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

Good afternoon, and welcome to the Thor Explorations Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question received 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 submit the following poll. And I'd now like to hand you over to CEO, Segun Lawson. Good afternoon to you, sir.

Good afternoon. I'm here to be presenting an investor update following the end of 2024 and what we have to look forward to in 2025. So just to give an overview of who we are, there may be some new people attending. Thor Explorations is a West Africa focused gold producer and explorer. We think we have a very compelling investment case. We have projects which are diversified in 3 countries and diversified by stage of development. We're advancing projects in 3 West African countries in Nigeria, where we have a producing Segilola gold mine where we've just completed another calendar year producing 85,000 -- just over 85,000 ounces of gold. We have a project in Senegal, the Douta project, which we are advancing to the final stages of a preliminary feasibility study. And in the second half of last year, we entered into the Ivory Coast, into Cote d'Ivoire where we've started assembling a portfolio and kicked off exploration there. We're very well positioned for organic growth through exploration in all 3 of these countries. And our shareholder value is underpinned by the high-margin gold production we have in Nigeria, where we are generating very strong cash flow and strengthening our balance sheet. Our project in Nigeria is based on DFS of 518,000 ounces gold resource, and we've set the guidance for this year between 85,000 and 95,000 ounces for the calendar year. Hopefully, we will be in the top half of that guidance. In Senegal, we have a project where we have a resource of 1.78 million ounces, which is divided between an indicated and inferred resource, we have a 70% economic interest in there. We are in the final stages of PFS there, where we have been doing a lot of detailed work and hence, having to push it back a couple of times, but we are in the final stages, and we'll be releasing that this quarter. In Cote d'Ivoire, we're very pleased with the project we acquired from Endeavour, the Guitry project. And we have also picked up additional ground where we have kicked off exploration. We look forward to updating the market in the next couple of months starting off in this quarter with the results of our exploration. And lastly, we do have an early-stage lithium portfolio, which we are advancing -- we continue to advance in the background, and we will be updating investors with the progress of that. So in summary, as a company, we are present in 3 countries. We have strong cash flows, and we are growing. We think there's a lot of value to deliver through the progress of all our projects. For corporate snapshot, we're listed on the TSX.V in Toronto, and we're also listed on the AIM market of the London Stock Exchange. We have a market cap of about CAD 216 million. Our share price performance over the last 12 months was north of 35%. I personally believe it would have been even more had we not had those issues, as you can see in late September with the allocations by the Osun State government, but we continue to recover. And I think one thing that is a very interesting and compelling for all our investors is that we're gradually getting more and more institutionalized, more long-term supportive institutional shareholders over the last 24 months have been taking the decent positions on our shareholder register. Our largest shareholders, Africa Finance Corporation, we have rougher SSI Asset Management, recently Konwave taking a decent steak, Premier Miton, AIMS Asset Management and so on. Broker coverage in the U.K. by Canaccord and Hannam & Partners and Alternative Resource Capital, and in North America, a number of names, including Echelon Partners. You can see by the target prices, it's not just myself who believes we're undervalued to have a lot of growth potential and deliverables to unlock this value. Our brokers that cover us also seem to see things with the target practices they've put. So I'm going to go into how we performed over the last 12 months. And I will start off by just giving a snapshot summary. The year ended very strongly. We were really pleased with that. We ended up gold pouring just over 85,000 ounces of gold, which was just above our revised guidance. It was our strongest quarter of the year, 24,000 ounces were poured during the quarter. We sold just under 25,000 ounces. Some left over from the quarter before. Q4 last year generated record revenue for a period, for any 3 months for us as a company, which is around about $62 million. And I think the most significant milestone for us as a company was we paid our final senior debt repayment to the Africa Finance Corporation. And as a company, we are now completely delevered from our senior debt facility with them. We transitioned from a net debt position in Q3 to a net cash position. In Q3 it was about $2.7 million. I'm pleased to say we have since built on that on a monthly basis over the last 3 months. We obviously don't -- this is not a financial update, all our numbers here are unaudited. But the direction has been in the right direction and we're very pleased with that. And we are now with a clean balance sheet, growing net cash exploration ongoing in -- across