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Very good but equally im disappointed that PFS has slipped back to Q3... losing count of how many times its been delayed now - 9months and counting!
I guess the lack of Segan meeting his self set deadlines matters less in this current gold price climate. With the PFS now on ice till the back end of the year hopefully they can really get the mine life at Segiloa extended.
Today's RNS is very significant for Thor, as it has the potential to double or triple the size of their resources in Senegal.
In summary, they have just more than tripled their Senegal licence areas for about half a day's free cash flow from Segilola; ie they've paid for it this morning!
The expanded licence areas are 207.5 sq kms (58+93=56.5), vs 58 before. 207.5/58 = 3.58 times the previous size.
Obviously Douta-West extends the existing resource to the south-west and to the north, with Sofita also being highly-prospective as Thor say "The licence covers rocks belonging to the Diale-Dalema Supergroup of the eastern part of the Kedougou-Kenieba Inlier and is essentially composed of Paleoproterozoic rock formations. These rocks are similar to those that host the gold resources of the Douta Gold Project."
These high grade (incl 30gm/t), reasonably shallow depth drill results from Kola indicate that there is a potential resource here that is well suited to trucking to Segilola to extend mine life. Further drilling here is likely this quarter.
The greenfield discovery at Kola located 23km to the south returned several high-grade encouraging drill results and has opened up a new front of exploration potential to the south, an area which is now of priority.
Drilling during Q4 2023 returned encouraging high-grade intercepts, including at the Kola Prospect:
o SGRC188: 4 metres at 30.2g/t Au from 14 metres
o SGRC 189: 8 metres at 3.0g/t Au from 56 metres
o SGRC 190: 7 metres at 26g/t Au from 49 metres
o SGRC 194: 7 metres at 34.2g/t Au from 49 metres
o Previously unreported drilled in Q4 2023
o SGRC 236: 2 metres at 12.61g/t Au from 49 metres
o SGD 295: 5 metres at 11.25g/t Au from 15 metres
o SGD 296: 3 metres at 2.49g/t Au from 55.5 metres
HarChris. No one knows what resource lies at depth at Segilola because no drilling has yet been done. But the gold in the open pit which they are mining has come from somewhere. If that somewhere lies below the pit then only by this new drilling will Segun or anyone else be able to quantify it.
Is 300k oz a total stab in the dark from you pacifico or has Segun intimated that previously?
It's likely significant gold resource will be discovered beneath the open pit with this first ever deep drilling at Segilola due to start this quarter. If the drilling proves up another 300k oz at a decent grade this would add a further 3 years to the mine life without taking into consideration potential resources being drilled at satellite deposits within trucking distance of the mine.
Initial budget of $4 million for 2 rigs deeper drilling near the pit and another rig for satellite prospects near mine. Results will be given out from Q2 onwards.
Watch for these drill results as they come in.
In themselves they could near double the valuation as the discount for a perceived short mine life is removed.
Canaccord: A further 5p to be added to the valuation per year of mine life extension (1-2 years expected) from Q2 drilling.
At current gold price, THX will be adding an extra 20 mil USD to annual income when compared to mid Feb gold prices. That's 25% of current MCAP, which was already undervalued. I know gold miners are out of favour, but this is getting daft now.
Great news, I'll adjust my numbers by 30%.
In the broker notes there is no tax forecasted for the next three years so previous poster is right about the tax relief.
This is from a note from Alternative Resource Capital (ARC) dated Feb 22. i downloaded the whole thig at the time, but you may be able to locate the original with a bit if diligent searching.
"Having historically been viewed as an oil-dominated natural resources jurisdiction,
Nigeria is increasingly getting on the radar of miners given its aforementioned gold
potential, an accommodating legislative structure (including a five-year tax holiday
for new mining ventures) and Thor’s success in delivering Segilola to commercial
production. Thor’s substantial ground-holding and status as the only commercial-
scale producer in the country gives it significant first-mover advantage, in our view,
and provides a solid foundation for further success"
Any idea where you read that? If you have a link I'd appreciate it. I'll have a look through the old RNS because that would be a huge deal.
Think they have a 5 year tax holiday from memory.
Balance sheet looks good to me. With any luck it's $100 million EBITDA per year going forward. It's 100% owned too. Most West African countries seem to take 20%. The tax rate in Nigeria is 30%, which is heft, but I belive they can offset some against write downs in plant asset value. I hope we get a dividend this year.
Production will be gold poured and not include what remains in the circuit.
Thanks @pacifico. I don't understand when in-circuit material is counted in production figures, I think that's the crux of my confusion. I hope you're right about 95-100k oz. being conservative, otherwise my point about this years new production being the same as last years still stands, as far as I understand it.
@HarChris - yes, 100k oz. per year base case from Segilola would be wonderful. That's the hope and why I'm invested — just keen to see it realised and understand the numbers a bit more :)
Segun stated base case of 3 more years, after this year, of around about 100k ounces, generating ~$300m free cash flow so this year's production figure is expected to be repeated until the (current) end of the life of this mine.
That by itself is a phenomenal amount of cash generation before we even talk a year or two more at Segilola, Douta, or the lithium potential.
