Assuming completion of the transaction, Gold Fields will become the Hummingbird’s largest shareholder, with 26.3% of the enlarged share capital of the company.
Hummingbird Resources, a gold exploration and development company with assets in Liberia, has entered into a conditional sale and purchase agreement to acquire all of Gold Fields Ltd.’s mining and exploration interests in Mali. Gold Field’s primary Mali asset is its Yanfolila gold project in southwest Mail, which has a current mineral inventory of 1.8 million oz of gold at a grade of 2.8 g/mt.
Consideration for the acquisition is $20 million payable in Hummingbird ordinary shares. The acquisition is conditional upon approval by Hummingbird shareholders.
Hummingbird anticipates that the Yanfolila project can deliver its first gold production by the end of 2015, producing 80,000 oz of gold during its first year of production. Capital expenditures for an initial oxide-only carbon-in-leach operation are estimated at $52 million.
The Yanfolila project is fully permitted with a 30-year mining license. Approximately $100 million has been spent on exploration and development of the project to date. Significant exploration potential remains on the project’s 3,200 km2 of exploration ground. The acquisition will include access to Gold Fields’ database from 420,000 m of drilling, including identified oxide targets that have already been drilled.
Gold Fields’ Yanfolila management team will join Hummingbird on completion of the transaction.
Dan Betts, managing director of Hummingbird, said, “This acquisition will transform Hummingbird from a single-project company into a multiproject, near-term producer. Hummingbird’s strategy has always been to create a mid-tier gold company that has a portfolio of assets encompassing exploration, development and production, and this is a major step to fulfill that ambition. We believe Gold Fields’ decision to accept Hummingbird shares as consideration for the acquisition underlines the potential of the Yanfolila project, our portfolio in Liberia, and their confidence in our ability to bring both projects into production.”
In Liberia, the definitive feasibility study for Hummingbird’s Dugbe 1 project remains on track for completion in the third quarter of 2014.
Gold Fields CEO Nicholas Holland said, “Yanfolila is a robust, high-grade project, but the scale of the known resources does not support a Gold Fields-scale operation and is better suited to development by a junior. Due to the quality nature of the asset and Hummingbird’s ability to unlock this value, we have sought to retain exposure to the upside through a significant shareholding in Hummingbird. We look forward to seeing the development of Yanfolila and share in Hummingbird’s desire to see it brought to production in the near future.”