Thor Explorations (TSXV:THX) — Q3 2024 Financial & Operating Investor Webinar

0:01 Good afternoon, ladies and gentlemen, and welcome to the THOR EXPLORATIONS LTD investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please 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 questions submitted today, and we'll publish those responses where it is appropriate to do so. And before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to CEO, Shagan Lawson. Shagan, good afternoon, sir. Good afternoon, Jake. So good afternoon all in attendance.

0:47 I'm pleased to be here to be talking through our q three operational update, which is largely focused around the performance at our Segolola mine in Nigeria. There will be forward looking statements in this presentation, and there's a disclaimer here, which will also be be available on our website for further details. So I will start off by giving a brief introduction and overview of THOR like I always do. We're a West Africa focused gold producer and explorer. We have operations and activities in three countries, which has just changed in the last quarter.

1:36 Our flagship project is a Segolola gold mine, which is being which is producing gold in its third calendar year, and it's producing based on the DFS reserve of just over half a million ounces grading at just over four grams per ton. After production last year of 85,000 ounces, we, earlier this year, revised our guidance to a production target this year of 85,000 ounces. We're also advancing our Duta project in Senegal, which has a global resource of about 1,780,000 ounces. That's divided approximately fifty fifty between an indicated and an inferred resource.

2:24 We are we have been working through the course of this year carrying out drilling exploration activities and advancing that project towards a preliminary feasibility study as our next milestone here. Most recent operational advance into a new jurisdiction was into Cote D'Ivoire, which also happened this year, where we have acquired and signed a binding agreement of the Gritu project from Endeavor Mining. We've also carried out options to pick up additional perspective ground on the Permian Greenstone belts there, and I'll be going into more details. Outside gold, we have assembled a portfolio of prospective early stage lithium ground, which we continue to advance after an initial drilling program that was carried out last year.

3:25 So before I go into our actual operations updates, I would like to quickly speak on the developments which most people are aware of in Nigeria where we have had various tax allegations carried out by Oshun state in Nigeria, Oshun state government against the company. Further to the allegations made by the state government, there has been a response by the federal government who do have the jurisdiction and preside over mining activities in the country That resulted in the commissioning of a fact finding committee to investigate these allegations.

4:11 We provided all the information we were requested to provide, including all evidence of our tax payments, withholding tax, PAYA tax, to the fact finding committee. The further to this, the the allegations were investigated by the state as well, and they requested an additional extension to which to provide, their evidence to substantiate their claims. We understand that this, final report was submitted last week Friday, and now we are awaiting the review of the report by the minister of mines in Nigeria and a statement to be made by him in the near future.

4:58 I will stress that we are very confident in our position, and we believe we have complied with all tax rules and obligations that we are required to in Nigeria. So moving to our operational highlights. Operationally, this was a challenging quarter for us, and that resulted us in pouring and selling less gold than we did in the previous quarter, which had been a record for us. To talk about some of those challenges, initially, right at the beginning of the quarter, we had a fly rock incident, which resulted in the management at site stopping further blasting and investigating how best to manage our blasting.

5:55 This resulted in about a week of inability to access the desired high grade gold, and we knew that would have an impact on the quarter's performance and subsequently the annual performance. Later on in that quarter, you know, our operations were the impact on operations were further compounded when we out of our control. We were subject to the late delivery of a liner. This meant that a three week period in September, we were using a less than efficient liner for our mills, and that resulted in a lower recovery for the period. And, again, resulting in a lower production of gold.

6:48 And thirdly, a later and heavier rainy season this year in most of West Africa and also in Washington state where we operate resulting in rainfall rainfall in our pit that was above our pumping capacity, again, affecting access to the high grade area of the pit for several days. We have, as a result, reduced our guidance to 85,000 ounces for the year. And halfway through q four, as I'm speaking to you now, we maintain that guidance. Well, I can say about q three that has just passed despite these operational challenges. We're very pleased to say that, you know, it was a a very profitable quarter for us, generating revenues of just over $40,000,000, an EBITDA of over $27,000,000, and a net profit for the period of $17,500,000.

7:53 We further deleveraged our balance sheet with now just one remaining debt payment to our senior lender, the Africa Finance Corporation, and we continue to make positive progress on our balance sheet in terms of reducing our accounts payable. I think very importantly and notably for the quarter, we transitioned from a a net debt position to a net cap cash position. Our net debt position at the end of June was $2,700,000, and our net cash position at the end of September was a positive $2,700,000. And then if you look at that versus the end of the year last year where we had a net debt position of $15,000,000 to our net cash position of $2,700,000, We're very pleased with the progress we made and the direction of the strengthening of the balance sheet.

