Vancouver, August 24, 2023 - Thor Explorations Ltd. (TSXV: THX) (AIM: THX) ("Thor Explorations", "Thor" or the "Company") is pleased to provide an operational and financial review for its Segilola Gold mine, located in Nigeria ("Segilola"), and for the Company's mineral exploration properties located in Nigeria, Senegal and Burkina Faso for three ("Q2 2023" or the "Period") and six months to June 30, 2023 ("H1 2023").
The Company's Consolidated Condensed Interim Financial Statements together with the notes related thereto, as well as the Management's Discussion and Analysis for the three and six months ended June 30, 2023, are available on Thor Explorations' website at https://thorexpl.com/investors/financials/.
All figures are in US dollars ("US$") unless otherwise stated.
Operational Highlights for Q2 2023 and H1 2023
Production
Gold production for the Period totaled 23,078 ounces ("oz") (H1 2023: 43,707 oz)
All main operating units of the process plant continue to perform better than expected, with the plant operating above nameplate capacity
Several improvement projects at the process plant are being undertaken through the remainder of 2023
Three Loss Time Injuries ("LTIs") occurred in H1 2023, which triggered an increase in training and workplace inspections to improve working conditions
Exploration
The Company has prioritized exploration within a 25-kilometre ("km") radius of Segilola with the key objective being to extend the life of mine
Four main advanced exploration targets that have been defined are the Kola Prospect, Igila, Aye-Ile Western Prospects and Ijarigbe
The Kola Prospect is located 23km south of Segilola and is a new high-grade greenfield exploration discovery:
Reverse Circulation drilling ("RC") was carried out at a low-level stream sediment zone and showed initial positive results, which included 7 metres ("m") grading at 25.98 g/t gold in the near-surface weathered horizon and 4 m at 30.17 g/t gold in the primary horizon
Exploration testing of the general area is continuing and drilling activities will continue through the remainder of the year
The Igila Prospect is located 15km west of Segilola
Exploration activities are ongoing and focused on delineating additional strike length and identifying additional lodes
The Aye-Ile Prospect is located 1.2km south-east from Igila
Drill testing has focused on the anomalous auger geochemistry located a north-east dipping vein-system that is developed on the same structural orientation as Igila
In Senegal, exploration activities at the Douta Project ("Douta") have progressed throughout Q2 2023
Thor Lithium - Newstar Minerals Limited
Thor, through its fully owned subsidiary Newstar Minerals Ltd, acquired a significant tenure in south-west Nigeria that covers both known lithium bearing, pegmatite deposits and a large, unexplored, prospective, pegmatite-rich belt
An initial drilling program is being undertaken on one of the Company's prospects located in the West Oyo Project Area to confirm and delineate lithium-bearing mineralisation, such as spodumene and lepidolite at depth
Post Period, the Company announced its initial results with the below key highlights:
11m at 2.61% lithium oxide ("Li2O") from 15m
9m at 2.42% Li2O from 35m
11m at 1.53% Li2O from 14m, including 9m at 1.70% Li2O from 15m
Spodumene is confirmed as the main lithium-bearing mineral, with minor lepidolite and shallow mineralisation
Financial Highlights of the Period and H1 2023
Q2 2023 revenue of US$41.3 million (Q2 2022: US$41.3 million) and H1 2023 of US$81.7 million (H1 2022: US$66.2 million)
Q2 2023 operating cost of US$942 per oz sold (Q2 2022: US$983 per oz) and an all-in sustaining cost ("AISC") of US$1,230 per oz sold (Q2 2022: US$1,236 per oz)
Q2 2023 EBITDA of US$19 million (Q2 2022: US$17.7 million) and H1 2023 of US$35.1 million (H1 2022: US$31,1 million)
Q2 2023 net profit of US$7.9 million (Q2 2022: US$6.7 million) and H1 2023 of US$12.2 million (H1 2022: US$10.2 million)
As of June 2023, the Company had cash of US$11.1 million (Q1 2023: US$4.5 million)
Q2 2023 net debt of US$16.8 million (Q1 2023: US$24.9 million)
Environment, Social and Governance
The Segilola HSE team commissioned a team of standby emergency responders in Q2 2023, with 28 personnel specifically trained to respond to emergency related, medical and operational situations at the SROL site
The Company progressed its livelihood restoration programs for the local communities
Vegetable farms were completed in Q1 2023 and produced their first crops and improved tomato species in Q2 2023, with commercial off-takers purchasing the produce
Fish farms in the local community neared completion in Q2 2023 with farming to commence in Q3 2023
Improved cocoa species seedlings were issued to the local community in Q2 2023 and training provided to the farmers to improve yields and commercial returns
In Senegal, community projects undertaken included upgrading a local school's facilities block, clearing land at a local cemetery and providing a generator for the local police station
Outlook
Segilola production for the full year expected to be 85,000 oz with AISC expectations maintained at US$1,150 - US$1,350 per oz
Q3 2023 production is expected to be below original expectations at the beginning of the financial year. However, Q4 gold production forecast remains in-line with original expectations, with potential upside as mining conditions continue to improve with the west wall push back nearing completion
Continue to advance exploration programs across the portfolio, including:
Continuation of step-out drilling at Douta gold project in Senegal
Continuation of drilling at Segilola gold regional targets
Continuation of drilling at L06 lithium prospect in Nigeria
Completion of the Douta preliminary feasibility study ("PFS") in Q4 2023
Segun Lawson, President & CEO, stated:
"The second quarter of 2023 has seen good developments across Thor's project portfolio. Operations are performing well, with the processing plant still operating above nameplate design. The Company posted strong revenues for H1 of US$81 million, with an EBITDA of US$35.1 million and a net profit of US$12 million for the same period.
"The Company expects to achieve its total material mined forecast for H2, however grade control drilling for Q3 indicates a lower than forecast recovered gold production for the period. While the Q4 gold production forecast remains in-line with our original target, with potential upside as mining conditions continue to improve as the west wall push back nears completion, the Company considers it prudent to update guidance for 2023 to 85,000oz of recovered gold - the lower end of the previously announced range for the full financial year.
"As we look to extend the life of mine at Segilola, Thor has located several exploration targets within close proximity to the project. These exploration targets are encouraging so far have demonstrated positive results from initial exploration drilling activities. We plan to follow up with further drilling activities in Q3 and Q4 2023. At Douta, Thor is making great progress towards completing the PFS, which is scheduled to be completed in Q4 this year.
"With our strategy to identify high-value resource opportunities, Thor acquired a significant tenure in south-west Nigeria, which is known for lithium-bearing pegmatite deposits. An initial drilling program is being undertaken on the West Oyo Project area, with the objective to confirm and delineate lithium bearing mineralization. I am pleased to confirm that, post period, the program confirmed spodumene as the main lithium-bearing mineral, together with minor lepidolite. We will continue to explore the area and believe this poses a great opportunity to increase shareholder value.
"We take the working conditions at our operations very seriously, and as such, Thor has increased training and workplace inspections to improve working conditions. The Segilola HSE team has also commissioned a team of standby emergency responders during the Quarter, with 28 personnel specifically trained to respond to emergency related, medical and operational situations at the SROL site. The program comprised classroom and practical sessions on how to respond to first aid cases, administering basic life support to unconscious victims and emergency response planning and activation processes to ensure there are fewer lost time injuries.
"The Company is in a good position to advance its projects in the next quarter, with further developments made at its exploration prospects as well as improvements in processing capabilities which should result in improved production. I look forward to updating the shareholders on the developments made in the next quarter."
About Thor Explorations
Thor Explorations Ltd. is a mineral exploration company engaged in the acquisition, exploration, development and production of mineral properties located in Nigeria, Senegal and Burkina Faso. Thor Explorations holds a 100% interest in the Segilola Gold Project located in Osun State, Nigeria and has a 70% economic interest in the Douta Gold Project located in south-eastern Senegal. Thor Explorations trades on AIM and the TSX Venture Exchange under the symbol "THX".
Ibu Lawson (Investor Relations) Tel: +447909825446 Email: ibu.lawson@thorexpl.com
BlytheRay (Financial PR) Tim Blythe / Megan Ray / Said Izagaren Tel: +44 207 138 3203
Qualified Person The technical information included in this report has been prepared under the supervision of Alfred Gillman (Fellow, AusIMM, CP Geology), who is designated as a "qualified person" under National Instrument 43-101 and AIM and has reviewed and approves the content of this news release. He has also reviewed QA/QC, sampling, analytical and test data underlying the information.
Management Discussion & Analysis for Q2 2023
HIGHLIGHTS AND ACTIVITIES - SECOND QUARTER 2023
Operating results for the quarter were highlighted by the selling of 20,852 ounces of gold during the period at a cash operating cost1 of $942 per oz sold, with an all-in sustaining cost1 of $1,230 per oz sold. AISC guidance for 2023 is maintained at US$1,150 per ounce to US$1,350 per ounce.
Gold recovered for the quarter was 23,078 ounces. The Company has updated its production guidance to 85,000oz for the year.
Key Operating and Financial Statistics
Three Months period ended
Six Months period ended
June 30, 2023
March 31, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Operating
Gold sold
Au
20,852
21,553
22,173
42,405
35,636
Gold recovered
Au
23,078
20,629
26,331
43,707
45,128
Average realised gold price
$/oz
1,990
1,902
1,842
1,945
1,852
Cash operating cost
$/oz
942
899
983
920
873
AISC
$/oz
1,230
1,346
1,236
1,289
1,189
EBITDA
$/oz
913
745
802
828
873
Financial
Revenue
$
41,364,169
40,287,830
41,354,747
81,651,999
66,220,229
Net Profit
$
7,912,187
4,331,347
6,778,954
12,243,534
10,210,578
EBITDA
$
19,044,002
16,065,334
17,772,616
35,109,336
31,127,944
June 30, 2023
March 31, 2023
December 31, 2022
Cash and cash equivalents
$
11,149,491
4,505,071
6,688,037
Deferred Income
$
865,173
-
6,581,743
Net Debt
$
16,807,972
24,940,762
31,650,722
Segilola Gold Mine, Nigeria
Mining
During the three months ended June 30, 2023, 5,633,688 tonnes of material were mined, equivalent to a mining rate of 61,909 tonnes of material per day. In this period, 278,583 tonnes of ore were mined, equivalent to a mining rate of 3,061 tonnes of ore per day, at an average grade of 2.43g/t. Mining of the West wall of the pit is progressing well, with most of the more challenging mining for the year completed. Production areas are increasing in width allowing for improved utilization and productivity. Grade was lower than planned due to delays in accessing higher-grade ore zones in the central mine.
The stockpile balance at the end of the period was 297,100 tonnes of ore at an average of 1.06g/t. This comprised 1,961 tonnes (4.42g/t) at high grade, 2,006 tonnes (2.09g/t) at medium grade, 288,401 tonnes (1.00g/t) at low grade and 4,693 tonnes (2.45g/t) on the coarse ore stockpile.
Processing
During the three months ended June 30, 2023, a total of 255,231 tonnes of ore, equivalent to a throughput rate of 2,805 tonnes per day, was processed. Throughput was higher than planned, with no significant downtime periods.
