Thor Explorations (TSXV:THX) — Investor Presentation

0:00 Good afternoon, and welcome to the THOR EXPLORATIONS investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the q and a tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to make the following poll. I'd now like to hand you over to CEO, Sheagan Lawson. Good afternoon, sir.

0:28 Good afternoon. I'm pleased to be here to report on our q two performance and h one performance and provide our outlook for the remainder of the year and also talk about our current operational activities, with exploration in Nigeria and the advancing of our Duta project in Senegal.

0:54 So there's a disclaimer. There will be forward looking statements in this presentation. So I always give an introduction of who we are and an overview with THOR EXPLORATIONS. We're a West Africa focused gold producer with an exploration portfolio in Nigeria and in Senegal. Our flagship project is the Segalodar gold project, which underpins our value and generates our cash flow. Last year was our second calendar year of production where we produced around about 85,000 ounces. This year, we have a production guidance which has been reduced to 90,000 ounces, and we believe we are on track to deliver that.

1:42 Our resource in Nigeria is based on our DFS, which had delineated a reserve of 518,000 ounces of gold grading at 4.2 grams per ton. We also have a an advanced exploration project in Senegal, the Duta project, where we have a global resource of about 1,780,000 ounces. We have a 70% economic interest there. That resource is divided between almost fifty fifty between an indicated and inferred resource. It's in a very prospective location approximately five kilometers from Massawa, and we have just completed 15,000 meter drilling program there with results pending. And lastly, we have a portfolio of licenses in Nigeria where we believe we are a first mover in the mining sector.

2:34 We have a portfolio of lithium exploration ground where we are carrying out early stage exploration on a number of prospective sites. We're also growing our land package there at very little cost. We had initial encouraging result drilling results, and we're looking to to build on that slowly through the course of this year. There's an ongoing drill program, which is being used to test various targets we are delineating.

3:08 So going into our q two performance. So in q two, it was a very strong quarter for us operationally and financially. We sold 23,588 ounces of gold with, which for the quarter was, you know, a record. As, and it was we were very pleased to do so at prevailing high gold prices. We achieved an average realized gold price of $2,309 per ounce. We're very pleased how we managed to stay on top of our costs as well, with a cash operating cost of $585 per ounce and, all in sustaining cost for the quarter of $802 per ounce. I will say that we did push higher grade material through the mill and put some lower grade material onto the stockpile and, hence, the lower all in sustaining cost for the quarter.

4:17 It was our revenues for the quarter was just under $54,000,000, and we had a a net profit, which was another record in the quarter of $27,500,000 and an EBITDA of 37.5 just over 37.5, million dollars for In terms of, cash and cash equivalents, we had about 7,500,000 that we're pleased to pay down significant another significant tranche of our senior debt facility with the outstanding amount remaining just over $6,000,000, which will all be gone by the end of this year. We have two tranches left to pay over the next two quarters, leaving us in a net debt position of $2,700,000.

5:12 So like, we see particularly being supported by these times of very high gold prices, we're rapid and we continue to strengthen our balance sheet through the course of this year.

5:35 In terms of just 4,700,000 tons, which was about 491,000 tons of ore mined at a grade of 1.77 grams per ton. We have built up our stockpile. We have over a million tons of ore on our stockpile, which can be processed over the course of over one year. So we're very encouraged by that. There will be a period in according to the mine plan where the physical mining is significantly reduced and stopped, and all we're doing is processing the stockpile at a very low cost.

6:24 The grade in in terms of processing, we processed a lower amount this quarter, but at a significantly higher grade. We processed 174,000 tons at a grade of 3.42 grams per ton. We did complete the upgrade of our our plant. We had made a number of changes which had kicked off in q three and q four last year, and this was commissioned during the period. And we were very pleased with how that what that resulted in recovery rate of 94.6%, which was the highest recovery rate over the last five quarters. And so now what we're trying to do is maintain these levels of processing and this level of recovery.

