Forward
Annual Report &
Accounts 2022
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hummingbirdresources.co.uk
Contents
GROUP OVERVIEW:
Our Strategy
Our Values and Principles
Interim Chairman and CEO’s Statement
OPERATIONAL REVIEW:
Operational Overview
Key Highlights
Sustainability Report
Financial Review
Group Strategic Report
GOVERNANCE:
Directors’ Section 172 Statement
Corporate Governance
Audit Committee Report
Remuneration Committee Report
Board of Directors
Group Directors’ Report
Statement of Directors’ Responsibility
FINANCIAL STATEMENTS:
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Cash Flows
Company Statement of Changes in Equity
Notes to the Company Financial Statements
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“The path of the righteous miner is beset on all sides
by the inequities of the world and the duplicities of
evil men. Blessed is he who in the name of charity
and goodwill mines through the valley of darkness
for he is truly his brother’s keeper and the finder of
lost riches” – Basil De Tent
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 2
Our Strategy
At Hummingbird, our primary corporate
goal continues to be to maintain
our growth trajectory to become a
significant gold producer through
efficient and profitable production
and the delivery of our medium to
long term growth initiatives. Our
core focus is to operate responsibly
through strict Environmental, Social
and Governance (“ESG”) standards
and respect for all of our stakeholders
including the communities in which we
operate. Furthermore, our vision is
to extend on our current multi-asset,
multi-jurisdiction gold asset base, that
provides diversification of cash flows
and returns from profitable projects,
while maintaining and continually
improving on our technical expertise,
both in exploration and operationally, to
support the sustainable growth of the
Group for the longer term.
HUMMINGBIRD RESOURCES 3
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 4
HUMMINGBIRD RESOURCES Our Priorities
5
PROFITABLE GROWTH
RESPONSIBLE MINING
Focus on improving our production profile for the medium
and longer term and generating consistent, accretive, and
profitable cash flows for the Group.
Mining responsibly and adhering to leading ESG reporting
framework, to provide positive benefits for all stakeholders
in the regions and environments we operate in.
■ Our key short-term growth priority is to successfully advance
our Kouroussa Gold Mine in Guinea to first gold pour by the
end of Q2 2023 and complete a successful ramp up phase
towards name plate production.
■ Deliver an operational underground mine at Yanfolila, Mali for
a full year of production in 2024. The newly developed mine
will provide a base load production profile at that asset for the
medium and longer term.
■ Continue to advance the strategic review that is underway at
Dugbe, Liberia with our joint venture partner, Pasofino Gold Ltd
(“Pasofino”), to evaluate and execute on options to best realise
the maximum value of the asset for all stakeholders.
■ With a regionally influential strategic investor, CIG SA (“CIG”),
continue to evaluate M&A opportunities for the long-term
growth prospects of the Group.
EXPLORATION
Building on the Group’s Resources and Reserves base
through brownfield and greenfield exploration.
■ Life of mine (“LOM”) extension and increase of the Group’s
Resources and Reserves continue to be a key strategic focus
area.
■ In November 2022, Hummingbird successfully achieved a key
strategic goal of achieving full World Gold Council (“WGC”)
Responsible Gold Mining Principles (“RGMPs”) compliance, at
both the Corporate and Yanfolila site level. The RGMPs provide
a credible and internationally recognised framework through
which Hummingbird can demonstrate and provide confidence
that gold has been produced responsibly. The compliance
against the RGMPs further demonstrates Hummingbird’s
dedication to building a lasting positive legacy in the regions
and communities in which we operate.
■ Continued advancement of Single Mine Origin (“SMO”) initiative
as the leading brand and standard in fully traceable precious
metals to end source and galvanising more mining companies
to join the SMO platform alongside Hummingbird and others
already on the platform.
■ Continue to enhance our community engagement and
initiatives at all our assets to provide lasting benefits to the
communities in the regions we operate.
■ Embedding leading technologies where possible into our
operations to better enhance energy efficiency and carbon
emission reduction capabilities, such as those at Kouroussa,
including a 7Mwh solar plant and heat recapturing recovery
unit initiatives.
■ Dugbe, Liberia, although significant exploration has taken place
historically by Hummingbird and Pasofino, material exploration
upside remains on the c.2,500 km2 exploration area.
ENTREPRENEURIAL AND
EXPERIENCED MANAGEMENT TEAM
■ Focus on targeted greenfield exploration to identify additional
Resources.
Maintaining a culture of being entrepreneurial to create
shareholder value and positive benefits for all stakeholders.
■ Growing a culture of accountability, inclusiveness, and respect
that is committed to driving an entrepreneurial mindset in how
we conduct our business, to create shareholder value and
positive benefits for all stakeholders.
■ Focus on maintaining and continually improving on our
expertise, from the board room, senior management team,
head office to site levels, to support the growth of the Group
for the longer term. This is achieved by adopting a culture of
continuous professional development, corporate learning and
other training and development initiatives to foster innovation
and life-long learning at corporate and operational level.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 6
Our Values and Principles
OUR VALUES
– Responsible mining
– Safe working environment
– Operational integrity
– Sustainable local engagement
– Environmental stewardship
– A lasting positive legacy
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HUMMINGBIRD RESOURCES
7
OUR PRINCIPLES
Hummingbird first
■ Pride and value in Hummingbird
■ Company-centric thinking and working
■ Promoting our success and values, internally and externally
Forward
■ Focus on core strategic priorities and common goals
■ Delivering with urgency and agility
■ Providing solutions to drive outcomes and progress
Care
■ Thinking about others and the environment we operate in
■ Providing regular mutual support and feedback to help us be
the best we can
■ Recognising and rewarding success together
Smarter
■ Clear accountability and performance expectations
■ Empowered teams, making timely, fact-based decisions
■ Utilising collaborative processes, tools and technology
8
COMPANY OVERVIEW
Interim Chairman
and CEO’s Statement
Dan Betts
Interim Chairman and
Chief Executive Officer
During the past year our key priorities
were to: commence construction at
our Kouroussa Gold Mine in Guinea
with a target of achieving first gold
pour by the end of Q2 2023; to fulfil
our strategic objective of becoming
a multi-asset, multi-jurisdiction gold
producer; analyse, understand and
increase the Group’s Resources and
Reserves profile on the back of the 2021
exploration drilling campaign; to assist
our joint venture partners Pasofino, to
deliver a robust and valuable definitive
feasibility study (“DFS”) at Dugbe;
to continue to improve on our ESG
initiatives, including SMO; to achieve
full compliance of the year 3 WGC
RGMPs; and to achieve better overall
performance at Yanfolila in Mali.
With Yanfolila ending the year in a
significantly better state than at the
beginning and with Kouroussa on track
to pour gold imminently, I am pleased
to be able to report that we have
achieved all of those objectives.
HUMMINGBIRD RESOURCES 9
In early January 2022, the Group formally commenced
construction at Kouroussa following the mobilisation of equipment
and personnel in December 2021, by the Project’s construction
and engineering firm WACOM, in line with the Project schedule
and targeted first gold pour by the end of Q2 2023. Throughout
the year construction advanced from first breaking ground and
clearance works, towards the major civil work construction phase.
By Q4 2022, an increasing focus turned to ‘operational readiness’
programmes, with James Francis joining the Group as General
Manager for Kouroussa to lead the business forward.
Despite the well documented macro global inflationary challenges
(which persist), and despite the regional backdrop of ECOWAS
sanctions and restricted movements of people and goods in
the region I am pleased to be able to report that the Kouroussa
project remained on tack and on budget throughout the period.
Furthermore, as this Annual report goes to print, we are within
days of “first gold” at Kouroussa with the project currently going
through its commissioning phase and so I am confident that it will
be delivered ahead of schedule and on budget. This will be the
second mine that the Hummingbird team have designed, financed
,and built on time and on budget; and given the challenging
environment it is an extremely commendable achievement by the
team.
In 2021 we embarked on a targeted c.44,000-meter exploration
drilling campaign at Kouroussa and Yanfolila, with a focus
to increase our overall Group Reserves profile and provide
meaningful LOM extensions at our assets. This cumulated in the
release of our updated Group Resources and Reserves statement
in June 2022, which showcased a material uplift to Kouroussa’s
Reserves profile to 647 kilo ounces (“Koz”) at a high grade of 4.15
grammes a tonne (“g/t”) and added Reserves net of depletions at
Yanfolila totalling 719 Koz, including extending the underground
Reserves profile at Yanfolila to 278 koz at 3.94 g/t. Further, at
Dugbe via our joint venture partner, Pasofino, final DFS results
were announced on 13 June 2022, establishing a material maiden
Reserves profile at Dugbe of 2.76 million ounces (“Moz”) in which
the Group retains a controlling 51% interest. The material uplift in
the Group’s Reserves profile was a significant achievement for the
Group during 2022. This work has led the Group to two significant
conclusions that will shape our focus going forward. Firstly, the
exploration potential at Kouroussa is significant and we will be
looking to ramp up our regional exploration efforts to extend the
mine life as soon as possible. Secondly, the exploration potential
at Yanfolila would seem to lie mainly in the underground potential
which could go on for many years, and as time goes by will
shape our focus towards making Yanfolila a smaller underground
operation focussed on cost and profitable ounces.
On Dugbe, as noted above, our joint venture partner Pasofino
released a detailed and robust DFS with key highlights being:
strong financial metrics, with a pre-tax NPV 5% of US$690
million, 26.35% IRR (23.6% post-tax); fast capital payback of
approximately 3.5 years from start of production; a large mineral
Reserve with potential for expansion of 2.27 Moz of gold, with
a long 14-year LOM; and a detailed Environmental and Social
Impact Assessment (“ESIA”) study also completed.
With a robust Dugbe DFS completed, an increasing focus then
turned towards working on a strategic review with our joint
venture partner Pasofino on determining the best options to
generate maximum value of Dugbe for all stakeholders. The
strategic review remains ongoing, and we are confident of
highlighting in 2023, a pathway towards unlocking the material
value of that asset to our shareholders.
In relation to ESG, November 2022 saw a key milestone for the
Group as it achieved Year 3 full compliance of the WGC RGMPs.
Hummingbird is committed to operating responsibly with strict
ESG protocols and practices. Adopting the WGC RGMPs is
a key part of Hummingbird’s strategy for building a long term,
responsible mining company. Meeting and where possible
exceeding these requirements demonstrate our continued
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 10
COMPANY OVERVIEW
commitment to adhering to international best practice ESG
standards. Ever since the Company was founded, ESG concepts
have been more than just a word to us. We want to be at the
forefront of developing the art of responsible mining in the industry
leaving a lasting positive legacy in the regions and communities
in which we operate. For this reason, we established the Pygmy
Hippo foundation (“PHF”) in 2011 to work to preserve the regional
environment around our projects. In addition, we have worked
very closely to establish community health benefit initiatives with
our partner Critical Care International (“CCI”) whilst seeking to
increase transparency and exposure through our support of Single
Mine Origin Gold (“SMO”) creating a universe of environmental,
social, healthcare and transparency impacts against which we can
be measured.
SMO continues to gain increased industry recognition in 2022,
with multiple jewellery brands using and endorsing SMO gold
in their products, including British jewellers Boodles. As I noted
in last year’s annual report, the SMO initiative gives us the
opportunity to showcase mining as the force for good that we
at Hummingbird fundamentally believe can and should be. It
also gives us the opportunity to be a part of a larger movement
that future proofs mining in a world of increased scrutiny and
showcases responsible mines for all the valuable work that they
do. I believe this initiative has the scope to transcend our Group
and be a driver of change for the positive impact the mining
industry delivers more broadly.
Regrettably, the achievements as highlighted above were
significantly hampered by the operational underperformance
at Yanfolila in Mali during 2022, particularly for the first three
quarters of the year. A key driver of this was the continual
underperformance of our mining contractor’s fleet, materially
hindering the ability to follow the scheduled mine plans. The
Group, in turn, took decisive and necessary actions to stabilise
ongoing production challenges and return Yanfolila to a cashflow
positive position by addressing the poor mining performance of
the Yanfolila mine both in the immediate and longer term. The
Group stepped in to support our mining contractor by providing
additional fleet such as extra excavators, reinforcing the contract
miner’s maintenance teams to improve the overall mining fleet
performance coupled with several other work stream initiatives;
ultimately (post year-end) our relationship with our contract miner
has come to an end and mining activities are now being carried
out by a new contractor with much more internal support.
Pleasingly, by the end of 2022, the decisive initiatives the Group
took as noted above, coupled with on site management changes,
saw Yanfolila’s operational performance materially improve, which
has continued into 2023. Hummingbird’s Q4 2022 production and
AISC profile were amongst some of the best recorded for several
years. Gold production was 28,264 oz at an AISC profile of
US$1,248 per oz, leading to a materially improved Group EBITDA
of c.US$11 million for the Q4 2022 quarter. This was a hugely
positive outcome at the end of what was a challenging year at
Yanfolila.
2023 OUTLOOK:
In March 2023 the Group secured a key, regionally influential
strategic partner and strengthened the balance sheet with a
c.US$17 million placement led by CIG group. The placement has
helped ensure Kouroussa gets into production as scheduled for
first gold pour by the end of Q2 2023 and provide the ability to
help fast-track further exploration at the asset. This investment
by new and existing shareholders endorses the Group’s growth
strategy in the West African region and beyond.
With this support, we will achieve our strategic goal this year of
being a multi-asset, multi-jurisdiction gold producer.
At Yanfolila, a key focus is to maintain the improved operational
performance, as exhibited by our Q4 2022 and Q1 2023
operational results and to bring online Yanfolila’s underground
mine by year end for a full year of production in 2024. Further, at
Dugbe, with a strategic review underway, our goal for 2023 is to
show a pathway to unlocking the material value of that asset for
all stakeholders.
On exploration, given limited drilling was undertaken in 2022, we
are cognisant of the need to increase the Group’s exploration
activities to maintain and extend the Group’s Reserves base. This
is a priority for us going forward. We are completing a detailed
review of exploration plans at Kouroussa and Yanfolila, with
expectations in 2H 2023 and 2024 to have reinitiated exploration
campaigns at those assets, particularly at Kouroussa.
We successfully achieved Year 3 WGC RGMP full compliance
at both corporate and Yanfolila site levels, as part of our
increasing focus to ensure these and other leading international
ESG standards are embedded into the Group’s and mine site’s
procedures and policies. Importantly we aim to continue to
enhance sustainable community livelihood programmes and
projects at our assets, whilst growing the SMO initiative across
the broader gold market.
On a final note, I would like to thank our previous chairman,
Russell King for his time and valuable guidance at the company.
Since his retirement in June 2022, I have assumed the role of
Interim Chairman in addition to being CEO. It is probably fair to
say that the environment in the middle of last year for attracting
a suitable Chair to help us drive forward with our next stage of
growth was somewhat sub optimal; but we are in much better
shape now as Kouroussa comes online and it is indeed our
intention to find such a candidate. Whilst we will not rush into a
hasty decision, it remains a priority for the group going forward.
In conclusion, with Yanfolila’s operational performance improving,
and Kouroussa’s birth imminent, the Group is at a pivotal juncture
for exponential growth, a key focus for the executive team this
year is to show improved cash flow generation and a stronger
balance sheet for the Group to underpin our growth strategy and
ultimately drive shareholder returns.
Dan Betts
Interim Chairman and
Chief Executive Officer
HUMMINGBIRD RESOURCES 11
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 12
OPERATIONAL REVIEW
Operational Overview
Hummingbird Resources plc (AIM: HUM)
is a leading multi-asset, multi-jurisdiction
gold company that is on track to
organically grow to be a +200,000
oz per year gold producer. The
company is a member of the WGC and
founding member of Single Mine Origin
(singlemineorigin.com). While adhering
to strict ESG policies and practices, our
vision is to continue to grow our asset
base and producing profitable ounces.
Edward Montgomery
Managing Director,
Corporate Development
The Group currently has three gold assets,
the Yanfolila Gold Mine in Mali which has
been operating since December 2017; the
Kouroussa Gold Mine in Guinea, which is
soon to be the Group’s second producing
gold mine with first gold pour scheduled
by the end of Q2 2023; and the Dugbe
Project in Liberia, which the Company has
a controlling 51% interest in with our Joint
Venture partners Pasofino, with a detailed
and robust DFS study completed and a
strategic review underway to determine
the best options to generate maximum
value of Dugbe for all stakeholders.
HUMMINGBIRD RESOURCES 13
Yanfolila Gold Mine, Mali has been operating since 2017, and
has a current Reserve base of 719 koz at 2.85 g/t, that produced
80,653 oz of gold in 2022. The mine has paid off over US$100
million in debts and associated costs to fund its development,
with the focus, as seen in the materially improved operating
results of Q4 2022, to provide good cash flow returns consistently
to the business for the near, medium, and longer term. Yanfolila
has underground Reserves of 278 koz at 3.94 g/t, which once
developed, is expected to provide a full year of production in 2024
to underpin Yanfolila’s future production profile.
Kouroussa Gold Mine, Guinea was acquired in September
2020, with the Group granted the mining licences by the Guinea
government in May 2021. The mine is situated in the prolific Siguiri
Basin in Guinea, with a high-grade Resources base of 1.2 Moz
at 3.02 g/t and Reserves of 647 koz at 4.15 g/t. Significant
exploration potential is known to exist at depth beneath the
Kouroussa’s two key deposits, Koekoe and Kinkine, with several
other high priority targets identified for further exploration and
resource growth potential. Kouroussa is currently in the final
stages of construction advancing rapidly towards first gold pour
by the end of Q2 2023, which once producing and at name
plate production is expected to more than double the Group’s
production profile to take Hummingbird to a be +200,000 oz per
year gold producer.
RESPONSIBLE MINING
Core to the Group’s principles is to operate responsibly to
internationally recognised ESG standards for the benefit of all
stakeholders. In June 2020 the Group joined the World Gold
Council (“WGC”) and that year committed to adhere to the high
and internationally recognised Responsible Gold Mining Principles
(RGMPs). The RGMPs provide a sustainable reporting framework
that supports international best practice in addressing key ESG
requirements as to what constitutes responsible gold mining via
ten umbrella principles and 51 detailed principles. The Group is
using the RGMPs to framework the ESG process and protocols
throughout the organisation which we believe will benefit all
stakeholders and our belief is this will also lead to a better and
more productive Group as a whole. In November 2022, the
Group successfully achieved full compliance with the World Gold
Council’s Responsible Gold Mining Principles (“RGMPs”).
As part of our sustainable mining platform, the Group is a
founding member of SMO, a gold certification initiative for mines
which adhere to the WGC RGMPs. SMO accredited gold is
segregated throughout the supply chain, with end customers
provided with an auditable chain of custody from source mine to
final product, providing assurance of responsible mining practices.
At Hummingbird, we have a key focus on community, health
and safety and environmental practices which are detailed in the
Sustainability Report section of this annual report.
Further details can be found in the Sustainability Report from
page 30.
Dugbe, Liberia is our development asset, with a
Definitive Feasibility Study (“DFS”) completed in June
2022 by our joint venture partner, Pasofino, in which
the Group maintains a controlling 51% interest. Dugbe
is a strategically valuable asset for the Group with a
DFS showcasing a pre-tax NPV of US$690 million, for a
26.35% IRR at gold price of US$1,750 per oz, long life of
mine (“LOM”) of 14 years, with c.200,000 oz per annum
production in the first five years, at a low AISC profile of
c.US$1,005 per oz, and a short 3.5-year capital payback
period once into production. With the DFS completed, a
strategic review is underway with our joint venture partners
Pasofino to determine the best options to generate
maximum value of Dugbe for all stakeholders.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 14
OPERATIONAL REVIEW
Key Highlights
Overview of key outcomes for 2022
1. KOUROUSSA GOLD
MINE, GUINEA INTO
CONSTRUCTION.
Commenced construction early
January 2022, in line with the target of
achieving first gold pour by the end of
Q2 2023.
■ Early January 2022, the Group
formally commenced construction
at Kouroussa, in line with the Project
schedule and targeted first gold pour
by the end of Q2 2023.
2. MATERIAL GROUP
RESERVES INCREASE TO
4.13 MOZ.
Material increases to the Group’s
Resources and Reserves profile
achieved in June 2022.
■ June 2022 the Group released an
updated Group Resources and
Reserves statement showcasing a
material increase in Group Resources
and Reserves totalling 4.13 Moz and
7.28 Moz respectively.1
■ Progressive advancement of
■ Kouroussa’s Reserves materially
construction during the year of major
civil works, into operational readiness
programmes by year end achieved.
■ Remaining on budget towards first
gold pour the end of Q2 2023, while
facing material inflationary and logistical
macro headwinds during the year and
into 2023, a key achievement by the
project team.
■ An experienced General Manager for
Kouroussa hired in Q4 2022, to lead
operational readiness programmes
towards first gold pour and beyond.
increased to 647 koz at a very high
grade of 4.15 g/t.
■ Yanfolila, Mali Reserves increased to
719 koz, net of depletions, notably
extending the underground Reserves
profile to 278 koz at 3.94 g/t.
■ Dugbe, Liberia via our earn in partners
Pasofino, established a material maiden
Reserve at Dugbe of 2.76 Moz, in
which the Group retain a controlling
51% interest.
3. DUGBE, LIBERIA ROBUST
AND HIGHLY VALUABLE DFS
COMPLETED
Via our joint venture partners,
Pasofino, a robust and highly valuable
DFS was completed in June 2022.
■ June 2022, joint venture partners
Pasofino on Dugbe, released a detailed
DFS highlighting:
■ High DFS pre-tax NPV of US$690
million (US$530 million post tax), for
a 26.35% IRR (23.6% post-tax).
■ LOM AISC of US1,005/oz, with a
3.5-year capital payback period
once into production.
■ 14-year LOM, with c.200,000 oz
per annum in the first five years of
production.
■ LOM strip ratio 4.21:1, lower in the
first five years.
■ Detailed ESIA also completed.
■ Strategic review initiated with our
joint venture partners Pasofino, on
determining the best options to
generate maximum value of Dugbe
for all stakeholders.
1
2
All Group Reserves and Resources are shown on a 100% basis.
Hummingbird retains a controlling interest in Dugbe of 51%.
Adjusted EBITDA Earnings before interest, tax, depreciation and
amortisation, effect of impairment charges, foreign currency translation
gains/losses and other non-recurring expense adjustments but including
IFRS 16 lease payments.
HUMMINGBIRD RESOURCES 4. RESPONSIBLE MINING
ADVANCEMENT WITH FULL
COMPLIANCE OF THE
YEAR THREE WGC RGMPS
ACHIEVED
November 2022, the Company
achieved full compliance of the
WGC RGMPs, which address key
environmental, social and governance
issues for the gold mining sector.
■ In November 2022 a key milestone
for the Group was achieved with
the awarding of the year three full
compliance of the WGC RGMPs.
■ Meeting and in some cases exceeding
these requirements demonstrates our
continued commitment to the highest
standard of ESG performance.
■ Adopting the WGC RGMPs is a key
part of Hummingbird’s strategy for
building a long term, sustainable mining
company.
5. 2022 SUSTAINABILITY
REPORT HIGHLIGHTS
Inaugural Group Sustainability Report
for 2022 issued.
■ $438,123 spent on community and
livelihood projects in Mali
■ $15.2 million of economic contribution
to host nations in respect of taxes and
duties, in Mali, Guinea and Liberia
■ 90% national employment at
operations
■ 0.84 LTIFR at Yanfolila with 0 fatalities
■ Over 2.5m LTI free hours at Kouroussa
■ 85% process water recycled
■ 10,000 trees planted annually at
Yanfolila through the Hummingbird
Tree Initiative
■ For full disclosure, please refer to the
Sustainability Report section of this
report.
15
6. PRODUCTION OUTCOMES
Q4 2022 saw material production
and AISC improvements following a
challenging 1H 2022.
■ Full year 2022 production of 80,653
oz (2021: 87,558 oz) and 80,445
oz (2021: 87,553 oz) of gold sold at
an AISC of US$1,782 per oz (2021:
$1,536 per oz), meeting revised
guidance.
■ Q4 2022 saw a material improvement
from previous 2022 quarterly results,
with production of 28,264 oz, a +67%
improvement from the 16,827 oz in Q3
2022, and improved AISC of US$1,248
per oz (Q3 2022 US$2,161 per oz).
■ Generating Group 2022 revenues
of US$143.3 million (2021: $156.6
million), with additional US$7.2 million
(2021: $6.2 million) revenue generated
from the sale of SMO gold.
■ 2022 Group negative Adjusted
EBITDA2 of US$7.0 million (vs
positive Adjusted EBITDA of $28.2
million in 2021). Refer to page 71 for
reconciliation to GAAP measures.
■ The first three quarters of 2022
production at Yanfolila, Mali, in
particular were negatively impacted due
to poor availability and performance
of mining equipment by our contract
miner to meet our scheduled mine
plans.
■ The Group intervened during the year
with our contract miner in securing
additional key equipment to site,
including grade control and production
rigs, coupled with onsite leadership
changes.
■ These measures have been broadly
successful, with the Group being able
to better achieve its mine plan schedule
as highlighted above with a strong year
end, 2022 production quarter, with
these more positive results at Yanfolila
being carried through into 2023.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 16
OPERATIONAL REVIEW
Group Revenue $'000
AISC $/oz
185,072
156,874
162,777
150,519
116,539
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1,782
1,536
1,087
986
1,147
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Gold Production - oz
115,649
101,069
91,620
87,557
80,653
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Gold Sales - oz
120,000
100,000
80,000
91,546
60,000
40,000
20,000
0
112,686
104,174
87,554
80,445
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Adjusted EBITDA $'000
Tonnes Ore Mined - t
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
-10,000
-20,000
62,346
46,273
14,737
18,582
2,500,000
2,000,000
1,500,000
1,000,000
1,130,990
-7,020
500,000
0
1,733,870
1,645,418
1,431,293
1,905,500
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Tonnes Ore Processed - t
Average Grade Mill Feed - g/t
1,253,658
1,092,485
1,388,641
1,404,982
1,330,202
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2.83
2.88
2.41
2.09
2.00
3.5
3
2.5
2
1.5
1
0.5
0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Recovery - %
1.2
1
0.8
0.6
0.4
0.2
0
95.38%
93.48%
94.08%
92.26%
94.33%
2018
2019
2020
2021
2022
HUMMINGBIRD RESOURCES OPERATIONAL REVIEW
Operational Overview
Statement
17
With the commencement of
construction at Kouroussa
in early 2022, and major civil
and operational readiness
work programmes being
implemented by year
end, the Group will realise
it’s ambition of being a
multi-asset, multi-jurisdiction
gold producer in 2023 – taking
the Group to being a +200,000
oz per annum gold producer.
Operationally, the Group faced challenging worldwide conditions
in 2022 with ongoing issues from the Covid-19, including
restricted goods and services movements and rising inflation.
While facing these challenges, the Group began construction
at Kouroussa, and moved rapidly into the advanced civil
construction phase, remaining on time and on budget for the year,
which was a commendable effort by the Kouroussa project teams
given the difficult wider global challenges. Further, at Yanfolila,
despite these challenging wider global conditions, production
did continue even though 2022 was a more disappointing year in
terms of production and cost profile. With several measures put
in place as detailed throughout this Annual Report, Yanfolila had
a strong Q4 2022. At Dugbe, Liberia, our joint venture partners,
Pasofino, delivered a robust DFS at that asset middle of the year,
while also facing these difficult macro conditions.
YANFOLILA, MALI 2022 OPERATIONAL SUMMARY
Overall progress of the Group was impacted by the
underperformance at Yanfolila, particularly the first three quarters
of the year. Whilst the mine faced difficult macro conditions as
noted above, a key factor impacting the production and cost
performance at Yanfolila was the continual underperformance
of our mining contractor’s fleet, materially hindering the ability to
follow the scheduled mine plans at that asset. Full year guidance
was impacted, and reduced to 77,000 - 87,000 oz, coupled
with an adjustment to full year AISC guidance to US$1,600 -
US$1,800 per ounce.
These changes, although difficult, were necessary and have been
broadly successful in delivering improved operational results at
Yanfolila. Q4 2022 production and AISC profile were some of the
bests recorded for several years. Gold production was 28,264 oz
at an AISC profile of US$1,248 per oz sold, leading to a materially
improved Group EBITDA of c.US$11.0 million for the quarter.
Encouragingly these better results have been carried into 2023,
with ongoing improvement work streams, including a real drive to
reduce costs at the mine, while not impacting production taking
place.
Faced with these operational challenges at Yanfolila, the Group
took decisive and at times difficult decisions in 2H 2022 to
stabilise ongoing production and return Yanfolila to being cashflow
positive by addressing the poor mining performance of the
Yanfolila mine both in the immediate and longer term, including:
■ The replacement of the mining contractor’s production and
grade control rigs by third party contractors.
■ Increased external support in the form of equipment,
management expertise and funding for the contract miner.
■ Changes to the leadership team of the mine.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 18
OPERATIONAL REVIEW
2022 YANFOLILA PRODUCTION STATISTICAL SUMMARY
Q4 2022 saw material production and AISC improvements following a more difficult 1H 2022.
■ Full year 2022 production of 80,653 oz and 80,445 oz of gold sold at an AISC of US$1,782 per oz,
meeting revised guidance.
■ Q4 2022 saw a material improvement from previous 2022 quarterly results, with production of
28,264 oz, a +67% improvement from the 16,827 oz in Q3 2022, and improved AISC of US$1,248
per oz (Q3 2022 US$2,161 per oz).
■ Yanfolila, Mali full year 2023 guidance set at 80,000 – 90,000 oz of gold, with an AISC of
1 million
lost time injury (“LTI”) free hours by the
end of 2022, and over 2.5 million LTI free
injury hours in Q1 2023. Also as detailed in
the Group’s Sustainability report, detailed
ESG programmes, policies and practices
were implemented at Kouroussa in 2022,
with details of these in that report and the
Sustainability section of this annual report.
The advancement of the Kouroussa Gold
Mine during 2022 importantly remained
on time and on budget towards first gold
pour by the end of Q2 2023. Given this
backdrop and the improving gold price
trends, especially early 2023, the Group
continues to and increasingly believes with
the high-grade nature of the Kouroussa’s
deposits, coupled with further material
exploration potential, that the cash flow
returns and longevity of the Kouroussa
project look very promising. Details of
Kouroussa’s project economics were
published in October 2021, showcasing a
high returning asset once into production.
With the current Reserve of 647 koz at
4.15 g/t with upside potential to extend
LOM the Group estimates Kouroussa
once at name plate production will
produce an average of between 120,000
- 140,000 oz for the first three years of
production and average 100,000 oz over
the initial LOM.
Details of Kouroussa’s project economics
detailed in the table below, as previously
published on 12 October 2021.
Kouroussa, Guinea – project timeline to production
2020
Q3
Project
acquired
2021
2022
2023
Q2
Q3
Q4
Q1
Q2
Q3
Q2
24,000m infill drill
programme initiated
Contruction
commenced
Company
resources
& reserves
update
Financing completed
Kouroussa maiden reserves update
Complete 2021 infill drill programme
First gold pour
Ramp up to
nameplate production
HUMMINGBIRD RESOURCES
21
CAPITAL ITEM
ESTIMATE (US$MILLION)
Processing plant
Tailing storage facility
Camp and related infrastructure
Mining establishment
Project management,
support and other equipment
Total processing plant and
establishment costs
Pre-production mining costs
Contingencies
56.0
10.5
7.2
8.3
15.5
97.5
10.0
7.5
Total project cost
115.0
GOLD PRICE (US$/OZ)
IRR
NPV 10% (US$MILLION)
1,350
1,500
1,750
2,000
2,350
34%
49%
71%
93%
123%
75
126
210
294
412
DUGBE, LIBERIA 2022
OPERATIONAL SUMMARY
High DFS value1
■ High DFS pre-tax NPV of US$690 million (US$530 million post
In June 2022, our joint venture partners, Pasofino released a
robust DFS on Dugbe, in which Hummingbird retains a controlling
interest of 51%. With the DFS completed, a strategic review was
initiated with Pasofino to determine the best options to generate
maximum value of Dugbe for all stakeholders, which remains
ongoing.
tax)
■ 26.35% IRR (23.6% post-tax)
■ LOM AISC of US1,005/oz
■ 3.5 years capital payback
KEY HIGHLIGHTS OF DUGBE,
AND THE DFS INCLUDE:
Reserves & Resources
■ 14-year LOM, with c.200,000 oz per annum in the first five
years of production
■ LOM strip ratio 4.21:1, lower in first five years
■ Detailed ESIA completed
■ The Birimian geological region of West Africa is one of the
Current
largest gold producing areas in the world
■ Dugbe is one of the largest deposits in this part of the Birimian
■ 2.74 Moz Reserves and 4.01 Moz Resources
■ 2,559 km2 under MDA for 25 years, with +100 exploration
targets
■ 6 key targets explored
■ Strategic review underway with JV partner Pasofino to best
realise the maximum value of Dugbe for all stakeholders
1
See release dated 13 June 2022: “Dugbe Gold Project Feasibility Study Results”.
22
OPERATIONAL REVIEW
2022 GROUP RESOURCES AND RESERVES STATEMENTS
7.28 million ounces of Group Resources
COMPANY RESOURCES
Asset
Yanfolila, Mali (net of mining depletions)
Kouroussa, Guinea
Dugbe, Liberia
Total Company Resources
4.13 million ounces of Company Reserves
COMPANY RESERVES
Asset
Yanfolila, Mali (net of mining depletions)
Kouroussa, Guinea
Dugbe, Liberia
Total Company Reserves
kt
28,946
12,365
98,100
139,411
kt
7,853
4,856
66,000
78,709
g/t
2.22
3.02
1.27
1.62
g/t
2.85
4.15
1.30
1.63
koz
2,065
1,200
4,013
7,279
koz
719
647
2,760
4,126
1. All Company Reserves and Resources are shown on a 100% basis. Hummingbird will retain a controlling interest in Dugbe of 51%.
2. Yanfolila Reserves and Resources statements effective 31.12.2021.
3. Dugbe Reserves statement effective as at 01.05.2022 and Resources statement effective as at 17.11.2021 as produced by Pasofino
Gold Ltd.
4. Yanfolila and Kouroussa Reserves based on US$1,500 AU and Dugbe Reserves based on US$1,600 AU as prepared by Pasofino Gold
Ltd.
5. Total g/t is based on a total weighted average ounces calculation per asset.
6. See release 30 June 2022 “2022 Updated Company Reserves and Resources Statements” for more details.
A core value-accretive strategy for Hummingbird has been to increase the Group’s Reserves asset base through
extensive drilling programmes that occurred during the 2021 year at all three of its assets.
June 2022 the Group provided an updated Reserves and Resources Estimate statements for each of its three
gold assets which included: Yanfolila in Mali; Kouroussa in Guinea, including a maiden Ore Reserve at the Kinkine
deposit and higher-grade Ore Reserves at the Koekoe deposit; and maiden Reserves for Dugbe in Liberia, as
announced by Hummingbird’s joint venture partners in Dugbe, Pasofino.
The success of 2021 drilling campaigns resulted in a material uplift to the Group Reserves and Resources,
providing Life of Mine (“LOM”) extensions to our asset base. Group Reserves increased materially to 4.13 Moz of
gold (“Au”) from 1.12Moz, as reported in November 2021 and Resources increased 8% to 7.28Moz of Au since
previous statements as summarised in the Group Reserves and Resources tables above.
HUMMINGBIRD RESOURCES 23
YANFOLILA, MALI RESOURCES AND RESERVES STATEMENTS
Yanfolila Reserves and Resources total 719 thousand ounces (“koz”), an increase of 13 koz (+2%) at 2.85 grams
a tonne (“g/t”), and 2.07 Moz at 2.22 g/t, an increase of 100 koz (+5%) net of depletion from mining since the
previous statements respectively.
Notably underground Reserves at Komana East Underground (“KEUG”) increased by 75koz (+37%), to total
278koz at 3.94 g/t and Gonka underground Resources totalled 225 koz at high grades of 4.16 g/t, being an
addition of 68koz (+43%) since the last statement. With Yanfolila’s current Reserves and Resources profile the
Group is confident of a minimum seven-year LOM, with potential to maintain and extend Yanfolila’s LOM with
further drilling campaigns, in particular at the underground deposits which are of a higher grade to the open pit
operations.
Yanfolila, Mali summary Resources and Reserves tables below.
YANFOLILA, MALI RESOURCES
Deposit
Komana West (KW)
Komana East (KE)
Sonioumale West (SW)
Sonioumale East (SE)
Gonka (GK)
Komana East Underground (KEUG)
Gonka Underground (GKUG)
Gurin West (GW)
Kabaya South (KS)
Kabaya South (KS non code)
Badogo-Malikila (BM non code)
Run-of-Mine Stockpiles
Heap Leachable Stockpiles (HLS)
kt
5,951
1,116
3,462
2,949
601
4,379
1,680
1,161
2,020
950
2,347
722
1,607
Total Yanfolila Resources
28,946
Au (g/t)
1.84
3.20
1.72
2.49
3.45
3.94
4.16
1.98
1.31
1.50
0.81
1.19
0.60
2.22
koz
353
115
191
236
67
555
225
74
85
46
61
28
31
2,065
1. Yanfolila Resources Statement effective as 31.12.21.
2. See release 30 June 2022 “2022 Updated Company Reserves and Resources Statements” for more details.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 24
OPERATIONAL REVIEW
YANFOLILA, MALI RESOURCES AND RESERVES STATEMENTS (CONTINUED)
YANFOLILA, MALI RESERVES
Deposit
Komana West (KW)
Komana East (KE)
Sonioumale West (SW)
Sonioumale East (SE)
Gonka (GK)
Komana East Underground (KEUG)
Run-of-Mine Stockpiles
Total Yanfolila Reserves
1 Yanfolila Resources Statement effective as 31.12.21.
kt
891
1,099
922
1,375
651
2,192
723
7,853
Au (g/t)
2.62
2.99
1.86
2.53
3.15
3.94
1.19
2.85
KOUROUSSA, GUINEA RESOURCES AND RESERVES STATEMENTS
Kouroussa Reserves totalled 647 thousand ounces (“koz”), an increase from the last announced reserves.
Kouroussa, Guinea summary Resources and Reserves tables below.
KOUROUSSA, GUINEA RESOURCES
Deposit
Kinkine (KI)
Koekoe (KK)
Kinkine Underground (KIUG)
Koekoe Underground (KKUG)
Bag Farm Junction (BFJ)
X-Vein (XV)
kt
1,947
5,680
421
2,220
1,743
354
Total Kouroussa Resources
12,365
KOUROUSSA, GUINEA RESERVES
Deposit
Kinkine (KI)
Koekoe (KK)
Total Kouroussa Reserves
kt
1,234
3,622
4,856
Au (g/t)
2.18
3.85
1.75
2.30
1.59
7.33
3.02
Au (g/t)
2.56
4.69
4.15
koz
75
106
55
112
66
278
28
719
koz
136.6
704.0
23.7
165
89.0
83.0
1,200.3
koz
101.4
545.8
647.2
HUMMINGBIRD RESOURCES 25
DUGBE, LIBERIA RESOURCES AND RESERVES STATEMENTS
On 13 June 2022, joint venture partners at Dugbe, Pasofino, released the results of the Dugbe Gold Project DFS.
The release highlighted a material maiden Reserve of 2.76 Moz and Resources of 4.01 Moz being an increase
of 447 koz since Pasofino’s last Mineral Resources Estimate (“MRE”) update, of which Hummingbird will retain a
51% controlling interest in the project.
Dugbe is a large-scale gold asset with a 14-year LOM, low AISC profile of US$1,005/oz, with material exploration
upside potential given only six of the probable 100 targets have been explored over the 2,559 km2 exploration
license area.
As noted previously, the Group is working with Pasofino conducting a strategic review of our options to best
realise the maximum value of Dugbe for all stakeholders.
Dugbe, Liberia summary Resources and Reserves tables below.
BUGBE, LIBERIA RESOURCES
Deposit
Dugbe F and Tuzon
BUGBE, LIBERIA RESERVES
Deposit
Dugbe F and Tuzon
kt
98,100
kt
66,000
Au (g/t)
1.27
Au (g/t)
1.30
koz
4,013
koz
2,760
1. Dugbe Reserves and Resources are shown on a 100% basis. Hummingbird will retain a controlling interest in Dugbe of 51%.
2. See release dated 13 June 2022 “Dugbe Gold Project Feasibility Study Results” for more details.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 Kouroussa, Guinea – exploration upside to drive LOM extensions
26
OPERATIONAL REVIEW
YANFOLILA, MALI
Mining and exploration licences
KOUROUSSA, GUINEA
Mining Licences held
Mining licences
Koekoe deposit & historical drilling holes
Koeke deposit section view 1
Kouroussa, Guinea – exploration upside to drive LOM extensions
Mining Licences held
Koekoe deposit and historical
drilling holes illustration
Koekoe deposit & historical drilling holes
Corporate Update
Corporate Update February 2023: A multi-asset, multi-jurisdiction gold producer
Koeke deposit section view 1
‹#›
15
Komana East Deposit illustration
Corporate Update
Corporate Update February 2023: A multi-asset, multi-jurisdiction gold producer
‹#›
15
HUMMINGBIRD RESOURCES
27
A
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28
OPERATIONAL REVIEW
DUGBE, LIBERIA
West Africa and Liberia key mining map and Dugbe illustration
Dugbe F and Tuzon deposit illustration
HUMMINGBIRD RESOURCES
CCoorrppoorraattee UUppddaattee February2022Clear path to beinga multi-asset producer‹‹##››RReesseerrvveess && RReessoouurrcceess■The Birimian geological region of West Africa is one of the largest gold producing areas in the world■Dugbeis one of the largest deposits in this part of the Birimian■2.74 Moz Reserves and 4.01 Moz Resources ■2,559 km2under MDA for 25 years, with +100 exploration targets■6 key targets exploredHHiigghh DDFFSS vvaalluuee11■High DFS pre-tax NPV of US$690 million (US$530 million post tax)■26.35% IRR (23.6% post-tax)■LOM AISC of US1,005/oz ■3.5 years capital payback ■14 year LOM, with c.200,000 oz per annum in the first five years of production■LOM strip ratio 4.21:1, lower in first five years■Detailed ESIA completed CCuurrrreenntt■Significant shareholder:TurkishmininggroupESAN■Strategic review underway with JV partner Pasofino to best realise the maximum value of Dugbe for all stakeholdersDDuuggbbee,, LLiibbeerriiaa ––ssttrraatteeggiicc rreevviieeww uunnddeerrwwaayy ttoo rreeaalliissee mmaaxxiimmuumm vvaalluuee1.See release dated 13 June 2022: "Dugbe Gold Project Feasibility Study Results”.2222CCoorrppoorraattee UUppddaattee FFeebbrruuaarryy 22002233:: AA mmuullttii--aasssseett,, mmuullttii--jjuurriissddiiccttiioonn ggoolldd pprroodduucceerr 29
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30
Sustainability Report
Dan Betts
Interim Chairman and
Chief Executive Officer
INTRODUCTORY REMARKS
I am pleased to share with you the
following Sustainability Report,
which summarises the progress
we have made over the past
year and beyond on sustainability
issues, and demonstrates our
ongoing commitment to improving
our performance as we continue
to advance towards a high level
of Environmental, Social and
Governance (“ESG”) disclosure.
Strong ESG performance is essential
to the sustainable success of
our business, as it underpins our
social licence to operate, and
serves as the foundation of our
important relationships with the
communities and governments of
our host nations. Our core value of
responsible mining underpins our
internal practices, and our focus on
providing a positive lasting legacy in
the regions where we operate.
HUMMINGBIRD RESOURCES 31
MATERIALITY
In order to identify the material sustainability issues which
are most important to Hummingbird and its stakeholders, we
undertook a materiality assessment focused on ESG issues.
Working with an external consultant, we reviewed key issues for
the mining sector by their impact on our key stakeholders and on
Hummingbird’s business, in order to determine their materiality
to the company. The determination of material topics and their
importance in turn inform the disclosures in the Sustainability
Report. This process in turn informs the disclosures included in
this report and ensures that the report addresses all topics which
are determined to be most material to mining companies by
recognised ESG frameworks. In future reports, we will consider
different frameworks to align our sustainability disclosures against
in addition to the RGMPs and intend for our 2023 sustainability
report to be our first report to address the recommendations of the
Task force on Climate-related Financial Disclosures (“TCFD”).
Materiality matrix
3
2
1
n
o
p
u
o
r
G
s
e
c
r
u
o
s
e
R
d
r
i
b
g
n
m
m
u
H
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f
o
t
c
a
p
m
I
l
s
r
e
d
o
h
e
k
a
t
s
l
a
n
r
e
t
x
e
0
0
1
2
3
12
13
15
14
4
7
11
8
16
18
9
17
5
6
10
19
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Operational health, safety & security
Resettlement
Tailings management
Water stewardship
Community engagement
Economic development of host communities
Business ethics & compliance
Environmental compliance
Talent attraction and retention
Corporate governance
Climate change
Human rights
Biodiversity
Waste and hazardous materials
Mine closure
ED&I
Anti-bribery and corruption
Responsible sourcing
Infectious disease management
1
2
Impact on Hummingbird Resources Group’s commercial success
3
Governance
Social
Environmental
High Importance
Medium Importance
1
2
5
6
3
4
8
7
Operational health, safety & security
Resettlement
Community engagement
Economic development of host communities
Tailings management
Water stewardship
Environmental compliance
Business ethics & compliance
9
15
16
11
14
10
12
17
18
Talent attraction and retention
Mine closure
ED&I
Climate change
Waste and hazardous materials
Corporate governance
Human rights
Anti-bribery and corruption
Responsible sourcing
Hummingbird’s key stakeholder groups include:
■ Local host communities
■ Employees
■ Governments of the countries we operate in, at local and national level
■ Shareholders
■ Customers
■ Suppliers and contractors
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
32
WGC RGMP COMPLIANCE
EMPLOYMENT PRACTICES
We are proud to be committed to local employment, with a high
proportion of employees at our sites being Malian or Guinean
nationals. In 2022 our Equality, Diversity and Inclusion (“ED&I”)
principles were further embedded into our employment practices
through the implementation of policies at the local level, as we
continue to promote a workforce which fully represents the
communities where we live and work.
GHG CALCULATION
2022 saw our measurement practices for our GHG emissions
improve, with the Group calculating its Scope 2 and contractor
emissions at sites for the first time. Building on this, we continue
to assess options for reducing the carbon intensity of our
operations. Key emissions reduction strategies include our 7MW
solar PV system and heat recovery system to be installed at our
Kouroussa site, which we expect to have a significant impact on
emissions, while also saving cost.
Going forward, we have developed a plan for further improving the
measurement and monitoring of our GHG emissions, in order to
identify important areas for reduction and integrate management
of these areas at site level. We’re looking forward to sharing more
on our emissions reduction approach in due course.
DUGBE
On the environmental front, an Environmental and Social Impact
Assessment (“ESIA”) was completed at Dugbe. Building on
previous studies, alongside social impacts the ESIA highlights
areas of sensitivity in the surrounding ecosystem, to help ensure
the project progresses with due regard to biodiversity. This
matches the approach to environmental protection we take at
our other sites, which are supported by site-specific biodiversity
management plans.
SMO AND CLOSING REMARKS
The Single Mine Origin (SMO) initiative, of which Hummingbird
is a founding member, continued to be adopted by miners
and manufacturers in 2022. Enabled by our compliance with
the RGMPs, our SMO certification provides assurance of our
responsible operation for our whole supply chain, including end
consumers.
This year we are working towards further improving our
sustainability‐related disclosures, and intend for our 2023 report
to be our first report to address the recommendations of the
Task force on Climate‐related Financial Disclosures (TCFD). We
recognise that sustainability is an area where we have to make
continual progress, and we look forward to improving the degree
and depth of our ESG disclosures in coming reports.
I would like to thank our employees, communities and host
countries for their collaboration and support throughout the year,
as we continue to realise our vision of sustainable gold mining.
In November 2022, the Group successfully achieved full
compliance with the World Gold Council’s Responsible Gold
Mining Principles (“RGMPs”). The result of significant work over
the past three years on improving ESG integration and monitoring,
this is a significant step on our ESG journey which the Group can
take pride in.
The process of achieving compliance, which is subject to annual
independent audits, also strengthened our practices in a number
of areas. We now have a stronger governance framework and a
robust range of policies, which we will continue to make sure are
operationalised by our HSEC teams and will monitor for continued
effectiveness.
The World Gold Council (“WGC”) launched the RGMPs in 2019
in order to create a framework for gold mining companies which
sets out clear expectations for consumers, investors and the gold
supply chain as to what constitutes responsible gold mining.
Developed through extensive external consultation, the RGMPs
reflect the perspectives on responsible mining of a broad range of
stakeholders, including governments, international organisations,
civil society, supply chain participants and investors. The 10
principles cover material governance, social and environmental
topics for the industry.
During 2022 Hummingbird underwent an internal assessment
against the principles in order to achieve compliance with them,
benchmarking and in many cases improving its ESG practices.
