acquisition of gold fields yanfolila...
TRANSCRIPT
Disclaimer
1
The content of this document has not been
approved by an authorised person within the
meaning of the Financial Services and
Markets Act 2000. Reliance on this document
for the purpose of engaging in any investment
activity may expose an individual to a
significant risk of losing all of the property or
other assets invested. These presentation
slides (the “Slides”) have been prepared by,
and are the sole responsibility of, the directors
of Hummingbird Resources plc (the
“Company”). Those directors have taken all
reasonable care to ensure that the facts
stated herein are true to the best of their
knowledge, information and belief.
These Slides do not comprise an admission
document, listing particulars or a prospectus
relating to the Company or any subsidiary of
the Company, do not constitute an offer or
invitation to purchase or subscribe for any
securities of the Company and should not be
relied on in connection with a decision to
purchase or subscribe for any such securities.
The Slides and any accompanying verbal
presentation do not constitute a
recommendation regarding any decision to
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By accepting these Slides you confirm,
represent and warrant that you have
consented to receive inside information (as
defined in the Criminal Justice Act 1993 and
the Financial Services and Markets Act 2000
(as amended)), and you agree not to deal in
any securities of the Company until such time
as such inside information has been made
public and until such time that the Placing has
been publicly announced by the Company.
The Slides and any accompanying verbal
presentation are confidential and are being
supplied to you solely for your information.
The Slides should not unless otherwise
agreed in writing by the Company be
reproduced or distributed to any other person
or published, in whole or in part, for any
purpose. No reliance may be placed for any
purpose whatsoever on the information
contained in the Slides and the accompanying
verbal presentation or the completeness or
accuracy of such information.
No representation or warranty, express or
implied, is given by or on behalf of the
Company or its shareholders, directors,
officers or employees or any other person as
to the accuracy or completeness of the
information or opinions contained in the Slides
and the accompanying verbal presentation,
and no liability is accepted for any such
information or opinions (including in the case
of negligence, but excluding any liability for
fraud). The Slides contain forward-looking
statements, which relate, inter alia, to the
Company’s proposed strategy, plans and
objectives.
The content of this document has not been
approved by an authorised person within the
meaning of the Financial Services and
Markets Act 2000. Reliance on this document
for the purpose of engaging in any investment
activity may expose an individual to a
significant risk of losing all of the property or
other assets invested. These presentation
slides (the “Slides”) have been prepared by,
and are the sole responsibility of, the directors
of Hummingbird Resources plc (the
“Company”). Those directors have taken all
reasonable care to ensure that the facts
stated herein are true to the best of their
knowledge, information and belief.
These Slides do not comprise an admission
document, listing particulars or a prospectus
relating to the Company or any subsidiary of
the Company, do not constitute an offer or
invitation to purchase or subscribe for any
securities of the Company and should not be
relied on in connection with a decision to
purchase or subscribe for any such securities.
The Slides and any accompanying verbal
presentation do not constitute a
recommendation regarding any decision to
sell or purchase securities in the Company.
By accepting these Slides you confirm,
represent and warrant that you have
consented to receive inside information (as
defined in the Criminal Justice Act 1993 and
the Financial Services and Markets Act 2000
(as amended)), and you agree not to deal in
any securities of the Company until such time
as such inside information has been made
public and until such time that the Placing has
been publicly announced by the Company.
The Slides and any accompanying verbal
presentation are confidential and are being
supplied to you solely for your information.
The Slides should not unless otherwise
agreed in writing by the Company be
reproduced or distributed to any other person
or published, in whole or in part, for any
purpose. No reliance may be placed for any
purpose whatsoever on the information
contained in the Slides and the accompanying
verbal presentation or the completeness or
accuracy of such information.
No representation or warranty, express or
implied, is given by or on behalf of the
Company or its shareholders, directors,
officers or employees or any other person as
to the accuracy or completeness of the
information or opinions contained in the Slides
and the accompanying verbal presentation,
and no liability is accepted for any such
information or opinions (including in the case
of negligence, but excluding any liability for
fraud). The Slides contain forward-looking
statements, which relate, inter alia, to the
Company’s proposed strategy, plans and
objectives.
