Gold Fields has spent about $100m over five years at Yanfolila‚ including the purchase price of $42m in 2009. It had the asset on its books as an asset held for sale valued at $16m.
If Hummingbird's shareholders approve the transaction‚ Gold Fields will own 26.3% of the company‚ traded on London's Alternative Investment Market (AIM)‚ which has a market capitalisation of £31.4m.
Hummingbird has a full permitted and explored prospect to start developing on a much smaller scale than that envisaged by Gold Fields‚ Daniel Betts‚ Hummingbird's MD said yesterday.
The mine will produce 55‚000oz of gold a year on average in the first six years‚ and Hummingbird plans to add more oxide ore‚ or easily treatable ore at or near surface‚ to the project at the 5‚000m2 tenement in southwest Mali.
Hummingbird is doing a feasibility study on a $200m‚ 3-million tonnes-a-year capacity gold mine in Liberia - a project which cannot wait for funding from Yanfolila‚ which is expected to come into production in 2015 and be repaid in two years‚ Betts said. Having Yanfolila in production and generating cash would give Hummingbird more financing options in developing the Liberian project‚ he said. "If we can build a profitable gold mine in this gold price environment with 25% downside protection and the gold price goes up‚ then we've just bought ourselves a money machine."
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