Thursday, September 28th 2023

Thor Explorations Ltd

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A smashing quarter for Thor Explorations


“…the company has been able to continually upgrade its production guidance for Segilola, and exploration at Douta, particularly in regard to the recently discovered Sambara Prospect, with a Preliminary Feasibility Study on the horizon…”


Thor Explorations (AIM:THX), a gold producer and explorer focused on West Africa, continues to ramp up production at its Segilola Gold Project in Nigeria, elaborate the promise of its prospect at Douta, Senegal, and record impressive revenue growth. But though the company’s vector seems to be pointing upwards, prospective investors seeking to ride THX’s momentum should be prepared to strap in: this is one of AIM’s popular trades, but a volatile one.

THX acquired its headline asset, the Segilola Gold Project in Nigeria, about 120km northeast of Lagos, in 2016. The Project’s most recent Mineral Resource and Mineral Reserve Estimate (MRE) and improved Life of Mine plan, published in Q1 2021, stated ‘a high grade open pit probable reserve of 517,800oz at 4.02g/t within an open pit indicated MRE of 532,000oz of gold grading at 4.5g/t, and an underground indicated resource of 76,000oz of gold grading at 6.1g/t, with additional significant exploration upside potential.’ Gold production got underway last year, with 9,921oz produced through FY 2021, first gold sales generating revenues for FY 2021 of CAD$7,815,621, and a Q4 net profit of CAD$3,354,803, against a loss of CAD$3,704,785 for the previous year. Exploration continues through a reverse circulation drilling programme designed to find open pit ounces that can be trucked to the Project’s plant.

THX’s most significant exploratory interest is its 70pc stake in the Douta Gold Project, covering 58km2 within the Kéniéba inlier, eastern Senegal. The Project encompasses the Makosa Gold Deposit, for which a maiden MRE published late last year stated an Inferred Resource of 730,000 ounces of gold, comprising 15.3Mt grading 1.5g/t Au. Makosa is located just 4km east of the Massawa North and Massawa Central deposits which form part of the world class Sabadola-Massawa Project owned by Endeavour Mining, and adjacent to Bassari Resources’ Makabingui group gold deposits which collectively contain some 340,000oz of gold in the indicated category and 670,000oz of gold in the inferred category. Exploratory drilling last year discovered gold mineralisation at another prospect, Mansa. 

THX also has an interest in Burkina Faso at the Central Houndé Project, which comprises three early stage exploration permits covering 474km2 located in the prospective Houndé Greenstone belt. The company has secured option agreements for three further interests in Nigeria, exploration licences located in the Ogun, Osun and Oyo States.

Progress at Douta, strong production at Segilola


This year’s exploration campaign at Douta got underway in February, with a view to the publication of a Preliminary Feasibility Study. The drilling programme began with 5,000 metres of RC drilling designed to extend the strike extensions of a resource that remains open-ended along strike to the north. An additional 25,000 metres is targeting an upgrade to the existing resource at Makosa and testing three priority targets within the licence. Parallel workstreams include detailed metallurgical sampling and testing, environmental and social baseline monitoring as part of an Environmental and Social Impact Assessment, and geotechnical and hydrological studies.

But most of the investor buzz about THX this year has been generated by the ongoing success of its production at Segilola. A Q2 operations update reported production of 23,785oz, up 11pc on Q1, bringing the total for the first half of the year to 45,128oz, allowing the company to issue guidance for full year production of 85,000 to 100,000oz. THX’s Q3 operations update was also robust, reporting record quarterly production of 26,523oz, exceeding guidance for the quarter of 23,000 to 25,000oz. Production guidance for Q4 2022 is 25,000 to 27,000oz of gold, and  90,000 to 100,000oz is projected for the full year.

Sales were allowing THX to pay down its debt with a tranche of $10.3m in Q3 reducing the company’s Senior Debt Facility to $29m, down from $50m at the end of the previous quarter: THX has been able to pay off more than two-fifths of its debt in the first nine months of commercial production.  Q2 financial results published in August detailed the company’s financial progress. THX sold 38,830oz of gold and 2,273oz of silver in H1 2022, generating a net profit for the period of $6.163m. Gold sales earned revenues of $66,220,229, and the company revised its production guidance for 2022 upwards to 90,000 to 100,000oz of gold at an All-In Sustaining Cost of $850 to 950 per oz. As at 30 June the company had cash of $5,055,930.

Last month THX published ‘encouraging’ results from the Makota Gold Deposit and a newly discovered Sambara Prospect at Douta. Intercepts at Sambara, located 15km north-east along strike from the Makosa resource, included 6m at 4.80g/t Au from 65m; 6m at 4.80g/t Au from 12m, 2m at 6.39g/t Au from 8m; 6m at 2.58g/t Au from 57m; anda2m at 5.85g/t Au from 26m. Drilling at the southern extremity of Makosa resulted in ‘a high grade intersection which indicates that robust mineralisation extends at depth’. Results included 8m at 4.77g/t Au from 62m; and 4m at 2.95g/t Au from 1m. CEO Según Lawson said the programme had so far ‘established that gold mineralisation is developed in the northern parts of our exploration permit’ and that ‘the first batch of samples from the Makosa upgrade drilling program have produced very positive results that suggest that the resource may extend at depth.’ The programme will continue through October.



THX’s progress this year comes against the background of an uncertain near term outlook for gold. The price of the precious metal has dipped to its lowest level for two years, down to around $1,650 per ounce, 9pc below its recent peak in March, and 8pc lower than its price at the beginning of this year, with rising US interest rates, higher bond yields and a strong dollar all weighing on its value. But gold stands ever ready to resume its historic role as a safe haven asset should the global economic slowdown deteriorate into stagflation – a combination of low growth and high inflation – and the fraught situation in Ukraine worsen further.

Prospective investors should also consider the fractious economic and political environment in which THX operates. The company’s Central Houndé Project in Burkina Faso is somewhat clouded by the ongoing efforts of groups linked to al-Qaeda and Isis to gain control of mines across north and west Africa. Analysts believe terrorist groups are active in 10 of Burkina Faso’s 13 regions, a perpetual threat undermining the country’s commitment to democracy. An elected government has just been deposed by military commanders promising to take tougher action against the terrorists. Nigeria, home to the Segilola Gold Project, is also suffering, the country’s central bank raising interest rates to an all-time high of 15.5pc as it struggles against surging inflation: low oil production – partially due to the theft of an estimated 400,000 barrels per day – has led to a scarcity of US dollars in its import-heavy economy, making imports more expensive. But the resource-rich country’s economic fundamentals still appear to be strong, underlined by Shell’s decision to make its first power sector acquisition in Africa the purchase of the Nigerian renewable energy provider Daystar, which the energy giant described as ‘a fundamental step for Shell in growing our presence in emerging power markets’.

THX’s shares have been choppy this year, touching lows of 13.25p in February and periodic highs of 20p. The company’s stock is currently just under 17p, taking its market cap to CAD$166m. THX seems headed in the right direction: the company has been able to continually upgrade its production guidance for Segilola, and exploration at Douta, particularly in regard to the recently discovered Sambara Prospect, seems to offer another value trigger, with a Preliminary Feasibility Study on the horizon. The company operates in somewhat uncertain environments, but the bulk of its interests are concentrated in relatively established jurisdictions in Nigeria. Prospective investors can choose to take a longer term stake in a company that seems on an upward path, or, as much of the market seems to be doing, take a chance on gaining near term profits on the expectation of positive operations updates and further developments at Douta.

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