Transformational acquisition
•Building a multi-project gold Company:
production, development and exploration
•Targeting high quality development and production
assets with upside
•Exploiting opportunity of current gold market dynamic
(divestment and distressed opportunities)
•Acquisition of Yanfolila project from Gold Fields
•Consideration of US$20m in HUM shares at 56p
•Approx US$100m historic spend and US$65m tax credit
•Fully permitted 1.8Moz Au at 2.8g/t
and significant exploration upside
•IRR 53%2
•Capex US$522
•Fully permitted project
•Use expertise to “right size” projects
and optimise capex
•Key Gold Fields management
will join Hummingbird
•Phase 1: Oxide only plant, 850ktpa for up to
80k oz production at US$503/oz cash cost in 20152
Hummingbird
(Liberia) Dugbe1
4.2Moz
Str
ateg
yA
cqu
isit
ion
Del
iver
y
Hummingbird
(Mali) Yanfolila
1.8Moz
1Based on 15 days VWAP on signing of exclusivity agreement with Gold Fields.2HUM internal financial modelling.
6Moz Gold
Resources
Yanfolila cash flow supports Dugbe 1 development
2
Yanfolila, Mali – transaction summary
• Consideration US$20m by way of 21.3m ordinary shares
in HUM at 56 pence/share1
• Gold Fields c.26% shareholder of HUM on completion of deal
• 12 month orderly market agreement
• Pro rata pre-emption right to maintain strategic holding
• No board representation
• All major HUM shareholders support the transaction
% Equity 74% 26% 100%
Hummingbird Gold Fields Post deal
Ordinary Shares 59,484,764 21,258,503 79,743,267
Market Cap 32,751,468 11,904,762 44,656,230
Cash £ 5,952,381 - 5,952,381
Debt £ - - -
EV £ £ 26,799,087 £ 11,904,762 £ 38,703,849
EV $ $ 45,022,466 $ 20,000,000 $ 65,022,466
Resource (au equiv ozs) 4,220,000 1,817,400 6,037,400
EV/Resources oz 10.98 11.00 10.99
1Based on 15 days VWAP on signing of exclusivity agreement with Gold Fields
Source : Intierra and company websites
3
Hummingbird - the new multi-project gold company
Total resources: 4.2Moz at 1.4 g/t
• Indicated resources: 2Moz at 1.5g/t
DFS due in 2014
Operational in country for 7 years
75,000m drill data
3,200km2 exploration potential
Provides scale and longer-term growth
20 year mine life
Total resources: 1.8Moz at 2.8 g/t
• Indicated resources: 0.9Moz at 3.3 g/t
Fully permitted
Full GF operational team and camp
420,000m drill data
2,300km2 exploration potential
Approx US$100m spent to date
(US$65m tax credit)
Near-term production
Dugbe 1Yanfolila
Hummingbird Re-Positioned
1Being the aggregate of the NI 43-101 compliant resources of 4.2moz (based on 0.5g/t cut-off) at Dugbe 1 and 1.8Moz (based on a 1.0g/t cut-off) at Yanfolila. Note that the resource
inventory at Yanfolila has not been independently verified.
