Thor Explorations Announces Full Year Results

Thor Explorations Ltd
29 April 2024
 

THOR_EXPLORATIONS_FULLCLRLOGO_onwhite 

 

 

 


NEWS RELEASE

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR
DISTRIBUTION TO U.S. WIRE SERVICES

 

 

                                                                                                                                                     

29 April, 2024

 

TSXV/AIM: THX

                                                                                                                                                     

 

This Announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR"). Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

 

 

THOR EXPLORATIONS ANNOUNCES AUDITED FINANCIAL AND OPERATING RESULTS FOR THE FULL YEAR AND THREE MONTHS ENDING DECEMBER 31, 2023

 

Thor Explorations Ltd. (TSXV / 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 the three months ending December 31, 2023 ("Q4 2023") and the audited financial results for the year ending December 31, 2023 (the "Year" or "FY 2023").

 

The Company's Consolidated Audited Financial Statements together with the notes related thereto, as well as the Management's Discussion and Analysis for the year ending December 31, 2023, are available on Thor Explorations' website at https://thorexpl.com/investors/financials/.

 

All figures are in US dollars ("US$") unless otherwise stated.

 

FY 2023 Financial Highlights

  

·      73,356 ounces ("oz") of gold sold with an average realised price of US$1,907 per oz 

·      Cash operating cost of US$1,006 per oz sold and all-in sustaining cost ("AISC") of US$1,313 per oz sold 

·      FY 2023 revenue of US$141.2 million ("m") (FY 2022: US$165.2m)

·      FY 2023 EBITDA of US$55.3m (FY 2022:US$84.2m - restated)

·      FY 2023 net profit of US$10.8m (FY 2022: US$37.9m - restated)

·      Cash and cash equivalents of US$7.8m (FY 2022: US$6.7m)

·      Senior debt facility significantly reduced from US$54.0m to US$22.6m as at December 31, 2023

Payment of US$8.2 m towards the outstanding senior debt facility paid in the post period

·      Net debt of US$15.9m (FY 2022: US$31.6m)

 

FY 2023 Operational Highlights

 

Segilola Production

 

·      Gold production for the Year totaled 84,609 oz

Gold recovered during the Year includes approximately 11,210 oz of Gold In-Circuit ("GIC")

·      Successfully completed push back of the Segilola Western Wall

·      Successfully upgraded the process plant elution and electrowinning system

 

Segilola Near-Mine Exploration

 

·      Expansion of exploration tenure to a total area of 1,542 square kilometres ("km2"). This tenure comprises 16 granted permits that are 100% owned by Thor, together with nine granted permits held under options agreements with seven third parties

·      In addition to near-mine exploration, activities on the ground have focused on these main areas: Western Prospects - Igila, Aye-Ile and Central Prospects - Kajola

 

Western Prospects

 

·      The Western Prospects are located approximately 15 kilometres ("km") directly west from the Segilola Gold Mine and comprises several exploration permits that are held under exercised option agreements

·      Initial results from the soil geochemistry programme returned values of 6.50 grammes per tonne gold ("g/tAu") and 10g/tAu towards the southeast portion of this area. Rock chip sampling returned high grade values including 65.1g/tAu in the central part of the area and several samples in excess of 30g/tAu located towards the northwest

·      Based on these results, an initial drill testing programme comprising both diamond core and reverse circulation ("RC") drilling was completed in 2023

 

Southern Prospects

 

·      The Southern prospects cover an area that is located to the south of the Segilola Gold Mine. Regional stream sediment sampling located an area of interest at what is now referred to as the Kajola target located approximately 20km from the Segilola Mine

·      Drill testing of this greenfield target intersected several zones of interest including 11 metres grading 22g/tAu

·      Ongoing exploration is focused on generating additional targets in the general area

Douta

 

·      During the Year an updated mineral resource estimate ("MRE") was announced. The 2023 MRE encompasses the Makosa, Makosa Tail and Sambara zones, which are collectively named the Douta Resource

An initial Indicated Mineral Resource of 20.2 million tonnes ("Mt") grading 1.3 g/t Au for 874,900 oz Au; and

Inferred Mineral Resource of 24.1 Mt grading 1.2 g/t Au for 909,400 oz Au

·      The Douta Resource is supported by a total of 64,567 metres of drilling

·      Workstreams designed to advance the project to the prefeasibility stage ("PFS") have commenced and are expected to be completed by H2 2024. This included a diamond drilling programme that was designed to obtain sufficient core samples for comprehensive metallurgical test work and mineralogical studies

 

Lithium Exploration

 

·      Thor, through its wholly owned subsidiary Newstar Minerals Limited ("Newstar"), secured over 600km2 of granted tenure in Nigeria that form Oyo State, Kwara State and Ekiti State Lithium Project Areas

·      The Oyo State Lithium Project comprises approximately 38km2 of exploration tenure that is located towards the westernmost border of Nigeria and within 200km of the commercial capital of Lagos

·      In the Oyo Prospect, a programme of RC drilling targeted an identified pegmatite trend that is developed within northerly trending mafic sequence that is surrounded by granitoid-gneiss terrain.

·      In the Ekiti Prospect, nine RC holes were completed

·      Significant intersections previously reported include 11 metres grading 1.53% lithium oxide ("Li2O"), 9 meters grading 2.42% Li2O and 11 metres grading 2.61% Li2O

·      Following the drilling campaigns, follow up soil sampling and mapping continued to generate anomalous targets which have been identified for drilling in Q2 2024

 

Environment, Social and Governance

 

·      Completed significant community and Livelihood Restoration projects in the three host communities around the Segilola Gold Mine, including school refurbishment, a 33kV transformer installation, and the launch of commercial fish and vegetable farms, directly benefiting over 11,000 residents

·      Enhanced local workforce capacity and diversity, achieving a 98% Nigerian staffing level, a 50% increase in local hires, and promoting gender diversity by integrating women into traditionally male roles

·      Environmental standards compliance was maintained across air, dust, noise, and water quality, with biodiversity improvements noted in annual surveys

·      Successfully renewed two Community Development Agreements, facilitating 26 impactful community projects, including educational scholarships and youth training programmes

·      Conducted a Biodiversity Survey for the Douta Exploration License area, identifying environmental sensitivities, and continued quarterly water quality monitoring to manage elevated chromium and cadmium levels

·      Supported local community and economic development through initiatives such as a vegetable garden and academic excellence awards at local schools

·      Baseline data collection is underway for the Douta Gold Project's economic assessment

 

Post FY 2023 Highlights

 

·      Segilola gold production of 19,589 oz during Q1 2024

·      Successfully upgraded and commissioned three additional CIL tanks in the process plant with drawdown of excess gold in circuit successfully commenced in March 2024

·      Additional near Segilola mine drilling targets delineated with drilling having commenced in April 2024

·      The Company acquired additional licences in Senegal, which included the contiguous Douta-West licence and commenced exploration activities. Initial results have delineated anomalies which will be drilled in Q2 2024 as part of the Company's Douta exploration plan

·      Exploration on the Company's lithium licences in Nigeria continued during Q1 2024 and was successful in generating a number of drill targets. The Company will commence a 4,000 metre drilling programme in May 2024

·      Payment of US$8.2m towards outstanding senior debt facility, leaving a balance of US$15.2m to be paid in 2024

·      Cash balance (unaudited) as at 31 March 2024 of US$3.1m

Outlook

 

·      Production guidance set at 95,000-100,000 oz for 2024 with an AISC guidance of US$1,100 to US$1,200 per oz

·      Advance exploration programmes across the portfolio, including near mine and underground projects at Segilola, the regional Segilola exploration programme, extension and infill programmes at Douta and the assessment of potential regional targets in Nigeria

·      Continue to advance the Douta Gold Project towards PFS for publication in H2 2024

 

Segun Lawson, President & CEO, stated:

 

"The end of 2023 marks two calendar years of commercial gold production at our flagship asset, the Segilola Gold Mine. Thinking back to the original mine plan in the Definitive Feasibility Study, we knew as a management team that the second year of production was going to be an operationally challenging year, requiring the pushback of the western wall of the pit and mining of waste material in order to access the orebody efficiently in the subsequent years.

 

"Despite the operational challenges, we are pleased to have produced approximately 85,000 ounces of gold in 2023 versus the original mine plan projection of 72,000 ounces. This was achieved whilst carrying out certain plant upgrades which would also optimize gold production for the remainder of the Segilola mine life. In addition to this, we were able to deliver our operations in a safe and responsible manner, with an improved safety performance in 2023. We continue to prioritize safety and best practice standards and aim to continuously improve.

 

"Personally, I am pleased we managed to achieve our operational objectives. We refreshed the leadership at the mine site with the appointment of a new General Manager in October 2023 and executed necessary upgrades to the process plant whilst ending the year having achieved an all-in sustaining cost for the Segilola Gold Mine of $1,313 per ounce.

 

"The Company is now strongly positioned for repayment of its long-term debt during 2024, and growth, primarily coming from strong cash flow at Segilola, and also through exploration and the development of the Douta Gold Project in Senegal.

 

"We are also continuing to prioritize our Environmental, Social and Governance standards, particularly as we are in a country where we must set an example as pioneers in the industry.

 

"Furthermore, in 2023, we began to capitalise on our first mover advantage in Nigeria through the acquisition of over 600 square kilometres of lithium-bearing ground. We believe our first mover advantage allows us to quickly and professionally assess value accretive opportunities for our shareholders. Having successfully carried out early-stage exploration on our lithium portfolio, we are able to provide our shareholders with significant value optionality that can be funded by the Company's existing cash flow and human resources in Nigeria.

 

"In 2024, the Company's strategy will be focused on growth. The first priority is to extend the Segilola Mine life where there is currently an underground resource of over 100,000 ounces that has not been incorporated into the existing mine plan. At the current prevailing high gold prices, we aim to assess our options in re-optimising the Segilola Pit to produce gold from this resource prior to transitioning into an underground mine. We also aim to carry out further exploration at depth aimed at increasing the existing underground resource which has not been closed out.

 

"In Senegal, the Douta Gold Project continues to provide blue sky exploration upside potential. The Douta Gold Project is undergoing a PFS and subsequent to the year, we acquired additional contiguous ground with potential to scale the Douta Gold Project.

 

"Our strategy in Senegal in 2024 is to focus on increasing the oxide component of the existing Douta resource in parallel with the PFS workstreams. We will be carrying out drilling programmes across various geochemical targets on both the Douta and Douta-West licences. The aim is to increase the oxide resource, where high recoveries are metallurgically straightforward, to a target of 500,000 ounces.

 

"We ended 2023 with our Segilola gold mine well positioned to produce approximately 100,000 ounces per year for the next three years. The Company will also be deleveraged in 2024 and will continue to strengthen its balance sheet in the historically high gold price environment.

 

"Looking further ahead, our ambition to continue to grow through mine life extension at Segilola and exploration across our entire portfolio remains unchanged, and we will also be well-positioned for future opportunities that may accelerate our growth into a more mature gold producer.

 

"I am proud of what we achieved in 2023, which is all the result of the hard work and commitment of our people. I am equally excited about the opportunities we have in front of us as we continue to build a uniquely positioned African-focused gold producer."

 

 

 

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".

 

THOR EXPLORATIONS LTD.

Segun Lawson

President & CEO

 

For further information please contact:

 

Thor Explorations Ltd

Email: info@thorexpl.com

 

Canaccord Genuity (Nominated Adviser & Broker)

Henry Fitzgerald-O'Connor / James Asensio / Harry Rees

 

Tel: +44 (0) 20 7523 8000

 

Hannam & Partners (Broker)

Andrew Chubb / Matt Hasson / Jay Ashfield / Franck Nganou

 

Tel: +44 (0) 20 7907 8500

 

 

BlytheRay (Financial PR)                                      

Tim Blythe / Megan Ray / Said Izagaren

 

Tel: +44 207 138 3203

 

Yellow Jersey PR (Financial PR)                                      

Charles Goodwin / Shivantha Thambirajah / Zara McKinlay

 

Tel:  +44 (0) 20 3004 9512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Management Discussion & Analysis for Q4 2023 and Full Year 2023

 

CHAIRMAN'S STATEMENT

 

Dear fellow shareholders, I am pleased to report that 2023 was a year in which Thor Explorations successfully navigated through a technically challenging year and delivered its target gold production of approximately 85,000 ounces. I would like to thank all our employees, Leadership team and Board for their continued hard work and dedication in the year, and our investors for their continued support.

 

In Nigeria, where we are a pioneer in the mining sector, we have also recognised that we need to take a long-term view of building a local mining skill-base, and as a result, we have invested in youth, undergraduate and graduate programmes as well as post-secondary school apprenticeship schemes in our host communities and regions. We remain committed to labour excellence through managing employee job satisfaction in the local community. 

 

We have also continued to enjoy a healthy and cooperative relationship with our host communities. In 2023, we completed our first two livelihood restoration programmes which had 135 direct beneficiaries. In total, 4,479 community members have benefited from our Community Development Agreement programs and an impressive 11,122 people have directly benefited from our Corporate Social Responsibility programmes.

 

Following the regrettable loss of life of an individual as a result of our operations in  2022, we are reassured that the measures put in place to guarantee the safety of all our employees and stakeholders we interact with during our operations, continue strictly prioritised and effected. This resulted in a fatality free year with our employment practices being recognised and rewarded with the Labour Award at the 2024 Mining Indaba, selected by the Mining Indaba Sustainability Committee.

 

Operationally, we continue to be strategically driven. The addition of our early-stage lithium licences to our portfolio demonstrates our ability to move quickly and with flexibility in-country to capitalise on value accretive opportunities in Nigeria.

 

Looking ahead, 2024 promises to be a year of delivery. With upgrades to the Segilola processing plant complete and completion of the pushback of the west wall of the Segilola pit, we are confident that the Company is well positioned to grow through gold production and value creation through exploration success in Nigeria.

 

We are confident of our strategy in Nigeria and West Africa in 2024 and thank you for your support for Thor Explorations in 2023. Please be assured that the Board and Leadership Team are resolutely focused on delivering our strategy and creating value for our shareholders and all of our stakeholders.

 

Adrian Coates

Chairman

 

 

 

CEO'S STATEMENT

 

The end of 2023 marks two calendar years of commercial gold production at our flagship asset, the Segilola Gold Mine. Thinking back to the original mine plan in the Definitive Feasibility Study, we knew as a management team that the second year of production was going to be an operationally challenging year, requiring the pushback of the western wall of the pit and mining of waste material in order to access the orebody efficiently in the subsequent years.

