Half-yearly Report

 

 

 

Thor Mining PLC

 

 

 

 

 

 

 

Half-yearly Report

 

For the six months ended

31 December 2015

 

HIGHLIGHTS

 

·      Completion of the acquisition of 49% of the Spring Hill gold project for A$310,000, including cash of A$210,000, to take Thor ownership to 100%.

·      Option agreement signed to sell 100% of Spring Hill for total consideration of A$3.5 million plus royalties. The option was exercised, and the sale completed, after the period end.

·      Tungsten prices remain subdued, however capital & operating costs savings have been identified for Molyhil tungsten project.

 

REVIEW OF OPERATIONS

 

Depressed commodity prices have delayed financing for the development of the Molyhil tungsten project, however ongoing reviews have established reductions in both capital and operating cost estimates, which places the project in a good position to attract financing when the commodity price rebounds.  The cash return from the sale of the Spring Hill project has strengthened the Company's balance sheet significantly, allowing the repayment of loans secured against the Company's projects.  The net result of operations for the half-year was a loss of £1,036,000 (2014: £562,000).  The 2015 net result of operations was impacted by a write down of the carrying value of the Spring Hill tenements of £719,000, reflecting the consideration agreed for the sale of those tenements which has completed subsequent to 31 December 2015.

 

Molyhil Tungsten project (NT, Australia)

 

Project Development

Activities during the period were focussed upon cost optimisation of the 2015 Molyhil Feasibility Study, where expected capital cost savings in the order of A$8million from the original estimate have been identified, while estimated operating cost savings in the order of A$2million annually have been identified owing to reduced costs of both power generation and mining costs, owing to the reduction in global oil prices.

 

While APT tungsten currently sits at its lowest price point since 2008 the directors are confident of a medium term upswing driven by strong supply - demand fundamentals.  A sizeable portion of global mine production is at higher cash cost levels than market pricing, providing some confidence in an improvement in pricing as some of that production capacity may be shelved in the medium term.

Table 2: Molyhil Open Cut Ore Reserve Statement - Compliant with JORC 2012 (Announced 29 July 2014)

Classification	Reserve	WO3		Mo
	'000 Tonnes	Grade %	Contained metal (t)	Grade %	Contained metal (t)
Probable	3,000	0.31	9,200	0.12	3,600
Total	3,000	0.31	9,200	0.12	3,600

Notes:  ●      Thor Mining PLC holds 100% equity interest in this reserve

·      Estimates have been rounded to reflect accuracy

·      All estimates are on a dry tonne basis

·      The reserve estimate extends to a maximum depth below surface of 150 metres

 

Concentrate Offtake and Finance

In 2013, Thor received a Letter of Intent from US-based Global Tungsten & Powders undertaking, subject to due diligence and sourcing project finance, to purchase 70% to 75% of tungsten concentrates produced from Molyhil, at pricing benchmarked against Metal Bulletin (LMB) APT European free-market prices.

 

The Company continues to seek and appraise sources of project finance, in order to further support the development of mining and processing operations at Molyhil, and ultimately commission the mine into production. The Company has retained advisors to assist this process.

 

 

Pilot Mountain Tungsten project (Nevada, USA)

During 2014, Thor acquired the Pilot Mountain tungsten project in the United States. 

 

Following the acquisition, Thor holds 100% equity interest in:

·      An Indicated and Inferred Resource of 6.8 million tonnes @ 0.31% WO_3, plus attractive copper and silver credits at the Desert Scheelite deposit; plus

·      Exploration targets¹ of 11.0 to 23.0 million tonnes @ 0.30 - 0.50% WO₃ within very close proximity to the Desert Scheelite deposit.

¹ Exploration Targets are conceptual in nature and there has been insufficient exploration to define a Mineral Resource under the 2012 JORC Code and it is uncertain if further exploration will result in the determination of a Mineral Resource

The Desert Scheelite Indicated and Inferred Resource comprises a 2012 JORC Compliant 6.8 million tonnes @ 0.31% WO₃, 0.17% Copper, and 22.8g/t (grams/tonne) Silver, announced on 10 June 2014.