Total resources: 6Moz gold resources1
Extensive exploration upside: 5,000km2 of licence area
Combines near-term production and cash generation from
Yanfolila with scale and longer-term growth from Dugbe 1
Multiple avenues to unlock additional value from Yanfolila-
additional satellite pits, heap leach, asset spin offs
A new multi asset producer with a strong platform for growth
Funded to deliver optimisation
Near-term cash flow generation and longer-term large scale growth
4
Hummingbird – consistent growth delivery
Proven track record in West Africa
•Discovered 4.2Moz Au in 4 years
•One of the lowest cost per oz discovery costs in West Africa
(in frontier terrain)
•Infrastructure and studies delivered on time
and within budget in Liberia
Current strategy
• Maximise shareholder return utilising Yanfolila
as a near-term, low-cost cash generator to support
the development of Dugbe 1 as a long-mine life asset:
•Optimise Yanfolila project size and capex
•Production at Yanfolila by end of 2015
•Completion of Dugbe 1 Detailed Feasibility Study
Executive & operating team
•Ian Cockerill – NED Chairman (HUM)
•Mark Calderwood – Technical Advisory Committee (HUM)
•Dan Betts – CEO (HUM)
•Graham Hill – Project Management (HUM)
•HUM will actively look to augment the board
as we move into new development phase
•Key GF personnel to join team
Repositioning Amongst Peer Group
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Dugbe resourceat AIM
Admission(Dec 2010)
Resourceincrease at
Dugbe(Sep 2011)
Maidenresource at
Tuzon(Feb 2012)
Updatedresource at
Tuzon(Nov 2013)
Tuzon resourceincrease
(Mar 2014)
Yanfolilaacquisition(May 2014)
Hummingbird -Repositioned
0.80.9
2.1 (0.5)0.9
1.8
6.0
0
2000
4000
6000
8000
10000
12000
Sou
rce:
Com
pany
ana
lysi
s S
ourc
e :
Intie
rra
and
com
pany
web
site
s
5
Hummingbird Resource Growth
*
* Change of independent resource consultant
To
tal H
um
min
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ird
Res
ou
rce
s (
Gro
ss
)T
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Mining industry in Mali & Liberia – proven jurisdictions
Mali
•Mining contributes to 7.6% of economic growth
•Africa’s 3rd largest gold producer
•Recent elections concluded smoothly - widely praised for
transparency
•4% Govt. royalty and 30% basic tax rate
•No restrictions on foreign investment or capital flows in and out of
Mali
•Pro-mining government
Liberia
•Mining contributes to 10% of economic growth
•US$19bn in committed investment over next 6 years
•Favourable fiscal regime – expected 3% royalty
and 25% basic tax rate
•A pro-mining government, democratically
re-elected in November 2011
•Liberia remains stable since political stability
was restored in 2003
6
Liberia
Mali
Yanfolila – Site map and oxide resources
• Multiple high grade oxide pits
pre optimisation incl.;
• Komana East 122,307 ozs @ 3.72 g/t
• Komana West 102,891 ozs @ 3.15 g/t
• Sanoumale West 118,530 ozs @ 2.5 g/t
• Guiren West 58,850 ozs @ 2.01 g/t
• All pits in easy trucking distance of plant
• Natural topography for tailings
• Abundant water availability
• Good camp and infrastructure
8
Yanfolila – Phase 1 production
Overview
•Fully permitted for 30 years
•Approx US$100 invested on project to date
• US$30m on feasibility studies
• US$65m tax credit against profit
•Robust project with limited technical risk
• Shallow free digging, open pits (60 – 80m)
• Excellent Metallurgy – 95% + recoveries,
50+% gravity recoverable and 12 hour leach cycle
• Infrastructure in place – well conditioned roads,
flat topography, plentiful water supply
• Simple flexible mine plan
• Low power requirements (4MW) –
soft oxide material no crushing circuit
Yanfolila Project - Oxide only Base case
Gold Price (US$) $1,250
Initial production 81,000 ozs1
Initial mine life 6 years
Capex (US$) $52m
Life of Mine Capex (US$) $71m
Average Recovery 95.5%
Annual Processing 850 ktpa
Payback (after tax) < 2 yrs
Direct C1 cash operating costs (US$/oz) $503
All in sustaining costs (US$/oz) $700
After tax NPV (8%) (HUM Share) (US$) $65.5
After tax IRR 53%
