In June 2023, Hummingbird Resources endowed Guinea with a new gold mine with a forecast output of 100,000 ounces per year. The project should ramp up the country’s overall production which was estimated at 12 tons in 2020.

A contractual dispute could hamper Hummingbird Resources’ plans of entering, this quarter, commercial production at its Koussoura gold mine in Guinea. The dispute is with Corica Mining Services, Hummingbird’s main subcontractor on the project. Mining at Koussoura was paused on March 17, 2024, due to the dispute.

Dispute background 

According to Corica’s claims, Hummingbird owes it around $27 million for completed work and has also not provided the required guarantee. Hummingbird disputes these allegations, claiming that Corica has underperformed since the beginning of the contract in September 2022. The mining giant claims the subcontractor delayed in mobilizing mining equipment and recruiting personnel.

Hummingbird had indeed notified Corica in July 2023 of a contract breach due to underperformance, and withholding payments until the issues were resolved. The firm said it tried to settle the issue with Corica, offering interim payments and engaging other mining service providers to support the subcontractor.

After initially threatening to "exercise its rights, which could include resuming mining operations and collaborating with other mining contractors and equipment suppliers," if the works did not resume shortly, Hummingbird was opened to talks for settling the matter peacefully.

Impacts on production and cash flows

According to information gathered by the Ecofin Agency, the Kouroussa processing plant is already operating at its nominal capacity. However, extracted volumes must go up for commercial production levels to be reached.

If the dispute persists, it could also affect the cash flow generation schedule. In this regard, Hummingbird indicates that it is in discussions with Coris Bank, its main financial partner, regarding potential implications.

The Kouroussa mine produced its first gold in June 2023. The mine is forecast to deliver between 120,000 and 140,000 ounces of gold over the first three years of operation, and an annual average of 100,000 ounces over an initial lifespan of 7 years.

Louis-Nino Kansoun