all our projects. We are very well positioned for a strong performance financially and operationally in 2025. How did we produce this amount of gold in Q4? You can see in terms of mining, we mined 383,000 tonnes of ore at the highest grade that we have through the course of the year, 2.3 grams per tonne. In terms of processing, we processed just under 250,000 tonnes of ore at just over 3 grams per tonne. It's worth highlighting that at the end of Q2 and at the beginning of Q3, we went through some operational challenges. And the plant upgrades we had made early in the year and the blasting of mining practices we had implemented began to come fruitful towards the end of the year. So we really enjoy the benefits of this through the fourth quarter. We should have seen similar numbers in Q3, however, as we updated everyone in July was a very tough month for us. So this fourth quarter is a clear demonstration of what can be achieved. We would like to get our recoveries back above those 90% like how we were in Q2, closer to 93%, 94%. And with that and the throughput rate we were in Q4, we should be generating more gold. One thing of note is that we did have a lot of gold locked up in circuit at the beginning of the 12 months. We have, over the course of 12 months, drawn down on that. You can see there was more gold poured than recovered during Q4, and we're now getting to the levels where we think we will sustain the amount of gold in circuit. From a social and environmental side and community development side, I think it's very important, particularly given the bad press we got in Q3 last year. Just to highlight a lot of the good things we're doing in country. We employ 98% Nigerian Nationals, of which the 37% are recruited from the local communities. We only have an expat number of 2%. But we've increased our training programs by 64%. We constantly engage with all our stakeholders. We've had 126 stakeholder meetings. And with over 2,500 participants, we really do have the social license to operate. Over the course of 2024, even though we're not acquiring more land, we've established the land footprint. The work we do in exploration and around our tailings dam has required us to carry out more land crop compensation through the course of the year, and that was $138,000. And since we started, construction has been over $7 million. We've completed 40 community projects in the course of the year as well and updated our community development agreements, where we can, we try and procure locally. 80% of all our procurements in 2024 was local. From an environmental compliance side, we've had 0 chemical spills. We've reclaimed over 1,100 megaliters of water. And in terms of our water intensity, we're extremely happy with the amount of water we use per ounce to produce. Going to exploration. One of the key trends last year was refocusing on extending the mine life, having knowing in particular, we were coming to the tail end of our senior debt repayments. We spent a lot of time in the first half of the year, carrying out structural studies with independent consultants, gathering data from our grade control programs, and using that to design an initial 12-hole drilling program, which was designed to test the continuation of mineralization. The initial -- this was an initial program and had a proof of concept or some shallow dipping shoots and this has proven to be successful. We're very pleased that well over 90% of the holes we drilled came back mineralized, some of our great intersections that 1.8 meters of nearly 40 grams per tonne, 3.5 meters of 4.8 grams per tonne. We had 3.5 meters at 4 grams, we had in sections of 3 meters at 11.25 grams per tonne. And what we're constantly doing is optimizing the pit shell. You can see in this image, the bottom of current design pit. We're optimizing at a high gold price, implementing and putting in these drill results and seeing how we can increase the mine life before that inflection point of transitioning to an underground. The success of the initial drill program has led to us and has justified the budget of the next phase of drilling, which is a 7,500 meter program. And I'm pleased to say that has commenced now, that will be targeting -- continuing to target these shallow dipping shoots and also beneath these hybrid areas, which we have drilled. As you can see on the next slide, the image on the left is a cross section of our most recent drill hole. You can see that is 140 meters below the final pit design, current pit design. And you can see, similarly on the image on the right-hand side, where we intersect, we have not closed out this resource at depth. So this resource remains open. We're excited about the drilling where we're going to do. We're looking forward to updating the market with our progress here. Before I move on to Senegal, I will just say a final comment about explanation in Nigeria. We're not just looking at the underground. We have other project areas and satellite discoveries, which we have made over the last 36 months. We continue to carry out a regional exploration in that regard. And we also continue to evaluate the ability and optionality to mine these and incorporate them into our mine plan. So that's all being constantly a work stream that's going on in parallel with the exploration we're doing underneath the pit. Moving on to our project in Senegal. Obviously, this area of the world is much more than for its gold