Aim-listed Hummingbird Resources recorded a “disappointing” production performance at Yanfolila, in Mali, for the third quarter ended September 30.

Nevertheless, it was a quarter of progress in addressing the root cause of the issues which Yanfolila has faced over the last 12 months in particular, CEO Dan Betts said in an operational, finance and trading update for the period.

Production at Yanfolila was 16 827 oz for the quarter.

Betts explained that the main reason for the lower-than-expected production at Yanfolila this quarter was the delay in mining the high-grade Komana East deposit, which hd historically been the company’s most reliable orebody.

“This delay was driven by the continued underperformance of the mining fleet in delivering the contracted tonnes and face positions as per the mine plan. Since JCM took over the mining contract from AMS they have been unable to deliver the contracted rates because of an undercapitalised maintenance and fleet management plan.

“Resolving this has proved a challenge, but I am happy to say we have now agreed on a working plan which brings together all the interested parties,” Betts said.

Supported by West Africa mining contractor Corica Mining Services, and Coris Bank International, a new structure is expected to be implemented this quarter, supported by a liquidity package to recapitalise the contract miner’s ability to right-size the fleet and ensure it is adequately maintained to deliver as planned.

“This is a significant step forward in resolving the longer-term operational challenges at Yanfolila. We have also changed the site leadership team during the quarter. We are now mining the high-grade Komana East deposit and expect it will provide the majority of the ore for quarter four,” Betts noted.

Additionally, with the support of Coris Bank International, Hummingbird had agreed a new liquidity line of $35-million. The first $15-million had already been advanced to the company and the balance should alleviate concerns about its liquidity position, while it focused on bringing Kouroussa into production, Betts explained.

“Kouroussa, which recently celebrated a major milestone of one-million injury-free hours, remains on time and on budget to pour gold by the end of quarter two next year.  We are confident that this is shaping up to be a high-grade strongly cash generative mine from inception,” Betts acclaimed.

He addsed that the signing of the mining contractor, Corica, was another significant milestone.

At Dugbe, in Liberia, Hummingbird is currently conducting a strategic review of its options to best realise the maximum value, with this process ongoing with its joint venture partner Pasofino Gold.

“While the company has been traversing a challenging path, the actions taken during the quarter have stabilised the business in terms of group liquidity required to deliver Kouroussa and improvements at Yanfolila,” Betts noted.

All-in sustaining costs (AISC) were $2 161/oz for the period, an increase from the previous quarter mainly owing to a lower production rate quarter-on-quarter and ongoing inflationary pressures - in particular fuel, spares, consumables and reagents.

Gold sold was 16 917 oz, at an average realised price of $1 713/oz. Hummingbird held 2 187 oz of gold inventory at period-end, valued at about $4-million.

OUTLOOK

Although production in the third quarter had been impacted significantly owing to the issues alluded to, Hummingbird said it was beginning to access the higher-grade ore zones in Komana East that were originally forecast to be accessed in the third quarter.

Although the anticipated increase in tonnage from the higher-grade Komana East openpit is expected to considerably improve production and lower cash costs in the fourth quarter, the poor performance in the period and the delay in getting back into Komana East has resulted in the year-end production guidance range being conservatively lowered to between 77 000 oz and 87 000 oz from between 87 000 oz and 97 000 oz.

Full year AISC guidance has also been adjusted to $1 600/oz to $1 800/oz from $1 300/oz to $1 450/oz.

Additionally, as a result of the actions taken, Yanfolila is expected to deliver an AISC of under $1 400/oz for the fourth quarter and be cash flow positive.