Nigeria’s capacity for gold supply might be poised for expansion as Canadian-listed Thor Explorations, which runs a gold mining project in the country, advances in its hunt for investment. The latest result of its investment bid is a $78 million debt-equity financing from Africa Finance Corporation (AFC), a corporation which the central bank of Nigeria and some commercial banks have stakes, reports say.
Although deposits of 44 minerals, including gold, iron ore, coal, tin and zinc, in over 500 locations across the nation, many of them remain proven reserves that are largely untapped. Most of the mining have remained at artisanal levels, limiting the active addition of gold detected in proven reserves into the supply chain.
Nigeria’s first gold refinery, Kian Smith with an initial capacity to produce three tons of gold monthly and one ton of silver is expected to more than triple its capacity within five years. But it will not be relying on gold sourced from Nigeria alone, but also from supplying partners in Ghana, Sierra Leone and Tanzania, according Nere Teriba, vice chairman of Kian Smith Trade & Co said in a monitored report.
What it implies is that despite proven reserves of both alluvial and primary gold in the in the south-western part of the country, poor capacity to mine can edge it out of competition in the West Africa’s gold supply chain.
This is why the country has overtime made efforts to lure private investors such as Thor Explorations and Australian-listed Kogi Iron to stake concessions on these primary deposits.
In 2018, both companies pushed for the consolidation of their investments in gold and iron mining in Osun and Kogi states respectively, hunting for a combined sum of $422 million.
Thor aimed for $72 million, promising rapid payback on invested funds once production takes flight.
The renewed attention was spurred by the support interest of the World Bank in Nigeria 2017 when in April it said it was providing funds to help the government develop its neglected mining sector.
The bank’s support programme involved providing about $150 million to the government to enable it to jumpstart non-oil sectors of the economy that have suffered decades of neglect after an oil sector boom. With highly volatile oil prices that have consistently left the government’s failing to meet its revenue target, it has seen the need to diversify its economy.
Read also: Gold price could smash records at $2,000, says Citi
Thor identifies the opportunity in government’s reprioritising of the non-oil sector and is leveraging on the underdevelopment in the mining sub-sector.
The Canadian company owns a gold exploration licence in Osun State and has set up a mining operation known as Segilola Gold Project, for which Segun Lawson, its chief executive, says it is aiming to produce gold in the first quarter of 2021 with probable reserves of up to 500,000 ounces.
The project was brought in 2016 for a cash back up of $3.1 million plus Thor shares put at six million.
Segun Lawson, president and chief executive of Thor said: “Detailed design work on the Segilola Project is in progress and we are on track to break ground in Q4 this year. We look forward to completing the current equity placements and AFC debt documentation, at which point, the Segilola Project will be fully funded.”
The company received conditional approval from the TSX Venture Exchange for the first tranche of a proposed $15,000,000 private placement with the Africa Finance Corporation (“AFC”), earlier this month. In August, it extended its proposed private placement, ‘Offering’, by 30 days and thereafter received the first $6 million in subscriptions from the Offering, moving the company into advanced discussions with parties who were completing their required due diligence on the Company.
Being a sector that has struggled to attract foreign investment, mining provides only around 0.5 percent of Nigeria’s gross domestic product (GDP), according to the World Bank figures
The oil sector accounts for an estimated 8.7 percent of the GDP and is critical for foreign exchange and fiscal revenue.
Gold Reserves in Nigeria averaged 21.37 tons between 2000 and 2019, hitting an all-time high of 21.50 tons in the second quarter of 2019, available statistics show.
With Thor’s investment progress, Nigeria could be set for its first industrial-scale gold mine from Thor Explorations Ltd., which is developing a project capable of producing 80,000 ounces per year in southwest Nigeria.
