Hummingbird Resources (HUM) has bought a million-ounce gold project in Guinea, just days after farming-out the development of its Dugbe prospect in Liberia. The company will initially pay £10m in shares to private Canadian company Cassidy Gold, which will become a major shareholder.
The Kouroussa project is in Guinea, a relatively untested mining jurisdiction for gold, better known for being at the centre of the Rio Tinto (RIO), Vale (Bra:VALE3) and Beny Steinmetz’s battle over the Simandou iron ore rights. Cassidy was moving the project toward production until 2016, when it suspended work.
Hummingbird says it can get Kouroussa to first gold within two years, at a cost of $90m (£71m). It would be an openpit project with a grade of over 3 grammes of gold per tonne (g/t), with some resources underground. The current forecast is an operation producing around 100,000 ounces (oz) a year, similar to Yanfolila.
The sale price will increase by £10 with each ounce Hummingbird converts to reserve level, which has a higher certainty than resource, after 400,000oz, topping out at 1moz. Cassidy also holds onto a 2 per cent royalty on gold sold from Kouroussa.
Hummingbird chief executive Dan Betts said last week the Dugbe farm-out was partly done so management could invest in “smaller, high-margin projects”. Kouroussa would cost less than half of the $200m-plus needed to get the Liberian mine running.
Hummingbird said it had a letter of intent from its bank to lend $100m towards Kouroussa’s development.
