Hummingbird Resources PLC Signing of SPA for Kouroussa & Exploration Update (2158R)

TIDMHUM

RNS Number : 2158R

Hummingbird Resources PLC

26 June 2020

Hummingbird Resources plc / Ticker: HUM / Index: AIM / Sector: Mining

Hummingbird Resources plc

("Hummingbird" or the "Company")

Signing of Sale and Purchase Agreement for the Kouroussa Gold Project & Exploration Highlights

Further to the Company's announcement on 8 June 2020, Hummingbird Resources plc (AIM:HUM), is pleased to announce the signing of a conditional binding Sale and Purchase Agreement ("SPA" or the "Agreement") confirming and setting out the key terms for the acquisition of the Kouroussa Gold Project (the "Project") located in Guinea, from Cassidy Gold Corp ("Cassidy"), following the completion of confirmatory due diligence by the Company on the Project.

The Company has also completed a more in-depth review of the Project's geological database which highlights promising drill intersections both within and outside the current stated mineral resource used in the mine plan. These drill intersections also demonstrate the high grade nature of the targets proximal to the project and within the permit area.

Kouroussa Exploration Update - Highlights

The tables below illustrate a small number of the notable drill intersections with greater than 100 gram meter intervals and re-confirms the Company's belief in the exciting exploration potential to extend the resources at Kouroussa beyond the known 1.1Mozs.

All deposits remain open and further exploration work is required to enable Hummingbird to fully evaluate the potential of the Project.

Koekoe deposit

 
 HOLEID     PROSPECT        FROM    TO      Interval   Au      Gram/Metre 
 KRC0565    Sanu Folo       30.0    48.0    18.0       70.78   1,274 
           --------------  ------  ------  ---------  ------  ----------- 
 KD125      Sanu Filanan    73.0    86.0    13.0       53.04   689 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1381    Sanu Filanan    114.0   123.0   9.0        64.06   577 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1378    Sanu Filanan    33.0    53.0    20.0       25.97   519 
           --------------  ------  ------  ---------  ------  ----------- 
 KD005      Sanu Filanan    34.8    41.1    6.3        70.72   446 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1570    Sanu Filanan    29.0    37.0    8.0        46.73   374 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1515    JJ              55.0    64.0    9.0        43.44   391 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC0027    JJ              16.0    30.0    14.0       23.90   335 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1110    JJ              97.0    102.0   5.0        42.62   214 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1000    KD-1            77.0    95.0    18.0       13.92   251 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC0975    KD-1            38.0    50.0    12.0       18.26   219 
           --------------  ------  ------  ---------  ------  ----------- 
 

Kinkine deposit

 
 HOLEID      PROSPECT    FROM   TO     Interval   Au      Gram/Metre 
 KRC0862     Kinkine     46.0   70.0   24.0       19.41   466 
            ----------  -----  -----  ---------  ------  ----------- 
 KRAB0416    Kinkine     56.0   68.0   12.0       38.67   464 
            ----------  -----  -----  ---------  ------  ----------- 
 KRC0861     Kinkine     11.0   25.0   14.0       17.70   248 
            ----------  -----  -----  ---------  ------  ----------- 
 KRC0910     Kinkine     88.0   92.0   4.0        47.08   188 
            ----------  -----  -----  ---------  ------  ----------- 
 KRC0828     Kinkine     42.0   77.0   35.0       3.81    133 
            ----------  -----  -----  ---------  ------  ----------- 
 

X-Vein deposit

 
 HOLEID      PROSPECT    FROM    TO      Interval   Au       Gram/Metre 
 XV004       X-Vein      52.5    54.5    2.0        151.81   304 
            ----------  ------  ------  ---------  -------  ----------- 
 XVRC-004    X-Vein      188.0   198.0   10.0       17.83    178 
            ----------  ------  ------  ---------  -------  ----------- 
 XV018       X-Vein      95.0    99.0    4.0        40.14    161 
            ----------  ------  ------  ---------  -------  ----------- 
 XVDH-003    X-Vein      110.5   112.6   2.1        64.46    135 
            ----------  ------  ------  ---------  -------  ----------- 
 XVDH-003    X-Vein      121.2   123.8   2.6        33.19    86 
            ----------  ------  ------  ---------  -------  ----------- 
 

