Hummingbird Resources shares crashed to an all-time record low on Monday after the company announced it is facing significant funding constraints due to poor production at the Kouroussa Gold mine.
Hummingbird Resources shares were down 28% at the time of writing.
The heavily indebted gold miner said it faces financial difficulties despite its Kouroussa Gold Mine in Guinea reaching commercial production. Production figures fall short of the company’s previously announced target of 2,000-2,500 ounces per week, primarily due to mining capacity constraints and lower-than-expected mill feed grades.
The mine has achieved a four-week trailing average production of approximately 1,900 ounces, selling at an average price of US$2,473 per ounce, below current market rates due to existing hedging contracts.
The company announced in September this year that it had net bank debt of $135m. Poor production from Kouroussa is only making problems worse.
Hummingbird has acknowledged that even with commercial production achieved at Kouroussa, the group is unlikely to generate sufficient near-term cash flow to alleviate its current liquidity problems. These financial struggles are further complicated by loss-making operations at its Yanfolila site and payments that are due to the Mail Government.
The company is in ongoing discussions with financing partners to explore options, but the company’s high debt pile relative to its low market cap will make any resolution challenging.