 

Despite the operational challenges, we are pleased to have produced approximately 85,000 ounces of gold in 2023 versus the original mine plan projection of 72,000 ounces. This was achieved whilst carrying out certain plant upgrades which would also optimise gold production for the remainder of the Segilola mine life. In addition to this, we were able to deliver our operations in a safe and responsible manner, with an improved safety performance in 2023. We continue to prioritise safety and best practise standards and aim to continuously improve.

 

Personally, I am pleased we managed to achieve our operational objectives. We refreshed the leadership at the mine site with the appointment of a new General Manager in October 2023 and executed necessary upgrades to the process plant whilst ending the year having achieved an all-in sustaining cost ("AISC") for the Segilola Gold Mine of $1,313 per ounce.

 

The Company is now strongly positioned for repayment of the Company's long term debt during 2024 and growth, primarily coming from strong cash flow at Segilola, and also through exploration and the development of the Douta Gold Project in Senegal.

 

We are also continuing to prioritise our Environmental, Social and Governance ("ESG") standards, particularly as we are in a country where we must set an example as pioneers in the industry.

 

Furthermore, in 2023, we began to capitalise on our first mover advantage in Nigeria through the acquisition of over 600 square kilometres of lithium-bearing ground. We believe our first mover advantage allows us to quickly and professionally assess value accretive opportunities for our shareholders. Having successfully carried out early-stage exploration on our lithium portfolio, we are able to provide our shareholders with significant value optionality that can be funded by the Company's existing cash flow and human resources in Nigeria.

 

In 2024, the Company's strategy will be focussed on growth. The first priority is to extend the Segilola Mine life, where there is currently an underground resource of over 100,000 ounces, that has not been incorporated into the existing mine plan. At the current prevailing high gold prices, we aim to assess our options in re-optimising the Segilola Pit to produce gold from this resource prior to transitioning into an underground mine. We also aim to carry out further exploration at depth, aimed at increasing the existing underground resource which has not been closed out.

 

In Senegal, the Douta Gold Project continues to provide blue sky exploration upside potential. The Douta Gold Project is undergoing a preliminary feasibility study ("PFS") and subsequent to the year, we acquired additional contiguous ground with potential to scale the Douta Gold Project.

 

Our strategy in Senegal in 2024 is to focus on increasing the oxide component of the existing Douta resource in parallel with the PFS workstreams. We will be carrying out drilling programs across various geochemical targets on both the Douta and Douta-West licences. The aim is to increase the oxide resource, where high recoveries are metallurgically straightforward, to a target of 500,000 ounces.

 

We ended 2023 with our Segilola Gold mine well positioned to produce approximately 100,000 ounces per year for the next three years. . The Company will also be completely deleveraged in 2024 and will continue to strengthen its balance sheet in the historically high gold price environment.

 

Looking further ahead, our ambition to continue to grow through mine life extension at Segilola and exploration across our entire portfolio remains unchanged, and we will also be well-positioned for future opportunities that may accelerate our growth into a more mature gold producer.

 

I am proud of what we achieved in 2023, which is all the result of the hard work and commitment of our people. I am equally excited about the opportunities we have in front of us as we continue to build a uniquely positioned African-focussed gold producer.

 

 

Segun Lawson

Chief Executive Officer

 

 

OVERVIEW

 

Thor Explorations Ltd. (the "Company"), together with its subsidiaries (collectively, "Thor" or the "Group") is a gold production, development and mineral exploration company focussed on West Africa and dual-listed on the TSX Venture Exchange TSX-V (THX: TSX-V) and the AIM market of the London Stock Exchange (THX: AIM).  The Group's main assets include its flagship producing Segilola Gold mine in Nigeria and the advanced exploration project, Douta, in Senegal. The Group has a growing portfolio of prospective exploration licences on the unexplored Ilesha schist belt in near proximity to the Segilola gold mine and further exploration licences in Nigeria and Burkina Faso.

 

As part of the Group's strategy in identifying high-value mineral resource opportunities, Thor, through its wholly owned subsidiary Newstar Minerals Ltd ("Newstar"), completed 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.

 

Our strategy is to operate, develop and explore mineral properties where our expertise can substantially increase shareholder value. The Group operates with transparency and in accordance with international best practices and is committed to delivering value to its shareholders through responsible development, providing economic and social benefit to our host communities and operating in a manner where health and safety and the environment are integral to our operations and development approach.

 

 

Figure 1.1: Thor's Properties in West Africa

A map of the united states Description automatically generated

 

HIGHLIGHTS AND ACTIVITIES - FOURTH QUARTER 2023 AND YEAR ENDED DECEMBER 31, 2023

 

Operating results for the year were highlighted by the selling of 73,356 ounces ("oz") of gold during the period at a cash operating cost of $1,006 per oz sold, with an all-in sustaining cost ("AISC") of $1,313 per oz sold.

 

Gold recovered for the quarter was 21,798 ounces. The Group has set its production guidance for 2024 to 95,000 to 100,000 oz, while AISC guidance for 2024 is set at US$1,100 per ounce to US$1,200 per ounce.

 

 

Table 2.1 Key Operating and Financial Statistics



Three months period ended

Year ended



December 31, 2023

September 30, 20231

June

30, 20231

March

31, 20231

December 31, 20221

December 31, 2023

December 31, 20221

Operating









Gold sold

Au

11,930

19,021

20,852

21,553

24,918

73,356

92,489

Gold recovered

Au

21,798

19,104

23,078

20,629

26,523

84,609

98,006

Average realised gold price2

$/oz

1,927

1,910

1,971

1,832

1,657

1,907

1,767

Cash operating cost2

$/oz

1,451

1,193

628

961

342

1,006

685

AISC (all-in sustaining cost) 2

$/oz

1,706

1,392

916

1,408

610

1,313

954

EBITDA2

$/oz

266

624

1,227

683

1,035

755

911










Financial









Revenue

$

22,998,429

36,594,900

41,364,169

40,287,830

43,251,204

141,245,328

165,174,531

Net (Loss)/Profit

$

(8,847,842)

2,270,508

14,458,095

2,988,685

10,715,034

10,869,446

37,996,903

EBITDA2

$

3,175,024

11,862,271

25,589,910

14,722,672

25,800,397

55,349,877

84,277,983












 

 



December 31, 2023

September 30, 2023

June

30, 2023

March 

31, 2023

December 31, 2022

Cash and cash equivalents

$

7,839,757

8,264,796

11,149,491

4,505,071

6,688,037

Deferred Income

$

11,838,898

-

865,173

-

6,581,743

Net Debt2

$

15,926,289

19,374,507

16,807,972

24,940,762

31,650,722

1 The figures for the production costs and net profit have been restated in connection with the restatement of the financial statements. Refer to note 25 of the financial statements for further details.
2 This is a non-IFRS measure. Refer to the non-IFRS measures section.

 

 

Segilola Gold Mine, Nigeria

Mining

During the three months ended December 31, 2023, 5,483,291 tonnes of material were mined, equivalent to a mining rate of 59,601 tonnes of material per day. This was higher than the mine plan due to some resequencing of mining areas and demonstrated a maintained increase in material mined since the end of Q1 2023 in order to efficiently mine the required waste material in the west wall of the southern end of the pit.

In this period, 451,360 tonnes of ore were mined, equivalent to a mining rate of 4,906 tonnes of ore per day, at an average grade of 1.93g/t. Completion of the west wall pushback has meant production areas are increasing, which allows maintaining higher production rates than was in the annual plan. Grade was lower than Q3 2024 due to increased low grade material identified during grade control drilling increasing the stockpiles for processing at the end of the mine's life.

The stockpile balance at the end of the period increased by 59.8% to 541,151 tonnes of ore at an average grade of 1.04g/t. This comprised 1,003 tonnes (8.47g/t) at high grade, 18,648 tonnes (2.15g/t) at medium grade, 521,501 tonnes (0.99g/t) at low grade and 4,563 tonnes (3.34g/t) on the coarse ore stockpile between the crusher and mill.

The Group ended the year with a gold recovery of 84,609 oz vs the year end guidance of 85,000 oz. Gold recovered during the year includes approximately 11,250 oz of Gold In-Circuit ("GIC"). 

Processing

During the three months ended December 31, 2023, a total of 262,439 tonnes of ore, equivalent to a throughput rate of 2,852 tonnes per day, were processed with no significant downtime periods. The process plant maintained the Q3, higher than design, throughput rates with all the main operating units continuing to perform better than expected.

 

The Q3 2024 mill feed ore tonnes were maintained and recovered ounces of 21,798 were achieved at an average grade of 2.77g/t gold and at an improved recovery of 93.4%.

 

A leach circuit tank upgrade was ongoing during the period with a projected full commissioning during Q2 2024, to improve processing recovery and efficiency which will reduce the gold in circuit through 2024.

 

 

Table 2.2: Production Metrics


Units

Q4 - 2023

Q3 - 2023

Q2 -2023

Q1 - 2023

Q4 - 2022

Q3 - 2022

Q2 - 2022

Q1 - 2022

 










Mining

 









Total Mined

Tonnes

5,483,291

5,673,193

5,633,688

4,194,689

4,296,494

4,018,431

4,031,584

3,759,524

Waste Mined

Tonnes

5,031,932

5,370,279

5,355,105

3,996,264

3,974,073

3,793,249

3,747,504

3,533,610

Ore Mined

Tonnes

451,360

302,915

278,583

198,425

322,421

225,182

284,079

226,314

Grade

g/t Au

1.93

2.44

2.43

2.85

3.51

4.43

3.63

2.68

Daily Total Mining Rate

Tonnes/Day

59,601

61,665

61,909

46,608

46,701

43,679

44,303

41,772

Daily Ore Mining Rate

Tonnes/Day

4,906

3,292

3,061

2,205

3,505

2,448

3,122

2,515











Stockpile

 









Ore Stockpiled

Tonnes

541,151

338,558

297,060

270,215

300,531

229,909

249,281

179,758

Ore Stockpiled

g/t Au

1.04

0.99

1.06

1.14

1.48

1.19

1.46

1.23

Ore Stockpiled

Oz

18,141

10,756

10,124

9,904

14,300

8,796

11,701

7,109











Processing

 









Ore Processed

Tonnes

262,439

261,671

255,231

231,001

254,824

241,434

211,582

221,900

Grade

g/t Au

2.77

2.46

2.99

2.95

3.38

3.58

3.66

3.18

Recovery

%

93.4

92.3

94

94.1

95

95.5

95.5

94.1

Gold Recovered

Oz

21,798

19,104

23,078

20,629

26,331

26,523

23,785

21,343

Milling Throughput

Tonnes/Day

2,852

2,844

2,805

2,567

2,770

2,624

2,325

2,466












 

 

 

NON-IFRS MEASURES

 

This MD&A refers to certain financial measures 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 Group's financial statements because the Group 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 statements 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 consolidated financial statements have been reconciled to the gold revenue for all periods presented.

 

Table 3.1: Average annual realised price per ounce sold



Three Months period ended

Year ended


Units

December 31, 2023

September 30, 2023

June

30, 2023

March 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Revenues

$

22,998,429

36,594,900

41,364,169

40,287,830

43,251,204

141,245,328

165,174,531

By product revenue

$

(40,063)

(56,244)

(68,587)

(43,773)

(32,845)

(208,667)

(114,211)

Gold revenue

$

22,958,366

36,538,656

41,295,582

40,244,057

43,218,359

141,036,661

165,060,320










Gain/(Loss) on forward sale of commodity contracts

$

26,261

(205,323)

(200,534)

(750,482)

(1,925,754)

(1,130,078)

(1,587,524)

Adjusted gold revenue

$

22,984,627

36,333,333

41,095,048

39,493,575

41,292,605

139,906,583

163,472,796










Gold ounces sold

Oz Au

11,930

19,021

20,852

21,553

24,918

73,356

92,489

Average realized price per ounce sold

$

1,927

1,910

1,971

1,832

1,657

1,907

1,767

 

 

Cash operating cost per ounce

 

Cash operating cost per oz sold, combined with revenues, can be used to evaluate the Group's performance and ability to generate operating income and cash flow from operating activities. The Group 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.

 

Table 3.2: Average annual cash operating cost per ounce of gold

 



Three Months period ended

Year ended


Units

December 31, 2023

September 30, 20231

June

30, 20231

March

31, 20231

December 31, 20221

December 31, 2023

December 31, 20221

Production costs

$

16,743,415

22,032,471

11,249,777

19,649,164

6,272,403

69,674,827

56,309,287

Transportation and refining

$

613,813

712,258

810,080

342,291

971,849

2,478,442

3,419,334

Royalties

$

(4,835)

-

1,102,308

768,282

1,317,417

1,865,755

3,696,527

By product revenue

$

(40,063)

(56,244)

(68,587)

(43,773)

(32,845)

(208,667)

(114,211)

Cash Operating costs

$

17,312,330

22,688,485

13,093,578

20,715,964

8,528,824

73,810,357

63,310,937










Gold ounces sold

Oz Au

11,930

19,021

20,852

21,553

24,918

73,356

92,489

Cash operating cost per ounce sold

$/oz

1,451

1,193

628

961

342

1,006

685

1 The figures for the production costs have been restated in connection with the restatement of the financial statements. Refer to note 25 of the 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 include 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. From June 30, 2023, this was deemed to be 33%, for prior periods, including 2022, it was considered to be 50%. The change is reflective of the increase in the Group`s exploration activities.

 

Other companies may calculate this measure differently as a result of differences in underlying principles and policies applied.

 

Table 3.3: Average annual all-in sustaining cost per ounce of gold

 



Three Months period ended

Year ended


Units

December 31, 2023

September 30, 20231

June

30, 20231

March

31, 20231

December 31, 20221

December 31, 2023

December 31, 20221

Cash operating costs2

$

17,312,330

22,688,485

13,093,578

20,715,964

8,528,824

73,810,357

63,310,937

Segilola mine - other administration expenses

$

2,323,963

806,394

1,093,344

3,775,777

6,171,107

7,999,478

14,042,505

Sustaining capital3

$

714,793

2,979,303

4,914,550

5,864,894

500,040

14,473,540

10,917,636

Total all-in sustaining cost

$

20,351,086

26,474,182

19,101,472

30,356,635

15,199,971

96,283,375

88,271,078










Gold ounces sold

oz Au

11,930

19,021

20,852

21,553

24,918

73,356

92,489

All-in sustaining cost per ounce sold

$/oz

1,706

1,392

916

1,408

610

1,313

954

1 The figures for the cash operating costs have been restated in connection with the restatement of the financial statements. Refer to note 25 of the financial statements for further details.