Bag Farm Deposit

 
 HOLEID     PROSPECT    FROM   TO     Interval   Au      Gram/Metre 
 KRC1432    Junction    61.0   97.0   36.0       5.63    203 
           ----------  -----  -----  ---------  ------  ----------- 
 KRC0783    Junction    81.0   83.0   2.0        88.68   177 
           ----------  -----  -----  ---------  ------  ----------- 
 KRC0752    Junction    9.0    14.0   5.0        30.21   151 
           ----------  -----  -----  ---------  ------  ----------- 
 KRC0748    Junction    22.0   93.0   71.0       2.09    149 
           ----------  -----  -----  ---------  ------  ----------- 
 KD174      Junction    35.0   48.0   13.0       7.12    93 
           ----------  -----  -----  ---------  ------  ----------- 
 

Map of major deposits with location of selected drill holes

http://www.rns-pdf.londonstockexchange.com/rns/2158R_1-2020-6-26.pdf

Key terms of the SPA Agreement

-- Initial consideration of GBP10 million satisfied through the issue of 35,248,441 Hummingbird new Ordinary Shares at 28.4p ("Initial Consideration"), currently representing 9.0% of the then enlarged share capital of the Company:

-- Equivalent to approximately US$10 per resource ounce

-- All significant beneficial owners of Cassidy subject to 12 month lock in and 12 month orderly market provisions

-- Deferred consideration of GBP10 for every ounce of gold reserve published (or processed if not included in a reserve) in excess of 400,000 ounces (subject to a maximum of 1,000,000 ounces, or GBP6 million)

-- Additionally, Cassidy shall retain a 2% net smelter royalty on all gold sales by or on behalf of the Company over and above the first 200,000 ounces of its production and sales, subject to a maximum of 2.2 million ounces of production and sales

Dan Betts, CEO of Hummingbird, commented:

"I am delighted we have been able to confirm the purchase of the Kouroussa Gold Project and look forward to working with the Government of Guinea as we progress the development of the Project as quickly as possible whilst continuing to explore the remarkable geological potential at the project.

"This marks a pivotable point in Hummingbird's story and is a significant next step in achieving our long term ambition to create a sustainable multi-asset gold producer. I would like to take this opportunity to thank all stakeholders who have contributed to getting us this far and continue to support us at this exciting time for the Company."

Murray Paterson, VP Geology of Hummingbird, commented:

"Having the opportunity to work on a new gold system at Kouroussa is extremely exciting. There is undoubtably further potential to be discovered but what is most exciting is the abundance of high grades as evidenced by the large number of gram metre intercepts >50 gram metres but also the many occurrences of visual gold. The old adage "Grade is King" is particularly relevant to Kouroussa and our technical team is looking forward to the challenge of unlocking the system's full economic potential. We look forward to sharing the story as it unfolds."

For further information, including an updated Corporate presentation, please visit www.hummingbirdresources.co.uk or contact:

 
 Daniel Betts,     Hummingbird Resources plc   Tel: [phone] 
  CEO                                           6660 
  Thomas Hill, 
  FD 
  Douglas Ross, 
  IR 
 
 James Spinney     Strand Hanson Limited       Tel: [phone] 
  Ritchie Balmer                                3494 
  James Bellman     Nominated Adviser 
                  --------------------------  --------------------- 
 
 James Asensio     Canaccord Genuity Limited   Tel: [phone] 
  Ed Montgomery     Broker                      8000 
                  --------------------------  --------------------- 
 
 Tim Blythe        Blytheweigh                 Tel: [phone] 
  Megan Ray                                     320 5 
  Rachael Brooks    Financial PR/IR 
                  --------------------------  --------------------- 
 

Notes to Editors:

