• Advancing two high-value gold projects in West Africa
  • Nigeria has had very little exploration over last 60 years due to focus on oil
  • Segilola has nameplate capacity of 650,000 tonnes per annum (tpa); processing rate of 625,000 tpa

What Thor Explorations does:

West Africa-focused mining group Thor Explorations Ltd (CVE:THX) (LON:THX) is advancing Nigeria’s first large-scale gold mine, namely its flagship Segilola project, towards first production.

The Vancouver-based company is fully funded, in construction and on track for the first gold pour at the wholly-owned project in the second quarter of 2021, the company has said.

Thor Explorations also has the Douta exploration project, where it holds 70% and has an opportunity to increase that to 100%, in the south-east region of Senegal. The mining lease lies within 5 kilometres (km) of Senegal’s largest undeveloped gold resource, namely the 4.4 million ounce (Moz) Massawa deposit, which was recently sold by Barrick Gold Corp (NYSE:GOLD) to Teranga Gold Corp (TSE:TGZ) for up to US$430 million.

Elsewhere, Thor Explorations is also in a joint venture with major Barrick Gold on the Central Houndé project in western Burkina Faso. Barrick has a 51% stake, while Thor owns 49%.

Barrick is earning up to 8% by funding a minimum of US$2 million and completing a pre-feasibility study (PFS) on the property, which lies in the prospective Houndé belt, which has seen 10 Moz worth of gold discoveries.

Back to the firm’s main project, and construction at Segilola started on the mine early last year. It has a 15 month build timeline for the high-grade open pit project and all approvals are in place.

Segilola has a 25-year mining licence and the NI-43 101 open pit probable reserve stands at 405,000 ounces of the yellow metal at a grade of 4.2 grams per ton (g/t). The higher confidence indicated resource is 469,000 ounces at 4.7 g/t of gold.

A definitive feasibility study showed a robust project, to be mined by a contractor, with a five-year mine life, which offers excellent leverage to the gold price.

Capital expenditure for the mine was put at just US$87.5 million, while the all-in-sustaining-costs (AISC) are put at a competitive US$662 per ounce, which is in the lowest quartile on the global cost curve.

Based on a gold price of US$1,300 per ounce, the post-tax net present value (NPV) comes in at US$138 million with an impressive 50% internal rate of return (IRR) and a payback in under 1.4 years. With the current reserve, at a US$1,600 gold price, Segilola shows a post-tax NPV of US$238.1 million and at a US$1,800 gold price shows a post-tax NPV of US$305 million

In April, 2019, Thor signed a term sheet for a US$78 million financing with the Africa Finance Corporation (AFC) for the construction and ramp-up of the project. The package included a US$54 million senior secured credit facility, a US$9 million gold stream pre-payment and a US$15 million equity investment from AFC, which will become a 20% shareholder in Thor.

How is it doing:

Thor Explorations reached another company milestone with the admission of its shares on the AIM market of the London Stock Exchange on June 22, 2021. The move was aimed at offering wider access for investors as it progresses through a transformational period in its development.

Thor said it continues to focus on pouring first gold at the Segilola Project in Nigeria in July and is targeting publication of a maiden resource at Douta in Senegal by the end of 2021. Exploration programs focused on the company’s exploration licences running along the Ilesha Schist belt in Nigeria are also continuing.

The company said its strong pipeline of organic opportunities is supported by low-cost production at Segilola, with a target of 40,000 ounces this calendar year and forecast of over 100,000 ounces in 2022.

In a March 29 update, Thor had reported an improved resource and reserve for Segilola project in Nigeria, improving the asset’s economics Notably, the new probable reserve of 517,800 ounces at 4.02 grams per tonne (g/t) is a 28% increase over the definitive feasibility study issued in March, 2019. That report two years ago considered an open pit and building a new 625,000 tonnes per annum (tpa) processing plant.

Following further resource definition drilling, design optimisation and positive industry sentiment in the gold price, Thor reviewed the process plant design capacity and optimum pit design, which has resulted in a larger pit design and an increase in production plant capacity to 715,000tpa.

Meanwhile, on February 2, Thor announced an encouraging first set of drill results from the northern extensions of the Makosa Discovery at its Douta Project, with mineralisation confirmed over 1,000 metres (m) of strike length in a number of parallel lodes at Makosa North.

The group noted that the drilling program was designed to test the mineralisation along strike and down dip from the mineralisation delineated from previous drill programs on Makosa. The results received to date confirm the continuation of the Makosa mineralised system along strike to the north.

The best results included 5m grading 3.37g/t gold from 32m returned from drill hole DTRC129, which is located on the northern-most section completed in this program. The group said there is obvious potential to extend the mineralised strike length further to the north. Ongoing exploration is planned to explore the Makosa North mineralisation both to the north and at depth.

On the financing front, on December 1, 2020, Thor revealed that it had received an initial disbursement of US$21.5 million under the  US$54 million senior debt facility from the Africa Finance Corporation.

The drawdown coincided with the arrival of the first shipments of equipment at Lagos port, as well as the shipment of SAG and ball mills from China under an EPC contract with Norinco International.

Inflection points: 

  • AIM listing to widen investor base
  • First gold pour from Segilola project
  • Further results from Douta

What the broker says:

In a note to clients on June 22, 2021, Canaccord Genuity maintained a ‘Buy’ recommendation on Thor, with a target price of C$0.65.

Canaccord’s analysts said Thor stood out on a number of metrics when compared to its global gold junior coverage, including a higher free cash flow (FCF) yield. The company is also considering dividend policy options which would act as a clear differentiating factor to many other junior gold companies, they noted.

The analysts estimate a 30% payout of FCF in 2022 could result in a dividend of around 9% in that year.

“Our base case valuation is predicated solely on the value of the initial 5-6 year open pit operation at Segilola, with no allowance for exploration success or additional life extension (which is arguably a very conservative stance),” they concluded.

What the boss says:

In June’s statement on the AIM listing, Thor Explorations chief executive Segun Lawson, told investors: “Today’s admission to the AIM market of the London Stock Exchange represents another milestone in the development of the company, offering wider access for investors as we progress through a transformational period in the company’s development.

“With near term production, a clearly defined growth strategy, a positive market setting for gold and a track record of exploration and development success, we are excited to have brought the opportunity to invest in our growing company to London.”

Contact the author at stephen.gunnion@proactiveinvestors.com