8:47 So when this is going to leave us, it's going to be in a position at the end of this quarter where we're completely delevered from our senior debt facility. In terms of production in q three as well, I've spoken about the challenges we had, which has which meant that, you know, we processed at a grade of just roundabout two grams per ton. And I think the key point here, can see our recoveries were down just below 90%, which is lower than than we would expect and lower than than we have had in the previous five quarters. And that was down to the that was down to the late replacement of the liner, or should I say the inability to replace the the liner when we had planned.

9:38 We have grown our stockpile. There's a significant amount of gold over 40,000 ounces on stockpile, which we can continue to process and and and blend with our ongoing production, but also it provides us with significant amounts of material to process even after mining activities have stopped. And and at these gold prices, that's a very, should I say, healthy stockpile to have. So to see what this looks like on a year to date basis, we have poured just over 60,000 ounces and sold just under 60,000 ounces. Our year to date EBITDA is $88,000,000, and our year to date net profit is $57,000,000.

10:33 We have production guidance of 85,000 ounces. We have been tracking our costs very well through the course of the year, and we believe our all in sustaining guidance is going to land between 800 and $900 per ounce for the full year. In q three, we had a big focus on going to the next step of exploration underneath the pit. We have historically delineated a significant amount of gold underneath the pit over a 135,000 ounces. Earlier this year, we carried out a number of studies with various consulting groups and structural studies, and we also compiled and combined all the historic grade control data we've gathered over the last three years to define a drilling program.

11:30 This drilling program has been defined based on a concept of high grade shoots, which are gently sloping underneath the pit, which we historically have not closed out at depth. It's also worth noting that, historically, we carried out our our definitive feasibility study and designed this pit at a much lower gold price, and the gold price is is now, you know, trading about 900 to a thousand dollars above the the the pit design. So we do see a significant amount of upside potential there. We have kicked off in the period an initial 12 hole drilling program to test this proof of concept.

12:19 We are certainly going to be expanding this drill program and testing other areas. In the quarter, we we press released the initial first the first two initial holes of the drilling program. As you can see, both beneath the pit at today's gold price just using a back of the envelope rough calculation. We do think there's certainly scope for the pit to be increased and go deeper prior to transitioning into an underground to to to mine some of this gold that we we are intercepting.

13:04 We're very pleased with the the intersection and the grade of of the gold here. If you look at it on a gram meter basis in particular, this gold certainly is mineable, and it's the first indication of mine life beyond the definitive feasibility study. We have since completed further holes, and we will be press releasing during the course of this month in November additional results from this program. Exploration has also been continuing on the satellite deposits, which we have a smaller scout rig operating on. And the these are being the the drilling cap being carried out here is being used to to define a much bigger drilling program. We still have very strong confidence that the gold discoveries we have made within trucking distance can be expanded further and can be incorporated into the Segulola mine plan.

14:10 This is something we will be looking to update the market on during q four this year as well. In Senegal, where we have our Duta project, during the course of this year, we increased the the size of our Duta landholding. We acquired the contiguous licenses license to the West and an additional license to the South. Due to we have a a resource where we have a global resource of 1,780,000 ounces where we have been carrying out various work programs. One work program that was completed in q three was the drilling activities. These drilling results are now being have now been compiled and being used as inputs into an updated resource.

15:01 It's important to note that the the aim of this drilling program was twofold. Number one was to increase the oxide component of the resource, and number two was to recategorize more of the resource into an indicated category. And we are happy with how that's progressed. This information will be used to advance our preliminary feasibility study, which we believe should provide an indication of the material value that can be delivered to our shareholders from this project, which we don't believe currently is being attributed to any of our, should I say, market capitalization. The exploration drilling program, we we we've already released these results.

15:54 We were we were pleased to press release that these results were not just within the strike length of the main deposit, Mecoza or Mecoza tail. However, we are continuing to make different discoveries all around this license. Here are some of the results from Mecosa East, which lies parallel to the main Mecosa deposit, which we have been drilling over the years. One of the characteristics we were very pleased with was that we are getting significant drill results or intersections in the oxidized layer, which was our target, and they have come back at relatively decent rates as well. So this project continues to be of serious importance to us.

16:40 We do believe it is a a very material project in terms of value, and we look forward to continuing to progress this and update our shareholders with with news from Duta where our next milestone is a preliminary feasibility study. We announced our entry into Cote D'Ivoire, Ivory Coast, where, you know, we we have strategically, this was a a continued increase in our footprint across West Africa. Strategically, it was also a diversification in terms of stage of development of our projects and also diversification in terms of jurisdiction.