Colinzeal. 10k oz of 2023 production was in circuit from 2022 production. Carried forward into this year. The plant modifications made in H2/23 will allow draw down of some of this in 2024 production. Segun is very conservative in his statements but to me it seems likely that production this year may be above 100k oz.
What I found most interesting about his discussion surrounding Douta was the extra targets they're finding.
The Douta licence area is slap-bang in the middle of a highly-prospective gold-bearing area and if 32km long. They have previously said that it's largely either unexplored or under-explored. Segun has now said that they have found and are about to drill more oxide targets in Q2, which should add to the commerciality and profitability of the resource.
I've long been of the opinion that 2 million ounces will be just the start at Douta, the additional targets simply adding extra ounces to the initial PFS over time.
I wondered if anyone who watched yesterday's Crux Investor interview ([LINK REMOVED] picked up on the detail around some of last year's production being left in-circuit.
A lot of emphasis has been placed on the fact that 2023 was an operationally difficult year for Thor due to the 'push back' of the Western wall at Segilola, resulting in the lower production figure of 85k oz. (compared with 2022's 98k oz. figure) materially contributing to the poor share price. Segun stated that there was 10-11k oz. of gold last year sat 'in circuit' due to plant modifications. He stated that production in 2024 should be markedly improved, with a forecast of 95-100k oz. However, included within this year's target is the 10-11k oz. of in-circuit gold.
I'm struggling to make sense of this. If the 10-11k oz. gold in-circuit was produced last year but not counted in last year's production figures, then last years production was actually in line with that of 2022. In which case it was not a bad year at all and management could have avoided all talk of challenging production. So it strikes me that's not what happened — my feeling is that the 10-11k oz. was included in 2023 production figures.
If the in-circuit gold was included in last year's production figures, then including it again in this year's figures to attain the 95-100k oz. forecast is surely double counting, and means that there is only 85-90k oz. of new production this year, which is in the territory of last year's "challenging" output and is a long way off the '100k oz. per year' figure that's often cited as being the expected production level.
Can anyone make sense of this? I feel like I'm missing something.
Segun interview 21/3/24.
https://www.youtube.com/watch?v=J6IHr1AxehQThor Explorations, a West Africa-focused gold producer, is poised for a pivotal year in 2024 as it looks to capitalize on strong production, significant cash flow generation, and exploration upside.
The company is guiding for gold production of 95,000 to 100,000 ounces this year. This production profile is expected to drive robust free cash flow generation, which will be used to strengthening the balance sheet. Thor expects to fully repay its $22 million in debt by the end of 2024, with large debt repayment already at the end of March of $8 million, leaving the company with a clean balance sheet and strong cash flows to fund growth initiatives.
A key focus for Thor is extending the mine life at Segilola through exploration drilling. The deposit remains open at depth, providing potential to expand resources and reserves to support a larger open pit operation or a future underground mine. Thor is mobilizing two drill rigs in Q2 to test these deeper targets, with another rig allocated to explore near-mine satellite deposits. The geology of the area is highly prospective and provides meaningful upside to the company's production and cash flow profile.
At Thor's Douta Gold Project in Senegal, the company is awaiting the results of a preliminary feasibility study (PFS) that has been delayed due to additional metallurgical testing. However, oxide material has shown strong recoveries and will be the focus of a drill program in Q2 aimed at enhancing the project economics. Once the PFS is delivered, Thor plans to rapidly advance the project to a definitive feasibility study to support a construction decision.
The company is also resuming its lithium exploration efforts in Nigeria, with drilling set to commence in Q2 following a comprehensive target generation program. The drill program is expected to generate steady news flow and has the potential to define a significant lithium resource.
With a market capitalization of approximately $95 million, Thor trades at its expected free cash flow at current gold prices. This represents a compelling valuation for a growing gold producer with a strong balance sheet and meaningful exploration upside. As the company delivers on its operational and exploration objectives, there is potential for significant re-rating of the stock to better reflect its fundamental value.
In conclusion, Thor Explorations offers investors an attractive opportunity to gain exposure to a growing West African gold producer at a deeply discounted valuation. With a robust production profile, significant near-term cash flow, and multiple avenues for growth, the company is well-positioned to create value for shareholders in 2024 and beyond.
Good post.
A LOT needs to go wrong to lose money from here, at $105m mcap. And if POG holds up, targets are met, a year or two is added at Segilola, Douta proves a valuable profitable mine and the Lithium business gets off the ground we're talking god knows what price.
And anything inbetween will generate a healthy return.
After doing the hard yards last year, Thor have confirmed that they are now mining the relatively high-grade ore body, which means they'll be averaging 4+ g/t for the next few years in the open pit.
At nameplate, the mine should produce about 100,000 oz per annum, with a reduced ASIC due to the higher-grade mining.
At current gold prices they're making over $1,000 an ounce of free cash flow, equating to $100m+ free cash per year.
I have always found Segun to be straightforward, honest and very conservative, dependably delivering or over-delivering on the company's guidance, and he talks of $300m free cash over the next three years, which clearly gives Thor an awful lot of options going forward.
I've bought in here. Looks pretty decent and I'll welcome the relative stability of Nigeria after suffering in Hummingbird.