 

Table 3: Desert Scheelite Resource Estimate - Compliant with JORC 2012(Announced 10 June 2014)

Desert Scheelite	Resource	WO3		Ag		Cu
	Tonnes	Grade %	Contained metal (t)	Grade g/t	Contained metal (t)	Grade %	Contained metal (t)
Indicated	6,090,000	0.31	18,900	24.2	150	0.16	10,000
Inferred	700,000	0.30	2,100	9.1	10	0.24	2,000
Total	6,790,000	0.31	21,000	22.8	160	0.17	12,000

Note: Thor Mining PLC holds 100% equity interest in this resource

 

Table 4: Pilot Mountain Exploration Target summary (Announced 1 December 2014)

	Tonnage (Mt)	% WO3	Comment
Tier 1 Targets	7.5 - 13.5	0.3 - 0.5	Based on historic drill intersections
Tier 2 Targets	3.5  -  9.1	0.3 - 0.5	Based on favourable geology and proximity to known mineralisation.
Total Exploration Target*	11.0  -  23.0	0.3 - 0.5	Combined Tier 1 & 2

 

Exploration activities at Pilot Mountain are dependent upon raising the necessary finance.  Thor is evaluating a range of alternative options to facilitate the work necessary to further develop the project, including fundraising, project finance or securing a joint venture partner.

 

Gold Exploration projects

 

Spring Hill - Northern Territory

Following the acquisition of the remaining 49% equity in Spring Hill, to take Thor equity to 100%, the Company received a number of expressions of interest in acquiring this project.  In December 2015, Thor announced it had signed an option agreement to sell 100% of the Spring Hill project, for:

·        A$2.0 million payable in cash, for a 60% interest, and 100% management control; and

·        A$1.5 million payable in cash, for the remaining 40% interest within 12 months.

 

In addition, following completion of the acquisition of the 100% stake, Thor will receive a royalty of:

·      A$6.00 per ounce of gold produced from the Spring Hill tenements where the gold produced is sold for up to A$1,500 per ounce; and

·      A$14 per ounce of gold produced from the Spring Hill tenements where the gold produced is sold for amounts over A$1,500 per ounce

 

After the period end, the option to acquire Spring Hill was exercised and the sale completed. On 26 February 2016, Thor announced the receipt of the A$2.0 million first tranche of the sale proceeds.

 

 

Dundas - Western Australia

 

The Dundas gold project is located approximately 100 kilometres east-south-east of Norseman in Western Australia.  The tenements are in close proximity to the sealed arterial Eyre Highway, providing all-weather access to the project area. It is also approximately 250 kilometres south of the major regional mining centre of Kalgoorlie.

 

Prioritising expenditure on other projects has delayed progress of planned exploration at Dundas.  Exploration work on this project continues to be conditional upon the availability of working capital.

 

 

Finance

 

During the period, the Company raised £437,500 before costs following the issue of 875 million shares in the United Kingdom at an average issue price of 0.05 pence per share.

 

In order to conserve cash, the Directors elected to receive all of their directors' fees as shares, for the 12 months to 30 September 2015.  In addition, I also elected to receive 41% of my consulting fees in shares, for the period 1 September 2014 to 30 September 2015.  The total of 356,898,014 of remuneration shares were issued to Directors in December, following shareholder approval.

 

As noted earlier in this report, 76,398,285 shares were issued as part consideration for the acquisition of the remaining 49% of Spring Hill.

 

The Company continues to hold discussion with various parties with the aim of securing project finance for the Molyhil project, as tungsten prices improve.

 

In 2014, the Company entered into share subscription agreements and equity swap agreements with Lanstead Capital LP ("Lanstead").  These agreements expired in January 2016.

At the commencement of the half year, a number of parties held mortgages over the Molyhil and Pilot Mountain tungsten projects, and the Spring Hill gold project in respect of loans advanced and assigned to the Company.  During the period, and subsequent to the end of the period, these loans have since been repaid, with the mortgages discharged or in the process of being discharged.

 

Comprehensive Income

 

The comprehensive income statement records a comprehensive loss of £936,000 (2014: £1,009,000) after taking into account unrealised exchange differences of £126,000 gain (2014: £430,000 loss).

 

 

 

Mick Billing

Executive Chairman

7 March, 2016

 

Competent Person's statements

 

The information in this report that relates to exploration results is based on information compiled by Richard Bradey, who is a Member of The Australasian Institute of Mining and Metallurgy.  Mr Bradey is an employee of Thor Mining PLC.  He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.  Richard Bradey consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.