" or the "Company")

H1-2024 Interim Results

Hummingbird Resources (AIM: HUM) is pleased to announce its unaudited results for the six months ended 30 June 2024 ("the Period" or "H1-2024").

Financial Results

·      The Group recorded revenue of US$62.8 million at the Yanfolila Gold Mine in Mali ("Yanfolila") during the Period (H1-2023: US$98.6 million), from the sale of 30,687 ounces ("oz") of gold at an average price of US$2,048 per oz (H1-2023: 51,149 oz sold at an average price of US$1,927 per oz).

o  An additional US$2.3 million (H1-2023: US$4.6 million) of revenue generated from the sale of single mine origin ("SMO") gold.

·      The Group reported an adjusted EBITDA loss of US$8.9 million for H1-2024 (H1-2023 gain of US$33.1 million), primarily due to reduced production from Yanfolila in the second quarter. The pre-tax loss for the period was US$29.6 million (H1-2023 profit of: US$4.1 million).

·      At the end of H1-2024, the Company held a net bank debt position of US$153.5 million (US$150.1 million including gold inventory value).

Operating Summary

·      During the period, Yanfolila produced 29,064 oz at an AISC of US$2,015 per oz, driven by lower grade through-put and increased waste stripping in preparation for H2-2024 operations.

·      The Kouroussa Gold Mine in Guinea ("Kouroussa") produced 13,657 oz of gold in H1-2024 as ramp-up of operations faced challenges through the period. Following the restart of mining by the mining contractor, volumes progressively increased with the mining of high-grade fresh material mining commencing in late Q2-2024.

·      Through the year, Hummingbird has continued to advance its ESG initiatives, focusing on community engagement and sustainability projects and the Company published its annual Sustainability Report during H1-2024, which is available on the Company's website.

Post Period Corporate Updates:

·      In August 2024, Hummingbird secured a refinancing package of US$25 million with its principal lender, Coris Bank International ("Coris Bank"). This financing covers existing obligations and is repayable over two years with a one-year payment and interest deferral, offering the Company financial flexibility during this crucial phase of ramp-up at the Kouroussa.

·      Hummingbird's 53%-owned subsidiary, Pasofino Gold Limited ("Pasofino"), has made considerable progress in its strategic review of the Dugbe Gold Project in Liberia. Pasofino received two non-binding expressions of interest from third parties in late August 2024. On 16 September 2024, Pasofino entered into an exclusivity agreement with a potential purchaser to acquire the company for a total consideration of US$75 million.

Dan Betts, CEO of Hummingbird, commented:

"This year has been a challenging period for us and our stakeholders, with operational and market headwinds to navigate. Despite these hurdles, we have made significant strides in positioning the Company for a stronger future. Our focus on advancing key projects, particularly the ramp-up at Kouroussa and the implementation of strategic initiatives at Yanfolila, is laying the groundwork for improved performance in the second half of the year and beyond. Securing the US$25m refinancing with Coris was another crucial step, providing the flexibility needed as we progress towards our goal of becoming a 200 Koz pa producer.

Looking ahead, our priority remains on delivering profitable production and value for our shareholders. With Kouroussa nearing commercial production and the ongoing optimisation programme at Yanfolila, we are confident in delivering improved production in the last quarter of the year. Additionally, our commitment to sustainable and responsible mining practices is unwavering, with continued progress on our ESG initiatives.

With gold prices remaining robust, we are highly optimistic about the future and believe Hummingbird is well-positioned to capitalise on the vast opportunities that lie ahead. We will continue to keep our stakeholders informed and provide further updates in due course."

**ENDS**

Notes to Editors:

Hummingbird Resources plc (AIM: HUM) is a leading multi-asset, multi-jurisdiction gold producing Company, member of the World Gold Council and founding member of Single Mine Origin (https://singlemineorigin.com/). The Company currently has two core gold projects, the operational Yanfolila Gold Mine in Mali, and the Kouroussa Gold Mine in Guinea, which will more than double current gold production once at commercial production. Further, the Company has a controlling interest in the Dugbe Gold Project in Liberia that is being developed by joint venture partners, Pasofino Gold Limited. The final feasibility results on Dugbe showcase 2.76Moz in Reserves and strong economics such as a 3.5-year capex payback period once in production, and a 14-year life of mine at a low AISC profile. Our vision is to continue to grow our asset base, producing profitable ounces, while central to all we do being our ESG policies and practices.