In November 2022, we were proud to announce that we had
achieved full RGMP compliance. As required by the WGC, we
worked with an external assurance provider to confirm our
conformance with the principles.
Compliance with the RGMPs, which are subject to annual
assurance, is a reflection of our ongoing commitment to
responsible operation, and indicative of our ambition to
consistently improve on our ESG performance.
COMMUNITY INVESTMENT
At our Yanfolila site, throughout 2022 we continued to support
initiatives which are having a positive impact on the ground,
working in tandem with community needs. Water infrastructure
was expanded as part of our successful WASH Programme, with
boreholes installed at several villages to provide vital sources of
water.
The market garden programme, which provides an alternative
source of livelihood for around 900 people in local communities,
primarily women, was expanded further. A total of 48 wells have
now been constructed, serving 16 villages in the local area.
Additional community projects included the continued
sponsorship of teachers to support the education system, the
construction of three new classrooms at Sanioumale with funding
of teacher salaries, the ongoing poultry farm project which
provides skills for young people, spraying programmes to prevent
malaria, and improvements to local road infrastructure.
Our progressive reforestation programme, the Hummingbird Tree
Initiative, now successfully plants 10,000 trees a year, creating a
source of income while providing skills in plant propagation.
Similar initiatives are now underway at our Kouroussa site, where
we seek to have an equivalent degree of community involvement
to that in Yanfolila.
HUMMINGBIRD RESOURCES Sustainability Highlights
33
$438,123
SPENT ON COMMUNITY
AND LIVELIHOOD
PROJECTS IN MALI
$15.2 MILLION
ECONOMIC CONTRIBUTION
TO HOST NATIONS IN TAXES AND
DUTIES
90%
NATIONAL EMPLOYMENT
AT OPERATIONS
0.84 LTIFR
AT YANFOLILA
0
FATALITIES
HUMMINGBIRD RESOURCES
85%
PROCESS WATER
RECYCLED
10,000
TREES PLANTED ANNUALLY
IN YANFOLILA THROUGH THE
HUMMINGBIRD
TREE INITIATIVE
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 34
GOVERNANCE
Principle 1: Ethical conduct
We will conduct our business with
integrity, including absolute opposition
to corruption
SOCIAL
Principle 4: Safety and health
We will protect and promote the
safety and occupational health of our
workforce (employees and contractors)
above all other priorities and will
empower them to speak up if they
encounter unsafe working conditions
Principle 7: Working with
communities
We will contribute to the socio-
economic advancement of communities
associated with our operations and treat
them with dignity and respect
ENVIRONMENT
Principle 2: Understanding
our impacts
We will engage with our stakeholders
and implement management systems
so as to ensure that we assess,
understand and manage our impacts,
realise opportunities and provide
remedy where needed
Principle 3: Supply chain
We will require that our suppliers
conduct their business ethically and
responsibly as a condition of doing
business with us
Principle 5: Human rights
and conflict
We will respect the human rights of our
workforce, affected communities and
all those people with whom we interact
Principle 6: Labour rights
We will ensure that our operations
are places where employees and
contractors are treated with respect
and are free from discrimination or
abusive labour practices
Principle 8: Environmental
stewardship
Principle 9: Biodiversity,
land use and mine closure
Principle 10: Water, energy
and climate change
We will ensure that environmental
responsibility is at the core of how we
work
We will work to ensure that fragile
ecosystems, habitats and endangered
species are protected from damage,
and will plan for responsible mine
closure
We will improve the efficiency of our use
of water and energy, recognising that
the impacts of climate change and water
constraints may increasingly become a
threat to the locations where we work
and a risk to our licence to operate.
HUMMINGBIRD RESOURCES 35
Sustainability Governance
Hummingbird recognises the importance of robust
governance mechanisms to ensure sustainability and
ESG issues are monitored, discussed and addressed at
the local and corporate levels.
The success and viability of our operations and long-term
sustainability of the business depend on responsible management
of the impacts we have on communities and the environments in
which we operate, and on ensuring a safe working environment
for all employees and contractors. Hummingbird’s focus on
sustainability matters is intended to benefit all stakeholders,
including its host communities in the countries where it operates,
and its employees, suppliers and shareholders.
Hummingbird’s ESG Committee, established in 2018, provides a
formal and transparent governance mechanism for ensuring that
the Board is provided with oversight and guidance on ESG issues,
and so that the Board can develop and revise the Group ESG and
sustainability policy appropriately.
The ESG Committee provides support in managing key
sustainability risks and objectives. It is responsible for reviewing
Group performance against these issues, and the effectiveness
of management systems. The Committee’s remit is focused on,
but not limited to, key material issues including occupational and
community health and safety, environmental stewardship and
compliance, social performance and community development,
stakeholder engagement, and cultural heritage. The ESG
Committee also provides advice and guidance on relevant
aspects of the licence to operate, including strategies on security,
procurement, tax and human resources.
This Committee reports quarterly to the board and is currently
chaired by an external ESG and sustainability specialist. The
Board and Corporate Executive Team are invited to the quarterly
meetings, in addition to the local Health, Safety, Environment and
Community (“HSEC”) managers at the Yanfolila and Kouroussa
sites.
Additionally, the Committee holds weekly meetings with the HSEC
managers, during which key areas of ESG progress and risk are
raised and discussed.
Responsibility for sustainability matters is assigned at operational
level. HSEC managers at each site, supported by staff within
their departments, are responsible for day-to-day implementation
of policy and sustainability strategy, and provide updates to the
general managers at each site.
36
CODE OF CONDUCT
Hummingbird’s company-wide Code of Conduct and associated
policy framework is intended to ensure that all parts of the
business are conducted with integrity, including absolute
opposition to bribery and corruption. The Code of Conduct is
distributed and signed by all employees at both corporate and
local level and describes what is expected of employees, and is
developed in line with our organisational principles and values (see
page 6). We endeavour to always operate in a way that respects
the human rights of our employees and all those within our supply
chain.
CODE OF CONDUCT
Describes our expectations for all employees
The code is informed by our policy framework:
Safety, Occupational Health
and Wellbeing Policy
Environmental Policy
Anti-bribery and
Corruption Policy
Whistleblowing Policy
Political Donation Policy
Human Rights Policy
Corporate Security Policy
Share Dealing Policy
Equal Opportunity Policy
Anti-discrimination,
Harassment and Bullying Policy
Community and Social
Performance Policy
Gifts and Hospitality Policy
IT and Communication
Systems Policy
Group Travel Expenses Policy
Social Media Policy
GOVERNED BY THE ESG COMMITTEE
Responsible for ESG and sustainability strategy at Group level
HUMMINGBIRD RESOURCES
37
A
N
N
U
A
L
R
E
P
O
R
T
+
A
C
C
O
U
N
T
S
S
T
A
T
E
M
E
N
T
2
0
2
2
RESPONSIBLE SOURCING
Responsible sourcing and the safety and wellbeing of workers
is of paramount importance to Hummingbird. We require that all
our suppliers conduct their business ethically and responsibly
as a condition of doing business with us, and operate to our
standards of ethics, safety, health, human rights, and social and
environmental performance.
These core principles are reflected in our Supplier Code of
Conduct, implemented in 2022, which is distributed to all
suppliers as a matter of course and establishes the minimum
standards that must be met by any entity that supplies products
or services to Hummingbird.
Our Supplier Code of Conduct
requires all suppliers to be compliant
on issues including:
Slavery, human trafficking and child labour
Never using child, compulsory or forced labour or any other
form of slavery
Human rights
Compliance with all internationally recognised human rights
Equal opportunities
No discrimination to employees based on race, gender, or any
other characteristic
Freedom of association
Respecting the right of workers to associate with groups of
their choice including trade unions
Safe working environment
Provision of a safe and healthy working environment and
compliance with all applicable health and safety laws
Environmental responsibility
Compliance with all applicable environmental laws, and
environmental management in place to address environmental
risks and continuously improve environmental performance
Bribery and corruption
Suppliers do not accept or offer bribes or political
contributions
In 2022, we began distributing our Supplier Code of Conduct to
all suppliers, beginning with those that service the Yanfolila site
both locally and internationally.
From April 2022, we implemented a new due diligence framework
and checklist, which are applied to each new supplier. Our
due diligence process includes the requirement for suppliers to
confirm their compliance on human rights issues in the upstream,
core operation and downstream parts of their own supply chains.
We are in the process of implementing additional annual due
diligence checks, to be applied to key suppliers and suppliers
categorised as high-risk, in order to ensure continued compliance.
Supply chain teams at each site are responsible for performing
risk assessment on suppliers. In 2022, no incidents of non-
compliance by our suppliers against the Supplier Code of
Conduct were recorded.
All the gold dore produced by Hummingbird’s mines is purchased
by Auramet, a US-based specialist in metal transactions, which
then refines the gold at three refiners: Metalor, Rand Refinery,
and Argor-Heraeus. All three refiners are London Bullion Market
Association (“LMBA”) certified, meaning they meet the authority’s
standards for responsible operation and strong governance.
Hummingbird does not currently have any contracts with refiners.
Hummingbird is a founding member of SMO, a gold certification
initiative for mines which adhere to the WGC RGMPs. All gold
produced from our Yanfolila site is SMO accredited. SMO gold
remains segregated throughout the supply chain, with end
customers provided with an auditable chain of custody from
source mine to final product, providing assurance of responsible
mining practices.
38
SINGLE MINE ORIGIN
Single Mine Origin (SMO) is a gold certification standard which
provides a consistent global supply of responsibly sourced gold,
fully traceable to a single mine.
All SMO gold is produced by mines that adhere to exacting
standards for responsible mining established by international
standards bodies, with every gram of gold produced providing
a traceable and auditable chain of custody directly to the mine
where the gold was sourced.
Buyers of SMO gold can be certain as to the journey and
origins of their gold, and know that their purchase contributes
to sustainability initiatives benefiting local communities.
Hummingbird’s Yanfolila mine in Mali has been an SMO
accredited mine since 2017.
How SMO Gold is different
Certified Responsibility: All SMO mines comply with standards
set by the World Gold Council’s Responsible Gold Mining
Principles (RGMPs), Initiative for Responsible Mining Insurance
(“IRMA”) or International Council on Mining and Metals (“ICMM”).
Segregated Supply: SMO gold remains segregated from any
other material throughout the supply chain, from mine output, to
logistics, to LBMA-certified refiners, to pre-delivery manufacturing
– with the whole journey fully documented.
Refinement: Most of the world’s gold becomes untraceable once
it enters the refinery. SMO gold is an exception, refined by LBMA
refiners in total segregation from any other material, in a process
overseen by an independent auditor – the most critical part of
SMO’s chain of custody.
1oz coin from SMO produced exclusively
with gold sourced from our Yanfolila mine
Boodles, the luxury jeweller, exclusively uses
SMO gold in all new jewellery since 2020
Hummingbird is a founding member of SMO,
with other mines and companies globally joining
the growing platform.
Benefits for communities
SMO gold makes a proven contribution to community projects, including health, infrastructure
and social initiatives
94% of employees at SMO mines are nationals, many from the local host communities
Benefits for miners
SMO accreditation provides proof of responsible production, and appropriately to showcase
the positive impact their operations have
Benefits for purchasers of gold
Access to a consistent, reliable supply of responsibly produced gold on a mass market scale
Benefits for consumers
Unique QR code allows consumers to trace the provenance of a product back to a single mine
HUMMINGBIRD RESOURCES 39
ETHICAL BUSINESS
Anti-bribery and Corruption
Hummingbird has no tolerance for bribery and corruption. Bribery
is a crime which has a major negative economic, political and
environmental impact on societies, and diverts public resources
from priorities such as education, infrastructure and health.
Our Anti-bribery and Corruption Policy is part of the Code of
Conduct, which is shared with and signed by all employees upon
commencement. This policy applies to all employees and provides
instruction on the principles and behaviours in relation to bribery
which must be adhered to. The policy details the whistleblowing
channels through which concerns can be raised, and includes an
option for confidential reporting of incidents.
We require all employees to complete anti-bribery training upon
commencement and sign a declaration in relation to Conflict of
Interest and the Gift & Hospitality register, and complete updated
training annually. Training courses cover our expectations of
employee behaviour, and how to effectively recognise and report
instances of potential misconduct.
We have Code of Conduct and Anti-bribery and Corruption
classroom trainings at sites, run by our HR teams, in order to
ensure that employees who do not have access to computers,
who are on rotation, or who have low literacy have access to
regular training.
Whistleblowing
Hummingbird takes any misconduct in relation to our Policies
seriously, and intends to maintain a culture of openness and
accountability. Employees at all levels are encouraged to speak
up in relation to suspected wrongdoing on issues including
bribery, corruption, dangers to health and safety, or any other
breach of internal policies and procedures. Our Whistleblowing
Policy recommends that staff raise issues with their line managers,
and includes a confidential line of reporting available at all hours,
with contact options for email and phone included to report
issues directly to the Chair of the Audit Committee, the Company
Secretary, and the CEO.
The Audit Committee has ultimate responsibility for our
Whistleblowing Policy and for reviewing the effectiveness of
actions taken in response to raised concerns. The Chair of the
Audit Committee has operational responsibility for this policy and
for ensuring that all staff who may deal with raised concerns under
this policy receive regular and appropriate training.
Modern Slavery
In compliance with the UK Modern Slavery Act 2015,
Hummingbird publishes an annual Modern Slavery Statement,
approved by the Board, which describes the steps taken towards
seeking to ensure that there is no slavery or human trafficking
within our business or at any stage of the supply chain. Respect
for human rights and total compliance with laws on forced labour
and trafficking are conditions of our Supplier Code of Conduct,
with due diligence carried out on key suppliers as part of the
tender process. There were no reported cases of modern slavery
during 2022 for Hummingbird.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 40
Our People
Hummingbird’s performance as a company is dependent
upon the commitment and engagement of our people,
who we endeavour to treat with respect and whose
wellbeing we strive to protect.
The health and safety of our workforce is of utmost priority. We
aim for every employee, contractor and visitor to return home
safely each day, and for workforce health to be protected by
dedicated medical teams. Hummingbird is committed to inclusivity
at its places of work, and to creating working environments with
high accountability which are free from discrimination.
The involvement of local people working within our mine and
across our projects is central to our vision of sustainable and
responsible mining. Local hiring, training and succession planning
remains a priority, as does maintaining strong relations with
employee unions.
Our priorities:
■ Zero Harm target: Achieving Zero Harm with every employee,
contractor and visitor
■ Healthcare: Providing regular consultations, proactively
preventing health risks, and reducing infectious disease
spread, for both our workforce and our host communities
■ An inclusive workforce: Supporting a workforce which
reflects the global communities where we operate
■ Fair treatment: Providing equal opportunities for development
and progression, and adhering to fair labour practices
This approach is supported at Group level by our Safety,
Occupational Health and Wellbeing Policy, Equal Opportunity
Policy, Human Rights Policy, and Anti-Discrimination, Harassment
and Bullying Policy.
HUMMINGBIRD RESOURCES 41
OPERATIONAL HEALTH AND SAFETY
Our Targets
Our approach
We believe that all accidents are preventable, and aim to achieve
Zero Harm for all employees, contractors and visitors. Through
effective implementation of health and safety measures, we seek
to support timely and cost-effective exploration, development and
production operations.
Occupational Health and Safety Management Plans are
developed for each operation, reflecting local applicable laws and
regulations, international best practice requirements, regular risk
assessments, application of the mitigation hierarchy, and adaptive
management processes that emphasise prevention and training to
control risks. These plans are reviewed and updated on a periodic
basis, in order to ensure continuous improvement and sustained
performance.
Health and Safety Principles
Zero Harm
Is possible for all no matter where we work
No Repeats
All necessary steps will be taken to learn
from incidents and audit findings in order to
prevent reoccurrence
Continuous
Improvement
Is essential – we must learn, adapt, anticipate
and prevent reoccurrence of any issues
Simplicity and
Consistency
Are the basis for exceptional performance
across our business, wherever we work
Hummingbird’s Group Level Safety, Occupational Health
and Wellbeing Policy outlines our commitment to effective
management of health and safety. The Policy compels
Hummingbird, among other actions, to:
■ Provide safe and healthy working conditions and meet all
relevant statutory health and safety related requirements
■ Educate, inform, instruct and ensure that all employees and
contractors have the appropriate skills and knowledge for their
roles, understand their obligations, and are held accountable
■ Work with partners and regulatory agencies to support the
enhancement of community health systems within project
areas of influence
As per the policy, employees are reminded of and made
individually responsible for relevant occupational health and
safety measures, and for complying with all requirements for their
activities.
Ultimate responsibility for our health and safety performance at
Group level sits with the Board. Any serious health and safety
incidents are immediately reported to the management team
and Board. At site level, health and safety is managed and
implemented by the SHEC manager at our Yanfolila site, and the
site ESG manager at Kouroussa.
0
FATALITIES
<1.2
LTIFR
<2.5
TRIFR
11,400
HOURS SAFETY
TRAINING ANNUALLY
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 42
Safety
Safety performance remained strong at our Yanfolila site in 2022, with a Lost Time Injury Frequency Rate (“LTIFR”)
of 0.84 and a Total Recordable Injury Frequency Rate (“TRIFR”) of 1.26, exceeding our targets.
Yanfolila safety statistics
LTIFR
TRIFR
TARGET
<1.2
<2.5
2020
0.29
0.82
2021
0.30
0.59
2022
0.84
1.26
At Kouroussa, safety programmes have been developed and implemented as the project is set to enter
production in Q2 this year. The LTIFR in 2022 was zero, with no lost time incidents occurring.
There were no work-related fatalities recorded across any sites in 2022.
Training
All employees and contractors are required to complete Hummingbird’s safety training modules in hazard
awareness, job safety analysis, basic fire response, and first aid and chemicals awareness. We provide
role-specific training for roles with higher risk, including for the handling of cyanide.
Site safety managers are responsible for maintaining safety training records.
In 2022, training hours were 13,464 (2021: 6,230 hours) above our target of 11,400 hours annually. In 2023, we
expect to continue to meet our safety training target.
Training hours
TOPIC
Safety Inductions
External Emergency Response Training
Cyanide Awareness
Working at Heights
Workplace Inspection
Industrial Fire Fighting
First Aid Training
Defensive Driver Training
Security Training - VPSHR
Other Safety Training (including hazard awareness and LOTO)
Total Training Hours
TRAINING HOURS
4,355
440
1,340
320
384
864
1,325
984
264
3,188
13,464
Our site team also carried out Safety Awareness Campaigns through two local radio stations, at Bougoudalé and
Yanfolila, which were primarily targeted at our workforce. Hummingbird also completed fire awareness campaigns
at Soloba village, and road traffic awareness campaigns at Bougoudalé.
HUMMINGBIRD RESOURCES
43
HEALTH
Infectious Diseases
The health of our workforce is essential to ensuring good
productivity and wellbeing. In partnership with Critical Care
International (“CCI”), a leading provider of healthcare solutions in
remote areas, Hummingbird has brought specialist professional
care to the Yanfolila site since construction on the mine began.
Health activities are focused around providing medical
consultations for employees, preventing and controlling
the incidence of infectious disease, providing preventative
maintenance to the workforce through systematic medical
surveillance, and providing urgent care.
In 2022 the Yanfolila and CCI medical services carried out a
total of 3,394 consultations for employees at Yanfolila. 3,031 of
these were initial consultations, and 323 were medical reviews
consisting of follow-up appointments, assessments for chronic
illness, and for patients returning to work after a period of
absence.
Preventative medical analysis with the goal of diagnosing and
treating medical issues including cataracts, glaucoma, diabetes,
cancer and gout at an early stage was carried out on employees.
No such diseases were diagnosed.
Medical checks for employees with a higher risk of exposure to
harmful substances, including those working in the gold room
where exposure to lead is higher, were carried out, including
checks for intoxication with cyanide, mercury and arsenic. These
checks did not reveal any issues.
Annual medical visits to inspect the health services at the Yanfolila
site are carried out under the supervision of the Institut National
de Prévoyance Sociale (“INPS”) of Sikasso.
At Kouroussa, we have done detailed planning on implementing
healthcare initiatives at site and in our surrounding communities,
with HSEC officers and medical staff now being recruited and
OHS training being implemented.
Our mines are located in areas where malaria is endemic. One of
the priorities of our health programme is to prevent the prevalence
and spread of this preventable disease, both for our workforce
and in our host communities.
In 2022, 461 cases of Malaria were recorded at Yanfolila, with
an expected seasonal variability which sees cases peak between
August and November.
Measures have been implemented at Yanfolila to actively reduce
the spread of malaria and increase awareness among employees,
including the distribution of mosquito nets and repellents, a
long-sleeves policy for employees at night, and regular insecticide
spraying inside each room in the camp.
Measures to combat malaria extend to the surrounding
communities. The Indoor Residential Spraying (“IRS”) program
was carried out in 2022, under the supervision of the National
Malaria Control Program (“NMCP”) and PMI/USAID (President’s
Malaria Initiative) in Mali. The IRS treated 5 satellite villages of the
mine during the rainy season, Bougoudalé, Tiémba, Lèba, Soloba
and Komana, with a total of over 2,000 structures sprayed and
10,457 individuals protected.
Overall, the incidences of malaria for the years 2020-2022 is
significantly lower than incidences from 2017-2019, a reflection of
the success of preventative measures carried out.
COVID-19 continued to be prevalent, but to a lesser extent to in
2020 and 2021. Prevention and control measures continued, with
the LBMA laboratory installed at Yanfolila site carrying out over
3,500 PCR tests in total. 329 positive cases of COVID-19 were
recorded, all of which were cured. There were no serious cases
of COVID-19 in 2022. In September 2022, the on-site laboratory
was closed, and we continue to test for COVID-19 with rapid
diagnostic tests.
Yanfolila malaria incidence 2017-2022
0.160
0.140
0.120
0.100
0.080
0.060
0.040
0.020
0.000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2017
2018
2019
2020
2021
2022
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 44
Bougoudalé Health Centre
In 2018 following requests from surrounding communities a
community health centre, or CSCom, was built to service the
localities of Bougoudalé, Tiemba and Lèba, covering a population
of around 6,000. The CSCom was an improvement on the
medical outpost which serviced the area previously.
Since construction the centre has contributed to improved health
care and coverage of the population, including through the
delivery of malaria vaccinations, and has been able to provide
significantly more consultations than the previous outpost. The
CSCom is staffed by a national medical doctor, assistants funded
by the ASACO (the elected local committee which governs the
CSCom) and a nurse and matron funded by Hummingbird.
The ASACO is responsible for management of the health centre.
Planned improvements to the CSCom will involve the ASACO
receiving training on management and staffing from FENASCOM,
the national federation of CSCom governance, and from the
Chief Medical Officer at Yanfolila who is providing support and
oversight.
Critical Care International (“CCI”)
Critical Care International is an internationally recognised
medical company which Hummingbird Resources
has worked with for several years to deliver employee
healthcare and community initiatives.
CCI works in Africa to build relationships with local
communities in order to deliver healthcare development
programmes that ensure sustainable change and skills
transfer.
CCI are responsible for the staffing and operation of
our site clinic at Yanfolila. In collaboration with CCI, we
have delivered projects including annual Malaria spraying
campaigns, educational workshops, and a training and
mentoring package for a local community clinic.
The CSCom at Bougoudalé
HUMMINGBIRD RESOURCES 45
SECURITY
TRAINING AND DEVELOPMENT
Hummingbird seeks to continually train and develop our
employees in order to promote exceptional performance and to
contribute to the skill bases of our host communities. We aim for
our mining operations to be run by locally and nationally employed
staff, and to provide these employees with opportunities to
support their career progression and development, with all
promotion decisions made on the basis of merit. 90% of our
current total workforce is nationally employed (see page 33).
A total of $56,000 was spent on training led by the Yanfolila
HR team in 2022. Training focused on environmental and
social training, including on engagement, social dialogue and
interactions with unions, accountancy and taxation in relation to
the mining sector and West African standards, Health, Safety,
Security & Environment (“HSSE”) training, and training for the
Health and Safety Committee.
The goal of our security measures is to provide a safe and secure
working environment for all employees, while maintaining our
stringent approach to human rights which is critical to our licence
to operate. Effective security standards, policies and procedures
are fundamentally important to our business.
The Group has security employees, retains private security
contractors both on site and in consultative roles, and benefits
from the support of Gendarmes and National Guard elements in
each of Mali and Guinea. In 2022, we had a total of 205 personnel
in our security department.
Our approach to security is governed by our Corporate Security
Policy. This outlines our responsibility to protect our employees,
assets and shareholders from loss, engage with governments and
local communities regularly on security issues, and ensure that
our security approaches are guided by the Voluntary Principles on
Security and Human Rights (“VPSHR”).
All security personnel undergo annual training on VPSHR, and
on the company’s policies on human rights and ethical conduct.
This is to ensure that security tasks are conducted in compliance
with VPSHR, and that all personnel are proficient in human rights
standards. In 2022, this involved training sessions held for 203
security personnel.
No major security-related incidents were recorded during the year,
and we did not receive any security-related grievances.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 46
FAIR WAGES
In compliance with RGMP 6, Hummingbird is committed to paying
its workforce fair wages and benefits. We pay above the local
minimum wage at our sites and wage surveys have recently been
carried out to benchmark pay levels against national companies
and other global mining companies. This analysis also covered
employee benefits including performance incentives, paid
holidays, and healthcare. The results of these studies enabled
us to develop new site-based salary scales and further extend
our corporate incentive scheme to a greater proportion of our
workforce.
DIVERSITY AND INCLUSION
Hummingbird is committed to an inclusive workforce that fully
represents different backgrounds, cultures and perspectives, and
which reflects the global communities where we operate.
We are an equal opportunities employer and do not discriminate
on the grounds of gender, sexual orientation, race, national or
ethnic origin, religion, age, disability, or any other characteristic.
We work to ensure that our Equal Employment Opportunity
approach is enforced, such that all recruitment, training and
promotion activities are undertaken without regard to any
protected characteristic. Hummingbird does not tolerate
harassment or bullying, and we provide lines of reporting,
including confidential lines, for raising issues.
These commitments are outlined in our Equal Opportunities Policy
and Anti-Discrimination, Harassment and Bullying Policy, which
are both reviewed annually to meet best practice.
Our Recruitment Policy is reviewed annually by the Managing
Director, People. This policy is cascaded through to site level
with the aim of ensuring diversity and inclusion are considered at
each stage of recruitment, in line with RGMP 6. Additionally, a site
level Diversity Policy has been implemented in 2022 to address
workforce diversity and create an environment that welcomes all
employees.
In 2022 we updated our Equality, Diversity & Inclusion (ED&I)
policy at Yanfolila, maintaining a focus on key principles:
■ We will recruit, hire, train, and promote qualified persons in
all roles, without regard to any actual or perceived protected
characteristic.
■ We will base decisions on employment to further the principle
of equal employment opportunity.
■ We will ensure that all people focused actions such as
compensation, benefits, transfer, company sponsored training,
education, tuition assistance, social and recreational programs,
will be administered without regard to any actual or perceived
protected characteristic.
We continue to address the historical gender imbalance in the
mining industry by prioritising gender diversity, including the
sourcing and development of talented female workers at all levels
in our company, from trainee to management. At a corporate
level, in 2022 44% of our employees were women, with 27% of
those women in management team roles. 75% of new hires in
2022 were women. At a site level, in 2022 there were a total of
85 women in our total site workforce, representing 5% of the
workforce.
At a corporate level, we run a comprehensive annual performance
and talent management process, focusing on individuals who
can make a difference to organisational performance either
through their immediate contribution or, in the longer-term,
by demonstrating the highest levels of potential.
Training is offered ranging from onboarding, in-role skills
development, technical role-based training, and ongoing
development programmes. To help structure and develop our
training offering, we plan to develop our people database to
capture individual employee skills and personal development
plans as part of our performance and talent management
process.
We understand that our people are what makes us, and we
continue to invest in our employees in a number of ways:
■ Performance and Talent management and succession planning
■ Competitive base salaries and employee benefits based on
market analysis and benchmarking
■ Incentive programs designed to reward safety adherence,
successful production, and cost management at our
operations, whilst also recognising and rewarding individual
performance
■ Long-term incentive programs, providing eligible employees
share-based incentives
LABOUR RELATIONS
Hummingbird retains strong relations with labour unions at its
sites and respects the rights of its employees to join unions
and engage in collective bargaining. This right is defended in
the Anti-discrimination, Harassment and Bullying Policy, which
appreciates the legal right of the workforce to associate with
others and to join, or refrain from joining, labour organisations of
their choice without retaliation.
At the site level, SHEC and HR teams have regular meetings
with trade unions representatives, through which employees can
raise their concerns or provide their feedback on employment
conditions or possible improvements that the Group could
consider. In 2022, 6 general assemblies were held, and 4
meetings with Hummingbird Management were held, during which
minutes are kept.
HUMMINGBIRD RESOURCES
47
Communities and
Social Responsibility
Hummingbird is committed to demonstrating that
responsible gold mining can play a progressive role
and build a lasting positive legacy in the regions and
communities in which it operates.
Our aim is to contribute sustainably to the opportunities, livelihoods
and quality of life at our host communities. This is done through
our investment of capital and expertise at our sites, which creates
employment opportunities and an economic contribution, and
through investing in community projects and livelihood programmes.
We recognise that our contributions need to be managed
responsibly and be based on regular engagement with local
stakeholders. We look to support leaders and representatives
from all stakeholders on an ongoing basis, in order to work
towards sustainable outcomes that create positive legacies.
Our priorities:
■ Community projects: Working in collaboration with our host
communities to deliver projects with sustainable and long-
lasting benefits
■ Economic contribution: Making an economic contribution
through our operations to the nations we operate in and for
those we employ
■ Engaging with stakeholders: Maintaining strong
relationships and ongoing lines of communication with our local
and national stakeholders
■ Protecting livelihoods: Providing livelihood restoration
programmes and managing ASM at our sites
This approach is embedded through Hummingbird’s Group level
Community and Social Performance Policy, which compels us to:
■ Deliver community investment programmes based on
consultation with stakeholders, and evaluate their effectiveness
on an ongoing basis
■ Maintain regular communication channels with the
communities associated with our operations
■ Ensure that local people have access to training and job
opportunities at our operations, and identify opportunities for
the involvement of local businesses
■ Respect and preserve the cultural heritage of local communities
This policy is reviewed annually by the ESG Committee, with
ultimate accountability for the policy resting with the Board.
48
COMMUNITY INVESTMENT
COMMUNITY PROJECTS
It is our responsibility to provide community projects and livelihood
programmes which contribute to the prosperity of our host
communities. This supports our social licence to operate and the
delivery of our operations, which both depend strong relationships
with key stakeholders. Investment in our host communities is
central to our vision of sustainable mining.
STAKEHOLDER ENGAGEMENT
In line with RGMP 2 and 7, we listen to and engage with
stakeholders in order to ensure our community engagement
results in a positive and sustainable outcome. A Group level
Stakeholder Engagement Policy is in place in order to integrate
stakeholders’ interests and concerns into how we carry out
business.
A site-specific Stakeholder Engagement Plan (“SEP”) is in place at
our Yanfolila site, to assist with the implementation of appropriate
communication strategies to promote positive and long-term
relationships with the community. This plan governs how we
define and classify stakeholders according to our level of impact
on them and defines the range of ongoing engagements we
instate.
Committee Local Development (“CLD”) meetings are held
monthly, with CLD members comprising representatives of 16
surrounding villages, the mayors of 3 surrounding communes, and
representatives from local authorities, in which local development
projects are discussed and feedback is gathered.
Maintaining positive ongoing relationships and dialogues with
our communities and with national governments strengthens our
ability to work within our host countries. A comparable SEP will be
instated at our Kouroussa site this year.
The projects we develop at our Yanfolila and Kouroussa sites
are created in line with community consultations and needs, and
centre on positive planning for the future. At our Dugbe site, we
plan to have a similar degree of community investment.
YANFOLILA
Through the Community Local Development Committee (“CLDC”)
we seek to build consensus around projects and themes
for socio economic development, which are in line with the
Programme de Développement Economique, Social et Culturel
(“PDSEC”), a local development plan developed by the mayor
of the Yallonkoro-Soloba commune. The CLDC is financed by
Hummingbird, with projects allocated based on consensus and
prioritisation.
The PDSEC considers Hummingbird, via the Yanfolila site, to be a
key contributor, both in terms of investments into projects and as
a supplier of local employment.
WASH Programme
Hummingbird’s WASH Programme (Water, Sanitation and
Health) is an ongoing annual programme of installing key
water infrastructure systems in order to increase access to
and distribution of safe drinking water. In addition, we provide
maintenance training programs for delegates in the local villages in
order to maintain upkeep of water pumps.
Activities in 2022 at Yanfolila:
BENEFICIARIES
TYPE
Digneba Village
Séré Moussa Ani Samou
Commune
Bougoudalé Village
Sindo Village
Tiemba Village
Bougoudalé Village
Bandjougoufara Village
Komana Village
Soloba Village
Fougatie Village
Guelenkoro Village
Teguelendougou Village
Kona Village
Tientogo Village
Makandiana Village
Borehole With Manual Hand
Pump
Second Borehole With 40m3
Water Tower
Borehole Rehabilitation From
Hand Pump To Water Tower
With Distribution Points
Villages Had Wells Built To
Support Market Garden
Projects, With A Total Of 4
Wells Constructed At Each
Village
Total Expenditure: USD 126,000
HUMMINGBIRD RESOURCES 49
Since operations at Yanfolila began, Hummingbird has installed a total of:
14
LARGE SCALE
WATER TOWERS
3
DEEP
BOREHOLES
28
REHABILITATIONS
OF KEY WATER
INFRASTRUCTURE
48
MARKET
GARDEN WATER WELLS
Education
Community Healthcare
Since 2016 Hummingbird has sponsored 12 teachers at local
schools to assist in the delivery of education to some of Mali’s
poorest rural communes, improving the education system in a
region covering 10 villages. At the Sanioumale site, Hummingbird
has recently provided salaries for three teachers, and paid for the
construction of three additional classrooms.
We have additionally partnered with Malian NGOs to offer
vocational training programmes to youths, with topics including
both trade skills and basic business schools.
Infrastructure
Hummingbird invests in rehabilitation and improvements for local
roads to benefit connectivity for rural communities.
In 2022, projects included:
■ Maintenance on roads for Bougoudalé village totalling 1,300m
■ Dust suppression on a key road between Komana and
Yanfolila
In partnership with Critical Care International (“CCI”) we continued
to deliver our annual malaria Indoor Residual Spraying (“IRS”)
campaigns.
The IRS treated five satellite villages of the mine during the rainy
season, Bougoudalé, Tiémba, Lèba, Soloba and Komana, with
a total of over 2,000 structures sprayed and 10,457 individuals
protected.
Hummingbird also supported the construction and continues to
support the running of a community health centre in Bougoudalé,
details of which are given on page 44.
Additionally, through CCI we run educational workshops to inform
employees and local communities on topics including infectious
disease, maternity, and sexual health.
A summary of expenditures in 2022 at Yanfolila on both
community investments and livelihood projects is given below:
PROJECT AREA
2022 ACTIVITIES
EXPENDITURE (USD)
Livelihood restoration and food security
WASH programme
Education / Training
Health
Stakeholder engagement
Soap project
Poultry farm project
Market gardens
Borehole construction
Bougoudalé water supply
Market garden wells
Construction of classrooms at Sanioumale
Sponsorship for English courses
Nurse and teacher salaries (20)
Maternity equipment
Malaria sprays
Committee meetings
Local donations
123,637
126,065
67,092
9,091
112,238
Total: 438,123
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 50
KOUROUSSA
At our Kouroussa site in Guinea, we hold regular meetings with
local communities and authorities to inform Hummingbird’s
engagement. Several community investment projects are currently
underway in the communities near our Kouroussa site. In 2023,
we plan to implement further projects, achieving an equivalent
degree of community investment to Yanfolila.
INFRASTRUCTURE
Beneficiaries
Bananko village
Menindji village
Kouroussa
LIVELIHOOD
Beneficiaries
Sando village
Kominiko village
Kouroussa
Kinkini village
Project
Construction and equipment of a dyeing centre, including provision of technical training
Construction and equipment of a youth centre
Refurbishment for Kouroussa prefectural hospital, including provision of equipment
Project
Training in business development and funding for 50 locally affected people, including
finance for six micro projects
Training in business development and funding for 50 locally affected people, including
finance for six micro projects
Sewing and dyeing training for 50 female artisanal miners
Multi-function platform construction and training
Sangbarala village
Multi-function platform construction and training
Bananko village
Multi-function platform construction and training
Project
Community water boreholes each village
WATER
Beneficiaries
Bananko village
Menindji village
Sando village
Komoniko village
Kinkini village
Sangbarala village
HUMMINGBIRD RESOURCES LIVELIHOOD RESTORATION
KOUROUSSA
51
Planning is underway for future community livelihood
programmes, with an agreement reached with the community to
develop a market garden programme with accompanying wells.
Resettlement
In order to develop a mine, it may be necessary to relocate
people and communities. Hummingbird recognises that this can
be a challenge for the community involved and the mine. If not
managed well, resettlement can weaken relationships and cause
disruptions.
We will always seek to avoid involuntary resettlement. Where this
is not possible, we will proceed on the basis of consultation with
the affected people, the restoration of established livelihoods, and,
if necessary, fair compensation.
In Mali in 2022, management carried out resettlement
consultations with the Sanioumale East communities in relation to
the Sanioumale East pit, ensuring that compensation packages
were fair and in compliance with international and Malian law.
Working with external consultants ESDCO a Resettlement Action
Plan (“RAP”) was developed in accordance with IFC Performance
Standard 5 on resettlement and World Bank OP 4.12.
Government agencies visited Sanioumale East in March 2022,
accompanied by ESDCO and the Yanfolila site’s SHEC team. The
government delegation was satisfied with the visit and received
confirmation from the local community, the administration, and the
municipality on their agreement to resettlement.
Hummingbird is committed to improving the livelihoods of
individuals in host communities, and where communities have
been affected by our mining operations, to restore established
livelihoods.
YANFOLILA
Market Gardens
Since commencing operations at Yanfolila, Hummingbird has
supported the development of local community market gardens
servicing 16 villages. In the communities surrounding the Yanfolila
mine, these provide sustainable alternative livelihoods and
agricultural skills for over 900 people, mainly local women.
Hummingbird provides support for:
■ Water infrastructure and the wells required to operate the
garden
■ Building infrastructure and maintenance
■ Tools supply and training in agriculture techniques
Our focus is on improving operations and local engagement with
these gardens, so that they can offer a preferable alternative
income to Artisanal and Small-Scale Mining (“ASM”) activities such
as gold panning.
Poultry Farms
A local poultry farm project was undertaken following requests
from communities for an alternative livelihood to gold panning,
particularly for young people, and was begun in 2019. A total
of 8 have been developed with over 60 individuals employed in
operating them, providing local employment and supporting food
security.
Hummingbird provides support for:
■ Construction and maintenance
■ Purchasing support of poultry produce for the site
■ Training in poultry rearing
■ Water infrastructure to service the farms
Bee Keeping
A community round table in 2019 resulted in a pilot of an
apiculture and honey initiative at Bandjougoufara. The success
of this pilot phase resulted in the launching of a full project, with
funding provided by Hummingbird. It now covers 8 villages in
the Yallankoro-Soloba area, with honey harvest increasing year
on year to 394 litres of pure honey in Q3 2022. The project has
resulted in employment and a source of income, as well as more
hygienic honey production.
Planned improvements with the community include further
apiculture training and stronger connections with quality PPE
suppliers.
Soap production
Following community requests, particularly from women within
three surrounding communes, a saponification programme was
initiated in 2017 with 300 women, and expanded in 2020 with
a store constructed in Donsosso village. In 2022, five additional
stores have been budgeted for construction.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 52
LOCAL EMPLOYMENT
The involvement of local people working within our mine and
across our projects is central to our vision of sustainable and
responsible mining. We prioritise local and national recruitment at
both sites to help build talent and skills in our organisation and to
contribute to our positive impact on local, regional, and national
economies and communities.
At both operational sites we are committed to ongoing
nationalisation plans for all positions and national succession
plans for roles currently held by international employees.
At Yanfolila, 94% of all site employees, including contractors, are
Malian nationals. Out of all Malian employees, 37% are from local
communities, an improvement on 35% in 2021.
At Kouroussa, 83% of all site employees, including contractors,
are Guinean nationals. Out of all Guinean employees, 63% are
from local communities.
Yanfolila
Kouroussa
Yanfolila
Employees
Kouroussa
Employees
Nationals
Expatriates
Nationals
Expatriates
National
Employees
at Yanfolila
National
Employees
at Kouroussa
Locally recruited
From other parts of Mali
Locally recruited
From other parts of Guinea
ECONOMIC CONTRIBUTION
Hummingbird participates in the Extractive Industries
Transparency Initiative (“EITI”) processes in Mali, Guinea and
Liberia. In 2022 Hummingbird paid a total of $13.8 million to
the Government of Mali comprising taxes, duties and royalties,
a decrease of $2.1 million, reflecting lower minimum tax
payments. In addition to reporting in line with UK disclosure
requirements we strongly support the in-country EITI
transparency processes in stimulating continuing dialogue
between governments, business and civil society and enhancing
accountability around the use of the countries’ resource
endowments.
In Liberia, Hummingbird through our earn-in partner, Pasofino,
paid $0.5 million in licence fees and taxes to the Government
of Liberia and in Guinea the Group paid $0.8 million to the
Government of Guinea, comprising taxes, duties and licence fees.
HUMMINGBIRD RESOURCES Payments to Government of Mali 2022
Payroll taxes
Social Security
Withholding tax - IBIC
Royalties - CPS Tax Payable
Customs and import fees
Gold export fees
Corporation tax/Minimum tax
Other taxes
Total*
2022
2021
XOF’000’000
$’000
XOF’000’000
684
1,164
239
1,859
3,019
466
893
317
1,089
1,881
381
2,969
4,792
751
1,434
538
8,641
13,835
739
1,125
1,058
2,547
1,079
551
1,352
318
8,769
* Certain taxes in Mali are currently being offset by VAT receivable balances.
Payments to Government of Guinea 2022
The Group has made the following payments to the Government of Guinea.
Payroll taxes
Social Security
Withholding tax
Custom duties
Total
2022
2021
GNF’000’000
$’000
GNF’000’000
3,755
392
2,674
301
7,122
433
45
309
33
820
1,042
349
688
–
2,079
Payments to Government of Liberia 2022
The Group through its earn-in partner, Pasofino, has made the following payments to the Government of Liberia.
Business registration fees
Licence fees
Surface rent
Payroll taxes
Withholding tax
Total
2022
$’000
8
3
178
57
288
534
53
$’000
1,351
2,043
1,943
4,623
1,939
999
2,419
570
15,887
$’000
108
36
71
–
215
2021
$’000
5
37
142
102
588
874
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
54
Mali Local Procurement 2022
In 2022, 89% of payments for goods and services were made to nationally registered and local suppliers, equating to over $137,154 of
purchases.
Vendors
Local Vendors (Yanfolila area)
National Vendors
International Vendors (11% of total (2021: 16% of total))
Total
Liberia Local Procurement 2022
2022
$’000
905
2021
$’000
96
136,249
108,058
16,961
13,080
154,115
121,234
In 2022, 11% of procurement for goods and services were made to national and local suppliers, equating to over $363,000 of invoices.
Vendors
Local Vendors (Dugbe area)
National Vendors
International Vendors
Total
2022
$’000
36
327
2,926
3,289
2021
$’000
578
5,422
3,791
9,791
Guinea Local Procurement 2022
In 2022, 65% of procurement for goods and services were made to national and local suppliers, equating to over $56 million of invoices.
Vendors
Local Vendors (Kouroussa area)
National Vendors
International Vendors
Total
2022
$’000
118
56,410
30,617
87,145
2021
$’000
279
6,773
491
7,543
POLITICAL DONATIONS POLICY
CULTURAL HERITAGE
Hummingbird’s objective is to work in partnership with host
governments to the benefit of all stakeholders. Perceptions of
political partiality may hinder our relations with stakeholders
and create perceptions of the company as seeking to secure
preferential treatment or influence government decisions in an
illegitimate manner.
Hummingbird therefore has not made political donations to
political parties or individual candidates, in our host nations, the
UK or any other country. As per our Political Donation Policy,
any political donation activities require pre-approval from the
Board.
We are respectful of local cultural heritage and acknowledge the
necessity to protect cultural heritage resources at our sites, in
accordance with Malian national law.
A Cultural Heritage Management Plan (“CHMP”) is in place at our
Yanfolila site, which provides detail on the avoidance, mitigation
and management measures for cultural heritage impacts
related to our operations, with the goal of ensuring that the
management of cultural heritage on site is line with international
standards. This plan was updated by external consultants and
re-implemented in 2022 to meet best practice.
HUMMINGBIRD RESOURCES 55
ARTISANAL AND SMALL-SCALE MINING
(“ASM”)
ASM refers to mining by individuals or cooperatives, often
informal, characterised by low mechanisation, and sometimes
taking place illegally in licensed areas. Hummingbird recognises
that ASM plays an important role in community livelihood
provision, particularly given rates of unemployment in Mali in
recent years.
However, we remain concerned about the health and safety risks,
environmental impacts stemming from mercury usage, and the
possible disruption to local communities which ASM can cause.
As per RGMP 5, Hummingbird supports access to legitimate
markets for artisanal and small-scale miners who respect
applicable legal and regulatory frameworks, who seek to address
the environmental, health, human rights and safety challenges
often associated with ASM activity, and who, in good faith, seek
formalisation.
Hummingbird has implemented a strategic action plan for
managing ASM, at both our Yanfolila and Kouroussa sites.
In accordance with this plan, we ensure that SHEC teams at our
sites are equipped to carry out regular stakeholder engagement
to increase local awareness on how to mitigate the potential
negative impacts of ASM, including on the use of mercury, and
on implementing minimum health and safety. Through livelihood
programs and training, the Group’s goal is to support alternative
livelihoods that are sustainable and which provide beneficial
skillsets. Where appropriate, we consider relinquishing concession
areas to legal ASMs in order to resolve disputes.
Progress against this plan is assessed quarterly, with regular
assessments of the extent and expansion of ASM activities,
and the prevalence of ASM practices with a high environmental
impact. General Managers at each site are made responsible for
oversight and implementation of the plan. Security departments
are responsible for the security strategy for managing artisanal
mining activities on site.
We continue to work with national and local governments to
progress a potential regulated ASM corridor in the region.
The CHMP identified areas of cultural importance, including active
and non-active cultural sites, and makes recommendations on
the potential impact to these sites, in order to guide the best
alignment of mining areas and access roads.
As according to RGMP 7, the plan also institutes a Chance
Find Procedure (“CHP”), a site-specific procedure that outlines
actions required if previously unknown archaeological or cultural
heritage resources are encountered during activities. This process
prevents chance finds from being disturbed until an assessment is
made by a specialist.
The Environmental and Social Impact Assessment (‘’ESIA’’)
completed for the Kouroussa Gold Mine project in 2015 identified
cultural heritage sites within the project permit as well as
immediate areas, which may be impacted by the exploration and
mining activities. Consequently, a CHMP has been developed
based on the findings of on-site assessment by an independent
ESIA consultant, which seeks to provide details regarding the
implementation of management measures for impacts related to
Kouroussa operations and ensure the management of cultural
heritage on site.
Additionally, a CHP has also been developed to outline actions
required if previously unknown archaeological or cultural heritage
resources are encountered during the project mining activities.
GRIEVANCE
Grievance mechanisms are in place and made accessible at
our sites. These mechanisms are designed to help the Group
be made aware of issues, understand them, and resolve them
effectively.
The Group has both internal and external grievance procedures,
which are adopted at local levels. The ESG Committee is
responsible for reviewing actions taken as a result of any major
incidents or grievances, and where necessary recommending
further action or follow-up.
In 2022, we recorded no grievances at our Yanfolila site, down
from the five grievances recorded in 2021, which were primarily
related to blasting activities from our operations near Silikila village.
At Kouroussa, we recorded 7 grievances. These were primarily
related to artisanal mining activities, complaints with the local
recruitment process, and a fire near a cashew plantation
caused by one of our suppliers. There were also disputes over
compensation payments in relation to encroachment on a
plantation, and in relation to encroachment by an access road.
All of these grievances have been resolved.
We are always aiming to improve our grievance management
procedure and to reduce any negative impacts our operations
have on surrounding communities. Procedures for grievance have
been approved by the ESG Committee, and are reviewed annually
in line with RGMP 2.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 56
HUMMINGBIRD RESOURCES
Protecting the Environment
57
Hummingbird understands
the need to operate with a
high level of environmental
stewardship. At every
stage of the mine life cycle,
our activities can have a
long-lasting impact on the
surrounding environment and
our host communities.
Our approach to environmental management is to avoid, reduce,
mitigate, and compensate our impacts wherever possible,
with our objective being to protect and conserve the natural
environment, and to continually improve our performance.
