Thor Explorations Ltd. (THX.V) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Thor Exploration's Investor Presentation. [Operator Instructions]. I'd now like to hand you over to CEO, Olusegun Lawson. Good afternoon to you, sir.

Good afternoon, and good morning or good evening to everyone who's tuned in. I'm very pleased to be here to be talking through the preliminary feasibility study results for the Duta project, which we own in Senegal. Thank you. So first of all, we do have a disclaimer in place. There will be forward-looking statements in this presentation. So we'll just alert our listeners to that. For those who are new to the story, here's an overview of the company. Thor is a West Africa-focused gold producer and developer. We're currently advancing projects in 3 jurisdictions in West Africa, in Nigeria, where we have our flagship gold mine, the Seneggola mine, in Senegal, where we've just announced the results of our preliminary feasibility study at the Duta project and in Côte d'Ivoire, where we moved into in 2024. And we've assembled a very prospective portfolio there with very encouraging initial exploration results. Our Nigeria project is based on an initial open pit resource of just over 0.5 million ounces grading at 4.2 grams per tonne. Last year was a very successful year for us in terms of operational efficiency. We produced just under 92,000 ounces of gold, and we did that within our guidance below $1,000 per ounce. This year, we have a production guidance of 75,000 to 85,000 ounces per ounce at an all-in sustaining cost guidance of between $1,000 and $1,200 per ounce. At the Duta project, we have increased our stake in both licenses that hold the reserves there to 100% prior to the government 10% free carry. Our global resource now stands just under 2 million ounces with 1.7 million ounces of that being in the indicated category grading just over 1 gram per tonne. We also now have a probable reserve, which we designed the preliminary feasibility study on of 1.2 million ounces, also grading at just over 1 gram per tonne. We're very encouraged by the results of the preliminary feasibility study, which shows a material economic outcome and a material valuation to us as a company, showing a preliminary feasibility study NPV 5% pretax of $908 million at a gold price of $3,500 per ounce. In Côte d'Ivoire, we continue to aggressively carry out exploration on our 3 licenses there, the Gui project, the Maui project and the Bundiali license. Bundiali license, we're doing some lower cost exploration. But as I speak now, we're actively drilling on our Gui project, and we kicked off finally on our Maui project, which we're very excited about as well. And then lastly, as a first mover in Nigeria, we have in a lower order priority assembled an early-stage lithium exploration portfolio, which we continue to advance at a low cost. Still for those new to the story, we are listed on both the AIM market of the London Stock Exchange and the TSXV market of the Toronto Stock Exchange. We had a very stellar year last year in terms of share price performance. We now have a market cap of CAD 1.14 billion. And I personally believe we still have a way to go in terms of unlocking value for our shareholders across our entire portfolio. We continue to be supported by our institutional shareholders. And as you can see, our broker share price targets still not quite there in terms of both on the Canadian dollar side and obviously correspondingly on the AIM market side. So we are encouraged, and we do believe we will continue to unlock some value. Before I go into the Vita project, I'll just do a quick recap on our performance last year. We started the year on a completely delevered balance sheet. As we went through the year, our margins continue to grow as we kept the same cost pretty much through the course of the year, whilst the gold price continued to rise. So as of Q3 last year, we have transitioned completely over a 12-month period from a net debt position of minus $27 million to an adjusted net cash position of just under $100 million. In Q3, we paid a dividend of $1.40 per share. And in 2025 as a whole, we paid -- we returned around about $18 million to our shareholders in the form of dividends. Our cash position at the end of the year was much higher than budgeted, and we declared a bonus dividend of $0.015 -- apologies, not $0.15, $0.05 per share in Q4. So that was all really capped off by a very strong Q4, where we had records by all financial metrics in terms of revenue, profitability, EBITDA, -- we had a revenue of $108 million. We finished the year with $137 million in the bank and with bullion of just under 3,200 ounces, which were sold in Q1. So the Senegal project, the Duta project, a project which we are extremely excited about. Our landholding here has grown from the original Duta project, which is the brown license you see here, which hosts the Makosza series of deposits. We then acquired the Duta West license. And then last year, we acquired the