Thor Explorations Ltd pays first gold in Nigeria and expands ownership in Senegal

  • Advancing two high-value gold projects in West Africa
  • Nigeria has had very little exploration in the past 60 years due to the emphasis on oil
  • Segilola has a nominal capacity of 650,000 tonnes per year

What Thor Explorations does:

West Africa-focused mining group (,,,) () () is advancing Nigeria’s first large-scale gold mine, its flagship Segilola project.

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

Thor Explorations also owns the Douta exploration project, in which it owns 70% and has the opportunity to increase it to 100%, in the south-eastern region of Senegal. The mining lease is within 5 kilometers (km) of Senegal’s largest undeveloped gold resource, the 4.4 million ounce (Moz) Massawa deposit, which was recently sold by Barrick Gold Corp () to () for an amount of 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 owns 51% of the capital, while Thor owns 49%.

Barrick earns up to 8% by funding a minimum of US $ 2 million and performing a Pre-Feasibility Study (PFS) on the property, which is in the potential Houndé Belt, which has seen gold discoveries of a value of 10 Moz.

Back to the company’s main project, and construction at Segilola began on the mine early last year. He has a 15 month construction schedule for the high grade surface mine project and all approvals are in place.

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

A definitive feasibility study has shown a robust project, to be operated by an entrepreneur, with a lifespan of five years, which offers excellent leverage on the price of gold.

Capital expenditure for the mine has been estimated at just US $ 87.5 million, while all-in costs (AISC) are competitively priced at US $ 662 per ounce, which is in the quartile on lower on the global cost curve.

Based on a gold price of $ 1,300 per ounce, the net present value (NPV) after tax is $ 138 million with an impressive internal rate of return (IRR) of 50% and a return on investment in less than 1.4 years. With the current reserve, at a gold price of $ 1,600, Segilola has an after-tax NPV of $ 238.1 million and at a gold price of $ 1,800, an after-tax NPV of 305 million US dollars

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

How’s it going :

On August 9, Thor Explorations revealed that it had discovered “Bridge” mineralization during additional drilling near the southern Makosa Tail area on its Douta project in Senegal. The 1,600-meter (m) program, which targeted a previously untested gap between Makosa to the north and the tail of Makosa, is called Makosa Bridge.

Test results for the bridge area indicate that gold mineralization is developed in sheared sedimentary and gabbroic host rocks along the length, connecting the tail of Makosa and Makosa.

Significantly, at the end of July, the company announced that it had completed its first gold pour at its Nigerian Segilola mine. The gold miner plans to steadily increase production ahead of commercial production slated for September this year. The planned processing rate is 715,000 tonnes per year, targeting approximately 85,000 ounces of gold per year.

When announcing expectations for the first gold pour in Segilola earlier in July, Thor also said he was aiming to release a first resource in Douta, Senegal by the end of 2021. The programs Exploration focused on the company’s exploration licenses along the Ilesha Shale Belt in Nigeria also continues, he added.

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

In a March 29 update, Thor reported improving resources and reserves for Segilola, improving the economy of the asset. Notably, the new probable reserve of 517,800 ounces at 4.02 grams per tonne (g / t) is a 28% increase over the final feasibility study. published in March 2019. This report two years ago envisaged a surface mine and the construction of a new processing plant of 625,000 tonnes per year (tpa).

After further resource definition drilling, design optimization, and a positive industry sentiment regarding the price of gold, Thor reviewed the design capability of the process plant and the optimal design of the pit, resulting in a larger pit design and increased production plant capacity to 715,000 tpa.

And on February 2, Thor announced an encouraging first round of drilling results from the northern extensions of the Makosa discovery on its Douta project, with mineralization confirmed over 1,000 meters (m) in length in several veins parallel to Makosa North. .

The group noted that the drill program was designed to test mineralization along the strike and down dip of mineralization delineated in previous drill programs on Makosa. The results received to date confirm the continuation of the Makosa mineralized system along the northerly direction, he said.

Thor Explorations also took another important step with the admission of its shares to the London Stock Exchange’s AIM market on June 22, 2021. The move was intended to provide broader access to investors as it progresses into a period of transformation of its development.

Inflection points:

  • More news on the “Bridge” mineralization near the southern Makosa Tail zone
  • First resource in Douta by the end of 202
  • New rise of Segilola

What the broker says:

In response to Thor Exploration’s announcement revealing the discovery of a ‘bridge’ area connecting the Makosa Tail and Makosa targets on its Senegal property, Hannam & Partners released a corporate overview and maintained its action focus of CA $ 0.08 per share.

Company analysts noted that the company shows upside potential in the fourth quarter thanks to the discovery of the bridge as well as the ramp-up of gold production from its flagship Segilola project in Nigeria.

“We are maintaining our target of C $ 0.80 / sh (per share) for now, noting the significant increase that a first resource estimate at Makosa or commercial production at Segilola, expected in September, could have on the stock. . We still believe that the market has yet to recognize the robustness of Thor’s short-term profitability and cash flow, as well as his exceptional potential to add value through expanding resources in Nigeria ”, Hannam analysts said.

Thor expects commercial production to begin at Segilola in September.

“We get a late 21E DCF for Segilola of US $ 648 million, using $ 1,950 / oz of gold and a WACC of 10%, to which we apply a mixed target P / NPV of 0.72x. We see the possibility of increasing our P / NPV target once commercial production is reached at Segilola, ”added analysts.

“Combined with a conservative estimate of C $ 25 million (only 4 c $ / sh) for Douta and other assets, and after adjusting for net debt and other items, our risky SOTP for Thor is 47 p or CA $ 0.80 / share,> 2x the current share price, offering significant upside potential for an increasingly low-risk project “, they concluded

What the boss says:

Commenting on the Makosa Bridge news in August, Thor Explorations CEO and President Segun Lawson said: “The first drilling results from the newly discovered Makosa Bridge prospect are very encouraging. Importantly, the results established that continuous gold mineralization is developed over a strike length. nearly 7.5 km stretching from Makosa Tail in the south to Makosa North. “

Lawson added, “Based on these reconnaissance drilling results, it appears the Makosa system is developing on a large scale and Makosa North is not yet closed to the north. We look forward to receiving the latest round of results aimed at expanding Makosa North, after which we will work on creating a first resource in Makosa. “

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