Our areas of priority for managing our environmental impact,
which are covered in this section, are:
■ Tailings management
■ Water stewardship
■ Waste management, including hazardous waste
■ Energy usage and climate change
■ Biodiversity
■ Closure and rehabilitation
Our approach to environmental management is governed by our
Group level Environmental Policy, which embeds our commitment
to drive continuous improvement in our environmental
performance. Site-based HSEC teams are made responsible for
ensuring environmental procedures and protocols are adhered to
in accordance with the policy.
The ESG Committee has day-to-day responsibility for the effective
operation of the policy, with ultimate accountability resting with
the Board. The ESG Committee reviews the policy annually.
58
TAILINGS
Tailings are the residual by-product of mining activities, and
are stored in Tailings Storage Facilities (“TSF”). Tailings facilities
need to be properly managed in order to ensure their stability
and to prevent seepage, given that tailings contain residual
hazardous chemicals from processing activities. Due to the
potentially significant environmental impact they can have, good
management of tailings is one of our highest priorities.
Yanfolila
The Yanfolila TSF was commissioned in December 2017, and
located in a natural valley enclosed by a single main embankment.
The embankment has a natural impermeable clay liner and a
poly liner on the upstream wall in order to prevent seepage
and erosion. Each year, the main embankment is raised using
the downstream method, to accommodate additional tailings
deposition. A Stage 5 raise was completed in 2022, with the
Stage 6 raise underway in 2023. Prior to each lift an independent
assessment of the performance of the TSF is undertaken and this
informs the next stage design and scope of works.
The TSF was subject to a third party review of the dam’s
design, and construction and continued operation is completed
in compliance with the Global Industry Standard on Tailings
Management (“GISTM”). The TSF is independently audited
quarterly by a chartered engineer, and independently audited
annually by Knight Piésold, a specialist TSF consultancy, in order
to ensure alignment with established international standards and
practices, and to make any recommendations for changes in
operating practices.
Audit reports are reviewed by management, the Technical
Advisory Committee (“TAC”) and the Board.
An independent Yanfolila TSF Dam Breach Analysis and
Inundation Study was completed in June 2022, which noted
that SMK has a comprehensive tailings management system in
place, with key aspects of which include a robust surveillance and
monitoring system, annual expansion designs by a third-party
engineer experienced in tailings management, supernatant pond
management and tailings deposition management.
In 2022, additional quarterly audits of the TSF were undertaken
by three different Government entities, the Nation of Direction
of Geology and Mining (“DNGM”) for classified facilities and
chemicals, the National Water Laboratory (“LNE”), and the Service
Yanfolila water usage
of Sanitation, Pollution and Nuisance Control (“SACPN”).
A closure plan for the TSF has been reviewed by the Engineer
of Record who is responsible for the quarterly audit. This plan is
informed by the same standards and guidance at the Yanfolila
closure plan, details of which are given on page 64.
Kouroussa
At our Kouroussa site, the TSF was designed by Knight Piésold,
and construction of the TSF has been completed in preparation
for full operations commencing in 2023. Emergency response,
survey and review processes are currently being developed.
At Dugbe, a site selection process for the TSF location has been
conducted, with the TSF split into two phases. Both phases have
been designed as downstream valley dams, with a detoxification
plant and associated water dam constructed near the TSFs to
treat and release excess water. Raw water will be supplied from
the Geebo River in the first year of operation, with return water
from the TSF being used from year 2 onwards.
In consultation with engineers, geochemical characterisation of
the tailings and waste rock has been undertaken, with both TSFs
designed to minimise seepage and prevent accidental releases to
the environment.
WATER
Water is essential for mining activities and is used at many
different stages in our operations, including ore processing. Good
management of water and robust water efficiency measures
are critical for protecting the surrounding environment, and for
ensuring that there is enough water for other users.
Mali, where our Yanfolila site is located, is a hot, water-stressed
region which suffers from recurring drought and unpredictable
rainfall, making good water usage and management in the region
vital so as not to impact the availability of water resources for
other users.
Site-level water management procedures prioritise the efficient
use of water, limiting water consumption and water extraction,
and reusing and recycling water where possible. Hummingbird
utilises fresh water from the Sankarani River and extracts mineral
groundwater through the dewatering of open pits. We aim to use
as much return water from the TSF as possible, with a target of
recycling 85% of water pumped into the TSF.
Water recycled from TSF (%)
Fresh water efficiency (m3/tonne ore)
2020
78%
0.42
2021
86%
0.26
2022
85%
0.20
In 2022, 85% of water pumped to the TSF was recycled for use in
processes, in line with our target and with our 2021 performance
of 86%.
During 2022, we had one minor incident relating to water involving
a spillage at the TSF return pipeline caused by a bush fire. The
incident was dealt with swiftly with minimal environmental impact.
WASTE
The Yanfolila site has a comprehensive material recycling
programme in place working with accredited national and local
contractors. 80% of our waste materials are recycled or reused.
HUMMINGBIRD RESOURCES HAZARDOUS WASTE
ENERGY USAGE AND CLIMATE CHANGE
59
Hummingbird recognises the global challenge of climate change
and acknowledges that all companies have an important role to
play in minimising their greenhouse gas (“GHG”) emissions and
reducing their contribution to climate change.
Mali, where our Yanfolila site is located, is particularly vulnerable
to climate change impacts. Erratic rainfall, with almost no
precipitation in the dry months between November and
March, risks becoming even less reliable, while temperatures
increase. This will put further water stress on the ecosystem and
surrounding communities. Poverty, low educational levels, poor
access to social services and food security means that the ability
of local communities to adapt is also low, increasing the socio-
economic challenge posed by climate change.
Cyanide is a hazardous chemical, used as a reagent in the
production of gold, which requires careful management in order to
avoid damage to the environment and health.
Hummingbird’s site-level Cyanide Management Plan was
prepared in accordance with the International Cyanide
Management Code (“ICMC”) and is implemented in order to
minimise the risk of cyanide exposures to employees, local
communities and the environment. The plan, which is regularly
reviewed and updated, covers procedures for cyanide offloading,
disposal, spill response, and prevention and response to
poisoning incidents. Training and competency with these
procedures is required by all employees handling cyanide, with
no employee permitted to work with cyanide unless they have
undergone training. SHEC managers at sites are ultimately
responsible for ensuring that cyanide procedures and programs
are properly maintained.
Upon commencement of operations, our site at Kouroussa has a
one-year equivalent Cyanide Management Plan already in place.
At our Yanfolila site, a Hazardous Materials Management Plan
(“HMMP”) has been implemented for managing potential risks
relating to the transportation, handling, storage and disposal of all
hazardous materials, which is subject to regular reviews.
Scope 1+2 emissions and contractor emissions*
Scope 1 (tCO2e)
Scope 2 (Location-based) (tCO2e)
Contractor emissions (part of Scope 3) (tCO2e)
UK AND OFFSHORE
GLOBAL
TOTAL
–
5
–
12,446
12,446
53
57
63,900
63,900
Energy Consumption (kWh)
24,452
47,775,564
47,800,016
Emissions by area of operation*
LOCATION
SCOPE 1 (TCO2E)
SCOPE 2 (TCO2E)
Yanfolila (including Bamako office)
Kouroussa (including Conakry office)
London
Total
11,594
853
–
12,446
40
13
5
57
CONTRACTOR
EMISSIONS (TCO2E)
(PART OF SCOPE 3)
TOTAL (TCO2E)
58,998
4,902
–
70,632
5,767
5
63,900
76,404
Emissions intensity (tCO2e / oz gold)
Scope 1 + 2 + contractor emissions intensity
Scope 1+2 intensity
* Numbers are displayed in rounded form meaning sum totals may differ by a value of 1
0.95
0.16
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 60
2022 GHG PERFORMANCE
Mining is an energy intensive activity, and as per RGMP 10, we
aim to increase the energy efficiency and carbon efficiency of
our operations, in order to support the long-term sustainability
of the business. Emissions have been calculated using the
GHG Protocol Corporate Accounting and Reporting Standard.
Emissions factors used were provided by the UK Department
for Business, Energy and Industrial Strategy (“BEIS”) and the
International Energy Agency (“IEA”). This section is presented in
line with SECR requirements.
As Hummingbird works with contractors at our Yanfolila and
Kouroussa sites, the majority of our emissions from our mining
operations fall under Scope 3. We have chosen to calculate
and include contractor emissions, as we believe we have a
responsibility in the reduction of these emissions. Contractor
emissions are considered as part of our Scope 3 Category 1:
Purchased Goods and Services.
In order to determine the organisational boundary for our GHG
measurements, we adopted an operational control approach.
This approach involves accounting for 100% of emissions from
operations over which Hummingbird has operational control,
which includes our offices, as well as the running of the mining
sites at Yanfolila and Kouroussa.
The Dugbe site and associated Monrovia office were not included
within calculations, as in 2022 Pasofino were the operators. The
Dugbe site is currently at an early stage of development.
We consider an emissions intensity calculation which incorporates
Scope 1, 2 and our contractor’s emissions to be an accurate
reflection of the emissions intensity of our operations, which
currently stands at 0.95 tCO2e / oz gold. An emissions intensity
calculated using only Scope 1 and 2 is also given, which stands at
0.16 tCO2e / oz gold.
These intensity figures were calculated including emissions from
our Kouroussa site, although the site was not producing gold
in 2022. Kouroussa is set for its first gold pour in Q2 2023. An
intensity figure calculated using only emissions from the Yanfolila
site, including contractor emissions, gives an emissions intensity
of 0.88 tCO2e / oz gold.
While contractors are included within our Scope 3 emissions,
our full Scope 3 emissions have not been calculated for this
year. Going forward, we are planning on improving our Scope 3
reporting, and calculating more of our total Scope 3.
Our Scope 1 emissions result primarily from stationary and mobile
fuel combustion used in mining operations. A small portion of
emissions comes from fugitive refrigerant emissions from cooling
uses at sites.
Scope 1 emissions (tCO2e)*
Fuel
Refrigerants
12,207
240
* Numbers are displayed in rounded form meaning sum totals may differ by a
value of 1
Scope 2 emissions represent a minor portion of Hummingbird’s
emissions, which mainly come from the purchase of electricity to
power the offices. Much of our electricity usage falls under Scope
1 rather than Scope 2, as diesel generators are primarily used
to provide electricity at our sites, as we operate in remote areas
where grid electricity is often uncommon.
We have worked with an external sustainability consultancy to
develop a plan for improving how we measure GHG emissions
to ensure that major sources of emissions can be identified
and integrated into our site-level environmental management
procedures.
MANAGEMENT AND IMPROVEMENT
The ESG Committee Board is assigned ultimate responsibility
for GHG emissions reduction, and climate change is a regular
topic at Committee meetings. Our objective is to implement
GHG emissions reduction strategies that are practical and cost
effective, and consistently review progress and the possibility for
new initiatives.
KOUROUSSA
The planned integration of solar energy generation and heat
recovery units at our Kouroussa site is expected to result in
emissions reductions, leading to:
■ An annual total reduction in missions from the Solar PV system
operation of 10,768 tCO2e, and corresponding saving of
c. 4.1 million USD per year in fuel usage
■ An annual total reduction in emissions from the heat recovery
system of 1,207 tCO2e, and corresponding saving of c.
465,000 USD per year in fuel usage
These energy technologies together provide a capacity of 7MW,
with potential for expansion of capacity once environmental
operational.
A dry stack tailings approach, which produces minimal fugitive
emissions, was assessed for practicality and economic viability
for the Kouroussa site but was ultimately not pursued. For future
sites we will consider dry stack tailings as an alternative for tailings
storage.
YANFOLILA
We are engaging our energy supplier on improving fuel efficiency,
with the goal of producing an action plan for diversifying our
site energy mix in order to reduce emissions by reducing diesel
consumption. As part of this we are investigating heat recovery
systems similar to those being implemented at Kouroussa.
DUGBE
At the Dugbe site, it is planned to power the site using LNG
alongside solar PV, which provides the lowest energy cost while
also delivering an expected reduction in GHG emissions against
alternatives.
BIODIVERSITY
Our mines are located at sites with ecological and
biodiversity-related sensitivities, with the potential for our
operations to have a significant impact on local wildlife
and ecology. In accordance with our Environmental Policy,
Hummingbird is committed to avoiding or mitigating its biodiversity
impacts, and we seek to rehabilitate and protect the environments
where our operations are located. We do not undertake
exploration or mining activities on UNESCO World Heritage Sites.
Our management of biodiversity begins during the planning
stage of each project, with environmental procedures and
protections integrated into ongoing plans. Each site is subject
to an Environmental and Social Impact Assessment (“ESIA”)
from an early stage, followed by the development of Biodiversity
Management Plans (“BMP”). ESIAs help us to determine the
impacts our operations may present, which in turn informs our
environmental approach for each site.
HUMMINGBIRD RESOURCES YANFOLILA, MALI
In 2013 an ESIA study was completed, followed by an
independent Rapid Wildlife Assessment in 2015. This assessment
concluded that our Yanfolila site was absent of critical habitats for
the conservation of biodiversity, and that the mine would therefore
not affect the survival of species critical to biodiversity.
The ESIA informed the development of a Biodiversity Management
Plan for the site. We note that sensitive habitats are present in
the project area, and that the area is one of the richest in Mali in
terms of flora. However, the plan notes that no significant adverse
impacts are expected to occur from mine development, and that
standard mitigation measures are therefore appropriate.
61
ESIA activities are undertaken wherever we look to explore or
develop new areas across the Yanfolila licence area, in order to
ensure that our permits are updated in line with Malian regulation.
Following an ESIA study at Sanioumale East in 2021, during
2022 a resettlement program has been underway at the location,
following Hummingbird receiving the applicable permits and
agreeing compensation with the local community, as detailed on
page 51.
An ESIA study completed at the Komana East Underground
location led to an environment permit being issued in 2022,
followed by the issuing of the mining permit.
We aim to improve the extent of our monitoring and
implementation of the recommended mitigation and compensation
measures detailed in the Rapid Wildlife Assessment.
As the site is closely located to the Sankarani River and to the
Sankarani-Fié Ramsar wetland in Guinea, a designated Wetland
of International Importance, we also aim to improve our avoidance
measures for the contamination of streams which drain into the
Sankarani River. Our avoidance measures include implementation
of group level Environmental Policy as well as regular water
sampling and monitoring protocols. Yanfolila team collects and
analyses Ground, Surface and TSF pond water for physiochemical
and metal analysis, and testing drinking waters against the WHO
drinking water standards. Water testing results are reported and
shared groupwide monthly.
KOUROUSSA, GUINEA
An ESIA was performed at the Kouroussa site as a prerequisite to
obtaining environmental authorisation for mine development. An
updated ESIA report was then initiated in 2020, which provided the
basis for the Biodiversity Management Plan implemented at the site.
The Project will have impacts on Critical Habitat for five biodiversity
features, as determined by the Project NCHA. The Project
also affects nine Natural Habitat types. Predicted impacts, as
determined from the Project Biodiversity Impact Assessment,
are summarised in the ESIA report. Targeted actions have been
developed as part of the Project’s biodiversity mitigation strategy
to address the potential severity and extent of each impact so
that residual impacts are minimised to the extent possible, in
accordance with the mitigation hierarchy.
BIODIVERSITY FEATURE
DESCRIPTION
IMPACTS
Phrynobatrachus pintoi
Endangered frog species confirmed during field surveys from
Habitat loss and fragmentation; habitat degradation;
four locations. Suitable habitat is Gallery Forest and adjacent
changes to local hydrology; inmigration (increased
grassland (within 250 m of Gallery forest).
habitat disturbance and removal of timber).
Indigofera pobeguinii
Critically Endangered plant species. Suitable habitat where it
Habitat loss; Habitat degradation (edge effects);
is likely to occur is wet bowé.
changes to local hydrology; In-migration (increased
grazing).
Aspilia chevalieri
Endangered plant species likely to occur in Gallery Forest
and wet bowé along the Niger River.
Habitat loss and fragmentation; Habitat degradation
(edge effects, altered fire regime); Inmigration.
Cyanotis scaberula
Endangered plant species likely to occur within wet bowé
Habitat loss; Habitat degradation (edge effects);
habitat.
changes to local hydrology; In-migration (increased
grazing).
Mafou Classified Forest
Nationally protected and internationally recognised areas
In-migration (increased hunting, and removal of
and the Upper Niger
potentially indirectly impacted. Note: Located outside the
timber).
National Park
exploration permit area.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 62
NATURAL HABITAT TYPE
IMPACTS
Gallery forest and woodland
Habitat loss and fragmentation; habitat degradation (edge effects, altered fire
regime); in-migration
Denser woodland in valleys/ravines
Habitat loss and fragmentation; habitat degradation; in-migration (habitat disturbance and
removal of timber)
Dry forest, or forest islands in deeper /
damper soils within bowé
Habitat loss and fragmentation; habitat degradation; in-migration (increased removal
of timber)
Wooded savanna
Habitat loss and fragmentation; habitat degradation; in-migration (habitat disturbance)
Open wooded savanna / grassland
Habitat loss: habitat degradation (edge effects, altered fire regimes and access roads)
Wet bowé
Habitat loss; habitat degradation (edge effects and access roads); changes to local
hydrology; in-migration (increased grazing)
Dry bowé (including recently burnt bowé)
Habitat loss; habitat degradation (edge effects and access roads); altered fire regime; in-
migration (increased grazing)
Freshwater aquatic habitats (Niger River
Changes to water quality and quantity; aquatic/riparian habitat loss; habitat degradation
and tributaries)
and fragmentation
Waterlogged areas / wetland
Habitat loss; habitat degradation and fragmentation; changes to water quality and
quantity
DUGBE, LIBERIA
In 2022 an ESIA was completed for the Dugbe site by Pasofino, in
accordance with the Liberian Environmental Protection Agency’s
(“EPA”) Environmental and Social Impact Assessment Procedural
Guidelines (2017). The ESIA involved primary environmental and
social data collection by a team of Liberian and international
specialists, and built on data available from the previous ESIA
study of the site completed in 2015.
Following the ESIA, an Environmental and Social Management
Plan (“ESMP”) has been developed that outlines the management
required to mitigate negative impacts and optimise positive
impacts from the project, which along with the ESIA has been
submitted to the Liberian EPA.
A Biodiversity Management Plan for the site is being developed in
order to manage the site’s impacts on areas of high biodiversity
sensitivity and areas of soils with higher sensitivity. A sustainable
forestry project is also being considered, with the goal of working
with local stakeholders to manage an area of forest with the aim
of offsetting biodiversity impacts.
HUMMINGBIRD RESOURCES 63
A
N
N
U
A
L
R
E
P
O
R
T
+
A
C
C
O
U
N
T
S
S
T
A
T
E
M
E
N
T
2
0
2
2
PYGMY HIPPO FOUNDATION
Hummingbird Resources launched the Pygmy Hippo Foundation
in 2012, a registered charity with the aim of promoting the
conservation, preservation, and protection of the endangered
pygmy hippopotamus in the remaining Upper Guinea forests of
West Africa.
Vision
The Foundation’s long term vision is to work alongside local
governments, communities, conservation organisations and
businesses to develop and implement an economically and
socially viable model for protecting and managing Sapo National
Park in Liberia.
Sapo is Liberia’s oldest and largest protected area, and believed
to contain the majority of the last remaining wild pygmy hippos.
Only 14% of West Africa’s original forests remain and around
40% of these surviving forests are in Liberia. There are estimated
to be only 2,000-2,500 pygmy hippos still existing today.
The Foundation focuses its work in this area by partnering
the Government of Liberia, local communities and other
conservation charities to assist in the re-development of
Sapo and to promote sustainable management of the
surrounding area.
Objectives and activities
The objectives and aims of the Pygmy Hippo Foundation (under
its Articles of Association) are:
1. To promote the conservation, preservation and protection
for the benefit of the public, of the Pygmy Hippo in its natural
environment.
2. To advance the education of the public by promoting
understanding and knowledge of the Pygmy Hippo in its
natural environment and its conservation, preservation and
protection.
3. To promote the conservation, preservation and protection
for the benefit of the public, of other species in their natural
environment.
4. To advance the education of the public by promoting
understanding and knowledge of endangered species in their
natural environment and its conservation, preservation and
protection.
64
64
Initiatives
To date, the Foundation has:
■ Worked with Leadership for Conservation in Africa (“LCA”) to
develop a long-term model for the sustainable management of
Sapo National Park
■ Involved the Liberian Forestry Development Authority (“FDA”),
Environmental Protection Agency (“EPA”) and Ministry of
Agriculture in conservation planning
Commissioned an Initial Scoping Study and a Landscape Level
Assessment
REHABILITATION AND AFFORESTATION
At Yanfolila in 2022, only a small amount of additional land was
disturbed for drilling pads. The current total disturbed land at our
Yanfolila site stands at 559 hectares.
Where possible, we seek to minimise the land disturbance
of our operations in order to mitigate our impact on the
environment and on communities. During 2022 we continued
with the Hummingbird Tree Initiative, our reforestation program
supporting land rehabilitation, with 10,000 trees planted in 2022
over 25 hectares, building on the 10,000 planted in 2021. In the
coming year, we are looking to accelerate the program at Yanfolila
in order to achieve our 170-hectare goal.
At Kouroussa we are exploring a similar plan to the reforestation
measures at Yanfolila, with a tree nursery programme at the site
currently in development.
Hummingbird Tree Initiative
Launched in 2020, the Hummingbird Tree Initiative is a
community-based project which engages local communities
to support a progressive reforestation programme. The
Initiative plants 10,000 trees a year in Mali, supported by
local villages who grow and nurture seedlings in market
gardens provided by Hummingbird.
As part of the initiative, women from the local community
are trained by the Yanfolila Water and Forestry department
in plant propagation skills, in order to support a high
proportion of planted trees surviving through to maturity.
The initiative has created planting of trees, responsibility for
keeping trees alive and a source of income for women from
local communities, who are reimbursed for the service of
raising seedlings. We intend to continue the Initiative in the
coming years.
CLOSURE PLANNING
Hummingbird’s objective for mine closure is to minimise or
prevent long-term environmental and social impacts which
might occur as a result of closure activities. We aim to create
a post-mining landscape that is safe for people and animals,
non-polluting, physically stable, and able to support sustainable
post-mining land uses that are agreed with stakeholders.
In 2022 we developed a mine closure plan for our Yanfolila site,
an update to the conceptual closure plan issued in 2019. The plan
applies to all of the Yanfolila site’s operating areas and related
infrastructure, including integration with surrounding natural
landforms, surrounding communities and local stakeholders.
Preparation of the closure plan was informed by Malian legal
requirements, the WGC RGMPs (specifically Principle 9) and the
recommendations of the International Council on Mining and
Metals (“ICMM”) as found in the Integrated Mine Closure Toolkit
and the Financial Concepts for Mine Closure documents.
In accordance with Hummingbird’s Stakeholder Engagement
Plan (“SEP”), through which we aim to integrate proactive and
meaningful engagement with stakeholders into our activities,
closure planning proceeds with regular meetings with local
communities and individuals. Hummingbird holds quarterly closure
committee meetings, at which closure activities at the mine are
shared and discussed, attended by government representatives,
mining unions at Yanfolila, local community representatives and
local authority representatives.
Additionally, Committee Local Development (“CLD”) meetings
are held monthly, attended by local authority representatives,
community members from 16 villages and mayors of 3
communes, at which closure activities are discussed. Stakeholder
engagement for the closure of Yanfolila has been ongoing since
the beginning of the mine operations.
At site level, the General Manager is made responsible for
providing sufficient resources to implement activities associated
with social engagement, while SHEC managers are made
responsible for implementing and maintaining engagement
activities.
HUMMINGBIRD RESOURCES
65
YANFOLILA
A summary of closure goals for Yanfolila is given below:
Environmental
TOPIC
OBJECTIVES
CLOSURE MANAGEMENT
Erosion control
No long term active erosion at the site
Surface water quality
No negative impact on human health or
final land use objectives
Ground water quality
No negative impact on human health or
final land use objectives
Erosion features that do not stabilise will
be repaired
Surface water to be monitored with water
quality to meet Malian Class II Water
Quality Standards
Ground water to be monitored with water
quality to meet Malian Class I Water
Quality Standards
Revegetation
Air Quality
Social
TOPIC
Long term native vegetation regrowth
where land has been disturbed
–
Dust from the closure site does not have a
negative impact on the community
Monitor air quality quarterly to ensure
compliance with Malian and / or
international standards in fallout dust
OBJECTIVES
CLOSURE MANAGEMENT
Stakeholder engagement
Ensure community and government are
kept informed on closure planning
Stakeholder Engagement Plan instigates
regular meetings with a range of
stakeholders
Public safety and access restriction
Prevent injury or illness from presence at
the mine site
Fencing and bunding around steep slopes
and poor quality water to prevent access
Social closure - retrenchment
Ensure a support program for employees
and their families to transition economic
activities positively
Social closure – community legacy
Leave a positive legacy in surrounding
communities
Social closure – post closure land use
Market garden and poultry farm projects
are a successfully integrated agricultural
business
Employees to:
■ Be redeployed to another mine
■ Receive training as part of
retrenchment planning
■ Receive microfinance support
Health, education, water, sanitation
and community development projects
created by Hummingbird are sustainable
post-closure
Health, education, water, sanitation,
and community development projects
created by Hummingbird are sustainable
post-closure
KOUROUSSA
A conceptual closure plan is being developed in 2023 to be agreed with the Guinean government, with scoping of areas to be
rehabilitated and estimated costs having been completed
DUGBE
A conceptual closure and rehabilitation plan has been developed, along with a preliminary cost estimate. The plan lays our progressive
rehabilitation requirements, closure approaches and post-mining monitoring and maintenance. Further studies will be conducted to
confirm final closure approaches, taking into account mining waste, expectations of communities, and the sensitivities of biodiversity,
soils and water resources.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 66
financial Review
Basis of preparation
The Group’s financial statements have been prepared in accordance with UK-adopted International Accounting Standards. The Group’s adoption
of new and revised standards, significant accounting policies, and critical accounting judgements are disclosed in the notes to consolidated financial
statements. The functional currency of the Group is United States dollar (“$”). The financial information below is presented in thousands of United
States dollars (“$’000”).
Consolidated statement of comprehensive income
An unabridged analysis of the consolidated statement of comprehensive income for the year ended 31 December 2022 is shown below.
2022
$’000
2021
Restated
$’000
Continuing operations
Group revenue
Production costs
Amortisation and depreciation - owned assets
Amortisation and depreciation - right of use assets
Royalties and taxes
Cost of sales
Gross (loss)/profit
Share based payments
Other administrative expenses
Operating loss
Finance income
Finance expense
Share of joint venture profit/(loss)
(Impairment)/reversals in impairment of financial assets and liabilities
Loss on financial assets and liabilities measured at fair value
Loss before tax
Tax
Loss for the year
Principal items of income and expense are explained as follows:
Revenue
Total Group sales was $150.5 million (2021: $162.8 million).
150,519
(126,527)
(26,022)
(11,335)
(5,620)
(169,504)
(18,985)
(1,941)
(11,791)
(32,717)
3,641
(14,156)
4
(316)
(715)
(44,259)
4,269
(39,990)
162,777
(113,606)
(26,250)
(12,067)
(6,297)
(158,220)
4,557
(1,459)
(10,263)
(7,165)
4,071
(8,190)
(46)
108
(3,134)
(14,356)
1,617
(12,739)
The Group’s Malian subsidiary sold dore containing 80,445 ounces of gold generating revenue of $143.3 million (2021: 87,554 ounces for
$156.6 million), an 8.5% decrease in revenue. The average realised price for gold dore was $1,781 per ounce (2021: $1,788 per ounce).
The gold dore is sold at a discount to the refined spot gold price which approximates to the refining and transport costs.
The Group also sold gold grain and investment gold products worth $7.2 million (2021: $6.2 million) at a premium to the spot gold price as
part the SMO Gold initiative.
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW
67
Cost of sales
Cost of sales of $169.5 million (2021: $158.2 million) primarily relate to the following cost elements:
■ Mining costs of $65.4 million (2021: $51.7million), represents both owner and contract mining costs. During 2022, Junction
Contract Mining (“JCM”) were the mining contractor responsible for performing the full mining scope from mining, production
drilling and blasting, to ore haulage for processing. The mining contract is based on a fixed and variable rate with allowances
for inflationary rise and fall adjustments. The mining costs exclude ‘lease’ cost for the mining equipment of approximately
$13.4 million (2021: $13.9million) which are treated as lease payments under IFRS 16.
■
■
■
■
■
■
Processing costs of $31.3 million (2021: $28.0 million), represents costs incurred at the processing plant. Major cost categories
include power, plant maintenance and chemical reagents costs. Cost increases were largely due to power costs increases
because of the increased fuel prices, largely caused by the Ukraine – Russia situation. Other increases were due to the
increased throughput of the plant and processing of a greater proportion of harder ores, plus increased maintenance costs due
to the plant being a year older.
Inventory adjustments were a gain of $1.3 million to income statement (2021: $8.9 million charge to income statement).
This represents the valuation of both gold on hand, stockpiles and gold in process at end of year. There was slightly more
gold on hand at 31 December 2022 due to timing of the shipments at year end, offset by higher ore stockpiles compared to
31 December 2021. There were no inventory adjustments to carry inventory at lower of cost and net realisable value (2021:
$nil).
Support costs of $23.2 million (2021: $19.5 million), represents costs incurred in supporting the core mining and processing
areas. Included in this are all site labour, insurance, finance and administration (excluding corporate head office costs),
community affairs, security and human resources. Increases in costs are mainly related to inflation, fuel price increases as well
as security and consultant cost increases.
Amortisation and depreciation on owned assets of $26.0 million (2021: $26.2 million). Amortisation and depreciation costs are
for the most part, based on a unit of production method, in line with ounces produced. The decrease year on year reflects a
larger depreciable base offset by lower ounces produced.
Amortisation and depreciation on right of use assets of $11.3 million (2021: $12.1 million). This represents depreciation and
amortisation of leased assets under IFRS 16, “Leases”. This mainly represents depreciation on assets leased under the mining
contract and the power generators in Mali, as well as offices in Mali and London.
Royalties and other taxes of $5.6 million (2021: $6.3 million), primarily representing amounts payable to the Government of Mali
on gold sales.
■ Gold grain and investment gold coins cost of sales of $8.1 million (2021: $5.5 million) representing the cost of purchasing,
transporting gold grain and minting investment gold coins.
Other administrative expenses
Other administrative costs of $11.8 million (2021: $10.2 million), represent mainly support costs including staff costs and
professional fees, as well as business development costs, a $1.6 million increase from prior year.
Finance income and expenses
Finance income of $3.6 million (2021: $4.1 million), principally foreign exchange gains on non-functional currency borrowings.
Finance expenses of $14.2 million (2021: $8.2 million), represents interest and amortised costs on borrowings, foreign exchange
losses, and unwinding of present value discounts on provisions. The increase from prior year is mainly due to a larger loan base.
Impairments and reversals in impairment of financial assets and liabilities
Having considered multiple scenarios on the manner, timing, quantum and probability of recovery on the receivable from the
Government of Mali, the Group recognised a lifetime credit loss of $0.3 million (2021: gain of $0.1 million). The allowance for lifetime
expected credit losses assessment requires a significant degree of estimation and judgement.
Gains and losses on financial assets and liabilities carried at fair value through profit
and loss
The Group recognised a loss of $0.7 million (2021: loss of $3.1 million) during the year from assets at fair value through profit or
loss. This loss was made up of losses of $2.0 million from the Group’s investment in Bunker Hill due to decrease in share price over
the year. The 2022 movement also included a net gain of $1.3 million related to the changes in the Group’s discount rate and the
impact this had on both the deferred consideration and the smelter royalty liabilities resulting from the Cassidy acquisition in 2020.
Taxation
The taxation of the Group’s operations in Mali are aligned to the mining convention (under the Mining Code of Mali 1999) in
accordance with which tax is charged at the greater of 1% of turnover and 30% of taxable profits. The net tax income of $4.3 million
in the year is made up of a $1.4 million minimum corporation tax charge in Mali offset by a net deferred tax income of $5.7 million.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 68
IFRS 16 Lease Interest – prior year adjustment
During the year, the Group discovered that the IFRS 16, Lease interest had been erroneously calculated since 2019. Although the total
interest over the life of the leases would be correct, the interest charge was increasing as the liabilities were decreasing, resulting in lower
interest charges in the early years of the IFRS 16 lease liabilities. Consequently, the line items finance expense, included in the consolidated
statement of comprehensive income, and lease liabilities, included in current and non-current liabilities in the statement of financial
position, have been understated. There is no impact on the Group’s total operating, investing, or financing cash flows for the year ended
31 December 2021. Refer to note 9 for further details.
Statement of Financial Position
An abridged analysis of the statement of financial position as at 31 December 2022 is shown below:
Non-current assets
Current assets
Cash and cash equivalents
Total assets
Non-current liabilities
Non-current borrowings
Current liabilities
Current borrowings
Bank overdraft
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Non-controlling interest
Total equity
Principal movements in assets and liabilities are explained as follows:
Total assets
2022
$’000
370,912
67,600
3,892
442,404
71,561
71,840
95,506
43,862
1,741
284,510
157,894
120,430
37,464
157,894
31 December
2021
Restated
$’000
279,626
38,300
36,739
354,665
62,919
61,812
59,280
–
–
184,011
170,654
161,134
9,520
170,654
1 January
2021
Restated
$’000
248,402
33,076
11,068
292,546
31,615
–
65,334
13,208
–
110,157
182,389
172,786
9,603
182,389
As at 31 December 2022, the Group’s assets totalled $442.4 million, an increase of $87.7 million on the prior year. Total assets comprise:
non-current assets; including investments, exploration and evaluation assets, property, plant and equipment, and Current assets; including
cash and cash equivalents, inventories, trade and other receivables.
■
■
Non-current assets
Increased by $91.3 million during the year, as a result of additions and offset by depreciation and amortisation charges. The movement
in 2022, also includes over $38.5 million in capitalised expenditures in Liberia following the completion of the earn in by Pasofino, refer
to note 26. Included within non-current assets are leased assets capitalised under IFRS 16, Leases. This standard requires that all
qualifying leased assets are recognised on the balance sheet as right of use assets. The increase in non-current assets was mainly
because of the $81.9 million spend in Guinea as the Kouroussa construction ramped up ahead of the expected first gold pour in
Q2 2023. Additions also included $2.2 million sustaining capex in Mali, mainly to increase the capacity of the tailings storage facility.
Also included in non-current assets is the $1.5 million (2021: $3.5 million) Bunker Hill investment. Depreciation and amortisation
charges on property, plant and equipment was $26.0 million and depreciation on right of use asset of $11.3 million. Also included in
non-current assets is a net deferred tax asset of $9.5 million (2021: $3.9 million) in respect of the Malian subsidiary.
Current assets
Increased by $29.3 million during the year, comprised of $18.3 million increase in VAT recoverable, $2.6 million increase to inventories
as well as $6.6 million increase in prepayments and other receivables. The time to receive VAT from the Government of Mali is
unpredictable, and although the Group was able to continue to offset balances in 2022, the VAT balance in Mali remain high at
$25.9 million on 31 December 2022 and it is expected to be received via offset of future taxes or cash. The timing of recoverability
of these amounts is unpredictable and are subject to foreign currency risk as the amounts are recoverable in West Africa Francs
(“FCFA”). Increase to inventory was mainly impacted by increase in ore stockpiles of $1.4 million due to higher ore stockpile quantities
as well increase in consumable spares to support the mines. There was also a decrease in the grain and coins inventory of $0.8 million
compared to the previous year. Also included within receivables is a $3.8 million balance due from Pasofino for ongoing funding of the
Dugbe project in Liberia.
■
Cash and cash equivalents
As at 31 December 2022 the Group held cash and cash equivalents of $2.2 million, of which $3.9 million is restricted in accordance
with the Group’s borrowing obligations (2021: $36.7 million, of which $4.2 million was restricted). See analysis of consolidated
statement of cashflow.
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW
69
Total liabilities
As at 31 December 2022, the Group’s liabilities totalled $284.5 million, an increase of $100.5 million on the prior year. Total liabilities were
mainly impacted by a drawdown of $28.7 million (CFA 18.5 billion) on the Coris Loan facility in Mali, as well as $30.0 million drawdown
of the Coris Loan facility in Guinea, both to help fund the Kouroussa mine construction. The movement in 2022, also now includes
$18.6 million in loans due to Pasofino irrespective of their 49% intercompany loans relating to the Dugbe project. Total liabilities movements
were also impacted by:
■
■
■
Current liabilities (excluding borrowings)
increased by $36.2 million during the year, mainly related to the increased activity in Guinea as construction progressed, which saw
current liabilities increase by $11.0 million in Guinea. Also included within this balance are $3.2 million worth of interest accruals due to
Coris Bank International. Included within current liabilities is the deferred consideration of $1.8 million (net of deductibles), due to the
vendors of Cassidy as part of the acquisition of Kouroussa in 2020. The shares relating to this were subsequently issued in February
2023.
Non-current liabilities (excluding borrowings)
Increased by $8.6 million during the year, because of $18.5 million in loans due to Pasofino following the completion of the earn-in
in Liberia offset by a $1.0 million decrease in the 2% smelter royalty liability retained by Cassidy as part of the Kouroussa acquisition.
There was also a $6.2 million increases in the rehabilitation provision ($1.5 million in Mali and $4.8 million in Guinea) representing
the present value of estimated future rehabilitation costs relating to mine sites (note 20). There was additionally a net decrease of
$9.9 million in IFRS 16 lease liabilities mainly because of lease repayments during the year.
Borrowings
Borrowings (including capitalised issue costs) increased by $53.9 million during the year. The increase is the net result of a $58.7 million
drawdown on Coris Loans in Mali and Guinea (note 19), foreign exchange movements plus issue costs capitalised.
Consolidated statement of cash flows
An unabridged analysis of the consolidated statement of cash flows for the year ended 31 December 2022 is shown below.
Net cash inflow from operating activities
Investing activities
Purchases of intangible exploration and evaluation assets
Purchases of property, plant and equipment
Pasofino funding
Pasofino funding utilisation
Sale of shares in other companies
Interest received
Net cash used in investing activities
Financing activities
Exercise of share options
Lease principal payments
Lease interest payments
Loan interest paid
Loan drawdown
Loans repaid
Commission and other fees paid
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2022
$’000
13,181
(5,876)
(82,942)
4,665
–
–
2
(84,151)
14
(10,741)
(2,862)
(3,452)
58,695
–
(4,724)
36,930
(34,040)
(548)
36,739
2,151
2021
$’000
22,703
(9,992)
(22,295)
10,141
(10,946)
2,538
–
(30,554)
–
(11,014)
(3,006)
(721)
66,365
(13,278)
(5,413)
32,933
25,082
589
11,068
36,739
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
70
Net cash generated by operating activities
During the year ended 31 December 2022, the Group generated $13.2 million cash inflow from operating activities, a $9.5 million decrease
from 2021. Net cash flow from operations was lower largely because of lower quantity of gold sold during the year slightly offset by a slightly
higher realised price, together with higher operating costs due to inflation. 2022 cash flows from operating activities exclude ‘lease’ cost for
the mining equipment and generators of approximately $13.6 million treated as lease payments under IFRS 16 and which is reflected under
financing activities.
Net cash used in investing activities
During the year ended 31 December 2022, the Group reported a $84.2 million cash outflow from investing activities (2021: $30.6 million
cash outflow), $82.9 million on property plant and equipment. $5.9 million exploration and evaluation assets, largely in Mali. The Group also
received $4.7 million from Pasofino as part of the earn-in agreement on Dugbe.
Net cash generated from financing activities
During the year ended 31 December 2022, the Group reported a $36.9 million cash inflow from financing activities (2021: $32.9 million cash
inflow), of which $58.7 million was drawn down on the Coris Loan to aid the funding of Kouroussa and paid $4.5 million in scheduled fees
and interest repayments on borrowings. Further, loan fees of $3.7 million were paid in relation to the Coris Loan.
Future obligations and their maturities stated at their gross, contractual and undiscounted amounts, are shown below:
AT 31 DECEMBER 2022
Trade and other payables (note 23)
Other financial liabilities (note 24)
Deferred consideration (note 25)
Lease liabilities (note 21)
Borrowings (note 19)
Other commitments (note 32)
AT 31 DECEMBER 2021 (restated)
Trade and other payables (note 23)
Other financial liabilities (note 24)
Deferred consideration (note 25)
Lease liabilities (note 21)
Borrowings (note 19)
Other commitments (note 32)
LESS THAN ONE
YEAR
$’000
BETWEEN ONE
AND FIVE YEARS
$’000
OVER FIVE
YEARS
$’000
66,081
15,000
1,776
12,730
43,862
139,449
32,774
–
26,795
1,801
16,585
71,840
117,021
–
172,223
117,021
–
–
–
–
–
–
–
–
LESS THAN ONE
YEAR
$’000
BETWEEN ONE
AND FIVE YEARS
$’000
OVER FIVE
YEARS
$’000
33,708
15,000
–
13,496
–
62,204
10,366
72,570
–
9,092
4,627
32,641
61,812
108,172
–
108,172
–
–
–
–
–
–
–
–
TOTAL
$’000
66,081
41,795
3,577
29,315
115,702
256,470
32,774
289,244
TOTAL
$’000
33,708
24,092
4,627
46,137
61,812
170,376
10,366
180,742
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW
71
NON-GAAP FINANCIAL PERFORMANCE MEASURES
The performance of the Group against its strategy and objectives is linked to the remuneration of the executives and senior employees as
the annual bonus plan performance targets are aligned to the Group’s Key Performance Indicators (“KPIs”) and strategic priorities.
We use the following non-GAAP financial performance measures in assessing performance.
■
■
■
■
EBITDA and adjusted EBITDA
Cash costs per ounce; and
All-in sustaining costs per ounce (“AISC”).
Net cash
EBITDA and Adjusted EBITDA
Earnings before interest, taxes, depreciation and amortisation (“EBITDA”) is a factor of revenues, volumes, prices and cost of production.
This is a measure of the underlying profitability of the Group, widely used in the mining sector. Adjusted EBITDA removes the effect of
impairment charges and fair value adjustments, foreign currency translation gains/losses and other non-recurring expense adjustments but
including IFRS 16 lease payments.
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Net loss before tax
Less: Finance income
Add: Finance costs
Add: Depreciation and amortisation
EBITDA
IFRS 16 lease interest and principal payments
Share based payments including NI
Share of joint venture (gain)/loss
Impairment/(reversals) in impairment of financial assets
Losses on financial assets and liabilities measured at fair value
Adjusted EBITDA
Net Cash Reconciliation
Net cash for the Group can be reconciliated to the cash in the statement of financial position as follows:
Reconciliation of net cash before IFRS 16 Liabilities
Group cash balances (including restricted cash)
Add: Gold on hand (including SMO gold)
Less: Bank debt
Net Debt
2022
$’000
(44,259)
(3,641)
14,156
37,435
3,691
(13,602)
1,866
(4)
316
715
(7,018)
2022
$’000
2,151
3,728
(115,702)
(109,823)
2021
$’000
(14,356)
(4,071)
8,190
38,395
28,158
(14,020)
1,372
46
(108)
3,134
18,582
2021
$’000
36,739
4,089
(61,812)
(20,984)
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
72
CASH COST PERFORMANCE
Cash costs per ounce and all-in sustaining costs per ounce are non-GAAP financial measures which are calculated based on the definition
published by the World Gold Council (“WGC”), a market development organisation for the gold industry. Management uses these measures
to monitor the performance of our gold mining operations and their ability to generate positive cash flow.
Cash costs are calculated as direct mine operating costs (including mine based general and administration costs but excluding depreciation
and amortisation) divided by ounces of gold sold.
All-in sustaining cash cost is calculated as cash cost above plus sustaining capital expenditures divided by ounces of gold sold.
Our use of cash costs and all-in sustaining cash costs are intended to assist analysts, investors and other stakeholders to understand the
costs associated with producing gold better as well as assessing our operating performance and our ability to generate free cash flow from
current operations.
Reconciliation of Cost of Sales to Cash Costs, All-in Sustaining Costs including on a per ounce basis
Group cost of sales
SMO cost of sales
Depreciation and amortisation within cost of sales
Lease charges under IFRS 16 relating to mining operations
Corporate recharges and administration costs applicable to mining operations
Cash cost
Mine sustaining capital expenditures
All-in sustaining cash cost
Ounces sold
Cash cost per ounce
All-in sustaining cash cost per ounce
2022
$’000
169,504
(8,057)
(37,357)
13,541
3,551
141,182
2,160
143,342
80,445
1,755
1,782
2021
$’000
158,220
(5,531)
(38,317)
14,020
3,148
131,540
2,903
134,443
87,553
1,502
1,536
Cash costs were adversely impacted mainly due to the lower production primarily due to our mining contractor’s excavator fleet not meeting
the contracted mining rates, fuel price increases as well as the general inflation impact.
Exploration costs and expansion capital expenditures, for example development and expansion costs incurred on Gonka, SE, SW and
KE Underground, which were all under development in the year, are not included in AISC. Further exploration costs on new deposits are
also excluded from our AISC number.
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW
Group Strategic Report
73
The purpose of this report is to show how the Group assesses and manages risk and uncertainty and adopts appropriate policies and
targets. Further details of the Group’s business and expected future developments are also set out elsewhere (our Strategy, Our Values and
Principles, the Interim Chairman and CEO’s Statement, Operational Review, Financial Review and Sustainability Report) form part of this
Strategic Review in order to achieve compliance with provision of the Companies Act 2006.
Risk Management Framework
The Board analyses the Group’s risks and mitigation measures that have been put in place on a regular basis. As part of this assessment
Group executives and senior management regularly reports to the Board via its various subcommittees including operational reports,
sustainability reports, community reports, cost analysis and compliance reports to facilitate ongoing comprehensive assessment of the
Group’s primary and emerging risks.
Principal risks and uncertainties
The nature of the Group’s activities and the locations in which it operates mean that it is generally exposed to significant and uncertain
risk factors, some of which are beyond its control. The ability to deliver the Group’s objectives and vision depends on an ability to identify,
understand, and appropriately mitigate and monitor our risks. The table below, while not exhaustive, sets out the principal risk factors and
uncertainties which may impact the Group’s future performance, and its strategy for managing them.
Emerging risks
Together with the principal risks below, the following are emerging risks that are being monitored:
Interest rate risk
The current increases in global interest rates may have an impact on the Group’s ability and the costs of accessing new capital if required.
Currently the Group has a supportive partner in Coris Bank International and our current debt facilities are at a fixed rate.
New Environment Targets and Impacts on Group Performance
With increased scrutiny on the environment and other areas, there is now more focus on how the Group is gearing itself to manage of these
new risk items. Our Sustainability Report from pages 30 to 65 covers most of the processes and procedures we are doing to monitor and
manage some of these new risks and in particular the environment, greenhouse emissions and others.
If not properly managed, new environmental regulations may have both an operation and a cost impact to the Group.
Energy security
With increased power costs and logistical issues linked to world conflicts and inflation, together with push to more cleaner energy sources,
there is increased impact on energy costs that would impact the Group’s profitability.
The Group is already planning for other alternative sources of energy, like solar, as evidenced by the planned Dugbe site to use LNG
alongside solar PV, and the integration of solar energy generation and heat recovery units at our Kouroussa site is expected to result in
emissions reductions.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 74
RISK
Asset portfolio
MITIGATION / MANAGEMENT RESPONSE
The Group’s revenue is currently derived from the Yanfolila Gold
Mine in Mali. Reliance on a single asset requires continual focus on
efficient management of operations and risks.
The Group continually reviews and implements targeted projects
seeking to enhance the reliability, effectiveness and long-term
profitability of the Yanfolila Gold Mine.
The Group continuously assesses a range of internal and external
growth opportunities to build on its existing asset portfolio as well
as ensuring that efficient production from Yanfolila is maintained.
The following represents focus on those areas:
■
■
■
Kouroussa construction is nearing completion with first gold
pour expected in Q2 2023. This provides the Group with
optionality and moves the Group towards being a multi-asset
producer.
The finalisation of the earn-in agreement with Pasofino on the
Dugbe Project in Liberia during the year and the creation of the
joint venture ensures that Dugbe continues to progress.
Further, ongoing exploration and development activities
provides internal growth opportunities.
The Group monitors its exposure to commodity price fluctuations
and foreign exchange rate fluctuations as part of financial and
treasury planning.
The Board reviews these risks regularly (including at the quarterly
Board meetings) and considers whether any additional actions
are appropriate, taking into account forecasts and expectations of
stakeholders.
The Group has historically from time to time purchased low cost
put options as partial insurance against a significant drop in the
gold price in the short term.
The Group continuously reviews its mining methods and, together
with the mining teams and relevant contractors, assesses
performances against targets on a regular basis.
The Group brought in additional fleet and personnel to support the
contract miners’ fleet and continues to work with the contractors to
seek to mitigate this risk. This has seen a marked improvement in
mining activities in late 2022 and early 2023.