Boba license. This Duta project has been organically developed right from Grassroots. We actually drilled the first discovery hole in this license in the grassroots exploration license in 2012, and we've since drilled over 133,000 ounces in the Duta and the Duta West permits. With our indicated resource now at 1.7 million ounces, we've got a discovery cost of $8.5 per indicated ounce, which is highly efficient. It's located in all the right rocks in this right part of West Africa in the Beromian rocks of the Keneva. -- and our total acreage there now stands at 541 square kilometers. The preliminary feasibility study shows probable reserves now of 1.2 million ounces, and we believe that's growing. We use a long-term gold price of $3,000 per ounce to come up with that reserve and an indicated resource of 1.7 million ounces at 1.04 grams per tonne, also added additional inferred resources of 273,000 ounces. The resources have been calculated at $4,000 per ounce whilst the reserves at 3,000 ounces per ounce. And to recap, we've increased our economic interest now with the 2 licenses that host all the reserves, we now own 100% have economic 100% economic interest in them. So last year, from March last year to December, we carried out a couple of drilling programs, and that was really designed at increasing the economic ounces. We had an indicated resource of 875,000 ounces, which was our last declared resource. The drilling we carried out because we knew we were carrying out this preliminary feasibility study, we wanted as many mineable ounces as possible. That drilling was designed at increasing the indicated component of the resource to recategorize that into indicated and for that and then generate a reserve, and that was successful. We had a 94.3% increase in our indicated resource. And unlike last year, we now have a reserve of 1.2 million ounces, weighting at just over 1 gram per tonne. So a snapshot of the preliminary feasibility study. It's I think first and foremost, it's a long mine life of just over 12.5 years. The CapEx of $254 million is extremely manageable by us, a company our size and our balance sheet strength. It's got a very fast payback of a $3,500 gold price of less than a year and a post-tax IRR of 61% at $3,500 gold price. In the first 4 years, this project will produce over 100,000 ounces per year for a total of 411,000 ounces. And this is all from its 1.2 million ounce reserve. The post-tax NPV is $633 million at $3,500 gold price and whereas the pretax NPV is $908 million at the same gold price. The reason why I put these 2 numbers here is because in Senegal, every mining license is individually negotiated with the government, which includes your tax holidays, your investment incentives, which can be applied. We've -- for the post-tax NPV scenario, we've assumed we get tax holidays and incentives. So in summary, we do expect the post-tax NPV to land somewhere between that $633 million and the $908 million once the negotiations have been complete. The project itself is -- the production profile is comprised of 2 phases. The first phase, which is the higher-margin phase is the oxide ore phase and the second phase is the primary ore phase. The oxide ore phase currently spans for 4 years of mining and processing of the oxide and transitional ore through a conventional carbon and leach circuit. Once we complete that, we then move into the primary ore phase, which runs for another 8 or so years through the same circuit. However, due to the more complicated metallurgy and the requirement to unlock components of the gold from silicon, there will be the inclusion of suspension roasting as well. This produces around about 61,000 ounces per year. Project will have very strong early cash flow. In fact, in the first 3 years, even stronger cash flow, producing about 110,000 ounces per year at the cost -- all-in sustaining cost of $1,493 per ounce. Like I said, it's very highly leveraged to the gold price. If we use a $4,250 gold price, the project NPV on a 100% equity basis increases to $1.43 billion with an IRR of 102%. So with the low initial CapEx, the long life of mine, the all-in sustaining cost for the total project below $1,900, we do -- this project does support strong margins throughout the life of mine, and we're extremely pleased with this. And we do believe we can optimize this further over the next 6 to 9 months. The project itself is going to be entirely funded from our cash balance and project financing, and there's going to be no requirement for third-party equity and shareholders are going to be exposed to absolutely 0 share dilution. So the existing resource, this is just a quick illustrative slide exists in the Duta and the Deter West license. However, we've spent the last 6 months working very aggressively on other areas of the license. We believe that we are going to increase the resource. In particular, we believe we are going to increase the oxide resource and the oxide phase of the oxide ore phase of the project when we get into