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Hummingbird encouraged by Gonka study

By BFN News | 08:17 AM | Tuesday 02 February, 2016

Hummingbird Resources has issued the results of a desktop study on the Gonka deposit, located 5km south of the proposed Yanfolila gold project plant in Mali, prepared for the company by DRA Projects. Gonka is not currently included in the Yanfolila definitive feasibility study and the results of the study demonstrate the potential to significantly increase the NPV and mine life of the Project. Taurus Mining Finance Fund LP has agreed a one month extension to the USD15 million bridge facility to 8 March. Hummingbird says it will provide a further update prior to 8 March. Chief executive Dan Betts said: "It has always been our belief that Yanfolila's mine life will grow significantly and this is another step in that process. This study adds USD24m to the DFS NPV and 169k ozs gold to the mine life, a very pleasing piece of upside. This study is early stage however we anticipate extensions of the underground resources to increase the size of this deposit even further in the future. "Gonka is located only 5km south of the Yanfolila process plant and so is ideally placed to add open pit ore and higher grade, over 4g/t, underground ore into the mine plan to increase the Project's production rate and enhance the overall economics. As the underground mineralisation is open, we intend to not only improve the resource categorisation of Gonka but also test and define depth extensions, potentially adding to the mine life." The study completed by Hummingbird's consultants, DRA, is based on a combination of the SAMREC compliant Inferred Mineral Resources of 139koz @ 2.9g/t (corresponding to the open pit) and additionally a Goldfields internal estimate of 170koz @ 4.03g/t (corresponding to the underground), as reported in the Company's London Stock Exchange announcement of 15 December. DRA undertook initial underground mine design and pit optimisation work which resulted in a mining inventory of 169koz, mined over a 6 year mine life, including: � 92k ozs @ 2.3g/t in open pit; and � 77k ozs @ 4.5g/t underground To test the economic viability of Gonka, DRA completed a conceptual financial analysis of a standalone Gonka operation, but assuming ore was trucked and treated through the Yanfolila process plant 5km away. This analysis did not consider the integration of the Gonka deposit into a consolidated mine schedule and the likely modifications required to the processing facility and the associated capital costs. Since the Yanfolila plant has been designed for potential modular expansion from 1.25Mtpa to 1.5Mtpa, Hummingbird has undertaken a conceptual financial analysis to investigate the likely incremental value uplift from incorporating Gonka into a consolidated Yanfolila mine schedule by increasing throughput at the Yanfolila processing plant and where the first year of mining from Gonka is aligned to that of the rest of the Project. This financial analysis incorporated DRA's mining schedule and operating costs into the existing DFS financial model, along with additional capital estimate of US$5m to expand the plant capacity to 1.5Mtpa. The company says the results from this analysis were highly encouraging, revealing that by incorporating Gonka, a significant incremental uplift in the project NPV8% by US$24 m can be achieved relative to the DFS, with a total project NPV8% of US$166m using a gold price of US$1,250/oz. Using a more conservative gold price of US$1,100/oz, the value uplift is still significant at US$13m with a total project NPV8% of US$101m. At 8:17am: (LON:HUM) Hummingbird Resources share price was +0.25p at 15p Story provided by

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