Should cash flows from the Group’s sole producing asset be
impacted adversely from an unexpected event, the Group may
need to raise additional funding. Should additional funding be
required, then as noted in note 3, there is a risk that the Group may
not be able to obtain it in the necessary timeframe.
Changes to commodity prices, cash flow and credit risk
As a junior mining company operating its first gold mine and
bringing a second mine into production, the Group’s financial
performance is significantly exposed to the price of gold. Should
the gold price fall significantly this will impact future reserves,
profitability and could ultimately impact the Group’s ability to service
debt and meet operating costs.
Financial performance may also be impacted through foreign
exchange movements, rises in fuel prices or where there is an
inability to secure adequate funding.
Mining risk
The Group’s financial performance is currently largely dependent
on the efficient operation of the Yanfolila Gold Mine in Mali and
going forward the Kouroussa mine in Guinea. This requires
effective management of the mining contractor, strip ratios, mining
techniques, dewatering, infrastructure and pit slopes in ensuring
cost effectiveness and timely delivery of material at sufficient
quantity and grade for processing.
The Yanfolila mining contractor’s performance in 2021 and 2022
was below expectations largely due to availability, and productivity
stemming from cumulative maintenance deficiencies and poor
equipment availabilities resulting in the termination of the mining
contract on 31 March 2023. Any significant delays in delivering
the planned ore volumes or additional costs of mining, ore losses
and additional dilution could lead to the project requiring additional
working capital or becoming uneconomic.
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW RISK
Geological risk
The Groups cashflows and profitability is dependent on achieving
the predicted grades and tonnages of ore forecast in the mine
plans. The mine plans are based on geological models, supported
by resource and reserve estimates. Resources and reserves
are estimated based on assumed continuity between points
of observation where data samples have been gathered. Until
material is mined and processed, there is a risk that the grades
and tonnages of ore may be materially different to that estimated,
including through unanticipated incursions by artisanal mining
groups.
Fraud, error and corruption
The Group is aware of the risk of internal fraud, error and corruption
activities, and the various ways that such risk may transpire.
There is also awareness that the risk is increased where there are
differences in financial processes, language or culture between
stakeholders.
Operational performance and reporting
As a listed company, the Group acknowledges the importance of
communicating actual and forecast operational performance on a
timely basis.
Social licence to operate
The Group’s ability to develop and operate its projects is dependent
on the support of its host communities.
Overall relations with the host communities have been positive,
however there is a risk that if the relationships deteriorate then the
ability of the Group to operate could be temporarily or permanently
adversely impacted.
Health and Safety
The mining workplace environment is subject to a number of
hazards, including the risk of serious injury or fatality while working
on site. The physical remoteness of sites also increases the risk
of commuting to site and the availability of medical assistance in
the event of an incident. The Group is also aware of the risk of
an outbreak of a serious illness amongst the workforce and the
associated potential for large-scale disruption to operations as a
consequence.
Security and conflict risk
The Group is exposed to the external physical security risks
presented by artisanal mining activities, territorial conflicts and/or
terrorist actions which could impact our people, our operations and
our broader supply chain.
75
MITIGATION / MANAGEMENT RESPONSE
Geological models are subject to internal and/or external reviews
before being classified as resources and reserves or being used to
support long term mine plans. Additionally, as further information
becomes available, including through mining, geological models are
updated accordingly.
The Group has robust policies and internal controls in place with
the objective of mitigating the risk of fraud, corruption and error to
the business.
The Group’s focus on a culture of sustainability, good governance
and disclosure is aimed to provide timely, relevant and up-to-date
information on activities impacting shareholders and other key
stakeholders.
The Group is proactive in its social engagement and places a high
importance on its relationship with the host communities as key
stakeholders.
The Group employs a wide range of safety management systems
with the objective of ensuring the safety of the team. The Group
provides training and supervision on safety management, which the
intention of promoting and embedding safe operating practices.
The Board is able to draw upon the expertise of its Environment,
Social and Governance Committee and its medical advisor Critical
Care International for guidance.
The Group employs a range of measures to mitigate the risk
of harm to our people and operations. Country and regional
information is continuously monitored to assess the risk of terrorism
and security plans are in place to mitigate identified risks including
relative to the OECD Due Diligence Guidance on the responsible
sourcing of minerals from conflict-affected and high-risk areas.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 76
RISK
Legal and regulatory risks
MITIGATION / MANAGEMENT RESPONSE
The Group’s exploration, development and exploitation activities are
dependent upon the grant of appropriate licences, concessions,
leases, permits and regulatory consents which may be withdrawn
or made subject to limitations. Such licences and permits are
as a practical matter subject to the discretion of the applicable
Government or Government office. The Group must comply with
known standards, existing laws and regulations that may entail
greater or lesser costs and delays depending on the nature of
the activity to be permitted. The interpretations, amendments to
existing laws and regulations, or more stringent enforcement of
existing laws and regulations could have a material adverse impact
on the Group’s results of operations and financial condition. Whilst
the Group continually seeks to do everything within its control to
ensure that the terms of each licence are met and adhered to, third
parties may seek to exploit any technical breaches in licence terms
for their own benefit.
There is a risk that negotiations with a Government in relation to the
grant, renewal or extension of a licence, or Mineral Development
Agreement (“MDA”), may not result in the grant, renewal or
extension taking effect prior to the expiry of the previous licence
period, and there can be no assurance of the terms of any
extension, renewal or grant.
Additionally, whilst the Group has diligently investigated title to its
licences and, to the best of its knowledge, title is in good standing,
this should not be construed as a guarantee of title. If a title defect
does exist, it is possible that the Group may lose all or part of its
interest in the relevant properties.
Changes to existing applicable laws and regulations, more stringent
interpretations of existing laws or inconsistent interpretation or
application of existing laws by relevant authorities have the potential
to adversely impact the Group’s business activities.
The Group’s operational and exploration activities are subject to
extensive regulation in the relevant jurisdictions.
Geopolitical risks
The recent changes to governments in Mali and Guinea together
with the ongoing economic sanctions in Mali have had an impact
and disruption to logistical movement, of people, goods, supplies,
spares, reagents, and the export of gold which has had some
impact on our ability and cost to operate.
Should further sanctions be placed, or existing sanctions continue
for an extended period, there is an increased risk to the ability to
operate.
Exploration and development risk
There is no assurance that the Group’s exploration and
development activities will be successful, and statistically few
properties that are explored are ultimately developed into profitable
producing mines.
The Group monitors legal and geopolitical risks as a key part of
its overall assessment process when considering changes to
operations or pursuing new growth opportunities.
The Group actively engages with Governments and policy makers
at the most senior levels to discuss regulatory developments that
are applicable to the Group’s business activities.
In respect of the recent changes in government and sanctions the
Group continue to engage the necessary authorities in the relevant
countries where necessary to limit any disruption to the business.
The Group monitors its supply chain and works closely with key
suppliers and business partners to seek to mitigate material risks in
this area.
The Group aims to conduct exploration on a systematic basis
focusing on opportunities to increase long term shareholder value
within available budgets.
In June 2022, the Group announced an updated Group Reserve
statement which showed over 4.1 million ounces, reflecting
continued focus on exploration and future development of the
Group.
Where appropriate, the Group will consider farmouts and joint
ventures such as with Pasofino on the Dugbe Project.
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW 77
RISK
Capital project delivery
MITIGATION / MANAGEMENT RESPONSE
The Group is in the process of commencing on a large-scale
capital project in respect to construction of the Kouroussa Project
in Guinea.
The Group previously delivered the Yanfolila Project on time and on
budget, and currently about to deliver the Kouroussa Project also
on time and on budget.
Large capital projects require multi-year execution plans. The
Group’s ability to deliver projects in terms of safety, cost and
schedule – may vary due to changes in technical requirements,
law and regulation, government or community expectations,
skills, availability of funding or through commercial or economic
assumptions proving inaccurate through the execution phase.
Delays and overruns in projects could negatively impact our
profitability, cash flow, ability to repay project-specific debt and
relationships with key stakeholders.
The team tasked with delivery of the project are supported by an
experienced Technical Advisory Committee (“TAC”) and Board.
Our methodology includes:
■
■
Following strict budgetary and project approval processes
Constant monitoring and status evaluation, together with
ongoing stakeholder engagement
■
Strong focus on contractor management
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 78
DIRECTORS’ SECTION 172 (1) STATEMENT
The Board understand their duties and responsibilities under section 172 (1) (a) – (f) of the Companies Act 2006 (the ‘’Act’’), which were
introduced to assist shareholders so that they can better understand how the Board have discharged their duties to promote the success of
the Group while having regard to:
(a)
the likely consequences of any decision in the long term
(b)
the interests of the Group’s employees
(c)
the need to foster the Group’s business relationships with suppliers, customers and others
(d)
the impact of the Group’s operations on the community and the environment
(e)
the desirability of the Group maintaining a reputation for high standards of business conduct
(f)
the need to act fairly as between members of the Company.
In accordance with the requirements by the Act, the Board considered that, during the financial year ended 31 December 2022, they have
acted in a way that they consider, in good faith, to be most likely to promote the success of the Group for the benefits of the members, as
well as have regard to wider stakeholder groups.
The following table sets out a few key stakeholder groups identified by the Board, and examples of Board’s decision during the year and the
s.172 matters considered in pursuing these activities.
KEY STAKEHOLDER GROUPS
KEY INTERESTS
HOW WE ENGAGE
ENGAGEMENT OUTCOMES
During the year, we took steps
to improve our understanding
of investor driven climate
related risks and their impact
on the Company, financially
and operationally. As a
result, we developed a GHG
reduction strategy with detailed
implementation actions,
including measuring GHG
emissions for all our assets and
considering new technologies
where practical at our sites to
reduce GHG emissions.
Our Shareholder
Shareholder value is vital in the
Board decision making process.
Over the past year, we have
received a number of topics
from our shareholders, such as:
1) Strategic options for the
Dugbe Project in Liberia
Our key mechanisms of
communicating and engaging
with our shareholders include
but not limited to:
1) Regular interactive sessions
2) Construction progress on the
with investors
Kouroussa Project
3) AISC and how we manage
our cost and supply chain
4) Growth strategy
2) Regularly updated investor
presentations which are also
available on our website
3) Regular updates on project
developments, such as
the resource and reserve
updates, and updates on
the Kouroussa construction
project
4) Updates on social medias,
such as LinkedIn
5) Annual and interim financial
results announcements
6) General and Annual General
Meetings
7) Quarterly market updates
The Board receives regular
updates from executive and
senior management team on
share analysis, shareholder
interactions and feedback.
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW
79
KEY STAKEHOLDER GROUPS
KEY INTERESTS
HOW WE ENGAGE
ENGAGEMENT OUTCOMES
Local Communities
Our social licence to operate
is vital to our success and
we seek to take a proactive
approach in building trust with
the communities we are part
of. We recognise our business
operations have the potential
to impact these communities
both positively and negatively.
Our communities expect us to
commit to high standards in
managing our environmental
footprint and respecting
community and human rights.
Our Business Partners
The Board understands the
Company’s success is directly
impacted by our long-term
relationship with our customers
and suppliers, including
contractors
Our Employees
Employees are critical to the
success of the Company, and
are central to our ambitious
corporate goals.
1) Employment opportunities
2) Compensation and relocation
of affected communities
3) Community projects
We consult with our
communities regularly, through
our dedicated community teams
at each site, and always aim to
do so in good faith, and in ways
that are transparent, inclusive,
and culturally appropriate.
Supportive communities
for a physical relocation at
Yanfolila, following independent
resettlement assessment by
external independent expert in
line with International Finance
Corporation Performance
Standard 5, together with
numerous community
consultations, as highlighted in
our Sustainability Report.
1) Security management and
human rights
2) Management of health,
safety and environmental
impacts
1) Policies and procedures
2) Formal meetings
3) Sites visits
Implementation of Supplier
Code of Conduct,
Onboarding and due diligence
process
Some of the topics raised by
employees and their union
representatives in 2022 included
but not limited to:
1) Salary scales and production
1) Meetings with union
representatives
2) Induction, training and
development events
3) Performance reviews
bonus
2) Learning and development
3) Promotion
1) Health and Safety Training,
including formal tutor-led
trainings, on-the-job
trainings, and trainings held
overseas by specialists
2) Local recruitment
3) Growth and promotions
EXAMPLES OF KEY BOARD DECISIONS:
EXAMPLES OF BOARD’S DECISION DURING THE YEAR AND THE S.172 MATTERS CONSIDERED IN PURSUING THESE ACTIVITIES.
Stakeholder Considerations and Impacts
KE Underground
In early 2022, Hummingbird started detailed
analysis of the KE Underground deposit in
terms of its economics, mining and when to
incorporate it into the future mine plans at
Yanfolila.
Once the KE Underground Reserves
completed, the Board endorsed the
acceleration of the development and
integration of the high grade KE Underground
deposit into Yanfolila’s 2023 mine plan.
s.172 (1) (a)
s.172 (1) (b)
s.172 (1) (d)
The acceleration of the KE Underground project with first
gold production expected in H2 2023, brings forward
production from a high-grade deposit underpinning Yanfolila’s
production profile for years to come and removing sole
reliance on its current open pit operations.
Contract Miner
Remediation
Hummingbird’s production was significantly
hampered by the underperformance of the
mining contractor, including the availability of
the required drilling fleet, due to a prolonged
under investment in their equipment.
s.172 (1) (a)
s.172 (1) (b)
s.172 (1) (c)
s.172 (1) (d)
s.172 (1) (f)
To stabilise production, the Board endorsed
the proposed management intervention
plans by securing additional key equipment
to site, and assistance with the restructure
of the contract miner to ensure the technical,
operational, managerial and fleet capacity is
available to support the production.
Following the intervention, by the end of 2022, Yanfolila’s
operational performance started to materially improve and
into Q1 2023. Q4 2022 production and AISC profile were
amongst some of the best recorded for several years. This
was a hugely positive outcome at the end of what was a
challenging year at Yanfolila.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
80
EXAMPLES OF BOARD’S DECISION DURING THE YEAR AND THE S.172 MATTERS CONSIDERED IN PURSUING THESE ACTIVITIES.
WGC’s Responsible
Gold Mining Principles
We announced in November 2022 that the
Company had successfully achieved Full
World Gold Council (“WGC”) Responsible
Gold Mining Principles (“RGMP”) compliance,
within the shortest possible timeframe at
both Corporate and Yanfolila site level,
received an independently audited assurance
report, highlighting the achievement of three
consecutive years’ conformance with the
World Gold Council’s Responsible Gold Mining
Principles (RGMPs).
s.172 (1) (a)
s.172 (1) (e)
Launched by the WGC in September 2019, the RGMPs
provide a sustainable reporting framework that supports
international best practice in addressing key environmental,
social and governance (“ESG”) requirements as to what
constitutes responsible gold mining via ten umbrella
principles and 51 detailed principles.
By receiving an independent audit report, it demonstrated
the Company is committed to operate responsibly for the
benefit of all stakeholders and to maintain a reputation for
high standards of business conduct.
Adopting the World Gold Council’s RGMPs is a key part of
the Company’s strategy for building a long term, sustainable
mining company for the benefit of our shareholders and
stakeholder groups. Meeting RGMPs’ requirements
demonstrated a high standard of ESG performance, which is
essential for the Company’s social licence to operate in the
countries and communities we engage with and work in.
Approval of Incentive
schemes
We announced in March 2022 that
Hummingbird adopted a long term employee
incentive scheme that comprises an annual
discretionary cash award, which is based on
both corporate and personal targets being
met, and an equity based LTIP, intended
to better align Hummingbird employee
participants with shareholders, to create
medium to long term shareholder value.
s.172 (1) (a)
s.172 (1) (b)
Hummingbird wishes to reward performance and to ensure
that the interests of employees are aligned with the interests
of shareholders. Therefore Hummingbird has adopted and
operates the long term employee incentive schemes to as
part of a remuneration strategy to deliver this aim, to increase
productivity, reinforce efficiency while recognizing the
contribution that our employees make.
This Group Strategic Report has been approved by the Board and signed on its behalf by:
DE Betts
Director
05 June 2023
HUMMINGBIRD RESOURCESOPERATIONAL REVIEW
81
Corporate Governance
The Board of Hummingbird adopted the QCA Corporate
Governance Code 2018 (the ‘QCA Code’) and believe the
application of and the compliance with the QCA Code supports
the Group in pursuing medium to long-term value for shareholders,
without stifling the entrepreneurial spirits and creativity. The Board
is satisfied that the ten principles of the QCA Code are well
applied but recognises the need to continue to review and develop
governance practices and structures, to ensure they are in line with
the growth and strategic plan of the Group. The ten QCA principles
and how Hummingbird has applied them can be found on the
company website.
Strategy and Business Model
The Group currently has two core gold projects, the Yanfolila Gold
Mine in Mali and the Kouroussa Gold Project in Guinea. Additionally,
the Group controls the Dugbe Gold Project in Liberia that is being
developed through a joint venture with Pasofino Gold Limited.
The Group Strategic Report on pages 73 to 80 provides details the
Group’s strategy, as well as key risks and mitigation actions.
Details of the Board’s decisions in 2022 to promote long-term
success, and how it engaged with stakeholders and considered
their interests when making those decisions, can be found
throughout the Operational Review, Strategic Report and Directors
Report.
The World Gold Council (“WGC’’) launched the Responsible Gold
Mining Principles (‘’RGMPs’’) in September 2020, an overarching
framework that represent international best practices in exploration,
operation and closure of gold mines. The Group, as part of its
support of international best practices, declared its intent to
adopt the RGMPs and to work towards the September 2022 full
conformance deadline. Responsible gold mining is conducted
with respect for the environment, the human rights and wellbeing
of our employees, contractors and members of the communities
associated with our activities.
The Responsible Mining page on the Group’s website provides
details regarding our commitment to creating value for all
stakeholders and building a lasting legacy for the communities
living within its licence areas.
Understanding and meeting shareholder
needs and expectations
Effective Risk Management Throughout the
Organisation
The Group’s Executive Committee meets institutional shareholders,
fund managers and analysts to understand how the strategy and
the Board’s decisions impact on and is received by shareholders.
Hummingbird has four committees to assist in its continuous
assessment and management of potential risks to the Group, both
from a corporate and project perspective:
Shareholders are encouraged to engage with the Group throughout
the year through RNS announcements, direct communication,
conference calls, website content, corporate presentations together
with national and international medias including social media.
Additionally, shareholders are typically invited to the AGM where
they are given opportunities to ask questions. Where this is
not practical (for example in 2021 it was not possible to invite
shareholders to the AGM due to COVID-19 travel restrictions)
shareholders are encouraged to submit questions to the Group in
advance of the AGM.
Contact details are provided within every Group announcement and
are available on the Group’s website.
Wider stakeholder needs and social
responsibilities
In accordance with Section 172 of the UK Companies Act 2006,
the Board has a duty to promote the success of the Group for
the benefit of its members as a whole. In doing so, it must have
regard (amongst other matters) including the interest of the Group’s
employees, the need to foster the Group’s business relationship
with host governments, suppliers, customers and others, and the
impact of the Group’s operations on local communities and the
environment.
The Board has always recognised the relationships with key
stakeholders are central to the long-term success of the business
and therefore seeks active engagement with all stakeholder groups,
to understand and respect their views, in particular of those with
the local communities in which it operates, its host governments,
employees and suppliers.
■
■
■
■
The Audit Committee
The Remuneration Committee
The Technical Advisory Committee (“TAC”)
The Environment, Social and Governance (“ESG”) Committee
The Audit, and Remuneration and ESG Committees typically meet
a minimum of four times a year; whilst the Technical Advisory
Committees typically meet monthly.
The Board receives and reviews reports on Group’s principal risks
on a regular basis, including Political, Social, Financial, Mining and
Technical risks. Control mechanisms have been put in place for the
purpose of monitoring and mitigating these risks.
Hummingbird is exposed to a variety of financial risks including
currency risk, credit risk and liquidity risk. Some of the objectives
and policies applied by management to mitigate these risks are
identified and outlined in both the Strategic Report and note 30
to the Consolidated Financial Statements. The Audit Committee
assists the Board in fulfilling its responsibilities regarding financial
reporting, external and internal audit, risk management and
controls and to oversee policies on whistleblowing, compliance,
fraud, and anti-bribery.
Hummingbird faces mining and technical challenges, the Technical
Advisory Committee assists the Board in carrying out functions
and duties including reviewing ongoing technical performance of
the Group, evaluating the effectiveness of the Group’s policies and
systems for identifying and managing operational risks.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 82
A balanced and well-functioning Board led by
the Chairman
Biographies of all Directors are included on
page 94.
The Board consisted of the Non-Executive Chairman* in first half
of 2022, the Interim Executive Chairman and Chief Executive
Officer*, the Finance Director and four Non-Executive Directors. All
Non-Executive Directors are considered to be independent, and
the Board believes there to be an appropriate composition, given
the size and nature of the business. All board members contribute
a significant amount of their time to discharge their duties and
responsibilities. The two Executive Directors are full time employees
of the Group, and the Non-Executive Directors are remunerated
on a fixed fee part time basis. The Board typically meets on a
quarterly basis and holds additional meetings either in person or
by conference calls to review and, if considered necessary, make
plans to improve Group performance.
Since the retirement of the Non-Executive Chairman, Russell King
in June 2022, the CEO, Daniel Betts has taken on a combined
responsibility of Interim Executive Chairman and CEO. The Board
is cognisant of the QCA Code’s recommendation with respect to
having in place an independent Non-Executive Chairman and has
therefore been actively searching for a suitable candidate for the
role of Non-Executive Chairman.
The Board meets typically on a quarterly basis, holds additional
meetings either in person or by conference call as required to
review company performance and consider, and if appropriate
approve, future plans and strategies.
In summary, the Board is overall satisfied with the size, diversity and skills on the Board, with the search of a suitably qualified Non-Executive
Chairman ongoing.
DIRECTOR
BOARD OF DIRECTORS***
AUDIT COMMITTEE
REMUNERATION COMMITTEE
TECHNICAL ADVISORY
COMMITTEE
Russell King *
Dan Betts **
Thomas Hill **
Stephen Betts
David Straker-Smith
Attie Roux
Ernie Nutter
2/4
4/4
4/4
4/4
4/4
4/4
4/4
–
–
–
–
5/5
–
5/5
–
–
–
–
4/4
–
4/4
–
–
–
–
–
14/14
14/14
*
**
***
Russell King retired in June 2022, and Dan Betts assumed the Chairmanship on an interim basis.
The CEO and CFO were invited to and regularly attended TAC and Remuneration Committee Meetings. The CFO was invited to and regularly attended Audit Committee meetings. The
Chairman, CEO and CFO are all routinely invited to and regularly attended meetings of the ESG Committee.
In addition to the four full board meetings, Independent Committee of the Board held three meetings in relation to matters arising where certain directors had conflict of interests. The
Independent Committee of the Board consisted of Russell King (until June 2022), Stephen Betts, David Straker-Smith and Attie Roux.
Experience, skills and
capabilities of the Board
All Directors retire at intervals in accordance with the Company’s
Articles of Association, and if appropriate offer themselves for
election by the shareholders.
The Directors have gained their skillsets and knowledge through
experience in gold exploration, development and production, as
well as in wider business sectors; their skillsets and knowledge
are kept up to date by the Group’s advisory teams, involvement
and participation in industry conferences, and through their own
continuing professional development.
The Company Secretary ensures the Board is informed of its legal
responsibilities, and the Company is compliant with applicable
regulatory requirements and legislation. The Board also has access
to advice from external bodies such as the Group’s nominated
advisor, auditors and lawyers.
Solicitors to the Company were invited in November 2022 to
provide a refreshment session on the Directors’ statutory and
general duties, disclosure obligations under the Market Abuse
Regulation and AIM rules and provided practical legal advice.
Refresher trainings on the AIM rules by the Company’s Nominated
Adviser occurred in Q2 2023.
Board Evaluation
The Board reviews its performance and discusses the effectiveness
of the board on a quarterly basis, seeking to identify opportunities
for improvement with the overriding objective of maximising
long-term shareholder value.
The Group implemented a formal assessment process, which
employees’ performance, including the Executive Directors are
assessed annually against the agreement personal objectives and
targets.
Corporate Culture
A key part of the Board’s function is to ensure that there are sound
ethical values and behaviours upheld throughout the organisation.
HUMMINGBIRD RESOURCESGOVERNANCE 83
The Group has four organisational principles which are set out below:
Governance Structure
ORGANISATIONAL PRINCIPLES
BEHAVIOURS
Hummingbird
First
■ Pride and value in Hummingbird
■ Company-centric thinking and working
■ Promoting our success and values,
internally and externally
Forward
■ Focus on core strategic priorities and
common goals
■ Delivering with urgency and agility
■ Providing solutions to drive outcomes
and progress
Care
■ Thinking about others and the
environment we operate in
■ Providing regular mutual support and
feedback to help us be the best we can
■ Recognising and rewarding success
together
Smarter
■ Clear accountability and performance
expectations
■ Empowered teams, making timely,
fact-based decisions
■ Utilising collaborative processes, tools
and technology
The Group, wherever it operates in the world, is committed to
adhering to the highest standards of ethical behaviour in the
conduct of its business.
The Group has no tolerance for bribery and corruption, and this
applies without any exception for cultural differences. The Group
has an Anti-Bribery and Corruption Policy, which is reviewed by
the Audit Committee annually and updated if appropriate. This
Policy is available in French and is accessible to all employees. All
employees are required to attend anti-bribery trainings, either face
to face or e-learning. A dedicated whistleblowing telephone number
and email address have been set up for the Yanfolila operations,
for employees to report suspected wrongdoings in confidence.
The Group is in process of setting up a dedicated whistleblowing
telephone number for the Kouroussa project.
Additionally, the Group is committed to ensuring that there is no
modern slavery or human trafficking in its supply chains or any
part of the business and has planned to perform risk based due
diligence on key suppliers.
The Company has adopted Code of Conduct, which is based on
the core values, provides guidance as to how the Company and its
associated companies, employees and business partners should
operate. Along with the Code of Conduct, there are several group
level policies supporting ethical business approach, including
Whistleblowing Policy, Human Rights Policy, Environmental Policy
and Supply Chain Policy.
Division of Responsibilities
The Chairman leads the Board and is responsible for its overall
effectiveness in directing the Group and the Chief Executive Officer
is responsible for implementing the Group’s strategy and for its
operational performance. Following the retirement of the previous
Chairman in June 2022, the Chief Executive Officer has taken
on the combined role of Interim Executive Chairman and Chief
Executive Officer. Hummingbird has been actively searching for a
suitable candidate for the role of Non-Executive Chairman.
The Chairman is responsible for Hummingbird’s adherence to an
appropriate corporate governance structure. Detailed roles and
responsibilities of the Directors can be found on pages 96 and 98.
The Board is supported in its decision making by four committees.
Each committee has Terms and Reference setting out its duties,
authorities and reporting responsibilities.
Audit Committee
The Audit Committee oversees and reviews the Hummingbird’s
financial reporting and internal control processes, its relationship with
external auditors and the conduct of the audit process together with its
process for ensuring compliance with laws, regulations and corporate
governance. The Group’s external auditors are invited to attend the
meetings of the Committee on a regular basis. The Audit Committee
comprises David Straker-Smith (Chairman) and Ernie Nutter. Refer
to the Audit Committee Report from page 84.
Remuneration Committee
The Remuneration Committee is responsible for determining
the framework and policy for the remuneration of the Group’s
Chairman and the executive directors including pension rights
and compensation payments. The Committee is also responsible
for making recommendations as to the level and structure of
remuneration for senior management. The Remuneration Committee
comprises David Straker-Smith (Chairman) and Ernie Nutter.
Technical Advisory Committee
The Technical Advisory Committee acts as an independent body
of experts for Hummingbird in order to establish formal and
transparent arrangements to assist the Group in assessing and
guiding technical and operational performance. The TAC comprises
Attie Roux (Chairman), Ernie Nutter and Wayne Galea.
ESG Committee
The ESG Committee acts as an independent body of experts to
establish formal and transparent arrangements for considering how
the Board should assist Hummingbird to implement Group policies
and manage risks relating to occupational and community health
and safety, environmental performance and compliance, social
performance, stakeholder relations and political risk. The ESG
Committee comprises a Chairman who is an independent ESG
specialist, Hummingbird’s Head of ESG, and Senior members of
the organisation invited to attend ESG Committee meetings.
Further details regarding the roles and responsibilities of these
committees can be found on the Group’s website.
Hummingbird has adopted, and will maintain, governance structures
and processes that are fit for purpose. This governance structure may
evolve over time in parallel with the development of the Group and
therefore any fluctuation in its objectives, strategy and business model.
Communication with Shareholders
and other relevant stakeholders
The Group seeks to engage regularly with shareholders, including
through post-RNS announcements, conference calls and the AGM.
The Group welcomes engagement with shareholders throughout
the year either in person, by telephone or by email. A range
of corporate information, including all Group announcements,
historical annual reports and other governance-related material,
is also available to shareholders, investors and the public on the
Group’s website.
This Corporate Governance Report has been approved by the
Board and signed on its behalf by:
Dan Betts
Interim Executive Chairman and CEO
05 June 2023
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 84
Audit Committee Report
Dear Shareholder,
I am pleased to present you the Audit Committee Report for the
financial year ended 31 December 2022.
Composition
The Audit Committee consists of two Non-Executive Directors,
Ernie Nutter and myself. The Board consider that the Committee
as a whole has the necessary competence relevant to the sector in
which the Group operates.
The Audit Committee held 5 meetings in 2022 and both members
attended.
Responsibility
Detailed duties and responsibilities of the Committee are set out
in its Terms of Reference, which was approved by the Board of
Directors. The primary function of the Committee is to assist the
Board of Directors of the Company in fulfilling its responsibilities
with regard to financial reporting, external and internal audit, risk
management and controls and to oversee various policies including
whistleblowing, anti-corruption and bribery.
In the past financial year, the Committee reviewed and approved
the interim and year-end financial results. The Committee met with
the auditors to review and approve their audit plan, received their
findings and monitored the integrity of the financial statements of
the Group. During the year, the Committee also worked closely
in ensuring adherence to the anti-bribery protocols as well as
monitoring the maintenance of sound internal controls and risk
management across the Group. The Chief Financial Officer
provided regular updates to the Committee throughout the year
and the Committee was satisfied with the effectiveness of internal
controls and risk mitigation.
External Audit
The Audit Committee reviewed and recommended to the Board the
appointment and remuneration of the Group’s external auditor, and
is satisfied that the current auditor, RSM UK Audit LLP maintains its
objectivity and independence in carrying out audit work.
Accordingly, the Committee recommended to the Board that RSM
UK Audit LLP be re-appointed for the next financial year.
Significant issues related to the financial
statements
During 2022, the Committee spent time considering the significant
issues of judgement relating to the financial statements, including
but not limited to those listed below. In each case, the Committee’s
work was to ensure that issues are identified early and that
accounting judgements adopted were sound.
Going concern
As set out in note 3, the annual financial statements have been
prepared on a going concern basis. In making an assessment
on going concern, the Group has prepared cash flow forecasts
based on estimates of key variables including production, gold
price, operating costs, scheduled debt repayments in line with
the Group’s debt arrangements and capital expenditure through
to December 2024 that supports the conclusion of the Directors
that there is sufficient funding available to meet the Group’s
anticipated cash flow requirements to this date. These cashflow
forecasts are subject to a number of risks and uncertainties, in
particular the ability of the Group to achieve the planned levels
of production and the recent higher gold prices being sustained.
The Committee reviewed and challenged the key assumptions
used by management in its going concern assessment, as well
as the scenarios applied and risks considered, including the risks
and potential disruptions associated with the recent change in
governments in Mali and Guinea and subsequent sanctions.
The biggest material uncertainty and risk remains ounces produced
and whether the current mine plan can be achieved (including
expected production from the Kouroussa mine which is currently
being commissioned), mining contractor equipment performance,
and sanctions on Russia, which are also having a logistical impact
on the Group. These production levels are also key in supporting
the scheduled debt repayments over the period under review.
Where additional funding may be required, the Group believes it
has several options available to it, including but not limited to, use
of the overdraft facility, cost reduction strategies, selling of non-core
assets, raising additional funds from current investors and debt
partners.
The Committee also considered sensitivities to those cash flow
scenarios (including where production is lower than forecast and
gold prices lower than current levels) which would require additional
funding. Should this situation arise, the Committee believe that they
have several options available to them, as referenced above, which
would allow the Group to meet its cash flow requirements through
this period, however, there remains a risk that the Group may not
be able to achieve these in the necessary timeframe.
Based on its review, the Committee has a reasonable expectation
that the Group has adequate resources to continue operating for
the foreseeable future and hence the Committee considers that the
application of the going concern basis for the preparation of the
Financial Statements is appropriate. However, the risk of lower-
than-expected production levels, timing of VAT offsets and receipts,
increased fuel costs and potential disruptions to supply chain and
the ability to secure any potential required funding at date of signing
of these financial statements, indicates the existence of a material
uncertainty which may cast significant doubt on the Group’s ability
to continue as a going concern.
Should the Group be unable to achieve the required levels
of production and associated cashflows, defer expenditures,
HUMMINGBIRD RESOURCESGOVERNANCE 85
obtain additional funding or renegotiating the current financing
arrangements such that the going concern basis of preparation
was no longer appropriate, adjustment would be required including
the reduction of balance sheet asset values to their recoverable
amounts and to provide for future liabilities should they arise.
Exploration and evaluation (E&E) assets
As a result of a deficit arising between the Group’s market value
(capitalisation) against book value (net assets) at 31 December
2022, the Group conducted an assessment of impairment over
E&E assets. As set out in note 4, in respect of E&E assets, the
Group considers there to be three cost pools, being the whole
of Liberia, the whole of Guinea and whole of Mali, and therefore
aggregates assets in respect of each for the purposes of
determining whether impairment of E&E assets has occurred.
During 2022, Pasofino continued to progress the project in Liberia
and completed its earn in. This continued activity displays no
indicators of impairment under IFRS 6 and hence no impairment
assessment was required. However due to the market capitalisation
of Pasofino, management did an assessment of the recoverability
of the Liberian cash generating unit using a combination of two
methods. The first was through the valuation of Pasofino as
management believes most of the value of this company is driven
from the earn-in agreement on the Dugbe Project, and therefore
believe the value of Pasofino provides indication of the value of
Dugbe. The second method continued to consider the recoverable
amount of the Liberian cash generating unit (“CGU”), with reference
to the 2021 Preliminary Economic Assessment (‘PEA’). The net
present value method further proved that no impairment loss was
to be recognised for the year ended 31 December 2022.
Further exploration work was completed in the Malian licence areas
in 2022, further providing evidence that there were no indicators of
impairment. Management also considered the recoverable amount
of the Malian CGU, with reference to the Group’s latest budget
and life of mine (“LOM”) plan for the Group’s Yanfolila Gold Mine
in Mali, no impairment loss was recognised for the year ended
31 December 2022.
As at 31 December 2022, the Guinean E&E assets were immaterial
and therefore considered to not present a material risk of material
misstatement and for this reason no impairment assessment was
carried out.
Having considered the above, the Committee found the Group’s
assessment of impairment in respect of E&E assets to be
appropriate.
Property, plant and equipment
As a result of a deficit arising between the Group’s market value
(capitalisation) against book value (net assets) at 31 December
2022, the Group conducted an assessment of impairment over
property, plant and equipment. As set out in note 4, determination
as to whether, and by how much, an asset or cash generating
unit (“CGU”) is impaired involves management estimates on highly
uncertain matters such as; gold price, discount rates used in
determining the estimated discounted cash flows of CGU, foreign
exchange rates, the level of proved and probable reserves and
measured, indicated and inferred mineral resources that may be
included in the determination of value in use.
The principal CGUs, to which mine property, plant and equipment
relates is the Group’s Yanfolila Gold Mine in Mali (operating
segment) and the Kouroussa Gold Project in Guinea which is
currently under construction. In determining the recoverable
amount of the Malian CGU at 31 December 2022, future cash
flows were discounted using rates based on the Group’s estimated
weighted average cost of capital. Operating and capital cost
assumptions are based on the Group’s latest budget and life of
mine (“LOM”) plan.
The table below summarises the key assumptions used in the carrying value assessments of the Malian CGU:
Gold price ($ per ounce):
Discount rate % (post tax):
2022: $1,800
2021: $1,750
2022: 21.86%
2021: 12.58%
Commodity price and foreign exchange rates were estimated with
reference to external market forecasts. The rates applied to the
valuation had regard to observable market data.
In determining the value in use of the CGU, the future cash flows were
discounted using rates based on the Group’s estimated real weighted
average cost of capital, with an additional premium applied having
regard to the geographic location of the CGU and company size.
Operating and capital costs:
LOM operating and capital cost assumptions are based on the Group’s latest budget and life
of mine plan.
Based on the recoverable amount of the Malian CGU, no
impairment loss was recognised for the year ended 31 December
2022. At around 7% lower production, the headroom is eroded
and value in use is equal or less than the carrying value of the
CGU. The headroom is also eroded though a combination of
lower production and projected cost savings not being achieved.
There is a possibility that changes in circumstances will alter these
projections, which may impact on the recoverable amount of the
assets.
No impairment assessment was considered necessary with
respect to the Kouroussa Gold Project in Guinea as it is still under
construction.
Having considered the above, the Committee found the Group’s
assessment of impairment in respect of property, plant and
equipment to be appropriate.
Other receivables
As set out in note 4, included in other receivables is an amount
of CFA 4,968,387,000, approximately $8,017,000 (2021:
$8,585,000), due from the Government of Mali, arising on
2 February 2017 when the Government of Mali exercised its right
to acquire an additional 10% of Societe Des Mines De Komana
SA (which would take its total interest in Societe Des Mines De
Komana SA to 20%). The Group remains in discussions with the
Government of Mali as to the timing and mechanism of payment of
this remaining balance. The relevant shares will not be issued until
the mechanism on payment of the remaining balance has been
agreed.
The Group considers the receivable to be ‘credit-impaired’ as part
of it remains unpaid more than 1 year since the Government of Mali
exercised its right. The Group has reassessed the recoverability of
the balance having considered multiple scenarios on the manner,
timing, quantum and probability of recovery on the receivable,
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 86
the part payment in 2020 together with movements in exchange
rates. This assessment resulted in a lifetime expected credit
charge of $316,000 as at 31 December 2022. This takes the net
lifetime expected credit loss for the full balance to $1,603,000 as
at 31 December 2022. The allowance for lifetime expected credit
losses assessment requires a significant degree of estimation and
judgement.
the explosives magazine not fully completed, it is therefore safe to
say there was no significant wear and tear on the plant that would
need specialist clean up nor were there any contamination from
chemicals from the TSF and explosive magazine. For this reason,
should there be need to rehabilitate the site as of 31 December
2022, it is expected the cost required to do this work will be far less
than would be required for a fully operational mine.
Having considered the above, the Committee found the Group’s
assessment of impairment (on application of IFRS 9 ‘Financial
Instruments’) in respect of the receivable due from the Government
of Mali to be appropriate.
Recoverability of VAT in Mali and Guinea
VAT recoverable at end of 31 December 2022, includes VAT
receivables of $25.9 million in Mali, $5.2 million in Guinea and
$100,000 in Isle of Man.
The time to receive VAT from the Government of Mali is
unpredictable, and although the Group was able to continue to
offset some VAT balances against tax in 2022 (and in 2023), the
VAT balance in Mali remain high at $25.9 million on 31 December
2022 (2021: $11.2 million). Recoverability is expected to continue
via offset of future taxes or cash. The Group was able to receive
cash of $0.6 million in January 2023. The timing of recoverability of
these amounts is unpredictable and are subject to foreign currency
risk as the amounts are recoverable in West Africa Francs (“CFA”).
In Guinea, VAT receivables have increased during the year as
construction activities increased. In Guinea VAT receipts are
expected to be received via cash refunds. All VAT submissions
are being made to the Government in line with local requirements,
however, no receipts have been received yet pending the
finalisation of the initial submissions review by the Government. The
timing of recoverability of these amounts is unpredictable and are
subject to foreign currency risk as the amounts are recoverable in
Guinea Francs (“GNF”).
The Committee regularly engages management and consider
actions taken by management to recover these amounts and it
is satisfied that all necessary efforts are being done to ensure the
amounts can be recovered as they fall due.
Rehabilitation provision
The Group makes full provision for the future cost of rehabilitating
mine sites and related production facilities on a discounted basis
at the time of developing the mines and installing and using those
facilities. The rehabilitation provision represents the present value
of rehabilitation costs relating to mine sites. The Group assesses
its mine rehabilitation provision at each reporting date. Significant
estimates and assumptions are made in determining the provision
for mine rehabilitation as there are numerous factors that will affect
the ultimate amount payable. These factors include estimates of the
extent and costs of rehabilitation activities, technological changes,
regulatory changes, cost increases as compared to the inflation
rates and changes in discount rates. These uncertainties may result
in future actual expenditure differing from the amounts currently
provided. The provision at reporting date represents management’s
best estimate of the present value of the future rehabilitation costs
required.
Following the increased construction activities in Guinea, the Group
have reassessed the rehabilitation provision balance, resulting
in a $5.8 million provision being recognised as of 31 December
2022. The major disturbances up to 31 December 2022 in Guinea
was mainly the process plant, camp, the tailings storage facility
(“TSF”) structure, roads and any other workshop and ancillary
buildings. Further as of 31 December 2022, the plant was still in
construction and the TSF had not been filled with any materials and
Having considered the above, the Committee found the Group’s
estimate and assumptions therein to be appropriate.
Liberia Earn-In Agreement
Pasofino Gold Limited (“Pasofino”), continued to develop Dugbe
Gold Project in Liberia (“Dugbe”) in 2022 as part of the earn-in
agreement with a further $4.7 million advanced to Dugbe in 2022.
Pasofino completed the Definitive Feasibility Study (“DFS”) for
Dugbe on 1 August 2022, and therefore satisfying the condition
for their earn-in. On 20 September 2022, Pasofino then formally
notified the Group of their intention to exercise their right to the
49% in Dugbe. Following this notification, a Sole Funding Period
agreement was entered into whereby Pasofino will solely fund the
first $4.7 million of expenditures in Liberia following the completion
of the earn-in. After this amount is exhausted, the two parties will
fund the ongoing expenditures in line with their respective holdings,
through an operating joint venture agreement.
The Committee has considered the proposed accounting treatment
adopted by management together with the key judgements made,
as reflected in note 26.
Having considered these, the Committee found the Group’s
estimate and assumptions therein to be appropriate.
Deferred Tax
As set out in note 22, management assessed the taxation situation
of the Group. The taxation of the Group’s operations in Mali are
aligned to the Mining Code of Mali 1999 under which tax is charged
at an amount not less than 1% of turnover and not more than 30%
of taxable profits.
Following a review of the future profitability of the Malian subsidiary,
in light of the relatively high gold price environment being
experienced, deferred tax assets of $13.2 million and deferred tax
liabilities of $3.6 million were recognised at 31 December 2022 in
respect of the Malian subsidiary. This resulted in a net credit to the
income statement of $5.7 million in 2022. The deferred tax has
arisen on the temporary differences between the carrying value of
assets and tax written down value of assets.
No deferred tax assets have been recognised in respect of the
remaining deferred tax assets of $17.3 million, as the recovery is
dependent on the future profitability, the timing and the certainty of
which cannot reasonably be foreseen.
In Guinea, following the finalisation of the 2021 local audit, a total
of GNF 585 billion (US$60.0 million) of historical costs have been
transferred to Kouroussa Gold Mine SA, from the now dissolved
Cassidy Gold Guinea SA (“CGG”). The Group is currently finalising
the tax implications of this transfer with its tax advisors, in respect
of whether the full balance together with any losses will be available
for future tax offset. Initial discussions and tax advise confirm that
it should be possible, but not certain, that Kouroussa Gold Mine
SA will benefit from the full amount transferred. Further, given that
Kouroussa Gold Mine SA is still under construction, any amounts
being spent in Guinea are currently regarded as capital work
in progress (“WIP”), until such a time commercial production is
reached at which point costs will then be transferred to the fixed
asset register and depreciation commence.
It is at this point also, that the research fees transferred from CGG
HUMMINGBIRD RESOURCESGOVERNANCE 87
will also commence amortisation and hence will then have taxable
temporary differences. On 31 December 2022, the accounting
base and tax base of the capital WIP balances as well as the
amounts transferred from CGG is the same resulting in nil impact
on deferred tax.
Having considered the above, the Committee found the Group’s
estimate and assumptions therein to be appropriate.
Fair value of the Cassidy Smelter Royalty
The Cassidy Smelter Royalty was reassessed to $8.2 million as at
31 December 2022 (2021: $9.1 million), using the latest discount
rates and mine plans. This represents a 2% smelter royalty retained
by the vendors on all gold sales from the project over and above
the first 200,000 ounces of its production and sales, subject to a
maximum of 2.2 million ounces of production and sales.
Significant judgement and estimations were used to determine
the fair value of this liability including judgement on likelihood
of payment of this liability, estimating the discounts rates used
in determining the net present values of amounts used as well
as estimating the future production profiles. There is significant
estimation uncertainty in the calculation of the liability and cost
estimates can vary in response to many factors including timing
of reserves growth, as well as commodity prices. Some of the key
assumptions used in the model include average gold production
volumes of approximately 100,000 ounces per annum over 7 years.
As part the model, production was assumed to start in Q2 2023
and the royalty currently estimated to be payable from 2025, with a
pre-tax discount rate of 21.86% (2021:15.03%). The model is also
subject to gold price changes.
Judgement was also applied in respect of the treatment of the
movement in the liability. The movement on the balance has been
recorded with the income statement in line with the applicable
International Accounting Standards.
Having considered the above, the Committee found the Group’s
estimate and assumptions therein to be appropriate.
Cassidy Deferred Consideration
The deferred consideration payable to the vendors of Cassidy
was reassessed to $4.2 million as at 31 December 2022 (2021:
$4.6 million), using the latest discount rates and reserve growth
estimations, with the resulting movement recorded within
statements of comprehensive income. This was then offset by the
$0.6 million relating to amounts that were paid by the Group on
behalf of Cassidy, resulting in a net deferred consideration balance
of $3.6 million as at 31 December 2022.
Following the publication of the reserve of 647,000 ounces (at
4.15g/t) at Kouroussa on 30 June 2022, deferred consideration in
respect of 200,000 excess ounces became payable to Cassidy,
and shares were issued on 7 February 2023 to satisfy this liability.
The deferred consideration due of £2.0 million ($4.2 million) was
reduced by £532,032 (US$642,000) due to the settlement of
liabilities by the Group on behalf of Cassidy, and therefore resulted
in the issue of 22,688,844 new Ordinary Shares to the underlying
shareholders of Cassidy (the “Cassidy Deferred Consideration
Shares”), when a volume weighted average price (“VWAP”)
of 6.47 pence is applied (being the 5-business day trailing VWAP to
31 December 2022).
The deferred consideration is payable of £10 for every ounce of
gold reserve published (or processed if not included in a reserve)
more than 400,000 ounces (subject to a maximum of 1,000,000
ounces). In short, any growth in reserves up to a maximum of
1,000,000 results in additional purchase price.
Judgements and estimations were used to determine the fair value
of this liability including judgement on likelihood of payment of this
liability, exchange rates, estimating the expected future reserve
growth both quantum and timing, estimating the discounts rates
used in determining the net present values of amounts used.
There is significant estimation uncertainty in the calculation of the
liability and cost estimates can vary in response to many factors in
particular timing of reserves growth.
The final reserve growth was estimated to be in 2027, and a
pre-tax discount rate of 21.86% (2021:15.03%) was used in the
calculations. The movement on the balance has been recorded
with the income statement in line with the applicable International
Accounting Standards.
Having considered the above, the Committee found the Group’s
estimate and assumptions therein to be appropriate.
Litigations and disputes
The Committee also considered all the current litigations and
disputes as well as management’s assessment of any provisions
required to settle those.
Looking forward
In the coming financial year, in addition to ongoing duties,
the Committee will review the cost and benefit of changes to
the internal control and internal audit capability and will make
recommendations to the Board accordingly.
Approval
This Audit Committee Report has been approved by the Committee
and signed on its behalf by:
David Straker-Smith
Chair of the Audit Committee
05 June 2023
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 88
Renumeration Committee Report
The Company aims to offer competitive salary packages that
attract, retain, and motivate highly skilled individuals and align
remuneration packages with performance related metrics.
The Remuneration Committee consists of myself as the Chairman
and Ernie Nutter. The Committee met formally 4 times in 2022
and all committee members attended the meetings. Additionally,
the Committee met a number of times informally to provide
oversight, support and guidance as required. The Chief Executive
Officer and Chief Financial Officer are invited to attend meetings
of the Committee. None of the Committee members have any
personal financial interest, conflicts of interests arising from cross
directorships, or day-to-day involvement in running the business.