* Based on existing GF defined oxide resources with initial internal HUM estimates based on re-scoped project from GF studies
Source : Company estimates
155,000oz p.a. LOM average 2GF internal estimates 3To date grade has increased from Inferred to Indicated
Resilient project - Gold price sensitivities
Gold Price (US$) IRR (post tax)
1,000 34%
1,250 53%
1,500 69%
Source : Company estimates
Resources2
Category Tonnes (t) Grade (g/t)3 Gold (oz)
Measured - -
Indicated 8,188,100 3.3 870,400
Inferred 11,910,000 2.5 947,000
Total 20,098,100 2.8 1,817,000
Source: GoldFields
Base case: Low cost, low technical risk, quick to production
9
Yanfolila – Core Asset
Resource –
20.1 Mt @ 2.8 g/t
for 1.8moz•Phase 1
•6 year initial LOM
•55koz Au p.a. average production
•US$503/oz cash cost
•US$52m Capex
Investment
•Approx US$100m expenditure spent to date;
includes US$65m tax credit provision
History
•BHP (1992 to 1996) defines anomaly
•Randgold (1996 to 1999) 5,000m drilling
•Glencar (2004 to 2009) 140,000m drilling
•Gold Fields (2009 to 2013) 275,000m drilling
Mali
Government
(10%)1
Hummingbird
Resources PLC
(85%)
Africa
Resources
(5%)
Glencar Mali
Yanfolila
Project
Asheba Project
• Potential spin-out project
• Ghana 175k ozs @1.8g/t
• 24km2 exploration licence
• 30km from Tarkwa mine
Ghana
Oxide Upside
Advanced drilling targets
•Current est. exploration
upside 450k ozs including;
•Sanoumale East est. 350k
ozs @ 2g/t
•Soloba
•Kama
•Bodogo Malikila
•7 deposits currently drilled to
80x80m or better targeted for
additional ozs
Yanfolila – Robust project with clear upside
Oxide Upside Exploration Upside
1Additional 10% option, note all HUM models based on 75% interest
Kangare Project
• Potential satellite deposit
for Yanfolila
• 1 deposit and
five target areas
• 16,056m drilling inc. 24m
@ 3.29g/t from 16m depth
Kabaya South
• 1km of 7km strike tested
• 95,000 ozs Resource
at 1.3g/t
• Significant Resource growth
potential of +500,000ozs
• Potential Heap Leach
operation
10
329
82
64
58
48
41
36
0
50
100
150
200
250
300
350
1 2 3 4 5 6 Total
82
146
204
252
293
Optimise flow sheet and plant
designConstruction
Production starts
Cumulative production projection – Phase 1 Capex breakdown
Phase 1:
329,000oz produced over 6 year LOM
Upside from phase 1 base case
•Targeting a 10+ year LOM through
further identified 300k – 500k ozs in oxide resource
•Enhanced definition of high grade zones
for potential increase to head grade
•Potential to establish heap leach operations
and truck concentrate
•Expansion of plant to process fresh rock material
Development Timeline
Q2-Q4 2014 Q1 2015 – Q3 2015 Q4 2015
Yanfolila – Phase 1 production
Source: Company estimates Source: Company estimates
oz
11
US$m
7
6
19
5
10
4.7
Geology and infrastructure Mining and plant Environmental and legal
Resources Estimation Mining Scenarios Custom & Fiscal Regime
Metallurgical Tests Tailing Dam Legal Framework
Geotechnical Waste Rock Characterisation Environment
Pit Optimisation Infrastructure Layout Benchmarking
Hydrology & Hydraulics Flow Sheet Social & Community
Water Supply Plant Design Artisanal Workings
Power Supply Costing (Capex & Opex) Financial Modelling
O
P
T
I
M
I
S
E
Solid base for opportunity to right size capex
Yanfolila – well advanced & ready for optimisation
12
Asset Overview
• 40 miles by road from Greenville port in Liberia
• Resources total 4.2Moz over 2 deposits
• A 3rd mineralised deposit drilled
• Positive PEA in varying gold price environment
• 20 year mine life (Tuzon: 10 years)
• 140+ targets over shear zone with 40 targets
currently being investigated
Tuzon (US$1,500 pit)1 Tonnes (m) Grade (g/t) Ounces (m)
Inferred 10.2 1.32 0.43
Indicated 41.8 1.51 2.03
Total 52.00 1.47 2.46
Tuzon (US$1,200 pit)1
Inferred 4.9 1.55 0.24
Indicated 37.4 1.56 1.88
Total 35.01 1.56 2.12
Dugbe F2
Inferred 43.00 1.28 1.76
PEA highlights – April 2013
Gold Price (US$/oz) $1,300 $1,500
*Throughput 3.5 Mtpa 3.5 Mtpa
Total cost/oz years 1-5 $749 $759
Total cost/oz LOM $894 $904
Capex (m) $212 $212
NPV (m) (10%, post tax) $186 $337
IRR (%) 29 43
Strip ratio LOM years 1-5 2.4:1 2.4:1
Gold produced/year (oz) 125,000 125,000
