TSXV-listed West African junior Thor Explorations, winner of Mining Indaba’s Investment Battlefield in 2018, is proving this accolade well deserved.
The company has made significant progress towards developing its flagship Segilola gold project in Osun, Nigeria – which is on track to pour first gold in Q2, 2021 – and will unlikely be impacted by COVID-19 as it moves towards this timeframe target, CEO SEGUN LAWSON told Mining Review Africa.
The delivery of first gold from Segilola will be a proud moment for Lawson – who is not only the CEO of Thor Explorations but also its founding member.
Even though the company has a variety of early stage projects in Senegal and Burkina Faso, Segilola is and will for some time remain the company’s sweet spot considering Lawson is a British born Nigerian:
“With my geological background and full understanding of the country – I have always known the project would be a company and country defining success story,” he begins.
Having acquired 100% of the project in August 2016, Thor Explorations’ status shifted from an early stage explorer to a company with a tangible asset which already offered a proven resource and quality gold ounces.
Segilola on the investment map
Under Lawson’s guidance, the company has been pushing the project forward ever since taking ownership of it – completing a pre-feasibility study in October 2017 and a definitive feasibility study (DFS) in February 2019.
“The success we had in undertaking and concluding the DFS for what has revealed itself to be an economically favourable project, can largely be attributed to the publicity we secured in winning the Investment Battlefield to showcase our project’s potential,” Lawson confirms.
“The exposure put our company and our project on the map – and saw us secure our first North American investment, Sprott Capital Partners, who lead a US$8 million investment towards completing our DFS in September 2018.”
The next step, securing the cash to take the project forward into full construction – $100 million – has been not been easy to secure. The company, in April 2019, received investment committee approval from and executed an agreed term sheet with the Nigeria-based Africa Finance Corporation (AFC) for a $78 million financing package for the construction and ramp-up of Segilola.
The total $78 million funding comprised a $54 million senior secured credit facility, a $9 million gold stream prepayment and a $15 million equity investment from AFC as well.
“Again, another proud moment for the company in securing a Pan-African multilateral development finance institution,” Lawson notes. The total funding package from AFC was increased from $78 million to $86 million in April 2020.
Some of the balance necessary to take the project forward was secured in the same month when Thor Explorations received a commitment from China-based Norinco International Cooperation for 10% financing of the $65 million lump-sum turnkey, engineering, procurement and construction (EPC) contract value awarded to the company to develop the mine.
Norinco is an incorporated company affiliated to China North Industries Corporation. The company is listed on the Shenzhen Stock Exchange with a market capitalisation of CNY 6.3billion ($930 million).
Norinco has built projects in multiple industrial sectors in Asia, Africa and Europe and according to Lawson has developed a close and transparent working relationship with Thor Explorations.
Having since then secured the necessary cash to move into construction through private share placements, the company made the final investment decision to proceed with construction of the project in April 2020.
It has also followed the implementation of COVID-19 procedures on site, established in accordance with industry best practice and the guidelines set out by the Osun State government and the Ministry of Mines and Steel Development.
“We have benefited enormously from working with a China-based contractor who has brought with it the risk mitigation procedures established in what is recognised as the virus originating country. Our camp is isolated and we are maintaining social distancing and conducting temperature checking.
“We have also teamed up with a local accredited laboratory with access to testing as we require. This has worked well for us to date and we are confident of meeting our Q2, 2021 start-up deadline,” Lawson highlights.
A closer look at Segilola
As of mid-May 2020, Norinco was making steady progress. Site clearance had been completed and civil works on the plant site was underway. Construction of the camp was approaching completion and all ancillary infrastructure, including access roads and a water storage dam, were underway. Long lead items had been ordered and will be manufactured in China.
Based on the DFS outline, Segilola will comprise an open pit mine and a new 625 000 tpa processing plant, which will consist of a conventional crushing circuit, two stage grinding, gravity, carbon-in-leach, elution, electro-winning and smelting to produce high purity gold doré.
“We are projected to produce 100 000 ozpa in our first operating year and an average of 80 000 ozpa over the mine’s current five-year open pit lifespan – averaging around 4.2 g/t.”
At a gold price of just $1 300/oz, this equates to a post-tax NPV5% $138 million, 50% IRR and payback of less than 1.4 years, producing at an all-in-sustaining-cost of $622/oz. The project economics are even more attractive at current gold prices with a payback of less than one year and an IRR of 70%.
During construction a 400 kW and 200 kW diesel generator will be installed by the contractor at the processing plant and at the camp. The permanent main power supply for processing will be provided by seven 1.2 MW compressed natural gas (CNG) generators, five of which will be on duty and two on stand-by. Emergency power will be provided by a 640kW, 50Hz diesel powered generator.
The planned 43 ha open pit was determined through an iterative process of optimisation and design work and is 1 600 m long, 140 m to 430 m wide, and ranges between 55 m and 210 m in depth.
Three pushbacks are planned utilising an excavator and truck fleet for both ore and waste. A large part of the mined material will require drill and blast.
Mining operations will last for 45 months, with processing continuing for a further 19 months thereafter. Sizable stockpiles are created, allowing processing to continue for some time after mining ends.
Mining in advance of the processing demand allows the ore supply to be smoothed out and also allows better grades to be processed earlier in the overall schedule.
A detailed mining schedule has been developed that requires minimal pre-stripping prior to plant commissioning. Production will initially commence from the high grade northern pit, which outcrops at surface and along with the Stage 2 pit which commences after nine months will return an average head grade of approximately 6.3 g/t for the first 12 months of operation.
Stage 3 commences in month 14 upon the completion of Stage 1, with a cut back of the southern wall of the Stage 2 pit to the final pit design. The mining schedule incorporates stockpile management such that processing plant feed grade is smoothed in order to optimise project cash flows.
Plenty of upside
There are two legs to Segilola’s upside value – the first lies in securing additional open pit gold ounces.
“We have capitalised on our first mover advantage in Nigeria and picked up an additional two exploration licences in the last 12 months in Nigeria which cover a combined area of 344 km²,” the CEO notes.
The licences cover a strike length of 20 km over the highly prospective gold-bearing Ilesha Schist Belt and the immediate northern extensions of the Segilola gold trend.
Thor’s exploration tenure in Nigeria now comprises nine explorations licences. Together with the mining lease over the Segilola gold deposit Thor’s total exploration tenure amounts to 912 km² highly prospective gold-bearing Ilesha Schist Belt.
The incorporation of additional ore bodies into the Segilola operation is a short-term plan which could materially impact our project and we are confident of finding more gold,” Lawson notes.
To date the company has two auger drills running on the tenement and has already picked up satellite soil anomalies.
Segilola’s long-term future also lies in tapping into its underground potential. A preliminary economic assessment of an underground mine (below 200 m) has been completed and has already determined an initial three-year underground operation can be brought on during the open pit mine life to supplement the open pit ore with high grade underground production – taking the annual production rate of the mine up to about 110 000 ozpa Lawson reveals.
“We have a high grade inferred resource which will supplement our mine perfectly.” The deposit remains open below the resources considered in the underground project.
“Nigeria needs a great success story to help build its mining industry and our commitment to establishing the country’s first large-scale gold mine will do just that,” Lawson enthuses.
The company aims to employ about 400 local Nigerians once operational, which will have a much bigger impact on direct employment opportunities downstream.
““This project is the first of its kind in Nigeria, a country where we believe there is considerable geological potential.
“The initial project economics are excellent and we have the right team in place to build, operate and capitalise on our first mover advantage in Nigeria and we have every confidence of producing first gold as promised,” Lawson concludes.