For further information, please visit hummingbirdresources.co.uk or contact:

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

	Share capital $'000	Share premium $'000	Retained earnings $'000	Total equity attributable to the parent $'000	Non-controlling interest $'000	Total $'000
As at 1 January          2023	5,828	17,425	97,177	120,430	37,464	157,894
(Loss)/profit for the period	-	-	(3,846)	(3,846)	823	(3,023)
Total comprehensive (loss)/profit for the period	-	-	(3,846)	(3,846)	823	(3,023)
Transactions with owners in their capacity as owners:
Shares issued	2,459	16,222	-	18,681	-	18,681
Total transactions with owners in their capacity as owners	2,459	16,222	-	18,681	-	18,681
Share based payments	-	-	1,288	1,288	-	1,288
As at 30 June 2023 (Unaudited)	8,287	33,647	94,619	136,553	38,287	174,840
As at 1 January 2023	5,828	17,425	97,177	120,430	37,464	157,894
Loss for the year	-	-	(24,359)	(24,359)	(1,463)	(25,822)
Total comprehensive loss for the year	-	-	(24,359)	(24,359)	(1,463)	(25,822)
Transactions with owners in their capacity as owners:
Issue of shares	3,012	21,940	-	24,952	-	24,952
Issue of shares - fees	-	(225)	-	(225)	-	(225)
Movements in non-controlling interest	-	-	(15,809)	(15,809)	32,262	16,453
Share based payments	-	-	2,390	2,390	-	2,390
As at 31 December 2023	8,840	39,140	59,399	107,379	68,263	175,642

 

 

 

As at 1 January 2024	8,840	39,140	59,399	107,379	68,263	175,642
Comprehensive (loss)/income for the period:
Loss for the period	-	-	(25,670)	(25,670)	(3,011)	(28,681)
Total comprehensive loss for the period	-	-	(25,670)	(25,670)	(3,011)	(28,681)
Transactions with owners in their capacity as owners:
Shares issued	2,021	20,573	-	22,594	-	22,594
Movement in minority interest	-	-	13	13	273	286
Total transactions with owners in their capacity as owners	2,021	20,573	13	22,607	273	22,880
Share based payments	-	-	741	741	-	741
As at 30 June 2024 (Unaudited)	10,861	59,713	34,483	105,057	65,525	170,582

1.   General information

Hummingbird Resources PLC is a public limited company with securities traded on the AIM market of the London Stock Exchange. It is incorporated and domiciled in the United Kingdom and has a registered office at 49-63 Spencer Street, Hockley, Birmingham, West Midlands, B18 6DE.

The nature of the Group's operations and its principal activities are the exploration, evaluation, development, and operating of mineral projects, principally gold, focused currently in West Africa.

2.   Adoption of new and revised standards

The interim financial statements have been drawn up based on accounting policies consistent with those applied in the financial statements for the year ended 31 December 2023. There were several accounting standards updates effective 1 January 2024, which did not have any material impact on the financial statements of the Group. 

 

IFRS 16	effective 1 January 2024	Lease Liability in a Sale and Leaseback - Amendments to IFRS 16 Leases
IAS 1	effective 1 January 2024	Classification of liabilities as Current or Non-Current and Non-current Liabilities with Covenants - Amendments to IAS 1 Presentation of Financial Statements
IAS 7	effective 1 January 2024	Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures - Supplier Finance Arrangements

 

3.   Significant accounting policies

Basis of preparation

The financial statements have been prepared in accordance with UK adopted International Accounting Standards. The principal accounting policies adopted are set out below. The functional currency of all companies in the Group is United States Dollar ("$"). The financial statements are presented in thousands of United States dollars ("$'000").

The consolidated interim financial information for the period 1 January 2024 to 30 June 2024 is unaudited, does not include all the information required for full financial statements and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2023.  In the opinion of the Directors the consolidated interim financial information for the period represents fairly the financial position, results from operation and cash flows for the period in conformity with generally accepted accounting principles consistently applied. The consolidated interim financial information incorporates comparative figures for the interim period 1 January 2023 to 30 June 2023 and the audited financial year to 31 December 2023.  As permitted, the Group has chosen not to adopt IAS34 'Interim Financial Reporting'.

The annual financial statements of Hummingbird Resources plc are prepared in accordance with UK adopted International Accounting Standards.  The Group's consolidated annual financial statements for the year ended 31 December 2023, have been filed with the Registrar of Companies and are available on the Company's website www.hummingbirdresources.co.uk. The auditor's report on those financial statements though unqualified contained a material uncertainty paragraph in respect of risks surrounding the going concern assumption of the Company at that date.