7:13 We also are in a position in the mine where through the course of the year, we're now entering into a relatively high grade area. We do see ourselves slightly higher than the 3.4 grams per ton being processed from now through to the end of the year. This resulted in a total of 18,000 ounces of gold recovered, and we also poured 3,000 ounces more than was recovered, really because during the course of the upgrade to the plant, there was a buildup of golden circuit up to about 11,000 ounces. We are looking to pull down on that golden circuit throughout the course of the year. And, hopefully, once we've done that, stabilize at a level between 1,502 ounces of gold in circuit.

8:09 I have had a few inquiries as to what it's like operating in Nigeria, and I I guess we we do have a lot of, should I say, new shareholders or potential shareholders looking at the company who don't know anything about Nigeria in the mining sector, really because, I guess, we are a pioneer. This is the still the only large scale gold mine in in Nigeria. So in that regard, I'll I'll go through the slide again, which we've kept on our in our presentation for a while. It's the major economy in Africa. It has a politically stable environment where we haven't had any coups in for forty years.

8:58 There's been a presidential election about twelve months ago, and we've managed to operate since smoothly without any issues. We've been in the country for seven years and haven't had any incidents that have disrupted our activities. Yes. It's not known as a mining destination, but it has got an established industrial base, huge cement industry, obviously, a massive oil and gas industry with a lot of transferable skills and a good access to labor. And, you know, finally, the last two points on the slide is, you know, there is very strong support from the Ministry of Mines and the government trying to diversify the economy away from oil and gas. Hence, we the the incentives that are in place for us are extremely enabling.

9:46 We own our project 100%. We have a favorable royalty rate. We have an a five year period of corporate tax holiday. And lastly, we do believe we're in an area with immense geological potential, which has been largely underexplored.

10:09 In that regard, we think the the biggest wins and our our primary targets for the remainder of the year is to extend this MyLife. We have put ourselves in a position where we have no more CapEx requirements, expenditures, significant CapEx requirements, We have we will be completely delevered from the end of the year. We are rapidly strengthening our balance sheet and paying down our accounts payable. So any significant increase to the mine life, or should I say any every incremental ounce we find is hugely value accretive to us as a company.

10:55 And what I would like to talk to on this slide is how what our how our exploration underneath the pit has evolved since having this asset. You know, we we have delineated an underground resource of a 135,000 ounces grading it over five and a half grams per ton. What you see in the top image, in purple, you see our open pit, and then the colors underneath it are the resource colors that we delineated while we were putting while we were defining the resource through a diamond drilling program where we drilled over 12,000 meters. A couple of key points are that we had never closed out this resource at depth.

11:44 And secondly, this was our understanding. You could see the the high grade shoots we we defined were were almost vertical. If you look at the image on the bottom, this is following the completion of structural studies by two independent structural geologists, structural geology consultants that have visited the sites through the course of the year, and also compiling the grade control data we've had we've now built up since completing the resource model over the course of the last three years. And and what you can see in the bottom image that differs from the top image is how tightly constrained the pink areas are, the the pink shoots, which are the the high grade areas grading above five grams per ton.

12:37 They're gently sloping, shallow sloping, high grade shoots dipping from north to south as opposed to vertically as we previously assumed. So we're now in a position where we we're we're very encouraged by this. We've kicked off a 12,000 meter program chasing these shoots, to the south, with the aim of increasing, the underground resource. It's probably worth mentioning at the time of, carrying out this resource, gold is probably gold was trading at $1,600 per ounce. We're now trading at $2,500 per ounce. There's significant scope for the pit to go deeper prior to transitioning into an underground, so we do see some low hanging fruit here in terms of extending the mine life.

13:29 The drilling is ongoing now. We aim to release our first set of material resource results, sorry, through the course of September and throughout to the end of the year. This 12,000 meters is an initial program to continue to, chase this concept. However, should it be successful, we we can rapidly, upgrade the number of meters, and that's our intention. We've also continued to acquire additional exploration tenure.

14:15 You can see in blue is on this map on the left hand side is the licenses we currently own 100%. We have drilled to success a number of small deposits and discoveries. We've also, through our reconnaissance and desktop studies of the region, identified an area to the south of Segolola, and we've assembled a a land package there. We've started carrying out soldier chemistry surveys on the land package, and we're pleased to say we've delivered to, you know, second point of length of anomalous ground down there. We are working these up into drill targets over the through q three, and we hope and aim to start drilling the before the end of this year.

