New licence for Hummingbird

25 January 2011
New licence for Hummingbird

Agreement regarding Mount Ginka Iron Ore Exploration Licence, Liberia

Hummingbird Resources Plc (AIM:HUM) is pleased to announce that, further to the Memorandum of Understanding entered into on 28 June 2010, on 24 January 2011, and together with its wholly owned subsidiary Iron Bird Resources Inc ("Iron Bird"), it entered into an agreement with Petmin Limited ("Petmin") relating to Hummingbird's Mount Ginka licence for exploration of iron ore in northern Liberia ("the Agreement").

Under the Agreement Petmin will provide up to a total sum of US$2m for the exploration of the Mount Ginka licence area in a two stage plan to ascertain the commercial viability of the project.

The key terms of the Agreement are:

  • Iron Bird will issue new shares equivalent to 15% of its issued share capital to Petmin for a consideration of US$500,000 ("First Phase Investment"). This investment is conditional on the transfer of the Mount Ginka licence to Iron Bird.
  • The First Phase Investment will be used for the purpose of demonstrating whether a commercially saleable magnetite concentrate can be produced ("Phase 1 of the Work Programme").
  • On successful completion of Phase 1 of the Work Programme, Petmin will invest a further US$1,500,000 in Iron Bird, to increase its shareholding to 50% ("Second Phase Investment").
  • The Second Phase Investment will be utilised to demonstrate the scale of the resource within the licence area.

Phase 1 of the Work Programme will commence with an aeromagnetic survey which has been contracted to be flown shortly. Following this, Phase 1 of the Work Programme is expected to progress with grab sampling, trenching, pitting and scout drilling with the aim of obtaining a representative sample for metallurgical test work.

Mount Ginka - Geology and Location

The itabirite ridge in the Company's Mount Ginka licence area is east west trending with a 30 kilometre long strike length and reaches elevations of up to 500 MASL, with an average elevation of approximately 400 MASL. The ridge is dissected halfway through by a structural break. The itabirite ridge has a near vertical dip and measures up to 400 metres in thickness.

The Mount Ginka licence area covers approximately 155 square kilometres and is situated in Nimba County in north central Liberia. It is located approximately 15 kilometres south of Yekepa, a major iron ore deposit located at Mt Nimba, which is currently being developed by Accelor-Mittal. In addition BHP Billiton is undertaking iron ore exploration approximately 30 kilometres northwest of Mount Ginka at the Mount Kitoma licence area.

The Mount Ginka licence area is approximately 200 kilometres from Monrovia and can be easily reached via road access. The licence area is located in Nimba County, which has an extensive history of iron ore production. The project area is favourably situated 15 kilometres from a railway line, which connects Mount Nimba to the deep water port at Buchanan on the coast. The railroad is currently undergoing reconstruction to service BHP Billiton's and Arcelor-Mittal's projects located nearby and once completed the Group will be entitled to use this railroad in accordance with the terms of Arcelor-Mittal's licence. Furthermore, the surrounding area to Mount Ginka has numerous small roads and tracks making local access relatively simple.

Dan Betts, CEO of Hummingbird, commented:

"We are delighted to have finalised the terms of this agreement and look forward to working with a team we know well to progress the Mount Ginka project. This deal allows us to understand the commercial viability of the project at no cash cost to our shareholders, and we look forward to the results of the contracted aeromagnetic survey."

Jan du Preez, CEO of Petmin, commented:

"The Mount Ginka JV with HUM represents an early stage, cost effective entry into a potentially prospective venture. It is further progress on our stated intention of diversifying both our product mix and expanding our global footprint."