The contractor claims that Hummingbird owes it $27 million for work already completed, while the miner argues that Corica has consistently underperformed against established performance targets, failing to meet its mining contract volumes.
Hummingbird noted the “constructive” tone of its ongoing talks with Corica surrounding the resolution of the key disputes. “The aim of these discussions remains to get Corica to return to Kouroussa and ramp-up operations under the existing mining contract between the parties,” the company said.
Shares in Hummingbird jumped as much as 17% in early London trading to 7.96p, leaving the company with a £59.4 million ($74m) market capitalization.
“Despite ongoing discussions with Corica, we have taken the action to issue a Step-In Notice to Corica to mitigate the current impacts of the temporary suspension,” chief executive, Dan Betts, said in the statement.
Parallel to its negotiations with Corica, Hummingbird is progressing with the restart and ramp up of mining activities at Kouroussa, with the goal of achieving commercial production as soon as possible.
Before the dispute with Corica, the miner had anticipated the start of commercial mining by the end of March, making of Kouroussa Hummingbird’s second operating mine.
“The strategic actions we have taken, including the growing of our partnership with ETASI, an operator we have worked closely with in the past, has meant that we are able to recommence the ramp-up of production towards commercial production,” Betts said.
First gold at the mine was poured in June last year and it is expected to churn out an average of 120,000 to 140,000 ounces of gold for the first three years of commercial production. After that, Kouroussa would average 100,000 ounces of gold a year over an initial seven-year life.
Hummingbird took on a $55 million loan with Coris Bank in September, pledging to cut $122.8 million in debt over three years starting with a $77 million debt repayment by the end of this year.
The miner also raised $30 million mainly through a share placement at an average price of 11.26 pence per share with shareholders, including 45% shareholder CIG, an investment bank.
Hummingbird agreed at the time to hedge 30,000 ounces of gold, which represents about 15% of its total production. This decision was made amid soaring bullion prices, which are hitting all-time highs.
Bullion was on Friday $2,375 per ounce, slightly down from the $2,382 it hit on Monday. Prices are up 1.54% from last week and 8.39% from one month ago.
The miner has faced challenges in bringing the Kouroussa mine up to full production. Aside the ongoing issues with Corica, activities at the mine were disrupted last year by rain and delays associated with skill development.