Hummingbird Resources (AIM: HUM) is a leading gold production, development and exploration company. The Company has two core gold projects, the Yanfolila Gold Mine in Mali and the recently acquired Kouroussa Gold Project in Guinea. Yanfolila produced its first gold pour on time and budget in December 2017. At 31 October 2019 Yanfolila has a 7.9Mt of Reserve ore @ 2.66 g/t for 676,000ozs gold. At 31 March 2019 Yanfolila had a total Resource base (inclusive of Reserves) of 28Mt of Ore @ 2.23 g/t for 2,005,300ozs gold. The Kouroussa Gold Project has a Resource base of 1.18Moz @ 3.08 g/t, which will be fast tracked to production, adding an additional c.100,000 oz of gold per annum to its production profile. Hummingbird also has a controlling interest in the Dugbe Gold Project that is being developed by ARX Resources through an earn-in agreement. The Dugbe Gold Project has Resources currently totalling 4.2Moz of gold and a completed NI 43-101 compliant PEA on the project showing a 43% IRR and US$337m NPV at a US$1,500 gold price.

Further Information

It is the Company's intention to spend the next six months optimising the project with the objective of commencing construction at the start of 2021. Whilst the final design is dependent on work to be conducted during the next six months, it is anticipated that the project will be of a similar scope and flow sheet to the Company's Yanfolila project. First gold pour is targeted within two years.

During the initial six month period the Company will analyse the optimal funding structure for the project, consistent with the letter of intent received from our west African banking partners, Coris Bank. The financing is expected to support the project with up to $100 million and will take into account the fact that the Company expects to be generating significant cash flows from its Yanfolila mine, which is due to become debt free in Q2 2021.

Kouroussa Exploration Update

Over the past three weeks, following the initial due diligence into the Kouroussa project, a more in depth data review by Hummingbird's technical team has highlighted the high grade nature of the Kouroussa gold system (includes Koekoe, Kinkine, X-Vein and Bag Farm - Junction) and the further upside potential for open pit and underground resources outside of the current stated mineral resource of 1.1Mozs.

The extent of the Kouroussa gold system is defined on surface by its Gold-In-Soil anomaly (greater than 20ppb Au) approximately 3.0 km long by 2.0 km wide, orientated in a north westerly direction, parallel to the interpreted regional Kiniero - Kouroussa fault zone. The four main deposits of the Kouroussa gold system are hosted within predominantly mafic intrusives or volcanics. The gold grades at the deposits correspond to the size, and composition of the quartz - sulphide veins that are controlled by localised structures within the host rocks.

As a result of the in depth data review, and a sign of the potential world class nature of the Kouroussa gold system which will only become apparent through further focused exploration, is the presence of gram metre intervals greater than 100 gram metres.

At the Koekoe deposit, made up of four principal mineralised zones, Sanu Filanan, Sanu Folo, KD-1 & JJ, the following are indicative of the high grade nature of the deposit, they only represent a small number of the intervals greater than 100 gram metres.

 
 HOLEID     PROSPECT        FROM    TO      Interval   Au      Gram/Metre 
 KRC0565    Sanu Folo       30.0    48.0    18.0       70.78   1,274 
           --------------  ------  ------  ---------  ------  ----------- 
 KD125      Sanu Filanan    73.0    86.0    13.0       53.04   689 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1381    Sanu Filanan    114.0   123.0   9.0        64.06   577 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1378    Sanu Filanan    33.0    53.0    20.0       25.97   519 
           --------------  ------  ------  ---------  ------  ----------- 
 KD005      Sanu Filanan    34.8    41.1    6.3        70.72   446 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1570    Sanu Filanan    29.0    37.0    8.0        46.73   374 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1515    JJ              55.0    64.0    9.0        43.44   391 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC0027    JJ              16.0    30.0    14.0       23.90   335 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1110    JJ              97.0    102.0   5.0        42.62   214 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC1000    KD-1            77.0    95.0    18.0       13.92   251 
           --------------  ------  ------  ---------  ------  ----------- 
 KRC0975    KD-1            38.0    50.0    12.0       18.26   219 
           --------------  ------  ------  ---------  ------  ----------- 
 

Throughout the Koekoe deposit, holes are predominantly drilled to the North East, perpendicular to the localised structural trends at a dip of minus 50-55 degrees, this has been to ensure that the mineralisation is intersected as true width as possible. The Koekoe deposit remains open to the south, west and to the north west. Exploration drilling is being planned to fully close off the deposit and test for all near surface extents of mineralisation before drilling any potential underground extensions.

