Thor Explorations Ltd (CVE:THX) is ready to begin construction on its Segilola gold project after reaching its funding goals thanks to the Africa Finance Corporation.
The Vancouver-based company announced the milestone Wednesday, calling the decision the “most significant” breakthrough to date.
Segun Lawson, Thor’s CEO, told shareholders that the company was “delighted” to be in a position to begin construction.
“This project is the first of its kind in Nigeria, a country where we believe there is considerable geological potential,” Lawson said in a statement. “The initial project economics are excellent and we have the right team in place to build, operate and capitalize on our first mover advantage in Nigeria.”
Segilola boasts a high-grade gold reserve of 3,345,000 tons at 4.2 grams per ton, good for 448,000 ounces in the probable category.
A preliminary feasibility study demonstrates robust cash flow payback of under two years, with a post-tax net present value of US$138 million and an internal rate of return of 53%.
Fully funded for construction
Under the terms of the agreement with Africa Finance Corporation (AFC), the executed definitive documents include a subscription agreement with AFC for a private placement of Thor shares worth US$4.2 million, or just over 28,215,750 shares priced at C$0.20. Thor previously closed the first tranche of its private placement of US$11.8 million on December 5.
AFC’s executive director Oliver Andrews will join Thor’s board of directors, the company told investors. Andrews has over 35 years of experience in investing and developing infrastructure as well as mining projects and financing.
Thor is also proposing to issue 34.8 million shares against US$5 million of invoices under its construction schedule in a shares-for-debt arrangement. In total, the company expects to close an anticipated US$9.3 million by issuing nearly 63 million shares at a price of C$0.20 per share.
Thor, through its wholly owned subsidiary Segilola Resources Operating Limited, also signed a deal with the AFC on a US$21 million stream agreement, as well as definitive documentation for the provision of US$54 million senior secured credit facility. The credit facility represents the balance of the funding required for Segilola’s construction. The company will issue AFC an additional 33.3 million bonus shares at C$0.20 per share.
On closing the credit facility and the private placement, AFC will have provided a combined equity and debt financing package of US$86 million and hold 19.5% of Thor’s total shares.
“As a long-term committed investor of Thor, AFC is pleased to participate in the full funding of this landmark project which represents not only a good quality asset, but also sets a benchmark for the future of commercial gold mining in Nigeria,” AFC’s CEO Samaila Zubairu said in a statement.
Thor said it will use the net proceeds from the AFC financings as the major component of the capital cost and working capital requirements to construct the project. The total funding requirement to build the project is approximately US$98 million.
The firm expects to pour its first gold at Segilola in the second quarter of 2021.
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