Having leveraged on its first-mover advantage in the under-explored West African country of Nigeria, TSXV-listed West Africa-focused mineral exploration company Thor Explorations will soon begin construction of its flagship Segilola gold project.
This will cement its position in the country by building Nigeria’s first large-scale gold mine, CEO and president SEGUN LAWSON tells CHANTELLE KOTZE.
Thor Explorations completed an independent DFS on Segilola in February 2019 which validated the findings of the preliminary feasibility study and confirmed the project’s economic robustness.
The DFS considered a processing rate of 625 000 tpa of ore, producing an average of 80 000 ozpa of gold over a proposed five year life of mine at an all-in sustaining cost of US$662/oz for a total capital expenditure of $87.6 million.
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“The Segilola open pit economics were robust,” says Lawson, adding that at a $1 300/oz gold price, the project has a net present value (5%) of $138 million, an internal rate of return of 50% and a payback of 1.5 years.
“The positive change to the gold price since the release of our DFS results, which traded above $1 500/oz in August, makes the project even more attractive,” Lawson adds.
With all the necessary approvals in place and 25-year mining license issued in 2016, Thor Explorations is currently underway with pre-construction work at Segilola, which involves detailed design, tender document review, the ordering of long lead items as well as the optimisation of the mine scheduling, with construction expected to begin in Q4 of this year.
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Despite its long-stop construction period of 17 months, the company’s first gold pour target remains H2, 2020.
Ordering the long lead items such as the mill, crushers and power plant, which are being manufactured outside of Nigeria, will be undertaken this month, while civil and construction work will take place during the upcoming dry season.
This will be followed by the installation of the long lead items once they arrive on site.
Of the total $97.6 million funding requirement, Thor Explorations has since closed a $78 million financing facility with Africa Finance Corporation.
As per its lump sum turnkey engineering, procurement and construction (EPC) contract signed with Norinco International, the contractor has also committed to provide $6.5 million in financing of the EPC contract.
Thor Explorations also has also inked a $1.9 million working capital facility with the project’s consumables supplier.
The remainder of the project funding will be undertaken by way of a private placement, which upon closing will result in the project being fully funded through construction into operation.
At this point, Thor Explorations will also have enough exploration budget to fund further exploration in Nigeria and continue its exploration currently underway at its Douta gold project in Senegal.
Exploring the underground and regional potential at Segilola
Segilola remains a highly prospective exploration project and Thor Explorations is therefore continuing with exploration in Nigeria work to investigate identified geochemical anomalies on strike to Segilola, assessing the potential for near-pit satellite opportunities as well assessing the extent of the underground resource at the project – which remains open at depth.
Of equal importance to the construction of Segilola is exploration outside of the pit where Thor Explorations is exploring for a potential satellite pit. Finding an open ‘pittable’ resource within trucking distance of Segiloa would be highly accretive to the overall project,” Lawson notes.
Thor Explorations has resultantly undertaken drilling at some of the targets it has identified with some success.
The company has also picked up a portfolio of licences, totaling about 660 km2 within 50 km radius of Segilola to the north and the south, on what Lawson terms as “very interesting gold targets” that lie along strike to Segilola.
The company has begun early exploration work on these to assess any gold anomalism.
Concurrent to the open pit DFS, the company undertook a PEA to determine the potential for a future transition of operations from open pit to underground, extending the mine life beyond the PFS mine plan of seven years.
The PEA confirmed the potential for an initial three year underground operation that can be brought on during the open pit mine life to supplement the open pit ore with higher grade underground production – grading at 6.3 g/t and able to increase total gold production to above 100 000 ozpa.
The underground deposit is open below the resources considered in the PEA and the resource has not yet been closed out at depth.
Future exploration drilling is planned to focus on the high-grade shoots identified in the previous drill programmes.
“The plan is to continue exploration in Nigeria in parallel to construction of Segilola as we think that a very exciting growth story still exists, not only at Segilola but within the licence, below ground and even further regionally – an area that remains unexplored,” Lawson concludes.