Hummingbird's Bets Paying Off in Liberia's Jungle
Issue 26, January 2013
“If you want to shoot elephants, go to elephant country,” says Dan Betts, founder of Hummingbird Resources, who in 2005 flew to southeast Liberia, rented a jeep and disappeared into the rainforest.
“Nothing sticks out at you,” he says. “There's just trees and mud and jungle.” Five years later, Hummingbird raised £26m ($40m) for 30 per cent of the business on London's junior market and in the two years since, has outlined 3.8m gold ounces over two deposits, Dugbe F and Tuzon.
When his family's smelting business was offered options on tenements in the country, initially Betts tried to flip them, but was scoffed at by junior miners. “No one took us seriously,” he says, “not surprisingly. We didn't have any data; no-one wanted to look at it.”
Academically however he recognised the land's potential as the last unexplored tract of West Africa's Birimian Craton. Until Liberia's peace deal in 2003, the country's gold-rich southeast had been shielded from exploration by civil war and a belief before the ‘80s that the region's large, low-grade deposits were not economic. “That has been proved obsolete,” says Betts, who avoids taking a macro view on the gold price.
Having carved tracks into the area, “we must have taken 60,000 stream sediment and geochem samples. Every single one of those is a team of people, a process. It is a mission.”
Results however warranted drilling. “We took the view that we would drill at 160m spacing, the idea being that we could push to the edges of the mineralised envelope as quickly as possible. That could easily have been too wide and we could have missed it, but credit to our team of geologists, it meant we could add a lot of ounces very quickly.”
The strategy allowed Hummingbird to delineate 1.8m gold ounces at Dugbe F and after only four months drilling, a further 2m ounces at Tuzon. At $6 per ounce, the speed and cost of discovery would have delighted a less lugubrious market, but the company’s share price has declined in line with peers, valuing it at £45m ($72m). Deducting cash of $27m and Hummingbird trades at less than $12 per ounce in situ.
Drilling doubled in the last year to 53,000m, but the company is now focused on in-fill drilling, upgrading the existing resource. “There's more gold in the larder when we need it,” says Betts, “but we need to prove that the resource we've got is a gold mine. Five years ago it was all about getting as big a resource as possible. Now, you can have as much gold as you like, but what's the metallurgy like, what's the cash cost?” Aided by a scoping study due for release this quarter, Betts is focused on proving that Hummingbird has a viable gold mine, before bumping up the resource size and by dint, the mine life.
Dugbe and Tuzon are only 3km apart, easily within truckable distance of a single plant and only 40km from the deepwater port of Greenville. “We’re looking at a multi-pit, classic Bariminian-style, open-pit gold mine,” he says. “Tuzon and Dugbe will be the first two pits within a multi-pit complex. We'll find the highest grade portion of ore within those deposits, mine that first to pay off the cap-ex and step-out from there.”
Both deposits, which gently dip from surface at 25 to 45 degrees, grading 1.2 to 1.3 grams per tonne, will benefit from minimal overburden. “The advantage we have is very shallow dipping orebodies. Many deposits are vertical or sub-vertical and the deeper you go, the amount of waste you mine is exponentially increased, whereas these are virtually flat-lying.”
Following nine months of negot- iation and due diligence, London-listed royalty group Anglo Pacific last month bought into the project, offering $15m for a 2 per cent royalty on ore mined within a 20km radius of Dugbe F. “It was a comprehensive, under-the-skin process,” says Betts. “They didn't go into it lightly and I'm delighted to have them onboard.”
On top of a $5m share placing to the World Bank, the royalty finances Hummingbird “at no dilutionary cost to our shareholders” until 2014. It also greatly endorses the project, validating Betts’ belief in Liberia. Anglo Pacific has meanwhile bolstered its portfolio with a multi-million ounce gold resource that remains largely underexplored.
Despite his adventurism, Dan Betts, who has been known to interrupt the Mining Indaba conference for a spot of shark diving, remains modest about Hummingbird's success on the ground. “You need a lot of luck,” he says. “Most exploration companies just don't find anything.
I guess we've been very lucky.”
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