17:25 Cote D'Ivoire has excellent geology with a great mining code and has been a real success story over the last ten, fifteen years in terms of gold production and gold discoveries. Our portfolio currently consists of the Gucci project, which we signed from Endeavor, and also the Bundiali project, which was which covers significant greens brimming green stone ground, which we are advancing early stage exploration on as well. I will just talk very briefly on the project we acquired in from from Endeavor, the Gitche project. The project, we're very excited about because it is an advanced exploration project with significant blue sky exploration potential.

18:20 It's a project which we spent many months in the data room and carried outside visits, and we're very impressed by what we saw. There's an 8.5 kilometer by four kilometer area of gold anomalism, which has been drilled and has intersected mineralized gold at some very, very exciting intersections, 12 meters grading over 10 grams, 16 meters round about eight grams, 24 meters to two grams, and 16 meters to two grams to to name a few of them. There are two main prospects here, and I think, importantly, this these exploration targets remain open. So in addition to this, there's significant areas of the license that that haven't been tested by drilling or geochemistry, and we have given ourselves an internal target to kick off exploration here at the beginning of next year and have a maiden inferred resource by the end of the year. We've put a very aggressive ambitious target of between half a million and a million ounces for the year.

19:27 So to talk about the what are we looking to achieve for the remainder of the year. You know, we we've maintained the guidance that we revised, 85,000 ounces. We will we are very confident that our all in sustaining guidance will be below $1,000 per ounce. To be more specific, we think we will land in that range of 800 to $900 per ounce. We will be completely deleveraged from our senior debt position by the end of next month. We have drilling programs which have restarted in Senegal. Now the rainy season is over. Have an ongoing drilling program at Segalola, which is a Segalola underground drilling program that is to be expanded and results to start coming out from this month.

20:19 We have also scout drilling programs on the Duta West license as well where we have defined drill targets through the course of the year. And lastly, we do still have our lithium portfolio, and we are advancing low cost exploration across various targets there. We are our next milestones are are significant milestones to come up are the due to PFS and exploration in both Nigeria and Cote D'Ivoire. So that's everything for me, and I think we will move on to the q and a. Thank you very much. Perfect, Shagan. That's great. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen.

21:11 But just while the company takes a few moments just to review those questions, that were submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard. Shagan, as you can see there, we have received a number of questions that were both presubmitted ahead of today's event as well as well as those that have made their way through, throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Shaken, at this point, if I may hand back to you, sir, just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you. Thank you, Jake. Okay. Alright. I'll read out the questions, I guess, and then I will I will answer the questions. So the first question is, with the senior debt paid off this quarter, cash generation at likely record levels in q four.

22:04 Are we close to seeing a dividend policy initiated? Will this come early in 2025, or are buybacks an option if the market valuation is still low? Yes. I think imp importantly, we we we're very pleased to completely delever and continue to strengthen our balance sheet. I think I mentioned at the end of our last last quarter that the board is discussing a a dividend policy. We haven't finalized that yet. We will certainly be looking to to return money to shareholders, whether it's by dividend or a buyback in at in the first half of next year.

22:49 I I have to say this hasn't been finalized yet, but this is a a conversation that we continue to have with the board. Second question, cost control this year has been very impressive. Are we likely to see all in sustaining costs remain as low as this through 2025 and 2026 at? Yes. Look. There are a couple of a few key inputs into our costs that have remained low. I would say the the diesel price, we've benefited from a lower than budgeted diesel price. I would also say that the fact that we continue to use compressed natural gas as a source of power instead of diesel on the plants as opposed to the the mining trucks and equipment, that's really helped our all our in sustaining costs and also the the the grade of the gold we're we're processing as well.

23:43 We do expect these levels of costs below $1,000 for the next couple of years, certainly. And the next question sorry. Before I go on to the next question, there is a the function of the diesel price and the ammonium nitrate price, which have also remained reasonable through the course of this year, and I will caveat it by saying any serious spikes in these two prices will affect our all in sustaining cost. Okay. Can you confirm that THOR has a five year tax holiday in Nigeria? It means a no corporation tax till 2027.

24:29 I have seen conflicting information about this many things. So the mining act does provide for for a tax holiday and the so does the pioneer act. We do have a tax holiday that has been officially granted for an initial period up until the end of twenty twenty six. 2024. And then after that, it is extendable by a further two years. So, you know, we will certainly be hoping that it's extended based on the conversations we've had. A key function of this being extended is our ability to extend the mine life as well. Next question. Any major CapEx spending plan for 2025?

25:23 What is the budget plan for exploration total across all three countries? Okay. So our our biggest CapEx, we believe, is has been sunk already. We've upgraded the plant this year. You know, that's that's also one of the the the joys, I would say, of completely deleveraging, and that's also one of the huge benefits of finding additional answers because the incremental value is is significant. We don't have any massive CapEx requirements over the course of next year. Obviously, as the mining fleet gets older, we will be replacing trucks and and and and and so on.

