Hummingbird Resources Update

18 December 2012
Hummingbird Resources Update

US$15 million royalty funding agreement

Hummingbird Resources plc together with its subsidiaries (the "Group"), announces that the Group has entered into a financing agreement with a wholly owned subsidiary of Anglo Pacific Group plc (LSE: APF) ("Anglo Pacific") to support further exploration and development of the Group's Dugbe 1 Project in Liberia.

Highlights

  • Anglo Pacific to advance US$15 million in three equal tranches in return for 2% net smelter return royalty
  • Agreement relates only to products mined within a 20km radius of the Group's Dugbe F Resource
  • Proceeds to be used to fund the Group's 2013 work programme

Dan Betts, Chief Executive of Hummingbird, said:

"This agreement marks the conclusion of detailed due diligence by Anglo Pacific into our project and I am delighted that this agreement cements our common goal of building a gold mine. The IFC and Anglo Pacific agreements are key milestones for Hummingbird and a clear technical endorsement of the project. The funds received from the IFC, together with the proceeds from Anglo Pacific, will fund us through 2013 and today's announcement reflects the quality and deliverability of the project."

Anglo Pacific will advance US$15 million of funding in three equal tranches subject to the satisfaction of certain criteria. Under the terms of a separate royalty deed between the same parties, the advances will be converted into a 2% net smelter return royalty from any sales of product mined within a 20km radius of Dugbe F. After an initial grace period of 6 months following the commencement of commercial production, in the event that quarterly sales of gold produced are less than 50,000 ounces, additional quarterly payments will be required until such time as the cumulative royalty paid is US$15 million (the maximum total payment in any such quarter is equivalent to the royalty that would have arisen on sales of 50,000 ounces of gold). Following this period the royalty is 2% except where both the average gold price is above $1,800 and sales of gold are less than 50,000 ounces, in which case it increases to 2.5% in respect of that quarter.

The advances and royalty will be secured over relevant Group assets and the advances are only repayable in certain limited circumstances.

The funds, alongside the recent funding from IFC, will be used to support the 2013 work programme which is focussed on progressing the Dugbe 1 Project.

The first tranche of US$5 million will be payable as soon as local consents and filings have been obtained. The second tranche is payable upon either the completion of 25,000 metres of infill drilling or the publication of the results of a scoping study on the Dugbe 1 Project; and the third tranche will become due once both a scoping study and the 25,000 metres of infill drilling have been completed.