2022 Incentive Scheme
For 2022, the Company operated the 2022 incentive scheme for
its Executive Directors and other senior managers in line with the
incentives provided in previous years. Under this scheme, Executive
Directors could receive awards up to 250% of their base salaries’
payable half as cash and half as equity based on a long-term
incentive plan (structured as restricted stock units, RSUs vesting in
3 years subject to performance criteria), with any cash bonus being
paid 50% in the first quarter of 2023, 25% in December 2023 and
25% in December 2024.
Corporate targets covered the key performance areas of
production, AISC, cash flow, Kouroussa project delivery, safety, and
ESG commitments, in addition to individual personal performance
measures.
The Group encountered many challenges during the year including
poor performance from the mining contractor impacting production
in Mali. These challenges meant that the Group did not meet either
its production or AISC targets for 2022.
The Group considered that it was appropriate to recognise the key
achievements in 2022 (such as adherence to safety standards and
ESG performance), however these positives were tempered by
the fact that the Group did not meet several of its other corporate
targets. Therefore, the Committee considered it was appropriate
that the 2022 cash bonuses awarded should be reduced.
This report is for the year ended 31 December 2022. It sets out the
remuneration policy and the detailed remuneration for the Executive
and Non-Executive Directors of the Group. As an AIM-quoted
Company, the information is disclosed to fulfil the requirements of
AIM Rule 19.
Hummingbird Resources plc is not required to comply with the
Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013. The information is
unaudited except where stated.
Dear Shareholder,
I am pleased to introduce the Directors’ Remuneration Report for
the 2022 financial year. This letter introduces the report, outlines
the major decisions on Directors’ remuneration during the year and
explains the context in which these decisions have been taken.
Later in this report we set out information on our remuneration
policy and information on remuneration during the year.
As in previous year’s the Group reviewed the appropriate balance
of short-term incentives and long-term share-based incentives and
retention structures for Directors and key employees taking into
consideration the Group’s stage of maturity and future ambitions.
The Group continues to adopt a standard approach to senior team
incentives comprising an annual cash bonus plan and long-term
share awards. This approach is summarised below with greater
detail set out later in this report.
Aims of the Remuneration Committee
Our overall aim is to determine the framework and policy for the
remuneration of the Group’s employees including the executive
directors. We aim to align remuneration with delivery of long-term
value for our shareholders and stakeholders.
The terms of reference of the Remuneration Committee are set out
below:
■
■
■
■
Determine and agree with the Board the Company’s overall
remuneration principles and policy for the chairman and the
executive directors as well as considering policies for the rest
of the employees below the board and executive team.
Approve the principles, objectives and headline targets for any
performance-related bonus or incentive schemes.
Prepare an annual remuneration report to shareholders to
show how the policy has been implemented.
Review and approve any termination payment for executive
directors such that these are appropriate for both the individual
and the Company.
HUMMINGBIRD RESOURCESGOVERNANCE 89
In recognition of the achievements within the year, 36% of the
potential maximum for the CEO and the CFO was awarded.
Amounts awarded will be dependent on continued employment
with the Group, and malus provisions.
2023 Incentives Scheme
The structure of the incentive arrangements for 2023 will remain
consistent with 2022, with the objective of providing an industry
standard incentive structure with an appropriate balance of
short-term and long-term incentive and retention structures
considering the Group’s potential development paths. For 2023,
we have again extended the scheme further to more levels
within the organisation, at the corporate level and more widely
across operational sites, to support our performance and talent
management strategies.
Corporate targets covered the key performance areas of
production, AISC, cash flow, Kouroussa Project delivery, safety, and
ESG commitments, in addition to individual personal performance
measures. These have not been assessed yet and will be assessed
when complete. There is a possibility for a further bonus.
The Company scheme remains a discretionary short-term
cash-based scheme based on both corporate and personal targets
(with awards being paid out over 2 years subject to continued
employment and malus provisions), together with an equity based
Long Term Incentive.
The maximum amounts payable under the new arrangements have
not increased from the maximum incentive payment under the
previous year’s scheme.
Details of how the annual discretionary short-term cash-based
scheme and the Long-Term Incentive Plan will operate in 2023 are
set out later in this report.
Non-executive Director remuneration
In recognition of the experience and the ongoing level of
commitment of the Non-executive Directors, each Non-executive
Director receives an annual deferred share award with a value
of £25,000, vesting one year from the award date, subject to
remaining in office. These awards must be retained and cannot
normally be sold until the individual ceases to hold office.
The Group has determined that these immaterial awards does
not impact on each non-executive director’s independence in
performing their duties.
David Straker-Smith
Chair of the Remuneration Committee
05 June 2023
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 90
Remuneration policy
Basic salary and benefits for Executive Directors are reviewed
on an annual basis and any changes made to the structure of
these are based on a combination of individual performance
and market conditions. Bonus awards are assessed on overall
business and individual performance. Executive Directors and
senior management remuneration packages are heavily linked to
performance criteria to incentivise daily conduct in alignment with
the best interests of our shareholders.
Executive Directors are entitled to a pension allowance at 10% of
base salary, medical and life insurance.
Annual and long-term share-based incentives are described
elsewhere in this report.
Malus
Both annual bonus and long-term incentive awards are subject to
malus provisions as detailed elsewhere in this document.
Executive Directors’ service contracts and
payments for loss of office
The CEO and CFO have rolling service contracts dated 1 June
2014 and 2 August 2010, with notice periods of 12 months and
3 months, respectively. Our approach to remuneration in each
of the circumstances in which an Executive Director may leave
is determined by the Remuneration Committee in accordance
with the terms of the service contracts and any other relevant
agreements including incentive schemes.
Non-Executive Directors’ letters of
appointment
The Non-Executive Directors do not have service contracts
but instead have letters of appointment which set out their
responsibilities and are subject to a 1-month notice period.
Annual report on remuneration in year
This section sets out details of remuneration in 2022.
2022 Summary of Directors’ Total Remuneration
31 DECEMBER 2022
BASE SALARY
$’000
OTHER BENEFITS/
COMMITTEE FEES2
$’000
DEFERRED
BONUS PAID1
$’000
TOTAL
$’000
BASE SALARY
$’000
31 DECEMBER 2021
OTHER BENEFITS/
COMMITTEE FEES2
$’000
DEFERRED
CONSTRUCTION
BONUS PAID1
$’000
DE Betts
TR Hill
RJ King
SA Betts
RD Straker–Smith
GE Nutter
AA Roux
475
304
47
62
81
75
62
21
28
6
12
12
42
44
74
51
–
–
–
–
–
570
383
53
74
93
117
106
525
335
98
69
88
81
69
24
24
13
12
12
45
49
272
175
–
–
–
–
–
TOTAL
$’000
821
534
111
81
100
126
118
1,106
165
125
1,396
1,265
179
447
1,891
In addition to the amounts above, the Directors are accruing potential benefits under incentive schemes as set out in note 28.
1.
2.
Represents the vested cash portion of the various performance plans, the plans set up to incentivise management. Further details on the performance plans and related vesting conditions are
disclosed in note 28.
Other benefits and committee fees include pension allowances, medical and life insurances for DE Betts and TR Hill, additional benefits for attending board meetings and approximately
£30,000 annual fee for GE Nutter and AA Roux for membership of the Technical Advisory Committee.
Salary and fees
The salaries of the CEO and CFO in the year were £350,000 and
£225,000, respectively.
According to the 2022 Incentive Plan, 50% of the STI would have
been paid out in Q1 2023, 25% in December 2023 and 25% in
December 2024, and that share options granted under the LTI are
expected to vest on 4 February 2025 in equal thirds as follows:
The Chairman’s annual fee was £71,000, the annual base fee of the
non-executive directors’ is £50,000 with additional £5,000 for audit
and remuneration committee membership and £2,500 for chairing
committees. Members of the Technical Advisory Committee receive
an additional committee fee of approximately $30,000 per annum.
a)
b}
Incentive Plans (“IP”) – 2022 IP
The Group operated the 2022 Incentive Plan (‘’2022 IP’’), which
comprised of a Short-term Incentive (‘’STI’’) and a Long-Term
Incentive (“LTI”). The STI is a completely discretionary cash bonus
paid out over 2 years based on achieving both Corporate and
Personal Performance targets, as well as demonstrating behaviours
aligned with the Group’s principles. The LTI is a share scheme
based on total shareholder return, is intended to better align
shareholders with participants to create shareholder value over the
medium to long term.
Retention Tranche: 1/3 of the RSUs will be based on
continuous employment, malus provisions and the employee
meeting personal and Group targets.
Relative Total Shareholder Return (“TSR”): 2/3 of the RSUs
will be based on Relative TSR against the S&P Commodity
Producers Gold Index, with 25% vesting for meeting the index
rising on a straight-line basis to 100% for 5% outperformance.
Due to operational challenges the Group did not meet demanding
AISC or production targets in 2022, although other corporate and
personal targets were met. The Remuneration Committee taking
account of the importance of recognising the achievements of the
company and individual performance, motivating employees, as
well as the impact of the 2022 operational performance on the
business, approved STI cash awards of approximately £1,300,000,
with the payment terms.
HUMMINGBIRD RESOURCESGOVERNANCE
91
Directors’ interests in shares
The Directors beneficial interests in the ordinary shares of the Company were as follows:
DE Betts 1 & 2
TR Hill
SA Betts 1 & 3 & 4
RJ King
RD Straker–Smith4
AA Roux4
GE Nutter4
APPOINTMENT DATE
RESIGNATION DATE
NUMBER OF SHARES AT
31 DECEMBER 2022
NUMBER OF SHARES AT
31 DECEMBER 2021
30 October 2005
17 July 2012
28 April 2006
17 November 2014
29 June 2022
24 May 2017
30 April 2018
30 April 2018
5,734,149
408,235
2,998,601
–
–
–
–
5,049,149
208,235
1,498,601
303,955
–
–
–
1.
2.
3.
4.
The 315,101 shares held by Stephen Betts & Sons Limited, and 180,000 shares held by Stephen Betts & Sons Limited (Self-Administered) Pension Scheme are included in both SA Betts and
DE Betts.
DE Betts’s interest consists of 5,239,048 shares held by DE Betts, 315,101 shares held by Stephen Betts & Sons Limited, and 180,000 shares held by the Stephen Betts & Sons Limited (Self-
Administered) Pension Scheme.
SA Betts’s interests consist of 1,703,500 shares held by SA Betts, 800,000 shares held by Caroline Betts, 315,101 shares held by Stephen Betts & Sons Limited, and 180,000 shares held by
the Stephen Betts & Sons Limited (Self-Administered) Pension Scheme.
The shares for the annual directors deferred awards had not been issued as of 31 December 2022.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
92
Directors’ interests in share options
The Directors’ interests in the share options and RSUs of the Company at 31 December 2022 were as follows:
PLAN TYPE/YEAR
RSUS AT 1 JAN
2022
GRANTED
EXERCISED
LAPSED
RSUS AT
31 DEC 2022
EXERCISE
PRICE
DATE OF GRANT
FIRST DATE OF
EXERCISE
FINAL DATE OF
EXERCISE
–
–
–
–
–
–
–
–
–
–
–
–
–
–
DE Betts
DE Betts
DE Betts
2013
2013
2013
217,000
217,000
150,000
DE Betts
HIPPO 2016
426,136
DE Betts
HIPPO 2016
426,136
DE Betts
HIPPO 2016
426,136
DE Betts
HIPPO 2016
426,137
DE Betts
HIPPO 2018
227,865
DE Betts
HIPPO 2018
113,932
DE Betts
HIPPO 2018
113,932
DE Betts
HIPPO 2020
546,875
DE Betts
HIPPO 2020
273,437
DE Betts
HIPPO 2020
273,437
DE Betts
DE Betts
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
TR Hill
LTIP 2021
1,597,494
LTIP 2022
–
3,079,455
2013
2013
2013
100,500
100,500
100,000
HIPPO 2016
340,909
HIPPO 2016
340,909
HIPPO 2016
340,909
HIPPO 2016
340,909
HIPPO 2018
146,615
HIPPO 2018
HIPPO 2018
73,307
73,307
HIPPO 2020
351,875
HIPPO 2020
175,937
HIPPO 2020
175,937
LTIP 2021
1,026,960
–
–
–
–
–
–
–
–
–
–
–
–
–
–
LTIP 2022
–
1,979,649
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
217,000
£0.22
05/12/2013
01/06/2014 01/06/2024
217,000
£0.22
05/12/2013
01/06/2015 01/06/2025
150,000
£0.22
05/12/2013
10/04/2020 10/04/2029
426,136
£0.01
30/09/2016
19/12/2017
426,136
£0.01
30/09/2016
30/06/2019
426,136
£0.01
30/09/2016
19/12/2019
426,137
£0.01
30/09/2016
19/12/2020
227,865
£0.01
30/04/2019
27/02/2020 27/02/2025
113,932
£0.01
30/04/2019
31/12/2020 31/12/2025
113,932
£0.01
30/04/2019
31/12/2021 31/12/2026
546,875
£0.01
27/02/2020
31/03/2021 27/02/2026
273,437
£0.01
27/02/2020
31/12/2021 31/12/2026
273,437
£0.01
27/02/2020
31/12/2022 31/12/2027
1,597,494
£0.01
27/01/2021
28/02/2024
3,079,455
£0.01
04/02/2022
03/02/2025
100,500
£0.22
05/12/2013
01/06/2014 01/06/2024
100,500
£0.22
05/12/2013
01/06/2015 01/06/2025
100,000
£0.22
05/12/2013
10/04/2020 10/04/2029
340,909
£0.01
30/09/2016
19/12/2017
340,909
£0.01
30/09/2016
19/12/2019
340,909
£0.01
30/09/2016
19/12/2018
340,909
£0.01
30/09/2016
27/02/2020
146,615
£0.01
30/04/2019
27/02/2020 27/02/2025
73,307
£0.01
30/04/2019
31/12/2020 31/12/2025
73,307
£0.01
30/04/2019
31/12/2021 31/12/2026
351,875
£0.01
27/02/2020
31/03/2021 27/02/2026
175,937
£0.01
27/02/2020
31/12/2021 31/12/2026
175,937
£0.01
27/02/2020
31/12/2022 31/12/2027
1,026,960
£0.01
27/01/2021
28/02/2024
1,979,649
£0.01
04/02/2022
03/02/2025
–
£0.01
27/01/2021
28/02/2022
116,063
£0.01
27/01/2021
28/02/2022
116,063
£0.01
27/01/2021
28/02/2022
116,063
£0.01
27/01/2021
28/02/2022
116,063
£0.01
27/01/2021
28/02/2022
(214,495)
–
£0.01
04/02/2022
03/02/2023
–
–
–
–
214,495
£0.01
04/02/2022
03/02/2023
214,495
£0.01
04/02/2022
03/02/2023
214,495
£0.01
04/02/2022
03/02/2023
214,495
£0.01
04/02/2022
03/02/2023
R King
DD Plan 2021
116,063
SA Betts
DD Plan 2021
116,063
D Straker-
Smith
DD Plan 2021
116,063
E Nutter
DD Plan 2021
116,063
A Roux
DD Plan 2021
116,063
–
–
–
–
–
R King
DD Plan 2022
SA Betts
DD Plan 2022
D Straker-
Smith
DD Plan 2022
E Nutter
DD Plan 2022
A Roux
DD Plan 2022
–
–
–
–
–
214,495
214,495
214,495
214,495
214,495
(116,063)
–
–
–
–
–
–
–
–
–
Total
9,704,406
6,131,579
(116,063)
(214,495) 15,505,427
HUMMINGBIRD RESOURCESGOVERNANCE
93
2023 LOOKING AHEAD
Salaries
Following a review, the Remuneration Committee approved an
increase of the CEO and CFO salaries to £388,000 and £250,000
respectively with effect from 1 February 2023.
Annual bonus
Under the policy, Executive Directors participate in the annual
discretionary bonus plan with a maximum potential opportunity of
125% of salary payable in cash 50% in Q1 2024, 25% in December
2024 and 25% in December 2025 (subject to continuous
employment and malus provision). Half of the bonus will be based
on Group performance including production, AISC / Free Cash
flow, Strategic growth, Kouroussa project, ESG / Safety. Half of the
bonus will be based on personal targets.
The RSUs under the 2023 LTIP consist of options granted over
ordinary shares in the Company of £0.01 each (“Shares”), which
have an exercise price of £0.01 per Share. Once vested, any
RSUs may be exercised by the holder during a set exercise period
determined by the Company and notified to the option holders.
This is intended to be a minimum of a one-week period per year
when the Company is in an “open period” under MAR. Unvested
RSUs will normally lapse on cessation of employment for any
reason. The RSU holders will normally retain vested RSUs following
cessation of employment and will have two years from the date of
cessation of employment to exercise, after which the RSUs shall
lapse.
Total awards granted to the CEO and CFO, are 5,359,215 and
3,451,767 respectively.
Founders Equity Alignment Plan (“FEAP”)
The scheme is completely discretionary. Malus conditions apply to
the annual bonus in certain circumstances including in the event
of acts or omissions which justify summary dismissal or represents
gross misconduct, material failures of risk management, conduct
resulting in significant losses, failure to meet appropriate standards
of fairness and propriety, or misstatement of financial information
(whether or not audited).
Additionally, in accordance with the terms of the FEAP, the initial
Management Incentive Pool vested on 1 February 2023 with no
value accruing to participants, and a new Management Incentive
Pool with a life of up to ten years has been created on a consistent
basis including a two-year vesting period. No value will accrue to
the FEAP if the growth in shareholder value is less than 50% from
1 February 2023.
Long term incentive awards
Non-executive director remuneration
Awards will be made under the Long-Term Incentive Plan (“LTIP”)
approved by the board.
The 2023 annual awards have been made in line with the LTIP
rules, with the Remuneration Committee continuing to use a relative
TSR performance criterion over the S&P Commodity Producer
Gold Index (as detailed below) in order to reduce the impact of the
gold price in favour of relative outperformance.
Subject to the performance criteria being met for each respective
tranche and continuous employment with positive performance,
under normal circumstances, the RSUs are expected to vest on
7 February 2026 in two tranches as follows:
a)
b)
Retention Tranche: 1/3 of the RSUs will be based on
continuous employment, malice provisions and the employee
meeting personal and Group targets.
Relative Total Shareholder Return (“TSR”): 2/3 of the RSUs
will be based on Relative TSR against the S&P Commodity
Producers Gold Index, with 25% vesting for meeting the index
rising on a straight-line basis to 100% for 5% outperformance.
In the same way as 2022, in recognition of the experience and the
ongoing level of commitment of the Non-executive Directors, each
Non-executive Director will receive an annual deferred share award
with a value of £25,000, vesting one year from the award date,
subject to remaining in office. We believe offering a small number
of deferred shares to Non-executive Directors is an effective way
to align their interests with long-term interests of the Company’s
other shareholders, promote better governance while not hindering
Non-executive Director independence. These awards must be
retained and cannot normally be sold until the individual ceases to
hold office.
For 2023 each non-executive director received an award of
368,189 deferred share awards.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 94
GOVERNANCE
Board of Directors
DANIEL EDWARD BETTS
Interim Executive Chairman (from 1 July 2022) and Chief Executive Officer
Daniel founded Hummingbird in November 2005 and has run the Company since
its inception. After graduating from Nottingham University, he worked for Accenture
Management Consultants until he joined the Betts family business in 2000. Founded in
1760, the family business is the oldest privately-owned gold bullion smelters and refiners in
the country, and it has a long history of trading across the world and dealing in all areas of
the precious metal industry. Since founding Hummingbird, Dan has successfully taken the
Company from a grassroots exploration business to a listed, producing mining firm.
Dan took over as the Interim Chairman of the Board from 1 July 2022 until a suitable
Non‑Executive Chairman is appointed.
THOMAS HILL
Finance Director
Thomas joined the Company as Chief Financial Officer in September 2010 and was
appointed as Finance Director in July 2012. Prior to this Thomas was a senior manager
within BDO LLP’s natural resources department, where he worked extensively with quoted
mining and exploration companies and was involved with numerous flotations and other
corporate transactions. He has a metallurgy, economics and management degree from
Trinity College, Oxford and qualified as a chartered accountant with BDO LLP in 2001.
STEPHEN ALEXANDER BETTS
Non-Executive Director
Stephen co‑founded Hummingbird Resources in November 2005. He has over 40 years’
experience in trading with gold and related businesses in developing countries, having
established several businesses in West Africa during his career. He is the Chairman of the
Stephen Betts group of companies. The family business has over 250 years’ history in
smelting, refining and bullion dealing.
HUMMINGBIRD RESOURCES
95
DAVID STRAKER-SMITH
Non-Executive Director
David Straker‑Smith is a Director of CrossBorder Capital Ltd, which he joined in April 1999.
CrossBorder Capital is a London-based investment research and advisory firm regulated
by the FCA. Previously, he worked at ING Barings Securities Ltd from 1996 to 1999, where
he was Head of Equity Sales for Eastern Europe, and at Gerrard & National Holdings plc
from 1980 until 1995, a firm which operated as a discount house, futures broker, money
broker, stockbroker and fund manager. During his time at Gerrard & National Holdings plc,
he became a main Board Director and active Fund Manager. He is a Director of New Vision
Management Limited, a Dublin regulated management company, and a Director of Nomad
Energy UK Limited. David serves as Chairman of the Audit and Remuneration Committees.
ATTIE ROUX
Non-Executive Director
Adriaan (Attie) Roux is a Metallurgical Engineer with over 40 years’ Operational, Technical
and Executive Management experience in the Mining Industry. Attie was previously the COO
of Endeavour Mining where he was instrumental in its development and growth. He has
been internal director in a number of companies such as Anglogold Ashanti and Endeavour.
He is a Registered Professional with the SA Council for Natural Scientific Professions. Attie
also serves as Chairman of the Technical Advisory Committee.
ERNIE NUTTER
Non-Executive Director
Ernie is a highly regarded mining analyst, formerly with one of the world’s largest money
managers, Capital Group, from 2004 until his retirement in 2017. Prior to this, he spent over
13 years with the Royal Bank of Canada where he was Managing Director of RBC Capital
Markets, Director of RBC’s Global Mining Research team and former Chairman of RBC
Dominion Securities’ (now RBC Capital Markets) Strategic Planning Committee. Ernie holds
a Bachelor of Science degree in Geology from Dalhousie University and sits on the Audit,
Remuneration and Technical Advisory Committees.
96
GOVERNANCE
Group Directors’ Report
Group Directors’ Report
The Directors present their report on the affairs of the Group, together with the financial statements and Auditor’s Report for the year ended
31 December 2022.
Principal Activities
The Group’s principal activity is the exploration, evaluation and development of mineral projects, principally gold, focused in West Africa.
The subsidiary and associated undertakings principally affecting the profit or net assets of the Group in the year are listed in note 17 to the
financial statements.
Corporate Governance
The Group has adopted to the Quoted Companies Alliance (“QCA”) Code as set out in the United Kingdom. Further details are set out on
pages 81 to 83 and the Group’s website.
Board
The Board currently comprises six members, two of whom are executive. The Board meets regularly and is responsible for strategy,
performance, approval of major capital projects and the framework of internal controls. To enable the Board to discharge its duties, all
Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings, and all
Directors have access to the advice and service of the Company Secretary. The Articles of Association provide that Directors will be subject
to re-election at the first opportunity after their appointment and they will voluntarily submit to re-election at intervals of three years.
The Directors who served during the year and to the date of the report are as follows:
Non-Executive
■
■
■
■
■
Russell King (Non‑Executive Chairman until 29 June 2022)
Ernie Nutter
Attie Roux
David Straker‑Smith
Stephen Betts
Executive
■
■
Daniel Betts (Interim Executive Chairman from 1 July 2022)
Thomas Hill
Section 172 Statement
The Directors continue to act in a way that they consider, in good faith, to be most likely to promote the success of the Company for the
benefits of the members as a whole.
Details of the Board’s decisions in 2022 (and subsequently) to promote long‑term success, how it engaged with stakeholders and
considered their interests when making those decisions, can be found throughout the Strategic, Sustainability, Directors’ and Corporate
Governance Reports.
HUMMINGBIRD RESOURCES
97
Audit Committee
The audit committee comprises David Straker‑Smith (Chairman) and Ernie Nutter. The audit committee is responsible for reviewing a wide
range of financial matters including the annual and interim reports, the Group’s internal control and risk management system. The audit
committee’s responsibilities include meeting with the Group’s auditor and agreeing the scope of their audit.
Post reporting date events
Events after the reporting date have been disclosed in note 33 to the financial statements.
Strategic Report
The Strategic Report is shown on pages 73 to 77.
Results and Dividends
The results of the Group for the year ended 31 December 2022 are set out in the Consolidated Statement of Comprehensive Income.
The Directors do not recommend payment of a dividend for the year (2021: $Nil).
Directors’ Indemnities
The Company has obtained third party indemnity provisions for the benefit of its Directors and Officers.
Supplier Payment Policy
It is the Group’s policy to make payments, where possible, to suppliers in accordance with agreed terms provided that the supplier has
performed in accordance with the relevant terms and conditions. Trade payables of the Group at 31 December 2022 were equivalent to 46
(2021: 46) days’ purchases, based on the average daily amount invoiced by suppliers during the year. Trade payables of the Company at
31 December 2022 were equivalent to 30 (2021: 24) days’ purchases, based on the average daily amount invoiced by suppliers during the
year.
Engaging with Stakeholders
The Group has identified several key stakeholder groups based on their influence and level of importance to our business.
The Group’s process on engaging with our key stakeholders is detailed throughout the Sustainability Report from pages 30 to 65.
Employment of Disabled Persons
The Company is committed to promote equal opportunities, throughout the recruitment and selection process, training and promotion and
condition of services. All job applicants and employees receive equal treatment regardless of their diverse ability or disability.
People are encouraged to inform the Company if they are disabled or become disabled, so that the Company could discuss reasonable
adjustment which could help overcome or minimise the difficulty and offer appropriate support to accommodate their needs.
Employee Engagements
Employees are critical to the success of the Group, and therefore it is important to engage with employees in a variety of ways and
understanding their concerns and experience.
For example at the Group level, there are regular meetings where employees can raise their concerns and highlight challenges. At the
site level, SHEC (department of Safety, Health, Environment and Community) and HR teams have regular meetings with employee
representatives including trade unions, through which employees can raise their concerns or provide their feedback on employment
conditions or possible improvement that the Group could consider.
The Group operates incentive schemes that seek to align employees with shareholders and the Group’s culture. Detailed incentive schemes
can be found in the Remuneration Report.
Details of how the directors have regard for employee interests and effect of that regard can be found throughout the Sustainability Report
from page 30 and the S172 statement from page 78 within this annual report.
Culture and values
The Company consistently communicates its designed behaviours, core values and culture in its operational decisions and dealings with its
key stakeholders. Full details can be found throughout the Sustainability Report within this annual report.
The Board assesses this through its interactions with employees and from the Managing Director, People’s regular updates and feedback
to the board.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 98
GOVERNANCE
Charitable and Political Donations
During the year the Group and Company made no charitable donations (2021: $Nil).
The Group and Company did not make any payments to political parties during the year (2021: $Nil).
Financial Risk Management
The Group is exposed to a variety of financial risks including currency risk, credit risk and liquidity risk. Some of the objectives and policies
applied by management to mitigate these risks are outlined in both the Strategic Review and note 30 to the Consolidated Financial
Statements.
Energy Consumption and Greenhouse Gas Emissions
Details of the Group’s energy efficiency measures are reported in the Sustainability Report section of this annual report. For the UK,
the Company’s annual energy consumption is less than 40,000 kWh and is therefore exempt from reporting its UK greenhouse gas
emission under the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
Future Developments
Details of future developments are set out in the CEO’s Statement and Chairman’s Statement.
Statement as to disclosure of information to the Auditor
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
■
■
so far as the Director is aware, there is no relevant audit information of which the Group’s auditor is unaware; and
the Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit
information and to establish that the Group’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of sections 418 of the Companies Act 2006.
Auditor
RSM UK Audit LLP have expressed their willingness to continue in office as auditor and a resolution to re-appoint them will be proposed at
the forthcoming Annual General Meeting.
The Group Directors’ Report has been approved by the Board and signed on its behalf by:
DE Betts
Director
05 June 2023
Registered Office:
49‑63 Spencer Street, Hockley, Birmingham, B18 6DE
Company registered in England and Wales 05467327
HUMMINGBIRD RESOURCES 99
Statement of Directors’
Responsibility
The directors are responsible for preparing the Strategic Report, the Directors’ Report, and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare Group and Company financial statements for each financial year. The directors have
elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare the Group financial statements in
accordance with UK‑adopted International Accounting Standards and have elected under company law to prepare the Company financial
statements in accordance with UK‑adopted International Accounting Standards and applicable law.
The Group and Company financial statements are required by law and UK-adopted International Accounting Standards to present fairly the
financial position of the Group and the Company and the financial performance of the Group. The Companies Act 2006 provides in relation
to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references
to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing each of the Group and Company financial statements, the directors are required to:
a
select suitable accounting policies and then apply them consistently;
b make judgements and accounting estimates that are reasonable and prudent;
c
d
state whether they have been prepared in accordance with UK‑adopted International Accounting Standards;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will
continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible
for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Hummingbird
Resources PLC website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 100
FINANCIAL STATEMENTS
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HUMMINGBIRD RESOURCES PLC
OPINION
We have audited the financial statements of Hummingbird Resources Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the
year ended 31 December 2022 which comprise the consolidated statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of cashflows, the consolidated statement of changes in equity, the company statement of
financial position, the company statement of cashflows, the company statement of changes in equity and notes to the financial statements,
including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and
UK-adopted International Accounting Standards and, as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
In our opinion:
■
■
■
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted International Accounting
Standards and as applied in accordance with the Companies Act 2006; and
■
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
•
•
Materiality
•
•
•
•
Scope
■
Accounting treatment of Liberia earn‑in agreement
Parent Company
■
None
Group
■ Overall materiality: $2,280,000 (2021: $608,000)
■
Performance materiality: $1,710,000 (2021: $456,000)
Parent Company
■ Overall materiality: $1,200,000 (2021: $374,000)
■
Performance materiality: $900,000 (2021: $280,000)
Our audit procedures covered 100% of revenue, 99.5% of total assets and 92% of loss
before tax.
HUMMINGBIRD RESOURCES
101
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the group financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described
below to be the key audit matters to be communicated in our report.
Accounting treatment of Liberia earn-in agreement
Key audit matter description
As disclosed in note 26, the accounting treatment of the Liberia earn‑in agreement includes
recognition of assets and equity and liabilities of £42.9m as at 31 December 2022.
The Group entered into an earn-in agreement with Pasofino Gold Limited (“Pasofino”) in respect
of the Gold Project in Liberia (“Dugbe”). The earn-in entitled Pasofino to earn up to a 49% interest
in Dugbe.
The accounting for the transaction is complex due to the different equity and liability components
of consideration in exchange for the services provided by Pasofino. Calculation and treatment of
the consideration involves a high degree of management judgement.
As a result of the complexity of the transaction, and the high level of judgement applied by
management, we determined this to be a key audit matter.
How the matter was addressed in
the audit
Management provided us with their assessment of the agreement and circumstances around the
transaction that has taken place. We performed audit work on this model by:
■
■
■
Assessing whether the earn-in criteria has been satisfied and obtaining confirmation that the
earn‑in option has been executed.
Assessing control of Hummingbird Liberia Inc (“HBL”) to determine if consolidation of HBL
as a subsidiary at the end of the accounting period by Hummingbird Resources plc is
appropriate.
Reviewing the earn‑in journals posted for technical accuracy with regards to the terms of the
earn‑in agreement and International Accounting Standards.
■
Reviewing the accuracy and completeness of disclosures in the financial statements.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit
procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could
reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements.
Based on our professional judgement, we determined materiality as follows:
GROUP
PARENT COMPANY
Overall materiality
$2,280,000 (2021: $608,000)
$1,200,000 (2021: $374,000)
Basis for determining overall
5% of result before tax
0.9% of net assets
materiality
Rationale for benchmark applied
As a listed entity, result before tax is
considered the most appropriate benchmark
for users of the financial statements.
The parent is a holding company for the group
with the key balances being the investment
in group companies and the intercompany
receivables.
Performance materiality
$1,710,000 (2021: $456,000)
$900,000 (2021: $280,000)
Basis for determining performance
75% of overall materiality
75% of overall materiality
materiality
Reporting of misstatements to the
Audit Committee
Misstatements in excess of $114,000 and
misstatements below that threshold that, in
our view, warranted reporting on qualitative
grounds.
Misstatements in excess of $60,000 and
misstatements below that threshold that, in
our view, warranted reporting on qualitative
grounds.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 102
FINANCIAL STATEMENTS
An overview of the scope of our audit
The group consists of 26 components. The majority of the group’s operations reside in 4 components, located in the following countries:
■ Mali – contains the Group’s mining operations and some Exploration and Evaluation assets;
■
Liberia – contains the majority of the Group’s Exploration and Evaluation assets including the Dugbe project;
■ Guinea – contains the assets and liabilities of the Kouroussa Gold Project, which are now in the construction phase; and
■
United Kingdom – contains the head office operations.
The coverage achieved by our audit procedures was:
Full scope audit
Specific audit procedures
Total
NUMBER OF COMPONENTS
4
1
5
REVENUE
100%
–
100%
TOTAL ASSETS
LOSS BEFORE TAX
98.1%
1.4%
99.5%
92%
–
92%
Analytical procedures at group level were performed for the remaining 21 components.
Of the above, a full scope audit for one component was undertaken by a component auditor.
For one component, specific audit procedures were undertaken in respect of exploration and evaluation assets, due to their significance to
the total assets of the group.
Material uncertainty related to going concern
We draw attention to note 3 in the financial statements, which indicates that should the production of the mining operations be below
forecast levels, the group would require additional funding and this is currently not in place. As stated in note 3, these events or conditions,
along with the other matters as set forth in note 3, indicate that a material uncertainty exists that may cast significant doubt on the group’s
and parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to
continue to adopt the going concern basis of accounting included:
■
■
■
■
■
Reviewing the group’s cashflow forecasts, including challenge of the forward-looking assumptions used by management in their
assessment;
Performing sensitivity analysis on the forecasts, using reasonably possible changes to the assumptions;
Consideration of the timing of forecast repayments of borrowing and interest.
Discussion with, and challenge of, management on the funding options available to the group; and
Reviewing the accuracy and completeness of disclosures in the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
■
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
■
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
HUMMINGBIRD RESOURCES 103
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
■
■
■
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
■ we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 99, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including
fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit
evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures
in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that
may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws
and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to
fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing
and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’s
operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team and
component auditor:
■
■
■
obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks that the group and
parent company operate in and how the group and parent company are complying with the legal and regulatory frameworks;
inquired of management, and those charged with governance, about their own identification and assessment of the risks of
irregularities, including any known actual, suspected or alleged instances of fraud;
discussed matters about non‑compliance with laws and regulations and how fraud might occur including assessment of how and
where the financial statements may be susceptible to fraud.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could have a material effect on the financial
statements were communicated to the component auditor. Any instances of non-compliance with laws and regulations identified and
communicated by the component auditor were considered in our audit approach.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 104
FINANCIAL STATEMENTS
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit engagement team and component
UK-adopted IAS and Companies
Act 2006
Mining laws
auditor included:
Review of the financial statement disclosures and testing to supporting documentation;
Completion of disclosure checklists to identify areas of non‑compliance
Obtaining an understanding of the control environment in monitoring compliance with laws and
regulations in the countries in which the group operates, primarily Mali;
Reviewing minutes from board meetings of those charged with governance to identify any instances
of non‑compliance with laws and regulations.
Tax compliance regulations
Inspection of advice received from internal and external tax advisors.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Management override of controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
PAUL WATTS (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
Date: 05 June 2023
HUMMINGBIRD RESOURCES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
105
Revenue
Production costs
Amortisation and depreciation
Royalties and taxes
Cost of sales
Gross (loss)/profit
Share based payments
Other administrative expenses
Operating loss
Finance income
Finance expense
Share of joint venture profit/(loss)
(Impairment)/reversals in impairment of financial assets
Losses on financial assets and liabilities measured at fair value
Loss before tax
Tax
Loss for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Loss for the year
Loss per share (attributable to equity holders of the parent)
Basic ($ cents)
Diluted ($ cents)
NOTES
28
6
10
10
14
18
11
12
13
13
2022
$’000
150,519
(126,527)
(37,357)
(5,620)
(169,504)
(18,985)
(1,941)
(11,791)
(32,717)
3,641
(14,156)
4
(316)
(715)
(44,259)
4,269
(39,990)
(34,279)
(5,711)
(39,990)
2021 RESTATED
$’000
162,777
(113,606)
(38,317)
(6,297)
(158,220)
4,557
(1,459)
(10,263)
(7,165)
4,071
(8,190)
(46)
108
(3,134)
(14,356)
1,617
(12,739)
(12,656)
(83)
(12,739)
(8.71)
(8.71)
(3.22)
(3.22)
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
106
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2022
Assets
Non-current assets
Intangible exploration and evaluation assets
Intangible assets software
Property, plant and equipment
Right of use assets
Investments in associates and joint ventures
Financial assets at fair value through profit or loss
Deferred tax assets
Current assets
Inventory
Trade and other receivables
Unrestricted cash and cash equivalents
Restricted cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred consideration
Other financial liabilities
Provisions
Current liabilities
Trade and other payables
Lease liabilities
Deferred consideration
Other financial liabilities
Provisions
Borrowings
Bank overdraft
Total liabilities
Net assets
Equity
Share capital
Share premium
Shares to be issued
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interest
Total equity
NOTES
2022
$’000
31 DECEMBER
2021 RESTATED
$’000
1 JANUARY
2021 RESTATED
$’000
15
15
16
21
14
14
22
18
18
18
18
19
21
25
24
20
23
21
25
24
20
19
18
27
27
129,652
143
204,393
25,488
133
1,532
9,571
370,912
15,748
51,852
–
3,892
71,492
442,404
71,840
15,845
1,801
26,795
27,120
143,401
66,081
11,819
1,776
15,000
830
43,862
1,741
141,109
284,510
157,894
5,828
17,425
–
97,177
120,430
37,464
157,894
91,287
235
144,591
35,986
129
3,530
3,868
279,626
13,148
25,152
32,571
4,168
75,039
354,665
61,812
27,556
4,627
9,092
21,644
124,731
33,708
9,961
–
15,000
611
–
–
59,280
184,011
170,654
5,814
17,425
–
137,895
161,134
9,520
170,654
75,574
204
150,247
13,797
175
7,721
684
248,402
20,352
12,724
6,552
4,516
44,144
292,546
–
3,252
5,402
6,836
16,125
31,615
39,440
10,894
–
15,000
–
13,208
–
78,542
110,157
182,389
5,344
488
17,407
149,547
172,786
9,603
182,389
The financial statements of Hummingbird Resources PLC were approved by the Board of Directors and authorised for issue on 05 June 2023.
They were signed on its behalf by:
DE Betts
Director
Company number 05467327
The notes to the consolidated financial statements form part of these financial statements.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
107
Net cash inflow from operating activities
Investing activities
Purchases of intangible exploration and evaluation assets
Purchases of property, plant and equipment
Pasofino funding
Pasofino funding utilisation
Sale of shares in other companies
Interest received
Net cash used in investing activities
Financing activities
Exercise of share options
Lease principal payments
Lease interest payments
Loan interest paid
Commissions and other fees paid
Loans repaid
Loan drawdown
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year1
NOTES
29
26
26
2022
$’000
13,181
(5,876)
(82,942)
4,665
–
–
2
2021
Restated
$’000
22,703
(9,992)
(22,295)
10,141
(10,946)
2,538
–
(84,151)
(30,554)
14
(10,741)
(2,862)
(3,452)
(4,724)
–
58,695
36,930
(34,040)
(548)
36,739
2,151
–
(11,014)
(3,006)
(721)
(5,413)
(13,278)
66,365
32,933
25,082
589
11,068
36,739
1 The cash and cash equivalents includes unrestricted cash and cash equivalents, restricted cash and cash equivalents and bank overdrafts.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
108
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Balance at 1 January 2021(restated)
5,344
17,407
Balance (as originally stated) at
1 January 2021
Prior year equity adjustment – IFRS 16
(see note 9)
Comprehensive income for the year
restated:
Loss for the year (restated – see note 9)
Total comprehensive income for the
year
Transactions with owners in their capacity
as owners:
Shares issued as consideration in asset
purchase
Total transactions with owners in their
capacity as owners
Share based payments
As at 31 December 2021 (restated)
Comprehensive income for the year:
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Pasofino minority interest after earn–in
(see note 26)
Total transactions with owners in their
capacity as owners
Exercise of share options
Share based payments
As at 31 December 2022
SHARE
CAPITAL
$’000
SHARES TO BE
ISSUED
$’000
SHARE
PREMIUM
$’000
RETAINED
EARNINGS
$’000
TOTAL EQUITY
ATTRIBUTABLE
TO THE PARENT
$’000
NON–
CONTROLLING
INTEREST
$’000
TOTAL
$’000
5,344
17,407
488
150,246
173,485
9,776
183,261
–
–
–
–
–
–
–
488
–
–
(699)
(699)
(173)
(872)
149,547
172,786
9,603
182,389
(12,656)
(12,656)
(83)
(12,739)
(12,656)
(12,656)
(83)
(12,739)
470
(17,407)
16,937
(17,407)
16,937
–
–
–
–
–
1,004
1,004
–
–
–
–
–
1,004
–
–
–
–
–
–
–
–
–
17,425
137,895
161,134
9,520
170,654
–
–
–
–
–
–
(34,279)
(34,279)
(5,711)
(39,990)
(34,279)
(34,279)
(5,711)
(39,990)
(9,528)
(9,528)
33,655
24,127
(9,528)
(9,528)
33,655
24,127
–
–
3,089
3,089
–
–
14
3,089
17,425
97,177
120,430
37,464
157,894
470
–
5,814
–
–
–
–
14
–
5,828
Share capital
Non-controlling interest
The share capital comprises the issued ordinary shares of the Company
The non-controlling interest relates:
at par value.
Share premium
The share premium comprises the excess value recognised from the
issue of ordinary shares for consideration above par value.
Retained earnings
Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income.
(a) 20% stake the Government of Mali has in Société Des Mines
De Komana SA (“SMK”) which owns and operates the Yanfolila
Mine.
(b) 49% stake earned by Pasofino in Hummingbird Resources
(Liberia) Inc as part of the earn in agreement (see note 26).
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2022
109
1. GENERAL INFORMATION
Hummingbird Resources PLC is a public limited company with securities traded on the AIM market of the London Stock Exchange. It is
incorporated and domiciled in the England and Wales and has a registered office at 49-63 Spencer Street, Hockley, Birmingham, West
Midlands, B18 6DE.
The nature of the Group’s operations and its principal activities are the exploration, evaluation, development, and operating of mineral
projects, principally gold, focused currently in West Africa.
2. ADOPTION OF NEW AND REVISED STANDARDS
The financial statements have been drawn up on the basis of accounting policies consistent with those applied in the financial
statements for the year ended 31 December 2021. The following standards have been adopted in the year with no material impact on
the financial statements of the Company or the Group.
IAS 16 (Amendments)
IFRS 3 (Amendments)
IAS 37 (Amendments)
effective 1 January 2022
effective 1 January 2022
effective 1 January 2022
Proceeds before intended use
Reference to conceptual framework
Onerous Contracts – costs of fulfilling a contract
The following Standards and Interpretations which have not been applied in the financial statements were in issue but not yet effective.
IFRS 17
IAS 12 (Amendments)
IAS 8 (Amendments)
effective 1 January 2023
Insurance contracts
effective 1 January 2023
Deferred tax assets and liabilities from single transaction
effective 1 January 2023
Definition of accounting estimates
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with UK adopted International Accounting Standards.
The principal accounting policies adopted are set out below.
The functional currency of all companies in the Group is United States Dollar (“$”) . The financial statements are presented in thousands
of United States dollars (“$’000”) . For reference the year-end exchange rate from Sterling to $ was $1.2097 (2021: $1.3512) .
Going concern
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are set out in the Financial Review on pages
66 to 72. At 31 December 2022, the Group had net cash and cash equivalents of $2.2 million, (made up of $3.9 million of restricted
cash in line with the Group’s loan arrangements $1.7 million of overdraft) and total borrowings of $115.7 million. Details on the Group’s
borrowings are set out in note 19 to the financial statements.
The Group has prepared cash flow forecasts based on estimates of key variables including production, gold price, operating costs,
scheduled debt repayments in line with the Group’s debt arrangements and capital expenditure through to December 2024 that
supports the conclusion of the Directors that there is sufficient funding available to meet the Group’s anticipated cash flow requirements
to this date.
These cashflow forecasts are subject to a number of risks and uncertainties, in particular the ability of the Group to achieve the planned
levels of production and the recent higher gold prices being sustained. The Board reviewed and challenged the key assumptions
used by management in its going concern assessment, as well as the scenarios applied and risks considered, including the risks and
potential disruptions associated with the recent changes in governments in Mali and Guinea.
The biggest material uncertainty and risks remains ounces produced and whether the current mine plan can be achieved (including
expected production from the Kouroussa mine which is currently being commissioned) and mining contractor equipment performance,
and sanctions on Russia, which are also having a logistical impact on the Group. These production levels are also key in supporting the
scheduled debt repayments over the period under review. Where additional funding may be required, the Group believes it has several
options available to it, including but not limited to, use of the overdraft facility, cost reduction strategies, selling of non-core assets and
raising additional funds from current investors and debt partners.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 110
The Board also considered sensitivities to those cash flow scenarios (including where production is lower than forecast and gold prices
lower than current levels) which would require additional funding. Should this situation arise, the Board believe that they have several
options available to them as referenced above, which would allow the Group to meet its cash flow requirements through this period,
however, there remains a risk that the Group may not be able to achieve these in the necessary timeframe.
Based on its review, the Board has a reasonable expectation that the Group has adequate resources to continue operating for the
foreseeable future and hence the Board considers that the application of the going concern basis for the preparation of the Financial
Statements is appropriate. However, the risk of lower-than-expected production levels, timing of VAT offsets and receipts, increased
fuel costs and potential disruptions to supply chain and the ability to secure any potential required funding at the date of signing of
these financial statements, indicates the existence of a material uncertainty which may cast significant doubt on the Group’s ability to
continue as a going concern.
Should the Group be unable to achieve the required levels of production and associated cashflows, defer expenditures, obtain
additional funding or renegotiate the current financing arrangements such that the going concern basis of preparation was no longer
appropriate, adjustment would be required including the reduction of balance sheet asset values to their recoverable amounts and to
provide for future liabilities should they arise.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December 2022. Control is achieved where the Company has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed during the period are included in the consolidated statement of comprehensive income
from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein.
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the relevant
non-controlling interest’s share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest
in excess of the non-controlling parties’ interests in the subsidiary’s equity are allocated against the interest of the Group except to the
extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated
entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss
in profit or loss.
Joint ventures
Joint ventures are entities or arrangements where the Group has joint control. Investments in joint ventures are accounted for using the
equity method of accounting, after initially being recognised at cost.
Equity method
Under the equity method, the share of the profits or losses of the investee is recognised in profit or loss and the share of the
movements in equity is recognised in other comprehensive income. Investments are carried in the statement of financial position at
cost plus post-acquisition changes in the consolidated entity’s share of net assets of the associate. Goodwill relating to the associate is
included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or
receivable from associates reduce the carrying amount of the investment.
When the consolidated entity’s share of losses in an investee equals or exceeds its interest in the investee, including any unsecured
long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associate.
The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the investee and
recognises any retained investment at its fair value. Any difference between the investee’s carrying amount, fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
Leasing
The Group as a lessee
For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or
part of a contract, that conveys the right to use an asset (the underlying asset) for a period in exchange for consideration’.
To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:
■
■
■
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified
at the time the asset is made available to the Group;
the Group has the right to obtain substantially all the economic benefits from use of the identified asset throughout the period of
use, considering its rights within the defined scope of the contract; and
the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has
the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS 111
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use
asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the
Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance
of the lease commencement date (net of any incentives received) .
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
The lease liability is initially measured at the present value of the unpaid lease payments at the commencement date, discounted using
the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Generally, the Group uses
its incremental borrowing rates as the discount rate. Lease payments included in the measurement of the lease liability are made up of
fixed payments (including in substance fixed) , variable payments based on an index or rate, amounts expected to be payable under a
residual value guarantee and payments arising from options reasonably certain to be exercised.
The lease liability is measured at amortised cost using the effective interest method. Subsequent to initial measurement, the liability will
be reduced for payments made and increased for interest. It is subsequently remeasured to reflect any reassessment or modification,
or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
Short-term leases and low- value assets
The Group has elected to account for short-term leases of 12 months or less and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an
expense in profit or loss on a straight-line basis over the lease term.
Right of use assets are depreciated at the lower of lease term and useful life.
Foreign currencies
For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in
US Dollars (“$”) , which is the functional currency of all of the entities in the Group, and the presentation currency for the consolidated
financial statements.
Exchange differences are recognised in profit or loss in the period in which they arise.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of
comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 112
Revenue
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into
account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services
promised.