The mill feed grade was 2.99g/t gold with recovery at 94.0% for a total of 23,078 ounces of gold recovered. The mill rejected ore bearing material crusher was commissioned during the quarter. Smelting performance was improved with the commissioning of the new smelter.
All of the main operating units of the process plant continue to perform better than expected, with the plant operating above nameplate capacity. Several improvement projects are being undertaken through the remainder of 2023.
Production Metrics
Units
Q2 - 2023
Q1 - 2023
Q4 - 2022
Q3 - 2022
Q2 - 2022
Q1 - 2022
Mining
Total Mined
Tonnes
5,633,688
4,194,689
4,296,494
4,018,431
4,031,584
3,759,524
Waste Mined
Tonnes
5,355,105
3,996,264
3,974,073
3,793,249
3,747,504
3,533,610
Ore Mined
Tonnes
278,583
198,425
322,421
225,182
284,079
226,314
Grade
g/t Au
2.43
2.85
3.51
4.43
3.63
2.68
Daily Total Mining Rate
Tonnes/Day
61,909
46,608
46,701
43,679
44,303
41,772
Daily Ore Mining Rate
Tonnes/Day
3,061
2,205
3,505
2,448
3,122
2,515
Stockpile
Ore Stockpiled
Tonnes
297,060
270,215
300,531
229,909
249,281
179,758
Ore Stockpiled
g/t Au
1.06
1.14
1.48
1.19
1.46
1.23
Ore Stockpiled
oz
10,124
9,904
14,300
8,796
11,701
7,109
Processing
Ore Processed
Tonnes
255,231
231,001
254,824
241,434
211,582
221,900
Grade
g/t Au
2.99
2.95
3.38
3.58
3.66
3.18
Recovery
%
94.0
94.1
95.0
95.5
95.5
94.1
Gold Recovered
oz
23,078
20,629
26,331
26,523
23,785
21,343
Milling Throughput
Tonnes/Day
2,805
2,567
2,770
2,624
2,325
2,466
Units
Q2 - 2023
Q1 - 2023
Q4 - 2022
Q3 - 2022
Q2 - 2022
Q1 - 2022
Exploration Activity Summary Q2 2023
Nigeria Gold
Exploration remained a priority for the Company in 2023 in both Nigeria and Senegal. In Nigeria, the Company continued to prioritize exploration within a 25 kilometre radius of the Segilola Gold Mine. The Company also expanded and diversified its portfolio through the acquisition of over 600 sq km of lithium exploration licences via the grant of new licences and also entering into joint venture agreements with existing licence holders.
The key objective of the exploration strategy is to extend the life of mine ("LOM") at Segilola. Approximately 80% of the Company's Nigerian gold exploration effort is concentrated within a 25km radius of the Segilola operation such that potential gold-bearing material can be easily trucked to the existing plant. In areas that are further from the mine generative exploration is targeting potential new stand-alone operations.
The majority of the exploration activities carried out on all the Company's licences, consisted of RC drilling, Diamond Drilling, geochemical stream sediment sampling, auger drilling and soil sampling. Amongst other target areas that have been located, a new high-grade target, the Kola target, was discovered and is located about 23km from the Segilola Mine. The Kola target produced an initial significant geochemical signature with follow up drill testing intersecting several mineralized drilling intersections including 11m grading 22g/tAu.
Four main advanced exploration targets have been defined within a 25km radius of the Segilola Gold Mine. These comprise the following target areas:
Kola Prospect
Igila (Western Prospects)
Aye-Ile (Western Prospects)
Ijarigbe
New Exploration Prospect - Kola Prospect
The Kola Prospect is a new high-grade greenfield exploration discovery that is located 23km south of the Segilola Gold Mine within a 100% Thor-owned exploration permit The prospect developed from a low-level stream sediment anomaly which was confirmed by follow-up auger-assisted soil geochemistry that returned values of up to 4 g/t Au. Targeting of this anomalous zone was carried out with RC drilling. Initial positive results included 7m grading 25.98 g/t Au in the near-surface weathered horizon. Additional drilling located primary bedrock mineralisation grading 8m at 30.19 g/t Au. Initial data suggest that the geological controls relate to a steeply dipping north-easterly trending zone within a biotite gneiss sequence. Exploration testing of the general area is continuing. Whilst the initial drilling results from the Kola Prospect are encouraging, the Company has not yet identified significant strike length extensions that would add material mine life extensions to Segilola. Drilling activities will continue through Q3 and Q4.
Exploration Results from the Kola Prospect
(0.5g/t Au lower cut off; maximum 1m internal dilution)
x
y
Depth
Dip
Azimuth
From (m)
To (m)
Interval (m)
Grade (g/tAu)
True Width (m)
SGRC168
699897
807875
56
-60
90
1.0
2.0
1.0
0.96
1.0
SGRC188
699925
807871
90
-60
90
14.0
18.0
4.0
30.17
3.0
SGRC189
699954
807866
120
-60
90
56.0
64.0
8.0
3.01
6.0
SGRC190
699896
807877
60
-60
90
2.0
9.0
7.0
25.98
6.0
-60
90
58.0
59.0
1.0
0.78
0.8
SGRC191
699924
807872
55
-60
90
1.0
6.0
5.0
5.64
4.0
SGRC194
699961
807893
105
-60
90
49.0
57.0
8.0
30.19
7.0
SGRC195
699980
807886
110
-60
270
76.0
78.0
2.0
0.77
1.4
SGRC201
699926
807879
29
-90
0
31.0
32.0
1.0
0.63
1.0
38.0
41.0
3.0
0.55
3.0
SGRC202
699920
807870
30
-90
0
0.0
7.0
7.0
0.86
7.0
12.0
13.0
1.0
0.57
1.0
SGRC203
699913
807870
26
-90
0
0.0
13.0
13.0
11.57
13.0
14.0
17.0
3.0
0.71
3.0
21.0
24.0
3.0
0.97
3.0
SGRC204
699938
807889
70
-60
270
5.0
11.0
6.0
0.73
6.0
16.0
17.0
1.0
0.38
1.0
Kola Prospect Cross Section
To view an enhanced version of this graphic, please visit: https://images.newsfilecorp.com/files/7003/178306_03cede7e3491c95b_002full.jpg
Western Prospects
Igila
The Western Prospects are located about 15km directly west of the Segilola Gold Mine and are held under a joint venture agreement between Thor's wholly owned subsidiary Segilola Gold Limited ("SGL") and a local mineral exploration company.
Exploration activities at the Western Prospects are now focused on delineating additional strike length and identifying additional lodes such as the Aye-Ile prospect.
Aye-Ile
The Aye-Ile prospect is located approximately 1.2km to the south-east from Igila. Drilling is planned to expand the zone of mineralisation and to investigate a possible strike between Igila and Aye-Ile. Geochemical sampling to the south-east of Aye-Ile returned several anomalous values of up to 10g/t Au which suggest extensions of the structure.
Thor Lithium - Newstar Minerals Limited
As part of its strategy of identifying high-value mineral resource opportunities, Thor, through its fully owned subsidiary Newstar Minerals Ltd, announced the acquisition of significant tenure in south-west Nigeria that covers both known lithium bearing, pegmatite deposits and a large unexplored, prospective, pegmatite-rich belt. Thor's initial focus is on the south-west quadrant of Nigeria where vital infrastructure is located within close proximity.
An initial drilling program is being undertaken on one of the Company's prospects located in the West Oyo Project Area to confirm and delineate lithium-bearing mineralisation, such as spodumene and lepidolite, at depth. The Company announced its initial results on August 16 with the below key highlights:
- 11m at 2.61% Li2O from 15m
- 9m at 2.42% Li2O from 35m
- 11m at 1.53% Li2O from 14m, including 9m at 1.70% Li2O from 15m
Spodumene confirmed as main lithium-bearing mineral together with minor lepidolite
Mineralization is shallow
Thor Explorations Nigeria Licence Location Map
To view an enhanced version of this graphic, please visit: https://images.newsfilecorp.com/files/7003/178306_03cede7e3491c95b_003full.jpg
Senegal
Introduction
The Douta Gold Project is a gold exploration permit E02038, located within the Kéniéba inlier, eastern Senegal. The northeast-trending license has an area of 58 km2. Thor, through its wholly owned subsidiary African Star Resources Incorporated ("African Star"), has a 70% economic interest in partnership with the permit holder International Mining Company SARL ("IMC"). IMC has a 30% free carried interest in its development until the announcement by Thor of a Probable Reserve.
The Douta licence is strategically positioned 4km east of Massawa North and Massawa Central deposits, which form part of the world-class Sabadola-Massawa Project owned by Endeavour Mining. The Makabingui deposit, belonging to Bassari Resources Ltd, is immediately located east of the northern portion of E02038.
Exploration Activity
During the quarter, workstreams designed to advance the project to the prefeasibility stage ("PFS") commenced. This included a diamond drilling program that was designed to obtain sufficient core samples for comprehensive metallurgical test work and mineralogical studies.
Thor intends to progress the Makosa Resource expansion and infill drilling together with parallel workstreams including environmental and social baseline monitoring as part of an Environmental and Social Impact Assessment, geotechnical and hydrological studies.
NON-IFRS MEASURES
This MD&A refers to certain financial measures, such as average realized gold price, which are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies. These measures have been derived from the Company's financial statements because the Company believes that, with the achievement of gold production, they are of assistance in the understanding of the results of operations and its financial position.
Average realised gold price per ounce sold
The Group believes that, in addition to conventional measures prepared in accordance with GAAP, the average realised gold price, which takes into account the impact of gain/losses on forward sale of commodity contracts, is a metric used to better understand the gold price realised during a period. Management believes that reflecting the impact of these contracts on the Group's realised gold price is a relevant measure and increases the consistency of this calculation with our peer companies.
In addition to the above, in calculating the realised gold price, management has adjusted the revenues as disclosed in the consolidated financial statement to exclude by product revenue, relating to silver revenue, and has reflected the by product revenue as a credit to cash operating costs. The revenues as disclosed in the interim financial statements have been reconciled to the gold revenue for all periods presented.
Average annual realised price per ounce sold
Three Months period ended
Six Months period ended
Units
June 30, 2023
March 31, 2023
June 30, 20221
June 30, 2023
June 30, 20221
Revenues
$
41,364,169
40,287,830
41,354,747
81,651,999
66,220,229
By product revenue
$
(68,587
)
(43,773
)
(30,549
)
(112,360
)
(46,069
)
Gold revenue
$
41,295,582
40,244,057
41,324,198
81,539,639
66,174,160
Gain/(Loss) on forward sale of commodity contracts
$
200,534
750,482
(471,403
)
951,016
(176,480
)
Adjusted gold revenue
$
41,496,116
40,994,539
40,852,795
82,490,655
65,997,680
Gold ounces sold
Oz Au
20,852
21,553
22,173
42,405
35,636
Average realized price per ounce sold
$
1,990
1,902
1,842
1,945
1,852
1 The figures for the Three and Six months period ended June 30, 2022 have been restated in connection with the restatement of the interim financial statements. Refer to note 22 of the interim financial statements for further details.