production. I will start off by illustrating the image on the left, where we have the Makosza deposit and the Baraka deposit. However, we have now delineated 5 targets in the Duta West license and another 6 targets in the Buancoba license. We've already kicked off a 40,000-meter drilling program on these targets. And this aggressive drill program we're aiming to start releasing our results on a monthly basis from the end of February. We are going to incorporate these results into an updated feasibility study, and we are targeting and anticipating an increase of the oxide phase of the production. Why are we encouraged by this? If we take -- we zoom into the Duta West license, for example, if you look at the Baraka 3 resources, which lie outside these red Ellipses, these -- everything circled in the red ellipses are the drill targets we've now defined and designed. They show the exact same signature as Baraka. If we look at the image on the right, where we do zoom into one of them, one of the ongoing drill programs. These have been designed on soil, geochem and also Rckchipam. All these targets are longer than 1 kilometer in strike length. They're potentially open, particularly the ones of the north of DutaWest license into Bussancoba. There's significant amount of soil geochem anomalism all throughout this ground that we hold. So we've started drilling these holes. We've also started -- completed a diamond drilling program within Moraco and expect to increase the size of that oxide resource as well. Drilling the oxide over the next 6 months is our top priority alongside the rest of the development process. Going from there into the Booanoba license where we've delineated additional drill targets. We do have rig ongoing there, finding some very high resolution drill targets. You can see on the right-hand side from the in situ rocks and -- the in situ rocks that continue to amplify what we have seen at Sogeiochem level. There's a significant amount of untested strike length to be drilled, and that's going to be incorporated in our 40,000-meter RC drilling program. So we're seeing high-grade rock chip results. We're seeing this over an extensive piece of ground, and we're currently drilling that. And what we're aiming to do and where we're aiming to culminate that is to focus on increasing this oxide. So our focus now over the next 6 months, we're -- like I've mentioned consistently, we're looking to to complete this 40,000 meters of drilling. This is all going into a focus on increasing the oxide indicated resource. We believe over the last 18 months, we've been working alongside our EPC contractor that built our mine in Nigeria. We have extremely strong confidence in the pricing we've resulted in and the level of detail of the quotes. And we -- and through that, we believe we have the right sizing of the mill. We believe we've derisked this project enough to start ordering the long lead items as early as Q2 this year, even before financial close and possibly even towards the end of Q1 this year. Other focus in the first half of the year would be signing the mining convention with government of Senegal and updating our resource and coming up with an updated feasibility study. We do not believe that feasibility study is going to slow down our development process or our development time line. That feasibility study is clearly to demonstrate additional economic viability of this project. And that will be reflected in the extension of this oxide ore phase of production. When we come to the financing, our strong balance sheet enables us to contribute up to $100 million without impacting the rest of our activities in Nigeria, in Cote d'Ivoire in terms of returning funds to shareholders in dividend. and we are looking to fund the balance requirement of $155 million through leverage, whether it's a traditional project finance facility, it's a corporate loan, corporate facility at corporate level, we have a lot of optionality here, and we're in a very strong position to fully fund this project. From the discussions we've had, there's very strong early indicative interest. We are accelerating talks now the preliminary feasibility study has been released, and we're targeting a financial close before the end of June this year. Most of our CapEx is weighted towards 2027. And even before financial close, we do believe with our funding, we're able to place the order on the longer lead items. 