Sale of gold
Revenue from gold sales is recognised when the customer has accepted delivery of the goods. Amounts disclosed as revenue are net
of sales returns and trade discounts. Consideration is paid by the customer once the customer has accepted delivery.
The Group remains committed to operating as an unhedged gold producer. However, as at 31 December 2022, the Group was still a
single asset producer and hence a significant fall in the gold price could materially impact the Group’s ability to service debt and meet
operating costs. Accordingly, from time to time, the Group invests in low cost put options to partially insure against the risk of falling
gold prices without capping the exposure to the upside.
Intangible exploration and evaluation assets
The Group applies the full cost method of accounting for exploration and evaluation (“E&E”) costs, having regard to the requirements
of IFRS 6 Exploration for and Evaluation of Mineral Resources. Under the full cost method of accounting, costs of exploring for and
evaluating mineral resources are accumulated by reference to appropriate cost centres being the appropriate licence area but are
tested for impairment on a cost pool basis as described below.
E&E assets comprise costs of (i) E&E activities that are ongoing at the reporting date, pending determination of whether or not
commercial reserves exist and (ii) costs of E&E that, whilst representing part of the E&E activities associated with adding to the
commercial reserves of an established cost pool, did not result in the discovery of commercial reserves.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the statement of comprehensive
income as they are incurred.
Once the legal rights are obtained to explore all costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right
to explore, costs of technical services and studies, seismic acquisition, exploratory drilling and testing are capitalised as intangible E&E
assets.
Such costs include directly attributable overheads, including the depreciation of property plant and equipment utilised in E&E activities,
together with the cost of other materials consumed during the E&E phases.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each exploration licence/prospect are carried forward, until the existence (or otherwise) of commercial
reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on a
cost pool basis as set out below and any impairment loss is recognised in the statement of comprehensive income. The carrying value,
after any impairment loss, of the relevant E&E assets is then reclassified as mine development assets.
Impairment of E&E assets
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable
amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration for and
Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial reserves
exist.
Where there are indications of impairment, the E&E assets concerned are tested for impairment. Where the E&E assets concerned
fall within the scope of an established full cost pool, the E&E assets are tested for impairment together with all development and
production assets associated with that cost pool, as a single cash-generating unit.
The aggregate carrying value is compared against the expected recoverable amount of the pool, generally by reference to the present
value of the future net cash flows expected to be derived from production of commercial reserves.
Any impairment loss is recognised in the statement of comprehensive income as additional depreciation and amortisation, and
separately disclosed.
The Group considers there to be three cost pools, being the whole of Liberia, the whole of Mali and the whole of Guinea, and therefore
aggregates assets in respect of each for the purposes of determining whether impairment of E&E assets has occurred.
Intangible assets software
Intangible software assets are carried at cost less accumulated amortisation. Amortisation of the software to the statement of
comprehensive income will be completed in line with the useful life of the software. However, where the software assets relate to mine
development assets, amortisation to mine development assets will occur and follow the amortisation of mine development as shown
below.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS 113
Property, plant and equipment
Property, plant and equipment (“PP&E”) are carried at cost less accumulated depreciation and any recognised impairment loss. The
cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing it into working
condition for its intended use.
Property, plant and equipment are depreciated using the units of production method based on ounces produced, or the straight-line
method over the estimated useful lives of the related assets using the following rates:
Mine development assets
Mine closure assets
Plant & equipment
Infrastructure
Mobile & other equipment
Other
units of production method
units of production method
units of production method
10% – 33.3% per annum
10% – 33.3% per annum
10% – 33.3% per annum
Under the units of production (“UOP”) method, estimated economically recoverable reserves are used in determining the depreciation
and/or amortisation of mine development assets. This results in a depreciation/amortisation charge proportional to the depletion of the
anticipated remaining life of mine production. Each item’s life, which is assessed annually, has regard to both its physical life limitations
and present assessments of economically recoverable reserves of the mining interest at which the asset is located. The Group has
adopted the total output method (i.e., ounces produced) as a basis for determining the UOP. Changes are accounted for prospectively.
Upon disposal or abandonment, the carrying amounts of property, plant and equipment and accumulated depreciation and depletion
are removed from the accounts and any associated gains or losses are recorded in the statement of comprehensive income.
Amounts incurred on assets under construction are capitalised until the asset becomes available for its intended use, at which time
depreciation commences on the assets over its useful life. Repairs and maintenance of plant and equipment are expensed as incurred.
Costs incurred to enhance the service potential of plant and equipment are capitalised and depreciated over the remaining useful life of
the improved asset.
Impairment of property, plant and equipment
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if any) . Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Borrowing costs
Borrowing costs are capitalised when they are directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that take a substantial period of time to get ready for their intended use or sale. Borrowing costs are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale, or if construction is interrupted
for an extended period. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Inventory
Inventory consists of finished goods, work-in-process, stockpiled ore and consumables. Finished goods, work-in-process, and
stockpiled ore are valued at the lower of average production costs and net realisable value. Production costs include the cost of raw
materials, direct labour, mine-site overhead expenses, depreciation and depletion of mining interests. Consumables are valued at the
lower of average cost and net realisable value. Cost includes acquisition, freight and other directly attributable costs.
Net realisable value is calculated as the estimated sale price (based on prevailing market rates) less estimated future production costs
to convert the inventories into saleable form. When inventories have been written down to net realisable value, a new assessment of net
realisable value is made in each subsequent period. When the circumstances that caused the write down no longer exist, the amount
of the write down is reversed.
Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes a party
to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 114
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Fair value measurement hierarchy
The classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the
significance of the input used in making the fair value measurement.
The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: input other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices)
or indirectly (i.e., derived prices) ; and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable input) .
The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the
lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety
into only one of the three levels.
(a) Financial assets
Classification of financial assets
All recognised financial assets are measured subsequently at either amortised cost or fair value, depending on the classification of the
financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
■
■
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash
flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
The Group does not hold any financial assets that meet conditions for subsequent recognition at fair value through other
comprehensive income (“FVTOCI”) . All other financial assets are measured subsequently at fair value through profit or loss (“FVTPL”) .
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to cash flows from the asset expire; or it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for the amount it may have to pay. If the Group retains substantially all the risks
and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at amortised cost.
The measurement of the loss allowance depends upon the consolidated entity’s assessment at the end of each reporting period as to
whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss
allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that
is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk
has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit
loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate.
(b) Financial liabilities
Classification of financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its
characteristics. The Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair
value through profit or loss.
The Group’s financial liabilities measured at amortised cost comprise loans and other borrowings, lease obligations and other payables
and accruals.
The Group’s financial liabilities measured at fair value through profit or loss comprise Cassidy Smelter royalty and deferred
consideration, which are all summarised below.
Derecognition of financial liabilities
The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled, expired, or transferred.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS 115
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost less any
provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash with three months or less remaining to maturity and are subject to an insignificant risk of
changes in value.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective
interest rate method.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that
an outflow of economic resource will result and that outflow can be reliably measured.
Rehabilitation
The Group records the present value of estimated costs of legal and constructive obligations required to restore mining and other
operations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing
structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration,
reclamation and revegetation of affected areas.
The obligation generally arises when the asset is installed, or the ground/environment is disturbed at the mining production location.
When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the
related mining assets to the extent that it was incurred by the development/construction of the mine. Over time, the discounted liability
is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific
to the liability.
The periodic unwinding of the discount is recognised in profit or loss as a finance cost. Additional disturbances or changes in
rehabilitation costs are recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur.
Changes to estimated future costs are recognised in the statement of financial position by either increasing or decreasing the
rehabilitation liability and asset to which it relates if the initial estimate was originally recognised as part of an asset measured in
accordance with IAS 16 Property, Plant and Equipment.
Any reduction in the rehabilitation liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying
amount of that asset. If it does, any excess over the carrying value is taken immediately to profit or loss.
Retirement obligations
(a) Short-term employee benefits
The cost of all short-term employee benefits is recognised in the statement of comprehensive income during the period in which the
employees render the related service.
(b) Long-term employee benefits
The Group does not operate any retirement benefit plan for its employees. For employees of the Malian subsidiary, the Group provides
for end-of-service benefits based on the provisions contained in the local statutes based on years of service with the company;
these benefits are paid to employees falling under this category when they leave the Group as one-off lump sum on redundancy
or retirement. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit
obligation in relation to this agreement.
Contingent liabilities
Contingent liabilities are possible obligations whose existence will be confirmed by uncertain future events that are not wholly within
the control of the Group. An example is litigation against the Group when it is uncertain whether the Group has committed an act of
wrongdoing and when it is not probable that settlement will be needed.
Contingent liabilities also include obligations that are not recognised because their amount cannot be measured reliably or because
settlement is not probable. Contingent liabilities do not include provisions for which it is certain that the Group has a present obligation
that is more likely than not to lead to an outflow of cash or other economic resources, even though the amount or timing is uncertain.
Unless the possibility of an outflow of economic resources is remote, a contingent liability is disclosed in the notes to the financial
statements.
Other financial liabilities – Liberia Royalty
In order to determine the appropriate accounting treatment for the royalty financing which is described in note 24, assessment is
required of whether the substance of the arrangements constituted a financial liability, prior to commercial production. The Group can
be required to deliver cash to the provider in certain circumstances which are not all within the Group’s control, then this is considered
by the Group to represent a financial liability. The Group has chosen not to designate this as “a fair value through profit or loss” financial
liability and therefore it is recognised at amortised cost. Following commencement of commercial production, the Group is obliged
to pay a percentage of its revenue, then this is considered to have extinguished the financial liability, and this is recognised as a part
disposal of the relevant asset.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 116
Other financial liabilities – Cassidy Smelter Royalty
In order to determine the appropriate accounting treatment for the royalty financing which is described in note 24, assessment is
required of whether the substance of the arrangements constituted a financial liability, prior to commercial production. The Group can
be required to deliver cash to the provider in certain circumstances which are not all within the Group’s control, then this is considered
by the Group to represent a financial liability.
This liability is contingent on future sales as at commencement of commercial production, the Group is obliged to pay a percentage of
its revenue. Management considers this to be an instrument which contains an embedded derivative (being the gold price) and have
therefore elected to hold the entire instrument at fair value through profit or loss, as the embedded derivative would significantly modify
the cashflows that would otherwise be required.
Borrowings
The Group records and measures borrowings at amortised cost, using the effective interest rate method.
Equity
Ordinary shares are classed as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
Share-based payments
The Group has applied IFRS 2 Share based Payment for all share-based payments.
The Group has used shares, share options and other share-based payments as consideration for goods and services received from
suppliers and employees.
Share based payments to employees and others providing similar services are measured at fair value at the date of grant. The fair value
determined at the grant date of an equity-settled share-based instrument is expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of the shares (or other instruments) that will eventually vest. For equity settled share-based payments
the corresponding amount is credited to retained earnings. For cash settled share-based payments the corresponding amount is
recognised as a liability and remeasured at each reporting date with any changes in fair value being recognised in the statement of
comprehensive income.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably or excess fair value of the identifiable goods or services received, in which
case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the
counterparty renders the service. The fair value determined at the grant date of such an equity-settled share-based instrument is
expensed since the shares vest immediately. Where the services are related to the issue of shares, the fair values of these services are
offset against share premium in equity.
Fair value of share options and similar instruments are measured using the Black-Scholes model. The expected life used in the model
has been adjusted based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural
considerations.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments and
making strategic decision, has been identified as the Board of Directors.
The Board of Directors considers there to be four operating segments with only one operating to a significant degree during the year,
the exploration, development and exploitation of mineral resources, and four geographical segments, being Liberia, Mali, Guinea and
United Kingdom.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated
statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair
values at the acquisition date, which is the date when control passes to the Company. The results of the acquired operations are
included in the consolidated statement of comprehensive income from the date on which control was obtained. Any difference arising
between the fair value and tax base of the acquiree’s assets and liabilities that give rise to a taxable deductible difference results in
recognition of deferred tax liability. No deferred tax liability is recognised on goodwill.
Liberia earn-in earn agreement
Refer to note 26.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS 117
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both the current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of applying the Group’s
accounting policies and that have the most significant effect on the amounts recognised in the financial statements:
Fair value of the Cassidy Smelter Royalty
The Cassidy Smelter Royalty was reassessed to $8.2 million as at 31 December 2022 (2021: $9.1 million), using the latest discount
rates and mine plans. This represents a 2% smelter royalty retained by the vendors on all gold sales from the project over and above
the first 200,000 ounces of its production and sales, subject to a maximum of 2.2 million ounces of production and sales.
Significant judgement and estimations were used to determine the fair value of this liability including judgement on likelihood of payment
of this liability, estimating the discounts rates used in determining the net present values of amounts used as well as estimating the
future production profiles. There is significant estimation uncertainty in the calculation of the liability and cost estimates can vary in
response to many factors including timing of reserves growth, as well as commodity prices. Some of the key assumptions used in
the model include average gold production volumes of approximately 100,000 ounces per annum over 7 years. As part the model,
production was assumed to start in second quarter of 2023 and the royalty currently estimated to be payable from 2025, with a pre-tax
discount rate of 21.86%. The model is also subject to gold price changes, with a price of $1,800 per ounce having been used for the
2022 valuation.
Judgement was also applied in respect of the treatment of the movement in the liability. The movement on the balance has been
recorded within the income statement in line with the applicable International Accounting Standards.
Refer to note 24.
Rehabilitation provision
The Group assesses its mine rehabilitation provision at each reporting date. Significant estimates and assumptions are made in
determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate amount payable. These
factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases
as compared to the long-term inflation rates (2%) and changes in discount rates. These uncertainties may result in future actual
expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of
the present value of the future rehabilitation costs required.
For Mali, the Group continued to use the same methodology of reassessing the rehabilitation provisions as adopted in prior years.
Following the increased construction activities in Guinea, the Group have reassessed the rehabilitation provision balance, resulting in
a $4.8 million provision being recognised as of 31 December 2022. The major disturbance up to 31 December 2022 in Guinea was
mainly the process plant, camp, tailings storage facility (“TSF”) structure, roads and any other workshop and ancillary buildings. Further
as of 31 December 2022, the plant was still in construction, TSF had not been filled with any materials and the explosives magazine not
fully completed, it is therefore safe to say there is no significant wear and tear on the plant that would need specialist clean up nor were
there any contamination from chemicals from the TSF and explosive magazine. For this reason, should there be need to rehabilitate the
site as of this date, it is expected the cost required to do this work will be far less than would be required for a fully operational mine.
Refer to note 20.
Recoverability of VAT
In both Mali and Guinea, VAT is payable on qualifying purchases and reclaimed from the governments.
The time to receive VAT from the Government of Mali is unpredictable, and although the Group was able to continue to offset some
VAT balances against tax in 2022 (and in 2023), the VAT balance in Mali remains high at $25.9 million on 31 December 2022 (2021:
$11.2 million). Recoverability is expected to continue via offset of future taxes or cash. The Group was able to receive cash of
$0.6 million in January 2023. The timing of recoverability of these amounts is unpredictable and is subject to foreign currency risk as
the amounts are recoverable in West Africa Francs (“CFA”).
In Guinea, $5.2m VAT receivables have increased during the year as construction activities increased. In Guinea VAT receipts are
expected to be received via cash refunds. All VAT submissions are being made to the Government in line with local requirements,
however no receipts have been received yet pending the finalisation of the initial submissions review by the Government. The timing
of recoverability of these amounts is unpredictable and are subject to foreign currency risk as the amounts are recoverable in Guinea
Francs (“GNF”).
Refer to note 18.
Recoverability of mine property, plant and equipment
Determination as to whether, and by how much, an asset or cash generating unit (“CGU”) is impaired involves management estimates
on highly uncertain matters such as; gold price, discount rates used in determining the estimated discounted cash flows of CGU,
foreign exchange rates, the level of proved and probable reserves and measured, indicated and inferred mineral resources that may
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 118
be included in the determination of value in use, future technological changes which could impact the cost of mining, and future legal
changes (including changes to environmental restoration obligations). The costs to dispose are estimated by management based on
prevailing market conditions.
When applicable, value in use is estimated based on discounted cash flows using latest budgets, based on CGU life of mine (“LOM”)
plans. The value in use methodology adopted is categorised as Level 3 in the fair value hierarchy (in accordance with International
Financial Reporting Standards).
The principal CGUs, to which mine property, plant and equipment relates are the Group’s Yanfolila Gold Mine in Mali and the Kouroussa
Gold Project in Guinea which is currently under construction. In determining the recoverable amount of the Malian CGU at 31
December 2022, future cash flows were discounted using rates based on the Group’s estimated weighted average cost of capital.
When it is considered appropriate to do so, an additional premium is applied with regard to the geographic location and nature of the
CGU. LOM operating and capital cost assumptions are based on the Group’s latest budget and LOM plan.
The table below summarises the key assumptions used in the carrying value assessments of the Malian CGU:
Gold price ($ per ounce) :
Discount rate % (post tax) :
2022: $1,800
2021: $1,750
2022: 21.86%
2021: 12.58%
Commodity price and foreign exchange rates were estimated with
reference to external market forecasts. The rates applied to the valuation
had regard to observable market data.
In determining the value in use of the CGU, the future cash flows were
discounted using rates based on the Group’s estimated real weighted
average cost of capital, with an additional premium applied having regard
to the geographic location of the CGU and company size.
Operating and capital costs:
Life-of-mine operating and capital cost assumptions are based on the Group’s latest budget and
life of mine plan.
Having considered the recoverable amount of the Malian CGU, no impairment loss was recognised for the year ended 31 December
2022. At around 7% lower production, the headroom is eroded and value in use is equal or less than the carrying value of the CGU.
The headroom is also eroded though a combination of lower production and projected cost savings not being achieved. As always,
there is a possibility that changes in circumstances will alter these projections, which may impact on the recoverable amount of the
assets.
No impairment assessment was considered necessary with respect to the Kouroussa Gold Project in Guinea as it is still under
construction and on target for first gold pour in Q2 2023.
Recoverability of exploration and evaluation assets
Determination as to whether an exploration and evaluation (“E&E”) asset is impaired requires an assessment of whether there are any
indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of
Mineral Resources. As E&E assets are assessed for impairment on a cost pool basis, the existence and quantum of any impairment is
dependent on the choice of basis of cost pools. If there is any indication of potential impairment, an impairment test is required based
on value in use of the asset. This assessment involves judgement as to: (i) the likely future commerciality of each cost pool of assets; (ii)
when such commerciality should be determined; and (iii) the potential future revenues and the value in use. The value in use calculation
requires the entity to estimate the future cash flows expected to arise from the cash-generating unit (“CGU”) and a suitable discount
rate in order to calculate present value.
The Group considers there to be three cost pools, being the whole of Liberia, the whole of Guinea and whole of Mali, and therefore
aggregates assets in respect of each for the purposes of determining whether impairment of E&E assets has occurred.
A review of the three cost pools above revealed that there were no indicators of impairment and hence no impairment was recognised
as at 31 December 2022.
Liberia
During 2022, Pasofino continued to progress the project in Liberia resulting in them completing their earn-in and earning the 49% stake
in the Liberian subsidiary. This continued activity, release of the Definitive Feasibility Study (“DFS”) and the successful completion of the
earn-in provided evidence of no indicators of impairment under IFRS 6 and hence no impairment assessment was required. However
due to the market capitalisation of Pasofino, management did an assessment of the recoverability of the Liberian cash generating unit
was assessed using a combination of two methods. The first was through the valuation of Pasofino as management believes most
of the value of this company is driven from the earn-in agreement on the Dugbe Project, and therefore believe the value of Pasofino
provides an indication of the potential value of Dugbe. The second method continued to consider the recoverable amount of the
Liberian cash generating unit (“CGU”) using anticipated future cash flows which were discounted using rates based on the Group’s
estimated weighted average cost of capital. The net present value method further proved that no impairment loss was to be recognised
for the year ended 31 December 2022.
Guinea
As at 31 December 2022, the Guinean E&E assets were immaterial and therefore considered to not present a material risk of material
misstatement and for this reason no impairment assessment was carried out.
Mali
Further exploration work was completed in the Malian licence areas in 2022, further providing evidence that there were no indicators
of impairment. Management also considered the recoverable amount of the Malian CGU, with reference to the Group’s latest budget
and life of mine (“LOM”) plan for the Group’s Yanfolila Gold Mine in Mali, no impairment loss was recognised for the year ended
31 December 2022.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
119
There is a possibility that changes in circumstances will alter these projections, which may impact on the recoverable amount of the
assets.
Recoverability of other receivables and impairment of financial assets
Government of Mali
Included in other receivables is an amount of CFA 4,968,387,000 approximately $8,017,000 (2021: $8,585,000) before credit loss
allowances, due from the Government of Mali, arising on 2 February 2017 when the Government of Mali exercised its right to acquire
an additional 10% of Societe Des Mines De Komana SA (which would take its total interest in Societe Des Mines De Komana SA to
20%) . The Group remains in discussions with the Government of Mali as to the timing and mechanism of payment of the balance. The
relevant shares will not be issued until the payment mechanism of the final balance has been agreed.
The Group considers the receivable to be ‘credit-impaired’ as part of the balance remains unpaid more than 1 year since the Government
of Mali exercised its right. Having considered multiple scenarios including the partial receipt in 2020, on the manner, timing, quantum and
probability of recovery of the receivable, the Group recognised the lifetime expected credit loss $316,000 as at 31 December 2022 (2021:
loss reversal of $108,000) . The net cumulative lifetime expected credit loss for the balance is $1,603,000 at 31 December 2022. The
allowance for lifetime expected credit losses assessment requires a significant degree of estimation and judgement.
Deferred tax assets
In assessing the probability of realising potential deferred tax assets, management makes estimates related to expectations of future
taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that
tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives
additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based
on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from
operations are based on life of mine projections internally developed and reviewed by management. Weight is attached to tax planning
opportunities that are within the Group’s control and are feasible and implementable without significant obstacles. The likelihood
that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and
circumstances of the relevant tax position evaluated in light of all available evidence. Where applicable tax laws and regulations
are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur
that materially affect the amounts of income tax assets recognised. At the end of each reporting period, the Group reassesses
unrecognised and recognised income tax assets, and there is the possibility that a change in circumstances may impact on the
recoverability of the relevant deferred tax asset.
Following a review of the future profitability of the Malian subsidiary, in light of the relatively high gold price environment being
experienced, deferred tax assets of $13,168,000 and deferred tax liabilities of $3,597,000 were recognised at 31 December 2022 in
respect of the Malian subsidiary. The deferred tax has arisen on the temporary differences between the carrying value of assets and tax
written down value of assets.
Refer to note 22.
Cassidy Deferred Consideration
The deferred consideration payable to the vendors of Cassidy was reassessed to $4.2 million as at 31 December 2022
(2021: $4.6 million) , using the latest discount rates and reserve growth estimations, with the resulting movement recorded within
statements of comprehensive income. This was then offset by the $0.6 million relating to amounts that were paid by the Group on
behalf of Cassidy, resulting in a net deferred consideration balance of $3.6 million as at 31 December 2022. The deferred consideration
is payable at the rate of £10 for every ounce of gold reserve published (or processed if not included in a reserve) more than 400,000
ounces (subject to 100,000 ounces increments and a maximum of 1,000,000 ounces) . In short, any growth in reserves up to a
maximum of 1,000,000 results in additional purchase price.
Following the publication of the reserve of 647,000 ounces (at 4.15g/t) at Kouroussa on 30 June 2022, deferred consideration in
respect of 200,000 excess ounces became payable to Cassidy, and shares were issued on 7 February 2023 to satisfy this liability.
The deferred consideration due of £2.0 million ($2.4 million) was reduced by £532,032 (US$642,000) due to the settlement of
liabilities by the Group on behalf of Cassidy, and therefore resulted in the issue of 22,688,844 new Ordinary Shares to the underlying
shareholders of Cassidy (the “Cassidy Deferred Consideration Shares”) , when a volume weighted average price (“VWAP”) of
6.47 pence is applied (being the 5-business day trailing VWAP to 31 December 2022) .
Judgements and estimations were used to determine the fair value of this liability including judgement on likelihood of payment of this
liability, exchange rates, estimating the expected future reserve growth both quantum and timing, estimating the discounts rates used
in determining the net present values of amounts used. There is significant estimation uncertainty in the calculation of the liability and
cost estimates can vary in response to many factors in particular timing of reserves growth.
The final reserve growth was estimated to be in 2027, and a pre-tax discount rate of 21.86% was used in the calculations.
The movement on the balance has been recorded within the income statement in line with the applicable International Accounting
Standards.
Refer to note 25.
Liberia earn-in agreement
There is no formal accounting standard guiding the earn-in agreements. Judgement was therefore applied in what accounting policy
to adopt, including estimating the implication of this accounting policy on the Group’s financial position. Amounts advanced as part
of earn-in agreements were initially netted off against the related asset, and then added back when spent, until the conclusion of the
earn-in agreements. Refer to note 26 for further details.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 120
5. SEGMENTAL ANALYSIS
STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2022
Revenue
Production costs
Amortisation and depreciation
Royalties and taxes
Cost of sales
Gross loss
Share based payments
Other administrative expenses
Operating loss
Finance income
Finance expense
Share of joint venture income
Impairment of impairment of financial assets
Gain/(losses) on financial assets and liabilities measured at fair
value
(Loss)/profit before tax
Tax
(Loss)/profit after tax
STATEMENT OF FINANCIAL POSITION
YEAR ENDED 31 DECEMBER 2022
Segment assets
Segment liabilities
Segment net assets
STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2021 – RESTATED
Revenue
Production costs
Amortisation and depreciation
Royalties and taxes
Cost of sales
Gross profit
Share based payments
Other administrative expenses
Operating profit/(loss)
Finance income
Finance expense
Share of joint venture loss
Reversal of impairment of financial assets
Losses on financial assets and liabilities measured at fair value
Profit/(loss) before tax
Tax
Profit/(loss) after tax
MALI
S’000
GUINEA
$’000
LIBERIA
$’000
CORPORATE
$’000
TOTAL
$’000
143,344
(118,470)
(37,357)
(5,620)
(161,447)
(18,103)
–
(875)
(18,978)
3,100
(13,382)
–
(316)
–
(29,576)
4,269
(25,307)
–
–
–
–
–
–
–
–
–
–
–
–
–
874
874
–
874
–
–
–
–
–
–
–
(4)
(4)
23
(30)
–
–
–
(11)
–
(11)
7,175
150,519
(8,057)
(126,527)
–
–
(37,357)
(5,620)
(8,057)
(169,504)
(882)
(1,941)
(18,985)
(1,941)
(10,912)
(11,791)
(13,735)
(32,717)
518
(744)
4
–
3,641
(14,156)
4
(316)
(1,589)
(715)
(15,546)
(44,259)
–
4,269
(15,546)
(39,990)
$’000
$’000
$’000
$’000
$’000
187,576
131,863
109,541
13,424
442,404
(177,279)
(61,625)
(35,994)
(9,612)
(284,510)
10,297
70,238
73,547
3,812
157,894
MALI
$’000
GUINEA
$’000
LIBERIA
$’000
CORPORATE
$’000
TOTAL
$’000
156,561
(108,075)
(38,317)
(6,297)
(152,689)
3,872
–
1,013
4,885
4,033
(7,929)
–
108
–
1,097
1,617
2,714
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,256)
(2,256)
–
(2,256)
–
–
–
–
–
–
–
(20)
(20)
3
(6)
–
–
–
(23)
–
(23)
6,216
162,777
(5,531)
(113,606)
–
–
(38,317)
(6,297)
(5,531)
(158,220)
685
(1,459)
(11,256)
(12,030)
35
(255)
(46)
–
(878)
4,557
(1,459)
(10,263)
(7,165)
4,071
(8,190)
(46)
108
(3,134)
(13,174)
(14,356)
–
1,617
(13,174)
(12,739)
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
121
STATEMENT OF FINANCIAL POSITION
YEAR ENDED 31 DECEMBER 2021 – RESTATED
Segment assets
Segment liabilities
Segment net assets
NON-CURRENT ASSETS FOR THE YEAR ENDING 31 DECEMBER 2022
Intangible exploration and evaluation assets
Intangible assets software
Property, plant and equipment
Right of use assets
Investment in joint ventures
Financial assets at fair value through profit and loss
Deferred tax assets
Segment non-current assets
NON-CURRENT ASSETS FOR THE YEAR ENDING 31 DECEMBER 2021
Intangible exploration and evaluation assets
Intangible assets software
Property, plant and equipment
Right of use assets
Investment in joint ventures
Financial assets at fair value through profit and loss
Deferred tax assets
Segment non-current assets
$’000
217,651
$’000
56,168
(143,995)
(12,376)
73,656
43,792
MALI
$’000
24,561
143
77,664
24,778
–
–
9,571
GUINEA
$’000
668
–
124,878
–
–
–
–
$’000
$’000
$’000
69,870
(17,959)
51,911
LIBERIA
$’000
104,423
–
1,268
–
133
–
–
10,976
354,665
(9,681)
(184,011)
1,295
170,654
CORPORATE
$’000
–
–
583
710
–
1,532
–
TOTAL
$’000
129,652
143
204,393
25,488
133
1,532
9,571
136,717
125,546
105,824
2,825
370,912
MALI
$’000
23,816
235
95,080
35,986
–
–
3,868
158,985
GUINEA
$’000
238
–
49,442
–
–
–
–
LIBERIA
$’000
67,233
–
–
–
–
–
–
CORPORATE
$’000
–
–
69
–
129
3,530
–
TOTAL
$’000
91,287
235
144,591
35,986
129
3,530
3,868
49,680
67,233
3,728
279,626
Geographic information
During the year the Group had four operating segments, with only Mali currently producing gold. Revenues in connection with the Mail
operating segment totalled $143.3 million (2021: $156.6 million) and were derived from a single external customer. The Group is not
economically dependent on the customer, as gold can be sold through numerous commodity market traders worldwide.
Additionally, during the year sales of Single Mine Origin (“SMO”) gold grain and gold investment products (including coins) (via its UK
head office) generated revenues of $7.2 million (2021: $6.2 million) , and all were derived from a single related customer (note 31) at a
premium to the spot gold price.
Revenues from customers are based on the locations of the customers.
Dore
SMO gold
Total revenue from customers
LOCATION
USA
UK
2022
$’000
2021
$’000
143,344
156,561
7,175
6,216
150,519
162,777
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
122
6. ADMINISTRATIVE EXPENSES BY NATURE
Audit fees, including fees paid to subsidiary auditors (note 7)
Non-audit fees, including fees paid to subsidiary advisors
Bank charges
Communications and IT
Depreciation of property, plant and equipment
Insurance
Marketing
Office expenses
Other taxes
Professional and consultancy
Lease charges – short term and low value
Staff costs excluding share-based payments and employers NI accrual on share options
Travel and accommodation
Share based payments
Release of employers NI accrual on share options
Other income
Net foreign exchange losses
7. AUDITOR’S REMUNERATION
Amounts payable to RSM UK Audit LLP and its associates in respect of both audit and non-audit services:
Audit fees
Fees payable to the Group’s auditor for the audit of the annual accounts
Fees payable to the Group’s auditors for the audit of certain subsidiaries
Total audit fees
Non-audit fees payable to associates of the Company’s auditor
World Gold Council’s Responsible Gold Mining Principles compliance audit
Other non-audit fees
Total non-audit fees
2022
$’000
263
6
138
231
78
756
400
522
529
2,793
271
4,503
590
1,941
(77)
(7)
795
2021
$’000D
216
53
99
269
166
909
317
155
506
1,408
261
5,186
463
1,459
(87)
–
342
13,732
11,722
2022
$’000
263
–
263
27
53
80
2021
$’000
203
13
216
32
–
32
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
8. STAFF COSTS
The average monthly number of employees and directors was:
Directors
Other employees
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pensions
Charge for share-based payments
Charge for potential social security costs related to share-based payments
123
2022
NUMBER
2021
NUMBER
7
408
415
2022
$’000
12,363
2,183
67
1,941
7
357
364
2021
$’000
12,002
2,154
62
1,459
(77)
(87)
16,477
15,590
Within wages and salaries, $1,260,000 (2021: $1,433,000) relates to remuneration payable to directors, included within share-based
payments is a net charge of $682,000 (2021: $260,000) under cash-settled share-based payment scheme payable to directors, and
within pensions is $10,000 (2021: $11,000) relating to pension contributions in respect of directors.
The total remuneration of the highest paid director is $570,000 (2021: $821,000) comprising $565,000 (2021: $815,000) in relation to
wages and salaries (including vested performance bonuses paid) and pension contributions of $5,000 (2021: $6,000) .
The number of directors to whom benefits are accruing under defined contribution pension schemes is 2 (2021: 2) .
Included within staff costs is $1,054,000 (2021: $2,028,000) capitalised to intangible exploration and evaluation assets and $1,641,000
(2021: $390,000) capitalised into mine development assets.
9. PRIOR PERIOD ERROR – IFRS 16 LEASE INTEREST
During the year, the Group discovered that the IFRS 16, Lease interest had been erroneously calculated since 2019. Although the total
interest over the life of the leases would be correct, the interest charge was increasing as the liabilities were decreasing, resulting in
lower interest charges in the early years of the IFRS 16 lease liabilities. Consequently, the line items finance expense, included in the
consolidated statement of comprehensive income, and lease liabilities, included in current and non-current liabilities in the statement of
financial position, have been understated.
The errors have been corrected by restating each of the affected financial statement line items for prior periods.
The following tables summarise the impacts on the Group’s consolidated financial statements.
i. Consolidated statement of financial position
AS AT 1 JANUARY 2021
Total assets
Non-current liabilities – lease liabilities
Total liabilities
Net assets
Retained earnings
Non-controlling interest
Total equity
AS PREVIOUSLY
REPORTED
$’000
ADJUSTMENT
$’000
AS RESTATED
$’000
292,546
2,380
109,285
183,261
150,246
9,776
183,261
–
872
872
(872)
(699)
(173)
(872)
292,546
3,252
110,157
182,389
149,547
9,603
182,389
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
124
AS AT 31 DECEMBER 2021
Total assets
Non-current liabilities – lease liabilities
Current liabilities – lease liabilities
Total liabilities
Net assets
Retained earnings
Non-controlling interest
Total equity
ii. Consolidated statement of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2021
Finance expense
Loss for the period after tax
Attributed to:
Equity attributable to equity holders of the parent
Non-controlling interest
Loss for the period after tax
Loss per share (attributable to equity holder of the parent) :
Basic ($ cents)
Diluted ($ cents)
AS PREVIOUSLY
REPORTED
$’000
354,665
20,962
13,496
180,952
173,713
140,342
10,132
173,713
AS PREVIOUSLY
REPORTED
$’000
(6,003)
(10,552)
(10,908)
356
(10,552)
(2.78)
(2.78)
ADJUSTMENT
$’000
AS RESTATED
$’000
–
354,665
6,594
(3,535)
3,059
(3,059)
(2,447)
(612)
(3,059)
27,556
9,961
184,011
170,654
137,895
9,520
170,654
ADJUSTMENT
$’000
AS RESTATED
$’000
(2,187)
(2,187)
(1,748)
(439)
(2,187)
(0.44)
(0.44)
(8,190)
(12,739)
(12,656)
(83)
(12,739)
(3.22)
(3.22)
There is no impact on the Group’s total operating, investing, or financing cash flows for the year ended 31 December 2021, however
there was a reallocation of payments between lease principal and lease interest.
10. FINANCE INCOME AND EXPENSE
FINANCE INCOME
Interest on bank deposits
Foreign exchange gain
FINANCE EXPENSE
Interest on borrowings
Amortisation of borrowing costs (note 19)
Unwinding of discount on rehabilitation provision
Foreign exchange loss
2022
$’000
10
3,631
3,641
2022
$’000
10,317
1,421
261
2,157
14,156
2021
$’000
2
4,069
4,071
2021
RESTATED
$’000
5,419
261
64
2,446
8,190
Foreign exchange gains and losses arose mainly on non-functional currency bank deposits and foreign currency loans.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
11. LOSSES ON FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
The loss on financial assets and liabilities measured at fair value is made up as follows:
Fair value loss on Bunker Hill shares and warrants (note 14)
Fair value loss on Cora Shares
Fair value gain in deferred consideration (note 25)
Fair value (gain)/loss in Cassidy Smelter Royalty (note 24)
12. TAX
The tax (income) /charge for the year is summarised as follows:
Minimum tax pursuant to Malian law
Deferred tax income
Tax income for the year
2022
$’000
1,998
–
(408)
(875)
715
2022
$’000
1,434
(5,703)
(4,269)
The taxation charge for the period can be reconciled to the loss per the statement of comprehensive income as follows:
Loss before tax
Tax expense at the rate of tax 30.00% (2021: 30.00%)
Tax effect of non-deductible items
Origination and reversal of temporary differences
Deferred tax asset not recognised /(recognised)
Recognised deferred tax assets
Minimum tax pursuant to Malian law
Tax income for the year
2022
$’000
(44,259)
(13,278)
55
9,766
3,457
(5,703)
1,434
(4,269)
125
2021
$’000
1,483
170
(775)
2,256
3,134
2021
$’000
1,567
(3,184)
(1,617)
2021
RESTATED
$’000
(14,356)
(4,307)
–
10,089
(5,782)
(3,184)
1,567
(1,617)
The Group’s primary tax rate is aligned with its operations in Mali of 30% (2021: 30%) . The taxation of the Group’s operations in Mali
are aligned to the Mining Code of Mali 1999 under which tax is charged at an amount of the greater 1% (2021:1%) of turnover and
30% of taxable profits.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
126
13. LOSS PER ORDINARY SHARE
Basic loss per ordinary share is calculated by dividing the net loss for the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year.
The calculation of the basic and diluted loss per share is based on the following data:
Loss
Loss for the purposes of basic loss per share being net loss attributable to equity holders of the parent
(34,279)
(12,656)
2022
$’000
2021
RESTATED
$’000
Number of shares
Weighted average number of ordinary shares for the purposes of basic loss per share
Adjustments for weighted average share options and warrants
Weighted average number of ordinary shares for the purposes of diluted loss per share
Loss per ordinary share
Basic
Diluted
2022
NUMBER
2021
NUMBER
393,525,771
392,676,809
25,362,582
17,166,492
418,888,353
409,843,301
2022
$ CENTS
(8.71)
(8.71)
2021
Restated
$ CENTS
(3.22)
(3.22)
At the reporting date there were 29,560,125 (2021: 19,984,137) potentially dilutive ordinary shares and warrants. For the year ended
31 December 2022, because there is a reduction in diluted loss per share due to the loss-making position, therefore there is no
difference between basic and diluted loss per share.
14. INVESTMENTS
NAME OF ENTITY
PLACE OF BUSINESS/COUNTRY
OF INCORPORATION
% OF OWNERSHIP INTEREST
NATURE OF
RELATIONSHIP
MEASUREMENT METHOD
2022
%
2021
$
Single Mine Origin Gold
Limited (formerly Betts
Investments Limited) *
Bunker Hill Mining
Corporation
United Kingdom
49%
49%
Joint
venture 1
United States
America
4%
6% Investment 2
Equity method
Fair value through profit or
loss
1
2
Single Mine Origin Gold Limited (“SMO Ltd”) formerly Betts Investments Limited (“BIL”) has been established for the marketing of gold together with other precious metals investment
products, and the development of the Single Mine Origin business.
Bunker Hill Mining Corporation (“Bunker Hill”) is listed on the Canadian Securities Exchange. The principal activity of Bunker Hill is exploration and development of the historic Bunker Hill
mine.
* Private entity – no quoted price available.
Investments:
Investments as at 31 December 2022 totalled $1,665,000 (2021: $3,659,000) .
Investment in joint ventures (a)
Financial assets at fair value through profit and loss (b)
2022
$’000
133
1,532
1,665
2021
$’000
129
3,530
3,659
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
(a) Investment in joint ventures:
INVESTMENTS:
Opening carrying value
Share of profit/(loss)
Closing carrying value
127
SINGLE MINE ORIGIN GOLD LIMITED
(FORMERLY BETTS INVESTMENTS LIMITED)
2022
$’000
129
4
133
2021
$’000
175
(46)
129
Summarised financial statement information (100% share) of joint ventures, based on their financial statements, and a reconciliation
with the carrying amount of the investment in the Group’s consolidated financial statements, are set out below:
SINGLE MINE ORIGIN LIMITED (FORMERLY
BETTS INVESTMENTS LIMITED)
SUMMARISED STATEMENT OF COMPREHENSIVE INCOME:
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the year
Group’s % ownership
Group’s share of profit/(loss)
SUMMARISED STATEMENT OF FINANCIAL POSITION:
Non-current assets
Current assets
Current liabilities
Net assets
Group’s % ownership
Group’s share of net assets
RECONCILIATION TO CARRYING AMOUNTS:
Group’s share of net assets (as shown above)
Goodwill
Provision for impairment
Closing carrying value
2022
$’000
9
–
9
49%
4
$’000
46
44
(26)
64
49%
31
$’000
31
119
(17)
133
2021
$’000
(94)
–
(94)
49%
(46)
$’000
18
39
(36)
21
49%
10
$’000
10
119
–
129
Single Mine Origin Limited (“SMO Ltd”) formerly Betts Investments Limited (“BIL”)
On 23 May 2018 the Group entered into a joint venture agreement (“JV Agreement”) with Stephen Betts and Sons Limited (“SBS”) and
Betts Investments Limited (“BIL”) . On 30 June 2022, BIL changed its name to Single Mine Origin Limited (“SMO Ltd”) . Daniel Betts and
Stephen Betts who are both directors of the Company, are also directors of and shareholders in SBS.
Under the JV Agreement, the Group invested $105,000 (£75,000) for a 19.36% interest in SMO Ltd, and in April 2020 the Group
exercised its option to increase its stake to 49% for a further investment of $93,000 (£75,000) . The Group has agreed to sell
Hummingbird gold investment coins to SBS to fulfil orders placed by customers via SMO Ltd. Additionally, the Group provides
marketing support and treasury services to SMO Ltd. SBS is responsible for the fulfilment of all orders of gold and other precious
metals investment products. SMO Ltd receives a commission on sales of precious metals investment products and Single Mine Origin
(“SMO”) gold products by SBS.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
128
(b) Financial assets at fair value through profit and loss:
Opening position
Disposals
Loss through profit or loss
Closing carrying value
1 Warrants are valued using the Black Scholes model.
CORA GOLD SHARES
BUNKER HILL – SHARES AND WARRANTS1
TOTAL
2022
$’000
–
–
–
–
2021
$’000
2,708
(2,538)
(170)
–
2022
$’000
3,530
–
(1,998)
1,532
2021
$’000
5,013
–
(1,483)
3,530
2022
$’000
3,530
–
(1,998)
1,532
2021
$’000
7,721
(2,538)
(1,653)
3,530
Bunker Hill Mining Corporation – shares, warrants
The Company holds 9,625,837 common shares in Bunker Hill Mining Corp (“Bunker Hill”) , a Canadian listed exploration and
development company.
The Group also has the option to acquire an additional 2,660,000 shares at a cost of CAD$0.59 per share before 31 December 2025.
The investment is carried at fair value through profit and loss.
The shares in Bunker Hill have been deemed to be a level 1 asset under the fair value hierarchy. This instrument has been valued using
publicly quoted share price. The Group regards the warrants to be level 2 asset under the fair value hierarchy. These have been valued
using a combination of quoted prices as well as calculations under the Black Scholes model. The total investments on 31 December
2022 are split as follows, level 1 shares $1,208,000 (2021: $2,767,000) and level 2 warrants $323,800 (2021: $763,000).
The value of these shares and warrants on 31 March 2023 was $1.3 million.
15. INTANGIBLE ASSETS
(a) Intangible exploration and evaluation assets
Cost
At 31 December 2020
Transfers
Additions for the year
At 31 December 2021
Additions for the year1
At 31 December 2022
LIBERIA
$’000
GUINEA
$’000
MALI
$’000
TOTAL
$’000
65,118
–
2,115
67,233
37,190
104,423
–
–
238
238
430
668
10,456
4,916
8,444
23,816
745
75,574
4,916
10,797
91,287
38,365
24,561
129,652
1
For Liberia, additions represent assets that were previously being eliminated in line with the earn in agreement. Following the completion of the earn-in agreement, these assets are now
being recognised in the statement of financial position. See note 26.
Exploration in Liberia is undertaken by Hummingbird Resources (Liberia) Inc, a subsidiary. The intangible exploration and evaluation
assets in respect of Liberia principally relate to the Dugbe Gold Project (“Dugbe”) . As announced on 1 May 2019, the Group signed
a 25-year renewable Mineral Development Agreement (“MDA”) with the Government of Liberia (“GoL”) , covering a land package of
approximately 2,000km2, which includes the Group’s 4.2Moz Dugbe Project. In accordance with the MDA, the GoL will be granted a
10% free carried shareholding in Hummingbird Resources (Liberia) Inc.
On 4 June 2020 the Group announced an earn-in (“Earn-in”), agreement with Pasofino Gold (“Pasofino”) in respect of the Dugbe
Gold Project in Liberia (“Dugbe”) . The Earn-in entitled Pasofino to earn up to a 49% interest in Hummingbird Resources (Liberia) Inc
(excluding the GoL free carried stake).
On 3 November 2020 Hummingbird Resources (Liberia) Inc exercised its option to acquire the Central Licence (an exploration licence
surrounded by the MDA area) , which was subsequently absorbed into the MDA.
On 1 August 2021, Pasofino announced the results of its Definitive Feasibility Study (”DFS”) for Dugbe which showed significant
production potential with approximately 2.27 million ounces produced over a 14-year mine line at an average AISC of $1,005/ounce
producing an average of 200,000 ounces per annum in the first 5 years.
The earn-in was formally completed in September 2022. At this date Pasofino were therefore entitled to their 49% in Dugbe. At the
conclusion of the earn-in, the Group has now recognised all the expenditures that had been funded by Pasofino from the start of
the earn-in in the statement of financial position. This resulted in recognition of exploration and evaluation assets of $13.2 million, of
previously eliminated expenditures.
Intangible exploration and evaluation assets in respect of Mali principally relate to the Yanfolila Gold Project. Exploration licences in Mali
provide the Government with the right to a 10% free carried interest and the right to buy a further 10% interest.
Some limited exploration work was done in Guinea during the year resulting in a small amount of intangible exploration and evaluation
assets. It is expected this balance will increase over the years.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
(b) Intangible software assets
Cost
At 31 December 2020
Transfers
Additions
At 31 December 2021
Additions
Disposals
At 31 December 2022
Accumulated amortisation
At 31 December 2020
Charge for the year
At 31 December 2021
Charge for the year
Disposal
At 31 December 2022
Carrying amount
At 31 December 2021
At 31 December 2022
129
TOTAL
$’000
413
107
15
535
3
(7)
531
209
91
300
95
(7)
388
235
143
Intangible software assets include software purchased for the operations of the mines and exploration. Amortisation charge of $nil
(2021: $3,000) was capitalised into to mine development assets during the year.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
130
16. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise owned and leased assets that do not meet the definition of investment property. The net book
value of property plant and equipment is summarised as follows:
Right-of-use assets (note 21)
Property, plant and equipment – owned
(a) Property, plant and equipment - owned
2022
$’000
25,488
204,393
229,881
2021
$’000
35,986
144,591
180,577
MINE
DEVELOPMENT
$’000
MINE
CLOSURE
$’000
PLANT &
EQUIPMENT
$’000
INFRASTRUCTURE
$’000
MOBILE & OTHER
EQUIPMENT
$’000
ASSETS UNDER
CONSTRUCTION
$’000
OTHER
$’000
TOTAL PPE
$’000
Cost
At 31 December 2020
126,555
14,597
46,614
27,058
3,888
Additions
Transfers1
–
1,217
–
675
1,732
2,122
At 31 December 2021
127,772
15,272
50,468
Additions
Transfers1
Earn–in2
Disposals
1,184
1,896
3,544
1,258
1,577
–
(643)
(350)
845
636
–
(30)
At 31 December 2022
133,753
17,757
51,919
Accumulated depreciation
At 31 December 2020
Charge for the year
At 31 December 2021
Charge for the year
Earn-in²
Disposals
45,297
15,201
60,498
13,466
2,275
(456)
6,077
1,780
7,857
1,600
–
(52)
18,128
5,857
23,985
6,109
–
(30)
At 31 December 2022
75,783
9,405
30,064
Carrying amount
At 31 December 2021
At 31 December 2022
67,274
57,970
7,415
8,352
26,483
21,855
2,025
974
30,057
1,247
110
–
(1,128)
30,286
9,489
3,530
13,019
3,729
–
(1,126)
15,622
17,038
14,664
13,228
22,382
(10,217)
28,559
80,422
(4,282)
–
–
953
232,893
32
–
26,171
(5,025)
985
257,205
43
84,999
–
–
–
–
3,544
(2,151)
–
204
4,092
–
63
–
–
4,155
101,533
1,028
340,431
2,744
399
3,143
238
–
–
–
–
–
911
82,646
35
26,802
946
109,448
809
28
25,979
–
–
–
–
2,275
(1,664)
3,381
809
974
136,038
949
774
25,393
100,724
39
54
144,591
204,393
1
2
Transfers represents completed assets under construction balances being transferred to the respective asset categories.
