Hummingbird: Bulldozers Begin Rolling in Mali
Issue 120, March 2015
“Have you been to Mali?” says Dan Betts, chief executive of Hummingbird Resources. “It’s not what you imagine. You go to a concert in the evening and eat a croissant.”
Bulldozers are about to begin rolling at Hummingbird’s 1.8m ounce Yanfolila gold project in Mali, an epic moment for a company that has responded aggressively to the gold market downturn.
Betts founded Hummingbird in 2005, branching out from his family’s refinery business in Birmingham, the oldest in the UK, to explore for gold in Liberia’s jungle. The company listed in 2010, only for gold to collapse, folding shares from a peak of £1.79 to a low of 19p two years ago.
Institutional investors in London, including BlackRock and JPMorgan, rotated out of the stock and have been replaced by contrarian investors, including Ned Goodman and Rick Rule, who have backed Betts to buy-up assets.
Hummingbird paid $20m in stock for Yanfolila in Mali last year and has poached mine builders from Gold Fields, Randgold and Newmont. The company drilled 12,000m within a month of signing the deal and closing a $75m debt funding package one month later.
Its first gold pour is due in a year, with 100,000 ounces of output in year one and all-in costs below $750 per ounce over an initial 6 to 7 year mine life. “We’re building a cash generative business,” Betts says. “Are we going to sit on our hands? I’d rather be in Birmingham making wedding rings.”
Comfortably in his thirties, there is a boyishness to Betts, explaining his adventurism in Liberia. He is open in saying that West African politics “can be a challenge” and that Hummingbird’s Liberian assets need a higher gold price.
But he also appears to have been toughened by the current market; it is as though he has taken the share price personally and wants to see the other side. “Everyone always wants to know, what's the grand strategy? We were scratching around looking for gold in the jungle. I thought if I find a million ounces, I'm done, I'll retire, but if you go in with a strategy that's not adaptable, you get killed.”
Hummingbird has “the will and energy” to take on more assets, Betts says, and is weighing three projects within trucking distance of Yanfolila. “We've done it and we're open-minded to doing it again. 70 per cent of the stock is owned by 10 shareholders, so we almost see ourselves as a private company.”
Betts and Hummingbird are making a name for themselves in the current market, which seems likely to be amplified when prices recover. He flatly refuses to speculate on the gold price however, focusing purely on cash flow. “It's in our hands,” he says. “A year ago, we were in fate's hands.” Shares last traded at 32.5p, valuing the company at £28m ($41m).
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