Over the past couple of years, the company has offered an understated masterclass in developing an attractive-looking opportunity to something that looks wholly bankable.
Along the way, it’s managed to re-educate the market about the realities of doing business in Nigeria, and secured some of the country’s best ground for its own exploration and development purposes.
Now, the big hitters are moving in, in the latest endorsement of the company’s strategy.
Thor has just secured US$54mln in senior debt financing for the development of the Segilola project in Osun state, approximately 120 kilometres north of Lagos. Alongside that funding, there’s also a new US$15mln equity investment - at a premium, mind - and a US$9mln streaming deal.
The source of the money is the Africa Finance Corporation, an institution which serves West Africa, very roughly speaking, in the same manner as the IFC serves Southern Africa.
And since the AFC is partly owned by the Bank of Nigeria, that means that Segilola is now supported by some high-level Nigerian finance indeed. So, this funding package is both a tick in the box from the country’s business and finance community and, at least to a degree, a political endorsement of the project.
And why not?
Thor Explorations has stolen a march on every other mining company in the world and shown that Nigeria can be made to work as a gold-mining destination. West Africa as whole is one of the world’s premier gold mining jurisdictions, but until now Nigeria has remained largely untouched. Partly, that’s because the business community at large there remains focussed on the huge oil industry. But it’s also because of the ongoing perception that the country is a tough place to do business.
But not only has Thor managed to do business there pretty well, it’s also gained the support both in terms of debt finance and via a direct equity investment of a leading local institution.
And as first mover, it’s also been able to secure some of the most prospective ground in a country that’s almost completely untouched by exploration.
For the time being, though, the focus will be on the development of Segilola.
“The project is now 80% financed,” says Segun Lawson.
The plan is to secure the remaining 20% in the equity markets and then crack on and build an open pit mine that’s likely to produce a 80,000 ounces of gold in the first full year at a very significant margin, with more to come as the resultant cashflow finances a move underground.
Long-lead items will be ordered in the next quarter, and the initial phases of construction won’t be far behind.
“The first gold pour,” says Lawson, “is targeted for the second half of next year.
If that timetable holds, it will mean it’s taken Thor just four years to put the project into production, after it acquired it in June 2016. Such a speedy development timetable would be the envy of most junior companies, but in Thor’s case, it was helped along by the existence of a known resource right from the start, and by the overall attractiveness of the geology.
READ: Thor Explorations in advanced discussions with project financiers as it posts robust DFS for Nigeria gold project
A measure of the potential can be gleaned from the way Lawson speaks about it.
“We’re still very much an exploration play,” he says. “But what makes us unique is the 80,000 ounces of annual production we’ll have.”
That, and the roughly US$40mln of free cash flow that will be coming in every year.
So, just how long Thor will quality for the moniker of junior miner remains to be seen. The ambition is clearly sizeable. And the geology would seem to support it.
The company’s deepest holes at Segilola go down to around 240 metres, at which point they end in some of the highest grade material that’s available across the property. It’s that underground potential that makes Lawson confident production can immediately rise to 100,000 ounces in the second year, and potential increase further too.
Some of the new money raised will go straight into the underground development, including an upgrade to the existing preliminary economic assessment, so here’s a company that will be able to lay out significant plans for expansion even as it’s coming into the first phase of production.
There’s also the potential to expand along strike.
“It’s very unlikely this little reserve is there in isolation,” says Lawson. “We have two kilometres of strike length and nothing else. This area is completely unexplored and there’s huge upside potential.”