2 Refer to Table - 3.2 Cash operating costs.

3 Refer to Table - 3.3a Sustaining and Non-Sustaining Capital

 

The Group's all-in sustaining costs include sustaining capital expenditures which management has defined as those capital expenditures related to producing and selling gold from its on-going mine operations. Non-sustaining capital is capital expenditure related to major projects or expansions at existing operations where management believes that these projects will materially benefit the operations. The distinction between sustaining and non-sustaining capital is based on the Group's policies and refers to the definitions set out by the World Gold Council.

 

This non-GAAP measure provides investors with transparency regarding the capital costs required to support the on-going operations at its operating mine, relative to its total capital expenditures. Readers should be aware that these measures do not have a standardized meaning. It is intended to provide additional information and should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS.

 

 

 

Table 3.3a: Sustaining and Non-Sustaining Capital

 



Three months period ended

Year ended


Units

December 31, 2023

September 30, 2023

June

30, 2023

March

31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Property, plant and equipment additions

$

220,954

2,020,081

10,132,049

5,719,158

8,663,986

18,092,242

24,757,723

Non-sustaining capital expenditures1

$

(762,818)

(298,248)

(6,474,490)

(1,109,993)

(9,096,788)

(8,645,549)

(18,722,873)

Payment for sustaining leases

$

1,256,657

1,257,470

1,256,991

1,255,729

932,842

5,026,847

4,882,786

Sustaining Capital2

$

714,793

2,979,303

4,914,550

5,864,894

500,040

14,473,540

10,917,636










1 Includes EPC and other construction costs for the Segilola mine

2 Includes capitalized production stripping costs of $9,446,693 (2022: $6,034,850)

 

 

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

Group's debt leverage. The Group considers that in addition to conventional measures prepared in accordance with IFRS, net debt is useful to evaluate the Group's performance.

 

Table 3.4: Net Debt

 

 


December 31, 2023

September 30, 2023

June

30, 2023

March

31, 2023

December 31, 2022

Project Loan


20,360,657

23,853,406

24,187,306

24,257,746

24,459,939

EPC Payments


-

-

-

1,463,353

10,196,105

Deferred EPC Facility


3,405,389

3,785,897

3,770,157

3,724,734

3,682,715

Less: Cash and cash equivalents


(7,839,757)

(8,264,796)

(11,149,491)

(4,505,071)

(6,688,037)

Net Debt


15,926,289

19,374,507

16,807,972

24,940,762

31,650,722

 

 

Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA)

 

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.

 

 

 

Table 3.5: Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)



Three months period ended

Year ended


Unit

December 31, 2023

September 30, 20231

June

30, 20231

March

31, 20231

December 31, 20221

December 31, 2023

December 31, 20221

Net profit for the period

$

(8,847,842)

2,270,508

14,458,095

2,988,685

10,715,034

10,869,446

37,996,903

Amortisation and depreciation - owned assets

$

4,524,892

5,087,535

6,679,708

7,165,523

10,571,705

23,457,658

26,928,156

Amortisation and depreciation - right of use assets

$

1,195,517

1,196,936

1,195,213

1,194,587

1,246,105

4,782,253

4,724,100

Impairment of Exploration & Evaluation assets

$

2,588

2,622

3,365

3,096

2,433

11,671

12,014

Buy-out of gold sale agreement`s option

$

3,154,454

-

-

-

-

3,154,454

-

Interest expense

$

3,145,415

3,304,670

3,253,529

3,370,781

3,265,120

13,074,395

14,616,810

EBITDA

$

3,175,024

11,862,271

25,589,910

14,722,672

25,800,397

55,349,877

84,277,983










Ounces sold

Oz Au

11,930

19,021

20,852

21,553

24,918

73,356

92,489

EBITDA per ounce sold

$

266

624

1,227

683

1,035

755

911

1 The net profit for the period has been restated in connection with the restatement of the financial statements. Refer to note 25 of the 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 focussed on advancing the Company's strategic objectives and near-term milestones which include:

 

·      2024 Operational Guidance and Outlook

Gold Production

oz

95,000-100,000

All-in Sustaining Cost ("AISC")

US$/oz Au sold

$1,100 - $1,200

Capital Expenditure

US$

2,000,000 - 4,000,000

Exploration Expenditure:



Nigeria1

US$

4,000,000 - 6,500,000

West Africa

US$

 3,500,000 - 4,500,000

 

1 This includes purchase of licences

 

·      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 Gold Project towards PFS for publication in H2 2024

·      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

 

SUMMARY OF QUARTERLY RESULTS

 

The table below sets forth selected results of operations for the Company's eight most recently completed quarters.

 

Table 6.1: Summary of quarterly results

 

$

2023 Q4

Dec 31

2023 Q3

Sep 301

2023 Q2

Jun 301

2023 Q1

Mar 311

Revenues

22,998,429

36,594,900

41,364,169

40,287,830

Net (loss)/profit for period

(8,847,842)

2,270,508

14,458,095

2,988,685

Basic (loss)/earnings per share (cents)

(1.35)

0.35

2.24

0.46

 

 

$

2022 Q4

Dec 311

2022 Q3

Sep 301

2022 Q2

Jun 301

2022 Q1

Mar 311

Revenues

43,251,204

55,703,098

41,354,747

24,865,482

Net profit for period

10,715,034

10,712,996

9,928,444

6,640,429

Basic earnings per share (cents)

1.67

1.68

1.56

1.04

1 The net profit for the period has been restated in connection with the restatement of the financial statements. Refer to note 25 of the financial statements for further details.

 

The Company reported a net loss of $8,847,842 (1.35 cents per share) for the three months period ended December 31, 2023, as compared to a net profit of $10,715,034 (1.67 cents per share) for the three months period ended December 31, 2022. The decrease in profit for the period was largely due to:

 

·      Sales during the period of $22,998,429 (Q4 2022: $43,251,204); and

·      Production costs of $16,743,415 (Q4 2022: $6,272,403)

·      Buy-out of gold sale agreement`s option of $3,154,454 (Q4 2022: Nil)

·      Gold-in-circuit of 11,210 oz (Q4 2022: 1,031 oz)

 

These were offset partially by:

·      Amortization and depreciation of $5,720,409 (Q4 2022: $11,817,810); and

·      Interest of $3,145,415 (Q4 2022: $3,265,120)

 

 

No interest was earned during the three months period ended December 31, 2023, and 2022.

 

 

SELECTED ANNUAL FINANCIAL INFORMATION

 

The review of the results of operations should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto.

 

Table 7.1: Selected annual information

For the year ended


December 31, 2023

December 31, 2022

December 31, 2021

Total revenues

$

141,245,328

165,174,531

6,049,485

Net profit/(loss)

$

10,869,446

37,996,903

(2,069,195)

Profit/(loss) per share (cents)





Basic


1.67

5.92

(0.33)

Diluted


1.66

5.84

(0.33)

Total assets

$

259,114,169

235,849,775

212,238,762

Total non-current liabilities

$

19,895,396

57,663,580

63,406,824






 

 

RESULTS FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

 

The Company reported a net profit of $10,869,446 (1.67 cents per share) for the year ended December 31, 2023, as compared to a net profit of $37,996,903 (5.92 cents per share) for the year ended December 31, 2022. The reduction in profit for the year was largely due to:

 

sales during the year of $141,245,328 (2022: $165,174,531); and

Production costs of $69,674,827 (2022: $56,309,287)

 

These were offset partially by:

 

Amortization and depreciation of $28,239,911 (2022: $31,652,256); and

Interest of $13,074,395 (2022: $14,616,810)

 

No interest was earned during the year ended December 31, 2023, and 2022.

 

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

As at December 31, 2023, the Company had cash of $7,839,757 (2022: $6,688,037) and 4,405 ounces of gold dore in inventory to be sold (2022: 1,884 ounces), and a working capital deficit of $57,140,196 (2022: deficit of $16,518,953).

 

The increase in cash from December 31, 2022, is due mainly to cash generated in operations of $63,8379,783 offset by cash used in investing and financing activities of $37,838,419 and $25,067,047, respectively.

 

The increase working capital deficit is mainly due to the transfer of $22,359,551 of loans and other borrowings from non-current to current as these are due within 12 months from December 31, 2023.

 

 

Working Capital Calculation

 

The Working Capital Calculation excludes $12,343,232 (2022: $10,187,630) of gold stream liabilities, and nil (2022: $2,215,585) in third party royalties included in current accounts payable, that are contingent upon the achievement of the gold sales forecast of 95,000 to 100,000 ounces for the year ending December 31, 2024.

 

The Company carried out upgrades to the Segilola Processing Plant in Q3 and Q4 of 2023, including the upgrade of the elution circuit. This was done to ensure more efficient gold recoveries for the remainder of the mine life. During this period, there was a significant accumulation of gold-in-circuit of over 11,000 ounces, with a market value at December 31, 2023, of approximately $23 million. Following the period and the completion of the upgrades, the Company expects to drawdown this gold in circuit during the course of 2024.

 

Table 8.1: Working Capital


Unit

December 31, 2023

September 30, 20231

June

30, 20231

March

31, 20231

December 31, 20221

Current Assets

 






Cash

$

7,839,757

8,264,796

11,149,491

4,505,071

6,688,037

Inventory

$

41,770,046

47,576,396

37,862,168

36,336,108

32,499,224

Amounts receivable, prepaid expenses, advances and deposits

$

7,930,772

10,276,196

8,612,279

8,461,572

10,697,365

Total Current Assets for Working Capital

$

57,540,575

66,117,388

39,822,730

49,302,751

49,884,626








Current Liabilities

 






Accounts Payable and accrued liabilities

$

74,773,828

69,964,009

59,595,451

60,555,348

56,337,289

Deferred income

$

11,838,898

-

865,173

-

6,581,743

Lease Liabilities

$

4,820,353

4,813,352

4,819,439

4,815,512

4,811,991

Gold Stream Liability

$

12,343,232

10,686,862

9,319,784

9,979,413

10,187,630

Loan and other borrowings

$

23,247,692

23,757,835

20,235,386

11,790,796

888,141


$

127,024,003

109,222,058

94,835,233

87,141,069

78,806,794

less: Current Liabilities contingent upon future gold sales

$

(12,343,232)

(10,686,862)

(9,355,262)

(10,785,214)

(12,403,215)

Working capital deficit

$

(57,140,196)

(32,417,808)

(45,657,241)

(27,053,104)

(16,518,953)

 

1 The inventory balances have been restated in connection with the restatement of the financial statements. Refer to note 25 of the financial statements for further details.

 

 

Inventory

 

Gold inventory is recognised 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.

 

Table 8.2: Inventory



December 31, 2023

September 30, 20231

June

30, 20231

March

31, 20231

December

31, 20221

Current







Plant spares and consumables


8,681,433

8,185,909

7,072,420

9,146,279

4,751,922

Gold ore in stockpile


20,768,112

30,218,334

26,535,360

25,097,817

23,569,801

Gold in CIL


8,405,429

9,025,408

4,254,388

2,092,012

956,864

Gold dore2


3,915,072

146,745

-

-

3,220,637

 

$

41,770,046

47,576,396

37,862,168

36,336,108

32,499,224

Non-current







Gold ore in stockpile


               15,891,089

-

-

-

-

 

$

               15,891,089

-

-

-

-

1 The inventory balances have been restated in connection with the restatement of the financial statements. Refer to note 25 of the financial statements for further details.

2 Gold dore is valued at cost ($889/oz), which comprises production cost, depreciation and amortization.

 

Liquidity and Capital Resources

 

The Company has generated positive operating cash flow during Q4 2023, and the year ended December 31, 2023, and expects to continue to do so based on its production and AISC guidance. This strong 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 consist of cash, amounts receivable, accounts payable, accrued liabilities, gold stream liability, loans and other borrowings and lease liabilities.

 

Fair value of financial assets and liabilities

 

Fair values have been determined for measurement and/or disclosure purposes.  When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

 

The carrying amount for cash, amounts receivable, and accounts payable, accrued liabilities, loans and borrowings and lease liabilities on the statement of financial position approximate their fair value because of the limited term of these instruments.

 

Financial risk management objectives and policies

 

The Group has exposure to the following risks from its use of financial instruments

·      Interest rate risk

·      Credit risk

·      Liquidity and funding risk

·      Market risk

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies, and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements.

 

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies, and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in these notes.

 

The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below.

 

Financial instruments by category

 

The accounting policies for financial instruments have been applied to the line items below:

 

Table 9.3: Financial instruments by category 

 

 



December 31, 2023


December 31, 2022

 


Measured at amortized cost

Measured at fair value through profit and loss

Total


Measured at amortized cost

Measured at fair value through profit and loss

Total

Assets

 








Cash and cash equivalents

$

7,839,757

-

7,839,757


6,688,037

-

6,688,037

Amounts receivable

$

280,731

-

280,731


220,442

-

220,442

Total assets

$

8,120,488

-

8,120,488

 

6,908,479

-

6,908,479

 









Liabilities

 








Accounts payable and accrued liabilities

$

74,773,828

-

74,773,828


54,121,704

2,215,585

56,337,289

Loans and borrowings

$

23,766,046

-

23,766,046


28,142,654

-

28,142,654

Gold stream liability

$

-

20,042,997

20,042,997


-

25,039,765

25,039,765

Lease liabilities

$

11,490,070

-

11,490,070


15,409,285

-

15,409,285

Total liabilities

$

110,029,944

20,042,997

130,072,941

 

97,673,643

27,255,350

124,928,993

 

 

 

Liquidity risk

 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account the Group's holdings of cash.  The Group's cash is held in business accounts and are available on demand.

 

In the normal course of business, the Group enters into contracts and performs business activities that give rise to commitments for future minimum payments. 

 

The following tables summarize the Group's significant remaining contractual maturities for financial liabilities at December 31, 2023, and December 31, 2022.  The tables show projected cashflows including interest payments.

