Hummingbird Resources (AIM:HUM ) has signed a binding heads agreement to acquire the Kouroussa Gold Project in Guinea, West Africa from mineral explorer, Cassidy Gold Corp.
The African-based company will acquire the project for an initial consideration of £10m through 35.2m of its new ordinary shares at a price of 28.4p which represents 9.1% of the enlarged share capital.
Kouroussa is a near term development asset in the prolific Siguiri Basin, which has a high-grade mineral resource of 1.18Moz of gold at >3g/t, this morning’s statement outlined.
The group said the acquisition of the Kouroussa project will turn Hummingbird into a near term multi-asset producer with jurisdictional diversification in line with the company's strategy.
First gold production will be targeted within two years, with a production of around 100,000oz per annum and all-in sustaining costs of around $800 over an initial five-year life of mine.
Shares in Hummingbird Resources closed at 26p on Friday afternoon.
The group said significant exploration potential is known to exist at depth beneath the Koekoe deposit with another six high priority targets identified from intersections which require follow up work or surface bulk sampling results.
In addition, a letter of intent from Coris Bank International will provide up to US$100m to develop Kouroussa deemed necessary and according to the company’s funding strategy.
Dan Betts, CEO of Hummingbird said the intended acquisition of Cassidy Guinea and the Kouroussa Gold project marks “a transformational step” in Hummingbird’s development.
"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,” he commented.
The group said the project hosted a similar metallurgical flowsheet and process plant design to Yanfolila, allowing it to leverage construction and operational expertise gained to date.
He added, “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.”
The group added that Cassidy shall retain a 2% net smelter royalty on all gold sales over and above the first 200,000 ounces of its production and up to a maximum of 2.2m ounces of production and sales.
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