Mali: Hummingbird to Acquire 50% of the Kobada Gold Project from African Gold Group

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Hummingbird Resources has signed a deal to take a 50 percent interest in Kobada gold project, in Mali, from African Gold Group (AGG).

The transaction will see the London Alternative InveMarket-listed-listed company make an initial investment of $3.6-million to acquire a 9.9 percent interest in AGG.

“Based on the due diligence we have completed, to date, we believe we will be able to truck a high-grade concentrate to the Yanfolila processing plant from Kobada. This high-grade concentrate would have a material increase to our production rates and could add up to an additional 50 000 oz/y to our existing average life-of-mine production of 107 000 oz,” said Dan Betts, Chief Executive Officer, Hummingbird.

“The Yanfolila gold mine currently has a 7.5-year mine life based on reserves and we have over one-million ounces of gold in resources that we will look to convert to reserves and extend this mine life once in production.

This deal with AGG gives us a path to 150 000 oz/y of production within three years, combined with the organic extension of mine life from existing resources extending it well beyond ten years. This could significantly improve the production profile of Yanfolila and materially improve the mine’s net present value,” he added.

The Kobada project has a measured, indicated and inferred gold resource of 2.2-million ounces.

Stephan Theron, AGG CEO explained that the deal with Hummingbird validates the value of the Kobaba project and will hasten its planned development programme.

The deal is however, subject to certain conditions, including the signing of binding agreements within 45 days.

Hummingbird also has a 120-day exclusivity period to conclude its due diligence. During the exclusivity period, it will have the right to increase its shareholding in AGG to 19.2 percent for a further consideration of C$4.4-million in Hummingbird shares.

It will also have the right to appoint a project manager for a definitive feasibility study (DFS) on Kobada, with the DFS to be funded by AGG.

After completion of the DFS, it will then have the right to acquire a 50% interest in the project through funding the required capital expenditure (capex) for the construction of the mine and processing plant. It will also have the right to manage and operate the project.

Once in operation, Hummingbird will receive 70 percent of the net cash flow from Kobada until it has recovered the invested capex. It will receive 50 percent of cash flow from Kobada.

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