 

 

Table 9.4: Contractual maturity analysis

Contractual maturity analysis as at December 31, 2023

 


Less than

3 months

$

3 - 12

Months

$

1 - 5

Year

$

Longer than

5 years

$

 

Total

$

Accounts payable and accrued liabilities

63,950,634

10,823,194

-

-

74,773,828

Lease liabilities

1,213,678

3,236,476

7,282,070

-

11,732,224

Gold Stream Liability

3,484,102

10,553,647

9,317,278

-

23,355,027

Loans and borrowings

9,182,048

18,253,920

932,379

-

28,368,347

 

77,830,462

42,867,237

17,531,728

-

138,229,426

 

 

Contractual maturity analysis as at December 31, 2022

 


Less than

3 months

$

3 - 12

Months

$

1 - 5

Year

$

Longer than

5 years

$

 

Total

$

Accounts payable and accrued liabilities

55,368,069

1,001,983

-                                        

-

56,370,052

Lease liabilities

 1,255,581

3,766,744

12,681,521

-

17,703,846

Gold Stream Liability

2,986,708

8,475,973

23,420,334

-

34,883,015

Loans and borrowings

1,642,151

4,810,033

33,337,237

-

39,789,421

 

61,252,509

18,054,733

69,439,092

-

148,746,334









 

 

Interest rate risk

 

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's income and operating cash flows will be impacted by changes in market interest rates as the Group's secured loans from the AFC incurs Interest at SOFR plus 9% (Refer to Note 11 of the 2023 Audited Financial Statements). The Group's management monitors the interest rate fluctuations on a continuous basis and assesses the impact of interest rate fluctuations on the Group's cash position and acts to ensure that sufficient cash reserves are maintained in order to meet interest payment obligations.

 

 

Credit risk

 

Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its contractual obligations.

 

The Group manages the credit risk associated with cash by investing these funds with highly rated financial institutions, and by monitoring its concentration of cash held in any one institution. As such, the Group deems the credit risk on its cash to be low. At 31 December 2023, 78% of the Group's cash balances were invested in AA rated financial institutions (2022: 93%), 1% in AA- rated financial institutions (2022: 1%), 1% in A+ rated financial institutions (2022: 1%), 17% in A- rated financial institutions (2022: nil) and 3% in B rated institutions (2022: 4%).

 

The Group sells Its gold to large international organizations with strong credit ratings, and the historical level of customer defaults is minimal. As a result, the credit risk associated with gold trade receivables at 31 December 2023 is considered to be negligible.

 

 

Market risk

 

The Group is subject to normal market risks including fluctuations in foreign exchange rates and interest rates. While the Group manages its operations in order to minimize exposure to these risks, the Group has not entered into any derivatives or contracts to hedge or otherwise mitigate this exposure.

 

Foreign currency risk

 

The Group's primary operations are in Nigeria and Senegal. Revenues generated and expenditures incurred are primarily denominated in United States Dollars, as are its loan facilities.

 

Although the Group does not enter into currency derivative financial instruments to manage its exposure, the Group tries to manage this risk by maintaining most of its cash in United States dollars.

 

 

 

DISCLOSURE OF OUTSTANDING SHARE DATA

 

As at the date of this MD&A, there were 656,064,724 common shares issued and outstanding stock options to purchase a total of 14,040,000 common shares.

 

Authorized Common Shares

 

Table 14.1: Common shares issued

a)  


December 31, 2023

December 31, 2022

Common shares issued


656,064,724

644,696,185

 

Warrants

 

There were no warrants that were outstanding at December 31, 2023, and as at the date of this report.

 

During the quarter ended December 31, 2023, no warrants were issued.

 

Stock Options

 

The number of stock options that were outstanding and the remaining contractual lives of the options at December 31, 2023, were as follows.

 

Table 14.2: Options outstanding

Exercise Price

Number

Outstanding

Weighted Average Remaining Contractual Life

Expiry Date

C$0.200

14,040,000

1.05

January 16, 2025

Total

14,040,000



 

 

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 2023.

 

During the year ended December 31, 2023, the following options were exercised:

 

·      1,500,000 options exercised at a price of CAD$0.145 per share on June 5, 2023;

·      9,118,539 options exercised at a price of CAD$0.145 per share on June 14, 2023; and,

·      750,000 options exercised at a price of CAD$0.14 per share on September 28, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audited Financial Results for the Year Ended 31 December 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor's Report 

To the Shareholders of Thor Explorations Limited

 

Opinion

 

We have audited the consolidated financial statements of Thor Explorations Limited and its subsidiaries (the Group), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of comprehensive income, consolidated statements of cash flows, and the consolidated statements of changes in equity for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

 

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs).

 

Basis for Opinion

 

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Key audit matter

How the scope of our audit addressed the key audit matter

Valuation of Inventory (see Note 6)

 

There are a number of key judgements and estimates which are applied in assessing the valuation of inventory including the volumetrics of each type of inventory, the stage of completion and the allocation of overheads.

 

Valuation of inventory has been raised as a significant risk. During course of the audit, we have challenged management on the model utilized for the valuation of gold in stockpile, gold in CIL (Carbon-In-Leach) and Gold dore and as a result of this challenge, the Group identified an error in the prior year model used for valuation of gold Dore, gold in CIL and stockpiles.

The error has led to an adjustment to inventory balances as at 31 December 2022 amounting to $12,730,276 (note 6 and note 25).

 

In accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", the comparative disclosures (December 31, 2022), have been restated (note 25) by recording an increase in Inventory (note 6) and an equal decrease in cost of sales (note 5b).

 

Due to the material significance of the amount of inventory on the statement of financial position at year end we consider the valuation of inventory to be a key audit matter.

Our specific audit testing in this regard included:

 

In respect of the valuation of inventory for December 31, 2023

 

·      Obtaining an understanding of the processes around stockpile, gold dore and gold in CIL measurement, survey and any reconciliations performed to reconcile tonnes mined through each of the stages of production where inventory arises.

 

·      Attending the physical stock count as at year end and observing surveys and counts where applicable for all phases of production including but not limited to gold in stockpiles, gold in CIL and gold dore.

 

·      Assessing the competence and independence of management experts (surveyors).

 

·      Obtaining Management's model and calculation for the value of the gold in stockpile, gold in CIL and gold dore and checking the mathematical accuracy of the model and assessing the reasonableness of the inputs into the calculation against current year production and industry knowledge and experience within the team.

 

·      Assessing the reasonableness of the split between long-term and short-term stockpiles by comparing to future production plans included in the life of mine reporting prepared by a third party.

 

·      Assessing the accuracy and appropriateness of costs absorbed into the different phases of production through reference back to relevant accounting standard guidance and industry knowledge and experience.

 

·      Testing of the net realizable value for both the long term and short-term stockpiles by comparing the total costs, plus anticipated future costs to completion to current market prices for gold taken from third party data sources.

 

In respect of the prior period error, we have performed procedures including:

 

·      Challenging the margins within the underlying financial information compared to expectations and the mine plan which we raised challenge to management where there were inconsistencies with expectations.

 

·      Obtaining Management's model and calculation for the value of the gold in stock pile, gold in CIL and gold dore and ensured mathematical accuracy of the model and assessed the reasonableness of the inputs into the calculation. Ensuring that the key inputs audited in the prior year have remained unchanged in the calculation for example volumes and density.

 

·      Assessing the reasonableness of the split between long-term and short-term stockpiles by comparing to future production plans included in the life of mine reporting prepared by a third party.

 

·      Assessing the accuracy and appropriateness of costs absorbed into the different phases of production through reference back to relevant accounting standard guidance and industry knowledge and experience.

 

·      Testing of the net realizable value for both the long term and short-term stockpiles by comparing the total costs, plus anticipated future costs to completion to current market prices for gold taken from third party data sources.

 

·      Reviewed and assessed the adequacy of the disclosures in the financial statements to check that they were prepared in accordance with the requirements of the accounting standards.

 


Completeness of liabilities

 

During the audit of the financial statements for 31 December 2023, we identified discrepancies between balances confirmed by suppliers and balances recorded in the draft financial statements  which led to additional testing being performed to ensure that the completeness and cut-off of liabilities is appropriate. We also note there were prior period adjustments in respect of the completeness of liabilities impacting the prior year financial statements.

 

We therefore consider the   impact of cut-off and completeness of liabilities in the financial statements in the current period to be a significant risk for the December 31, 2023 audit and accordingly a key audit matter.

 

 

 

 

 

 

 

 

Our specific audit testing in this regard included:

 

·      Obtaining an understanding of the system to assess whether Management had implemented controls and processes to prevent or detect an error such as that arose in the prior year from reoccurring.

·      Obtaining the schedule of accruals as at  December 31, 2023 and checking the arithmetical accuracy of the schedule.

·      Obtaining confirmations for a sample of suppliers and agreeing balances confirmed to balances recorded and obtaining reconciliations for any differences noted. We have assessed the reasonableness of all reconciling items noted.

·      Agreeing the expenses to source documentation and internal cost to contract reconciliations for the Group's key suppliers

·      Selecting a sample of post year end payments until one week before sign off date and agreeing to source documentation to ensure the related expense has been recognised in the correct financial year.

·      Selecting a sample of post year end transactions from the detailed ledger until one week before the date of signing these financial statements and agreeing it to source documentation to check that the related expense has been recognised in the correct financial year.

·      Reviewing the list of accruals for reasonableness based on our understanding of the entity and a retrospective review as the business has not changed from prior year.

 

Other Information

Management is responsible for the other information. The other information comprises the information included in the Management's Discussion & Analysis.

 

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

 

We obtained the Management's Discussion & Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

 

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

·      Identify and assess the risks of material misstatement of the consolidated financial statements, 
whether due to fraud or error, design and perform audit procedures responsive to those risks, and 
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk 
of not detecting a material misstatement resulting from fraud is higher than for one resulting from 
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the 
override of internal control.

·      Obtain an understanding of internal control relevant to the audit in order to design audit procedures 
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 
effectiveness of the Group's internal control.

·      Evaluate the appropriateness of accounting policies used and the reasonableness of accounting 
estimates and related disclosures made by management.

·      Conclude on the appropriateness of management's use of the going concern basis of accounting and, 
based on the audit evidence obtained, whether a material uncertainty exists related to events or 
conditions that may cast significant doubt on the Group's ability to continue as a going concern. If 
we conclude that a material uncertainty exists, we are required to draw attention in our auditor's 
report to the related disclosures in the consolidated financial statements or, if such disclosures are 
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to 
the date of our auditor's report. However, future events or conditions may cause the Group to cease 
to continue as a going concern.

·      Evaluate the overall presentation, structure and content of the consolidated financial statements, 
including the disclosures, and whether the consolidated financial statements represent the 
underlying transactions and events in a manner that achieves fair presentation.

·      Obtain sufficient appropriate audit evidence regarding the financial information of the entities or 
business activities within the Group to express an opinion on the consolidated financial statements. 
We are responsible for the direction, supervision and performance of the group audit. We remain 
solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.  We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Anne Sayers.

 

A black background with colorful letters and numbers Description automatically generated

 

BDO LLP

Chartered Professional Accountants 
London, UK

27 April 2024 


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Notes to the Audited Financial Statements

 

1.   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.

 

 

2.   BASIS OF PREPARATION

 

a)   Statement of compliance

These consolidated financial statements, including comparatives, have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board

 

b)   Basis of measurement

The consolidated financial statements are presented in United States dollars ("US$"). 

 

These consolidated financial statements have been prepared on a historical cost basis and are presented in United States dollars, except for the valuation of certain financial instruments that are measured at fair value at the end of each reporting period as explained in the accounting policies below.

 

The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Group's accounting policies. A precise determination of many assets and liabilities is dependent upon future events, the preparation of consolidated financial statements for a period involves the use of estimates, which have been made using careful judgment. Actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are discussed in Note 4.

 

c)   Nature of operations and going concern

 

As at December 31, 2023, the Group had cash of $7,839,757 and inventory of 4,405 ounces of gold doré, as well as 11,210 ounces of gold-in-circuit inventory.

 

During the year ended December 31, 2023, the Group sold 73,356 ounces of gold and generated a net cash flow from operating activities to the Group of $63,837,783.

 

The Board has reviewed the detailed cash flow forecast prepared by management, for the twelve-month period from the date of this report.

 

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.

 

Key assumptions underpinning this forecast in addition to estimated production of 95,000 - 100,000 ounces of gold for 2024 include, gold prices between $2,000 per ounce and $2,095 per ounce, effective cost control of key production elements and production volumes in line with annual guidance. This is considered to be the Group's base case scenario which demonstrates the Group has sufficient cash and working capital to continue operations for a period of no less than twelve months from the date of approval of these financial statements.

  

The Directors have also considered various scenarios that may impact cashflow including adverse changes in gold price (down to $1,950 per ounce), inflationary pressures on key cost elements (up to 5%), and adverse positions regarding the Facility covenants. The Directors are satisfied that these stress test scenarios have appropriate planned mitigating actions, which will be sufficient to maintain the Group's going concern status if in the unlikely event, any of these eventualities occurred.

 

The Directors are therefore satisfied that the going concern basis of accounting is an appropriate assumption to adopt in the preparation of the consolidated financial statements as at December 31, 2023.

 

 

3.   MATERIAL ACCOUNTING POLICY INFORMATION

 

The accounting policies described below have been applied consistently to all periods presented in these consolidated financial statements unless otherwise stated.

 

a)   Consolidation principles

 

The assets, liabilities, revenues and expenses of the subsidiaries are recognized in accordance with the Group's accounting policies. Intercompany transactions and balances are eliminated upon consolidation.

 

b)   Details of the Group

 

In addition to the Company, these consolidated financial statements include all subsidiaries of the Company. Subsidiaries are all corporations over which the Company has power over the Subsidiary, and it is exposed to variable returns from the Subsidiary, and it has the ability to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity, with subsidiaries being fully consolidated from the date on which control is acquired by the Company. They are de-consolidated from the date that control by the Company ceases.