40,000 meters we're actually drilling is targeted of increasing the oxide resource between 200,000 and 500,000 ounces by the end of Q3. And then based on that, we will be looking at the economics again. What you can see from this chart, particularly in the post financial close time line is that we can push back the primary ore phase from the end of year 4 and hopefully much further down the line. Depending on where the gold price is, these 2 may even run concurrently overlap for a few years. So to finish off on this, -- we do have a fast-track development time line. We believe we've done a lot of heavy lifting already to date with our partners. One of the key milestones and gating points to overcome was receiving our environmental and social impact assessment certificate. That was done very recently in Senegal this year, around about 10 days ago. And we are now focusing in country on negotiating our convention. As a top priority are looking to extend the oxide resources and to update the feasibility study in Q3. And as early as Q2 or end of Q1, we are looking to order the long lead items. We're advancing talks with our financing parties, and we do expect this to close in Q2 this year. And once we've signed this mining convention with the Senegalese government at the end of first half of this year, we believe we're well positioned for our first gold in the first half of 2028. So that's a very short summary on our preliminary feasibility study. I would personally like to thank all our team and stakeholders that have been involved in getting this up. We are very, very excited by it. We think this is going to unlock a significant amount of value for our shareholders. Right now, the current mine life stands at 12.5 years. I suspect by the time we pour our first gold, we're going to be looking at something between 16 and 20 years in terms of mine life, and this continues to grow. We're extremely excited by it. We are very well positioned with our EPC partners to get on the ground and get this project up and running. And we're very confident that we will be pouring our first gold within 2 years. Thank you very much.

That's great. Well, thank you very much for your presentation. I'd like to remind you recording of this presentation along with the slides and the published Q&A can be accessed do Sean, as you can see, we have received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. At this point, Sean, I'll hand back over to you, and I'll pick up from you at the end.

Sure. Thank you. Okay. So I will start -- I'll read these in order. I'll read the questions out and then I'll answer them. Great job so far in execution. While related, so did many other exploration and developers being a producer, we expect it to be more leverage. How can we get more traction from Wall Street deep pocket investors? Any plans on upgrading to other exchanges unless the 3 mines and 5 years growth plan is made clear and acknowledged widely. I'm afraid may not receive the share price appreciation. Yes. Look, we believe we continue to unlock value. through what we're doing, obviously, producing in Nigeria and then bringing the second project on stream. Once we've -- I believe once we get to that final investment decision in Senegal and officially have updated the mine life in whatever form it looks like, whether it's additional open pit or underground. And once we're officially a longer-term producer, which is hopefully just a matter of time, then we've had these conversations. then we will consider looking at ourselves to other exchanges. Can you please provide some feedback regarding the possibility of implementing a share buyback program for 2026? At the moment, -- we're returning money to shareholders. I think if we do our budgeted dividend payments this year, we'll be returning around about $25 million to our shareholders. And then we have looked at the option of share buybacks previously. The fact that we are listed on AIM and TSXP has additional restrictions on AIM, which include and are really governed by your daily volumes, the amount of shares you can buy back. At the time when we looked, it was deemed extremely inefficient to slowly buy back tens of thousands of shares over the course of a quarter. We thought that wouldn't be the best use of our cash or very impactful. However, our volumes have increased on both the AIM market and the TSSP market. And it's not something at the top of our priority list right now. We do believe we have much more, should I say, valuable allocations of our capital, but it's not something we're completely closing the door on. Can you put into context the 40,000 meters of drilling planned for this year versus historic drilling to date? Additionally, can you expand on the district scale potential, what sort of blue sky potential does management see? Yes. Look, the 40,000 meters of drilling, I mean, okay, let's look historically. If we start with the drilling we've done to date, those have been over 95% of that has been done in Marosa and the remainder in Baraka-3. We've now on the ground seen signatures that are very similar to the discoveries we already have. We have a team that's had a very high success rate at a very low cost. We're very confident this 40,000 meter drilling is going to increase our resources from what we've seen on the ground. Right now, we're looking at indicated resources of 1.7 million ounces. I certainly think by the time we pour gold, we are definitely positioned to be well above 2 million ounces or somewhere between 2 million and 2.5 million ounces. And the 40,000 ounces is targeted at adding an initial 200,000 to 