Dugbe 1 Project
Source: Company analysis Source: 1 SRK consultancy 2 WAI 2013, ACA Howe 2011 resource was 1.76Moz at 80% Indicated
14
*DFS based on 3mtpa for Tuzon deposit
Combining Dugbe & Yanfolila to create synergies
• Fast track to production and early cash
flows from Yanfolila are likely to lead to
better visibility and re-rating in the capital
markets, leading to enhanced financing
opportunities
• Opportunity to secure debt
financing/gearing
• Clear path to 200k oz
p.a production
Sou
rce:
Com
pany
est
imat
es
Fast track to production and early cash flows are likely to provide capital markets and financing benefits
15
Yanfolila
Completion of acquisition
Optimisation and design
Mine Construction
Production Commences
Dugbe 1
Legal and Permitting
Dugbe F Infill
Phase III Drilling & Trenching
Options Study
Detailed Feasibility Study
Mine Contruction and Financing
Production Commences
2014 2015 2016
Investment summary
17
• Start of new strategy to exploit market and build multi asset gold company
• Advanced project; ready to deliver near term production – Yanfolila creates opportunities to optimise
development of Dugbe
• Yanfolila scalability – Multiple shallow oxide pits allow low-capex phased production, significant fresh rock
and heap lead potential
• Mineral resources – Well understood regional geology with good grade & recoveries
6Moz gold in total
• Infrastructure – Both projects have good access, water available
and multiple options for power
• Exploration upside – 5,000km2 with LOM extension opportunity at Yanfolila
• Management team with proven ability to deliver
Hummingbird contacts
Liberia:
Hummingbird Resources (Liberia) Inc.
Hummingbird House, Sophie Area,
Congo Town, Monrovia, Liberia
18
Strand Partners
Neil Passmore / Andrew Chubb
+44 (0) 207 907 8500
FTI Consulting
Ben Brewerton / Oliver Winters / Sara Powell
+44 (0) 207 831 3113
Cantor Fitzgerald Europe
Stewart Dickson / Jeremy Stephenson / Carrie Lun
+44 (0) 207 894 7000
Other contacts:
Email: [email protected]
Website: www.hummingbirdresources.co.uk
Key contacts
Dan Betts Chief Executive Officer
Tom Hill Finance Director
Bert Monro Head of Business Development
Office addresses
London:
Hummingbird Resources PLC
22 Mount Row, London W1K 3SF, UK
Switchboard:
+44 (0) 20 3416 3560
Hummingbird – Corporate overview
Share price performance graph
May 2013 – May 2014
Significant Shareholder
Management 14.3%
Dundee Corporation 14.1%
Mark Hillery 10.2%
Sprott Inc 8.9%
Capital Research 8.6%
IFC 5.4%
Resource Capital Funds 4.5%
Capitalisation Overview
Market Capitalisation (8 May 14) £30.3m
Closing Price (7 May 14) 51p
52 Week Low (08 July 2013) 18p
52 Week High (17 March 2014) 65.9p
Shares Basic 59.5m
Shares Fully Diluted 66.5m
Funding (30 April 2014) US$9m
Debt None
Source: Company website & FactSet
Source: Company website & FactSetSource: Company website & FactSet
20
Ian Cockerill
Non-Executive Chairman Ex-CEO of Gold Fields Ltd, Anglo Coal Ltd and Ex-Executive
Officer Business Development and African Operations at AngloGold Ltd
Non-Executive Chairman of Petmin Limited
Senior Lead Non-Executive Director of Ivanplants Ltd and
Vice-Chairman of African Minerals Ltd
Over 30 years in exploration and mining
David Pelham
Non-Executive Director
Minerals Geologist with 30 years
Blue-chip clients including Cluff Gold plc,
Outokumpu
& AMAX Exploration
Credited with discovery of 800Mt Coal
deposit in Venezuela & 5-6Moz Chirano gold
mine in Ghana now owned by Kinross
Daniel Betts
Managing Director
Co-Founded Hummingbird in November
2005
Formerly Management Consultant with
Accenture in 2000
10 years experience in precious metals
industry with dealings in developing countries
such as Uganda, Sierra Leone, Peru &
Mauritania
William Cook
Operations Director Formerly an officer in the British army
including duty in West Africa
Many years experience in security,
operations and logistics
Responsible for establishing operations in
Liberia, as well as more recently for the
general oversight of the DFS and ESIA
Matthew Idiens
Non-Executive Director
Co-Founded Hummingbird in November
2005.