 

 

 

The subsidiaries of the Company are as follows:

Company

Location

Incorporated

Interest

Functional currency

Thor Investments (BVI) Ltd. ("Thor BVI")

British Virgin Islands

September 30, 2011

100%

USD

African Star Resources Incorporated ("African Star")

British Virgin Islands

September 30, 2011

100%

 

GBP

Segilola Resources Incorporated ("SR BVI")

British Virgin Islands

March 10, 2020

100%

 

USD

Thor Gold Ventures Ltd ("THX GV")

United Kingdom

February 11, 2022

100%

GBP

African Star Resources SARL ("African Star SARL")

Senegal

July 14, 2011

100%

CAF

Argento Exploration BF SARL

("Argento BF SARL")

Burkina Faso

September 15, 2010

100%

CAF

AFC Constelor Panafrican Resources SARL ("AFC Constelor SARL")

Burkina Faso

December 9, 2011

100%

CAF

Segilola Resources Operating Limited

("SROL")

Nigeria

August 18, 2016

100%

USD

Segilola Gold Limited ("SGL")

Nigeria

August 18, 2016

100%

NGN

Newstar Minerals Limited ("Newstar")

Nigeria

July 5, 2022

100%

USD

Enorm Mining Limited ("Enorm")

Nigeria

August 20, 2023

51%

USD

Ngnira Gold SARL ("Ngnira")

Cote D'Ivoire

April 22, 2023

100%

USD

 

 

c)   Foreign currency translation

 

Functional and presentation currency

The Company's functional and presentation currency is the United States dollar ("$"). The functional currency for the Company being the currency of the primary economic environment in which the Company operates. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).

 

Exchange rates published by Oanda were used to translate the THX GV, African Star, SR BVI, African Star SARL, Argento BF SARL, AFC Constelor SARL and SGL's financial statements into the United States dollar in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard requires, on consolidation, that assets and liabilities be translated using the exchange rate at period end, and income, expenses and cash flow items are translated using the rate that approximates the exchange rates at the dates of the transactions (i.e., the average rate for the period). The foreign exchange differences on translation of subsidiaries Thor GV, Thor BVI, African Star, SR BVI, African Star SARL, Argento BF SARL, AFC Constelor SARL and SGL are recognized in other comprehensive income (loss). Exchange differences arising on the net investment in subsidiaries are recognized in other comprehensive income.

 

Foreign currency transactions
Foreign currency transactions are accounted for as follows:

·      Property, plant and equipment and intangible assets using the rates at the time of acquisition;

·      Other assets and liabilities using the closing exchange rate as at the balance sheet date with translation gains and losses recorded in other income/expense; and

·      Income and expenses using the average exchange rate for the period, except for expenses that relate to non-monetary assets and liabilities measured at historical rates, which are translated using the same historical rate as the associated non-monetary assets and liabilities are translated into the functional currency using the exchange rates prevailing on the dates of the transactions.

 

d)   Financial instruments

 

Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

 

Fair value through profit or loss

This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value (see "Financial liabilities" section for out-of-money derivatives classified as liabilities). They are carried in the statement of financial position at fair value with changes in fair value recognized in the consolidated statement of comprehensive income in the finance income or expense line. Other than derivative financial instruments which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

 

Amortized cost

These assets arise principally from the provision of goods and services to customers (e.g., trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortized cost using the effective interest rate method, less provision for impairment.

 

Impairment provisions for current and non-current trade receivables are recognized based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.  During this process the probability of non-payment of the trade receivables is assessed.  This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognized in profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

The Group's financial assets measured at amortized cost comprise cash, restricted cash, amounts receivable as well as prepaid expenses, advances and deposits in the consolidated statement of financial position.  Cash includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

 

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Group's accounting policy for each category is as follows:

 

Fair value through profit or loss

This category comprises out-of-the-money derivatives where the time value does not offset the negative intrinsic value (see "Financial assets" for in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value). They are carried in the consolidated statement of financial position at fair value with changes in fair value recognized in the consolidated statement of comprehensive income. The Group does not hold or issue derivative instruments for speculative purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss.

 

Other financial liabilities 

 

Other financial liabilities include the following items:

 

Borrowings are initially recognized at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortized cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

 

Accounts payable and other short-term monetary liabilities, which are initially recognized at fair value and subsequently carried at amortized cost using the effective interest method.

 

Fair Value measurement hierarchy

 

IFRS 13 "Fair Value Measurement" requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the input used in making the fair value measurement.

The fair value hierarchy has the following levels:

·      Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

·      Input other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived prices (level 2); and,

·      Inputs for the asset or liability that are not based on observable market data (unobservable input) (level 3).

 

The level in the fair value hierarchy within which the financial asset or financial liability is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

 

Gold Stream arrangement

 

On April 29, 2020, the Group announced the completion of financing requirements for the development of the Segilola Gold Project in Nigeria. The financing included a $21 million gold stream prepayment pursuant to a Gold Stream Arrangement ("GSA") entered into with the Africa Finance Corporation ("AFC"). 

 

Under the terms of the GSA an advance payment of $21 million was received. Upon the commencement of production at Segilola the AFC had the right to receive 10.27% of gold produced from the Group's ML41 mining license. Once the initial liability has been repaid in full any further gold

production will be delivered under the terms of the GSA up to the money multiple limit of 2.25 times the initial advance. The total maximum amount payable to the AFC under this agreement is $47.25m including the repayment of the initial US$21 million advance. The advanced payment has been recorded as a contract liability based on the facts and terms of the arrangement and own use exemptions considerations. 

 

The maximum $26.25 million payable, after the initial $21 million has been settled, has been identified as a significant financing component. The deemed interest rate is calculated at inception, using the

production plan and gold price estimates and released over the term of the arrangement as interest expense in the income statement upon commencement of production. The deemed interest rate is recalculated at each reporting period and restated based on changes to the expected production profile and gold price estimates.

 

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 for repayment of the gold stream arrangement. Therefore, the liability is accounted for in accordance with IFRS 9 whereby the liability is classified as a financial liability measured at fair value through profit or loss. The fair value measurement for the GSA is considered to be a level 3 under the hierarchy established by IFRS 13 for the years ended December 31 2023 and 2022.

 

Capitalization of borrowing costs

 

The Group capitalizes interest costs for qualifying assets. Qualifying assets are assets that require a significant amount of time to prepare for their intended use, including projects that are in the exploration and evaluation, development or construction stages. Qualifying assets also include significant expansion projects at our operating mines. Capitalized interest costs are considered an element of the cost of the qualifying asset which is determined based on gross expenditures incurred on an asset. Capitalization ceases when the asset is substantially complete or if active development is suspended or ceases. Where the funds used to finance a qualifying asset form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable to the relevant borrowings during the period. Where funds borrowed are directly attributable to a qualifying asset, the amount capitalized represents the borrowing costs specific to those borrowings.

 

e)   Property, plant and equipment

 

Motor Vehicles, Plant and Machinery and Office Furniture

 

At acquisition, the Group records Motor Vehicles, Plant and Machinery and Office Furniture at cost, including all expenditures incurred to prepare an asset for its intended use. These expenditures consist of: the purchase price; brokers' commissions; and installation costs including architectural, design and engineering fees, legal fees, survey costs, site preparation costs, freight charges, transportation insurance costs, duties, testing and preparation charges. These are depreciated on a straight-line basis over their expected useful life, which commences when the assets are considered available for use. Once buildings, plant and equipment are considered available for use, they are measured at cost less accumulated depreciation and applicable impairment losses. Depreciation on equipment utilized in the development of assets, including exploration assets, is recapitalized as development costs attributable to the related asset.

 

 

Estimated useful lives of asset categories

Rate

Motor vehicles

20-33%

Plant and machinery

20-25%

Office furniture

20-33%

 

Mineral Properties

 

Mineral properties consist of: Segilola Mine, Processing Plant and Decommissioning Asset. In addition, the Group incurs project costs which are generally capitalized when the expenditures result in a future benefit.

 

In open pit mining operations, it is necessary to remove overburden and other waste materials to access ore from which minerals can be extracted economically. The process of mining overburden and waste materials is referred to as stripping. Stripping costs incurred in order to provide initial access to the ore body (referred to as pre-production stripping) are capitalized as open pit mine development costs. Pre-production stripping costs are capitalized until commercial production levels are achieved, after which time such costs are either capitalized to inventory or, if it qualifies as an open pit stripping activity that provides a future benefit, to property, plant and equipment. Stripping costs incurred during the production stage of an open pit are accounted for as costs of the inventory produced during the period that the stripping costs are incurred, unless these costs are expected to provide a future economic benefit to an identifiable component of the ore body. Components of the ore body are based on the distinct development phases identified by the mine planning engineers when determining the optimal development plan for the open pit. Production phase stripping costs generate a future economic benefit when the related stripping activity: (1) improves access to a component of the ore body to be mined in the future; (2) increases the fair value of the mine (or open pit) as access to future mineral reserves becomes less costly; and (3) increases the productive capacity or extends the productive life of the mine (or open pit). Production phase stripping costs that are expected to generate a future economic benefit are capitalized as open pit mine development costs. Capitalized open pit mine development costs are depreciated on a UOP basis whereby the denominator is the estimated ounces of gold in proven and probable reserves and the portion of resources considered probable of economic extraction based on the current LOM plan that benefit from the development and are considered probable of economic extraction.

 

Assets under construction

 

Assets under construction comprise development projects and assets in the course of construction at both the mine development and production phases.

 

Development projects comprise interests in mining projects where the ore body is considered commercially recoverable, and the development activities are ongoing. Expenditure incurred on a development project is recorded at cost, less applicable accumulated impairment losses. Interest on borrowings, incurred for the purpose of the establishment of mining assets, is capitalized during the construction phase.

 

The cost of an asset in the course of construction comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use, at which point it is transferred from assets under construction to other relevant categories and depreciation commences. Depreciation commences once the asset is complete, commissioned and available for use.

 

 

 

f)    Exploration and evaluation expenditures

 

Acquisition costs

The fair value of all consideration paid to acquire an unproven mineral interest is capitalized, including amounts due under option agreements. Consideration may include cash, loans or other financial liabilities, and equity instruments including common shares and share purchase warrants.

 

Exploration and evaluation expenditures

All costs incurred prior to obtaining legal title are expensed in the consolidated statement of comprehensive loss in the year in which they are incurred. Once the legal right to explore a property has been acquired, costs directly related to exploration and evaluation expenditures are recognized and capitalized, in addition to the acquisition costs.  These direct expenditures include such costs as materials used, surveying costs, drilling costs, payments made to contractors and depreciation on plant and equipment during the exploration phase. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the year in which they occur.

 

When a project is deemed to no longer have commercially viable prospects to the Group, exploration and evaluation assets in respect of that project are deemed to be impaired. As a result, those exploration and evaluation assets, in excess of estimated realisable value, are written off to the statement of comprehensive income (loss).

 

At such time as commercial feasibility is established, project finance has been raised, appropriate permits are in place and a development decision is reached, the costs associated with that property will be transferred to and re-categorized as Assets under construction.

Farm-in agreements

As is common practice in the mineral exploration industry, the Group may acquire or dispose of all, or a portion of, an exploration and evaluation asset under a farm-in agreement. Farm-in agreements typically call for the payment of cash, issue of shares and/or incurrence of exploration and evaluation costs over a period of time, often several years, entirely at the discretion of the party farming-in. The Group recognizes amounts payable under a farm-in agreement when the amount is due and when the Group has no contractual rights to avoid making the payment. The Group recognizes amounts receivable under a farm-in agreement only when the party farming-in has irrevocably committed to the transfer of economic resources to the Group, which often occurs only when the amount is received. Amounts received under farm-in agreements reduce the capitalized costs of the optioned unproven mineral interest to nil and are then recognized as income.

 

g)   Impairment of non-current assets

 

Impairment tests for non-current assets are performed when there is an indication of impairment. At each reporting date, an assessment is made to determine whether there are any indications of impairment. Prior to carrying out impairment reviews, the significant cash generating units are assessed to determine whether they should be reviewed under the requirements of IAS 36 - Impairment of Assets for property plant and equipment, or IFRS 6 - Exploration for and Evaluation of Mineral Resources.

 

Impairment reviews performed under IAS 36 are carried out on a periodic basis to ensure that the value recognized on the Statement of Financial Position is not greater than the recoverable amount. Recoverable amount is defined as the higher of an asset's fair value less costs of disposal, and its value in use.

 

Impairment reviews performed under IFRS 6 are carried out on a project-by-project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise; typically, when one of the following circumstances applies:

(i)   sufficient data exists that render the resource uneconomic and unlikely to be developed

(ii)   title to the asset is compromised

(iii)  budgeted or planned expenditure is not expected in the foreseeable future

(iv)  insufficient discovery of commercially viable resources leading to the discontinuation of activities

 

If any indication of impairment exists, an estimate of the non-current asset's recoverable amount is calculated. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset's value in use. If the carrying value of a non-current asset exceeds its recoverable amount, the asset is impaired, and an impairment loss is charged to the statement of comprehensive loss so as to reduce the carrying amount of the non-current asset to its recoverable amount.

 

h)   Revenue recognition

 

The Group enters into forward sales contracts for the sale of gold at a pre-determined and agreed price with costumers who remit the cash proceeds to the Group on the same day. The advance cash payment received is treated as a contract liability without significant financing component. The Group recognizes the sale upon delivery at which point control of the product has been transferred to the customers. Transfer of control generally takes place when refined gold is credited to the metals account at the refinery of the customer who has sold the gold via forward sale. Revenue is measured based on the consideration to which the Group expects to be entitled under the terms of the Agreement with the customers.

 

i)    Royalties

 

The Group has royalty payment obligations from production from its Segilola Gold Mine in Nigeria. A royalty is payable to the Nigerian government at a rate of 16,218 Nigerian Naira (prior to May 1, 2022: 5,400 Nigerian Naira) per ounce produced. The royalty is paid before the doré is exported from Nigeria for refining. Royalties paid to the Nigerian government are recognized as cost of sales in the Consolidated Statements of Comprehensive Income/(Loss) at the point that the gold is exported.

 

The Group also had royalty obligations to three former owners of the Segilola Gold Project at rates of between 0.375% to 1.5% on the value of sales. Total royalties to the former owners ("third party royalties") were capped at $7.5 million in aggregate. Royalties were calculated using the outturn date as reference point, whereby the number of ounces outturned are multiplied using the London Bullion Market Association ("LBMA") p.m. rate on the outturn date to establish a deemed sales value. The applicable royalty rate for each former owner is applied to the deemed sales value to determine the royalty payable.

