Thor Explorations (TSXV: THX) estimated in a definitive feasibility study two months ago that pre-production capital expense to build an open-pit mine at its Segilola gold project in Nigeria would cost US$87 million.
In April the company announced it secured a US$78-million financing package from Africa Finance Corp., a multilateral finance institution with US$4.5 billion on its balance sheet.
The financing package consists of a US$54-million, senior-secured credit facility, a US$9-million gold stream prepayment and a US$15-million equity investment.
Thor Explorations will still need to raise US$18 million from debt or equity sources, it says.
News of Thor’s term sheet with Africa Finance Corp. was followed a day later by an announcement that the company received a financing commitment from its EPC contractor, China’s Norinco International Cooperation.
Norinco, which is affiliated with China North Industries Corp., has committed to fund 10% of the US$65-million turnkey, engineering, procurement and construction contract.
Segun Lawson, Thor’s president and CEO, noted in a press release that Norinco had “recently delivered a major copper-cobalt project in the Democratic Republic of the Congo,” and that Thor “is set to benefit from their comprehensive engineering, procurement, logistics and construction capability.”
Segilola, 120 km northeast of Lagos, has an estimated five-year mine life as an open pit, with average life-of-mine production of 80,000 oz. gold per year.
The definitive feasibility study (DFS) estimates all-in sustaining costs of US$662 per ounce.
At a US$1,300 per oz. gold price, the DFS forecasts a US$138-million post-tax net present value at a 5% discount rate, a 50% post-tax internal rate of return, and initial capital payback in a year and a half.
The study is based on an open pit that covers a 43-hectare area and is 1,600 metres long, 140 to 430 metres wide, and between 55 metres and 210 metres deep. Production will start from the high-grade northern pit, where the deposit outcrops, and, along with the stage-two pit (which starts after nine months), will return an average head grade of 6.3 grams gold per tonne for the first 12 months of production. Stage three starts in month 14, with a southern-wall cutback of the stage-two pit.
Segilola contains probable reserves of 3.35 million tonnes grading 4.2 grams gold per tonne for 448,000 contained oz. gold. Resources stand at 4.04 million indicated tonnes averaging 4.3 grams gold for 556,000 oz., and 2.03 million inferred tonnes grading 4.7 grams gold for 305,000 ounces.
The study envisions a 625,000-tonne-per-day processing plant that would include conventional crushing, two-stage grinding, gravity, carbon-in-leach, elution, electrowinning and smelting to produce gold doré. A tailings management facility would be built 1.3 km southwest of the process plant.
Construction could start in the second quarter of 2019, and be completed within 18 months.
At the same time Thor released its DFS on the open-pit part of the project, it completed a preliminary economic assessment (PEA) that evaluated an initial three-year underground mine, which could be brought online during the open-pit mine life to supplement feed from the open pit.
Development capital for the underground mine is US$13 million. The PEA forecast average life-of-mine production of 33,000 oz. gold per year, at all-in sustaining costs of US$756 per ounce. The post-tax net present value at a 5% discount rate could reach US$35 million. The PEA did not include an internal rate of return estimate.
The deposit at Segilola is open at depth.
Exploration drilling on targets within the exploration licence continues. The project is in the crystalline basement-complex rocks of southwestern Nigeria, within the Upper Proterozoic rocks of the Ilesha schist belt, which formed part of the Pan-African mineral belt.
Thor’s shares have traded within a 52-week range of 13¢ to 22¢ over the last year, and at press time were trading at 16¢. The junior has a $52-million market capitalization.
In addition to Segilola, Thor has a 70% stake in the Douta gold project in southeastern Senegal, and a 49% interest in the Bongui and Legue gold permits in southwestern Burkina Faso.