endowment. Douta project is down in that Southeast corner close to the Mali border, approximately 5 kilometers east of the Massawa deposit. We've been carrying out work here over the last couple of years, where we have delineated a 1.78 million ounce global resource. The work streams in support of the preliminary feasibility study continued. We also carried out exploration work in the northern part of the license. The feasibility study work streams are now coming to a close now, and they're currently being reviewed and refined. It's worth making an extra point that we are doing -- the work we're carrying out and the preliminary feasibility study we're looking to produce is right on the upper end of what you would expect in terms of detail. And that we believe has justified the delays that we have made. And this would position us very well to quickly move to that investment decision after the preliminary feasibility study, all the points we're getting correct in terms of suppliers, in terms of EPC contractors and in terms of mining contractors, -- and yes, we think this is a material milestone for us and will be value accretive to the company as a whole. Hence, the need to push this into Q1 has been justified, and we look forward to getting these results out during this period. This project had a number of drilling campaigns carried out over 2024. And you can see from the highlights a lot of them were from surface. In terms of grade, it's not Segilola. However, we're looking at something that's much bigger, lower grade with wide intersections and coming from surface with a large oxide component, which was part of our objective of the drilling that was carried out in 2024. In Cote d'Ivoire, we entered there in the second half of last year with a very low-cost entry having looked in and done a lot of due diligence in the country over the course of the 12 months before. We -- the properties we have acquired are on the prospective Birimian Greenstone belt, which is over 30% of the country. Cote D'Ivoire as a jurisdiction has been a success story in terms of discovering gold resources, developing them and building them on budget. We're extremely excited about being in the country. We think the projects we have there and the portfolio we've put together has given us an excellent platform from which to go from. Our portfolio consists of the Guitry project, which already has -- you'll see in the next slide, a significant amount of drilling that has been carried out on, but not yet a maiden resource. And we have commenced exploration in this country, and we'll be advancing that through the course of the next few quarters. You can see the drilling that was carried out there has already got some very, very exciting drill results in all of -- in the fresh and very compelling rates as well. So these exploration targets have given us a platform. They remain open. There are a number of prospects on each of our licenses. We are -- we have set ourselves an internal target of a maiden resource this year, and we've allocated ourselves a drilling budget, which should hopefully commence as soon as these drill targets are better defined. So what are we setting ourselves up for in the next 12 months -- 2025, sorry, 2024 guidance range is at between 85,000 and 95,000 ounces for the year. We are hoping to be at the top end of that for the first time. Now we have the plant running how we want and if we can get the recoveries to the levels that we have achieved in the past, we believe this should be attainable. We still believe our all-in sustaining costs will land below $1,000 per ounce, so between $800 and $1,000 per ounce. This year, the strengthening of our balance sheet will continue. We are projected to have very strong cash flows. This is all going to be on a completely delevered balance sheet with also -- which I haven't mentioned previously, but significant progress made on our accounts payable, which will become current in this quarter as well. So the cash generation and cash build up through the course of this year will be very strong. In addition to that, we expect growth organically through our portfolio through the near-mine drill targets, through the underground drilling that we're carrying out and do the drilling we're carrying out in Senegal on our Douta and Douta West licenses and also the exploration we're carrying out on our lithium portfolio, which has been scaled back with goal taking and continuing to be our main focus of priority. This quarter, we'll see the completion of a detailed Douta preliminary feasibility study and accelerated studies subsequent to that, to an investment decision. And lastly, in Cote d'Ivoire, we have budgeted 5,000 meters of drilling. So in summary, we think that the year ahead is extremely exciting for us as a company. We're underpinned by cash generation, which is very profitable. At the moment, the current prevailing gold prices, we think there's a lot of upside to come through our exploration and through our drill bit. And key for us is the extension of the Segilola mine life. Thank you very much, and I think we can move on to the Q&A.

[Operator Instructions] I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. Segun as you can see, we have received a number of questions throughout today's presentation. And if I could hand back to you to read out the questions and give responses where it's appropriate to do so. I'll pick up from you at the end.

