Member Info for ShareSleuth

I particularly like the fact that they've drawn this matter to the attention of the Federal Government, who won't be happy with it at a time they're trying hard to attract foreign investment to their nascent mining industry:

"The Company has written to the Federal Ministry of Mines in its capacity as the sector regulator to review the statements made and will seek dialogue with the State Governor regarding the inaccurate and unsubstantiated claims made by the State's Special Advisers."

Well, the forward p/e must be about 1 now, not to mention any of the various near-term catalysts.

SROL's country manager's rebuttal was as follows:

Reacting to the allegations, the country manager of Segilola Resources Operating Limited, Austine Menegbo said, the company under his watch has consistently demonstrated a commitment to being a law-abiding, transparent corporate entity, fulfilling all tax obligations and royalty payments in full and on time.

“The company maintain detailed records and have receipts for all royalty payments made to the Federal Government, as well as tax remittances to the State Government.”

“We are regularly audited by the Federal Ministry of Environment and the Ministry of Solid Minerals Development and to date, there has been no claim of pollution or environmental violations against the company”

“As one of Nigeria’s leading mining companies, we remain committed to contributing to the economic growth of the state and the country while adhering to the highest ethical and operational standards. We shall continue to maintain an open line of communication with relevant authorities to ensure that our operations are aligned with both federal and state laws”.

“The claims of environmental and operational non-compliance are not true as the company have sufficient evidence to prove that it followed all necessary protocols for environmental assessments and regulatory filings, including environmental compliance monitoring and mitigation of potential environmental impacts”, he submitted.

This 'storm in a teacup' has presented a great buying opportunity IMO.

The bottom line, assuming SROL/THX do owe what they're claiming (which SROL/THX dispute), will cost them about £1.5m - let's call it a week's FCF, vs a fall of approx £20m in THX's market cap!

Well, from this morning's RNS...

"Thor Explorations Ltd. (TSX VENTURE / AIM: THX) ("Thor Explorations" or the "Company") announces that Adrian Coates, Non-Executive Chairman, has carried out "Bed and ISA" transactions, having transferred 105,000 Common Shares respectively from his share dealing account into his ISA account."...

Adrian Coates obviously wasn't aware of any impending issues, probably quite the contrary!

If he'd done this transaction now he'd have managed to get 125,000 shares into his ISA.

Yes, that's about £1.5m or $1.9m, however Segilola Resources Operating Ltd completely denies the claim.

I found the wording of this paragraph particularly intriguing:

"We are encouraged by these results from a new prospect outside the existing resource base. The results are from surface and remain open at depth. The Makosa East Prospect now has a strike length of over 1.5 kilometres. We look forward to receiving the remaining outstanding results from the vicinity of the current known deposits and the larger project area with the objective of updating our resource and subsequently completing our Preliminary Feasibility Study for the Douta Project."

There are a couple of things in this paragraph that imply, to me anyway, that Makosa East is another substantial deposit running side-by-side with the existing Makosa deposit, also suitable for open-pit extraction.

The first is the term "1.5km strike length", which tends to imply continuous gold mineralisation, and the other is "we look forward to receiving the remaining outstanding results", which sounds like they already know there's more outstanding results in the pipeline.

Douta is shaping up to be a sizeable resource, with plenty of still unexplored potential to come.

TO73,

Amongst the many errors and assumptions in your 'Hm' post, this is probably the most obvious:

"This results in 4,840 working hours (121 days * 40 hours per week)"

As HarChris says, Segun is on record as saying they're pouring 2,000+ ounces per week, so unless you're disputing his honesty/integrity I'd go with that.

I think you're in danger of missing the bigger picture here, quibbling over fractions of a percent.

The temporarily lower production this quarter, and the expected higher production in H2, was explained in the following statement, which implies that this was planned and strategic, and this meeting guidance shouldn't be a problem:

Segun Lawson, President & CEO, stated:

"We were pleased by the performance of the Segilola Mine in the Quarter. Following the completion of the upgrade of the CIL circuit in Q1 2024, in the Quarter, we prioritised releasing GIC, by decreasing process plant throughput whilst focussing on increasing recovery and improving circuit efficiency. I am pleased to report that this has been a successful exercise, which is reflected in our operational results for the Quarter during which we achieved a recovery rate of 94.6% and poured more gold than recovered from the mine. We are now positioned in Q3 to return to the increased process plant throughput rate whilst maintaining these operational improvements that have been achieved in the Quarter, which should result in the continued increased amount of gold poured in H2 from both mined ore and further releases from GIC."

Bohercom

"I wouldn't be surprised to see SMU selling it on at some point to Askari.

Look at the location of ML129 - it's surrounded by the Askari licences."

In an ideal world (from Askari's perspective) that would make perfect sense, however Askari is very much an impoverished, heavily loss-making, explorer with a current market cap of about £2m - implying that they're probably not in much of a position to make the SMU a decent offer for ML129.

However, imagine the sheer scale of the combined resource were Andrada to manage to snap-up Askari for £4-5m.

(Not that I'm suggesting that's likely or even on Andrada's radar, just an observation.)

