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Hummingbird Resources - Initiation of Coverage

Mid-tier gold stock in the making - developing further gold mines in West Africa on the back of strong cash flow from Yanfolila

Hummingbird joined AIM in 2010 raising funds to develop its 4.2Moz Dugbe Gold Project in Liberia. In June 2014, during the worst of the downturn in the mining sector, the entrepreneurial board masterminded the opportunistic acquisition of Gold Field’s Mali gold portfolio including Yanfolila, a smaller higher-grade project which Hummingbird’s team of mine builders successfully put into production both on time and on budget.

• Yanfolila open pit gold mine in Mali producing at 110,000 oz a year

  Gold production set to rise to 120-130k oz pa this year at this high grade, low-cost mine boasting compelling economics. US$8 million per year of planned infill drilling should boost reserves, increase mine life and ensure that Hummingbird benefits from its enviable cash flow for many years.

• Liberia’s largest gold project with a lot more exploration potential

  The 4.2Moz Dugbe Gold Project has a PEA for a 125,000 oz per annum mine. But, there is obvious scope for a far larger project which is expected to be outlined in a forthcoming optimised DFS. Ongoing negotiations with well-financed joint-venture partners could fund the development through to production.

• Developing multiple assets backed by large & fast-growing resources

  The board is seeking to invest the cash generated at the first mine into additional gold projects, utilising their impressive skills to bring further development projects into production & add substantial value.

• NPV and peer group analysis suggests an upside of 52%

  Our conservative valuation illustrates the clear upside potential. We initiate coverage of Hummingbird with a target price of 46.43p and Conviction buy stance.