 

Third party royalties were assessed to be contingent consideration in the acquisition of the Segilola Gold Mine under IFRS 3. In accordance with the Group's accounting policy the contingent consideration was recognized as a financial liability at the point where there was considered to be certainty over the payment arising (commencement of production). The discount has been unwound over the estimated time it has taken to pay the entire $7.5 million obligation. The value of the royalties has been depreciated over the estimated life of the mine, and royalty payments have been applied in discharge of the financial liability. The financial liability was initially measured at fair value with subsequent fair value re-measurement to be recorded in the Consolidated Statements of Comprehensive Income/(Loss). The final payment under the third-party royalties' arrangement was made in July 2023. The fair value of the third party royalties as at December 31, 2022 was $2,215,585 and was considered to a level 3 under the hierarchy established by IFRS 13.

 

j)    Inventory

 

Stores and consumables are stated at the lower of cost and net realizable value. The cost of stores and consumables includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

 

Gold ore stockpiles are valued at the lower of weighted average cost and net realizable value. Cost includes direct materials, direct labor costs and production overheads.

 

Gold bullion and gold in process are stated at the lower of weighted average cost and net realizable value. Cost includes direct materials, direct labor costs and production overheads.

 

k)   Basic and diluted income or loss per share

 

Earnings per share calculations are based on the weighted average number of common shares issued and outstanding during the period. Diluted earnings per share is calculated using the treasury stock method, whereby the proceeds from the exercise of potentially dilutive common shares with exercise prices that are below the average market price of the underlying shares are assumed to be used in purchasing the Company's common shares at their average market price for the period.

 

l)    Comprehensive income (loss)  

 

Comprehensive income (loss) is defined as the change in equity from transactions and other events from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income (loss) that are excluded from net earnings (loss). The main element of comprehensive income (loss) is the foreign exchange effect of translating the financial statements of the subsidiaries from local functional currencies into US dollars upon consolidation. Movements in the exchange rates of the Canadian Dollar, Pound Sterling, Nigerian Naira and West African Franc to the US dollar will affect the size of the comprehensive income (loss).

 

m)  Share-based payments

 

Where options are awarded for services, the fair value at the grant date of equity-settled share awards is either charged to income or loss, or capitalized to assets under construction where the underlying personnel cost is also capitalized, over the period for which the benefits of employees and others providing similar services are expected to be received.  The corresponding accrued entitlement is recorded in the Options reserve. The amount recognized as an expense is adjusted to reflect the number of share options expected to vest. Where warrants are awarded in connection with the issue of common shares the fair value, at the grant date, is transferred from common shares with the corresponding accrued entitlement recorded in the share purchase warrants reserve. The fair value of options and warrants awards is calculated using the Black-Scholes option pricing model which considers the following factors:

 

·      Exercise price

·      Current market price of the underlying shares

·      Expected life of the award

·      Expected volatility

·      Risk-free interest rate


 

 

When equity instruments are modified, if the modification increases the fair value of the award, the additional cost must be recognized over the period from the modification date until the vesting date of the modified award.

 

 

n)   Decommissioning, site rehabilitation and environmental costs

 

The Group is required to restore mine and processing sites at the end of their producing lives to a condition acceptable to the relevant authorities and consistent with the Group's environmental policies. The net present value of estimated future rehabilitation costs is provided for in the financial statements and capitalized within property, plant and equipment on initial recognition. The capitalized cost is amortized on a unit of production basis. Unwinding of the discount is recognized as finance cost in the statement of comprehensive income as it occurs. Changes in estimates are dealt with on a prospective basis as they arise. The costs of on-going programs to prevent and control pollution and to rehabilitate the environment are charged to profit or loss as incurred.

 

 

o)   Leases

 

Lease liabilities

 

Lease liabilities recognized on balance sheet. On inception, the lease liability is recognized as the present value of the expected future lease payments, discounted using interest rate implicit in the lease. Lease payments included in the lease liability consist of each of the following:

·      Fixed payments, including in-substance fixed payments;

·      Payments whose variability is dependent only upon an index or a rate, measured initially using the index or rate at the lease commencement date. The lease liability is revalued when there is a change in future lease payments arising from a change in an index or rate

·      Any amounts expected to be payable under a guarantee of residual value

 

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change to the forecast lease payments. When the lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset.

 

Leased right-of-use assets

 

Leased right-of-use assets are included within Right-of-use assets, and on inception of the lease are recognized at the amount of the corresponding lease liability, adjusted for any lease payments made at or before the lease commencement date, plus any direct costs incurred and an estimate of costs for dismantling, removing, or restoring the underlying asset and less any lease incentives received. The right-of-use asset is depreciated on a straight-line basis over the term of the lease, or, if shorter, the useful life of the asset.

 

p)   Contingent liabilities

 

Contingent liabilities are possible obligations whose existence will be confirmed by uncertain future events that are not wholly within the control of the Group.

 

Contingent liabilities also include obligations that are not recognized because their amount cannot be measured reliably or because settlement is not probable. Contingent liabilities do not include provisions for which it is certain that the Group has a present obligation that is more likely than not to lead to an outflow of cash or other economic resources, even though the amount or timing is uncertain.

Unless the possibility of an outflow of economic resources is remote, a contingent liability is disclosed in the notes to the financial statements.

 

 

q)   Application of new and revised International Financial Reporting Standards

 

In the current year, the Group has applied a number of amendments to IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

 

·      IFRS 17 Insurance Contracts

·      Amendments to IAS 1 Presentation of Financial Statements

·      Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

·      Amendments to IAS 12 Income Taxes

 

r)    Future accounting pronouncements

 

At the date of authorization of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective.

 

Amendments to IFRS 16

 

Liability in a Sale and Leaseback

 

Amendments to IAS 1

Classification of Liabilities as Current or Non-current

Amendments to IAS 1

Non-current Liabilities with Covenants

Amendments to IAS 7

Supplier Finance Arrangements

 

The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods.

 

 

4.   CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

 

The Group makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

 

The effect of a change in an accounting estimate is recognized prospectively by including it in net and/or comprehensive loss in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both.

 

a)   Critical accounting estimates

 

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, that could result in a material adjustment to the carrying amounts of assets and liabilities, relate to, but are not limited to, the following:

 

(i)   Accounting treatment of Gold Stream Liability

Determining the appropriate accounting treatment for the Gold Stream Liability is not an accounting policy choice, rather it is an assessment of the specific facts and circumstances and requires judgement. The Group has reviewed the terms of the Gold Sale Agreement and determined that it constitutes a commodity arrangement as it is an arrangement to deliver an amount of the commodity from the Group's own Segilola Gold Project operation and does not constitute a contract liability under IFRS 15.

In 2021 the arrangement was modified to allow the Group to settle the Gold Stream Liability in cash which led to the arrangement being reclassified as a financial liability.

The principal accounting estimates in calculating the value of the Gold Stream Liability are production plan, gold price, the implied interest rate and future repayment profile.

 

In calculating the deemed interest rate for interest expense that will be released over the term of the Agreement, estimates of both the production plan and gold price will be the key variables. The deemed interest rate is calculated at each reporting period and restated based on changes to the expected production profile and gold price estimates, which will result in a revision to estimated future payments. Any change in future payments will result in a revision of the deemed interest rate.

 

The period-end Gold Stream obligation uses forward curve information based on the period-end gold spot price, which was US2,025 /oz at December 31, 2023. A 5% change in gold production estimates would result in an impact of $0.1 million on the Gold Stream liability.

 

(ii)   Estimated recoverable ounces

The carrying amounts of the Group's mining interests are depleted based on the estimated recoverable ounces. Changes to estimates of recoverable ounces due to revisions to the Group's mine plans and changes in gold price forecasts can result in a change to future depletion rates.

 

(iii)  Mineral reserves

 

Mineral reserves and mineral resources are determined in accordance with Canadian Securities Administrator's National Instrument 43-101 Standards of Disclosure for Mineral Projects. Mineral reserve and resource estimates include numerous estimates. Such estimation is a subjective process, and the accuracy of any mineral reserve or resource estimate is dependent on the quantity and quality of available data and on the assumptions made and judgements used in engineering and geological interpretation. Changes to management's assumptions including economic assumptions such as gold prices and market conditions could have a material effect in the future on the Group's financial position and results of operations.

(iv)  Restoration, site rehabilitation and environmental costs

The Group's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognizes management's best estimate of the rehabilitation costs in the period in which they are incurred. This estimate includes judgements from management in respect of which costs are expected to be incurred in the future, the timing of these costs and their present value. Actual costs incurred in future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision. Such changes could similarly impact the useful lives of assets depreciated on a straight-line-basis, where those lives are limited to the life of mine. A 1% change in the discount rate on the Group's rehabilitation estimates would result in an impact of $0.25 million (2022: $0.25 million) on the provision for environmental and site restoration. The value of the period-end restoration provision is disclosed within Note 13.

(v)  Inventory

Expenditures incurred, and depreciation and amortization of assets used in mining and processing activities are deferred and accumulated as the cost of ore in stockpiles, ore in mill, and finished gold doré inventories. These deferred amounts are carried at the lower of average cost or net realizable value.

 

Their measurement involves the use of estimation to determine the tonnage, the attainable gold recovery, and the remaining costs of completion to bring inventory to its saleable form. Changes in these estimates can result in a change in mine operating costs of future periods and carrying amounts of inventories.

 

In determining the net realizable value of ore in stockpiles, ore in mill, and gold doré the Group estimates future metal selling prices, production forecasts, realized grades and recoveries, and timing of processing to convert the inventories into saleable form. Reductions in metal price forecasts, increases in estimated future production costs, reductions in the number of recoverable ounces, and a delay in timing of processing can result in a write down of the carrying amounts of the Group's ore in stockpiles, ore in mill and gold doré inventories.

 

b)   Critical accounting judgments

 

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the financial statements within the next financial year are discussed below:

 

(i)         Impairment of exploration and evaluation assets

In accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources, management is required to assess impairment in respect of the intangible exploration and evaluation assets. In making the assessment, management is required to make judgments on the status of each project and the future plans towards finding commercial reserves. The nature of exploration and evaluation activity is such that only a proportion of projects are ultimately successful, and some assets are likely to become impaired in future periods.

 

Management has determined that it is appropriate to impair fully the value of the Central Houndé Project in Burkina Faso following the unsuccessful attempt by Barrick Gold to dispose of its 51% interest in the license. An impairment charge of $11,671 (2022: $12,014) has been charged to the Consolidated Statement of Comprehensive Income. There were no impairment indicators present in respect of any of the other exploration and evaluation assets and as such, no additional impairment test was performed.

 

(ii)         Indicators of impairment of property, plant and equipment

 

The Group considers both internal and external information in its process of determining whether there are any indicators for impairment of the Segilola Gold mine. Management considers the following external factors to be relevant: Changes in the market capitalization of the entity, changes in the long-term gold price expectations, or changes in the technological, market, economic or legal environment in which the entity operates, or in the market to which the asset is dedicated. Management considers the following internal factors to be relevant: changes in the estimates of recoverable ounces, significant movements in production costs and variances of actual production costs when compared to budgeted production costs, production patterns and whether production is meeting planned budget targets, changes in the level of capital expenditures required at the mine site, changes in the expected cost of dismantling assets and restoring the site, particularly towards the end of a mine's life. Refer to note 15 for details of impairment assessments performed during the year.

 

 

5.   PROFIT FROM OPERATIONS

 

 

 

5a. REVENUE

 

 

Year Ended

December 31,



2023


2022

Gold revenue


141,036,661


165,060,320

Silver revenue


208,667

 

114,211

 

$

141,245,328

$

165,174,531

 

The Group`s revenue is generated in Nigeria. All sales are made to the Group`s two customers, one of these customers representing approximately 96% of sales. However, because gold can be sold through numerous gold market traders worldwide (including a large number of financial institutions), the Group is not economically dependent on a limited number of customers for the sale of its product.

 

 

5b. COST OF SALES

 

Year Ended

December 31,



2023


2022

(restated1)

Mining


61,864,380


53,031,977

Processing


17,849,409


8,440,022

Support services and others


9,042,212


9,620,511

Foreign exchange gains on production costs2


(19,081,174)


(15,578,520)

Production costs

$

69,674,827

$

55,513,990

Transportation and refining


2,478,442


3,419,334

Royalties


1,865,755


3,696,527

Amortization and depreciation - operational assets - owned assets


22,777,712


25,673,590

Amortization and depreciation - operational assets - right-of-use assets


4,638,774


4,638,774

Cost of sales


101,435,510


92,942,215

1 Refer to note 25 for details on the prior year restatement

2 The total foreign exchange movements for the year ended December 31, 2023, were $19,081,174 gains (2022: gains of $15,578,520). These comprise of realized foreign exchange gains of $16,664,920 (2022: gains of $17,212,016) and unrealized foreign exchange gains of $2,416,254 (2022: loss of $1,643,496). During the years ended December 31, 2023, and 2022, SROL entered into spot currency trades to support funding of its operations in Nigeria. 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 as at the time of the trade. All local currency obtained from these spot currency trades are utilized wholly and exclusively for the purchase of raw materials, spare parts and other operational inputs required to support and maintain local operations.

 

 

5c. AMORTIZATION AND DEPRECIATION

 

 

Year Ended

December 31,


 

2023

 

2022

Amortization and depreciation - mining and operational assets - owned assets

 

22,777,712

 

25,673,590

Amortization and depreciation - mining and operational assets - right-of-use assets

 

4,638,774

 

4,638,774

Amortization and depreciation - owned assets

 

679,946

 

1,254,566

Amortization and depreciation - right-of-use assets

 

143,479

 

85,326

 

$

28,239,911

$

31,652,256

 

 

 

5d. OTHER ADMINISTRATION EXPENSES

 

 

 

Year Ended

December 31,



2023


2022

Employee compensation


3,883,477


4,666,009

Professional services


1,894,777


1,726,637

Other corporate expenses


4,968,095


9,491,230

 

$

10,746,349

$

15,883,876

 

 

5e. INTEREST EXPENSE

 

 

 

 

 

Year Ended

December 31,


Note

 

2023

 

2022

Interest on loan from the Africa Finance Corporation

11

 

5,735,251

 

6,465,751

Interest on deferred element of EPC contract

11

 

738,183

 

472,811

Fair value movements on Gold stream liability

10

 

5,244,531

 

6,311,927

Interest on leases

9

 

1,078,217

 

1,052,329

Interest on provisions

13

 

46,981

 

108,164

Other


 

264,957

 

205,828

Interest expense

 

 

13,074,395

 

14,616,810

 

 

 

5f. BUY-OUT OF GOLD SALE AGREEMENT'S OPTION

 

On April 15, 2020, SROL entered into the Offtake Agreement for the Sale and Purchase of Gold ("Offtake Agreement") with the AFC.  The Offtake Agreement gives the AFC the right to purchase up to 89.73%, to a maximum of 375,376 ounces of SROL's gold production at a "Low Reference Price," being the lowest gold price per the London Bullion Market Association ("LBMA") platform over an 8-day look back period from the date of delivery of the gold.