15:09 One thing we're also going to be positioning ourselves to do by the end of the year is to complete a study on mining these satellite deposits and transporting them to Segolola and stockpiling them there. So we do believe, you know, where we sit at the moment, there is material upside already based on the ground and the satellite deposits in terms of valuation and extending the mine life.

15:48 That's it on Nigeria gold. I'll now touch on our Senegal gold project. Senegal is obviously a much more advanced jurisdiction in terms of gold production, gold exploration, and gold mining. We have a very prospective bit of ground we've always been very excited about, which we've been advancing over the years. This project here is, in terms of ounces, a lot bigger than what we have in Nigeria, albeit it's a lower grade. And we've we've been drilling this through the course of the last few years growing the resource. We've carried out a 15,000 meter drill program this year. We had a very nice set of results in the period on and which was press released on June 25. We will be making we will be updating the market with the next set of results very shortly and the final set of results, in early September.

16:55 The Duta project itself has, 1,780,000 ounces. What is very attractive about this is this project is on a seven kilometer strike length, and our average depth is just round about 70 meters. So there's still a lot of scope to go deeper here. This is by no means closed up. You know, in terms of what we're valued at and recognized at, I believe we're recognized as a single project producer, a Nigeria single project producer. I believe this project has scope to deliver significant value to the company and its shareholders over the next few years.

17:38 We are our drill results our first actual results show mineralization from surface, stunning, intersections. For example, the, intersection we've shown here on the slide, 24 meters at three and a half grams per ton from surface. You know, wide intersection is 12 meters at 1.4 grams per ton, nine meters at 2.74, and eight meters at 1.13. As you can see, these are all very shallow intercepts targeting the oxide. We are we just subsequent to the period, we completed our 15,000 meter drill program, and we're now in the process of completing the remaining work streams our preliminary feasibility study, which will require these drill results.

18:32 The key components that are being finished off are the met work, which will be imputed into upgrading the resource as well, and then the subsequent upgrading resource will be the preliminary feasibility study. And that's all happening prior to the end of this year. Lastly, we do have a subsidiary which has assembled a a land package for early stage lithium in Nigeria. We have budgeted a small amount of money here and which is aimed at picking up ground, carrying out low cost exploration, and drilling out targets.

19:19 Our initial reconnaissance identified some prospective areas which had initial success with drilling. We're continuing to carry out that drilling through the course of the year, and this simply provides optionality for us as a company. We're a first mover in Nigeria. We try to see what we can we we have a lot of opportunities that come across us as a first mover, and then we try to see what can add significant value to our shareholders. We believe at a very low cost, we're able to analyze and assemble some very prospective ground here, and we will be hopefully press releasing some drill results again before the end of the year. So far, apart from the drilling we did last year, we haven't had hugely encouraging drill results yet.

20:12 However, we do have a number of prospective prospects that have been worked up into well well constrained drill targets, and those will be drilled those are being drilled and will continue to be drilled through the course of this year. I'll I'll close off by talking about the outlook for the year. You know, we we changed our guidance to 90,000 ounces. We believe that's achievable, and we think the company will will achieve that. We have reduced our all in sustaining cost. We we think that would fall below $1,000 per ounce, $900 to $1,000 per ounce. We will greatly strengthen our balance sheet. We'll be completely delevered from our senior debt position at the end of this year after the final two debt payments.

21:11 We have drilling programs going on across our entire portfolio. So second load and near mine. The underground is ongoing at the moment. We've completed the Dita and Dita West drilling programs and are now awaiting the balance of the results, And we have scout drilling on our Nigeria lithium portfolio. We also think material bit of news to look out for material milestone for us this year will be the due to resource and resource upgrade and preliminary feasibility study. We think the due to project is a project in our portfolio that we can build, and we'll be looking to advance rapidly once we complete the preliminary feasibility study.

