Interview with Robert Monro, Head of Business Development, Hummingbird Resources (AIM: HUM): Yanfolila Gold Project in Mali, Due to Pour Its First Gold in December of 2017
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 7/2/2017
Hummingbird Resources PLC (AIM: HUM) is a West African multi-project, gold explorer and
developer with projects in Mali and Liberia. Their strategy, in the immediate future,, is
to become a gold producer. We learned from Robert Monro, Head of Business Development for
Hummingbird Resources, that the company has over six and a half million ounces of gold
under management, with about four thousand square kilometers of exploration ground as
well. Their current focus is on the Yanfolila Gold Project in Mali, which is under
construction, fully financed and due to pour its first gold in December of 2017.
Hummingbird Resources
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News,
interviewing Robert Monro, who is Head of Business Development for Hummingbird Resources.
Bert, could you give our readers/investors an overview of Hummingbird as you edge closer
to first gold production?
Mr. Robert Monro: Absolutely. Hummingbird Resources is an AIM-listed gold
company on the London Stock Exchange. We have two main gold projects in West Africa, one
in Mali and one in Liberia. We have over six and a half million ounces of gold under
management and in the region of four thousand square kilometers of exploration ground as
well.
Our focus is currently on the Yanfolila Gold Project in Mali, which is under
construction. It's due to pour its first gold in December of this year, and it's fully
financed into positive cash flow through a large amount of equity that was raised last
year (US$75m) and also a debt facility with a West African bank, Coris Bank International.
Dr. Allen Alper: Could you tell us a little bit more about your strategy?
Mr. Robert Monro: Our strategy, in the immediate future, is to become a gold
producer. We were founded as an explorer back in 2005. We had a lot of exploration success
and discovered a huge amount of ounces. We've been through development and financing, and
we're now well into construction of the project, significantly developed. Our longer term
strategy is to become a mid-tier producer, with a pipeline of development and exploration
assets as well.
Dr. Allen Alper: That sounds great. Could you tell us a little bit about your
background, the team and the Board?
Mr. Robert Monro: Starting with the Board, it is chaired by Russell King who
is currently a Non-Ex Director of Aggreko, a FTSE 100 power company. He was previously on
the board of Anglo American. The CEO, Dan Betts founded Hummingbird Resources with his
father back in 2005. The Betts family has a 260 year history in the gold industry. I
think it's the oldest gold business in the UK, refining and smelting precious metals.
The rest of the Board is made up of a mixture of financiers, as well as technical
geologists and such like.
In terms of my background, I cut my teeth in Liberia. I joined Hummingbird as a
relatively young guy. I lived down in Liberia for a few years on our Dugbe Gold project.
Once we transitioned into a listed company, I came back to London to focus more on the
corporate side of the business.
Dr. Allen Alper: That sounds great. Could you tell us a little bit about your
financials?
Mr. Robert Monro: We raised US$75 million of equity last year. We have a US
$60 million debt facility in place. Our cash position at the end of Q1 2017 was US$54
million. We are undergoing the mine construction process as we speak. We are fully
financed to get into positive cash flow. We raised in excess of the amount of money needed
to build the project, to make sure that we had as strong a balance sheet as possible to
move us into positive cash flow. Our project capex is US$88 million. Within that US$88
million, there's a nine percent contingency.
Dr. Allen Alper: Sounds excellent. Could you tell us a bit about operating in West
Africa?
Mr. Robert Monro: We certainly enjoy it. We've had a good time, living and
working there for over a decade now. West Africa is different, depending on which country
you're in. We’re operating in both French West African countries, such as Mali, and in
Liberia, which is English speaking and based around an American legal system.
We've found it a good place to work, Mali has a well-developed mining sector, it's
had a commercial gold mining sector there for over 25 years. So the infrastructure and all
of their systems around mining are very well developed. So we've had a good time operating
there, but as ever in this industry it's not without its challenges at times. If you have
the right team and the right set up, there are proven success stories such as Randgold,
who has operated, until recently, nearly solely out of West Africa.
Dr. Allen Alper: Sounds good. Sounds like your company has a lot of experience
working in West Africa.
Mr. Robert Monro: Once you're comfortable working there, it becomes easier
and easier, building up a network and getting to know people. If you're new to any region,
whether it's Latin America, West Africa, Southeast Asia or wherever it might be, I've no
doubt, when you first get there, you probably find it harder to operate because you aren't
used to how they run things, how the government operates, logistically, language barriers,
etc. But once you've been operating there for a while, it’s a lot more straight forward.
Dr. Allen Alper: That sounds good. Could you tell us a bit about the reserves and
the resources and some of the properties?
Mr. Robert Monro: The Yanfolila Gold Project is in the construction phase,
due for first gold pour in December of this year. It has a resource of 2.2 million ounces
of gold at 2.4 grams a tonne. We also have a reserve of around 710,000 ounces at 3.14
grams per tonne, high grade open pit ore. Currently we are converting our resources to
reserves at around a fifty percent conversion rate, so we are looking forward to
increasing those reserves significantly, when we are in production and extending our mine
life on the back of that.
Dr. Allen Alper: Well, that sounds good. Could you tell us a bit more about your
development timetable?
Mr. Robert Monro: We're mid-construction right now. We're due to start pre-
production mining by the end of August. We expect to start commissioning the plant in Q4
and be in production by the end of the year. It's quite an immediate timetable and a
number of aspects of it have been completed.
Dr. Allen Alper: Well, that sounds good. What are the primary reasons our high-
net-worth readers/investors should consider investing in Hummingbird Resources PLC (AIM:
HUM)?
Mr. Robert Monro: I think technically the reason you should invest is
because it's a high-grade, open pit, low-risk mining operation with greater than three
gram a tonne reserves, which will be generating in excess of a 110,000 ounces, a year
production for the life of mine at a sub US$700/oz all in cost. On the technical front,
it's a stand out project in that respect. It is the highest margin undeveloped gold
project in West Africa.
I think on the financial front, our market cap's currently somewhere between one
and one-and-a-half times our first year's free cash flow, depending on where the share
price is. The market currently appears to be trading somewhere between five and fifteen
times free cash flow. From those numbers alone, when we deliver, we will be due a
significant re-rating just based on the free cash flow this mine will generate once we've
shown we're in production. I think, for the investor the obvious upside is the fact we're
trading at a huge discount to producers, because we aren't producing yet, but that will be
changing that in the next 6 months!
The technical aspect of the project is fantastic. It has great fundamentals.
So those are the two-fold reasons, on the technical and financial side, why I believe your
high-net-worth readers/investors might like to consider investing in Hummingbird Resources
PLC (AIM: HUM).
Dr. Allen Alper: Excellent! Is there anything else you'd like to add?
Mr. Robert Monro: Thank you, Dr. Alper, for talking with me about
Hummingbird Resources. It's an exciting time for the company. We're really looking forward
to becoming a producer in the not too distant future.
Dr. Allen Alper: Sounds excellent! I enjoyed talking with you and learning more
about Hummingbird.
http://hummingbirdresources.co.uk/
Bert Monro
Head of Business Development
+44 (0)20 3416 3560
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