 

The cost of the Offtake Agreement to SROL will potentially increase during periods of gold price volatility covering the 8-day look back period, increasing the variability of income and reducing the average realized gold price earned by SROL. 

 

In November 2023, the Group exercised and paid off the buy-out option contained in the Offtake Agreement valued at $3,154,454, which was also deemed to be its fair value at that date.

 

Following the exercise of the option, the Group is no longer liable to incur further losses on forward sale

of commodity contracts relating to the Low Reference Price.

 

 

5g. INCOME TAX

 

The difference between tax expense for the year and the expected income taxes based on the Canadian statutory income tax rate is as follows:

 

 

 

 

 

Year Ended

December 31,


 

 

2023

 

2022

Profit before income taxes

 

 

10,869,446

 

38,792,200

    Applicable Nigeria tax rate


 

0%

 

0%

    Tax at applicable tax rate


 

-

 

           -

    Adjustments for different tax rates in the Group


 

(893,704)

 

(877,688)

    Losses carried forward not recognized


 

893,704

 

877,688

Income tax credit/(charge)

 

$

-

 

-

 

During the years ended December 31, 2023, and 2022 the Canadian federal corporate income tax rate remained unchanged at 15%. The British Columbia provincial corporate income tax rate also remained unchanged at 12%.

 

The Senegalese, Burkina Faso and Cote D'Ivoire income tax rates remained unchanged at 30%, 28% and 25% respectively. 

 

The Nigerian corporate income tax rate remained unchanged at 30% however the Group companies in Nigeria are exempt from income tax during the first three years of operations under Section 36 of the Companies Income Tax Act of Nigeria.

 

The Company has available non-capital losses in Canada of approximately $17,546,000 (2022: $14,575,000). The Canadian non-capital losses may be utilized to offset future taxable income and have carry forward periods of up to 20 years. The losses, if not utilized, expire through 2040.

 

The only potential benefits of carry-forward non-capital losses and deductible temporary differences that have been recognized in these financial statements relate to the Company's Senegalese subsidiary African Star Resources S.A.R.L. No other potential benefits have been recognized as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered.

 

 

 

6.   INVENTORY

 

 

 

December 31, 2023

 

December 31, 2022

(restated)


January 01, 2022

(restated)

Current:

 

 

 




Plant spares and consumables

$

8,681,433

$

4,751,922

$

1,337,792

Gold ore in stockpile

 

20,768,112

 

23,569,801


6,209,548

Gold in CIL

 

8,405,429

 

956,864


1,943,042

Gold doré

 

3,915,072

 

3,220,637


7,860,879

 

$

41,770,046

$

32,499,224

$

17,351,261

 

Non-current:

 

 

 




Gold ore in stockpile

$

15,891,089

$

-

$

-

 

$

15,891,089

$

      -

$

      -

 

There were no write downs to reduce the carrying value of inventory to net realizable value during the years ended December 31, 2023, and 2022.

 

The cost of inventory recognized as expense in the year ended 31 December 2023 was $97,091,313 and was included in cost of sales (2022 - $85,826,354).

 

During the preparation of the current financial statements, the Group has refined its methodology and estimates for the valuation of Inventory stockpiles. The change in estimates apply to better management information being available to the Group such as improved density calculations for the determination of the mass of the stockpiles. These revisions have increased the amount of ore in the stockpiles by approximately 118,000 tonnes and 3,500 contained ounces as at December 31, 2023. Such changes in estimates have been applied prospectively in accordance with accounting guidance.

 

As part of this assessment, the Group has also identified an error in the methodology used to calculate the cost of its stockpile in previous periods. The error relates to calculating costs based on tonnes of ore mined as opposed to ounces. Considering this revision, the balance of Inventory as at December 31, 2022 increased by $12,597,962 and as at January 1, 2022 decreased by $795,297.

 

Please refer to note 25 of these financial statements for further details on the restatement.

 

 

7.   AMOUNTS RECEIVABLE

 

 

 

December 31, 2023

 

December 31, 2022

Accounts receivable

$

5,464

$

67,084

GST

 

4,319

 

993

Other receivables

 

270,948

 

152,365

 

$

280,731

$

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.

 

8.   PREPAID EXPENSES, ADVANCES AND DEPOSITS

 

 

 

December 31,

2023

 

December 31, 2022

Current:

 

 

 

 

Gold stream liability arrangement fees

 

             33,186


33,186

Advance deposits to vendors

 

         5,770,097


9,625,204

Other prepayments

 

         1,846,758


818,533


$

         7,650,041


10,476,923

Non-current:

 

 



Gold stream liability arrangement fees

 

               8,297


74,667

Other prepayments

 

           212,969


208,158

 

$

           221,266


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.

 

 

9.   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 years ended December 31, 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 year ended December 31, 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

 

 

(4,782,253)


-


(4,782,253)

Interest

 

 

-


(1,078,217)


(1,078,217)

Lease payments

 

 

-


5,026,847


-

Foreign exchange movement

 

 

28,522


(29,415)


(29,415)


 

 






Carrying value at December 31, 2023

 

$

12,095,671

$

(11,490,070)

$

(5,889,885)


 

 






Current liability

 

 



(4,820,353)



Non-current liability

 

 



(6,669,717)



 

The key impacts on the Statement of Comprehensive Income 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 into 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)



 

 

 

10.  GOLD STREAM LIABILITY

 

 

Gold stream liability



December 31, 2023

 

December 31, 2022

Balance at beginning of period

$

25,039,765

$

30,262,279

   Repayments


(10,241,299)


(11,534,441)

   Fair value movements


5,244,531


6,311,927

Balance at end of period

$

20,042,997

$

25,039,765

Current liability


12,343,232


10,187,630

Non-current liability


7,699,765


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.

 

The $26.25 million represents 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 fair value and repayment profile were the production profile and gold price. The future gold price estimates were based on market forecast reports for the years 2024 to 2025 and, the production profile was based on the latest budgets and life of mine plan model. The liability is 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. Any changes to the fair value of the liability are charged through the Consolidated Statements of Income (Loss).

 

Fair value movements of $5,244,531 were recognized for the year ended December 31, 2023 (2022: $6,311,927) and have been charged to the Consolidated Statement of Income. Prior to the commencement of commercial production on January 1, 2022, these were capitalized and included in the value of the Segilola Gold Mine (Refer to Note 14). A cumulative total of $10,200,430 has been capitalized prior to commercial production and included in the value of the Segilola Gold Mine.

 

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. Refer to Note 3d for further information on the accounting treatment of the gold stream liability.

 

The following table represents the Group's loans and borrowings measured and recognized at fair value.

 



Level 1

Level 2

Level 3

Total







Financial liability at fair value through profit or loss

$

-

-

20,042,997

20,042,997

 

The liabilities included in the above table are carried at fair value through profit and loss.

 

The fair value of the liability is calculated by present value techniques as per the income approach in accordance with "IFRS 13 Fair value measurement".

Key inputs to the valuations include:

·      Production profiles based on Segilola life-of-mine forecasts

·      Gold price ranging from $1,966/oz to 2,000/oz

·      Interest rate of 24.5%

 

 

11.  LOANS AND BORROWINGS

 

 

 

December 31,

2023

 

December 31, 2022

Current liabilities:

 

 

 

 

Loans from the Africa Finance Corporation

 

20,360,657


356,155

Deferred element of EPC contract

 

2,887,035


531,986


$

23,247,692

$

888,141

Non-current liabilities:

 

 



Loans from the Africa Finance Corporation

 

-


24,103,784

Deferred element of EPC contract

 

518,354


3,150,729

 

$

518,354

$

27,254,513

 

 

Loans from the Africa Finance Corporation

 



December 31,

2023

Total

 

December 31, 2022

Total

Balance at beginning of period

$

24,459,939

$

46,859,966

  Principal repayments


(5,776,084)


(24,220,764)

  Interest paid


(3,931,575)


(4,645,014)

  Arrangement fees


(126,874)


-

  Unwinding of interest in the period


5,735,251


6,465,751

Balance at end of period

$

20,360,657

$

24,459,939

Current liability


20,360,657


356,155

Non-current liability


-


24,103,784







 

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 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. The amendment was considered a non-substantial modification per "IFRS 9 - Financial Instruments".

 

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") signed with Norinco International Cooperation Limited. 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 element of EPC contract ") of 10% of the fixed price. As at December 31, 2023, a total of $3,405,389 (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.



December 31,

2023

Total

 

December 31, 2022

Total

Balance at beginning of period

$

3,682,715

$

6,210,090

    Offset against EPC payment

 

-

 

2,967,638

    Principal repayments 

 

(731,539)

 

(3,440,449)

    Interest paid


(283,970)


-

    Unwinding of interest in the period


738,183


472,811

Balance period end

$

3,405,389

$

3,682,715

Current liability

 

2,887,035

 

531,986

Non-current liability

 

518,354

 

3,150,729

 

 

 

12.  RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

 

 

December 31, 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:






   Principal repayments 


(10,241,299)

(5,776,084)

(731,539)

(16,748,922)

   Arrangement fees


                 -  

(126,874)

                   -  

(126,874)

   Interest paid


                 -  

(3,931,575)

(283,970)

(4,215,545)

Non-cash changes:






   Unwinding of interest in the year


-

5,735,251

738,183

11,717,965

   Fair value movements in the year


5,244,531

-

-

-

December 31, 2023

$

20,042,997

20,360,657

3,405,389

 

 

December 31, 2022

 

Gold stream liability

AFC loan

EPC deferred facility

Total

January 1, 2022

$

30,262,279

46,859,966

6,210,090

84,000,905

Cash flows:






   Principal repayments 


(11,534,441)

(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


-

6,465,751

472,811

13,250,489

   Fair value movements in the year


6,311,927

-

-

-

   Offset against EPC payment


-

-

440,263

440,263

December 31, 2022

$

25,039,765

24,459,939

3,682,715

 

 

 

 

13.  PROVISIONS

 

December 31, 2023

 

 

 

Other

 

Fleet demobilization costs


 

Restoration costs

 

 

 

Total

Balance at beginning of period

$

18,157

$

173,442

$

4,768,039

$

4,959,638

Unwinding of discount


-


-


46,981


46,981

Foreign exchange movements


941


-


-


941

Balance at period end

$

19,098

$

173,442

$

4,815,020

$

5,007,560

Current liability


-


-


-


-

Non-current liability


19,098


173,442


4,815,020


5,007,560

 

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)



Unwinding of discount


-


201


107,963


108,164

Foreign exchange movements


(258)


-


-


(258)

Balance at period end

$

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.

 

 

 

 

14.  PROPERTY, PLANT AND EQUIPMENT

 

 

 

A summary of depreciation capitalized is as follows:

 


 

Year Ended December 31,

Total depreciation

capitalized


 

 

2023

 

 

2022

 

December 31, 2023

 

December 31, 2022










Exploration expenditures


141,518


116,108


761,870


620,352

Total

$

141,518

$

116,108

$

761,870

$

620,352

 

a)   Segilola Project, Osun Nigeria: 

 

 

Decommissioning Asset

 

The decommissioning asset relates to estimated restoration costs at the Group's Segilola Gold Mine as at December 31, 2023. Refer to Note 13 for further detail.

 

Impairment assessment

 

During the year ended December 31, 2023, the Group performed a review for indicators of impairment for the Segilola Gold mine and evaluated key assumptions such as forecasts for gold prices, significant revisions to the mine plan including current estimates of recoverable mineral reserves and resources, recent operating results, and future expected production based on the reserves and resources. As a result of the above, the Group concluded that there were no indicators of impairment for the Segilola Gold mine at 31 December 2023.

 

 

15.  INTANGIBLE ASSETS

 

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

 

 

Impairment assessment

 

During the year ended 31 December 2023, the Group performed a review for indicators of impairment of all exploration and evaluation assets in accordance with IFRS 6, Exploration for and Evaluation of Mineral Resources. Exploration permits have been assessed as to whether the permits were in good standing and/or any further activity was planned. No impairment indicators were identified for the Group`s exploration and evaluation assets other than for the Central Houndé project as detailed below.

 

a)   Douta Gold Project, Senegal:

 

The Douta Gold Project consists of an early-stage gold exploration license located in southeastern Senegal, approximately 700 km 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.

 

Effective February 24, 2012, the Group exercised its option to acquire a 70% interest in the Douta Gold Project pursuant to the terms of the Option Agreement between the Group and IMC. As consideration for the exercise of the option, the Group issued to IMC 11,646,663 common shares, based on a VWAP for the 20 trading days preceding the option exercise date of $0.2014 (or US$0.2018) per share, valued at $2,678,732 based on the Group's closing share price on February 24, 2012. The share payment includes consideration paid to IMC for extending the time period for exercise of the option.

 

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 474 km2 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 current 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

 

During 2023, the Group has acquired over 600 km² of granted tenure in south-west Nigeria that covers both known lithium bearing pegmatite deposits and a large unexplored prospective pegmatite-rich belt. These are divided into the Oyo State, Kwara State and Ekiti State Lithium Project Areas and the Group is currently carrying out lithium exploration activities in these areas.

 

 

d)  Gold exploration Licenses

 

As at December 31, 2023, the Group's gold exploration tenure currently primarily comprises 13 wholly owned exploration licenses and four partnership exploration licenses. Together with the mining lease over the Segilola Gold Deposit, Thor's total gold exploration tenure amounts to 1,542 km².

 

 

16.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

 



December 31,

2023


December 31,

2022

Accounts payable

$

58,713,313

$

46,914,333

Accrued liabilities

 

14,116,212


6,213,977

Other payables

 

1,944,303


        3,208,979


$

74,773,828

$

56,337,289

 

Accounts payable and accrued liabilities are classified as financial liabilities and approximate their fair values.

 

 

17.  DEFERRED INCOME

 


 


December 31,

2023

 

December 31,

2022


 


 



Deferred income


$

11,838,898

$

6,581,743


 


 



The deferred income for the years ended December 31, 2023, and 2022 relates to cash received in advance of delivery of gold and not recognized as revenue. 