Okay. What is the target date to finish newly commenced trading at Segilola? So the drilling at Segilola is always ongoing. We will -- we have 7,500 meters as the next phase. We would like to get that done as quickly as possible, looking like during this period, the first 3 months of the year. And then from that point, we will put that data into an optimized study again, and looking at how best to increase the current open pit mine life before transitioning to an underground. However, if that drilling is successful, again, we will increase our -- the next phase of drilling and carry out an additional drilling program there. So it's ongoing and the 7,500 meter program is aimed for completion during this quarter. Is Thor Explorations already looking at financing options for the Douta project. Is there a scenario, this would be possible entirely out of cash flows or external funding definitely be required? We are having those conversations internally. We do have incoming from various advisers and lenders. Obviously, we have a very good relationship with Africa Finance Corporation, we've just repaid. We are now in a position where we believe that it should be a more compelling story for us to get leverage for -- in terms of project finance for the Douta project. The equity component, we would look to fund from our own cash reserves. So the intention at the moment is not to go out and raise any additional equity. We don't see any shareholder dilution coming from the development of the Douta project. Obviously, it's still very early now in the process. So nothing is concrete and set in stone, and that will be finalized over the course of the year and probably over the next 6 months. Next question. The issue with the Nigerian Government was a bit unexpected. How confident you'll steer away from legal conflicts in the future? Yes, it was very unexpected. And one thing I can say about operating in Nigeria is that we do have very strong support in terms of the Ministry of Mines, in terms of the Federal Government. The issue was with the State Government. Mining is regulated by the Federal Government. We said at the time, and we continue to reiterate that we believe and we feel that all these claims were false and were not substantiated. We've been completely transparent through the whole process. We do expect to be completely exonerated from all these allegations that were made as well. In terms of going to the future, what did we learn from this? We will have a very open dialogue with the state, and we will bring in the ministry in with and have them present all our dialogue with the state throughout to ensure things like this don't happen again in the future. But whilst talking about this is probably -- it's very important to state that, as you can see, our operations were completely unaffected by all the issues that were happening with the state. And we believe that the jurisdiction we're in, where rule of law does prevail, we're well protected as long as we continue to abide by the regulatory standards that have been set by the Ministry of Mines and Ministry of Environment. When do you expect to make announcement on the extension or [ not ] of the Segilola mine life? It's premature to say that. What I will say is that we are carrying out another 7,500 meters of drilling. And after that program is completed, we will evaluate any optimization studies and that might be a point to update the market. Financial Times recently had a piece on the terrifying crack down on mining companies in Africa's coup belt. What is Nigeria doing to reassure and incentivize investors? Why then is Osun going after Thor for taxes? Look, I think it's not really my place to say, but I can just speak about experience in Nigeria. It's not in the coup belt. It's a much more political -- politically stable jurisdiction. I don't think there's been a coup in Nigeria since 1984. We've had democratic governments and opposition parties in government for a number of years without issue. The mining act in Nigeria is extremely enabling unlike other jurisdictions in the coup belt that's been mentioned in this question, you're allowed to own 100% of your projects. You have free movement of your currency repatriation of your dividends. You have -- sorry, my mind is going blank -- yes, you have free movement of your currency, you have exemptions on your capital equipment as well and your mining equipment as well. So it's a very compelling jurisdiction in terms of the Mining Act. The federal government tries to make it enabling --they're trying to invite and attract international investors. They're trying to kick start the mining sector to make more of a contribution to the GDP. We think that there was a misalignment between the Osun State and the Federal Government that is being resolved now. The regulatory body we deal with is the Federal Government and they oversee all mining in Nigeria. Will there be a dividend in 2025? We have discussed this internally, yes, the company is looking to return money to shareholders in some form during the course of 2025, that policy hasn't been finalized yet, but the high-level answer is, yes, we are looking to do that. Will there not be a press release to get closure on Osun state allegations from Q3? Yes, we do intend to make a press release once the minister has made his statements public and the report of the findings of the committee have been made public. We hope that will be soon -- we were hoping that would have come in before the end of last year, and it didn't, is