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 United Kingdom 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 interim financial statements have been drawn up based on accounting policies consistent with those applied in the financial statements for the year ended 31 December 2019. There were several accounting standards updates effective 1 January 2020, which did not have any material impact on the financial statements of the Group.  

3.              Significant accounting policies

Basis of preparation

The consolidated interim financial information has been prepared using policies based on International Financial Reporting Standards issued by the International Accounting Standards Board ("IASB") as adopted by the European Union, which are expected to be applied in the Group's financial statements for the period ended 31 December 2020.

The consolidated interim financial information for the period 1 January 2020 to 30 June 2020 is unaudited, does not include all the information required for full financial statements and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2019.  In the opinion of the Directors the consolidated interim financial information for the period represents fairly the financial position, results from operation and cash flows for the period in conformity with generally accepted accounting principles consistently applied. The consolidated interim financial information incorporates comparative figures for the interim period 1 January 2019 to 30 June 2019 and the audited financial year to 31 December 2019.  As permitted, the Group has chosen not to adopt IAS34 'Interim Financial Reporting'.

The annual financial statements of Hummingbird Resources plc are prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union.  The Group's consolidated annual financial statements for the year ended 31 December 2019, have been filed with the Registrar of Companies and are available on the Company's website www.hummingbirdresources.co.uk. The auditor's report on those financial statements although unqualified, contained an emphasis of matter paragraph in respect of risks surrounding the going concern assumption of the Company at that date.

COVID - 19 Risk

On March 11, 2020 the World Health Organisation ("WHO") declared the outbreak of the coronavirus (COVID-19) a pandemic.

COVID-19 presents a set of dynamic challenges. These risks primarily involve potential disruptions to logistical movement, both into and out of our operational areas, of people, goods, supplies, spares, reagents and the export of gold which may impact our ability to operate. Currently many countries are still imposing restrictions on travel of people and goods.

In response to this the Group put in place plans and procedures to meet the Groups' primary objective of ensuring business continuity for the long-term benefit of all our stakeholders, as well as minimise any risk that may contribute to the virus spreading. 

At the date of issuance of these condensed interim consolidated financial statements, the Group's operations have been impacted with logistical, mechanical, and mining challenges all exacerbated by restricted movements and quarantine periods. There has been a number of cases reported at our Malian mining operations but we are pleased to announce that all those that have been detected have received the appropriate care in conjunction with the Malian government's response plan, which has allowed them to recover fully and get back to work as necessary. The Group continue to maintain a clear COVID-19 response plan including a tracing system on any of those who may have come into contact with those affected by it.

Whilst the Company has a positive outlook for H2 2020, there remains some uncertainties into how long this pandemic will last and ultimately this may result in the Company being forced to close its production facilities due to lack of spares and reagents.

Therefore, there is a risk that challenges being placed on the business, and the wider economy will further impact the Group's ability to operate, which will ultimately impact its cash flows.

4.              Earnings/(loss) per ordinary share

Basic earnings/(loss) per ordinary share is calculated by dividing the net profit/(loss) for the period/year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period/year.

The calculation of the basic and diluted earnings/(loss) per share is based on the following data:

At 30 June 2020 there were 19,686,505 potentially dilutive ordinary shares. Potentially dilutive ordinary shares include share options issued to employees and directors. For period ended 30 June 2019, because there is a reduction in loss per share resulting from the assumption that the share options and warrants are exercised, the latter are anti-dilutive and are ignored in the computation of diluted loss per share and therefore there is no difference between basic and diluted loss per share.

5.              Share capital

Authorised share capital

As permitted by the Companies Act 2006, the Company does not have an authorised share capital.

6.              Borrowings

7.              Investments

(a)    Investment in associates and joint ventures:

Betts Investments Limited ("BIL")

In April 2020, due to the increased global demand for physical product, the Group exercised its option to invest a further $93,000 (£75,000) in BIL. This investment increases the Group's stake to 49% in BIL.

(b)    Financial assets at fair value through profit and loss:

Cora Gold Limited

On 18 March 2020 Cora issued 60,838,603 new ordinary shares of no-par value, as a part of a planned fundraising. Following this placement, the Group's shareholding in Cora was diluted from 18.00% to 12.25%.  The Group remains a substantial shareholder in Cora and will continue to work closely with Cora in its metallurgical test work programme which is exploring the amenability of oxide ore at Cora's Sanankoro Gold Project to be concentrated for commercial trucking to Hummingbird's Yanfolila Gold Mine. 

Cora has had positive developments during the period including discovery of new gold zone at Sanankoro as well as signing a term sheet to fund the construction at this project.

Bunker Hill Mining Corporation - shares, warrants and convertible loans

On 26 February 2020, the Group acquired a further 1,392,857 shares in the company for an equivalent consideration of $600,000 at a price of $0.43 (CAD$0.56) a share, split as conversion of loan of $300,000 due from Bunker Hill as well as cash investment of $300,000. Following this, the Group holds 4,052,857 Common Shares, equating to an interest in Bunker Hill of 5.8 per cent.

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 and the convertible loans 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 significant share price increase for Bunker Hill to about CAD$1.00 per share at 30 June 2020, has seen the value of the investments increase during the six-month period resulting in the Company carrying a paper profit of approximate $2.8 million as at 30 June 2020. This share price has since dropped from period end and on 10 August 2020 Bunker Hill announced an updated private placement of 58,285,714 units at a price of CAD$0.35 per share equivalent to CAD$20,400,000.

(c)     Other Business Development Areas:

 Earn-in agreement with ARX on the Dugbe Gold Project

The Company announced on 4 June 2020 that it had entered into a conditional earn-in agreement with ARX Resources Limited ("ARX") in respect of the Company's Dugbe Gold Project ("Dugbe" or the "Project"), located in Liberia, which requires ARX completing a Definitive Feasibility Study, carrying out a significant exploration programme and covering all Project costs over the 2 year earn-in period (the "Earn-in").  The Earn-in entitles ARX to earn up to a 49% interest in the Project, and is subject to various conditions, including the payment by ARX to Hummingbird of a non-refundable deposit of US$2m. This $2m deposit was received in July 2020.  

Certain conditions of the transaction had not been fully met as at 30 June 2020, hence no formal business combination for accounting practices have been include in these financial statements.

Signing of Sale and Purchase Agreement for the Kouroussa Gold Project

The Company also announced the signing of a conditional binding Sale and Purchase Agreement ("SPA") on 26 June 2020 confirming and setting out the key terms for the acquisition of the Kouroussa Gold Project located in Guinea, from Cassidy Gold Corp ("Cassidy"), following the completion of confirmatory due diligence by the Company on the Project.  Summary of the terms of agreement are:

§  Initial consideration of £10 million satisfied through the issue of 35,248,441 Hummingbird new Ordinary Shares at 28.4p ("Initial Consideration"), currently representing 9.0% of the then enlarged share capital of the Company.

o  Equivalent to approximately US$10 per resource ounce

o  All significant beneficial owners of Cassidy subject to 12-month lock in and 12-month orderly market provisions

§  Deferred consideration of £10 for every ounce of gold reserve published (or processed if not included in a reserve) in excess of 400,000 ounces (subject to a maximum of 1,000,000 ounces, or £6 million)

§  Additionally, Cassidy shall retain a 2% net smelter royalty on all gold sales by or on behalf of the Company 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

The expected addition of Cassidy Gold Corp will enable the Company to achieve its next step of becoming a multi-asset gold producer.

The Company is in the final stages of its due diligence and hence no consideration or shares have been issued at this stage.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation 596/2014.