500,000 ounces. That would mean the extension of the oxide phase by 2 to 5 years of very low very -- sorry, low all-in sustaining cost of under $1,500 per ounce, producing north of 100,000 ounces per year. And also considering that, that phase of the project is already paid back at $4,250 gold price in 9 months is literally just generating very strong free cash flow north of $300 million annually to the bottom line if the gold prices stay above $4,250. So you can see how value accretive it is and why it's such a priority to complete this 40,000 ounces. With D's strong PFS results and recent share price performance, is management focused on organic growth through resource expansion and development? Or are you open to strategic opportunities such as the takeover to maximize shareholder value I think we've got a fantastic pipeline. I think we continue to drum strong cash in Nigeria to generate strong cash in Nigeria. I think when Duta comes online, that's going to be obviously at a scale much bigger than we've operated in Nigeria. And like I mentioned, after this -- the drilling program over the next 6 months, I think we'll demonstrate an even longer mine life than 12.5 years. And then one thing we haven't spoken about in this presentation because it's been focused on Da is the complete blue sky opportunity we have in Cote d'Ivoire as well, which I think will also unlock a lot of value for our shareholders. So right now, particularly given the gold price environment and the fact that we can fund everything ourselves, I think we've got -- we're in an excellent position in terms of our organic pipeline, and we look forward to delivering that. bonus dividend is very much appreciated. Can the Board take another look at share buybacks. Buybacks are highly earnings per share value accretive and tax efficient for all shareholders. Look, we've just had a very similar question. So I think this is noted, and we will Management have previously indicated 500,000 ounce oxide reach target. Can management spell out what each additional 100,000 ounce oxide would mean for the project economics? Yes. Look, I think I answered that question before you asked it, but I'll just reiterate that an additional -- every additional 100,000 ounces is usually value accretive. The mine is fully paid off in year 1. we're using a $1,500 all-in sustaining cost oxide phase and $4,250 gold price, we're looking at just under $3,000 margin per year. That oxide phase can produce between $100,000 and $110,000 and 110,000 ounces per year, and that will equate to the bottom line of $300 million per year. So we can certainly hugely increase this project NPV over the next 6 months, and we intend to do so. And that's why this updated feasibility study is such a priority. In saying that, we still have huge confidence in the project as it stands. The economics of the project is derisked enough that we're going full speed ahead on the development path, and that includes ordering the mills in the very near future, even before financial close. De exploration begins to show a significantly larger resource, will management consider increasing the plant throughput size, thereby reducing the all-in sustaining costs? Look, at the moment, we believe we've sized the plant optimally. It's a 1 gram at the moment. Obviously, in Sangola, we've been blessed with very high grade. It's not quite the same here. It's a low -- it's just simply a lower grade deposit. So we believe the plant is optimized. The nameplate capacity of 3.5 million tonnes per annum if we look at what we -- the nameplate capacity in Nigeria versus what we actually ended up producing, I think we've constantly for the last 4 years, produced at about 25% above nameplate capacity. So look, not to directly extrapolate but using the same EPC contractors in the same mills, perhaps we can -- we will be able to push ahead of the nameplate capacity that we have. By how much, I don't know, but I certainly think it's something we'll be able to do. Why does the Baraka 3 resource contribute relatively little to the total resource? Could this change further? I think that's an excellent and very important question. We drilled out Baraca-3. In terms of geological continuity, we still believe even within the pit shell, there's significant upside that we haven't infilled in terms of geostatistics, so just close to spacing drilling. So there's resources that lie within the pit, very easy wins, very low cost -- low-hanging fruit, should I say, as part of this 40,000 meters to be converted into indicated resources and correspondingly into reserves. We expect the Baraka 3 contribution to increase significantly over the next 6 months. after having delayed the PFS, the last thing I wanted to do was to announce another delay to complete this infill drilling. But the project as it stands has excellent economics and will only improve once we complete this drilling of Baraka 3 as well as the other targets I showed in the presentation. Where does the Preccess plant expect to be located