The Kinkine deposit is located approximately 4.0 kms north east of Koekoe. Kinkine currently contains Inferred material of 2.3Mt for 160kozs and is made up of a series of stacked lenses within a dome like mafic unit. The mineralisation is located towards the margin of the intrusive and older sedimentary units (carbonaceous mudstones, siltstones and greywacke).

 
 HOLEID      PROSPECT    FROM   TO     Interval   Au      Gram/Metre 
 KRC0862     Kinkine     46.0   70.0   24.0       19.41   466 
            ----------  -----  -----  ---------  ------  ----------- 
 KRAB0416    Kinkine     56.0   68.0   12.0       38.67   464 
            ----------  -----  -----  ---------  ------  ----------- 
 KRC0861     Kinkine     11.0   25.0   14.0       17.70   248 
            ----------  -----  -----  ---------  ------  ----------- 
 KRC0910     Kinkine     88.0   92.0   4.0        47.08   188 
            ----------  -----  -----  ---------  ------  ----------- 
 KRC0828     Kinkine     42.0   77.0   35.0       3.81    133 
            ----------  -----  -----  ---------  ------  ----------- 
 

Drilling has been relatively shallow at Kinkine with mineralisation open to the South West plunging below the base of the current drilling.

The X-Vein deposit, located 2.5 km in a Northerly direction from Koekoe, was discovered in 1948 by the French government organisation, BUMIFOM, which sank an exploration shaft with some limited underground development taking place. This previous work highlights the recognised high grade and amenability to underground mining. The mineralisation is hosted within mafic volcanics (pillow basalts) and dips steeply to the West. The deposit is made up of a single smokey quartz vein with a current strike length of 400 m. A representation of the gram metre intervals intersected at X-Vein are below,

 
 HOLEID      PROSPECT    FROM    TO      Interval   Au       Gram/Metre 
 XV004       X-Vein      52.5    54.5    2.0        151.81   304 
            ----------  ------  ------  ---------  -------  ----------- 
 XVRC-004    X-Vein      188.0   198.0   10.0       17.83    178 
            ----------  ------  ------  ---------  -------  ----------- 
 XV018       X-Vein      95.0    99.0    4.0        40.14    161 
            ----------  ------  ------  ---------  -------  ----------- 
 XVDH-003    X-Vein      110.5   112.6   2.1        64.46    135 
            ----------  ------  ------  ---------  -------  ----------- 
 XVDH-003    X-Vein      121.2   123.8   2.6        33.19    86 
            ----------  ------  ------  ---------  -------  ----------- 
 

X-Vein deposit has a high weathering profile making it suitable to establishing an underground operation from surface, which Cassidy Gold Ltd, had started a portal box cut in preparation of going underground, the box cut was nearly completed but never became operational.The deposit remains open to the North and down dip with shallow drilling having taken place to date to define the resources of 350 kt at 7.3 g/t. Multiple repetitions of similar quartz veins that make up the X-Vein deposit has been mapped and sampled within a 500 m radius West of X-Vein. In 2015, a 20 tonne bulk sample was collected, averaging over 8 g/t from one of the veins comprising the X-Vein West area. This area has never been drilled.

The Bag farm - Junction ("BFJ") Deposit, is semi contiguous to the X-Vein area and is located approximately 2.0 kms North West of Koekoe. BFJ lies along a strong North/Easterly trending structure with the near surface high grades clearly evident at the Junction or northern end of BFJ closest to X-Vein, with Cassidy's initial plans to link from X-Vein via an underground drive to Junction.

 
 HOLEID     PROSPECT    FROM   TO     Interval   Au      Gram/Metre 
 KRC1432    Junction    61.0   97.0   36.0       5.63    203 
           ----------  -----  -----  ---------  ------  ----------- 
 KRC0783    Junction    81.0   83.0   2.0        88.68   177 
           ----------  -----  -----  ---------  ------  ----------- 
 KRC0752    Junction    9.0    14.0   5.0        30.21   151 
           ----------  -----  -----  ---------  ------  ----------- 
 KRC0748    Junction    22.0   93.0   71.0       2.09    149 
           ----------  -----  -----  ---------  ------  ----------- 
 KD174      Junction    35.0   48.0   13.0       7.12    93 
           ----------  -----  -----  ---------  ------  ----------- 
 