Cash operating cost per ounce
Cash operating cost per oz sold, combined with revenues, can be used to evaluate the Company's performance and ability to generate operating income and cash flow from operating activities. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors may find this information useful to evaluate the costs of production per ounce.
By product revenues are included as a credit to cash operating costs.
Average annual cash operating cost per ounce of gold
Three Months period ended
Six Months period ended
Units
June 30, 2023
March 31, 2023
June 30, 20221
June 30, 2023
June 30, 20221
Production costs
$
17,795,685
18,306,502
20,273,742
36,102,187
28,493,272
Transportation and refining
$
810,080
342,291
604,991
1,152,371
1,107,213
Royalties
$
1,102,308
768,282
946,252
1,870,590
1,497,017
By product revenue
$
(68,587
)
(43,773
)
(30,549
)
(112,360
)
(46,069
)
Cash Operating costs
$
19,639,486
19,373,302
21,794,437
39,012,788
31,097,502
Gold ounces sold
Oz Au
20,852
21,553
22,173
42,405
35,636
Cash operating cost per ounce sold
$/oz
942
899
983
920
873
1 The figures for the Three and Six months period ended June 30, 2022 have been restated in connection with the restatement of the interim financial statements. Refer to note 22 of the interim financial statements for further details.
All-in sustaining cost per ounce
AISC provides information on the total cost associated with producing gold.
The Group calculates AISC as the sum of total cash operating costs (as described above), other administration expenses and sustaining capital, all divided by the gold ounces sold to arrive at a per oz amount.
Other administration expenses includes administration expenses directly attributable to the Segilola Gold Mine plus a percentage of corporate administration costs allocated to supporting the operations of the Segilola Gold Mine. For the three and six months periods ended June 30, 2023 and 2022, this was deemed to be 50%.
Other companies may calculate this measure differently as a result of differences in underlying principles and policies applied.
Average annual all-in sustaining cost per ounce of gold
Three Months period ended
Six Months period ended
Units
June 30, 2023
March 31, 2023
June 30, 20221
June 30, 2023
June 30, 20221
Cash operating costs2
$
19,639,486
19,373,302
21,794,437
39,012,788
31,097,502
Adjusted other administration expenses
$
1,093,344
3,775,777
3,895,264
4,869,121
5,353,995
Sustaining capital3
$
4,914,550
5,864,894
1,713,692
10,779,444
5,910,688
Total all-in sustaining cost
$
25,647,380
29,013,973
27,403,393
54,661,353
42,362,185
Gold ounces sold
oz Au
20,852
21,553
22,173
42,405
35,636
All-in sustaining cost per ounce sold
$/oz
1,230
1,346
1,236
1,289
1,189
1 The figures for the Three and Six months period ended June 30, 2022 have been restated in connection with the restatement of the interim financial statements. Refer to note 22 of the interim financial statements for further details. 2 Refer to Cash operating costs. 3 Refer to Sustaining and Non-Sustaining Capital
Net Debt
Net debt is calculated as total debt adjusted for unamortized, deferred, financing charges less cash and cash equivalents and short-term investments at the end of the reporting period. This metric is used by management to measure the Company's debt leverage. The Company considers that in addition to conventional measures prepared in accordance with IFRS, net debt is useful to evaluate the Company's performance.
Net Debt
June 30, 2023
March 31, 2023
December 31, 2022
Project Loan
24,187,306
24,257,746
24,459,939
EPC Payments
-
1,463,353
10,196,105
Deferred EPC Facility
3,770,157
3,724,734
3,682,715
Less: Cash and cash equivalents1
(11,149,491
)
(4,505,071
)
(6,688,037
)
Net Debt
16,807,972
24,940,762
31,650,722
Earnings Before Interest, Taxes, Depreciation and Amortisation
EBITDA is calculated as the total earnings before interest, taxes, depreciation and amortisation. This measure helps management assess the operating performance of each operating unit.
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Three Months period ended
Six Months period ended
Unit
June 30, 2023
March 31, 2023
June 30, 20221
June 30, 2023
June 30, 20221
Net profit for the period
$
7,912,187
4,331,347
6,778,954
12,243,534
10,210,578
Amortisation and depreciation - owned assets
$
6,679,708
7,165,523
5,977,675
13,845,231
10,982,292
Amortisation and depreciation - right of use assets
$
1,195,213
1,194,587
1,075,735
2,389,800
2,233,990
Impairment of Exploration & Evaluation assets
$
3,365
3,096
4,520
6,461
7,221
Interest expense
$
3,253,529
3,370,781
3,935,732
6,624,310
7,693,863
EBITDA
$
19,044,002
16,065,334
17,772,616
35,109,336
31,127,944
Ounces sold
Oz Au
20,852
21,553
22,173
42,405
35,636
EBITDA per ounce sold
$
913
745
802
828
873
1 The figures for the Three and Six months period ended June 30, 2022 have been restated in connection with the restatement of the interim financial statements. Refer to note 22 of the interim financial statements for further details.
OUTLOOK AND UPCOMING MILESTONES
This Section 5 of the MD&A contains forward looking information as defined by National Instrument 51-102. Refer to Section 16 of this MD&A for further information on forward looking statements.
We are focused on advancing the Company's strategic objectives and near-term milestones which include:
2023 Operational Guidance and Outlook
Gold Production
oz
85,000
All-in Sustaining Cost
US$/oz Au sold
$1,150 - $1,350
Capital Expenditure1
US$
10,000,000
Exploration Expenditure:
Nigeria2
US$
4,200,000
Senegal
US$
3,000,000
1 This excludes production stripping costs capitalizations. 2 This relates to all Nigeria exploration, including lithium and purchase of licenses.
The critical factors that influence whether Segilola can achieve these targets include:
Segilola's ability to maintain an adequate supply of consumables (in particular ammonium nitrate, flux and cyanide) and equipment
Fluctuations in the price of key consumables, in particular ammonium nitrate, and diesel
Segilola's workforce remaining healthy
Continuing to receive full and on-time payment for gold sales
Continuing to be able to make local and international payments in the ordinary course of business
Continue to advance the Douta project towards preliminary feasibility study ("PFS")
Continue to advance exploration programmes across the portfolio:
Segilola near mine exploration
Segilola underground project
Segilola regional exploration programme
Douta extension programme
Douta infill programme
Assess regional potential targets in Nigeria
Acquiring new concessions and joint venture options on potential targets
SUMMARY OF QUARTERLY RESULTS
The table below sets forth selected results of operations for the Company's eight most recently completed quarters.
Summary of quarterly results
$
2023 Q2 Jun-31
2023 Q1 Mar-31
2022 Q4 Dec-31
2022 Q3 Sep-30
2022 Q2 Jun-30
2022 Q1 Mar-31
2021 Q4 Dec-31
2021 Q3 Sep-30
Revenues
41,364,169
40,287,830
43,251,204
55,703,098
41,354,747
24,865,482
6,049,485
-
Net profit for period
7,912,187
4,331,347
14,908,460
4,126,066
6,778,954
3,490,938
3,116,416
463,844
Basic profit/(loss) per share (cents)
1.20
0.67
2.21
0.65
1.1
0.55
0.47
0.07
RESULTS FOR SIX MONTHS ENDED JUNE 30, 2023
The review of the results of operations should be read in conjunction with the Interim Financial Statements and notes thereto.
The Group reported a net profit of $12,243,543 (1.9 cents per share) for the six months period ended June 30, 2023, as compared to a net profit of $10,210,578 (1.6 cents per share) for the six months period ended June 30, 2022. The increase in profit for the period was largely due to:
revenue during the period of $81,651,999 (2022: $66,220,229)
These were offset partially by:
Amortization and depreciation of $16,235,031 (2022: $13,216,282);
Interest of $6,466,499 (2022: $4,171,263); and
Production costs of $36,102,187 (2022: $28,493,272)
No interest was earned during the six months period ended June 30, 2023, and 2022.
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2023, the Group had cash of $11,149,491 (December 31 2022: $6,688,037) and a working capital deficit of $45,657,241 (December 31, 2022: deficit of $29,116,915).
The increase in cash from December 31, 2022 is due mainly to cash generated in operations of $44,546,954 offset by cash used in investing and financing activities of $29,911,132 and $10,813,624, respectively.
The increase in working capital deficit is mainly due to the transfer of $19,347,245 of loans and other borrowings from non-current to current as these are due within 12 months from June 30, 2023.
The total EPC amount has been finalized with our EPC contractor, and the Group has paid all due outstanding EPC payments as at June 30, 2023.
Working Capital Calculation
The Working Capital Calculation excludes $9,139,784 (Q1 2023: $9,979,413 - 2022: $10,187,630) of Gold Stream liabilities, and $35,478 (Q1 2023: $805,801 - 2022: $2,215,585) in third party royalties included in current accounts payable, that are contingent upon the achievement of the revised gold sales forecast of 85,000 ounces for the year ending December 31, 2023.
Working Capital
Unit
June 30, 2023
March 31, 2023
December 31, 2022
Current Assets
Cash
$
11,149,491
4,505,071
6,688,037
Inventory
$
20,060,960
25,080,808
19,901,262
Amounts receivable, prepaid expenses, advances and deposits
$
8,612,279
8,461,572
10,697,365
Total Current Assets for Working Capital
$
39,822,730
38,047,451
37,286,664
Current Liabilities
Accounts Payable and accrued liabilities
$
59,595,451
60,555,348
56,337,289
Deferred income
$
865,173
-
6,581,743
Lease Liabilities
$
4,819,439
4,815,512
4,811,991
Gold Stream Liability
$
9,319,784
9,979,413
10,187,630
Loan and other borrowings
$
20,235,386
11,790,796
888,141
$
94,835,233
87,141,069
78,806,794
less: Current Liabilities contingent upon future gold sales
$
(9,355,262
)
(10,785,214
)
(12,403,215
)
Working capital deficit
$
(45,657,241
)
(38,308,404
)
(29,116,915
)
Inventory
Gold inventory is recognised, at cost, in the ore stockpiles and in production inventory, comprised principally of ore stockpile and doré at site or in transit to the refinery, with a component of gold-in-circuit.
