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Hummingbird Resources Is Giving Away 49% Of The Dugbe Gold Project For Peanuts

Jun. 10, 2020 1:17 PM ETHummingbird Resources PLC (HUMRF)7 Comments


  • ARX to earn 49% in Dugbe by investing $10 million in exploration and delivering a DFS.
  • The previous deal with a ARX foresaw the investment of $30 million in exploration.
  • Dugbe has a net present value of $337 million at $1,500 per ounce of gold.


Mali-focused gold miner Hummingbird Resources (OTCPK:OTCPK:HUMRF) has been searching for a partner with which to develop its stalled Dugbe gold project in Liberia for several years as the project is too large for the company to develop alone. The project has 4.2Moz of resources and the initial capex stood at $212 million.

There had been little development over the past six years but a partner was mentioned in the company’s 2019 results – a non-binding deal with an obscure firm named ARX Resources. The latter was set to acquire Dugbe by investing just $30 million in exploration and delivering a feasibility study.

In June 2020, Hummingbird announced the signing an earn-in agreement with ARX and the conditions are even more disappointing – a 49% stake in exchange for $10 million invested in exploration over two years and the completion of a definitive feasibility study (NYSE:DFS).

The Dugbe gold project

(Source: Hummingbird Resources)

Dugbe is located in southeastern Liberia and it includes the Dugbe, Joe Village, Nemo Creek and Tiehnpo permits. Hummingbird commenced exploration activities in 2006 and the project hada gold resource of 812,000 ounces when the company was listed on the LSE in 2010. Hummingbird managed to grow resources at Dugbe at a significant pace and they reached 4.2 million ounces by 2013. The same year, a Preliminary Economic Assessment (PEA) was completed and the key financial figures looked compelling. The net present value was $337 million using $1,500 per ounce of gold and a 10% discount rate. At that price of gold, the internal rate of return of the project was 43% with average all-in-sustaining costs of just $904 per ounce. These are very good figures for a gold project:

(Source: Hummingbird Resources)

Also, the initial capex could be decreased to $143 million if contract mining was used.

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Comments (7)

The market certainly was correct in assigning no value for the Dugbe project in its stock price. Still after all of the negative issues this is still up around 60% YTD and yes my worst performing gold stock I continue to hold.
11146471 profile picture
It's no accident that as cheap as HUM seems it can never catch a higher price...
A series of bad decisions and bad luck over the past few years. The LSE price was 60% higher a few years ago. I have a very small position, but almost everytime I am considering increasing it management does something unimpressive (like now).
hulubalang profile picture
Agree this looks like a bad deal but think Hummingbird management made this move in order to acquire a third producing gold mine, Kouroussa, which was announced on June 8 (not mentioned in this article).


Dan Betts, CEO of Hummingbird, commented:

"The intended acquisition of Cassidy Guinea and the Kouroussa Gold project marks a transformational step in the development of Hummingbird and the execution of our strategy to become a multi asset gold producer in the near term.

"Kouroussa is a high grade, high margin project with a number of similarities and synergies with Yanfolila which we are confident we can harness to our advantage. Over the last few years we have looked at a vast number of projects and Kouroussa ticks every box in terms of a next mine for Hummingbird. It is of the scale, geology, process circuit design and grade that are all perfect for our team's experience to be put to immediate use, and it is in line with our strategy to focus on high margin projects.

"I am delighted to welcome the shareholders of Cassidy Gold to the Hummingbird share register and I am pleased that our West African Banking partner, Coris, have indicated their keen support for the financing of the project as may be required. Our plan is to spend the next 6 months refining the detailed engineering and design of the project whilst initiating construction and ordering long lead items, with an aggressive timetable to try to accelerate the build and pour gold within two years of the acquisition.

"We look forward to updating the market as the development of Kouroussa progresses."
"badly-managed gold producer which should be avoided"

They've been bumbling through their first project, maybe they know they're in over their heads and need to team up with people who know what they're doing. If so, maybe it's not such a bad idea
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