BFJ is surrounded by an extensive clay alteration halo interpreted to be related to a deeper intrusive body at the South West end of the zone, where a distinct 500 m x 500 m soil anomaly (> 500ppb) is located. Shallow drilling defines the current resource of 1.7Mt at 1.6 g/t due to being of a lower grade the deposit hasn't been subjected to systematic or deeper evaluation. Further work is required to understand its true relationship to X-Vein and the similar X-Vein West dilational veins to the immediate north of BFJ.

In addition to the four deposits within the mining licenses, the Benegban exploration license lies 7.5 kms directly to the north of Koekoe, demonstrates similar potential based on soil geochemistry and artisanal workings existing within the license. First pass air core or RAB drilling is being planned to test the near surface potential contained at Benegban.

Details of the Acquisition

Hummingbird has agreed to acquire all of the share capital in Cassidy Gold Guinée S.A. ("Cassidy Guinea"), as well as the benefit of outstanding shareholder loans owed by Cassidy Guinea. Cassidy Guinea is being acquired from Cassidy Gold Corp (incorporated in Canada), which is wholly owned by Guinea Gold Limited. Guinea Gold Limited is incorporated in Labuan, and is 77.7% owned by Asian Investment Management Services Limited together with Halfmoon Bay Capital Limited (the "Majority Sellers").

The consideration is payable by:

1. Initial consideration of GBP10,000,000 (the "Initial Consideration"), to be satisfied by the allotment and issue of 35,248,441 new ordinary shares in Hummingbird, based on a 30 day VWAP prior to the Company's announcement on 8 June 2020. The Initial Consideration shall be subject to customary adjustments payable in cash for working capital and net debt, but which is estimated to be immaterial. The Initial Consideration shall only be payable on satisfaction of various conditions, including approval from the Government of Guinea for the change of control of Cassidy Guinea and completion and the issue of the mining permit in relation to certain areas currently subject to exploration permits. Further updates will be made as and when appropriate, including with respect to the admission to trading on AIM of the Initial Consideration shares.

2. Deferred consideration of GBP10 for every ounce of gold reserve published by or on behalf of the Company (or processed if not included in a reserve) in excess of 400,000 ounces (subject to a maximum of 1,000,000 ounces or GBP6,000,000) (the "Deferred Consideration") payable in cash or shares at the Company's discretion; and

3. Additionally, Cassidy shall retain a 2% net smelter royalty on all gold sales by or on behalf of the Company over and above the first 200,000 ounces of its production and sales up to a cap of 2.2 million ounces (the "Royalty").

The Initial Consideration currently represents approximately 9.0% of the share capital of the Company as enlarged by the issue of shares to satisfy the Initial Consideration.

The new ordinary shares allotted to the Majority Sellers to satisfy the Initial Consideration and, if applicable, the Deferred Consideration are subject to separate lock-in and standstill agreements whereby the legal and beneficial owners of such shares shall agree not to dispose or deal with them (except in customary limited circumstances) for a period of 12 months without Hummingbird's consent, and also agree without such consent not to (i) acquire any additional interests in Hummingbird shares for a period of two years; or (ii) vote any such shares other than in line with any recommendation of Hummingbird's board of directors for a period of 12 months. Additionally, the Majority Sellers will be subject a further 12 month orderly market provision.

The Deferred Consideration shall be payable (if due) in cash within five business days of the end of Hummingbird's financial year (or at Hummingbird's option in Hummingbird shares using the VWAP of such shares over the 30 trading days prior to the end of the financial year) in relation to each 100,000 ounces over 400,000 ounces that has been published, with any balance being carried forward to the next financial year.

Qualified Person sign off

Murray Paterson has reviewed the technical information contained within this announcement in his capacity as a Qualified Person, as required under the AIM Rules for Companies. Murray Paterson is the VP Geology for the Company and is a member of good standing with the Australasian Institute of Mining and Metallurgy (MAusIMM), with 25 years' experience.

**ENDS**

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June 26, 2020 04:51 ET (08:51 GMT)