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Hummingbird Resources has announced an agreement for its acquisition by Nioko Resources, a subsidiary of creditor CIG, in an all-cash deal valued at approximately £13.8m ($17.5m).
Nioko, which already owns around 41.81% of Hummingbird's share capital, will purchase the remaining shares for 2.6777 pence each.
The acquisition offer by Nioko, which has received unanimous approval from Hummingbird's board, aligns with the subscription price under the proposed debt-to-equity conversion agreement signed with CIG in November 2024.
At the time of the announcement, Hummingbird's stock was trading at around 1.65 pence.
Hummingbird has been facing operational challenges at its Yanfolila gold mine in Mali and delays in ramping up operations at the Kouroussa mine in Guinea.
These issues have significantly strained the company's balance sheet, affecting its ability to meet near-term debt obligations to creditors such as CIG and Coris Bank.
Nioko, holding voting rights within Hummingbird, will increase its stake to 71.8% following the debt-to-equity conversion.
The agreement aims to alleviate Hummingbird's financial difficulties and provides an opportunity for Hummingbird's minority shareholders to recuperate cash before its eventual delisting.
Hummingbird Resources CEO Geoff Eyre said: “Hummingbird requires a very material amount in equity financing to address the significant issues facing the business as a whole including urgently required remediation to the Kouroussa process plant infrastructure, resolution of contractual disputes, purchase of critical spares and alleviate the substantial creditor overhang to improve operational performance.
“The lack of sufficient cash flows generated by both Yanfolila in Mali and Kouroussa in Guinea combined with the sustained lack of working capital historically continues to have on ongoing detrimental impact upon operations and supplier contracts.
“With a debt repayment schedule of $30m due by the end of December to CIG adding additional financial strain to the company's balance sheet, the offer by Nioko represents an opportunity for independent shareholders to realise some cash sum for their holding now, which may not otherwise be available if the resolutions are not passed.”
The transaction is set to become effective in the first quarter of 2025, subject to the satisfaction or waiver of the conditions set out in the offer.
In September, Hummingbird signed an exclusivity agreement with an undisclosed potential buyer to acquire its subsidiary, Pasofino Gold, for $75m, representing a purchase price of $0.66 per Pasofino common share. Hummingbird currently holds a 53% stake in Pasofino.
