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

    

 

 

   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

 

 

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		2023 Q1	2022 Q4	2022 Q3		2022 Q2		2022 Q1		2021 Q4		2021 Q3
		Jun-31		Mar-31	Dec-31	Sep-30		Jun-30		Mar-31		Dec-31		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 Financial Statements

 

 

 

For the Three Months Ended March 31, 2023, and 2022

 

(in United States Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

 

1.    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.

 

2.    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

 

3.    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.

 

4.    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.

 

 

 

5.    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.

 

6.    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)

 

 

7.    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.

 

 

8.    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

 

9.    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

 

10.  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

 

 

 

11.  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.

 

12.  PROPERTY, PLANT AND EQUIPMENT

 

  

 

 

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.

 

 

13.  INTANGIBLE ASSETS

 

The Group's exploration and evaluation assets costs are as follows:

 

 

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: 

 

(i)      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.

 

(ii)     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.

 

 

14.  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

 

 

15.  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)

 

 

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:

 

 

 

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.