21:57 So, that's it from a presentation, perspective, and I'm happy to go through the questions. Thank you very much. Perfect, Shagan. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. Just while the company take a few moments to see the questions that have been submitted today, I'd like to remind you that recording of this presentation along with copy of the slides and the published q and a can be accessed via your investor dashboard. As you know, we received a number of free submitted questions, and we'd also receive questions throughout today's presentation. And at this point, if I could just hand back to you to read out those questions and give responses to what's appropriate to do so, I'll pick up from you at the end. Okay. So there's over in total over 40 questions. I don't think I'll be able to go through all of them, but let me give it a go.

22:52 Okay. So should I just go straight into the questions? Yes. If you could just read them out and then get the response, that'd be great. Okay. First question, do you think that second level underground can deliver more than the current 135,000 ounces of inferred resources? Yes. I certainly believe so. And my belief my belief is driven from the fact that we we haven't ever historically been in a position to throw significant amounts of cash at this. Secondly, we haven't ever closed this resource at a depth. And thirdly, we have a much better understanding of the geology here, the structural controls. Now we've opened up the pit. We're we're still very encouraged. So, yes, we we I certainly believe we can grow this resource from its current one thirty five thousand ounces.

23:45 Second question, will the cellular resource still be updated by year end and will include the known satellite deposits that have already been established? If so, then how many ounces can we expect to see from these satellites? So the We we we would like to update resource. However, we are constantly drilling, and that's so the resource is going to be a moving number between now and the end of the year. So I can't commit to that just yet. What we will do is as we drill, we will press release our drill results, and then we will assess whether or not it's a a good time to draw a line in the sand and update the resource.

24:28 Next question. Can you talk through the repayment schedule of the Goldstream facility and how this may be accelerated with gold now above $2,500 per ounce? Yes. The Goldstream facility is based on 10% of our gold being sold to our senior lender, the African Finance Corporation, at a 70% discount. So all in all, our our gold is discounted by 7%. This is a capped gold stream at 2.25 times value. Given the fact that the gold price is higher, does mean the cap comes in earlier. So we certainly expect that to fall away quicker than initially anticipated.

25:23 Next question. Due to PFS was delayed due to the shipment of samples for MET testing, where are we with this work? Can you advance permitting in all of the work streams to be close to a finance investment decision sometime early in '20 If the flow sheet requires an autoclave versus other methods, will this have large implications on the overall project CapEx?

25:44 I'm encouraged to say that we're very advanced in our data met test work. We expect that work to be completed next month. The other work streams for the PFS have pretty much been done. All the environmental work, the geotech work, that's all been done. We've we what we're waiting for essentially is the final network. In parallel to that, we have been advancing the permitting applications. And as you can imagine, the the outstanding request on the permitting front is the network as well. So having the PFS complete is and the resource updated is of very big importance for us.

26:34 I can't really say too much on what the on the implications of the overall CapEx, but we do have a back of the envelope number in in our minds, and we don't think it's a number that's insurmountable for us as a company. We believe we can build this without any dilution to our shareholders. We also what's the last part of the question? Finance investment decision sometime in the early twenty five. Yes. That's certainly the timeline we're working with. After the we're doing a very detailed preliminary feasibility study. We we're looking to fast track from preliminary feasibility to a bankable feasibility study and then get to a finance final investment decision in early twenty twenty five.

27:23 Next question. If you're able to increase the life of mine at Segolola and prove up the resource of due to given the current high gold prices, do you think THOR would be a big target? Honest answer, I don't know, but I certainly think THOR is a very attractive value proposition, strong cash flows, no debt, and a project in due to that can probably deliver, you know, gold for the next twelve to fifteen years at a rate of well, based on the current resource of of roundabout just over a 100,000 ounces per year. There have been substantial investments in long term inventories. When can we expect the inventory will turn into revenues? Yes. We have over $80,000,000 of inventories.

28:14 This is of we see this as a very big positive for us. We're putting high grade through the mine. Like I said earlier in the presentation, there will be a period where the mining is greatly reduced and stopped, and we have no diesel costs and no costs of extraction, just processing the stockpile. And that's when our all in sustaining cost comes right down, and we expect to generate very strong cash flows from the inventories at that time. And that will be, I think, from the back end of twenty twenty six onwards. The inventories, we also will be blending with some high grade through the course of later on this year and next year as well. So we will be turning some of that into cash flow as well.