26:09 However, right now, we believe we've sunk the majority of our CapEx. In terms of exploration, what we would look to do next year, certainly put more money into exploration around Segolola, underneath and around Segolola. And we have smaller exploration budgets in Senegal and Cote D'Ivoire where we will put about $3,500,000 each in each country there. So our total exploration costs for next year outside Nigeria is, you know, around about $7,000,000. In Nigeria, it's more difficult to give a number because that's really based on success. You know, if we suddenly start drilling some very interesting targets very close to the pit or underneath the pit, then we can rapidly scale up.

27:02 But we have an initial budget of roundabout $5,000,000, and then we obviously have the ability through our cash to to scale up and and increase the size of that budget through the course of the year. Next question. Is THOR looking at expanding beyond West Africa? The the short answer is yes. Given the gold price environment, given the fact that we are completely deleveraged, if there was an opportunity that that fit, you know, our capabilities in Africa, we certainly would look there. West Africa, we we believe we have expertise and we are very strong there, we know how to operate there. However, if there is a a a project that is attractive and value accretive to our shareholders, we certainly wouldn't rule it out because it's not in West Africa.

28:01 Next question. What is the worst case scenario in respect of the Austrian state federal legal challenges? I think look. First and foremost, we we have to respect the the fact finding committee that's being initiated and commissioned by the minister of mines. So I wouldn't like to comment on this in too much detail until the findings are made public and the minister has made a statement. However, I will just say the numbers that have been generated by the Austrian state, the liability they have alleged we owe is about 3,200,000,000 naira, which is just under $2,000,000.

28:51 We have noted there are different numbers being banded around in the local press in Nigeria that are very large sums, but none of these have been officially presented to us as one of the the the legal allegations. The number that's been put in front of us is about 1,900,000. Next question. Assuming you want to build a mine in Senegal, how could this be financed, debt, dilution from cash flow only? It's still early days, but we certainly think it would be a combination of our own cash and project finance. And, yeah, I think I don't think I've missed any questions. Oh.

29:37 One more question. You are doing fantastic. Keep going for Nigeria. Can you provide a pessimistic and optimistic estimate of the number of years of my life, assuming 90,000 ounces per annum produced? Pessimistic, I would say three and a half years at 90,000 ounces per annum production. So we still think there's significant upside in terms of valuation versus what we're valued at considering our costs. And particularly in that last year, it would just be low cost mining processing what's already on the stockpile. And that is taking the pessimistic the most pessimistic situation that we do not find another ounce of gold, which we know is not going to be the case given the additional inferred underground we've already drilled.

30:39 Optimistic look. I certainly think that, you know, we are in a situation where we can finally put some some more cash towards exploration. We have the the targets. We have better understanding. I do not think, you know, what we have at cellular is just stay in isolation. So being as being optimistic, I think it without giving a number, you know, I think, you know, there's certainly, you know, a a a number of years, and, obviously, that's been that we that's been optimistic. So I would say, yeah, certainly, well be beyond three years. So, look, we we have drilling results to come. We have the first half of next year drilling additional targets. We're constantly exploring. We've already found discoveries within tracking distance.

31:34 So I think the my life there's certainly a lot more my life here. Thank you very much. Yeah. Back to you, Jake. Perfect, Jake. And that's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Shaken, perhaps before really just looking to redirect those on the call to provide you with their feedback, I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Okay. Sorry, Jake. A couple of questions have just come in, but I I I guess we can reply by email because I I know it's they're still coming in. But so, yeah, just to to to wrap up, look, where where we've had a a challenging year operationally.

32:36 However, we've successfully navigated through this. I think the company is very well positioned now for for very good growth. We've had a very profitable year. It will be our most profitable year to date. And from the January 1 of next year, you know, there will be no more debt on the balance sheet. At these gold prices, the company will continue to go from strength to strength. Our key focus now is extending this mine life because that delivers significant value to to shareholders by increasing the for every single ounce of gold we we find without the requirements of significant CapEx, which has already been sunk. We are looking forward to hearing a response on the Austrian state allegations, and we're very confident with our position there.

33:24 And aside Nigeria, we do think there's significant growth of the company where where we're maturing as a company. We're developing where we have a a second project in our portfolio, which we believe we will build as a company. And we've entered into a new jurisdiction on a project that we are very excited about as as well. So, you know, I think, you know, we're the company is very well positioned. We're we're generating cash. We're strengthening our balance sheet, and we're growing through organic exploration as well. Shagan, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations?

34:11 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team with THOR EXPLORATIONS LTD, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.