BAMAKO (Reuters) - A subsidiary of UK mining firm Hummingbird Resources (HUMR.L) is on course to start production at an $88 million (£68.1 million) open cast gold mine in Mali this year, its director and Mali’s Minister for Mines told Reuters.
The Komana mine south of the capital Bamako is operated by the Société des Mines de Komana (SMK) and has proven reserves of 700,000 ounces, or around 20 tonnes, in its mine plan and an all-in production cost of $695 per ounce.
It is expected to produce 132,000 ounces during the first year of its seven-year life span but Hummingbird business development manager Robert Monro said on Tuesday total resources stood at 2.2 million ounces and there was scope for further development and underground mining.
Mali is Africa’s third largest gold producer after South Africa and Ghana and the country produced 50.9 tonnes last year. The commodity contributes around 25 percent of government revenue.
“The aim is to mine the first gold in the last third of 2017,” said SMK director Saidou Ide. Mines Minister Tiémoko Sangaré told Reuters on Monday after a visit to Komana that production would start in December.
Komana, which is also called the Yanfolila project, is an important project for London-listed Hummingbird, a small miner that founded the Dugbe project in Liberia but decided against developing it because of low gold prices in 2013, Monro said.
“It (Komana) is integral to our business, our primary focus. We need to deliver on Komana and continue delivering on it and we will be looking to increase the mine life,” he said, adding that the company also envisaged developing Dugbe later, although costs there were higher.
Up to 1,300 artisanal miners from Mali work at the Komana site on a seasonal basis and some have been moved from the first pit to a different area after negotiations, he said, adding that the artisanal miners extract up to 2,000 ounces per year.
Hummingbird owns 80 percent of the company while the rest is held by the Malian state. Debt finance for the project was agreed last month with Coris Bank International, which is based in Burkina Faso.
Additional reporting and writing by Matthew Mpoke Bigg; Editing by Louise Heavens