Inventory
June 30, 2023
March 31, 2023
December 31, 2022
Plant spares and consumables
7,072,420
9,146,279
4,751,922
Gold ore in stockpile
9,185,796
12,479,805
11,869,168
Gold in CIL
3,802,744
3,454,724
1,160,237
Gold Dore
-
-
2,119,935
$
20,060,960
25,080,808
19,901,262
Liquidity and Capital Resources
The Group has generated positive operating cash flow during H1 2023 and expects to continue to do so based on its production and AISC guidance. This operating cash flow will support debt repayments, regional exploration and underground expansion drilling at Segilola, planned capital expenditures and corporate overhead costs.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Group's financial instruments are classified as follows:
June 30, 2023
Measured at amortized cost
Measured at fair value through profit and loss
Total
Assets
Cash and cash equivalents
$
11,149,491
-
11,149,491
Amounts receivable
251,812
-
251,812
Total assets
$
11,401,303
-
11,401,303
Liabilities
Accounts payable and accrued liabilities
$
59,559,973
35,478
59,595,451
Loans and borrowings
27,957,463
-
27,957,463
Gold stream liability
-
21,840,525
21,840,525
Lease liabilities
13,501,928
-
13,501,928
Total liabilities
$
101,019,364
21,876,003
122,895,367
December 31, 2022
Measured at amortized cost
Measured at fair value through profit and loss
Total
Assets
Cash and cash equivalents
$
6,688,037
-
6,688,037
Amounts receivable
220,442
-
220,442
Total assets
$
6,908,479
-
6,908,479
Liabilities
Accounts payable and accrued liabilities
$
54,121,704
2,215,585
56,337,289
Loans and borrowings
28,142,654
-
28,142,654
Gold stream liability
-
25,039,765
25,039,765
Lease liabilities
15,409,285
-
15,409,285
Total liabilities
$
97,673,643
27,255,350
124,928,993
The fair value of these financial instruments approximates their carrying value.
As noted above, the Group has certain financial liabilities that are held at fair value. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques to measure fair value:
Classification of financial assets and liabilities Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
As at June 30, 2023 and December 31, 2022, all the Group`s liabilities measured at fair value through profit and loss are categorized as Level 3 and their fair value was determined using discounted cash flow valuation models, taking into account assumptions with respect to gold prices and discount rates as well as estimates with respect to production and operating results for the Segilola mine.
DISCLOSURE OF OUTSTANDING SHARE DATA
As at the date of this MD&A, there were 655,314,724 common shares issued and outstanding stock options to purchase a total of 14,790,000 common shares.
Authorized Common Shares
Common shares issued
June 30, 2023
December 31, 2022
Common shares issued
655,314,724
644,696,185
Warrants
There were no warrants that were outstanding at June 30, 2023, and as at the date of this report.
During the Three and Six Months ended June 30, 2023 no warrants were issued.
Stock Options
The number of stock options that were outstanding and the remaining contractual lives of the options at June 30, 2023, were as follows.
Options outstanding
Exercise Price
Number Outstanding
Weighted Average Remaining Contractual Life
Expiry Date
C$0.140
750,000
0.27
October 5, 2023
C$0.200
14,040,000
1.55
January 16, 2025
Total
14,790,000
The Company has previously granted employees, consultants, directors and officers share purchase options. These options were granted pursuant to the Company's stock option plan. No new options have been granted in Q2 2023.
During the Three and Six Months ended June 30, 2023, 12,111,000 options were exercised at a price of C$0.145.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In United States dollars (unaudited)
June 30,
December 31,
June 30,
Note
2023
2022
2022
$
$
$
(restated)
ASSETS
Current assets
Cash
11,149,491
6,688,037
5,055,930
Inventories
4
20,060,960
19,901,262
24,046,025
Amounts receivable
5
251,812
220,442
705,799
Prepaid expenses, advances and deposits
6
8,360,467
10,476,923
1,961,307
Total current assets
39,822,730
37,286,664
31,769,061
Non-current assets
Deferred income tax assets
89,120
87,797
79,771
Prepaid expenses, advances and deposits
6
239,527
282,825
287,338
Right-of-use assets
7
14,486,174
16,849,402
19,361,972
Property, plant and equipment
12
151,576,537
149,513,917
144,588,789
Intangible assets
13
23,123,115
19,231,208
16,260,028
Total non-current assets
189,514,473
185,965,149
180,577,898
TOTAL ASSETS
229,337,203
223,251,813
212,346,959
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
14
59,595,451
56,337,289
39,128,410
Deferred income
865,173
6,581,743
10,147,435
Lease liabilities
7
4,819,439
4,811,991
4,007,843
Gold stream liability
8
9,319,784
10,187,630
11,753,417
Loans and borrowings
9
20,235,386
888,141
15,779,820
Total current liabilities
94,835,233
78,806,794
80,816,925
Non-current liabilities
Accounts payable and accrued liabilities
14
449,798
-
354,459
Lease liabilities
7
8,682,489
10,597,294
13,135,582
Gold stream liability
8
12,520,741
14,852,135
17,323,911
Loans and borrowings
9
7,722,077
27,254,513
26,207,109
Provisions
11
4,983,909
4,959,638
5,358,322
Total non-current liabilities
34,359,014
57,663,580
62,379,383
SHAREHOLDERS' EQUITY
Common shares
15
81,450,778
80,439,693
79,949,297
Option reserve
15
2,046,737
3,351,133
3,455,454
Currency translation reserve
15
(2,406,013
)
(2,512,911
)
(4,464,940
)
Retained earnings/(deficit)
15
19,051,454
5,503,524
(9,789,160
)
Total shareholders' equity
100,142,956
86,781,439
69,150,651
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
229,337,203
223,251,813
212,346,959
These condensed interim consolidated financial statements were approved for issue by the Board of Directors on August 22, 2023, and are signed on its behalf by:
(Signed) "Adrian Coates"
(Signed) "Olusegun Lawson"
Director
Director
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
In United States dollars (unaudited)
Note
Common shares
Option reserve
Currency translation reserve
(Deficit)/ Retained earnings
Total shareholders' equity
Balance on December 31, 2021
$
79,027,183
$
4,513,900
$
(2,889,510
)
$
(21,058,184
)
$
59,593,389
Net profit for the period
-
-
-
10,210,578
10,210,578
Other comprehensive loss
-
-
(1,575,430
)
-
(1,575,430
)
Total comprehensive profit for the period
-
-
(1,575,430
)
10,210,578
8,635,148
Options exercised
19
922,114
(1,058,446
)
-
1,058,446
922,114
Balance on June 30, 2022 (restated)
$
79,949,297
$
3,455,454
$
(4,464,940
)
$
(9,789,160
)
$
69,150,651
Balance on December 31, 2022
$
80,439,693
$
3,351,133
$
(2,512,911
)
$
5,503,524
$
86,781,439
Net profit for the period
-
-
-
12,243,534
12,243,534
Other comprehensive income
-
-
106,898
-
106,898
Total comprehensive profit for the period
-
-
106,898
12,243,534
12,350,432
Options exercised
19
1,011,085
(1,304,396
)
-
1,304,396
1,011,085
Balance on June 30, 2023
$
81,450,778
$
2,046,737
$
(2,406,013
)
$
19,051,454
$
100,142,956
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CORPORATE INFORMATION
Thor Explorations Ltd. (the "Company"), together with its subsidiaries (collectively, "Thor" or the "Group") is a West African focused gold producer and explorer, dually listed on the TSX-Venture Exchange (THX.V) and AIM Market of the London Stock Exchange (THX.L).
The Company was formed in 1968 and is organized under the Business Corporations Act (British Columbia) (BCBCA) with its registered office at 550 Burrard St, Suite 2900 Vancouver, BC, CA, V6C 0A3. The Company evolved into its current form in August 2011 following a reverse takeover and completed the transformational acquisition of its flagship Segilola Gold Project in Nigeria in August 2016.
BASIS OF PREPARATION
a) Statement of compliance
These condensed interim consolidated financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").
These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, which have been prepared in accordance with IFRS.
These interim financial statements were authorized for issue by the Board of Directors on August 22, 2023.
b) Basis of measurement
These interim financial statements are presented in United States dollars ("US$").
These interim financial statements have been prepared on a historical cost basis, except for certain financial instruments that are measured at fair value at the end of each reporting period.
The Group's accounting policies have been applied consistently to all periods in the preparation of these interim financial statements. In preparing the Group 's interim financial statements for the three and six months ended June 30, 2023, the Group applied the critical judgments and estimates as disclosed in note 3 of its annual financial statements for the year ended December 31, 2022.
These interim financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company, which is defined as having the power over the entity, rights to variable returns from its involvement with the entity, and the ability to use its power to affect the amount of returns. All intercompany transactions and balances are eliminated on consolidation. The Company's subsidiaries at June 30, 2023 are consistent with the subsidiaries as at December 31, 2022 as disclosed in note 3 to the annual financial statements.
None of the new standards or amendments to standards and interpretations applicable during the period has had a material impact on the financial position or performance of the Group. The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.
2. BASIS OF PREPARATION (continued)
c) Nature of operations and going concern
The Board of Directors have performed an assessment of whether the Company and Group would be able to continue as a going concern until at least August 2024. In their assessment, the Group has taken into account its financial position, expected future trading performance, its debt and other available credit facilities, future debt servicing requirements, its working capital and capital expenditure commitments and forecasts.
At June 30, 2023, the Group had a cash position of $11.1million and a net debt position of $16.8 million, calculated as total debt adjusted for unamortized deferred financing charges less cash and cash equivalents and short-term investments. Cash flows from operating activities for the three and six months ended June 30, 2023 were inflows of $25.3 million and $44.5 million respectively.
The Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for at least the next twelve months and that, as at the date of this report, there are no material uncertainties regarding going concern
The Board of Directors is satisfied that the going concern basis of accounting is an appropriate assumption to adopt in the preparation of the interim financial statements as at, and for the period ended June 30, 2023.
PROFIT FROM OPERATIONS
3a. REVENUE
Three months ended June 30,
Six months ended June 30,
2023
2022
2023
2022
Gold revenue
41,295,582
41,324,199
81,539,639
66,174,161
Silver revenue
68,587
30,549
112,360
46,069
$
41,364,169
$
41,354,747
$
81,651,999
$
66,220,229
The Group's revenue is generated in Nigeria. All sales are made to the Group's only customer.
3b. COST OF SALES
Three months ended June 30,
Six months ended June 30,
2023
2022
2023
2022
Mining
21,836,232
17,883,204
41,873,619
24,814,116
Processing
4,312,647
2,584,044
8,421,432
4,054,501
Support services and others
1,873,999
3,446,978
3,279,061
5,448,950
Foreign exchange (gains)/losses on production costs*
(10,227,193
)
(3,640,484
)
(17,471,925
)
(5,824,295
)
Production costs
$
17,795,685
$
20,273,742
$
36,102,187
$
28,493,272
Transportation and refining
810,080
604,991
1,152,371
1,107,213
Royalties
1,102,308
946,252
1,870,590
1,497,017
Amortization and depreciation - operational assets - owned assets
6,641,484
5,486,909
13,534,856
10,219,689
Amortization and depreciation - operational assets - right of use assets
1,159,110
1,060,827
2,318,647
2,219,082
Cost of sales
27,508,667
28,372,721
54,978,651
43,536,273
* The total foreign exchange gain for the current period was $17,471,925, which comprises of realized foreign exchange gains of $11,878,343 and unrealized foreign exchange gains of $5,593,582. During the period, SROL purchased its local currency on a spot basis. The foreign exchange gains and losses from these trades are generated from the differences between the local currency values achieved on the trades versus the currency translation rate at the time of the trade.
