Thor Explorations builds commanding first-mover advantage in Nigerian gold mining industry

“It’s the most advanced gold project in Nigeria,” says Segun Lawson, chief executive of Thor Explorations Limited

The project in question, Segilola, sits in the southwest of the country in Osun State, approximately 120 kilometres of tarred roads away from Lagos.

“A tarred road dissects our license,” emphasises Lawson.

Nigeria may be almost virgin territory for junior miners, but it’s not a country without infrastructure. In fact it boasts Africa’s largest economy, and it’s also the second biggest recipient of foreign direct investment, after Egypt, in the continent.
It’s a place that is no stranger to business and commerce – it’s just that in the resources sector much of that business and commerce has centred around oil.
Lawson believes that herein now lies an opportunity for companies like Thor Explorations. Perhaps mindful that the days of oil may now be numbered with the advent of electric vehicles, the Nigerian government has designated mining a “pioneer” industry.
Indeed, there are parallels here to Saudi Arabia, which is also opening up its vast land resource to mining exploration after a hitherto exclusive focus on oil.
In Saudi there are already some big miners in on the ground, and operating big mines.
But in Nigeria, it’s earlier days, and Thor Explorations has first mover advantage.
Lawson is not being slow to capitalise on this advantage. Already Segilola boasts an indicated resource of over 550,000 ounces of gold grading 4.2 grams per ton, with a further 300,000 ounces inferred grading 4.7 grams per ton.
That in turn has been enough to hang an independent preliminary feasibility study on, the results of which have just lately been released and which look very favourable.
The study envisaged an average production rate of 81,000 ounces of gold per year for the first three years of the mine life at Segilola, falling thereafter to 47,000 ounces for the next four years.
Life of mine all-in sustaining costs were set at US$682 per ounce which, even allowing for the slight recent weakening of the gold price, allows for plenty of margin.
All-told the post-tax net present value at an 8% discount rings in at US$119 mln, with the post-tax internal rate of return at 53%.
There’s the small matter of the US$71 mln that the study estimates it will take to get Segilola into production, but on the other side of that coin there’s also plenty of room to fine tune the project and make the numbers even better.
“We still think there’s further optimisation to be done,” says Lawson. In part that will consist of the usual fine-tuning as study numbers get tighter, but there’s also a number of high-grade shoots that could be brought into the occasion, so the project certainly has the potential to surprise on the upside.
The plan now is to complete a definitive feasibility study by the end of the first half of next year and then to progress directly into development.
But while all that’s going on, investors will have one or two other things to think about too.
For a start, there’s the additional exploration upside on Segilola itself.
Next round of financing?
“We’ve only drilled the first two kilometres of a four kilometre anomaly,” says Lawson. “We think there’s a lot of upside potential here.”
And then there are the company’s other assets, particularly the Douta project in Senegal which, says Lawson, has recently delivered some “stunning drill results.”
Among the highlights of these were 9.5 metres true width at 8.1 grams per tonne and 18.9 metres at 2 grams.
When the time comes for the next round of financing, some money is likely to be set aside to push ahead with further exploration at Douta. There’s local precedent for success, given that Randgold’s 4.4 mln ounce Massawa project is just five kilometres away.
All told, there should be plenty to keep investors excited in the coming months.