and why? The Preccess plant is expected to be located just to the southwest of the Makosza deposit really because this is where most of the higher-grade ounces currently are and the Macosza tail is, and we do expect additional upside coming from Buancoba as well as Deta West, so right in the middle of all the resource targets we have. mining be done in-house or by a contractor. Currently, we've done our PFS based on using a mining contractor. But obviously, that could change over the next 12 months. But currently, the plan is to use a contractor. I'll keep going. Are you considering a TSX listing for the current fiscal year? No, not for the current fiscal year. I think this also ties into the question I just answered about promoting ourselves into a larger exchange. negotiation with the government in regards to tax likely take place. Again, that was covered in the presentation. We hope to have this put to bed by the end of this year. What is the current royalty rate being paid at has risen. In Nigeria, the current royalty rate, the status quo remains, which is around about $15 per ounce. We are talking with the government. We do expect a rise to about between $30 and $45 per ounce. When do you anticipate filing the NI 43-101 technical report for the DP affairs? We expect to file it within 45 days of yesterday. A lot of questions on Seg here and mine life where drilling is ongoing there. So I'll just group all the questions into one. Drilling is all ongoing. There are various studies being carried out as well, and we will be looking to update the market around the end of the quarter. Can you clarify the comments about the possibility of running with oxide at currently? Can this done within the capacity of the planned CapEx? Or will this require [ advance recovery? ] So yes, so what I was saying is right now, the oxide phase is designed to run from years 1 to year 4. And then then the primary phase is designed to come on stream from 5 to 12.5. However, if we do extend the oxide phase from years 1 to 8, and we are sitting on surplus cash, the primary phase of the roasting can come in -- doesn't have to wait for the oxide phase to end. So rather than producing 100,000 ounces a year from the oxide and then waiting for that to finish and producing 60,000 ounces from the primary, if we are sitting on sufficient cash and we do have the comfort confidence we can bring the primary phase on stream to produce an additional 60,000 to 100,000 we're producing from the oxide phase. It's a circuit that can be -- the primary output can be added on to the -- once it's been through the roasting once it's been through the racing circuit into the -- it can be added into the CIL circuit and then the output then increases as a whole. But obviously, for us, the focus right now is how to extend that oxide phase, and these are great options to be contemplating in a few years' time. Stick to dividends rather than share buybacks. Okay. I think, update on the lithium project considering the price increase of lithium. Yes. Look, we're -- obviously, as a top priority in Nigeria is exploration to extend the mine life. We've put a lot of money into the plant. It's fully repaid. The ounce we produce there is extremely valuable. So that's taken our top priority, but we are continuing to advance our exploration on our lithium portfolio at a much lower cost and a much lower rate than we have gold. One of the things we did do last year was purchased our own drilling rigs, which has enabled us to drill at a much more cost-effective rate. We are considering now whilst exploration is going, we're probably just waiting for a window where we can relieve one of the rigs from the gold to advance the lithium. But in the background, the drill targets are being delineated and a lot of work is being done on them, which includes mapping and geophysics. When we do come around to drill them, hopefully, we will be ready and we will have a good runway ahead of us to drill. Can you explain why you selected a discount rate of 5% to the NPV? Yes, we looked at comparables in Burkina, in Côte d'Ivoire, in Guinea, and we looked at what discount rate they used and they used 5% and we thought Senegal was similar, if not less risky than the other jurisdictions. However, we have included a sensitivity table. So you can see very clearly the discount rate at 5% and 10% Yes, I will be. We have a stand at Endava, and I'll be pleased to be anyone who comes to the stand and answer any questions or even to meet socially. Yes, look, I think I've covered as much as I can here. There's some repetition in the questions. But if there's anything I haven't answered, I'll be happy to follow up by e-mail.

That's great. Well, Sean, thank you very much for your time and for updating investors today. Can I please ask investors not to close the session should be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. On behalf of the management team of Thor Explorations, we'd like to thank you for attending today's presentation, and good afternoon