3c. AMORTIZATION AND DEPRECIATION
Three months ended June 30,
Six months ended June 30,
2023
2022
2023
2022
Amortization and depreciation - operational assets - owned assets
6,641,484
5,486,909
13,534,856
10,219,689
Amortization and depreciation - operational assets - right of use assets
1,159,110
1,060,827
2,318,647
2,219,082
Amortization and depreciation - owned assets
38,224
490,766
310,375
762,603
Amortization and depreciation - right-of-use assets
36,103
14,908
71,153
14,908
$
7,874,921
$
7,053,410
$
16,235,031
$
13,216,282
3d. OTHER ADMINISTRATION EXPENSES
Three months ended June 30,
Six months ended June 30,
2023
2022
2023
2022
Employee compensation
1,414,556
320,802
2,107,855
739,349
Professional services
614,104
777,007
1,268,310
1,148,534
Other corporate expenses
382,900
1,130,740
3,090,334
2,283,380
$
2,411,560
$
2,228,549
$
6,466,499
$
4,171,263
INVENTORIES
June 30, 2023
December 31, 2022
Plant spares and consumables
$
7,072,420
$
4,751,922
Gold ore in stockpile
9,185,796
11,869,168
Gold in CIL
3,802,744
1,614,267
Gold Dore
-
2,119,935
$
20,060,960
$
19,901,262
There were no write downs to reduce the carrying value of inventories to net realizable value during the periods ended June 30, 2023 and 2022.
AMOUNTS RECEIVABLE
June 30, 2023
December 31, 2022
Accounts receivable
$
38,715
$
67,084
GST
3,481
993
Other receivables
209,616
152,365
$
251,812
$
220,442
The value of receivables recorded on the balance sheet is approximate to their recoverable value and there are no expected material credit losses.
PREPAID EXPENSES, ADVANCES AND DEPOSITS
June 30, 2023
December 31, 2022
Current:
Gold Stream liability arrangement fees
33,186
33,186
Advance deposits to vendors
5,596,067
9,625,204
Other prepayments
2,731,214
818,533
$
8,360,467
10,476,923
Non-current:
Gold Stream liability arrangement fees
24,889
74,667
Other prepayments
214,638
208,158
$
239,527
282,825
Included in Advance deposits to vendors, are payment deposits towards key equipment, materials and spare parts, with longer lead times to delivery, which are of critical importance to maintain efficient operations of the mine and process plant. These were made to mitigate against price volatility and inflation currently affecting the sector.
LEASES
The Group accounts for leases in accordance with IFRS 16. The definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019. The Group has elected not to recognize right-of-use assets and lease liabilities for leases which have low value, or short-term leases with a duration of 12 months or less. The payments associated with such leases are charged directly to the income statement on a straight-line basis over the lease term. There were no such leases for the periods ended June 30, 2023 and 2022.
Leases relate principally to corporate offices and the mining fleet at the Segilola mine. Corporate offices are depreciated over 5 years and mining fleet over the life of mine of Segilola.
The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position for the period ended June 30, 2023, were as follows:
Right of use asset
Lease liability
Income statement
Carrying value December 31, 2022
$
16,849,402
$
(15,409,285
)
$
New leases entered in to during the period
-
-
-
Depreciation
(2,389,800
)
-
(2,389,800
)
Interest
-
(560,217
)
(560,217
)
Lease payments
-
2,512,720
-
Foreign exchange movement
26,572
(45,146
)
(45,146
)
Carrying value at June 30, 2023
$
14,486,174
$
(13,501,928
)
$
(2,995,163
)
Current liability
(4,819,439
)
Non-current liability
(8,682,489
)
7. LEASES (continued)
The key impacts on the Statement of Comprehensive Loss and the Statement of Financial Position for the year ended December 31, 2022, were as follows:
Right of use asset
Lease liability
Income statement
Carrying value December 31, 2021
$
20,843,612
$
(18,274,374
)
$
-
New leases entered in to during the period
660,064
(660,064
)
-
Depreciation
(4,724,100
)
-
(4,724,100
)
Interest
-
(1,052,329
)
(1,052,329
)
Lease payments
-
4,882,786
-
Foreign exchange movement
69,826
(305,304
)
(305,304
)
Carrying value at December 31, 2022
$
16,849,402
$
(15,409,285
)
$
(6,081,733
)
Current liability
(4,811,991
)
Non-current liability
(10,597,294
)
GOLD STREAM LIABILITY
Gold stream liability
June 30, 2023
December 31, 2022
Balance at Beginning of period
$
25,039,765
$
30,262,279
Repayments
(5,898,728
)
(11,534,441
)
Interest at the effective interest rate
2,699,488
6,311,927
Balance at end of period
$
21,840,525
$
25,039,765
Current liability
9,319,784
10,187,630
Non-current liability
12,520,741
14,852,135
On April 29, 2020, the Group announced the closing of project financing for its flagship Segilola Gold Project ("Segilola") in Osun State, Nigeria. The financing included a $21 million gold stream upfront deposit ("the Prepayment") over future gold production at Segilola under the terms of a Gold Purchase and Sale Agreement ("GSA") entered into between the Group's wholly owned subsidiary SROL and the AFC. The Prepayment is secured over the shares in SROL as well as over SROL's assets and is not subject to interest. The initial term of the GSA is for ten years with an automatic extension of a further ten years. The AFC will receive 10.27% of gold production from the Segilola ML41 mining license until the $21 million Prepayment has been repaid in full. Thereafter, the AFC will continue to receive 10.27% of gold production from material mined within the ML41 mining license until a further $26.25 million is received, representing a total money multiple of 2.25 times the value of the Prepayment, at which point the GSA will terminate. The AFC are not entitled to receive an allocation of gold production from material mined from any of the Group's other gold tenements under the terms of the GSA.
8. GOLD STREAM LIABILITY (continued)
The $26.25 million represented interest on the Prepayment. A calculation of the implied interest rate was made as at drawdown date with interest being apportioned over the expected life of the Stream Facility. The principal input variables used in calculating the implied interest rate and repayment profile were the production profile and gold price. The future gold price estimates were based on market forecast reports for the years 2021 to 2025 and, the production profile was based on the latest life of mine plan model. The liability was to be re-estimated on a periodic basis to include changes to the production profile, any extension to the life of mine plan and movement in the gold price. Upon commencement of production, any change to the implied interest rate will be expensed through the Condensed Interim Consolidated Statement of Income (Loss).
In December 2021, the Group entered into a cash settlement agreement with the AFC where the gold sold to the AFC is settled in a net-cash sum payable to the AFC instead of delivery of bullion in repayment of the gold stream arrangement.
The following table represents the Group's loans and borrowings measured and recognised at fair value.
Level 1
Level 2
Level 3
Total
Financial liability at fair value through profit or loss
$
-
-
21,840,525
21,840,525
The liabilities included in the above table are carried at fair value through profit and loss.
LOANS AND BORROWINGS
June 30, 2023
December 31, 2022
Current liabilities:
Loans payable to the Africa Finance Corporation less than 1 year
$
17,673,363
$
356,155
Deferred element of EPC contract
2,562,023
531,986
$
20,235,386
888,141
Non-current liabilities:
Loans payable to the Africa Finance Corporation more than 1 year
$
6,513,943
$
24,103,784
Deferred element of EPC contract
1,208,134
3,150,729
$
7,722,077
$
27,254,513
Loans from the Africa Finance Corporation
June 30, 2023
December 31, 2022
Balance at Beginning of period
$
24,459,939
$
46,859,966
Drawdown
-
-
Principal repayments
(1,053,077
)
(24,220,764
)
Interest paid
(1,955,325
)
(4,645,014
)
Arrangement fees
(126,874
)
-
Unwinding of interest in the period
2,862,643
6,465,751
Balance at end of period
$
24,187,306
$
24,459,939
Current liability
17,673,363
356,155
Non-current liability
6,513,943
24,103,784
9. LOANS AND BORROWINGS (continued)
On December 1, 2020, the Group announced that its subsidiary Segilola Resources Operating Limited ("SROL") had completed the financial closing of a $54 million project finance senior debt facility ("the Facility") from the Africa Finance Corporation ("AFC") for the construction of the Segilola Gold Project in Nigeria. The Facility could be drawn down at the Group's request in minimum disbursements of $5 million. As at December 31, 2022, SROL has received total disbursements of $52.6 million (2021: $52.6 million), with $nil drawn down in 2022 (2021: $31.2 million) and the remaining $1.35m undrawn facility cancelled by the Group during the period under review (2021: $nil). Total disbursements received represent 97% of the Facility. The Facility is secured over the share capital of SROL and its assets, with repayments commencing in March 2022 and to conclude in March 2025.
Repayment of the aggregate Facility will be made in instalments over a 36-month period by repaying an amount on a series of repayment dates, as set out in the Facility Agreement, which reduces the amount of the outstanding aggregate Facility by the amount equal to the relevant percentage of Loans borrowed as at the close of business in London on the date of Financial Close. Interest accrues at SOFR plus 9% and is payable on a quarterly basis in arrears.
In conjunction with the granting of the Facility, Thor issued 33,329,480 bonus shares to the AFC. Thor also incurred transaction costs of $4,663,652 in relation to the loan facility. The fair value of the liability at inception was determined at $45,822,943 taking into account the transaction costs and equity component and recognized at amortized cost using an effective rate of interest, with the fair value of the shares issued in April 2020 of $5,666,011 recognized within equity.
On 31 January 2023, the Group entered into an agreement with the AFC amending the terms of its senior debt facility.
The amended facility removes the project finance cash sweep requirement and allows for free distributions from SROL (subject to a 20% distribution sweep to the senior debt facility), as well as releasing the Group from restrictions regarding acquisitions, distribution of dividends and certain indebtedness covenants. The payment timetable was also re-scheduled to reallocate a higher percentage of the repayments to a later period in the Facility's term.
Deferred payment facility on EPC contract for the construction of the Segilola Gold Mine
The Group has constructed its Segilola Gold Mine through an engineering, procurement, and construction contract ("EPC Contract"). The EPC Contract has been agreed on a lump sum turnkey basis which provides Thor with a fixed price of $67.5 million for the full delivery of design, engineering, procurement, construction, and commissioning of the proposed 715,000 ton per annum gold ore processing plant.
The EPC Contract includes a deferred element ("the Deferred Payment Facility") of 10% of the fixed price. As at June 30, 2023, a total of $2,762,303 (December 31, 2022: $3,682,715) was deferred under the facility. The 10% deferred element is repayable in instalments over a 36-month period by repaying an amount on a series of repayment dates, as set out in the Deferred Payment Facility. Repayments commenced in March 2022 and will conclude in 2025. Interest on this element of the EPC deferred facility accrues at 8% per annum from the time the Facility taking-over Certificate was issued.
June 30, 2023
December 31, 2022
Balance at beginning of period
$
3,682,715
$
6,210,090
Offset against EPC payment
-
440,263
Principal repayments
(133,007
)
(3,440,449
)
Interest paid
(144,978
)
-
Unwinding of interest in the period
365,427
472,811
Balance at end of period
$
3,770,157
$
3,682,715
Current liability
2,562,023
531,986
Non-current liability
1,208,134
3,150,729
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
June 30, 2023
Gold Stream liability
AFC loan
EPC deferred facility
Total
January 1, 2023
$
25,039,765
24,459,939
3,682,715
53,182,419
Cash flows:
(Repayment of) / Proceeds from loans and borrowings
(5,898,728
)
(1,053,077
)
(133,007
)
(7,084,812
)
Arrangement fees
-
(126,874
)
-
(126,874
)
Interest paid
-
(1,955,325
)
(144,978
)
(2,100,303
)
Non-cash changes:
Unwinding of interest in the year
2,699,488
2,862,643
365,427
5,927,558
June 30, 2023
$
21,840,525
24,187,306
3,770,157
49,797,988
December 31, 2022
Gold stream liability
Short term advance
AFC loan
EPC deferred facility
Total
January 1, 2022
$
30,262,279
668,570
46,859,966
6,210,090
84,000,905
Cash flows:
(Repayment of) / Proceeds from loans and borrowings
(11,534,441
)
(668,570
)
(24,220,764
)
(3,440,449
)
(39,864,224
)
Interest paid
-
-
(4,645,014
)
-
(4,645,014
)
Non-cash changes:
Unwinding of interest in the year
6,311,927
-
6,465,751
472,811
13,250,489
Offset against EPC payment
-
-
-
440,263
440,263
December 31, 2022
$
25,039,765
-
24,459,939
3,682,715
53,182,419
PROVISIONS
June 30, 2023
Other
Fleet demobilization costs
Restoration costs
Total
Balance at Beginning of period
$
18,157
$
173,442
$
4,768,039
$
4,959,638
Initial recognition of provision
-
-
-
-
Changes in estimates
-
-
Unwinding of discount
-
-
23,432
23,432
Foreign exchange movements
839
-
-
839
Balance at end of the period
$
18,996
$
173,442
$
4,791,471
$
4,983,909
Current liability
-
-
-
-
Non-current liability
18,996
173,442
4,791,471
4,983,909
PROVISIONS (continued)
December 31, 2022
Other
Fleet demobilization costs
Restoration costs
Total
Balance at Beginning of period
$
-
$
173,241
$
5,064,935
$
5,238,176
Initial recognition of provision
18,415
-
-
18,415
Changes in estimates
-
-
(404,859
)
(404,859
)
Unwinding of discount
-
201
107,963
108,164
Foreign exchange movements
(258
)
-
-
(258
)
Balance at end of the period
$
18,157
$
173,442
$
4,768,039
$
4,959,638
Current liability
-
-
-
-
Non-current liability
18,157
173,442
4,768,039
4,959,638
The restoration costs provision is for the site restoration at Segilola Gold Project in Osun State Nigeria. The value of the above provision is measured by unwinding the discount on expected future cash flows using a discount factor that reflects the credit-adjusted risk-free rate of interest. It is expected that the restoration costs will be paid in US dollars, and as such US forecast inflation rates of 2.9% and the interest rate of 4% on 5-year US bonds were used to calculate the expected future cash flows, which are in line with the life of mine. The provision represents the net present value of the best estimate of the expenditure required to settle the obligation to rehabilitate environmental disturbances caused by mining operations at mine closure.
The fleet demobilization costs provision is the value of the cost to demobilize the mining fleet upon closure of the mine.
PROPERTY, PLANT AND EQUIPMENT
Motor vehicles
Plant and machinery
Office furniture
Land
Decommis-sioning Asset
Processing Plant
Segilola Mine
Assets under construction
Total
Costs
$
2,059,982
$
489,374
$
1,175,069
$
16,808
$
5,064,935
$
-
$
-
$
144,577,201
153,383,369
Balance, December 31, 2021
Transfers
-
-
-
-
-
60,687,651
83,889,550
(144,577,201
)
-
Additions
148,862
5,649,341
668,936
-
-
7,459,467
8,946,765
1,884,352
24,757,723
Revisions to decommisioning assets
-
-
-
-
(404,859
)
-
-
-
(404,859
)
Disposals
-
-
-
-
-
-
-
-
-
Foreign exchange movement
(40,004
)
(12,091
)
(9,118
)
-
-
-
-
-
(61,213
)
Balance, December 31, 2022
$
2,168,840
$
6,126,624
$
1,834,887
$
16,808
$
4,660,076
$
68,147,118
$
92,836,315
$
1,884,352
$
177,675,020
Transfers
-
-
-
-
-
-
-
-
-
Additions
247,804
234,034
550,468
-
-
5,413,164
9,405,737
128,843
15,980,050
Disposals
-
-
-
-
-
-
-
-
-
Foreign exchange movement
(96,390
)
3,939
3,457
-
-
-
-
-
(88,994
)
Balance, June 30, 2023
$
2,320,254
$
6,364,597
$
2,388,812
$
16,808
$
4,660,076
$
73,560,282
$
102,242,052
$
2,013,195
$
193,566,076
Accumulated depreciation and impairment
losses
$
754,516
$
263,647
$
251,289
$
-
$
-
$
-
$
-
$
-
1,269,452
Balance, December 31, 2021
Depreciation
457,259
354,275
306,542
-
952,322
10,247,764
14,603,113
-
26,921,275
Disposals
-
-
-
-
-
-
-
-
-
Foreign exchange movement
(14,966
)
(11,780
)
(2,878
)
-
-
-
-
-
(29,624
)
Balance, December 31, 2022
$
1,196,809
$
606,142
$
554,953
$
-
$
952,322
$
10,247,764
$
14,603,113
$
-
$
28,161,103
Depreciation
210,813
(255,410
)
169,325
-
434,463
5,473,406
7,840,210
-
13,872,807
Disposals
-
-
-
-
-
-
-
-
-
Foreign exchange movement
(52,286
)
3,208
4,707
-
-
-
-
-
(44,371
)
Balance, June 30, 2023
$
1,355,336
$
353,940
$
728,985
$
-
$
1,386,785
$
15,721,170
$
22,443,323
$
-
$
41,989,539
Carrying amounts
Balance, December 31, 2022
$
972,031
$
5,520,482
$
1,279,934
$
16,808
$
3,707,754
$
57,899,354
$
78,233,202
$
1,884,352
$
149,513,917
Balance, June 30, 2023
$
964,918
$
6,010,657
$
1,659,827
$
16,808
$
3,273,291
$
57,839,112
$
79,798,729
$
2,013,195
$
151,576,537
12. PROPERTY, PLANT AND EQUIPMENT (continued)
A summary of depreciation capitalized is as follows:
Three months ended June 30,
Six months ended June 30,
Total depreciation capitalized
2022
2021
2022
2021
June 30, 2023
December 31, 2022
Exploration expenditures
20,880
37,306
76,598
60,724
696,950
620,352
Total
$
20,880
$
37,306
$
76,598
$
60,724
$
696,950
$
620,352
a) Segilola Project, Osun Nigeria:
Classification of Expenditure on the Segilola Gold Project
On January 1, 2022, the Group achieved Commercial Production at the Segilola Gold Project in Nigeria ("the Project") Upon achieving Commercial Production, the Assets under Construction was reclassified within Property, Plant and Equipment, and transferred to Mining Asset, Processing Plant and Decommissioning Asset.
Decommissioning Asset
The decommissioning asset relates to estimated restoration costs at the Group's Segilola Gold Mine as at June 30, 2023. Refer to Note 11 for further detail.
EPC payments
During the six month period ended June 30, 2023, the Group paid $10,196,105 (December 31, 2022: $4,321,856) to the EPC contractor in relation to the construction of the Segilola Mine and processing plant.
INTANGIBLE ASSETS
The Group's exploration and evaluation assets costs are as follows:
Douta Gold Project, Senegal
Central Hounde Project, Burkina Faso
Lithium exploration licenses, Nigeria
Gold exploration licenses, Nigeria
Software
Total
Balance, December 31, 2021
$
14,219,982
$
-
$
-
$
895,301
$
230,136
$
15,345,419
Acquisition costs
-
-
-
24,103
-
24,103
Exploration costs
3,745,803
12,014
-
1,693,863
-
5,451,680
Additions
-
-
-
-
43,599
43,599
Amortisation
-
-
-
-
(122,988
)
(122,988
)
Impairment
-
(12,014
)
-
-
-
(12,014
)
Foreign exchange movement
(1,427,912
)
-
-
(70,679
)
-
(1,498,591
)
Balance, December 31, 2022
$
16,537,873
$
-
$
-
$
2,542,588
$
150,747
$
19,231,208
Acquisition costs
-
-
-
-
-
-
Exploration costs
2,301,937
6,461
611,679
792,971
-
3,713,048
Additions
-
-
-
-
77,380
77,380
Amortisation
-
-
-
-
(49,022
)
(49,022
)
Impairment
-
(6,461
)
-
-
-
(6,461
)
Foreign exchange movement
372,383
-
-
(215,421
)
-
156,962
Balance, June 30, 2023
$
19,212,193
$
-
$
611,679
$
3,120,138
$
179,105
$
23,123,115
13. INTANGIBLE ASSETS (continued)
a) Douta Gold Project, Senegal:
The Douta Gold Project consists of an early-stage gold exploration license located in southeastern Senegal, approximately 700km east of the capital city Dakar.
The Group is party to an option agreement (the "Option Agreement") with International Mining Company ("IMC"), by which the Group has acquired a 70% interest in the Douta Gold Project located in southeast Senegal held through African Star SARL.
Pursuant to the terms of the Option Agreement, IMC's 30% interest will be a "free carry" interest until such time as the Group announces probable reserves on the Douta Gold Project (the "Free Carry Period"). Following the Free Carry Period, IMC must either elect to sell its 30% interest to African Star at a purchase price determined by an independent valuer commissioned by African Star or fund its 30% share of the exploration and operating expenses.
b) Central Houndé Project, Burkina Faso:
Bongui and Legue gold permits, Burkina Faso:
AFC Constelor SARL holds a 100% interest in the Bongui and Legue gold permits covering an area of approximately 233 km2 located within the Houndé belt, 260 km southwest of the capital Ouagadougou, in western Burkina Faso.
Ouere Permit, Central Houndé Project, Burkina Faso:
Argento BF SARL holds a 100% interest in the Ouere gold permit, covering an area of approximately 241 km2 located within the Houndé belt.
The three permits together cover a total area of 474km2 over the Houndé Belt which form the Central Houndé Project.
The Group carried out an impairment assessment of the Central Houndé Project at December 31, 2020, and a decision was taken to fully impair the value of the Central Houndé Project. It is the Group's intention to focus on Segilola development and Douta exploration in the short term, and it does not plan to undertake significant work on the license areas in the near future.
c) Lithium exploration Licenses, Nigeria
During 2023, the Group has acquired over 600km2 of granted tenure in south-west Nigeria that covers both known lithium bearing pegmatite deposits and a large unexplored prospective pegmatite-rich belt.
d) Gold exploration Licenses, Nigeria
As at June 30, 2023, the Group's gold exploration tenure currently comprises 16 wholly owned exploration licenses and nine joint venture partnership exploration licenses. Together with the mining lease over the Segilola Gold Deposit, Thor's total gold exploration tenure amounts to 1,542 km².
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
June 30, 2023
December 31, 2022
Trade payables
$
45,534,482
$
46,914,333
Accrued liabilities
12,827,805
6,213,977
Other payables
1,682,962
3,208,979
$
60,045,249
$
56,337,289
Current liability
59,595,451
56,337,289
Non-current liability
449,798
-
Accounts payable and accrued liabilities are classified as financial liabilities and approximate their fair values.
Also included in trade payables is a total of $35,478 (December 31, 2022: $2,215,585) that relates to third party royalties that will become payable upon future gold sales. All these royalties' creditors are included in current liabilities.
The following table represents the Group's trade payables measured and recognized at fair value.
Level 1
Level 2
Level 3
Total
Trade payables
Third party royalties
$
-
-
35,478
35,478
CAPITAL AND RESERVES
a) Authorized
Unlimited common shares without par value.
b) Issued
June 30, 2023 Number
June 30, 2023
December 31, 2022 Number
December 31, 2022
As at start of the year
644,696,185
$
80,439,693
632,358,009
$
79,027,183
Issue of new shares:
- Share options exercised i
10,618,539
1,011,085
9,939,000
960,546
- RSU awards vested
-
-
2,399,176
451,964
655,314,724
$
81,450,778
644,696,185
$
80,439,693
i Value of 1,500,000 options exercised at a price of CAD$0.145 per share on June 5, 2023, and 9,118,539 options exercised at a price of CAD$0.145 per share on June 14, 2023.
15. CAPITAL AND RESERVES (continued)
c) Share-based compensation
Stock option plan
The Group has granted directors, officers and consultants share purchase options. These options were granted pursuant to the Group's stock option plan.
Under the current Share Option Plan, 44,900,000 common shares of the Group are reserved for issuance upon exercise of options.
On January 16, 2020, 14,250,000 stock options were granted at an exercise price of C$0.20 per share for a period of five years. The options vested immediately.
On October 5, 2018, 750,000 stock options were granted at an exercise price of C$0.14 per share for a period of five years.
On March 12, 2018, 12,800,000 stock options were granted at an exercise price of C$0.145 per share for a period of five years. All these stock options have been exercised.
All of the stock options were vested as at the balance sheet date. These options did not contain any market conditions and the fair value of the options were charged to the statement of comprehensive loss or capitalized as to assets under construction in the period where granted to personnel's whose cost is capitalized on the same basis. The assumptions inherent in the use of these models are as follows:
Vesting period (years)
First vesting date
Expected remaining life (years)
Risk free rate
Exercise price
Volatility of share price
Fair value
Options vested
Options granted
Expiry
5
March 12, 2018
-
2.00%
$ 0.145
105.09%
$0.14
12,111,000
12,111,000
June 15, 2023
5
October 5, 2018
0.27
2.43%
$ 0.14
100.69%
$0.14
750,000
750,000
October 5, 2023
5
January 16, 2020
1.55
1.49%
$ 0.20
66.84%
$0.07
14,250,000
14,250,000
January 16, 2025
In Canadian Dollars
The Group has elected to measure volatility by calculating the average volatility of a collection of three peer companies' historical share prices for the exercising period of each parcel of options. Management believes that given the transformational change that the Group has undergone since the acquisition of the Segilola Gold Project in August 2016, the Group's historical share price is not reflective of the current stage of development of the Group, and that adopting the volatility of peer companies who have advanced from exploration to development is a more accurate measure of share price volatility for the purpose of options valuation.
The following is a summary of changes in options from January 1, 2023, to June 30, 2023, and the outstanding and exercisable options at June 30, 2023:
15. CAPITAL AND RESERVES (continued)
c) Share-based compensation (continued)
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In Canadian Dollars
The following is a summary of changes in options from January 1, 2022, to December 31, 2022, and the outstanding and exercisable options at December 31, 2022:
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In Canadian Dollars
d) Nature and purpose of equity and reserves
The reserves recorded in equity on the Group's statement of financial position include 'Reserves,' 'Currency translation reserve,' 'Retained earnings' and 'Deficit.'
'Option reserve' is used to recognize the value of stock option grants prior to exercise or forfeiture.
'Currency translation reserve' is used to recognize the exchange differences arising on translation of the assets and liabilities of foreign branches and subsidiaries with functional currencies other than US dollars.
'Deficit' is used to record the Group's accumulated deficit.
'Retained earnings' is used to record the Group's accumulated earnings.
EARNINGS PER SHARE
Diluted earnings per share was calculated based on the following:
Three months ended June 30,
Six months ended June 30,
2023
2022
2023
2022
Basic weighted average number of shares outstanding
646,583,925
637,605,227
645,161,655
636,603,895
Stock options
5,242,375
-
5,242,375
-
Diluted weighted average number of shares outstanding
651,826,300
637,605,227
650,404,030
636,603,895
655,314,724
641,897,009
655,314,724
641,897,009
Total common shares outstanding
670,104,724
669,198,009
670,104,724
669,198,009
Total potential diluted common shares
646,583,925
637,605,227
645,161,655
636,603,895
RELATED PARTY DISCLOSURES
A number of key management personnel, or their related parties, hold or held positions in other entities that result in them having control or significant influence over the financial or operating policies of the entities outlined below.
a) Trading transactions
The Africa Finance Corporation ("AFC") is deemed to be a related party given the size of its shareholding in the Company. There have been no other transactions with the AFC other than the Gold Stream liability as disclosed in Note 8, and the secured loan as disclosed in Note 9.
b) Compensation of key management personnel
The remuneration of directors and other members of key management during the three and six months ended June 30, 2023, and 2022 were as follows:
Three months ended June 30,
Six months ended June 30,
2023
2022
2023
2022
Salaries and bonuses
Current directors and officers
(i) (ii) (iii)
$
736,436
$
163,566
$
973,098
$
331,995
Former directors and officers
$
-
$
34,739
$
-
$
71,557
Directors' fees
Current directors and officers
(i) (ii)
$
113,022
$
90,452
$
222,178
$
199,114
$
849,458
$
288,757
$
1,195,276
$
602,666
(i) Key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the three and six months ended June 30, 2023, and 2022.
(ii) The Group paid consulting and director fees to both individuals and private companies controlled by directors and officers of the Group for services. Accounts payable and accrued liabilities at June 30, 2023, include $56,938 (December 31, 2022 - $102,092) due to directors or private companies controlled by an officer and director of the Group. Amounts due to or from related parties are unsecured, non-interest bearing and due on demand.
(iii) Executive bonuses were paid in the three months period ended in June 30, 2023.
18. FINANCIAL INSTRUMENTS
The Group's financial instruments are classified as follows:
June 30, 2023
Measured at amortized cost
Measured at fair value through profit and loss
Total
Assets
Cash and cash equivalents
$
11,149,491
-
11,149,491
Amounts receivable
251,812
-
251,812
Total assets
$
11,401,303
-
11,401,303
Liabilities
Accounts payable and accrued liabilities
$
59,559,973
35,478
59,595,451
Loans and borrowings
27,957,463
-
27,957,463
Gold stream liability
-
21,840,525
21,840,525
Lease liabilities
13,501,928
-
13,501,928
Total liabilities
$
101,019,364
21,876,003
122,895,367
December 31, 2022
Measured at amortized cost
Measured at fair value through profit and loss
Total
Assets
Cash and cash equivalents
$
6,688,037
-
6,688,037
Amounts receivable
220,442
-
220,442
Total assets
$
6,908,479
-
6,908,479
Liabilities
Accounts payable and accrued liabilities
$
54,121,704
2,215,585
56,337,289
Loans and borrowings
28,142,654
-
28,142,654
Gold stream liability
-
25,039,765
25,039,765
Lease liabilities
15,409,285
-
15,409,285
Total liabilities
$
97,673,643
27,255,350
124,928,993
The fair value of these financial instruments approximates their carrying value.
As noted above, the Group has certain financial liabilities that are held at fair value. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques to measure fair value:
Classification of financial assets and liabilities Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
As at June 30, 2023 and December 31, 2022, all the Group`s liabilities measured at fair value through profit and loss are categorized as Level 3 and their fair value was determined using discounted cash flow valuation models, taking into account assumptions with respect to gold prices and discount rates as well as estimates with respect to production and operating results for the Segilola mine.
19. CAPITAL MANAGEMENT
The Group manages, as capital, the components of shareholders' equity. The Group's objectives, when managing capital, are to safeguard its ability to continue as a going concern in order to develop and its mineral interests through the use of capital received via the issue of common shares and via debt instruments where the Board determines that the risk is acceptable and, in the shareholders' best interest to do so.
The Group manages its capital structure, and makes adjustments to it, in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue common shares, borrow, acquire or dispose of assets or adjust the amount of cash.
20. CONTRACTUAL COMMITMENTS AND CONTINGENT LIABILITIES
Contractual Commitments The Group has no contractual obligations that are not disclosed on the Condensed Interim Consolidated Statement of Financial Position.
Contingent liabilities The Group is involved in various legal proceedings arising in the ordinary course of business. Management has assessed these contingencies and determined that, in accordance with International Financial Reporting Standards, all cases are considered remote. As a result, no provision has been made in the interim financial statements for any potential liabilities that may arise from these legal proceedings.
Although the Group believes that it has valid defenses in these matters, the outcome of these proceedings is uncertain, and there can be no assurance that the Group will prevail in these matters. The Group will continue to assess the likelihood of any loss, the range of potential outcomes, and whether or not a provision is necessary in the future, as new information becomes available.
Based on the information available, the Group does not believe that the outcome of these legal proceedings will have a material adverse effect on the financial position or results of operations of the Group. However, there can be no assurance that future developments will not materially affect the Group's financial position or results of operations.
21. SEGMENTED DISCLOSURES
Segment Information
The Group's operations comprise three reportable segments, the Segilola Mine Project, Exploration Projects, and Corporate.
