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What that also all means is that they will be continuing (as they have since the mine started) to hit pockets of higher-grade material which will be their focus on the processing side.

This again is supported by the knowledge that the stockpile whilst growing substantially in size has never recorded an average grade higher than 1.48g/t. Since Q1 2023 it has never broken 1.14g/t (recorded in Q1 2023).

Yet processed (milled) ore has ranged from 3.66g/t in 2022 to 2.46g/t in Q3 2023. What this clearly demonstrates is that THX is mainly processing high-grade material as it is pulled out of the ground supported by stockpiles when it is advantageous or necessary to do so.

As things stand THX requires roughly 23,000 oz per quarter in Q3/Q4 to hit its bottom-end guidance (allowing c. 7,200 of gold in the circuit. Same rate as Q2).

Assuming processing ramps back up to c. 250,000 tons that equates to an average milled ore grade of 3g/t at 94% recovery. The same was roughly achieved in Q2 2023.

Even with the high-grade stockpile element of 6,116 oz at 4.1 g/t fully recovered THX delivered further mined ore to the processor at +3.1g/t. So they just need to do roughly the same over the course of the rest of the year.

They may do a little worse or they may do a little better but it won't make a great deal of difference to the overall achievement which should be damn close to 95,000 oz.

Storm in a teacup but perhaps THX could have explained things a little better.

A little more detail for those who wish to understand what I wrote better.

From the start of 2022 to Q2 2024 actuals vs (planned).

Total mined = 46,74m tons (52.65m tons)

Total waste = 43.44m (50.55m tons)

Ore mined = 3.244m tons (2.092m tons)

Ore processed = 2.35m (1.7875m tons)

What these figures demonstrate is that over the majority of the mine life (commercial production was reached in Oct 2021 with minimal production in Q4 2021) THX has mined 11.62% less material overall with waste making up a smaller percentage of it which has led to mined ore increasing by c. 55% vs the mine plan.

This in turn thanks to the processing plant working so well has allowed THX to process 31.5% more ore.

The existence of considerably more ore than planned for is likely responsible for the overall mined grade being much lower than planned for in the mine plan. But as I explained in my last post that does not matter as much so long as they have a choice. Mining at nearly twice the rate delivers that.

This is why the mined grade is something of a red herring. It is heavily diluted by lower-grade material that likely wasn't expected to be there or wasn't included in the resource fue to cut off grades employed.

This does not mean that they are hitting the grades that were allowed for in the mine plan. But in highlighting that as a concern one must also appreciate the countermeasure they have in the form of a 31.5% uplift in processing capacity vs the mine plan. Such an uplift can counter much of the pain in lower grades and certainly help them reach their combined (gold in circuit included) production target for 2024. This is especially true when we consider that 2024 planned production at 5.4g/t and 715,00 tons of processed ore was supposed to deliver 121,000 oz of output. THX's target for 2024 is well below that level and includes a significant portion of gold in the circuit.

I know I said I wouldn't come back until further news was available but having read a number of the posts here I feel compelled to help correct the THX boat.

I entertained the notion of lower production in 2024 because I was trying to demonstrate that even at c. 85,000 oz THX would make a lot of money, enabling them to do many things.

However, the company is stating they will hit guidance of a minimum of 95,000 oz in 2024 and for good reason. It does not matter to me if this is actual production or production combined with gold in circuit.

One or two posters place emphasis on the running down of the higher-grade stockpile and presume that this will lead to lower production because the averaged mined grades are coming in lower than anticipated in the mine plan.

However, you are missing some important details.

Firstly, since Q4 2023 there is a significant difference between the average grade that is mined vs the average grade that is processed.

If THX was mining roughly the same amount it was processing I would be worried (which is what they did between Q1 2022 and Q3 2023) but a detailed review would show investors that since Q4 2023 THX has been mining ore at considerably higher rates than has been processed. This allows them to be selective about what goes through to processing.

