Hummingbird shares soar on restarting of Guinea mine

Shares in Hummingbird Resources (AIM: HUM) rose 17% on Friday, after the Africa-focused company said operations had resumed at its Kouroussa gold mine in Guinea following a two-month strike by its main contractor.

The gold producer, with operations in Mali, Guinea and Liberia, had to halt activities at the Kouroussa gold mine in March, when Corica Mining Services downed tools, citing contractual breaches.

Hummingbird noted that, as a result of the halt, only 5,868 ounces of gold were produced in the quarter ending on March 31, below the miner’s forecast.

The company said on Friday that Corica had agreed to redeploy equipment to the site and has already begun ramping up operations to fully resume commercial production at Kouroussa.

“Corica’s return to work will allow Hummingbird to increase the mining of the higher-grade material and accelerate our plans to reach production profile of 200,000 ounces of gold this year,” chief executive Dan Betts said.

Hummingbird said as part of the efforts to reduce risk related to its working capital position, it has secured $10-million loan from its largest shareholder, CIG SA. The fund, it said, will support Kouroussa’s ongoing operations during the ramp-up phase.

The miner noted it is holding talks with its main lender, Coris Bank International, to address the financial consequences of the operational suspension. An update will be provided at the appropriate time, it said.

Hummingbird has faced challenges in bringing the Kouroussa mine up to full production. Aside the issues with Corica, activities at the gold mine were disrupted last year by rain and delays associated with skills development.

The company’s stock price declined slightly in late afternoon, trading only 6.4% higher than Thursday close to 10p. That leaves the company with a market capitalization of £80 million (roughly $101m).