Six months ended June 30, 2023
Segilola Mine Project
Exploration Projects
Corporate
Total
Profit (loss) for the period
$
14,043,081
$
(302,124
)
$
(1,497,423
)
$
12,243,534
- revenue
81,651,999
-
-
81,651,999
- production costs
(36,102,187
)
-
-
(36,102,187
)
- royalties
(1,870,590
)
-
-
(1,870,590
)
- amortization and depreciation
(16,039,323
)
(2,246
)
(193,462
)
(16,235,031
)
- other administration expenses
(4,869,121
)
(293,417
)
(1,303,962
)
(6,466,499
)
- impairments
-
(6,461
)
-
(6,461
)
- interest expense
(6,624,310
)
-
-
(6,624,310
)
June 30, 2023
Segilola Mine Project
Exploration Projects
Corporate
Total
Current assets
$
38,292,438
$
106,500
$
1,423,792
$
39,822,730
Non-current assets
Deferred income tax assets
-
89,120
-
89,120
Prepaid expenses, advances and deposits
24,889
-
214,638
239,527
Right-of-use assets
13,913,706
-
572,468
14,486,174
Property, plant and equipment
150,918,862
518,646
139,029
151,576,537
Intangible assets
179,105
22,944,010
-
23,123,115
Total assets
$
203,329,000
$
23,658,276
$
2,349,927
$
229,337,203
Non-current asset additions
$
15,980,050
$
4,043,733
$
15,625
$
20,039,408
Liabilities
$
(127,390,018
)
$
(20,261
)
$
(1,783,968
)
$
(129,194,247
)
Non-current assets by geographical location:
June 30, 2023
Senegal
British Virgin Islands
Nigeria
United Kingdom
Canada
Total
Prepaid expenses, advances and deposits
-
4,214
24,889
210,424
-
239,527
Right-of-use assets
-
-
13,913,707
572,467
-
14,486,174
Property, plant and equipment
443,449
-
150,994,059
134,831
4,198
151,576,537
Intangible assets
12,957,163
-
10,165,952
-
-
23,123,115
Total non-current assets
$
13,400,612
$
4,214
$
175,098,607
$
917,722
$
4,198
$
189,425,353
21. SEGMENTED DISCLOSURES (continued)
Six months ended June 30, 2022
Segilola Mine Project
Exploration Projects
Corporate
Total
Profit (loss) for the year
$
12,521,263
$
(111,126
)
$
(2,199,559
)
$
10,210,578
- revenue
66,220,229
-
-
66,220,229
- production costs
(28,493,272
)
-
-
(28,493,272
)
- royalties
(1,497,017
)
-
-
(1,497,017
)
- amortization and depreciation
(13,196,331
)
(4,468
)
(15,483
)
(13,216,282
)
- other administration expenses
(1,887,750
)
(99,437
)
(2,184,076
)
(4,171,263
)
- impairments
-
(7,221
)
-
(7,221
)
- interest expense
(7,693,863
)
-
-
(7,693,863
)
December 31, 2022
Segilola Mine Project
Exploration Projects
Corporate
Total
Current assets
$
36,334,005
$
120,752
$
831,907
$
37,286,664
Non-current assets
Deferred income tax assets
-
87,797
-
87,797
Prepaid expenses, advances and deposits
74,667
-
208,158
282,825
Right-of-use assets
16,232,353
-
617,049
16,849,402
Property, plant and equipment
149,050,728
339,785
123,404
149,513,917
Intangible assets
150,747
19,080,461
-
19,231,208
Total assets
$
201,842,500
$
19,628,795
$
1,780,518
$
223,251,813
Non-current asset additions
$
10,527,299
$
2,612,033
$
1,337,066
$
14,476,398
Liabilities
$
(133,370,335
)
$
(1,381,629
)
$
(1,718,410
)
$
(136,470,374
)
Non-current assets by geographical location:
December 31, 2022
Senegal
British Virgin Islands
Nigeria
United Kingdom
Canada
Total
Prepaid expenses, advances and deposits
-
7,024
74,667
201,134
-
282,825
Right-of-use assets
-
-
16,232,354
617,048
-
16,849,402
Property, plant and equipment
176,645
-
149,230,320
101,491
5,461
149,513,917
Intangible assets
10,704,623
-
8,526,585
-
-
19,231,208
Total non-current assets
10,881,268
7,024
174,468,785
919,673
5,461
185,877,352
22. PRIOR PERIOD RESTATEMENT
Following the conclusion of the audited consolidated financial statements for the year ended December 31, 2022, the Group identified the restatements below for the three and six month period ended June 30, 2022:
1 - Capitalization of $348,211 and $3,331,529 for the three and six months periods ended June 30, 2022, respectively, of stripping costs within "Property, Plant and equipment" as these related to improved access to ore as determined by "IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine". Recognition of depreciation expenses of $188,666 in relation to the stripping costs for the three months period ended June 30, 2022;
2 - Capitalization of $455,467 and $762,614 for the three and six months periods ended June 30, 2022, respectively, of near mine exploration costs within "Intangible assets" as these meet the definition of an asset in accordance with "IFRS 6 - Exploration for and Evaluation of Mineral Resources";
3 - Reclassification of $6,547,736 and $12,250,105 for the three and six months periods ended June 30, 2022, respectively, of amortization and depreciation of operational assets to "Cost of sales";
4 - Reclassification of $3,640,484 and $5,824,295 for the three and six months periods ended June 30, 2022, respectively, of foreign exchange gains to "Production costs" as the foreign exchange resulted from the purchase of raw materials, spare parts and other operational inputs required to support and maintain the Segilola mine operations; and
5 - Reclassification of $464 and $3,467,617 for the three and six months periods ended June 30, 2022, respectively, of restricted cash cashflows from "Net cash flows from operating activities" to "Net cash flows used in investing activities".
6 - Reclassification of $2,997,495 and $4,804,185 for the three and six months periods ended June 30, 2022, respectively, of repayment of gold stream liabilities cashflows from "Net cash flows from operating activities" to "Net cash flows used in investing activities".
Therefore, in accordance with "IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors", the Condensed interim consolidated statements of financial position, Condensed interim consolidated statements of comprehensive income and Condensed interim consolidated statements of cash flows for the three-month period ended June 30, 2022 have been restated. The impact of the restatements on these statements is demonstrated below:
Condensed interim consolidated statements of financial position
June 31,
Restatements
June 31,
2022
2022
$
$
(reported)
Ref
(restated)
ASSETS
Total current assets
31,769,061
-
31,769,061
Property, plant and equipment
141,445,926
3,142,863
1
144,588,789
Intangible assets
15,497,414
762,614
2
16,260,028
Other non-current assets
19,729,081
19,896,499
Total non-current assets
176,672,421
8,419,369
185,091,790
TOTAL ASSETS
208,441,482
3,905,477
212,346,959
LIABILITIES
Total current liabilities
80,816,925
-
80,816,925
Total non-current liabilities
62,379,383
-
62,379,383
SHAREHOLDERS' EQUITY
Retained deficit
(13,694,637
)
3,905,477
1 - 2
(9,789,160
)
Other equity
78,939,811
78,939,811
Total shareholders' equity
65,245,174
3,905,477
69,150,651
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
208,441,482
3,905,477
212,346,959
Condensed interim consolidated statements of comprehensive income
Three months ended June 30, 2022
Restatements
Three months ended June 30, 2022
Six months ended June 30, 2022
Restatements
Six months ended June 30, 2022
$
$
$
$
(reported)
Ref
(restated)
(reported)
Ref
(restated)
Revenue
41,354,747
-
41,354,747
66,220,229
-
66,220,229
Production costs
(24,262,437
)
3,988,695
1 - 4
(20,273,742
)
(37,649,096
)
9,155,824
1 - 4
(28,493,272
)
Transportation and refining
(604,991
)
-
(604,991
)
(1,107,213
)
-
(1,107,213
)
Royalties
(946,252
)
-
(946,252
)
(1,497,017
)
-
(1,497,017
)
Amortization and depreciation of operational assets -
owned assets
(5,486,909
)
3
(5,486,909
)
(10,219,689
)
1 - 3
(10,219,689
)
Amortization and depreciation of operational assets -
right of use assets
(1,060,827
)
3
(1,060,827
)
(2,219,082
)
3
(2,219,082
)
Cost of sales
(25,813,680
)
(2,559,041
)
(28,372,721
)
(40,253,326
)
(3,282,947
)
(43,536,273
)
-
-
Loss on forward sale of commodity contracts
471,403
-
471,403
176,480
-
176,480
16,012,470
(2,559,041
)
-
13,453,429
26,143,383
(3,282,947
)
-
22,860,436
Amortization and depreciation - owned assets
(5,789,009
)
5,298,243
3
(490,766
)
(10,793,626
)
10,031,023
3
(762,603
)
Amortization and depreciation - right of use assets
(1,075,735
)
1,060,827
3
(14,908
)
(2,233,990
)
2,219,082
3
(14,908
)
Other administration expenses
(2,684,016
)
455,467
2
(2,228,549
)
(4,933,877
)
762,614
2
(4,171,263
)
Impairment of Exploration & Evaluation assets
(4,520
)
-
(4,520
)
(7,221
)
-
(7,221
)
Profit from operations
6,459,190
4,255,496
10,714,686
8,174,669
9,729,772
17,904,441
Interest expense
(3,935,732
)
-
(3,935,732
)
(7,693,863
)
-
(7,693,863
)
Foreign exchange gains
3,640,484
(3,640,484
)
4
-
5,824,295
(5,824,295
)
4
-
Net profit before taxes
6,163,942
615,012
6,778,954
6,305,101
3,905,477
10,210,578
Tax expense
-
-
-
-
Net profit for the year
6,163,942
615,012
-
6,778,954
6,305,101
3,905,477
-
10,210,578
Net profit (loss) per share
Basic
0.010
0.001
0.011
0.010
0.006
0.016
Diluted
0.010
0.001
0.011
0.010
0.006
0.016
Condensed interim consolidated statements of cash flows
Three months ended June 30, 2022 $
Restatements
Three months ended June 30, 2022 $
Six months ended June 30, 2022 $
Restatements
Six months ended June 30, 2022 $
(reported)
Ref
(restated)
(reported)
Ref
(restated)
Cash flows from/(used in):
Operating
Net profit
6,163,942
615,012
1 - 2
6,778,954
6,305,101
3,905,477
1 - 2
10,210,578
Amortisation and depreciation
6,864,744
188,666
1
7,053,410
13,027,616
188,666
1
13,216,282
Restricted cash
464
(464
)
5
-
3,467,617
(3,467,617
)
5
-
Repayment of goldstream liabilities
(2,997,495
)
2,997,495
6
-
(4,804,185
)
4,804,185
6
-
Other operating cash flows
6,113,072
-
6,113,072
12,058,093
-
12,058,093
Net cash flows from operating activities
16,144,727
3,800,709
19,945,436
30,054,242
5,430,711
35,484,953
Investing
Restricted cash
-
464
5
464
-
3,467,617
5
3,467,617
Property, Plant & Equipment
(1,247,464
)
(348,211
)
1
(1,595,675
)
(7,808,673
)
(3,331,529
)
1
(11,140,202
)
Exploration & Evaluation assets expenditures
(509,280
)
(455,467
)
2
(964,747
)
(1,097,588
)
(762,614
)
2
(1,860,202
)
Other investing cash flows
-
-
-
(169
)
-
(169
)
Net cash flows used in investing activities
(1,756,744
)
(803,214
)
(2,559,958
)
(8,906,430
)
(626,526
)
(9,532,956
)
Financing
(Repayment of) / Proceeds from loans and borrowings
(13,440,749
)
(2,997,495
)
6
(16,438,244
)
(15,424,675
)
(4,804,185
)
6
(20,228,860
)
Other investing cash flows
(2,097,061
)
-
(2,097,061
)
(1,852,685
)
-
(1,852,685
)
Net cash flows used in financing activities
(15,537,810
)
(2,997,495
)
(18,535,305
)
(17,277,360
)
(4,804,185
)
(22,081,545
)
Effect of exchange rates on cash
(70,618
)
-
(70,618
)
(90,792
)
-
(90,792
)
Net change in cash
(1,220,445
)
-
(1,220,445
)
3,779,660
-
3,779,660
Cash, beginning of the period
6,276,375
-
6,276,375
1,276,270
-
1,276,270
Cash, end of the period
5,055,930
-
5,055,930
5,055,930
-
5,055,930
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES
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