Again, there's a bit of reading between the lines to be done with this RNS (as usual).

The apparent contradiction between the tone of the previous RNS relating to what Andrada said about Spodumene Hill doesn't concern me particularly as you can have high-grade drill results but without viable/commercial quantities to make it worthwhile persuing - yes, the company were bigging-it-up at the time, but that's to be expected with initial positive (yet limited) drill results.

I guess you have to believe the company when they say it doesn't figure highly in their current strategy; that presumably being to get a deal or two done with their 'strategic partners'.

Now, I have no idea what the SMU will do with the licence they're about to aquire from Andrada, but there may be more to the arrangements than meets the eye; I certainly don't think the SMU have the resources to do much with it themselves, other than a bit of 'small mining'.

It may be that by reorganising the main assets we get a very lucrative deal done via the strategic partnership, at which point (or a couple of years down the line), Andrada buy back the Spodumene Hill licence from the SMU and everyone's happy.

(I simply don't know... but I expect someone does!)

ISA-Investor

Yes I'd noticed that too, although probably some UK investors probably either are don't know about or don't regularly follow the TSX price/volume activity. IMO, the TSX seller(s) is what has been largely responsible for subduing the THX share price, as recently the MMs have been able to dip into a pool of slightly cheaper stock from TSX.

The recent 'Low Valuation' discussion about the possibility of THX engaging in buying back a modest amount of its own stock would, in all likelihood, quickly remove any weak holders both on TSX and over here, hence allowing the market cap to progress from its current extremely low valuation.

All IMO, of course.

For the record, I'm definitely not in favour of a Special Dividend as firstly, it's not leveraged, ie it's a one-off payment that has no effect on all future payments, and secondly, it would probably simply result in a p-for-p reduction in the share price - as tends to happen with most ex-dividend share price movements.

There are not only opportunities but dangers associated with a lacklustre share price (eg low-ball bids) and a million quid could well double it. Added to which it's probably the best investment that the company could make at present, imho, in terms of cumulative future returns to shareholders.

Anyway, I'm not bothered; one way or another, value will out in due course. (Also, they may not currently have a mandate for share buybacks - I simply don't know.)

Personally, if my company was trading on a p/e of 1, I'd buy back as many shares as I could to even further enhance the value of the remaining shares, for whatever dividends, special dividends, placements, or whatever the company may wish to do in the future.

This would also send a clear message and give all investors confidence that their investment was underpinned and not at the vagueries/mercy of a short-sighted market; Segun already believes that THX shares are extremely undervalued at present, hence he keeps mentioning the $300m free cash flow over the next three years.

Such a move would also have the benefit of allowing any weak/stale holders to be cleared out of the way, hence allowing the share price to progress.

I know that the company would probably not be able to buy a huge number of shares at current price levels without significantly pushing up the share price, but presumably that would also be what current shareholders would wish to see happen!

(Just to illustrate the point, albeit theoretically, if they bought back half the shares at current prices this year from free cash flow, it would double the value of ALL future revenues, dividends, etc.)

...oh and I forgot to add, that Thor obviously have some other potentially very valuable assets like a multi-million ounce gold prospect at Douta in Senegal, not to mention significant lithium interests in Nigeria; the sky's the limit.

Thor's profits for 2024 are likely to be spectacular.

In Q4 2023, a relatively difficult high-strip mining period, they produced 21,798 ounces of gold at 2.79g/t.

The company stated that they had just completed the push-back of the west wall of the mine as of the end of 2023, exposing the higher-grade ore to be mined going forwards.

Now, the average grade of the open-pit resource is about 4.70g/t. If they simply processed the same number of tonnes through the plant at 4.70g/t (1.68 times higher grade than the lower grade ore processed during the west wall push-back), that would imply production of 36,720 ounces per quarter - not to mention the expected drawdown of the high level of gold in-circuit at year end.

Thor has a stated AISC guidance of about $1,100 per ounce, so at the current gold price of around $2,300 an ounce, they are making FCF of about $1,200 per ounce. (It could be even more than that if they are benefitting from the significant devaluation of the Nigerian Naira.)

So, pulling it all together, 36,720 ounces at a profit of $1,200 per ounce = approx $44m per quarter, or £176m per year.

At an exchange rate of $1.26 to the pound, gives a profit of about £140 per year - vs the current market cap of £92m = a p/e of 0.65!

It's difficult to see anything other than positives about today's RNS, unless you take anything other than a very short-term view.

Yes it's frustrating that the MRE and PFS have been pushed-back a bit, but nothing's changed other than Thor's Douta resource may, in the fullness-of-time, be considerably bigger than it is today - all of which bodes well for the economics.

Who knows, they may end up selling it to Endeavour for several times our current market cap.

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."

The striking thing for me in AV's 5-minute pitch is where he talks not only of 2,000 of tin metal production, but he goes on to say that once they've integrated the lithium pilot plant into the main circuit of the plant, they are looking to increase their lithium production to 50,000 tonnes of lithium concentrate a year - and that's with little additional capital expenditure.

Even at today's depressed lithium prices, which are widely expected to pick up significantly over the next 12-18 months, that's an additional $60m of revenues a year.