Hummingbird urges shareholders to vote in line amid cash crisis
By Josh White
Date: Monday 23 Dec 2024
(Sharecast News) - Hummingbird Resources updated the market on its operational and financial position on Monday, revealing significant underperformance at its Kouroussa and Yanfolila gold mines and warning of imminent financial instability without substantial external funding.
The AIM-traded firm said at the Kouroussa Gold Mine in Guinea, which recently achieved commercial production, December metrics fell sharply below forecasts.
Mined material was 39% below expectations, mill uptime was down 18%, and the mill feed grade was 56% lower than planned.
Although mill throughput exceeded projections, gold poured was 44% below target, with just 5,662 ounces produced versus the forecasted 10,049 ounces.
That underperformance resulted in about $11.2m in lost revenue for the month, leaving Kouroussa unable to generate the cash required for critical capital expenditures.
The Yanfolila Gold Mine in Mali was also underperforming, with mining activity 71% below forecasts for December, while the mill feed grade was nearly halved, resulting in a 48% shortfall in gold poured.
Yanfolila remained loss-making, with ongoing operational challenges compounded by aging equipment, insufficient investment, and overdue creditor payments.
The company said it was in discussions with the Malian government to resolve audit findings and clarify the application of the 2023 Mining Code, which was expected to crystallise further payment obligations.
As a result of the issues, Hummingbird revised its 2024 production guidance downward.
The company said it now expected to produce between 95,000 and 100,000 ounces of gold at an all-in sustaining cost of $2,200 per ounce, compared to its original forecast of 165,000 to 200,000 ounces at a lower all-in sustaining cost.
It said its liquidity had deteriorated, with net debt and payables standing at $310.6m as of 30 November, and its cash position at just $1.8m.
Hummingbird warned that without immediate and significant external funding, it would be unable to continue trading as a going concern.
Despite receiving $30m in debt repayment waivers from Coris Bank, it required additional inflows to address operational deficiencies, creditor obligations, and overall business continuity.
A general meeting scheduled for Monday would determine the fate of proposed resolutions needed to secure financing from CIG.
Failure to pass the resolutions could result in the company entering administration or other insolvency processes, leaving shareholders with little or no return and creditors likely to exercise their rights over the company's assets.
"Recent independent assessments have highlighted significant operational challenges at both the Kouroussa and Yanfolila sites, which continue to perform very poorly," said interim chief executive officer Geoff Eyre.
"Kouroussa requires fundamental improvements in mining, processing and site infrastructure which will take a significant amount of time and money to deliver.
"Yanfolila's future viability depends on substantial exploration investment and successful extension of its mine life."
Eyre said the company faced immediate financial pressures that required urgent recapitalisation.
"Whilst the board has explored multiple options, the transaction presented to shareholders represents the only viable path forward.
"If not for the forbearance of lenders and other creditors, the company would have run out of financial runway many months ago.
"The board recommends that all shareholders vote in favour of the resolutions at the forthcoming shareholder meeting to provide the company with the opportunity to repay creditors in full in due course and provide some value return to shareholders."
At 1120 GMT, shares in Hummingbird Resources were up 4.45% at 2.3p.
Reporting by Josh White for Sharecast.com.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN