Thor Explorations (THX) - 100,000 oz pa Gold Producer Plus 2nd Asset

Thor Explorations Ltd. is a TSX-V as well as AIM-listed West African focussed gold producer. The company’s flagship project, the Segilola gold project is located approximately 120 km northeast of Lagos. The project is forecast to produce 100,000 ounces of gold annually over the next five years from its open-pit operation. The project’s open-pit resource holds 517,800 ounces of gold in the probable category and 532,000 ounces of gold in the indicated category, with its underground resources showing 76,000 ounces of gold in the indicated category.

The company at the end of August 2022 released its Q2 financial and operational results. The highlights of the operational results included the commercial production of 23,785 ounces of gold at the Segilola Gold operation. The average mill feed grade during the 2nd quarter was 3.66 g/t of gold with the operation’s gold recovery being 95.5%. The company sold 22,172 ounces of gold in Q2 2022, which generated approximately USD$ 41 million in revenue and USD$ 6 million in net profit.

Thor Exploration Ltd. also announced that Chris Omo-Osagie had been permanently appointed as Chief Financial Officer (CFO) for the company, after acting as CFO for the last 3 months.

The company plans to produce between 90,000 to 100,000 ounces of gold in 2022, an increase from its previous guidance of between 85,000 to 100,000 ounces of gold for the year. Thor Exploration Ltd. will further continue with its exploration initiatives at the Segilola gold mine in the coming year, with it targeting near mine and underground reserves.  The company is also underway with the advancement of its Douta project to feasibility study level, as well as continuing with exploration initiatives in Nigeria.

Management

The company is led by Segun Lawson who serves as the company’s Chief Executive Officer (CEO), President and Director. Lawson has been the CEO of Thor Explorations Ltd. since 2011 and has been at the helm of each of the company’s acquisitions, financings and joint ventures. Lawson holds a Bachelor of Science from the Royal School of Mines at Imperial College (UK) with Honours in Geology and has an MBA from Cass Business School. He is also the co-founder of African Star Resources Inc., a wholly owned subsidiary of Thor Explorations Ltd.

Chris Omo-Osagie is the company’s Chief Financial Officer and joined the company officially in August 2022, after serving as acting CFO for three months. Omo-Osagie is an experienced senior executive who has held positions with companies such as PricewaterhouseCoopers, Deloitte, Centrica and Molson Coors throughout America, Europe, the Caribbean and Africa. He is highly experienced in financial reporting, operations, mergers and acquisitions, business transformation and treasury management. He served as the Deputy Regional Chief Finance Officer for Dangote Cement Plc in Nigeria before joining Thor Explorations Ltd.

Louise Porteus serves as the company’s Environmental and Social Manager and brings with her more than 30 years of experience in large-scale mining operations. Porteus is well versed in the creation of environment and social management plans, resettlement action plans as well as stakeholder engagement plans and urban development projects.

Alfred Gillman is the Group Exploration Manager for the company and has a successful track record in senior management positions connected to the exploration of base metals, uranium and gold projects. James Philip is the Vice President of Corporate Development and has more than 15 years of experience in a broad range of international advisory and financing transactions across Africa, the middle east and Europe.

Michael Kelly rounds out the executive management team as the General Manager of the company’s Segilola Gold project. Kelly has various accomplishments under his name including most recently the construction and commissioning of the Koka gold project in Eritrea.

Segilola Gold mine

The Segilola gold mine of the company is located in the state of Osun in Nigeria. The project is located approximately 120 km away from Lagos and consists of a high-grade open pit resource of 517,800 ounces of probable gold and 532,000 ounces of indicated gold. The mine also hosts an underground mineral resource of 76,000 ounces of gold in the indicated category and has vast exploration potential. The company commenced production at the mine in early 2022 and anticipates producing approximately 80,000 to 100,000 ounces of gold in 2022.  

Thor Explorations Ltd. at the end of August 2022, released its Q2 financial and operating results. The results show the commercial production of 23,785 ounces of gold by the company in Q2 2022, resulting in the total amount of gold produced at the Segilola gold mine for the first 6 months of 2022 at 45,128 ounces of gold. The average mill feed during the period was 3.66 grams per ton of gold with a recovery rate of 95.5%. The company sold 38,830 ounces of gold in the first half of 2022 and also has an inventory of 2,065 ounces of gold on hand.

The revenue obtained through the sale of gold totalled approximately USD$ 41.3 million in the second quarter of 2022 and totalled USD$ 66.2 million in the first half of 2022. Thor Explorations Ltd. also paid approximately USD$ 14.5 million of its principal and senior debt to the Africa Finance Corporation in Q2 2022. Segun Lawson sums up the company’s performance during this time as follows:

“What was really impressive to us internally about Q2 is that we have made improvements in a number of aspects quarter upon quarter, so not just in output, but in grade, throughput rate, and recovery rate, and the plant is running very well. We’re very happy with how it runs. We have a very strong stockpile. We went into Q3 with an excellent start, and we expect to be at the upper-end of our guidance for Q3 as well.”

Addressing the debt component and expanding the life of the Segilola gold mine

Lawson explains that at the initial stages of the Segilola gold mine, whilst the company was in search of funding it was able to secure financing through the African Finance Corporation. The search for funding proved difficult due to Nigeria being better known as an oil and gas country than a gold one. The financing structure of the initial investment however was according to Lawson better suited to the construction of the project and less so with regard to production, he explains the funding as follows:

“We weren’t spoiled for choice when it came to financing, but we have an excellent financing partner, the Africa Finance Corporation. Strategically, they’re a very good match for us. They didn’t just put in the debt, they became our largest shareholder as well, and they put in the stream, so the total funding package for the first-of-its-kind project of USD$ 86.5 million.”

Thor Explorations Ltd. is underway with repaying the loan amount and forecasts to pay the loan off in its entirety by Q3 2023. The company is however considering refinancing the loan which would enable a larger monthly free cash flow which it plans to invest in exploration initiatives around the Segilola gold mine, no final decision however has been made, Lawson states:  

“We would have paid the full loan back sometime in Q3 next year, or at the end of Q2 next year. However, should we choose to amortise the debt, something more flexible, better suited to a company that’s generating cash flow rather than a project finance structure that was initially put in place, that’s something that I think would probably be welcomed by the market as well. So, we keep all our options open. We haven’t decided on any at the moment, but we keep them all open.”

The company is financing all of its exploration initiatives at the moment through the sale of the produced gold from the Segilola gold mine. The exploration initiatives of the company can be broken into three separate components, namely near-mine, regional and underground exploration initiatives. The near-mine exploration initiatives are within 2 km to 3 km of the mine and the regional exploration initiatives are within trucking distance, i.e. between 15 km to 30 km. The third component of the company’s exploration initiatives is its underground exploration, which the company plans on commencing with upon the conclusion of the Nigerian rainy season. The underground exploration initiatives will be focused on the bottom of the project’s open pit where previous drilling initiatives encountered high-grade mineralisation. Lawson explains the company’s intent with its underground exploration as follows:

“Once the rainy season finishes, as I say we haven’t closed at this resource, our deepest drill holes intersected very high grades and are currently underneath the pit and aren’t being brought into the reserve, so there’s no economic allocation to that at the moment. So, the third aspect of our exploration is doing some infill, filing in that deeper drill program.”

Lawson is confident that the exploration initiatives will be successful in lengthening the life of mine of the Segilola gold mine:

“We constantly have drills turning close to the mine, within trucking distance of the mine as well. Underneath the mine, there’s an underground component. And we’re quietly confident that we will extend this mine life, certainly within the next 6 to 12 months and that’s a constant process that goes on in parallel with mining.”

The Douta and Central Houndé projects and future plans

The exploration initiatives of Thor Explorations Ltd. do not stop with the Segilola gold mine but continue with the company’s Eastern Senegal located Douta project. The project holds a land position of 52 km2 and is a partnership between International Mining Company SARL and African Star Resources SARL, a wholly owned subsidiary of Thor Explorations Ltd. Lawson sums up the company’s plans for the Douta project as follows:

“We’re looking at drilling about 25,000 m in total. So, hopefully, by the end of October, that should all be done, and all this data is going to feed into our PFS. So, we’re doing our met studies, our geotech, our hydro, our environmental studies, and unlike a lot of our peers, single mine producers that go out to acquire a second project, we’re hoping we can build our second project organically.”

The Central Houndé project of the company was obtained through a partnership agreement between the company’s wholly owned subsidiaries in Burkina Faso and Acacia Mining Plc. which was acquired by Barrick Gold Corp. The company received 100% interest in the projects when Barrick Gold Corp. sold its non-core African assets. Lawson states that the future of the project is unclear and that the company is aiming to make a decision regarding the project by the end of 2022:  

“…we haven’t fully decided what we’re going to do there. Our real focus is Nigeria and Senegal. It gives us optionality, whether to deploy cash there or to do something strategic on the right commercial terms, but we believe we’ll probably make a decision before the end of this year.”

The company will continue with its exploration initiatives in the coming year whilst increasing its gold production rate aiming to reach 100,000 ounces of gold produced in 2022. Thor Explorations Ltd. is positioned to meet its production guidelines for the year whilst also expanding its operations, with Lawson summing up the future of the company as follows:

“We got to the production stage last year, and we’re producing now. Now, we think we have an excellent platform generating strong cash, and with the growth potential to take it to the next level.”

To find out more, go to the Thor Explorations website