Total ore mined over the 9 months = 1,409,190 tons vs 672,372 tons processed.

What this also does is skew the figures between average mined ore grades and processed.

Hence why in Q1 2024 the average processed grade was 2.85g/t (mined 2.07g/t) and in Q2 even higher at 3.42g/t (mined 1.78g/t)

One can and indeed should respect the fact that lower average grade ore is being mined than planned for but without forgetting that such a large tonnage difference will skew the numbers.

This means that within 491,935 tons of mined ore in Q2 there can be a percentage that is a higher grade that ensures higher output. I appreciate that THX highlighted a high-grade element of their stockpile in Q1 2024 (6,116 oz at 4.1g/t) which naturally leads one to believe that this is what drove Q2 numbers. But Q2 2024 saw 18,090 oz produced at 3.42g/t. That is just 0.68g/t less than the said stockpile element.

A quick calculation will tell investors that even if THX was able to process that entire 6,116 oz they would still have needed to process ore at +3.1g/t (94% recoveries ignored) to achieve the remaining output of 11,974 oz and that is the whole point here.

Furthermore, investors should not lose sight of the fact that the processing plant whilst not quite hitting the recovery rates in the 2021 mine plan, is running well above its design capacity. This means that the average processed grade can indeed be lower vs. the mine plan but still achieve the projected guidance for the rest of the year.

Agreed.

Concern about exact timings shows impatience. The most important thing is that the drilling is going ahead as planned. It should never have been in doubt but news gaps allow voices in investor heads to grow louder.

The drilling is ver much on and that is what will take precedent once the market digests the information properly.

Cavendish has got a 12-month price target of 20p a share for EXR based on €5.3m in 2024 revenues which given the recent contract wins isn't that big an ask vs 2023.

Do I believe that is fair? No not really but even if they are 25% right it is a 400% uplift from here.

The business is in a far better position than it was H2 last year when it traded at 3p. Just needs a trigger or two.

The most important thing is that the market has confidence that they will be drilling and this message is very clear about that.

From the Helix newsletter dated 16th July.

"Drilling Rig, less than two weeks after listing Helix executed a binding contract with Treasure State Drilling, LLC for the provision of their Cardwell KB-150 D1D Drilling and equipment for the Company’s Q3 2024 appraisal drilling campaign at the Ingomar Dome project. This is now only weeks away from commencing operations."

"This is now only weeks away from commencing operations."

That message says a lot about their confidence that there will be no glitches and it is merely about the process of getting these drills done.

Civils signalled as first up which if they intend to RNS (these guys like strong regular messaging so I say yes) then first news really should be very close now.

The newsletter is available here.

https://www.helixexploration.com/helix-exploration-quarterly-newsletter/

Moorhouse

More excellent work oldtramp.

The second link to the more house article demonstrates the opportunity that exists out there in education through the advantages it can bring. Virtual assistants/teachers available whenever a student requires them. 24/7.

It is not difficult to imagine a time when human teachers will no longer be required. The size of the opportunity makes a mockery of the EXR valuation but as you say they aren’t shouting loud enough about it. That said what’s most important is that the progress far outstrips the market valuation. My confidence in the quality of the trading update has grown thanks to your research. So thank you. I will look to post this on my feed tomorrow.

Have you read this also?

Significant developments are coming from Meta in the education space and clearly in collaboration with EXR:

https://about.fb.com/news/2024/04/new-education-product-for-quest-devices/

Hi Oldtramp,

I trust you don't mind but I have taken your post and expanded on it on my feed.

Note here in March 2023 Inspired was at 17 schools after a successful pilot rollout. Now they are moving to 81 schools which is a 375% increase in just 16 months. This was "after substantial positive feedback from students, parents and teachers."

It is a clear example that the EXR VR education offering has value. Bodes well for the trading update.

What this is doing trading at cash on hand I have no idea.

https://www.inspirededu.com/news/inspired-education-expands-virtual-reality-and-metaverse-pilot

https://x.com/BigBiteNow/status/1813559702594228577

As I said this morning,

"I am happy to debate the investment case here so long as it doesn't turn into simply batting off every negative angle and indeed theory possible."

I'm done here until news flow deems it worthwhile posting again.

The market doesn't like missed production targets when it has priced them in. Try selling me the idea it has priced in 95,000 oz at $1,200/oz AISC when gold is running at nearly $2,500/oz.

This market hasn't even priced in 80,000 oz of production.

Gold is fast approaching $2,500/oz. It is up $490/oz since 14th Feb alone.

On 17th Oct 2023, THX reported its Q3 2023 production results and reiterated guidance of 85,000 oz and AISC of US$1,150 - US$1,350 per ounce.

The price of gold that day was $1,922/oz.

THX closed the day at 17p a share.

Jump forward to today and we are debating a worst-case scenario production outcome of 85,000 oz at likely that same top-end AISC outcome but for a company that has since paid down $18.6m in debt, strengthened its balance sheet, and re-commenced exploration on 4 fronts including the all-important underground drilling at Segilola.

Market indifference and the failure of the price to move up create doubt and a desire to justify it until sentiment changes.

Yes, missing production guidance is negative but only when the expectation of achieving it is high. Q1 had already put a dent in that belief. That says to me that it is the mine life is what is really holding THX back + a general indifference (so far looking at my other gold plays) from the market towards this latest breakout by gold.

I mean for goodness sake we are nearly at $2,500/oz. It's incredible how indifferent people are towards that fact.

A trigger will come here and it may come later than we think but it will come and then the SP will move and then any shortfall in guidance will be placed into the context of where it sits vs. the EV.

But remember they haven't downgraded yet. Rightly or wrongly they have reiterated both guidance and AISC.

The schedule is THX's which I copied directly from THX documentation. It may well have been the 2022 accounts or an RNS.

In the end, money talks and the point I was trying to make is that in 2024 THX is starting to make a lot of it. It is just that they have to tidy up their balance sheet first and invest in more mine life. The market will catch up in the end.

@HarChris

Believe me whilst I am happy to point out some of the history and perhaps reasoning for the subdued trading and indeed current SP in no way am I justifying it. The arguments and concerns being put forward here have a place in the debate but THX is so undervalued that they effectively mean nothing. We can apply a discount for payables, for Nigeria or for the shorter mine life but even then the SP should in my humble opinion be 3-5p higher.

Once the drilling confirms what we already know at Segilola then we should go even higher than that.

2/2

I believe the historical issues that I have listed are part of the reason that the market is slow to give THX credit in 2024.

But the market cannot ignore +$2,400/oz gold forever because even when we discount production or their guided AISC THX is beginning to make a lot of cash such that payables, CAPEX and even Douta will soon look like relatively minor issues.

I am happy to debate the investment case here so long as it doesn't turn into simply batting off every negative angle and indeed theory possible. Analysing the business and the accounts is fair but it needs to remain balanced. That applies to me also. But at the end of the day the business and the gold price environment will do far more talking than we ever could.

1/2

It is well documented that 2023 involved a need to upgrade the plant and push back the west wall at Segilola. This came with a significant cost during a phase when revenues were placed under pressure. This is in part why payables increased during the period. The pushing back of the west wall was not a surprise because it was in the mine plan.

THX clearly planned for this by negotiating lower debt payments during 2023 which inevitably led to increased interest payments. Nothing is for free after all.

Below is the payment schedule for 2023 and 2024. The first major payment came at the end of Q1 2024. So interest payments up until that point would have seen limited improvement. But since then THX has made some chunky payments such that senior debt is down from around $26.5m at the start of Q4 2023 to c. $8m today.