CEO and founder of AIM quoted Rose
Petroleum plc and founder of several natural
resources companies, including Seamwell
International (UCG in China)
21 years experience in the resource sector
Thomas Hill
Finance Director
Former senior manager within BDO LLP’s
natural resources department
Metallurgy, economics & management
degree from Trinity College, Oxford
10 years experience in the resource sector
Stephens Betts
Non-Executive Director
Co-Founded Hummingbird in November 2005
40 years experience in trading with gold
related businesses in developing countries
Chairman of Stephen Betts group – family
business with a 250 year history of gold
smelting, refining and bullion dealings
Hummingbird – Experienced board
21
Credited with discovery of 5-6Moz Chirano
Director at Hummingbird Resources for over
5 years
gold mine in Ghana now owned by Kinross
David Pelham Mike Skead
VP Project Evaluation at Dundee Resources
Ex-CEO of Ryan Gold
Former Head of Exploration at Banro Corp
Mark Calderwood
Ex-CEO of Perseus Mining
Successfully led Perseus from discovery to
production at Edikan Gold Mine with
production of over 200,000oz gold a year
Mechanical Engineer with 25 years mining experience
Involved in building of Yatela and Sabiola gold mines
in Mali for Anglo America
And development of Oxus Resources, Jerooy and
Amantatau gold mines in Central Asia
Previously COO of Axmin developing Passendro gold
project in CAR
Graham Hill, Project Manager
Hummingbird – Technical advisory committee
22
Gold Fields Team
Key personnel to join HUM
Yanfolila – Exploration Upside
• 2,300km2 Exploration ground in the deal
• Multiple greenfield and brownfield exploration targets inc;
Yanfolila Upside
Kabaya South
• 1km of 7km strike tested
• 95,000 ozs Resource at 1.3g/t
• Significant Resource growth potential of 500,000ozs
• Potential Heap Leach operation
Further exploration targets with known gold anomalies
• Badogo Malikila
• Sanoumale West
• Gonka
Kangare Project
• Potential satellite deposit for Yanfolila One
known deposit and five target areas
• 16,056m drilling inc. 24m @ 3.29g/t from 16m depth
Asheba Project
• Potential spin-out project
• Ghana 175k ozs @1.8g/t
• 24km2 exploration licence
• 30km from Tarkwa mine
Mali Licence Map
24
Sou
rce:
Gol
d F
ield
s
Ore Description % of Mill Feed SS Recovery (%)Revised
Recovery (%)
Oxide ore 40% 96.0 95.1
Transition ore 10% 94.0 94.4
Fresh ore 50% 95.0 94.0
Weighted Ave. 95.3 94.5
• 24 hour leach time for fresh rock
with only 12 hours required for oxide
• Oxide very soft – low energy no
requirement
for crushing circuit
• Oxide material will only achieve pulp
density of 39% in feed to CIL circuit
with pre-leach thickener
(addition since Scoping Study)
• Viscosity of saprolite at this density
is not problematic
• Gravity recoverable gold = 50-70%.
Gravity circuit design to take 50%,
but recovery model assumes only 30%
• Cyanide detox –
Include tails wash thickener
Recovery (adjusted to 2.49g/t head grade)
Source: Gold Fields
Yanfolila Project – Metallurgical recovery
25
Yanfolila Infrastructure
Road Access
•Route trade-off study concluded
•Final route identified
Water Supply
•Plentiful water available
•Investigated hydraulic conductivity between Sankarani River
and KW pit 72 hour pump tests – None found
•Compiled site wide water balance (GoldSIM)
•Groundwater model generated
•Raw water supply and storage needs determined
•Generated surface water management plan
26
Inventory with deal
•US$750,000 of;
• Vehicles
• Camp infrastructure
• Other equipment
GF have initiated a large number of community projects incl:
• Women market gardens in Kona, Soloba,
Sanoumale and Kabaya
• Training center for communities
• Building schools
• Helping communities with clean water sources
Yanfolila – CSR
Brick MakingWorking in the garden
Construction of the
Training Centre
28