Thor Explorations (TSXV: THX) estimated in a definitive feasibility study two months ago that pre-production capex to build an open-pit mine at its Segilola gold project in Nigeria would cost about US$87 million.
Today, the company announced it has secured a US$78-million financing package from the Africa Finance Corporation, a multilateral finance institution with US$4.5 billion on its balance sheet.
The financing package consists of a US$54-million senior secured credit facility, a US$9-million gold stream prepayment and a US$15-million equity investment.
Thor Explorations will still need to raise an additional US$18 million from debt or equity sources.
Segilola, 120 km northeast of Lagos, has an estimated mine life of five years as an open pit, with average life-of-mine production of 80,000 oz. gold per year.
The definitive feasibility study estimated all-in sustaining costs of US$662 per ounce.
At a gold price of US$1,300 per oz., the DFS forecasts a post-tax net present value at a 5% discount rate of US$138 million, a post-tax internal rate of return of 50%, and payback of initial capital in a year and a half.
The study was based on an open pit that covers a 43-hectare area and is 1,600 metres long, 140 to 430 metres wide, and between 55 metres and 210 metres deep. Production will start from the high-grade northern pit, which outcrops, and, along with the Stage 2 pit (which starts after nine months), will return an average head grade of 6.3 grams gold per tonne for the first twelve months of production. Stage 3 starts in month 14, with a cut-back of the southern wall of the Stage 2 pit.
Segilola contains probable reserves of 3.35 million tonnes grading 4.2 grams gold per tonne for 448,000 contained oz. gold. Resources stand at 4.04 million indicated tonnes averaging 4.3 grams gold for 556,000 oz., and 2.03 million inferred tonnes grading 4.7 grams gold for 305,000 ounces.
The study envisions a 625,000 tonne-per-day processing plant that would include conventional crushing, two-stage grinding, gravity, carbon-in-leach, elution, electrowinning and smelting, to produce gold dore. A tailings management facility would be built about 1.3 km southwest of the process plant.
Construction could start in the second quarter of 2019, and be completed within 18 months.
At the same time Thor released its DFS on the open-pit portion of the project, it completed a preliminary economic assessment (PEA) that evaluated an initial three-year underground mine, which could be brought online during the open-pit mine life to supplement feed from the open pit.
Development capital for the underground mine is US$13 million. The PEA forecast average life of mine production of 33,000 oz. gold per year, at all-in sustaining costs of US$756 per ounce. The post-tax net present value at a 5% discount rate is expected to reach US$35 million. The PEA did not include an IRR estimate.
The deposit at Segilola remains open at depth.
Exploration drilling on targets within the exploration license continues. The project is in the crystalline basement complex rocks of southwestern Nigeria, within the Upper Proterozoic rocks of the Ilesha schist belt, which formed part of the Pan African mineral belt.
In mid-afternoon trading, the company's shares are down 11.11%, at 16 ? apiece.
Thor's shares have traded with a 52-week range of 13 ? to 22 ?. The junior has a $52-million market capitalization.
In addition to Segilola, Thor has a 70% stake in the Douta gold project in southeastern Senegal and a 49% interest in the Bongui and Legue gold permits in southwestern Burkina Faso.