These represents assets that were previously being eliminated in line with the earn in agreement. Following the completion of the earn-in agreement, these assets and related depreciation
are now being recognised. See note 26.
Amortisation charge of $21,000 (2021: $606,000) was capitalised into to mine development assets during the year.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
131
17. SUBSIDIARIES
NAME AND REGISTERED OFFICE
Directly held
Trochilidae Resources Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
Hummingbird Resources (Liberia) Inc. 4
Hummingbird House, Sophie Area, Congo Town, Monrovia,
Liberia
Afro Minerals Inc.
Hummingbird House, Sophie Area, Congo Town, Monrovia,
Liberia
Golden Grebe Mining Limited
46-63 Spencer Street, Hockley, Birmingham, England BD18 6DE,
UK
Eagle Mining Limited
46-63 Spencer Street, Hockley, Birmingham, England BD18 6DE,
UK
Indirectly held
Deveton Mining Company
Hummingbird House, Sophie Area, Congo Town, Monrovia,
Liberia
Sinoe Exploration Limited
Warren & Carrey Street Intersection, Congo Town, Monrovia,
Liberia
Hummingbird Security Limited
Hummingbird House, Sophie Area, Congo Town, Monrovia,
Liberia
Intervest Inc
Hummingbird House, Sophie Area, Congo Town, Monrovia,
Liberia
Bentley International Trading Corporation
Hummingbird House, Sophie Area, Congo Town, Monrovia,
Liberia
Glencar Mining Limited
10 Earlsfort Terrace, Dublin 2, DO2 T380, Ireland
Centrebind Agency Limited
17 GR.Xenopolou, 3106 Limasol, Cyprus
Glencar International (BVI) Limited
Craigmuirr Chambers, Road Town, Tortola, BVI
Glencar Mali SARL
Sise à Magnambougou- Faso Kanu lot B11 0/1022, Commune VI,
Bamako, Mali
Société des Mines de Komana SA 1
Sise à Magnambougou- Faso Kanu lot B11 0/1022 Commune VI,
Bamako, Mali
Sunangel Resources Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
Sunangel Resources SARL5
09 BP 399 Ouagadougou 09, Burkina Faso
Yanfolila Mining Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
Yanfolila Finance Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
Yanfolila Holdings Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
Kouroussa Gold Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
Kouroussa Mining Limited
Falcon Cliff,Palace Road, Douglas, Isle of Man, IM2 4LB
COUNTRY OF
INCORPORATION
AND OPERATION
PROPORTION
OF VOTING
INTEREST %
- 2022
PROPORTION
OF VOTING
INTEREST %
-2021
Isle of Man
100
100
Liberia
51
100
ACTIVITY
Intermediate holding &
service company
Exploration &
development
Liberia
80
80
Dormant
United Kingdom
100
100
Intermediate holding
company
United Kingdom
100
100
Dormant
Liberia
80
80
Dormant
Liberia
90
90
Dormant
Liberia
100
100
Security
Liberia
100
100
Dormant
Liberia
100
100
Dormant
Ireland
100
100
Cyprus
100
100
British Virgin Islands
100
100
Intermediate holding
company
Intermediate holding
company
Intermediate holding
company
Mali
100
100
Exploration
Mali
90
90
Mining
Isle of Man
100
100
Intermediate holding
company
Burkina Faso
–
100
Exploration
Isle of Man
100
100
Intermediate holding
company
Isle of Man
100
100
Finance company
Isle of Man
100
100
Isle of Man
100
100
Isle of Man
100
100
Intermediate holding
company
Intermediate holding
company
Intermediate holding
company
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
132
Cassidy Gold Guinea SA 2
Landreah Cite Ministerielle, Conakry Republique de Guniee,
Kouroussa Gold Mining SA 3
Immeuble Sankaran Plaza,3 eme, Etage Apt B, Conakry
Republique de Guniee,
Kouroussa Exploration SARLU
Immeuble Sankaran Plaza,3 eme, Etage Apt B, Conakry
Republique de Guniee,
Guinea
Guinea
–
85
100
100
Exploration
Mining
Guinea
100
100
Exploration
1
On 2 February 2017 the Government of Mali exercised its right to participate in the Yanfolila project by acquiring in the subsidiary;
i)
ii) a 10% additional interest (for agreed consideration) . The Group remains in discussions with the Government of Mali as to the timing and mechanism of payment for the additional
a 10% free carried interest (pursuant to the applicable mining law) ; and
interest. The relevant shares will not be issued until the payment mechanism has been agreed.
The Government of Mali’s participation interest is considered a non-controlling interest, being a change in the ownership of a subsidiary that does not result in a change in control.
Cassidy Gold Guinea SA was dissolved on 17 January 2022.
The Government of Guinea is expected to hold up to a 35% interest under the relevant mining code (15% free carry and 20% right to purchase) .
Following the completion of the earn-in agreement in Liberia in 2022, Pasofino has earned 49% stake in Hummingbird Resources (Liberia) Inc. Refer to note 26.
2
3
4
5 Sunangel Resources SARL was dissolved in 2022
Additionally, as of 31 December 2022 the Group had a 49% (2021: 49%) investment in Single Mine Origin Limited (formerly Betts
Investments Limited) and a 4% (2021: 6%) investment in Bunker Hill Mining Corporation (note 14) .
Non-controlling interests – Government of Mali
Société des Mines de Komana SA in which the NCI is 20% (refer above) .
The revenues applicable to the NCI is reflected as follows:
Total revenue relating to Société des Mines de Komana SA
Revenue applicable to NCI (20% of above)
Movement in NCI during the year are as follows:
At 31 December 2020 – restated
Profit attributable to NCI
At 31 December 2021 – restated
Loss attributable to NCI
31 December 2022
2022
$’000
143,344
28,669
2021
$’000
156,560
31,312
$’000
9,603
(83)
9,520
(5,711)
3,809
Summarised financial information of the subsidiary adjusted for Group accounting policies, after to elimination of intra-group items is set
out below:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Loss after tax
Non-controlling interests – Pasofino
For details of the Pasofino non-controlling interest refer to note 26.
2022
$’000
178,301
49,051
(84,277)
(90,808)
52,267
2022
$’000
(28,556)
(28,556)
2021
RESTATED
$’000
203,519
61,193
(32,661)
(111,273)
120,778
2021
RESTATED
$’000
415
415
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
18. CURRENT ASSETS
Inventory
Dore, refined gold, SMO gold, gold grain and coins
Gold in process
Stockpiled ore
Consumables
133
2022
$’000
3,613
1,066
3,781
7,288
2021
$’000
4,085
1,401
2,376
5,286
15,748
13,148
At 31 December 2022, inventory included a provision of $nil (2021: $nil) to adjust finished gold and gold in process inventory to net
realisable value, being a provision of $nil (2021: $nil) and $nil (2021: $nil) respectively.
Cost of inventories of $153,551,472 (2021: $129,776,000) were recognised within cost of sales during the year.
Trade and other receivables
Other receivables
Less: Allowance for expected credit losses
Net other receivables
Prepayments and accrued income
VAT recoverable
2022
$’000
16,810
(1,603)
15,207
5,360
31,285
51,852
2021
$’000
10,204
(1,288)
8,916
3,200
13,036
25,152
Government of Mali
Included in other receivables is an amount of CFA 4,968,387,000, approximately $8,017,000 (2021: $8,585,000) , due from the
Government of Mali, arising on 2 February 2017 when the Government of Mali exercised its right to acquire an additional 10% of
Societe Des Mines De Komana SA (which would take its total interest in Societe Des Mines De Komana SA to 20%) . In 2020, CFA
1,656,129,505, approximately $1,883,000 was received in relation to this receivable. The Group remains in discussions with the
Government of Mali as to the timing and mechanism of payment of the remaining balance. The relevant shares will not be issued until
the mechanism on payment of the remaining balance has been agreed.
Having considered multiple scenarios on the manner, timing, quantum and probability of recovery on the receivable, the Group
recognised a lifetime expected loss $316,000 (2021: reversal of $108,000) . The net cumulative lifetime expected credit loss for the
balance is $1,603,000 at 31 December 2022. The allowance for lifetime expected credit losses assessment requires a significant
degree of estimation and judgement. Refer to note 30 for a reconciliation of lifetime expected credit losses.
VAT Recoverable
VAT recoverable at end of 31 December 2022, includes VAT receivables of $25.9 million in Mali, $5.2 million in Guinea and $100,000 in
Isle of Man.
The time to receive VAT from the Government of Mali is unpredictable, and although the Company was able to continue to offset
balances in 2022, the VAT balance in Mali remain high at $25.9 million on 31 December 2022 and it is expected to be received via
offset of future taxes or cash. The timing of recoverability of these amounts is unpredictable and are subject to foreign currency risk as
the amounts are recoverable in West Africa Francs (“CFA”) .
In Guinea, VAT receivables have increased during the year as construction activities increased. In Guinea VAT receipts are normally
received back from the Government as cash. All VAT submissions are being made to the Government in line with local requirements,
however today no receipts have been received yet pending the finalisation of the initial submissions review by the Government. The
timing of recoverability of these amounts is unpredictable and are subject to foreign currency risk as the amounts are recoverable in
Guinea Francs (“GNF”) .
Unrestricted cash and cash equivalents
Unrestricted cash and cash equivalents as at 31 December 2022 is a bank overdraft of $1,741,000 (2021: cash of $32,571,000)
comprising cash held by the Group.
Restricted cash and cash equivalents
Restricted cash and cash equivalents of $3,892,000 (2021: $4,168,000) , is cash held in an escrow account as part of the security held
by Coris Bank (note 19) .
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
134
Net debt reconciliation
Unrestricted cash
Restricted cash
Total cash & cash equivalents
Borrowings (note 19)
Lease liabilities (note 21)
Net debt
AT 1 JANUARY
2022
(RESTATED)
$’000
32,571
4,168
36,739
(61,812)
(37,517)
(62,590)
CASH FLOW
$’000
(34,040)
–
(34,040)
(55,371)
13,603
(75,808)
FOREIGN
EXCHANGE
MOVEMENT
$’000
AMORTISATION
OF ISSUE COSTS/
OTHER 1
$’000
AT 31 DECEMBER
2022
$’000
(272)
(276)
(548)
3,247
–
2,699
–
–
–
(1,741)
3,892
2,151
(1,766)
(3,750)
(115,702)
(27,664)
(5,516)
(141,215)
1
Included within the other category on lease liabilities is $761,000 additions to liabilities, $475,000 forfeiture of liabilities as a result of the renewal of the leases for the corporate office and,
interest charge of $2,862,000. Included within the other category for borrowings is $1.8 million of issue costs amortisation.
Unrestricted cash
Restricted cash
Total cash & cash equivalents
Borrowings (note 19)
Lease liabilities (note 21)
Net debt
19. BORROWINGS
At 1 January 2022
Loan drawdown
Issue costs arising during the year
Issue costs amortised in the year
Interest capitalised during the year
Interest charged during the year
Interest paid during the year
Loan interest accrued during the year
Foreign exchange loss during the year
Total borrowings at 31 December 2022
Analysed as:
Current
Non-current
AT 1 JANUARY
2021
(RESTATED)
$’000
6,552
4,516
11,068
(13,208)
(14,146)
(16,286)
CASH FLOW
$’000
25,082
–
25,082
(49,366)
14,020
(10,264)
FOREIGN
EXCHANGE
MOVEMENT
$’000
AMORTISATION
OF ISSUE COSTS/
OTHER
$’000
AT 31 DECEMBER
2021
(RESTATED)
$’000
937
(348)
589
24
–
613
–
–
–
738
(37,391)
(36,653)
32,571
4,168
36,739
(61,812)
(37,517)
(62,590)
CORIS MALI
FACILITY
$’000
CORIS GUINEA
FACILITY
$’000
TOTAL
BORROWINGS
$’000
61,812
28,698
(1,482)
1,421
–
6,430
(2,979)
(3,451)
(3,247)
–
29,997
(1,842)
345
1,020
–
(473)
(547)
–
61,812
58,695
(3,324)
1,766
1,020
6,430
(3,452)
(3,998)
(3,247)
87,202
28,500
115,702
41,322
45,880
2,540
25,960
43,862
71,840
Coris Mali Debt Facilities
a. Coris Loan CFA 38,500,000,000 (approximately $70,000,000)
On 4 November 2021, the Group’s subsidiary, Société des Mines de Komana SA (“SMK”) entered into a senior secured term debt
facility with Coris Bank International (“Coris”) for CFA 38,500,000,000 (approximately $70,000,000 before any fees) . In December 2021,
the full amount was drawn down. The debt facility has the following key terms:
■
■
■
4-year term.
Interest at 8.5% per annum (payable quarterly) .
Principal deferral period of 18 months from first draw down, payable quarterly thereon.
b. Coris financing package CFA up to 26,500,000,000 (approximately $35,000,000)
In September 2022, SMK entered a financing package with Coris of up to CFA 26,500,000,000 (approximately $35,000,000) excluding
fees to support the Group’s liquidity whilst it brings the Kouroussa Project into production.
This financing package was then split and drawn down as follows:
■
In September 2022, SMK drew down on an initial CFA 10,000,000,000 (approximately $15,000,000) of this facility before any fees.
This short-term debt facility is available for an initial one-year period from draw down date and carries interest at 9% per annum.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
135
■
In December, SMK drew down on another CFA 2,500,000,000 ($3.9 million at date of drawdown) of this facility. This
CFA 2.5 billion draw down is available for an initial six-month period from 28 December 2022, and carrying an interest of 9%
per annum.
■
The remainder of this finance package was undrawn as of 31 December 2022.
c. Coris Overdraft
Further, in December 2022 SMK and Coris, also agreed to alter the terms of the original overdraft facility of CFA 11,200,000,000 that
was available to SMK from Coris Bank on its annual renewal. Previously an overdraft facility of CFA 11,200,000 was available. However,
this was split into two facilities as follows:
■
■
A short-term loan of CFA 6,000,000,000 (circa $9.5 million at draw down date) . This is available for an initial one-year period from
drawdown date and has interest of 9% per annum. This facility is fully drawn down on 31 December 2022.
An overdraft facility of CFA 5,200,000,000 (circa $8.5 million on 31 December exchange rates) . This Overdraft Facility carries an
interest rate of 9% per annum and remains available twelve months from date of renewal.
Coris Guinea Debt Facility
On 4 November 2021, the Group’s subsidiary, Kouroussa Gold Mine SA (“KGM”) entered into a senior secured term debt facility with
Coris Bank International (“Coris”) for $30,000,000. This amount was also fully drawn down in 2022. The debt facility has the following
key terms:
■
■
■
A 4-year term.
Interest at 8.5% per annum (payable quarterly) .
Principal deferral period of 18 months from first draw down, payable quarterly thereon.
Security for these borrowings has been granted to Coris over the assets of SMK and KGM, as well as the share capital of SMK and
KGM, a parent company guarantee, and restricted cash held in an escrow account (note 18) .
The Group records and measures borrowings at amortised cost, using the effective interest rate method.
20. PROVISIONS
Provisions as at 31 December 2022 totalled $27,950,000 (2021: $22,255,000) .
Rehabilitation provision (a)
End of service provision (b)
2022
$’000
27,308
642
27,950
2021
$’000
21,436
819
22,255
(a) Rehabilitation provision
The Group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at
the time of developing the mines and installing and using those facilities.
The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred
up to 2029. These provisions have been created based on the Group’s internal estimates. Assumptions based on the current economic
environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These
estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual rehabilitation costs will
ultimately depend upon future market prices for the necessary decommissioning works required which will reflect market conditions
at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically
viable rates. This, in turn, will depend upon future gold prices, which are inherently uncertain. The remeasurement is capitalised into the
mine closure asset.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
136
At 1 January 2021
Utilised during the year
Remeasurement
Unwinding of discount
At 31 December 2021
Utilised during the year
Additions during the year
Remeasurement
Unwinding of discount
At 31 December 2022
Analysed as:
Current
Non-current
At 31 December 2022
REHABILITATION
PROVISION – MALI
$’000
REHABILITATION
PROVISION –
GUINEA
$’000
TOTAL
$’000
15,775
(35)
5,282
64
21,086
(60)
–
1,258
260
22,544
830
21,714
22,544
350
16,125
–
–
–
350
–
4,764
(350)
–
4,764
–
4,764
4,764
(35)
5,282
64
21,436
(60)
4,764
908
260
27,308
830
26,478
27,308
(b) End of service provision
The Company’s subsidiaries in Mali, are required to operate a post service benefit plans for qualifying employees. The plan is unfunded,
and a lump sum amount falls due to employees on cessation of service in qualifying circumstances which is dependent on final salary
and length of service. Once the lump sum has been paid on redundancy or retirement, no further payments are due to the individuals
as there are no ongoing benefits.
The structure of the benefits scheme is listed below:
YEARS OF SERVICE
First year up to 5 years
6th to 10th year inclusive
Over 10 years
BENEFIT
30% of salary
35% of salary
40% of salary
Further, the plan provides that in addition to the notice period and any severance pay, a special allowance, non-taxable, balance will be
paid by the employer and equal to one month of gross salary.
The retirement benefit obligation recognised in the balance sheet as at 31 December 2022 of $642,000 (2021: $819,000) represents
the present value of the end of service obligation in relation to this agreement. The charge for this provision is split between cost of
sales and some capitalised to the mine development asset in accordance with the payroll costs of the individuals to which the liability
relates.
There are no physical assets held to fund the liabilities. Payments will be met by the Group on a pay-as-you-go basis. The amounts
have been based on the above calculations performed by management with no actuarial valuations.
Given the level of employees in Guinea as well as length of service, an initial provision of $47,000 (2021: $nil) has been provided at the
year end. It is expected this amount will increase over the years due to increase in length of service and larger employee base.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
137
21. LEASES
The Group leases mining equipment, power plant generators and office space with terms of two to five years at inception. Lease
payments represent rentals payable by the Group for the Yanfolila Gold Mine power plant generators, fixed mining equipment in
addition to lease costs for properties located in Liberia, Mali, and the head office in the UK. The Group has elected not to recognise the
right of use assets for lease of low value and/or short-term leases.
(a) Right of use assets
Information about leased assets for which the Group is a lessee is presented below:
Cost
At 1 January 2021
Forfeiture/lapses
Arising during the year
At 31 December 2021
Forfeiture/lapses1
Arising during the year1
Remeasurement
At 31 December 2022
Depreciation
At 1 January 2021
Forfeiture/lapses
Charge for the year
At 31 December 2021
Forfeiture/lapses1
Charge for the year
At 31 December 2022
Carrying amount at 31 December 2021
Carrying amount at 31 December 2022
PLANT &
EQUIPMENT
$’000
36,819
(29,013)
39,711
47,517
–
–
127
47,644
23,151
(23,687)
12,067
11,531
–
11,335
22,866
35,986
24,778
OFFICES
$’000
TOTAL
$’000
475
–
–
475
(475)
761
–
761
346
–
129
475
(475)
51
51
–
710
37,294
(29,013)
39,711
47,992
(475)
761
127
48,405
23,497
(23,687)
12,196
12,006
(475)
11,386
22,917
35,986
25,488
1
The office lease of our corporate office was extended in September 2022, and a recalculation of the IFRS 16 liabilities and assets had to be done based on the new lease contract. This
resulted in the previous assets and liabilities being extinguished and new ones being recognised.
(b) Lease liabilities
Maturity analysis
At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
Total undiscounted lease liabilities at 31 December
2022
$’000
12,730
16,585
29,315
2021
RESTATED
$’000
13,496
32,641
46,137
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
138
Lease liabilities included in the statement of financial position at 31 December 2022 were:
At 1 January – restated
Forfeiture/lapses1
Arising during the year1
Remeasurement
Lease liability and lease interest paid during the year
Interest expense on lease liabilities
At 31 December
Analysed as:
Current
Non-current
At 31 December
2022
$’000
37,517
–
761
127
2021
RESTATED
$’000
14,146
(5,271)
39,711
(55)
(13,603)
(14,020)
2,862
27,664
11,819
15,845
27,664
3,006
37,517
9,961
27,556
37,517
1
The office lease of our corporate office was extended in September 2022, and a recalculation of the IFRS 16 liabilities and assets had to be done based on the new lease contract. This
resulted in the previous assets and liabilities being extinguished and new ones being recognised.
Amounts recognised in statement of comprehensive income includes depreciation on right of use assets of $11.4 million (2021:
$12.2 million) and $2.9 million (2021: $3.0 million) interest expense on lease liabilities. Low value and short-term lease charges of
$95,000 (2021: $47,000) were also charged into the income statement during the year. A further $86,000 (2021: $49,000) capitalised
into mine development in respect of Guinean based short-term leases.
Total of $13.6 million (2021: $14.0 million) was paid during in respect of lease principal and interest, and this is reflected in statement of
cash flows under financing activities.
22. DEFERRED TAX
Differences between IFRS and statutory tax rules give rise to temporary differences between the carrying values of certain assets and
liabilities for financial reporting purposes and for income tax purposes.
The taxation of the Group’s operations in Mali are aligned to the Mining Code of Mali 1999 under which tax is charged at the greater of
1% of turnover and 30% of taxable profits.
As at 31 December 2022, deferred tax assets of $13.2 million and deferred tax liabilities of $3.7 million were recognised in the Malian
subsidiary, resulting in a net deferred tax asset of $9.6 million (2021: asset of $3.9 million) . This resulted in a net deferred tax income of
$5.7 million recognised within comprehensive income. The deferred tax has arisen on the temporary differences between the carrying
value of assets and tax written down value of assets. The deferred tax assets are recognised as future forecasts indicate the availability
of future taxable profits against which deductible temporary differences can be utilised.
No deferred tax assets have been recognised in respect of the remaining potential deferred tax assets of $17,327,000, as the recovery
is dependent on the future profitability, the timing and the certainty of which cannot reasonably be foreseen.
In Guinea, following the finalisation of the 2021 local audit, a total of GNF 585 billion (US$60 million) of historical costs have been
transferred to Kouroussa Gold Mine SA. From the now dissolved Cassidy Gold Guinea SA (“CGG”) . The Group is currently finalising
the tax implications of this transfer with its tax advisors, in respect of whether the full balance together with any losses will be available
for future tax offset. Initial discussions and tax advice confirm that it should be possible, but not certain, that Kouroussa Gold Mine SA
will benefit from the full amount transferred. Further given the Kouroussa Gold Mine SA is still under construction, any amounts being
spend in Guinea are currently regarded as capital work in progress (“WIP”) , until such a time commercial production is reached at which
point costs will then be transferred to the fixed asset register and depreciation commence.
It is at this point also, that the research fees transferred from CGG will also commence amortisation and hence will also then have
taxable temporary differences. On 31 December 2022, the accounting base and tax base of the capital WIP balances as well as the
amounts transferred from CGG is the same resulting in nil impact on deferred tax.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
139
The movement in deferred tax assets and liabilities during the year is as follows:
UNRECOGNISED
RECOGNISED
DEFERRED TAX
ASSETS
$’000
DEFERRED TAX
LIABILITY
$’000
DEFERRED TAX
ASSETS
$’000
DEFERRED TAX
LIABILITY
$’000
NET DEFERRED TAX
ASSETS
$’000
At 31 December 2020
Tax losses arising during the year
Tax losses utilised during the year
Accelerated tax depreciation
At 31 December 2021
Tax losses arising during the year
Tax losses utilised during the year
Accelerated tax depreciation
At 31 December 2022
23. TRADE AND OTHER PAYABLES
Trade payables
Other taxes and social security
VAT payable
Accruals
Other payables
15,145
1,117
–
–
16,262
1,122
–
–
17,384
–
–
–
–
–
–
–
–
–
12,790
(12,106)
–
(1,346)
–
11,444
–
1,724
–
13,168
–
–
4,530
(7,576)
–
–
3,979
(3,597)
2022
$’000
20,525
7,814
430
31,141
6,171
66,081
15,829
1,117
(1,346)
4,530
20,130
1,122
1,724
3,979
26,955
2021
$’000
13,209
6,052
576
12,905
966
33,708
The average credit period taken for trade purchases is 46 days (2021: 46 days) . The Group seeks to settle agreed payables within the
contractual timeframe. The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
24. OTHER FINANCIAL LIABILITIES
Royalty liability – Kouroussa
Royalty liability – Ecora Resources PLC (Formerly Anglo Pacific Group PLC)
Loans – Pasofino
2022
$’000
8,218
15,000
18,577
41,795
2021
$’000
9,092
15,000
–
24,092
Royalty liability – Ecora Resources PLC (Formerly Anglo Pacific Group PLC)
On 17 December 2012 the Group entered into a royalty financing arrangement with APG AUS No 5 Pty Limited (a wholly owned
subsidiary of Anglo Pacific Group PLC (“APG”) in relation to Dugbe. Under the terms of the agreement APG agreed to advance $15m
in three equal tranches subject to the satisfaction of certain criteria. The first tranche of $5m was received on 14 March 2013 and
the second tranche of $5m was received on 10 April 2013, the third tranche of $5m was received on 13 March 2014 giving a total of
$15m.
During that same year the advances were converted into a 2% net smelter return royalty from any sales of product mined within a
20km radius of Dugbe. After an initial grace period of six months following the commencement of commercial production, in the event
that quarterly sales of gold produced are less than 50,000 oz, additional quarterly payments will be required until such time as the
cumulative royalty paid is $15m (the maximum total payment in any such quarter is equivalent to the royalty that would have arisen on
sales of 50,000 oz 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 oz, in which case it increases to 2.5% in respect of that quarter.
The amount advanced of $15m is repayable in certain limited circumstances, such as a change in control, and therefore is treated as
a financial liability. The amounts advanced are secured by legal charges over the assets of Hummingbird Resources (Liberia) Inc and
Sinoe Exploration Limited, and a legal charge over the shares of Hummingbird Resources (Liberia) Inc, Sinoe Exploration Limited and
Golden Grebe Mining Limited. Additionally, the Company has provided a guarantee to APG regarding the obligations of its subsidiaries
in respect of this arrangement.
On 5 October 2022, Anglo Pacific Group PLC, rebranded and changed its company name to Ecora Resources PLC.
Royalty liability – Kouroussa
The Cassidy Smelter Royalty was reassessed to $8.2 million as at 31 December 2022 (2021: $9.1 million) , using the latest discount
rates and mine plans. This represents a 2% smelter royalty retained by the vendors on all gold sales from the project over and above
the first 200,000 ounces of its production and sales, subject to a maximum of 2.2 million ounces of production and sales.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
140
The Cassidy Smelter royalty has been deemed to be a level 2 liability under the fair value hierarchy. This has been valued using
management estimated gold prices, production profiles as well as estimated discount rates.
Loan – Pasofino
Refer to note 26.
Royalty liability – Liberia MES Royalty
Following the purchase of the central licence area from MES Mining Corporation, on 11 May 2021 the Group granted a royalty to
MES Mining Corporation (“MES”) with respect to the central licence area. The Group shall pay MES a perpetual production royalty
based on Net Smelter Returns from the sale or other disposition of all the gold produced from the central licence area. The royalty will
apply to 100% of the central licence area, subject to:
–
No royalty to be paid until commercial production is reached – producing at least 10,000 oz a month from the Central licence area
over a sustained 3-month period
– Royalty will be paid only on the first 3,000,000 oz of gold produced from the licence area
– No royalty will be payable if the applicable spot gold price is less than $1,250 per ounce
In management’s view there is no obligating event and therefore no liability was recognised in the statement of financial position as at
31 December 2022. This liability, when there is an obligating event, will be deemed to be a level 2 liability under the fair value hierarchy.
25. DEFERRED CONSIDERATION
At 1 January 2021
Fair value movements through profit and loss
At 31 December 2021
Offsets for amounts receivables from Cassidy1
Fair value movements through profit and loss
At 31 December 2022
Analysed as:
Current
Non-current
At 31 December 2022
TOTAL
$’000
5,402
(775)
4,627
(642)
(408)
3,577
1,776
1,801
3,577
1
This was amounts deducted from the deferred consideration relating to the settlement of liabilities of £532,032 by the Group on behalf of Cassidy.
The deferred consideration was reassessed to $4.2 million as at 31 December 2022 (2021: $4.6 million) , using the latest discount rates
and reserve growth estimations, with the resulting movement recorded within statements of comprehensive income. This was then
offset by the $0.6 million relating to amounts that were paid by the Group on behalf of Cassidy, resulting in a net deferred consideration
balance of $3.6 million as at 31 December 2022.
The Cassidy deferred consideration is payable of £10 for every ounce of gold reserve published (or processed if not included in a
reserve) more than 400,000 ounces (subject to increments of 100,000 ounces and a maximum of 1,000,000 ounces) . In short, each of
the 100,000 ounces growth in reserves up to a maximum of 1,000,000 results in additional purchase price adjustment.
Following the publication of the reserve of 647,000 ounces (at 4.15g/t) at Kouroussa on 30 June 2022, deferred consideration in
respect of 200,000 excess ounces became payable to Cassidy, and shares were issued on 7 February 2023 to satisfy this liability.
The initial deferred consideration due of £2.0 million ($2.4 million) was reduced by £532,032 ($642,000) due to the settlement of
liabilities by the Group on behalf of Cassidy, and therefore resulted in the issue of 22,688,844 new Ordinary Shares to the underlying
shareholders of Cassidy (the “Cassidy Deferred Consideration Shares”) , when a volume weighted average price (“VWAP”) of
6.47 pence is applied (being the 5 business day trailing VWAP to 31 December 2022) .
The deferred consideration liability has been deemed to be a level 2 liability under the fair value hierarchy. This has been valued using
management estimated gold prices, reserve growth profiles as well as estimated discount rates.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
141
26. LIBERIA EARN-IN AGREEMENT
As previously announced, the Group entered into an earn-in agreement with Pasofino Gold Limited (“Pasofino”) in respect of the Gold
Project in Liberia (“Dugbe”). The earn-in agreement required Pasofino to complete a Feasibility Study (“FS”) and cover all project costs
over the 2 year earn-in period (the “Earn-in”). The Earn-in entitled Pasofino to earn up to a 49% interest in the Dugbe.
The Earned Interest of 49% was made up as:
a.
b.
49% of the equity in Hummingbird Resources (Liberia) Inc. excluding the Government of Liberia’s right to a 10% free carried
interest.
49% of any loan advanced to Hummingbird Resources (Liberia) Inc. or its subsidiaries by Hummingbird Resources plc and its
affiliates.
If Pasofino completed its conditions above, on being granted the 49 per cent economic interest in the Dugbe, the parties would
also enter into a customary joint venture agreement, as well as both having the right, subject to certain protections, to convert the
Company’s 51% controlling interest in the Dugbe into a 51% controlling interest in Pasofino.
Pasofino continued to develop Dugbe in 2022 and advanced a further $4.7 million to Dugbe in 2022, taking its total contribution to
$20.5 million from the start of the earn-in. Pasofino filed the FS for Dugbe on 1 August 2022, and therefore satisfying the key condition
for their earn-in.
Following this notification, a Sole Funding Period agreement was entered into whereby Pasofino will solely fund the first $4.7 million of
joint venture expenditures in Liberia. After this amount is exhausted, the two parties will fund the ongoing expenditures in line with their
respective holdings, through an operating joint venture agreement.
The earn-in was formally completed in September 2022. At this date Pasofino were therefore entitled to their 49% interest in Dugbe.
Key accounting judgements
Following the conclusion of the earn-in, Pasofino has earned a non – controlling interest in the Group’s subsidiary, Hummingbird
Resources (Liberia) Inc.
The Group has elected to measure the non-controlling interest earned by Pasofino initially at their proportionate share of the identifiable
net assets of Hummingbird Resources (Liberia) Inc, with intercompany loan added back at the date of completion of the earn-in.
There is no formal accounting standard guiding the earn-in agreements. Judgement was therefore applied in what accounting policy
to adopt, including estimating the implication of this accounting policy on the Group’s financial position. Amounts advanced as part
of earn-in agreements were initially netted off against the related asset, and then added back when spent, until the conclusion of the
earn-in agreements.
Following the conclusion of the earn-in further judgements were made over how to present the impact of the earn-in including:
■
■
■
■
The recognition of all the expenditures that had been funded by Pasofino from the start of the earn-in which were converted into
equity in Hummingbird Resources (Liberia) Inc.
Treatment of the transfer of 49% of the intercompany receivable due from Hummingbird Resources (Liberia) Inc to Pasofino.
Management treated this as a payment for Pasofino to deliver the DFS, and hence this amount was capitalised into exploration
and evaluation assets in Hummingbird Resources (Liberia) Inc.
The amount to be funded by Pasofino during the Sole Funding period was recognised as a receivable from Pasofino at conclusion
of the earn-in.
Finally, creating a Pasofino non-controlling interest in Hummingbird Resources (Liberia) Inc. In line with the accounting policy
above, the NCI was based on the 49% of the net assets of Hummingbird Resources Liberia (Inc), with intercompany loan added
back at date of earn-in. This resulted in an NCI of $33.7 million being recognised. This also resulted in the Group showing an
equity adjustment of $9.5 million as a result of the deemed proposal of the 49% to Pasofino.
Further on 11 November 2022, Pasofino exercised its right to acquire 100% of Dugbe, which if completed, would result in the Group
owning 51% of Pasofino. Management have applied judgement and deemed it appropriate to consolidate the results of Hummingbird
Resources (Liberia) Inc as at 31 December 2022 into the Group results as it still retains control. The Group retain control through
being able to direct the activities of the subsidiary by virtue of having an effective deciding vote over operational decisions and being
able to appoint the chairman. The Group therefore retains its power over Hummingbird Resources (Liberia) Inc to affect the amount
of returns to which it has variable exposure. Further judgements were made not to account for the 51% ownership of Pasofino as
at 31 December 2022, as this final part is still subject to several conditions which had not been satisfied as of 31 December 2022,
including but not limited to, Pasofino shareholder approval, TSX approval and Government of Liberia approval, and therefore as
completion has not as completion hasn’t occurred, our control assessment above is not impacted.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 142
The following table summarises the net position of the Group following the completion of the earn- in, and the necessary entries to
create the NCI:
Exploration and evaluation assets 1
Property plant and equipment 2
Balances due from Pasofino during Sole Funding Period
Intercompany Loan Transfer 3
Equity 4
Other Payables
Pasofino Non-Controlling Interest 5
Total
ASSETS
$’000
37,871
1,269
3,762
–
–
–
–
42,902
EQUITY AND
LIABILITIES
$’000
–
–
–
RECOGNISED
IN FINANCIAL
POSITION
$’000
37,871
1,269
3,762
(18,577)
(18,577)
9,528
(198)
(33,655)
(42,902)
9,528
(198)
(33,655)
–
1
Recognising the exploration and evaluation expenditures that were funded by through the advances to Dugbe, plus the $18.6 million intercompany transfer from the Group, to fund the
delivery of the feasibility study (see 3 below).
2 Recognising the property plant and equipment (net of depreciation charges), that were acquired during the period of the earn-in.
3 The Company transferring 49% of its loan due from Hummingbird Resources (Liberia) Inc to Pasofino (see 1 above).
4 Reflecting the fact, the net assets transferred were more than the consideration provided by Pasofino.
5 The non-controlling interest was based on the 49% of the net assets of Hummingbird Resources (Liberia) Inc, with intercompany loan added back.
The $18.6 million that is due to Pasofino from Hummingbird Resources (Liberia) Inc, which represents Pasofino’ s 49% share of the
intercompany payable following the completion of the earn-in, has no fixed repayment terms and is currently interest free. Under the
joint venture agreement, this can only be paid pro rata to each party’s holding.
Summarised financial information of Hummingbird Resources (Liberia) Inc. adjusted for Group accounting policies, after elimination of
intra-group items is set out below:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
49% of net assets above
AT 31 DECEMBER
2022
$’000
100,817
3,850
(2,407)
(33,577)
68,683
NON-CONTROLLING
INTEREST
$’000
33,655
33,655
Dugbe is still under development hence there is no revenue. There is an immaterial net loss of $11,000 arising mainly from foreign
exchange differences.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
143
27. SHARE CAPITAL
Authorised share capital
As permitted by the Companies Act 2006, the Company does not have an authorised share capital.
Issued equity share capital
Issued and fully paid
Ordinary shares of £0.01 each
Total Ordinary after issue – shares of £0.01 each
2022
2021
NUMBER
$’000
NUMBER
$’000
393,724,051
393,724,051
5,828
392,676,809
5,828
392,676,809
5,814
5,814
The Company has one class of Ordinary shares which carry no right to fixed income.
At 1 January 2021
Issue of shares – Kouroussa acquisition
At 31 December 2021
Exercise of share options and deferred share awards 1
At 31 December 2022
NUMBER OF
ORDINARY SHARES
OF £0.01
357,428,368
35,248,441
392,676,809
1,047,242
393,724,051
1
A total of 931,179 options were exercised in 2022 in the Company at an exercise price of £0.01 per share for a total return of £9,312, generating no share premium. A further 116,063
deferred share awards were also issued in 2022 at a price of £0.01 per share for a total return of £1,161 generating no share premium.
The total number of outstanding share options are:
SHARE OPTIONS
Opening balance
Issued
Exercised
Lapsed
As at 31 December
Total
2022
2021
19,880,880
15,410,260
14,900,636
10,946,233
(1,047,242)
–
(4,277,406)
(6,475,613)
29,456,868
19,880,880
29,456,868
19,880,880
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
144
28. SHARE BASED PAYMENTS
The following table outlines movement in share options granted and outstanding:
SHARE OPTIONS
Granted 5/12/2013
Granted 30/09/2016
Granted 26/09/2017
Granted 30/04/2018
Granted 24/01/2019
Granted 27/02/2020
Granted 16/04/2020
Granted 27/02/2021
Granted 04/02/2022
Total number of share options
Weighted average exercise price
2021
NUMBER
GRANTED
NUMBER
EXERCISED
NUMBER
LAPSED
NUMBER
2022
NUMBER
1,468,000
3,770,294
110,795
453,906
619,992
2,934,458
93,334
10,430,101
–
–
–
–
–
–
–
–
–
(686,205)
–
(70,182)
–
(112,292)
(62,500)
–
–
–
–
–
1,468,000
3,084,089
110,795
383,724
619,992
(53,750)
2,768,416
–
30,834
(116,063)
(1,492,236)
8,821,802
–
14,900,636
–
(2,731,420)
12,169,216
19,880,880
14,900,636
(1,047,242)
(4,277,406)
29,456,868
£0.03
£0.01
£0.01
£0.01
£0.02
Of the total number of share options outstanding at 31 December 2022 8,658,265 (2021: 8,119,283) had vested and were exercisable.
The weighted average fair value of share options granted during the year was $0.176 (£ 0.13) (2021: $0.404, (£0.304) ) .
The weighted average share price (at the date of exercise) of share options exercised during the year was $0.015 (£0.013) (2021: $nil
(£nil) ) .
The exercise price of share options outstanding at 31 December 2022 ranged between £0.01 and £0.22 (2021: £0.01 and £0.22) and
their weighted average contractual life was 6 years (2021: 5 years) .
The following table outlines share based payment charges:
Charge for equity settled share-based payments (HIPPO 2016 to 20)
Charge for cash settled share-based payments (CEO Deferred bonus)
Charge for Directors Deferred Share Awards
Charge for Long-Term incentive Plans (LTIPs)
Total share-based payment charges recognised in profit and loss
Charge for equity settled share-based payments (HIPPO 2016 to 20)
WACOM share based payments arrangements*
Total share-based payments capitalised to mine development
2022
$’000
35
(130)
117
1,919
1,941
–
1,752
1,752
2021
$’000
(235)
(461)
150
2,005
1,459
(99)
38
61
*
Following the Board approval of the build for the Kouroussa Mine, and to incentivise the contractor to deliver on time and on budget, the Company granted incentives to WACOM the
main civils contractor, to deliver the process plant and camp on time and on budget. The incentives are both cash settled as well as equity settled and payable after the delivery of the
Kouroussa project is confirmed. The charge was capitalised into the cost of mine development.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
145
Hummingbird incentive plan – performance orientated (“HIPPO 2016”)
The HIPPO 2016 scheme was initiated to retain and incentivise key team members to deliver the Yanfolila Mine, which was built on
time and on budget.
The below reflect the outstanding options in respect of the HIPPO 2016 as at 31 December 2022:
Total award granted
Exercise price of the options
Fair value of the options at the dates of grant
30 Sep 2016
26 Sep 2017
Number of shares options exercised or lapsed in prior periods
Number of share options exercised or lapsed during the current period
Number of share options outstanding as at 31 December 2022
SHARE AWARD
8,681,658
£0.01
$0.312 (£0.24)
$0.446 (£0.33)
(4,800,569)
(686,205)
3,194,884
CASH AWARD
($’000)
2,450
–
–
–
–
–
–
Hummingbird incentive plan – performance orientated (“HIPPO 2018”)
The Company announced on 30 April 2018 that it had implemented the Hummingbird Incentive Plan – Performance Orientated 2018
(“HIPPO 2018”) incentive scheme to retain and incentivise key team members to deliver efficient production from Yanfolila in its first year
of operations.
In recognition of the critical importance of the recovery plan announced on 29 November 2018 and to retain and incentivise key team
members, on 24 January 2019 the Company amended the targets for the HIPPO 2018 incentive scheme to align these with the
Company’s key objectives for 2019.
The below reflect the outstanding options in respect of the HIPPO 2018 as at 31 December 2022:
SHARE AWARD
CASH AWARD ($’000)
Total award granted 30 April 2019 – original grant
Black Scholes revaluation change
Lapsed as part of amendment
Reissued as part of amendment
Total HIPPO 2018 awards granted – as amended
Lapsed /paid out during the prior periods
Lapsed /paid out during the current period
Number of share options outstanding as at 31 December 2022
Exercise price of the options – amended
Fair value of the options at the date of grant -amended
6,157,819
–
(234,375)
751,427
6,674,871
(5,600,973)
(70,182)
1,003,716
$0.013 (£0.010)
$0.298 (£0.229)
2,010
(507)
(231)
9
1,281
(1,269)
(12)
–
–
–
Hummingbird incentive plan – performance orientated (“HIPPO 2020”)
The Company announced on 27 February 2020 that it had, consistent with prior years, initiated the HIPPO 2020 incentive scheme to
retain and incentivise key team members to deliver on the Company’s strategy.
The Restricted Share Units (“RSUs”) in the form of options under HIPPO 2020 have been granted over ordinary shares in the Company
of £0.01 each (“Shares”) and have an exercise price of £0.01 per Share. Subject to the performance criteria being met for each
respective tranche and continuous employment with positive performance, under normal circumstances, the RSUs shall vest 50% by
31 March 2021, 25% by 31 December 2021 and 25% by 31 December 2022. These were allocated as follows:
a) Production Tranche:
i.
ii.
iii.
1/9 of the RSUs will vest if 120,000 (or more) ounces of gold are poured between 1 January 2020 and 31 December 2020.
A further 1/9 of the RSUs will vest if 125,000 (or more) ounces of gold are poured between 1 January 2020 and 31 December
2020.
A further 1/9 of the RSUs will vest if 130,000 (or more) ounces of gold are poured between 1 January 2020 and 31 December
2020.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
146
b)
Cost and Cashflow Tranche:
i.
1/6 of the RSUs will vest if the Yanfolila AISC (as announced by the Company) , as normalised for a $0.70 / litre fuel price and
a $1,350 gold price, is equal to or lower than $850 per ounce sold;
ii.
1/6 of the RSUs will vest if the Company is in a net cash position by 31 December 2020.
c) Performance Tranche:
i.
up to 1/3 of the RSUs may vest based on participant performance against individually set KPIs and the Company’s overall
ESG and safety performance, at the Board’s discretion, following the recommendation of the Remuneration Committee.
Once vested, any RSUs may be exercised during a set exercise period determined by the Company and notified to the option holders.
This is intended to be a minimum of a one-week period per year when the Company is in an “open period” under MAR. Unvested
RSUs will normally lapse on cessation of employment for any reason. The RSUs holders will retain vested RSUs following cessation of
employment and will have two years from the date of cessation of employment to exercise, after which the option shall lapse.
The below reflect the outstanding options in respect of the HIPPO 2020 as at 31 December 2022:
Total award granted 27 February/16 April 2020 – original grant
Lapsed/exercised/paid during prior periods
Lapsed/exercised/paid out in current period
Number of share options outstanding as at 31 December 2022
SHARE AWARD
9,080,000
(6,052,208)
(228,542)
2,799,250
CASH AWARD
($’000)
2,350
(2,262)
(88)
–
2021 Incentive Scheme
Following a review led by external remuneration advisors of the appropriate balance of short and long of future short and long
term incentives and retention structures for Directors and key employees in light of the Company’s potential development paths,
the Company adopted a more standard approach of an annual award of a discretionary short term cash based incentive plan
(“STIP”) based on both corporate and personal targets together with an equity based Long Term Incentive Plan (“LTIP”) intended to
better align shareholders with participants to create shareholder value over the medium to long term.
Subject to the performance criteria being met for each respective tranche and continuous employment with positive performance,
under normal circumstances, the RSUs are expected to vest on 28 February 2024 in equal thirds as follows:
a) Retention Tranche: based on continuous employment and subject to malice provisions.
b)
c)
Absolute Total Shareholder Return versus the 5-working day VWAP to 28 February 2021, with 25% vesting for 8% compound
annual growth and 100% vesting for 18% compound annual growth.
Relative Total Shareholder Return against the S&P Commodity Producers Gold Index with 25% vesting for meeting the index rising
on a straight-line basis to 100% for 5% outperformance.
The below reflects the outstanding options in respect of the 2021 Incentive Schemes as at 31 December 2022:
Total award granted 28 February 2021
Others granted to selected employees 1
Lapsed/exercised/paid out in prior periods
Lapsed/exercised/paid out in current period
Number of share options outstanding as at 31 December 2022
SHARE AWARD
– LTIP
7,495,548
2,870,370
(516,132)
(1,492,236)
8,357,550
CASH AWARD
– STIP
($’000) *
3,752
–
(2,552)
(814)
386
* Proportionally in line with vesting conditions and prevailing exchange rates at the date of payment.
1
Additionally one off awards were also approved as follows to certain key employees for the purposes of recruitment, retention and alignment with the long term strategy: 370,370 RSUs
vesting on 31 August 2021 subject to continuous employment and a 3 month subsequent lock in; and 2,500,000 RSUs vesting on 31 May 2024 subject to continuous employment, a
minimum share price of 60 pence and then on a sliding scale of 25% vesting on a $300m market capitalisation to 100% on a $500m market capitalisation.
The performance period runs from 1 January 2021 to 31 December 2021.
The Company has the option to defer payment of cash awards until sufficient funds are available or settle in shares.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
147
The fair value of equity-settled share options granted was estimated as at the date of grant using the Black-Scholes model, taking into
account the terms and conditions upon which the options were granted. The expected volatility was determined based on the volatility
of similar quoted companies as well as the Company’s own historic volatility from listing on AIM. The table below lists the principal
assumptions and inputs to the model used for options granted:
Share price at the date of grant
Expected dividend yield
Expected volatility
Expected life
Risk free interest rate
Resultant fair value
DATE OF GRANT
$0.417 (£0.304)
Nil
47.77%
4.0 years
0.819%
$0.404 (£0.294)
Non-executive Director Deferred Share Awards
In recognition of the significant experience and the high level of personal commitment of the Non-executive Directors, each Non-
executive Director (including the Chairman) received an annual deferred share award with a value of £25,000, vesting one year from
award date. These awards must be retained until the individual ceases to hold office. For the year to 31 December 2021, the awards
were as follows:
NAME
Russell King
Attie Roux
Ernie Nutter
Stephen Betts
David Straker-Smith
Total
POSITION
Former Chairman
Non-executive director
Non-executive director
Non-executive director
Non-executive director
The below reflect Non- executive Director Deferred Share Awards as at 31 December 2022:
Total award granted 28 February 2021
Lapsed/exercised/paid out in prior periods
Lapsed/exercised/paid out in current period
Number of share options outstanding as at 31 December 2022
TOTAL NUMBER OF
DEFERRED SHARE
AWARDS
116,063
116,063
116,063
116,063
116,063
580,315
CASH AWARD
($’000) *
–
–
–
–
SHARE AWARD
580,315
–
(116,063)
464,252
The fair value of equity-settled share options granted was estimated as at the date of grant using the Black-Scholes model, taking into
account the terms and conditions upon which the options were granted. The expected volatility was determined based on the volatility
of similar quoted companies as well as the Company’s own historic volatility from listing on AIM. The table below lists the principal
assumptions and inputs to the model used for options granted:
Share price at the date of grant
Expected dividend yield
Expected volatility
Expected life
Risk free interest rate
Resultant fair value
DATE OF GRANT
$0.295 (£0.215)
Nil
47.77%
1.0 years
0.819%
$0.282 (£0.206)
2022 Incentive Scheme
In line with the Long-Term Incentive Plan (“LTIP”) , the Remuneration Committee approved the grant of 13,828,161 restricted share units
(“RSU”) awards to employee participants.
