Bloomberg News

Hummingbird Rises in London After Doubling Gold Resources

February 01, 2012

(Updates with closing share gain from first paragraph.)

Feb. 1 (Bloomberg) -- Hummingbird Resources Plc, owner of gold exploration licenses in Liberia, rose to the highest in four months after more than doubling its total gold resources.

Hummingbird shares jumped 6.5 pence, or 4.1 percent, to 164 pence in London, the highest level since Sept. 22. The company raised its total gold resources to 3.7 million ounces today after announcing it has an additional 2.05 million ounces at the Tuzon pit in eastern Liberia.

“This delivers the kind of scales sufficient to justify a multi-open pit mining complex,” Dominic O’Kane, an analyst at Liberum Capital Ltd. in London, said in a note to investors. “Hummingbird has only drilled about 1 percent of its 7,000 square-kilometer holdings; it has potential to uncover a new gold province.”

The company would go ahead with building a mine once resources exceed 3 million ounces, Managing Director Daniel Betts said last month. It needs to raise about $40 million to complete feasibility studies, which would take about two years.

Hummingbird will then need two years to finish construction at a cost of $200 million to $250 million, Betts said. The company aims to have annual production of 200,000 ounces of gold with a mine life of about 15 years, he said.

“Its drilling has a remarkable success rate and with its unrivaled regional potential, Hummingbird is a small-cap conviction,” Liberum said. “Calculated on peers’ average traded value of $125 an ounce for indicated and $43 ounce for inferred,” 352 pence a share is a fair value for the company.

The shares have gained 38 percent over the past year, valuing the company at 87.5 million pounds ($139 million).

--Editors: Randall Hackley, Alex Devine

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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