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Shares in Hummingbird Resources (AIM: HUM) plunged over 30% on Monday following the announcement that the company’s Kouroussa gold mine in Guinea had reached commercial production, but output has fallen short of expectations.
The mine’s four-week trailing average production reached almost 1,900 ounces, with an average selling price of $2,473 per ounce. The figure, said the company, is below the current spot gold price due to existing hedging contracts, which are set to expire at the end of the first quarter of 2025.
First production at the mine fell short of the previously announced target of 2,000 to 2,500 ounces per week. This was due mostly to a lower-than-expected mill feed grade, resulting from a shortage of high-grade ore caused by ongoing mining capacity constraints.
Hummingbird acknowledged that it is unlikely to generate sufficient near-term cash flows to address its current liquidity challenges. These issues are compounded by the loss-making operations at the Yanfolila gold mine in Mali and anticipated near-term payments related to ongoing negotiations with the Malian government.
The company also noted it recognizes that broader financial constraints may impact near-term operating performance, production consistency and the timeline for achieving steady-state production.
Hummingbird’s shares dropped 36% to 1.31 pence in early trading and were last trading at 1.43 pence, nearly 31% lower. This decline leaves the company with a market capitalization of £12.22 million ($15m).
First gold at the Kouroussa mine was poured in June last year. At that time, Hummingbird projected an average annual production of 120,000 to 140,000 ounces of gold for the first three years of commercial production. Following this period, Kouroussa is expected to produce an average of 100,000 ounces of gold annually over its initial six-year mine life.
Hummingbird has updated its production guidance for 2024, estimating 45,000 to 50,000 ounces of gold at an all-in sustaining cost below $1,500 per ounce for the remainder of the year.
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