By the time the debt is paid off at the end of this year, THX through these debt payments will have improved its EV by around £21.6m since early 2023. Equivalent to 3.3p a share.

It is important not to lose sight of the fact that THX financed the first-ever gold mine in Nigeria. They did this as an explorer with no producing assets. That meant that the financing naturally came with an elevated level of pain. Deals had to be done with the contractors on delayed payments plus they had to do a gold stream deal with their lenders.

This is in part why they have such high payables which we are told are now finally being paid down.

So given all of the above there is little point in analysing what they did before 2024. It is history and it is quickly being replaced by 2024 production and gold pricing. Because THX balance sheet is improving they have been able to bring forward the underground drill programme at Segilola to this year. They have also been able to step up exploration on other opportunities and progress new Douta drilling. Again there they have found a problem with the processing of the main ore which is why they are expanding the oxide resource to ensure a much more palatable front-end resource that can deliver high margins and so a more favourable finance deal. This all costs CAPEX which is why coupled with larger debt payments at the end of Q1 and Q2 the cash pile hasn't grown very much. But that is now set to change although it will be Q3 results that really demonstrate the progress that has been made.

The key now is where THX goes from here. Q2 financials should start to show some initial inroads into balance sheet improvement but it will be drill results at Segilla or an expanded resource for Segilola through satellites that really gets things going. Front-end drill results should help. Douta PFS will then add to this.

https://x.com/BigBiteNow/status/1760552031213805616

By 23,200 oz I mean the amount of actual production (without gold in circuit added) to achieve 95,000 of combined gold output.

Note 3 on page 15 of the Thor Q1 MD&A document.

As of 31st March.

"Gold in CIL contains approximately 12,255oz of gold and is valued at cost (average of $783/oz)"

3,652 oz poured in Q2 leaves c. 8,600 oz to go. Assuming they achieve the same as they did in Q2 over each of the next 2 quarters then we are talking actual production of around 23,200 oz per quarter. At full processing capacity that is very possible and certainly lends itself to them being close enough to make it matter. By this, I mean financial impact vs. EV.

Douta will be determined by sentiment towards gold miners. That in turn may deliver benefits as the resource is expanded through drilling. But yes the PFS is key. However, as a LT holder here I do not ignore what it will bring even if I have to wait for that benefit to hit the SP. It is a big project that will only grow in value once the market realises that THX will have the cash to deliver a solid financing package for it.

Fair point Schmidt1. I think we have a terminology question in play here but it is one where we should be coming down on the side of gold poured because no gold in that figure has ever been counted as production before. Also, the gold in circuit is affecting decision-making on processing because with it included it is delivering the business what it requires in terms of margin etc.

In terms of projecting Q2 production of 18,090 oz forward, we must be careful not to ignore the reduced processing.

We are told that post the plant upgrades and checks processing will now run at the full rate in Q3 and Q4.

This should see a return to c. 262,000 tonnes of processed ore. On a like-for-like basis for processed grade that should see production rise to around 27,000 oz. To that we then need to add gold in circuit which will give us a final gold poured figure.

The mined grade was low in Q2 and so it is difficult to know if they can hit that processed grade of 3.42g/t. But there has always been a step up in processed grade vs ore mined. But let's see.

Key for me is how much gold will they have to sell and what will it means for their EV and ability to fund future plans.

The 95,000 oz looks racey if it is to sit outside the gold in circuit number. But in previous interviews the CEO has indicated that the gold in circuit is what delivers their confidence in this year's production. So I think it will be included. We can talk actual production as much as we like but gold poured trumps everything else.

So the 41,300 oz figure remains valid for me although I accept that I was wrong in claiming it was pure production.

Also, they can afford to lose some of the Q2 processing grade and still (with gold in circuit) deliver close to the lower-end guidance. A position which calls for c. 26,850 oz per quarter until YE. With c. 3,600 oz of gold in circuit contribution that not a testing figure when the processing plant is back up to full speed.