Hummingbird mounts Yanfolila recovery

Hummingbird Resources continues to bring its Yanfolila in Mali back up to speed after a troubled 2021 while inflationary pressures may drive up the company’s all-in sustaining costs guidance for 2022.

Hummingbird's Yanfolila

Hummingbird's Yanfolila

"Despite macro conditions from inflationary pressures being seen across the board, we remain focused on maintaining an improving production profile through H2 2022 at Yanfolila, which should compensate for most of these pressures," Hummingbird's CEO Dan Betts said.

"The second half of 2022 is also a critical stage in the development of our second gold mine at Kouroussa in Guinea, which remains on track and budget for first gold pour by the end of Q2 2023.

"Finally, in H2 2022, we will work with our partners at Pasofino to conduct a strategic review of Dugbe, Liberia to better understand our options to maximise shareholder value from this rare and valuable asset," he said.

The company poured 20,013 ounces of gold in Q2, which is up from 15,548oz in Q1, and down from 24,494oz in Q2 last year, Hummingbird said.

Canaccord Genuity Capital Markets analyst Alexander Bedwany said the Q2 production was below CG's forecast of 22,000oz as higher ore milled volumes of roughly 358,000 tonnes partially offset lower grades of about 1.9g/t. CG had forecast 315,000t and 2.3g/t.

"We note that the company appears to have made progress on resolving prior operating issues at Yanfolila which resulted in significantly lower mining volumes from Q321-Q122," Bedwany said.

The lower volumes were caused by problems related to the company's contractor-operated mining fleet, which slowed the pace of excavation. It was also forced to halt operations briefly due to political unrest in Q4.

"Material mined is now back at levels seen at the beginning of 2021," Bedwany said.

Hummingbird has maintained its 2022 guidance of 87,000-97,000oz Au, forecasting improved H2 production compared to H1, but the inflationary pressures, particularly from fuel and consumables, has led to the company re-assessing its AISC guidance of US$1,300-US$1,450/oz, which is to be updated at the end of Q3.

The company's AISC in Q2 stood at $1,859/01 on gold sold, which is down from $2,235/oz in Q1, but up from $1,386 of Q2 last year.

Bedwany said he expects Hummingbird's production to come in under guidance, at 85,000oz, and AISC above guidance, at $1,660/oz.

"We note that the company's plan to expand the mining fleet to bring mining rates back up to planned levels appears to be working, and we now expect improvements in grade as the company progresses to higher grade parts of the mine," he said.

"Continued improvement in operations at Yanfolila in the coming quarters could lead the market to attribute additional value for the Kouroussa project in Guinea which is currently under construction," he added.

Hummingbird's share price closed the previous session at 9.10p (US$0.11). CG has a target price of 15p.

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