Subject to the performance criteria being met for each respective tranche and continuous employment with positive performance,
under normal circumstances, the RSUs are expected to vest on 4 February 2025 as follows follows:
a) Retention Tranche: 1/3 based on continuous employment and subject to malice provisions.
b)
2/3 will be based on Relative Total Shareholder Return against the S&P Commodity Producers Gold Index with 25% vesting for
meeting the index rising on a straight-line basis to 100% for 5% outperformance.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
148
The below reflects the outstanding options in respect of the 2022 Incentive Schemes as at 31 December 2022:
Total award granted 4 February 2022
Lapsed/exercised/paid out in current period
Number of share options outstanding as at 31 December 2022
* Proportionally in line with vesting conditions and prevailing exchange rates at the date of payment.
The performance period runs from 1 January 2022 to 31 December 2022.
SHARE AWARD
– LTIP
13,828,161
(2,516,925)
11,311,236
CASH AWARD
– STIP
($’000) *
4,210
(2,606)
1,604
The Company has the option to defer payment of cash awards until sufficient funds are available or settle in shares.
The fair value of equity-settled share options granted was estimated as at the date of grant using the Black-Scholes model, taking into
account the terms and conditions upon which the options were granted. The expected volatility was determined based on the volatility
of similar quoted companies as well as the Company’s own historic volatility from listing on AIM. The table below lists the principal
assumptions and inputs to the model used for options granted:
Share price at the date of grant
Expected dividend yield
Expected volatility
Expected life
Risk free interest rate
Resultant fair value
DATE OF GRANT
$0.176 (£0.13)
Nil
49.36%
3.0 years
0.819%
$0.163 (£0.120)
Non- executive Director Deferred Share Awards
Like in 2021, in recognition of the significant experience and the high level of personal commitment of the Non-executive Directors,
each Non-executive Director (including the Chairman) received an annual deferred share award with a value of £25,000, vesting one
year from award date. These awards must be retained until the individual ceases to hold office. For the year to 31 December 2022, the
awards are as follows:
NAME
Russell King
Attie Roux
Ernie Nutter
Stephen Betts
David Straker-Smith
Total
POSITION
Former Chairman
Non-executive director
Non-executive director
Non-executive director
Non-executive director
The below reflect Non- executive Director Deferred Share Awards as at 31 December 2022:
Total award granted 4 February 2022
Lapsed/exercised/paid out in current period
Number of share options outstanding as at 31 December 2022
TOTAL NUMBER OF
DEFERRED SHARE
AWARDS
214,495
214,495
214,495
214,495
214,495
1,072,475
SHARE AWARD
1,072,475
(214,495)
857,980
CASH AWARD
($’000) *
–
–
–
The fair value of equity-settled share options granted was estimated as at the date of grant using the Black-Scholes model, taking into
account the terms and conditions upon which the options were granted. The expected volatility was determined based on the volatility
of similar quoted companies as well as the Company’s own historic volatility from listing on AIM. The table below lists the principal
assumptions and inputs to the model used for options granted:
Share price at the date of grant
Expected dividend yield
Expected volatility
Expected life
Risk free interest rate
Resultant fair value
DATE OF GRANT
$0.158 (£0.117)
Nil
49.36%
1.0 years
0.819%
$0.145 (£0.110)
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
149
WACOM Incentive Plan
As we announced in December 2021, the Company has formally appointed WACOM to perform the civil and structural design of the
process plant, along with the plant fabrication and construction. WACOM is a group of companies specialising in the construction of
mining and industrial infrastructure in the West African region. WACOM have a large fabrication and machining workshop in Bamako,
Mali where most of the structural steel, plate work and tanks will be fabricated and transported by road to Kouroussa. This will ensure
both low cost and timely sequenced arrival of fabricated components for plant construction, WACOM has successfully built a number
of mines, including Yanfolila (when formally known as IMAGRI) , which was on time and on budget.
The WACOM contract is a lump sum fixed price, with penalties for late delivery. Additionally, to help ensure the project is delivered on
time, the Company has agreed an incentive package consisting of a potential bonus of up to $2.6 million, consisting of a cash bonus
of up to $0.75 million with the balance of up to $1.85 million (£1,395,000) payable through the issue of 6,342,857 new shares in
Hummingbird Resources Plc at the agreed price of £0.22 per share, to be issued 12 months after expected delivery date (i.e., in first
half of 2024) .
The below reflect the WACOM Incentive as at 31 December 2022:
Total award granted 25 November 2021
Lapsed/exercised/paid/ out during current and prior periods
Number of share options outstanding as at 31 December 2022
* Proportionally in line with vesting conditions and prevailing exchange rates at the date of payment.
SHARE AWARD
6,342,857
–
6,342,857
CASH AWARD
($’000) *
750
–
750
The fair value of equity-settled share options granted was estimated as at the date of grant using the Black-Scholes model, taking into
account the terms and conditions upon which the options were granted. The expected volatility was determined based on the volatility
of similar quoted companies as well as the Company’s own historic volatility from listing on AIM. The table below lists the principal
assumptions and inputs to the model used for options granted:
Share price at the date of grant
Expected dividend yield
Expected volatility
Expected life
Risk free interest rate
Resultant fair value
DATE OF GRANT
$0.23 (£0.17)
Nil
48.37%
2.0 years
0.662%
$0.28 (£0.21)
CEO Deferred bonus
On 1 June 2014, contingent on the successful acquisition by the Company (or a subsidiary of the Company) of the Yanfolila Project
the Company awarded the Chief Executive Officer a deferred bonus in the form of a cash settled share-based payment equivalent
to the cash value on the date of payment of 1,785,714 shares (subject to a maximum share price of £2.016) . This bonus is deferred
and except in the event of a change of control, only becomes payable after a vesting period of 2 years and at the earlier of the Chief
Executive Officer ceasing to be a director of the Company or 10 years.
The Yanfolila Project was acquired on 2 July 2014 and accordingly this cash settled share-based payment was granted on that date.
The share price and resultant fair value of this cash settled share-based payment was estimated as at the date of grant as $0.99 (£0.58)
and $1,774,000 (£1,036,000) respectively, which was spread over the vesting period of 2 years and is re-measured at each reporting
date using the share price on that date. The share price as at 31 December 2022 was $0.083 (£0.069) (2021$0.196, £0.145) .
As a result of movement in the share price and changes in foreign exchange rates, the deferred bonus liability was decreased by
$202,000 (2021: decreased by $461,000) .
Founders Equity Alignment Plan (“FEAP”)
On 1 July 2014 the shareholders approved the adoption of a long-term incentive plan for the purpose of retaining and motivating the
executive directors to deliver the proposed new strategy, which was rebased on 21 June 2016 as part of the fundraise to recapitalise
the Company.
Participants in the FEAP are limited to existing executive directors (“executives”) . Allocations of the FEAP are proposed by the Principal
Director (currently the CEO) and ratified by the board. As at 31 December 2022 no allocation had been proposed. The FEAP will
issue shares to the participants for adding material long term shareholder value and therefore align the interest of the executives with
the shareholders by providing a strong incentive for the executives to drive shareholder value. The value that may be delivered to
executives and the dilution of shareholders are commensurate with levels applying in schemes implemented by industry comparators.
Under the FEAP, shares may be distributed to participants depending upon the value that has been added to shareholders over the
vesting period. No value will accrue to the FEAP if the growth in shareholder value is less than 50% of the market capitalisation of
Hummingbird on 21 June 2016. If the growth in shareholder value is over 50%, a proportion of value added to shareholders will accrue
to the FEAP, increasing progressively, starting at 5% of the value added to shareholders up to a maximum of 15% of the value added
to shareholders above 150%. Shares with a value equal to the value accrued in the FEAP will be issued on vesting or the value can be
settled in cash at the Company’s option. There is also the flexibility to allow early payments under the FEAP where assets or companies
are disposed of and value has been added exceeding 50% on the same principles.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
150
29. NOTES TO THE STATEMENT OF CASH FLOWS
Loss before tax
Adjustments for:
Amortisation and depreciation
Amortisation and depreciation – right of use assets
Share based payments
Finance income
Finance expense
Share of joint venture loss
(Impairment) /reversals in impairment of financial assets
Loss on financial assets and liabilities measured at fair value
Operating cash flows before movements in working capital
(Increase) /decrease in inventory
Increase in receivables
Increase/(decrease) in payables
Taxation paid
Net cash inflow from operating activities
NOTES
2022
$’000
2021
RESTATED
$’000
(44,259)
(14,356)
15 & 16
21
28
10
10
14
18
11
26,048
11,386
1,865
(3,641)
14,156
(4)
316
715
6,582
(2,601)
26,286
12,197
1,372
(4,071)
8,190
46
(108)
3,134
32,690
7,204
(21,491)
(10,978)
32,101
14,591
(1,410)
13,181
(3,795)
25,121
(2,418)
22,703
Cash and cash equivalents (which are presented as a single class of assets on the statement of financial position) comprise cash in
hand, cash at bank and short-term bank deposits with an original maturity of three months or less. The carrying value of these assets
is approximately equal to their fair value.
30. FINANCIAL INSTRUMENTS
In common with all other businesses, the Group and Company are exposed to risks that arise from its use of financial instruments.
This note describes the Group’s and Company’s objectives, policies and processes for managing those risks and the methods used to
measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
Capital
The Company and Group define capital as share capital, unissued share capital, share premium, other reserves and retained earnings.
In managing its capital, the Group’s primary objective is to provide a return to its equity shareholders through capital growth. Going
forward the Group will seek to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a
sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust
its capital structure to achieve these aims, either through new share issues or the issue of debt, the Group considers not only its
short-term position but also its long term operational and strategic objectives.
Externally imposed capital requirements
The Group is not subject to externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement,
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in note 3 to the Consolidated Financial Statements.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
151
Principal financial instruments
The principal financial instruments used by the Group from which financial risk arises are as follows:
CATEGORIES OF FINANCIAL INSTRUMENTS
FINANCIAL ASSETS MEASURED AT
AMORTISED COST1
FINANCIAL ASSETS MEASURED
AT FAIR VALUE THROUGH PROFIT
OR LOSS
FINANCIAL LIABILITIES
MEASURED AT AMORTISED COST
FINANCIAL LIABILITIES AT FAIR
VALUE THROUGH PROFIT OR LOSS
FINANCIAL ASSETS
Cash and cash equivalents
(note 18)
Investments (note 14)
Other receivables (note 18)
Financial liabilities
Borrowings (note 19)
Lease liabilities (note 21)
Trade payables (note 23)
Other payables (note 23)
Accruals (note 23)
Royalty liability (note 24)
Pasofino Loan (note 24)
Deferred consideration (note 25)
2022
$’000
2021
$’000
2,151
36,739
2022
$’000
–
2021
$’000
–
–
15,207
17,358
$’000
–
1,532
3,530
8,916
45,655
$’000
–
1,532
$’000
–
3,530
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
$’000
2021
RESTATED
$’000
2022
$’000
2021
$’000
–
–
–
–
$’000
115,702
27,664
20,525
6,171
31,141
15,000
18,577
–
–
–
–
–
$’000
61,812
37,517
13,209
966
12,905
15,000
–
–
–
–
–
–
–
–
–
–
$’000
$’000
–
–
–
–
–
–
–
–
–
–
8,218
9,092
–
–
3,577
4,627
234,780
141,409
11,795
13,719
1 The carrying values of the financial assets carried at amortised cost approximates their fair value.
The following are the remaining contractual maturities for financial liabilities at the reporting date.
AT 31 DECEMBER 2022
Trade payables (note 23)
Royalty liability (note 24)
Pasofino loan
Other payables (note 23)
Accruals (note 23)
Deferred consideration (note 25)
Lease liabilities (note 21)
Borrowings (note 19)
LESS THAN
ONE YEAR
$’000
20,525
15,000
–
6,171
31,141
1,776
12,730
43,862
BETWEEN
ONE AND
FIVE YEARS
$’000
–
8,218
18,577
–
–
1,801
14,934
71,840
Net cash inflow from operating activities
131,205
115,370
AT 31 DECEMBER 2021 (RESTATED)
Trade payables (note 23)
Royalty liability (note 24)
Other payables (note 23)
Accruals (note 23)
Deferred consideration (note 25)
Lease liabilities (note 21)
Borrowings (note 19)
Net cash inflow from operating activities
LESS THAN
ONE YEAR
$’000
13,209
15,000
966
12,905
–
13,496
–
55,576
BETWEEN
ONE AND
FIVE YEARS
$’000
–
9,092
–
–
4,627
24,021
61,812
99,552
OVER
FIVE YEARS
$’000
–
–
–
–
–
–
–
–
–
OVER
FIVE YEARS
$’000
–
–
–
–
–
–
–
–
TOTAL
$’000
20,525
23,218
18,577
6,171
31,141
3,577
27,664
115,702
246,575
TOTAL
$’000
13,209
24,092
966
12,905
4,627
37,517
61,812
155,128
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. Whilst retaining
ultimate responsibility for these, the Board has delegated the authority for designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group’s finance function. The Board receives regular reports from the Group’s
finance function through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and
policies set.
The overall objective of the Board is to set policies that seek to reduce risk as far as practical without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
152
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit
risk arises principally from the Group’s investment in cash, trade and other receivables.
In respect of investments in cash, the Group seeks to deposit funds with reputable financial institutions until such time as it is required.
Impairment of financial assets
The Group’s financial assets that are subject to the expected credit loss model are trade and other receivables.
The Group’s credit risk on the trade receivables is concentrated with its primary customer, a global physical precious metals merchant
with a strong credit rating. The historical level of customer defaults is nil. As a result, the credit risk associated with trade receivables at
December 31, 2022 is considered negligible.
The Group’s credit risk on other receivables includes amounts receivable from the Government of Mali. Having completed a
recoverability assessment on other receivables in accordance with IFRS 9, the Group revaluated the expected credit loss allowance
31 December 2022 (note 18) .
The Group’s credit risk management practices and how they relate to the recognition and measurement of expected credit losses is set
out below.
Definition of default
The loss allowance on all financial assets is measured by considering the probability of default.
Receivables are considered to potentially be in default when the principal or any interest is more than 75 days past due, based on an
assessment of past payment practices and the likelihood of such overdue amounts being recovered.
Determination of credit-impaired financial assets
The Group considers financial assets to be ‘credit-impaired’ when the following events, have occurred:
■
■
■
■
default or late payments;
significant financial difficulty of the counterparty arising from significant downturns in operating results and/or significant
unavoidable cash requirements when the counterparty has insufficient finance from internal working capital resources, external
funding and/or group support;
observations of default or breach of contract; and
it becomes probable that the counterparty will enter bankruptcy or liquidation.
Where a significant increase in credit risk is identified, the loss allowance is measured based on the risk of a default occurring over the
expected life of the instrument rather than considering only the default events expected within 12 months of the year-end.
Write-off policy
Receivables are written off by the Group when there is no reasonable expectation of recovery, such as when the counterparty is known
to be going bankrupt, or into liquidation or administration.
The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk.
Lifetime expected credit losses
A reconciliation of the lifetime expected credit losses at 1 January 2022 and 31 December 2022 in accordance with IFRS 9, is set out
below.
As at 1 January 2021
Decrease during the year
As at 31 December 2021
Increase during the year
As at 31 December 2022
OTHER
RECEIVABLES
GOVERNMENT OF
MALI
$’000
1,395
(108)
1,287
316
1,603
Liquidity risk
Liquidity risk arises from the Group and Company’s management of working capital and the amount of funding committed to its work
programmes. It is the risk that the Group or Company will encounter difficulty in meeting its financial obligations as they fall due.
The Group and Company’s policy is to ensure that sufficient funds will be available to allow it to meet its liabilities as they fall due. To
achieve this, the Board receives cash flow projections as well as information regarding available cash balances on a regular basis.
The Board will not commit to material expenditures prior to being satisfied that sufficient funding is available. The Group’s borrowings
including maturity dates are detailed in note 19.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to
changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the Group uses. Interest
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
153
bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets. The Group’s interest-bearing
financial liabilities are at a fixed rate of interest.
Foreign exchange risk and foreign currency risk management
The Group is exposed to foreign exchange risk through certain costs being denominated in currencies other than the functional
currency, and from holding non-functional currency cash balances.
Although the Group has no formal policy in respect of foreign exchange risk, as the majority of the Group’s forecast expenditures are
in United States Dollars, Australian Dollars, Euros, Sterling, South African Rand, Guinea Francs and West Africa CFA Franc, the Group
holds the majority of its funds in these currencies. Currency exposures are monitored on a monthly basis.
The carrying amounts of the Group’s foreign currency denominated financial assets and monetary liabilities at the reporting date are as
follows:
Australian Dollars (“AUD”)
Canadian Dollars (“CAD”)
Euros (“EUR”)
Sterling (“GBP”)
South African Rand (“ZAR”)
Guinea Franc (“GNF”)
West African CFA Franc (“FCFA”)
LIABILITIES
ASSETS
2022
$’000
54
–
916
9,051
116
5,404
114,744
2021
$’000
22
–
207
8,900
16
2,523
77,004
2022
$’000
54
17
1,024
1,934
–
8,407
30,630
2021
$’000
165
61
4,940
1,260
151
3,381
41,630
FOREIGN CURRENCY SENSITIVITY ANALYSIS
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group
operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily to movements in
the $ against the EUR, GBP, ZAR, GNF and FCFA. The Group ensures it places any excess liquidity in stable currencies to reduce its
exposure to foreign currency risks. Foreign exchange differences on retranslation of monetary assets and liabilities are recorded in the
income statement.
At 31 December, if the $ had weakened/strengthened by 10% against the EUR, GBP, ZAR, GNF and FCFA, with all other variables
held constant, the impact on profit before tax on the non-$ denominated financial assets and liabilities would have been as follows.
A movement of 10% reflects a reasonably possible sensitivity when compared to historical movements over a three to five-year
timeframe. A positive amount in the table reflects a potential net increase in the profit before tax:
Increase in comprehensive income and net assets – EUR
Decrease in comprehensive income and net assets – GBP
Decrease in comprehensive income and net assets – ZAR
Decrease in comprehensive income and net assets – GNF
Decrease in comprehensive income and net assets – FCFA
2022
$’000
11
(712)
(12)
300
2021
$’000
474
(765)
14
86
(8,411)
(3,538)
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
154
31. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note.
Transactions with Stephen Betts & Sons Limited
During the year Stephen Betts & Sons Limited charged the Company $75,000 (2021: $84,000) under a contract for the provision
of staff, office equipment and warehouse space. There were $19,000 accrued outstanding charges between the parties as at
31 December 2022 (2021: $23,000) . Amounts outstanding are unsecured and have been settled in cash.
Additionally, during the year the Company sold Stephen Betts & Sons Limited $7,175,000 (2021: $6,218,000) in gold grain and
investment gold coins at a premium to the spot gold price. There was $42,000 accrued outstanding sales between the parties as at
31 December 2022 (2021: $191,000) . Amounts outstanding are unsecured and have been settled in cash.
Stephen Betts & Sons Limited is a related party of the Group because Stephen Betts and Daniel Betts are shareholders and Directors
of the ultimate parent company.
Earn-in Agreement with Pasofino
As previously announced the Group entered into an earn-in agreement with Pasofino, for the development of Dugbe, Liberia.
Three directors of the Company (Daniel Betts, Ernie Nutter and Thomas Hill) invested into Pasofino in support of the strategy to develop
Dugbe, as well as to demonstrate their personal commitment and long-term belief in the potential of the Dugbe Gold Project as a result
the three directors have an aggregate holding of approximately 14% in Pasofino as of 31 December 2022 (11% in March 2022) .
Each of their investments was on the same terms as third parties investing at the time, and the Company’s key interactions with
Pasofino are overseen by an independent committee of the Board, chaired by the Non-Executive Chairman until June 2022, and then
by the Chairman of the Audit Committee.
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the
categories specified in IAS 24 Related Party Disclosures.
Short-term employee benefits
Social security cost
Pensions
Share based payment charge
Decrease in provision for potential social security costs on share options
2022
$’000
1,260
154
10
682
(44)
2,062
2021
$’000
1,433
186
11
260
(191)
1,699
32. CAPITAL COMMITMENTS
As of 31 December 2022, the Group had commitments of $32,774,000 (2021: $10,366,000) in respect of the Yanfolila Mine and
Kouroussa Project. Included in the amount above is $8.7 million of equipment orders with EPIROC through vendor financing to be used
in the KE Underground mine at Yanfolila. First batch of equipment was delivered in February 2023.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
155
33. EVENTS AFTER THE REPORTING DATE
Issue of Shares and Strategic Investor
On 7 February 2023 the Company entered into a share subscription agreement for the investment of US$15 million into the Company
by CIG SA (“CIG”) , which was split into two tranches:
• A firm first tranche of circa US$3.8 million, involved the issue of 39,360,800 new ordinary shares of £0.01 of the Company and;
• A second tranche of circa US$11.2 million, which involved the issue of 117,724,008 new ordinary shares.
Following the CIG investments, the Group also received an additional subscription of a total of 23,070,797 shares in the Company, for
circa £1.8 million excluding fees from certain existing institutional shareholders and through an open offer.
All the shares were issued at a subscription price of 7.79 pence, which represented a c.2% premium to the 30-day VWAP. As part of
the share subscription CIG have the right to maintain their stake.
In aggregate, a total of 180,155,805 ordinary shares in the Company were issued to CIG and other investors, for a total of £14 million
(circa $17 million) excluding fees, to help fund Kouroussa into production.
Payment on the Deferred Consideration
Following the publication of the reserve of 647,000 ounces (at 4.15g/t) at Kouroussa on 30 June 2022, deferred consideration in
respect of 200,000 excess ounces became payable to Cassidy.
The deferred consideration due of £2,000,000 was reduced by £532,032 due to the settlement of liabilities by the Company on behalf
of Cassidy, and therefore resulted in the issue of 22,688,844 new ordinary shares to the underlying shareholders of Cassidy, when a
VWAP of 6.47 pence is applied (being the 5-business day trailing VWAP to 31 December 2022) . The shares were issued on 7 February
2023.
Notification to Change in Mining Contractor
The contract with Yanfolila’s contract miner Junction Contract Mining (“JCM”) was terminated on 31 March 2023 as a result of ongoing
poor equipment availability which materially impacted the operational performance of Yanfolila. The Group is currently supporting
a transition of mining activities to a new contractor, with the ongoing support from Corica Mining Services (“Corica”) (West African
contract mining specialist, and Kouroussa’s contract miner), including the excavators Corica have supplied for continued mining at
Yanfolila without disruption
2023 Long Term Incentive Scheme – 2023 LTIP
In line with the Long-Term Incentive Plan (“LTIP”), the Remuneration Committee has approved the grant of 20,622,436 restricted share
units (“RSU”) awards to employee participants.
Subject to the performance criteria being met for each respective tranche and continuous employment with positive performance,
under normal circumstances, the RSUs are expected to vest on 7 February 2026 in two tranches as follows:
a)
Retention Tranche: 7,725,724 RSUs will be based on continuous employment, malice provisions and the employee meeting personal and
Group targets.
b) Relative Total Shareholder Return (“TSR”): 12,936,712 RSUs will be based on Relative TSR from a share price of 7.79 pence against
the S&P Commodity Producers Gold Index, with 25% vesting for meeting the index rising on a straight-line basis to 100% for 5%
outperformance.
Under the 2023 LTIP the following RSU awards have been approved.
NAME
Daniel Betts
Thomas Hill
Other Employees
Total Directors and Employees
POSITION
Chief Executive Officer
Finance Director
TOTAL NUMBER OF SHARES SUBJECT TO
RSUS UNDER THE 2023 LTIP
5,359,215
3,451,767
11,811,454
20,622,436
The RSUs under the 2023 LTIP consist of options granted over ordinary shares in the Company of £0.01 each (“Shares”), which
have an exercise price of £0.01 per Share. Once vested, any RSUs may be exercised by the holder during a set exercise period
determined by the Company and notified to the option holders. This is intended to be a minimum of a one-week period per year when
the Company is in an “open period” under MAR. Unvested RSUs will normally lapse on cessation of employment for any reason. The
RSU holders will normally retain vested RSUs following cessation of employment and will have two years from the date of cessation of
employment to exercise, after which the RSUs shall lapse.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
156
Non-executive Director Deferred Share Awards
Like 2022, in recognition of the experience and the ongoing level of commitment of the Non-executive Directors, each Non-executive
Director (including the Chairman) will receive an annual deferred share award with a value of £25,000, vesting one year from the award
date, subject to remaining in office. These awards must be retained and cannot normally be sold until the individual ceases to hold
office. For the year to 31 December 2023, the awards are as follows:
NAME
Attie Roux
Ernie Nutter
Stephen Betts
David Straker-Smith
Total
POSITION
Non-executive director
Non-executive director
Non-executive director
Non-executive director
TOTAL NUMBER OF DEFERRED
SHARE AWARDS
368,189
368,189
368,189
368,189
1,472,756
Issue of shares, Admission and Total Voting Rights
On 4 April 2023, the Company has issued 5,350,000 shares at a price of 10 pence per share as settlement, in lieu of cash, of an
amount due of US$652,500, in respect of strategic advice and provision of operational support to improve performance at Yanfolila.
These shares are subject to a 6-month lock in and 6-month orderly market provision thereafter.
Founders Equity Alignment Plan (“FEAP”)
Additionally, in accordance with the terms of the FEAP, the initial Management Incentive Pool vested on 1 February 2023 with no
value accruing to participants, and a new Management Incentive Pool with a life of up to ten years has been created on a consistent
basis including a two-year vesting period. No value will accrue to the FEAP if the growth in shareholder value is less than 50% from
1 February 2023.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
COMPANY STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2022
157
Assets
Non-current assets
Investments
Financial assets at fair value through profit or loss
Property, plant and equipment
Right of use assets
Receivables from subsidiaries
Current assets
Inventory
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Deferred consideration
Lease liabilities
Current liabilities
Trade and other payables
Deferred consideration
Lease liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
NOTES
2022
$’000
2021
$’000
40
40
41
46
42
43
43
43
45
46
44
45
46
47
47
129,199
110,688
1,532
53
710
24,854
156,348
3,176
2,450
247
5,873
3,530
38
–
37,679
151,935
3,926
5,105
817
9,848
162,221
161,783
1,801
580
2,381
29,253
1,776
141
31,170
33,551
4,627
–
4,627
20,833
–
–
20,833
25,460
128,670
136,323
5,828
17,425
105,417
128,670
5,814
17,425
113,084
136,323
As permitted by section 408 of the Act, the Company has elected not to present its statement of comprehensive income for the year.
Hummingbird Resources PLC reported a loss for the year ended 31 December 2022 of $10,739,000 (2021: $7,163,000). The financial
statements were approved by the Board of Directors and authorised for issue on 5 June 2023.
They were signed on its behalf by:
DE Betts
Director
The notes to the Company financial statements form part of these financial statements.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
158
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Net cash outflow from operating activities
Investing activities
Purchases of property, plant and equipment
Decrease in investment in subsidiaries
Decrease/(increase) in amounts lent to subsidiaries
Sales of shares in other companies
Net cash generated by investing activities
Financing activities
Exercise of share options
Lease interest payments
Lease principal payments
Net cash used in financing activities
Net (decrease) /increase in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
NOTES
49
2022
$’000
(5,050)
(43)
66
4,697
–
4,720
14
(40)
(21)
(47)
(377)
(193)
817
247
2021
$’000
(21)
(32)
137
(543)
907
469
–
(20)
(105)
(125)
323
(6)
500
817
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
159
Balance at 1 January 2021
Comprehensive loss for year:
Loss for year
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Shares to be issued
Total transactions with owners in their capacity as
owners
Share based payments
As at 31 December 2021
Comprehensive loss for year:
Loss for year
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Shares issued
Total transactions with owners in their capacity as
owners
Exercise of share options
Share based payments
As at 31 December 2022
SHARE
CAPITAL
$’000
5,344
SHARES TO BE
ISSUED
$’000
17,407
SHARE
PREMIUM
$’000
RETAINED
EARNINGS
$’000
TOTAL
$’000
488
119,243
142,482
–
–
470
470
–
5,814
–
–
–
–
14
–
5,828
–
–
–
(7,163)
(7,163)
(7,163)
(7,163)
(17,407)
(17,407)
16,937
16,937
–
–
–
–
–
–
–
–
–
–
–
–
–
1,004
1,004
17,425
113,084
136,323
–
–
–
–
–
–
(10,739)
(10,739)
(10,739)
(10,739)
–
–
–
3,072
–
–
14
3,072
17,425
105,417
128,670
Share capital
The share capital comprises the issued ordinary shares of the Company at par value.
Share premium
The share premium comprises the excess value recognised from the issue of ordinary shares for consideration above par value.
Retained earnings
Cumulative net gains and losses recognised in the statement of comprehensive income.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
160
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2022
34. BASIS OF PREPARATION
The financial statements have been prepared in accordance with the provisions of the Companies Act 2006.
35. ADOPTION OF NEW AND REVISED STANDARDS
The financial statements have been drawn up on the basis of accounting policies consistent with those applied in the financial
statements for the year ended 31 December 2021. The following standards have been adopted in the year with no material impact on
the financial statements of the Company.
IAS16 (Amendments)
IFRS 3 (Amendments)
IAS 37 (Amendments)
effective 1 January 2022
effective 1 January 2022
effective 1 January 2022
Proceeds before intended use
Reference to conceptual framework
Onerous Contracts – costs of fulfilling a
contract
The following Standards and Interpretations which have not been applied in the financial statements were in issue but not yet effective.
IFRS 17
IAS 12 (Amendments)
IAS 8 (Amendments)
IAS 1 (Amendments)
effective 1 January 2023
effective 1 January 2023
effective 1 January 2023
effective 1 January 2024
Insurance contracts
Deferred tax assets and liabilities from single
transaction
Definition of accounting estimates
Non-current Liabilities with Covenants
36. SIGNIFICANT ACCOUNTING POLICIES
The separate financial statements of the Company are presented as required by the Companies Act 2006 (the “Act”) . As permitted by
the Act, the separate financial statements have been prepared in accordance with UK-adopted International Accounting Standards.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as
those set out in note 3 to the consolidated financial statements except as noted below.
Investments
Fixed asset investments, except those carried at fair value through profit or loss, including investments in subsidiaries, are stated at
cost and reviewed for impairment if there are any indications that the carrying value may not be recoverable.
37. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The Company’s financial statements, and in particular its investments in and receivables from subsidiaries, are affected by the critical
accounting judgements and key sources of estimation uncertainty in respect of the recoverability of exploration and evaluation assets
which are described in note 4 to the consolidated financial statements.
Recoverability of investment in subsidiaries
Where the majority of the assets of subsidiary undertakings are exploration and evaluation assets and mine development assets,
determining whether an investment in a subsidiary is impaired requires an assessment of whether there are any indicators of
impairment of these underlying exploration and evaluation assets. If there is any indication of potential impairment, an impairment test
is required based on value in use of the asset. This assessment involves judgement as to: (i) the likely future commerciality of each cost
pool of assets; (ii) when such commerciality should be determined, and (iii) the potential future revenues and value in use. The value
in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable
discount rate in order to calculate present value.
As the market capitalisation of the Group was less than the carrying value of the Company’s net assets as at 31 December 2022,
an impairment review was carried out in respect of the carrying values of the investment in subsidiaries as stated in the Company
Statement of Financial Position. As part of the impairment review of the carrying value of the Group’s mine development assets and
exploration and evaluation assets the Directors considered that there was no impairment as at 31 December 2022.
Recoverability of receivables from subsidiaries and impairment of financial assets
Receivables from subsidiaries represent trading balances and interest free amounts advanced to Group companies with no fixed
repayment dates, being amounts due from; Hummingbird Resources (Liberia) Inc, focused on supporting the Group’s Liberia
exploration interests; and Trochilidae Resources Limited, focused on supporting the Group’s wider business, including its Mali
operations. In accordance with IFRS 9 ‘Financial Instruments’, where the counterparty would not be able to repay the loan if demanded
at the reporting date, the Company has made an assessment of expected credit losses.
Having considered multiple scenarios on the manner, timing, changes in quantum and probability of recovery on the receivables, the
Company did not recognise a lifetime expected credit expense $nil (2021: credit reversal of $148,000) . The allowance for lifetime
expected credit losses assessment requires a significant degree of estimation and judgement.
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS 161
38. AUDITOR’S REMUNERATION
The auditor’s remuneration for audit and other services is disclosed in note 7 to the consolidated financial statements.
39. STAFF COSTS
The average monthly number of employees (including directors) was:
Directors
Other employees
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pensions
Charge for share-based payments
Charge for potential social security costs related to share-based payments
2022
NUMBER
2021
NUMBER
7
14
21
7
12
19
$’000
$’000
2,771
362
67
1,560
(77)
4,683
2,961
447
62
1,176
(87)
4,559
Within wages and salaries, $1,260,000 (2021: $1,433,000) relates to remuneration payable to directors, included within share-based
payments is a net charge of $682,000 (2021: $260,000) under cash-settled share-based payment scheme payable to directors, and
within pensions is $10,000 (2021: $10,000) relating to pension contributions in respect of directors.
The total remuneration of the highest paid director is $570,000 (2021: $821,000) comprising $565,000 (2021: $815,000) in relation to
wages and salaries including bonuses paid and pension contributions of $5,000 (2021: $6,000) .
The number of directors to whom benefits are accruing under defined contribution pension schemes is 2 (2021: 2) .
Key management remuneration is disclosed in note 31 to the consolidated financial statements.
40. INVESTMENTS
(a) Investments in joint ventures and subsidiaries:
Investments in joint ventures
At 31 December 2021
Additions
At 31 December 2022
Investment in subsidiaries
At 31 December 2020
Additions/Adjustments
At 31 December 2021
Additions/Adjustments 1
At 31 December 2022
Total investments
At 31 December 2021
At 31 December 2022
$’000
198
–
198
110,627
(137)
110,490
18,511
129,001
110,688
129,199
1
The earn-in in Liberia was formerly completed in 2022, and as part of this the Company converted 49% of its receivable balance from Liberia to Pasofino into investments. Refer to note 26
of the financial statements for further details.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
162
(b) Financial assets at fair value through profit or loss:
Opening balance
Disposal
(Loss) /gains through profit or loss
Closing carrying value
1 Warrants are valued using the Black Scholes model.
CORA GOLD
BUNKER HILL – SHARES AND WARRANTS1
TOTAL
2022
$’000
–
–
–
–
2021
$’000
968
(907)
(61)
–
2022
$’000
3,530
–
(1,998)
1,532
2021
$’000
5,013
–
(1,483)
3,530
2022
$’000
3,530
–
(1,998)
1,532
2021
$’000
5,981
(907)
(1,544)
3,530
Bunker Hill Mining Corporation – shares, warrants
The Company holds 9,625,837 common shares in Bunker Hill Mining Corp (“Bunker Hill”), a Canadian listed exploration and
development company.
The Group also has the option to acquire an additional 2,660,000 shares at a cost of CAD$0.59 per share before 31 December 2025.
The investment is carried at fair value through profit and loss.
The shares in Bunker Hill have been deemed to be a level 1 asset under the fair value hierarchy. This instrument has been valued using
publicly quoted share price. The Group regards the warrants to be level 2 asset under the fair value hierarchy. These have been valued
using a combination of quoted prices as well as calculations under the Black Scholes model. The total investments on 31 December
2022 are split as follows, level 1 shares $1,208,000 and level 2 warrants $323,800.
The value of these shares and warrants on 31 March 2023 was $946,000.
41. PROPERTY, PLANT & EQUIPMENT
Cost
At 31 December 2020
Additions
At 31 December 2021
Additions
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
At 31 December 2022
Carrying amount
At 31 December 2021
At 31 December 2022
OWNED
$,000
826
32
858
53
911
784
36
820
38
858
38
53
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
42. RECEIVABLES FROM SUBSIDIARIES
Receivables from subsidiaries
Less: Cumulative allowance for expected credit losses
163
2022
$’000
25,237
(383)
24,854
2021
$’000
38,062
(383)
37,679
Receivables from subsidiaries represent deferred trading balances and amounts advanced to Group companies, in the interest of
supporting long term growth, and are therefore shown within non-current assets. These amounts are interest free, unsecured, and
payable on demand. These in include amounts due from; Hummingbird Resources (Liberia) Inc, focused on supporting the Group’s
Liberia exploration interests; and Trochilidae Resources Limited, focused on supporting the Group’s wider business, including its Mali
and Guinea operations. Receivables from subsidiaries are interest free and repayable on demand. In accordance with IFRS 9 ‘Financial
Instruments’, where the counterparty would not be able to repay the loan if demanded at the reporting date, the Company has made
an assessment of expected credit losses.
Having considered multiple scenarios on the manner, timing, changes in quantum and probability of recovery on the receivables, the
Company did not recognise a lifetime expected credit expense (2021: gain of $148,000) . The net cumulating lifetime expected credit
loss for the balance is $383,000 at 31 December 2022 (2021: $383,000) . The allowance for lifetime expected credit losses assessment
requires a significant degree of estimation and judgement. Refer to note 50 for a reconciliation of lifetime expected credit losses.
The Directors consider that the carrying amount of the receivables from subsidiaries approximates their fair value.
43. CURRENT ASSETS
Inventory
Finished gold
2022
$’000
3,176
3,176
2021
$’000
3,926
3,926
At 31 December 2022, inventory included a provision of $nil to adjust finished gold to net realisable value (2021: $nil) .
Finished gold consist of Single Mine Origin (“SMO”) gold including coins, originating from the Yanfolila Gold Mine in Mali. Further details
are set out on the Group’s website.
Trade and other receivables
Other receivables
Prepayments and accrued income
Trade receivables – intercompany
2022
$’000
780
383
1,287
2,450
2021
$’000
688
348
4,069
5,105
Cash and cash equivalents
Cash and cash equivalents as at 31 December 2022 of $247,000 (31 December 2021: $817,000) comprise cash and short-term bank
deposits with an original maturity of three months or less. The carrying value of these assets approximates their fair value.
The Company’s principal financial assets are bank balances and cash and receivables from related parties, none of which are past due.
The Directors consider that the carrying amount of receivables from related parties approximates their fair value.
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
164
44. CURRENT LIABILITIES
Trade and other payables
Trade payables
Other taxes and social security
VAT
Accruals
Other payables
Trade payables – Intercompany
2022
$’000
1,149
150
60
2,791
526
24,577
29,253
2021
$’000
916
352
534
1,956
510
16,565
20,833
The average credit period taken for trade purchases is 29 days (2021: 24 days) .
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
45. DEFERRED CONSIDERATION
The movements on this item are disclosed in note 25 to the consolidated financial statements.
46. LEASES
The Company leases office space with terms of up to five years. Lease payments represent rentals payable by the Company for those
office spaces in the UK. The Company has elected not to recognised right of use assets for lease of low value and/or short-term
leases.
(a) Right of use assets
Information about leased assets for which the Company is a lessee is presented below:
Cost
At 1 January 2021
Remeasurements
At 31 December 2021
Additions
At 31 December 2022
Depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
At 31 December 2022
Carrying amount at 31 December 2021
Carrying amount at 31 December 2022
OFFICES
$’000
475
–
475
286
761
346
129
475
51
51
–
710
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
165
(b) Lease liabilities
Maturity analysis
At the reporting date, the Company had outstanding commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
Greater than five years
Total undiscounted lease liabilities at 31 December
Lease liabilities included in the statement of financial position at 31 December 2022 were:
At 1 January
Remeasurement
Lease liability and interest paid during the year
Interest expense on lease liabilities
At 31 December
Analysed as:
Current
Non-current
At 31 December
2022
$’000
200
677
–
877
2022
$’000
–
761
(61)
21
721
141
580
721
2021
$’000
–
–
–
–
2021
$’000
105
–
(125)
20
–
–
–
–
Amounts recognised in statement of comprehensive income includes depreciation on right of use assets of $51,000 and $21,000
interest expense on lease liabilities. A total of $61,000 of lease principal and lease interest were also paid during the year and disclosed
within financing activities on the statement of cash flows.
47. SHARE CAPITAL
The movements on this item are disclosed in note 27 to the consolidated financial statements.
48. SHARE BASED PAYMENTS
The Company’s share-based payments information is disclosed in note 28 to the consolidated financial statements.
49. NOTES TO THE STATEMENT OF CASH FLOWS
Loss before tax
Adjustments for:
Amortisation and depreciation
Share based payments
Finance income
Finance expense
Reversals in impairment of financial assets
Losses on financial assets measured at fair value
Operating cash flows before movements in working capital
Decrease/(increase) in inventories
Decrease in receivables
(Decrease)/increase in payables
Net cash outflow from operating activities
2022
$’000
2021
$’000
(10,739)
(7,163)
78
1,483
(185)
391
–
1,589
(7,383)
750
2,655
(1,072)
(5,050)
165
1,089
10
178
(148)
768
(5,101)
(744)
75
5,749
(21)
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
166
50. FINANCIAL INSTRUMENTS
The Company’s strategy and financial risk management objectives are described in note 30.
Principal financial instruments
The principal financial instruments used by the Company from which risk arises are as follows:
CATEGORIES OF FINANCIAL INSTRUMENTS
FINANCIAL ASSETS MEASURED
AT AMORTISED COST
FINANCIAL ASSETS MEASURED
AT FAIR VALUE THROUGH
PROFIT OR LOSS
FINANCIAL LIABILITIES
MEASURED AT AMORTISED
COST
FINANCIAL LIABILITIES AT
FAIR VALUE THROUGH PROFIT
OR LOSS
Financial assets
Cash and cash equivalents
Other receivables
Investments
Intercompany trade receivables
Loans due from subsidiaries
Financial liabilities
Trade payables
Other payables
Accruals
Intercompany trade payables
Deferred consideration
Lease liabilities
2022
$’000
247
780
–
2021
$’000
817
688
–
1,287
24,854
27,168
4,069
37,679
43,253
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
–
–
–
–
1,532
3,530
–
–
–
–
1,532
3,530
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,149
526
2,791
916
510
1,956
24,577
16,565
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
721
–
–
4,219
4,627
–
–
29,764
19,947
4,219
4,627
The risks that the Company is subject to in addition to the Group risks described in note 30 are set out below:
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.
In addition to the risks described in note 30, which affect the Group, the Company is also subject to credit risk on receivables from
subsidiaries.
Lifetime expected credit losses
A reconciliation of the lifetime expected credit losses at 31 December 2022 in accordance with IFRS 9, is set out below.
As at 1 January 2021
Decrease during the year
As at 31 December 2021
Decrease during the year
As at 31 December 2022
RECEIVABLES FROM SUBSIDIARIES
HUMMINGBIRD
RESOURCES
(LIBERIA) INC
$’000
TROCHILIDAE
RESOURCES
LIMITED
$’000
531
(148)
383
–
383
–
–
–
–
–
TOTAL
$’000
531
(148)
383
–
383
Foreign currency exposure and sensitivity analysis
The Company is exposed to foreign exchange risk through certain costs being denominated in currencies other than the functional
currency, and from holding non-functional currency cash balances.
The carrying amounts of the Company’s foreign currency denominated financial assets and monetary liabilities at the reporting date are
as follows:
Australian Dollars (“AUD”)
Canadian Dollars (“CAD”)
Euros (“EUR”)
Sterling (“GBP”)
South African Rand (“ZAR”)
LIABILITIES
ASSETS
2022
$’000
220
160
62
5,829
78
2021
$’000
91
93
22
7,210
3
2022
$’000
–
19
356
917
–
2021
$’000
–
46
4
1,450
–
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS
167
Foreign currency sensitivity analysis
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is
exposed to foreign exchange risk arising from various currency exposures, primarily to movements in the $ against the EUR, GBP and
ZAR. The Company ensures it places any excess liquidity in stable currencies to reduce its exposure to foreign currency risks. Foreign
exchange differences on retranslation of monetary assets and liabilities are recorded in the income statement.
At 31 December, if the $ had weakened/strengthened by 10% against the EUR, GBP and ZAR, with all other variables held constant,
the impact on profit before tax on the non-$ denominated financial assets and liabilities would have been as follows. A movement of
10% reflects a reasonably possible sensitivity when compared to historical movements over a three to five-year timeframe. A positive
amount in the table reflects a potential net increase in the profit before tax:
Decrease in comprehensive income and net assets – AUD
Decrease in comprehensive income and net assets – CAD
Increase in comprehensive income and net assets – EUR
(Decrease) /increase in comprehensive income and net assets – GBP
Decrease in comprehensive income and net assets – ZAR
51. RELATED PARTIES
2022
$’000
22
14
29
(491)
8
2021
$’000
9
14
3
831
–
The Company has entered into a number of unsecured related party transactions with its subsidiary undertakings. The most significant
transactions carried out between the Company and its subsidiary undertakings are mainly for short and long-term financing. Amounts
owed from these entities are interest free and repayable on demand. The following amounts were outstanding at the reporting date:
AS AT 31 DECEMBER 2022
Trade receivables – Intercompany
Loans due from related parties
Total related party receivables
Trade payables – Intercompany
Total related party payables
AS AT 31 DECEMBER 2021
Trade receivables – Intercompany
Loans due from related parties
Total related party receivables
Trade payables – Intercompany
Total related party payables
HUMMINGBIRD
RESOURCES
(LIBERIA) INC
$’000
TROCHILIDAE
RESOURCES
LIMITED
$’000
SOCIETE DES
MINES DE KOMANA
SA
$’000
KOUROUSSA GOLD
MINE SA
$’000
380
18,960
19,340
863
66
929
–
–
24,577
24,577
44
513
557
–
–
–
5,219
5,219
–
–
HUMMINGBIRD
RESOURCES
(LIBERIA) INC
$’000
TROCHILIDAE
RESOURCES
LIMITED
$’000
SOCIETE DES
MINES DE KOMANA
SA
$’000
KOUROUSSA GOLD
MINE SA
$’000
–
37,537
37,537
–
–
4,066
67
4,133
16,565
16,565
3
41
44
–
–
–
34
34
–
–
During the year, the Company entered into the following related party transactions with its subsidiary undertakings:
YEAR ENDED 31 DECEMBER 2022
Management fees
Recharge of technical fees
Total sales with related parties
HUMMINGBIRD
RESOURCES
(LIBERIA) INC
$’000
TROCHILIDAE
RESOURCES
LIMITED
$’000
SOCIETE DES
MINES DE KOMANA
SA
$’000
KOUROUSSA GOLD
MINE SA
$’000
–
–
–
4,670
2,998
7,668
–
–
–
–
–
–
TOTAL
$’000
1,287
24,758
26,045
24,577
24,577
TOTAL
$’000
4,069
37,679
41,748
16,565
16,565
TOTAL
$’000
4,670
2,998
7,668
ANNUAL REPORT + ACCOUNTS STATEMENT 2022
168
YEAR ENDED 31 DECEMBER 2021
Management fees
Recharge of technical fees
Total sales with related parties
HUMMINGBIRD
RESOURCES
(LIBERIA) INC
$’000
TROCHILIDAE
RESOURCES
LIMITED
$’000
SOCIETE DES
MINES DE KOMANA
SA
$’000
KOUROUSSA GOLD
MINE SA
$’000
–
–
–
2,071
4,288
6,359
–
–
–
–
–
–
TOTAL
$’000
2,071
4,288
6,359
The Company’s transactions with other related parties and remuneration of key management personnel are disclosed in note 31 to the
consolidated financial statements.
52. EVENTS AFTER THE REPORTING DATE
Events after the reporting date are disclosed in note 33 to the Consolidated Financial Statements
HUMMINGBIRD RESOURCESFINANCIAL STATEMENTS COMPANY INFORMATION AND ADVISORS
169
Company Secretary
Tracey Fung
Registered Office & Head Office
49-63 Spencer Street
Hockley
Birmingham
West Midlands
B18 6DE
United Kingdom
Company number
05467327
Nominated & Financial Adviser
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
United Kingdom
Broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
United Kingdom
Auditors
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
United Kingdom
Solicitors to the Company (UK Law)
Gowlings WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
United Kingdom
Registrars
Link Asset Services
6th Floor
65 Gresham Street
London
EC2V 7NQ
United Kingdom
Bank
Barclays Bank
1 Churchill Place
Canary Wharf
London
E14 5HP
United Kingdom
ANNUAL REPORT + ACCOUNTS STATEMENT 2022 “Gold comes from finding opportunities in problems,
From accepting challenges with a ruthless honesty
and integrity
For whilst the wheels of success grind slow, they grind
fine, and leave no stone unturned” – Basil De Tent.
This publication has been manufactured using 100% offshore wind electricity
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This document is printed on Colorplan and Magnosatin papers made of material
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london@blackandcallow.com
www.blackandcallow.com
020 3794 1720
Forward
Annual Report &
Accounts 2022
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