29:06 When can we buy additional shares? Will there be an opportunity to buy more shares? We don't plan on issuing any more shares. We're listed on the TSXV and the a market of the London Stock Exchange, and the, shares are available to buy there. And, yeah, I would certainly encourage you to to purchase shares from there. Next question. When does the company plan to reward the shareholders? I assume this means returning cash to shareholders. We've had that conversation as a company. We haven't don't have a formal policy, but we certainly intend to do so in the first half of next year sometime. We we this is all in discussion. There isn't a formal policy at the moment yet yet. However, we will be completely done with our senior debt by then and hopefully continue to and and and be building up cash and strengthen our balance sheet.

30:05 And, you know, we we we are the board and management is aligned with shareholders and hopes to reward the shareholders by returning cash. Next question. Could you please ensure that you post all updated presentations on your website? Make sure they're titled correctly in advance. Thank you in advance. Okay. Thank you. We'll do so. What's the rationale of hedging 2,000 ounces per month at $217.06 with a price of gold well ahead of that price currently? We we priced the the 2,000 ounces per month in in early q two at $217.06 at the time was all time highs for gold.

30:56 We just wanted to make sure we had enough enough budgeted to cover all our senior debt through the course of this year and whilst we turn our accounts payable into into current. And so it's it's it's about just under a quarter of our production. We know we're guaranteed that level of cash flow and blending, you know, the rest at the current gold prices. We think we we can live with. It still delivers record revenues and profits to us as a company, but we just wanted to have that in place in case there was a a drop in the gold price just knowing we we had our debt obligations covered.

31:50 What's the company's appetite for any acquisitions? At what point could THOR look at raising additional debt? Look. We're we're currently we we constantly, should I say, look for any value accretive opportunities, and we'll continue to do so. And if debt is required to to to make these acquisitions, I guess we'll sit down as a board and management and and see if it's appropriate to do so. Can you be more specific about what items contribute to accounts payable? Yes. Look. During the during the upgrade of the plants, we had a significant buildup of golden second, almost over 11,000 ounces. So at today's gold price, about $26,000,000 worth.

32:47 What we did at the time was have an agreement with our mining contractor to accrue the invoices until the end of the the upgrade and then and then start making headway into that once that upgrade was done. That's currently being done. That's those accounts payable were held at no interest rates, and that's going to be made that would also be made current by the end of this year. Yeah. So I think I've I've been through the questions here. Perfect. Sheagan, thank you very much for answering those questions. Of course, the company can review all the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors, provide you with their feedback, which is particularly important to yourself and the company, Shagan, could I just ask you for a few closing comments?

33:37 Yeah. Sure. Look. I I think I'll close by saying we're we're very pleased with how the quarter went and how the the remainder of the year is shaping up to be. We're doing this in at times of record high gold prices We're on top of our costs, and, you know, we think we're underpinned in terms of value by very strong cash flow now. Now if we put that to one side, we still think we're a growth company. We think, you know, any additional answers we find are almost classified as super answers because of the lack of CapEx required, the fact that we have all the infrastructure in place already, and we we believe we we will find more answers in Nigeria and extend the mine life.

34:24 Secondly, we have a project organically that probably has no value assigned to it in our share price. Once we start having some economics tied to that project in in the form of PFS, I believe people are going to see how much value that can be delivered to our shareholders through that. So we hope from now through to the end of the year, there's more there's a stream of positive news flow from our drilling, from our milestones in terms of the PFS in both countries as well. And like was in the q and a sec sec section, we also keep our eyes open for anything that may be value accretive to us in terms of an acquisition. Perfect, Sheagan. Thank you once again for updating investors today. Could I please ask investors not to close this session? As you know, we automatically redirect it to provide your feedback in order the management team can better understand your views and expectations.

35:21 This won't take a few moments to complete, so I'm sure it'll be greatly valued by the company. On behalf of the management team of THOR EXPLORATIONS, we'd like to thank you for attending today's presentation, and good afternoon to you all.