Going concern

The financial position of the Group, its cash flows, liquidity position and borrowings are set out in the Consolidated Statement of Financial Position and Consolidated Statements of Cash Flows above.  At 30 June 2024, the Group had net cash and cash equivalents of $0.4 million, net debt of $153.5 million, and total borrowings of $153.9 million.

The Group has prepared cash flow forecasts based on estimates of key variables including production, gold price, operating costs, scheduled debt repayments in line with the Group's debt arrangements and capital expenditure through to December 2025. These cash flows showed that due to delays in meeting commercial production at Kouroussa, plus the temporary stoppage by the mining contractor on 17 March 2024, and the impact this had on accessing the high-grade ore, the Group will need to reschedule its debt repayment and/or will require additional funding to meet its financial obligations over that period. 

To mitigate the impact of the stoppage and delays in meeting commercial production, the Group's majority shareholder, Nioko Resources provided the Group with a short-term loan of $10 million. Further, the Group's majority lender, Coris Bank International ("Coris") has provided a $25 million refinancing package, with further discussions ongoing surrounding the mitigation of the financial impacts of the suspension in operation. These discussions include reviews on current debt repayments profile together with options for further funding.

Management have therefore presented cashflows that supports the conclusion of the Directors that, subject to those discussions with Coris concluding positively on the loan repayment profile and the continued support of the majority shareholder, Nioko Resources, there is sufficient funding available to meet the Group's anticipated cash flow requirements to 31 December 2025. These cashflow forecasts are subject to a number of risks and uncertainties, in particular the estimated time it will take the mining contractor to access high grade ore at Kouroussa, the ability of the Group to achieve the planned levels of production and the recent higher gold prices being sustained. The Committee reviewed and challenged the key assumptions used by management in its going concern assessment, as well as the scenarios applied and risks considered, including the risks around production at Kouroussa.

The biggest material uncertainties and risks remains conclusion of the discussions with Coris, the ramp up at Kouroussa, ounces produced and whether the current mine plans can be achieved and mining contractor equipment performances at both Yanfolila and Kouroussa. Where additional funding may be required, the Group believes it has several options available to it, including but not limited to, use of the overdraft facility, cost reduction strategies, selling of non-core assets and raising additional funds.

The Board also considered sensitivities to those cash flow scenarios (including where production is lower than forecast and gold prices lower than current levels) which would require additional funding. Should this situation arise, the Committee believe that they have several options available to them, as referenced above, which would allow the Group to meet its cash flow requirements through this period, however, there remains a risk that the Group may not be able to achieve these in the necessary timeframe.

Based on its review and subject to successful negotiations with Coris, the Board has a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future and hence the Board considers that the application of the going concern basis for the preparation of the Financial Statements is appropriate. However, the risk of unsuccessful discussions with Coris, further delays in ramp up at Kouroussa, lower-than-expected production levels, timing of VAT offsets and receipts, and the ability to secure any potential required funding at date of signing of these financial statements, indicates the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

Should the Group be unable to achieve the required levels of production and associated cashflows, defer expenditures, and obtain additional funding and/or renegotiate the current financing arrangements, such that the going concern basis of preparation was no longer appropriate, adjustment would be required including the reduction of balance sheet asset values to their recoverable amounts and to provide for future liabilities should they arise.

4.   EBITDA and adjusted EBITDA

Earnings before interest, taxes, depreciation and amortisation ("EBITDA") is a factor of volumes, prices and cost of production. This is a measure of the underlying profitability of the Group, widely used in the mining sector. Adjusted EBITDA removes the effect of impairment charges, foreign currency translation gains/losses and other non-recurring expense adjustments but including IFRS 16 lease payments.

Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA

5.   Tax

The tax (income)/charge for the period/year is summarised as follows:

The taxation (income)/charge for the period/year can be reconciled to the loss per the statement of comprehensive income as follows:

The Group's primary tax rate is 30%. The taxation of the Group's operations in Mali are aligned to the Mining Code of Mali 1999 under which tax is charged at an amount not less than 1% of turnover and not more than 30% of taxable profits. For the Guinean operations the taxation is aligned to local statutes under which tax is charged at an amount of the greater 2% of turnover and 30% of taxable profits.

6.   Loss per ordinary share

Basic loss per ordinary share is calculated by dividing the net loss for the period/year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period/year.

The calculation of the basic and diluted loss per share is based on the following data:

For the period ended 30 June 2024, because there is a reduction in diluted loss per share due to the loss-making position, therefore there is no difference between basic and diluted loss per share.

7.   Share capital

Authorised share capital

As permitted by the Companies Act 2006, the Company does not have an authorised share capital.