Hummingbird forced to delay commercial production at Guinea gold mine
Hummingbird Resources (AIM: HUM) said on Thursday that it won’t be able to reach commercial production at its Kouroussa gold mine in Guinea by the end of March, as its main contractor has not conducted any mining since mid-March.
“As a consequence of the current significantly reduced mining activity, achieving commercial production will be delayed beyond our Q1 2024 target, until full mining capacity is restored onsite,” the Africa-focused miner said.
The company noted that a supporting mining contractor continues to run the mine, with the processing plant processing this ore and stockpiled material.
Corica Mining Services halted work at Kouroussa earlier this month as a result of various contractual disputes. Corica argues that Hummingbird owes it $27 million for work already completed, while the miner says the contractor “failed to meet mining contract volumes due to delays in mining equipment mobilization, commissioning, and overall operating performance”.
Hummingbird said on Thursday had attempted to solve the ongoing situation by engaging in discussions with Corica, alternative and additional contractors, suppliers, and the company’s primary lender, Coris Bank International.
“The objective of these discussions was to restart mining operations at Kouroussa as soon as possible and outline a path towards achieving sustainable commercial production levels,” the company noted, adding that talks remain ongoing.
“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,” it said in the statement.
Key asset
Kouroussa, Hummingbird’s second operating mine, achieved first gold pour in June 2023 and it is expected to churn out an average of 120,000 to 140,000 ounces of gold for the first three years of commercial production. After that, Kouroussa would average 100,000 ounces of gold a year over an initial seven-year life.
Hummingbird took on a $55 million loan with Coris Bank in September, pledging to cut $122.8 million in debt over three years starting with a $77 million debt repayment by the end of this year.
The miner also raised $30 million mainly through a share placement at an average price of 11.26 pence per share with shareholders, including 45% shareholder CIG, an investment bank.
Hummingbird agreed at the time to hedge 30,000 ounces of gold, which represents about 15% of its total production. This decision was made amid soaring bullion prices, which has been hitting all-time highs and that it is currently trading at $2,209.36 per ounce.
The miner has faced challenges in bringing the Kouroussa mine up to full production. Aside the ongoing issues with Corica, activities at the mine were disrupted last year by rain, a fire and delays associated with skill development.