dragging into this year. But as soon as that's made locally, we will be making our own press release. I think that's all the questions. Any more questions? There are some very long ones here, which I can reply. This one is a few paragraphs. I noticed the selling price was below spot price. Does this mean forward contracts have now been closed out? Are there plans to enter into new hedging strategy around an all-time high gold price? Yes, the selling price was below the gold price in the last quarter. Considering we produced more gold, we decided to unwind more of the hedge book without denting the price too materially. So we do have, I believe, 4,500 ounces left, average price of just under $2,300 per ounce to unwind. We would look at unwinding that maybe 1,500 ounces per month. If current economics persist, when do you anticipate the go stream liability will it be extinguished? That's a good question. We -- based on the last forecast I saw it will be around about middle of next year. What is the level of sustaining capital anticipated in the near term at Segilola? I'm actually pleased to say we spent significant amounts on our plants upgrades over the last 24 months. We don't envisage any material sustaining capital being spent above $5 million through the course of this year. How long after the PFS before DFS and construction of Douta. Could Douta begin build in 2025? The PFS, like I said, is going to be a more detailed end, and it's going to position us to fast track to investment decision and the final outstanding items remaining for the DFS. Internally, we believe we'll be ready to make that decision this year. However, there are a couple of things outside our control, which would be the final permitting process in Senegal, how long that takes, and also putting the financing together and hopefully, that shouldn't be anything else with the ordinary. So long as those 2 are within the course of the year, we would like to make that investment decision this calendar year. I think I've got it, anything else. Yes, there's one very long question. I will -- we can respond following -- investors need to know the net cash position, how much net cash do you have? The recent RNS just stated it has net cash? Yes, I think it's probably important to note the recent RNS was not our financials. Our financials have normally come in a couple of months after the end of the period once all the invoices have been settled and have been fully reviewed. That's why we only gave them, we said it was an unaudited revenue number of just over $62 million. What I can say is we transitioned from net debt to net cash at the end of Q3 of $2.7 million. We have since built on that on a monthly basis, quite materially as well. So I will have to wait for the financials to be completed before I do that. But yes, it's multiples above where we were at the end of Q3. If that's -- I hope that answers the question without giving the exact number. Do you agree as a flagship gold producer in Nigeria, it will be beneficial to up the investment into the local community and local schemes further to help build long-term relationships and bring positive change to Nigeria? Definitely, like I said in the presentation, we believe we already have the social license to operate with our local communities. We have taken a long-term view on Nigeria. We hope we're at Segilola for many more years, and we hope to find other gold discoveries in Nigeria and build mines for many more years. One thing we have taken out of the experience with Osun State is widening our CSR and seeing how we can be more interactive, even at a state level in terms of our CSR and projects we can jointly do, so yes. Does that ASIC drop assume less mining? What is driving this drop? Is the strategy to feel lower grade and higher mill throughput? Look, our ASIC has consistently come in lower than originally planned. So I think we have based the ASIC on the mine plan and factored in our experience over the last 3 years. Okay. I think I think I've answered everything.

Perfect. Thank you very much for answering these questions from investors. Of course, company can review all the questions submitted today, and we will publish those responses out on the Investor Meet Company platform. But just before redirecting investors to provide their feedback, which is particularly important to the company. Segun, could I just ask you for a few closing comments.

Yes. my closing comments on the -- we finished 2024 very strongly. It was a record quarter for us. It will be a record year for us in terms of profitability. Now we've deleveraged our balance sheet completely. We're very excited about 2025. We think this is a year of significant growth for us in terms of cash and also in terms of value generated through exploration. We have some big milestones coming up in Senegal and also in Nigeria, key being extending that mine life where every incremental year of mine life extension is probably cash generation of something similar to our market cap. So we're excited about 2025. We look forward to drawing a line including the door on the Osun State issues. And yes, we look forward to updating the market regularly on our drill results and our financial performance.

Thank you once again for updating investors today. Could I please ask investors not to close the session as you now will be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This is going to take a few moments to complete, but I'm sure will 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.