 

The advance sales as at December 31, 2023, represents 5,928 oz of gold that was delivered in January 2024 (2022: 3,687 oz delivered in January 2023).

 

 

18.  CAPITAL AND RESERVES

 

a)  Authorized

 

Unlimited common shares without par value.

 

b)   Issued


December 31,

2023

Number


December 31,

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

    11,368,539


        1,051,141

9,939,000


960,546

   - RSU awards vested

-


-

2,399,176


451,964


656,064,724

$

81,490,834

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;

9,118,539 options exercised at a price of CAD$0.145 per share on June 14, 2023; and,

750,000 options exercised at a price of CAD$0.14 per share on September 28, 2023

 

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.

 

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 following is a summary of changes in options from January 1, 2023, to December 31, 2023, and the outstanding and exercisable options at December 31, 2023:

 

 

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 'Option reserve,' '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)/Retained earnings' is used to record the Group's accumulated earnings.

 

 

19.  EARNINGS PER SHARE

 

Diluted earnings per share was calculated based on the following:

 



December 31,

2023

 

 

December 31, 2022

Basic weighted average number of shares outstanding


650,707,714

 

641,958,083

    Stock options

 

4,492,876

 

8,359,009

Diluted weighted average number of shares outstanding

 

655,200,590

 

650,317,092

 

 

 

 

 

Total common shares outstanding

 

656,064,724

 

644,696,185

Total potential diluted common shares

 

670,104,724

 

671,597,185

 

 

 

20.  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 buy-out of gold sale agreement's option as disclosed on note 5f, the Gold Stream liability as disclosed in Note 10, and the secured loan as disclosed in Note 11.

 

b)         Compensation of key management personnel

 

The remuneration of directors and other members of key management during the year ended December 31, 2023, and 2022 were as follows:

 


 

Year Ended December 31,


 

 

2023

 

2022

Salaries

 





   Current directors and officers

(i) (ii)

$

1,673,029

$

1,638,597

   Former directors and officers

 


-


71,557


 


 



Directors' fees

 


 



   Current directors and officers

(i) (ii)


457,997


404,097




 



Share-based payments



 



   Current directors and officers



-


296,502


 

$

2,131,026

$

2,410,753

 

 

(i)        Key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the years ended December 31, 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 December 31, 2023, include $81,730 (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.

 

21.  FINANCIAL INSTRUMENTS

 

The Group's financial instruments consist of cash, restricted cash, amounts receivable, accounts payable, accrued liabilities, gold stream liability, loans and other borrowings and lease liabilities.

 

Fair value of financial assets and liabilities

Fair values have been determined for measurement and/or disclosure purposes. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

 

The carrying amount for cash, restricted cash, accounts receivable, and accounts payable, accrued liabilities, loans and borrowings and lease liabilities on the statement of financial position approximate their fair value because of the limited term of these instruments.

 

Financial risk management objectives and policies

The Group has exposure to the following risks from its use of financial instruments

·      Interest rate risk

·      Credit risk

·      Liquidity and funding risk

·      Market risk

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements.

 

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in these notes.

 

The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below.

 

Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

 

December 31, 2023


Measured at amortized cost

Measured at fair value through profit and loss

Total

Assets





Cash and cash equivalents

$

7,839,757

-

7,839,757

 

Amounts receivable


280,731

-

280,731

 

Total assets

$

8,120,488

-

8,120,488

 

 

 

 

 

 

 

Liabilities





 

Accounts payable and accrued liabilities

$

74,773,828

-

74,773,828

 

Loans and borrowings


23,766,046

-

23,766,046

 

Gold stream liability


-

20,042,997

20,042,997

 

Lease liabilities


11,490,070

-

11,490,070

 

Total liabilities

$

105,379,217

24,693,724

130,072,941

 









 

 

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

 









 

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's income and operating cash flows will be impacted by changes in market interest rates as the Group's secured loans from the AFC incur Interest at SOFR plus 9% (Refer to Note 11). The Group's management monitors the interest rate fluctuations on a continuous basis and assesses the impact of interest rate fluctuations on the Group's cash position and acts to ensure that sufficient cash reserves are maintained in order to meet interest payment obligations.

 

The following table discusses the Group's sensitivity to a 5% increase or decrease in interest rates:

 

 

 

 

December 31, 2023


Interest rate

Appreciation

By 5%


Interest rate

Depreciation

By 5%

Comprehensive income (loss)





Financial assets and liabilities

$

(621,973)

$

621,973

 

December 31, 2022





Comprehensive income (loss)





Financial assets and liabilities

$

(2,086,408)

$

2,086,408

 

 

Credit risk

Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its contractual obligations.

 

The Group manages the credit risk associated with cash by investing these funds with highly rated financial institutions, and by monitoring its concentration of cash held in any one institution. As such, the Group deems the credit risk on its cash to be low. At 31 December 2023, 78% of the Group's cash balances were invested in AA rated financial institutions (2022: 93%), 1% in AA- rated financial institutions (2022: 1%), 1% in A+ rated financial institutions (2022: 1%), 17% in A- rated financial institutions (2022: nil) and 3% in B rated institutions (2022: 4%).

 

The Group sells its gold to large international organizations with strong credit ratings, and the historical level of customer defaults is minimal. As a result, the credit risk associated with gold trade receivables at 31 December 2023 is considered to be negligible.

 

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at December 31, 2023, and December 31, 2022, were as follows:

 

 

 

 

December 31,

2023

 

 

December 31,

            2022

Cash

$

7,839,757

$

6,688,037

Amounts receivable


280,731


220,442

Total

$

8,120,488

$

6,908,479

 

Liquidity and funding risk

 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account the Group's holdings of cash. The Group's cash is held in business accounts and is available on demand.

 

In the normal course of business, the Group enters into contracts and performs business activities that give rise to commitments for future minimum payments.

 

The following table summarizes the Group's significant remaining contractual maturities for financial liabilities at December 31, 2023, and December 31, 2022.

 

Contractual maturity analysis as at December 31, 2023


Less than

3 months

$

3 - 12

Months

$

1 - 5

Year

$

Longer than

5 years

$

 

Total

$

Accounts payable and accrued liabilities

63,950,634

10,823,194

-

-

74,773,828

Lease liabilities

1,213,678

3,236,476

7,282,070

-

11,732,224

Gold stream liability

3,484,102

10,553,647

9,317,278

-

23,355,027

Loans and borrowings

9,182,048

18,253,920

932,379

-

28,368,347

 

77,830,462

42,867,237

17,531,728

-

138,229,426

 

Contractual maturity analysis as at December 31, 2022


Less than

3 months

$

3 - 12

Months

$

1 - 5

Year

$

Longer than

5 years

$

 

Total

$

Accounts payable and accrued liabilities

55,368,069

1,001,983

-                                        

-

56,370,052

Lease liabilities

 1,255,581

3,766,744

12,681,521

-

17,703,846

Gold stream liability

2,986,708

8,475,973

23,420,334

-

34,883,015

Loans and borrowings

1,642,151

4,810,033

33,337,237

-

39,789,421

 

61,252,509

18,054,733

69,439,092

-

148,746,334








 

Market risk

The Group is subject to normal market risks including fluctuations in foreign exchange rates and interest rates. While the Group manages its operations in order to minimize exposure to these risks, the Group has not entered into any derivatives or contracts to hedge or otherwise mitigate this exposure.

 

a)         Foreign currency risk

 

The Group seeks to manage its exposure to this risk by holding its cash balances in the same denomination as that of the majority of expenditure to be incurred. The Group also seeks to ensure

that the majority of expenditure and cash of individual subsidiaries within the Group are denominated in the same currency as the functional currency of that subsidiary.

 

The Group's loan facilities, certain exploration expenditures, certain acquisition costs and operating expenses are denominated in United States Dollars, Nigerian Naira, UK Pounds Sterling and West African Franc. The Group's exposure to foreign currency risk arises primarily on fluctuations between the United States Dollar and the Canadian Dollar, Nigerian Naira, UK Pounds Sterling and West African Franc. The Group has not entered into any derivative instruments to manage foreign exchange fluctuations. The Group does enter into foreign exchange agreements during the ordinary course of operations in order to ensure that it has sufficient funds in order to meet payment obligations in individual currencies. These agreements are entered into at agreed rates and are not subject to exchange rate fluctuations between the agreement and settlement dates.

 

The following table shows a currency of net monetary assets and liabilities by functional currency of the underlying companies for the year ended December 31, 2023:

 


 

Functional currency



US dollar

Pound

Sterling

Nigerian

Naira

 

West

African

Franc

 

Total

Currency of net monetary asset/(liability)

December 31, 2023

USD$

December 31, 2023

USD$

December 31, 2023

USD$

December 31, 2023

USD$

December 31, 2023

USD$

Canadian dollar

(22,623)

-

-

-

(22,623)

US dollar

(121,108,884)

-

-

-

(121,108,884)

Pound Sterling

(348,905)

-

-

-

(348,905)

Nigerian Naira

(615,871)

-

-

11,855

(604,016)

West African Franc

-

-

70,127

-

70,127

Euro

142,835

-

-

-

142,835

Australian dollar

(80,987)

-

-

-

(80,987)

Total

(122,034,435)

-

70,127

11,855

(121,952,453)








 

 

 

The following table shows the currency of net monetary assets and liabilities by functional currency of the underlying companies for the year ended December 31, 2022:

 


 

Functional currency



US dollar

Pound

Sterling

Nigerian

Naira

 

West

African

Franc

 

Total

Currency of net monetary asset/(liability)

December 31, 2022

USD$

December 31, 2022

USD$

December 31, 2022

USD$

December 31, 2022

USD$

December 31, 2022

USD$

Canadian dollar

42,963

-

-

-

42,963

US dollar

(107,637,605)

-

-

-

(107,637,605)

Pound Sterling

(1,961,945)

(411,079)

-

-

(2,373,024)

Nigerian Naira

(2,362,830)

-

8,132

-

(2,354,698)

West African Franc

-

-

-

85,029

85,029

Euro

(170,595)

-

-

-

(170,595)

Australian dollar

(217,333)

-

-

-

(217,333)

Total

(112,307,345)

(411,079)

8,132

85,029

(112,625,263)








 

The following table discusses the Group's sensitivity to a 5% increase or decrease in the United States Dollar against the Nigerian Naira:

 

 

 

 

December 31, 2023


United States

Dollar

Appreciation

By 5%


United States

Dollar

Depreciation

By 5%

Comprehensive income (loss)





Financial assets and liabilities

$

29,327

$

(29,327)

 

December 31, 2022





Comprehensive income (loss)





Financial assets and liabilities

$

112,516

$

(112,516)

 

 

22.  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.

 

 

23.  CONTRACTUAL COMMITMENTS AND CONTINGENT LIABILITIES

 

Contractual Commitments

The Group has no contractual obligations that are not disclosed on the 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 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.

 

24.  SEGMENTED DISCLOSURES

 

Segment Information

 

The Group's operations comprise three reportable segments, being the Segilola Mine Project, Exploration Projects, and Corporate. These three reporting segments have been identified based on operational focuses of the Group following the decision to develop the Segilola Mine Project. The following table provides the Group's results by operating segment in the way information is provided to and used by the Group's chief operating decision maker, which is the CEO, to make decisions about the allocation of resources to the segments and assess their performance.

 

December 31, 2023

 

Segilola Mine Project

 

Exploration Projects

 

Corporate

 

Total

Current assets

$

56,790,700

$

148,675

$

601,200

$

57,540,575










Non-current assets









Inventory


15,891,089


-


-


15,891,089

Deferred income tax assets


-


90,277


-


90,277

Prepaid expenses, advances and deposits


9,702


-


211,564


221,266

Right-of-use assets


11,593,579


-


502,092


12,095,671

Property, plant and equipment


143,790,133


454,677


117,749


144,362,559

Intangible assets


3,050,307


25,862,425


-


28,912,732

Total assets

$

231,125,510

$

26,556,054

$

1,432,605

$

259,114,169

Non-current asset additions

$

33,345,114

$

7,598,627

$

51,564

$

40,995,305

Liabilities

$

(145,298,974)

$

(148,630)

$

(1,471,795)

$

(146,919,399)

Profit (loss) for the period

$

15,713,427

$

(43,515)

$

(4,800,466)

$

10,869,446

- revenue


141,245,328


-


-


141,245,328

- production costs


(69,674,827)


-


-


(69,674,827)

- royalties


(1,865,755)


-


-


(1,865,755)

- amortization and depreciation


(28,048,746)


(5,793)


(185,372)


(28,239,911)

- other administration expenses


(6,105,204)


(26,051)


(4,615,094)


(10,746,349)

- impairments


-


(11,671)


-


(11,671)

- interest expense


(13,074,395)


-


-


(13,074,395)

 

Non-current assets by geographical location:

 

 

 


December 31, 2022

 

 

Senegal

British Virgin Islands

 

 

Nigeria

 

United Kingdom

 

 

Canada

 

 

Total

Inventory

-

-

15,891,089

-

-

15,891,089

Prepaid expenses, advances and deposits

-

1,405

8,297

211,564

-

221,266

Right-of-use assets

-

-

11,593,579

502,092

-

12,095,671

Property, plant and equipment

408,518

-

143,836,292

114,735

3,014

144,362,559

Intangible assets

22,719,331

-

6,193,401

-

-

28,912,732

Total non-current assets

$23,127,849

$1,405

$177,522,658

$828,391

$3,014

$201,483,317

 

 

December 31, 2022

 

Segilola Mine Project

 

Exploration Projects

 

Corporate

 

Total

Current assets

$

48,931,967

$

120,752

$

831,907

$

49,884,626










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

$

214,440,462

$

19,628,795

$

1,780,518

$

235,849,775

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)

Profit (loss) for the period

$

43,686,742

$

(273,511)

$

(4,621,031)

$

38,792,200

- revenue


165,174,531


-


-


165,174,531

- production costs


(55,513,990)


-


-


(55,513,990)

- royalties


(3,696,527)


-


-


(3,696,527)

- amortization and depreciation


(31,561,887)


(4,468)


(85,901)


(31,652,256)

- other administration expenses


(11,091,717)


(257,029)


(4,535,130)


(15,883,876)

- impairments


-


(12,014)


-


(12,014)

- interest expense


(14,616,810)


-


-


(14,616,810)

 

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

-

16,849,402.00

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

$174,063,926

$919,673

$5,461

$185,877,352

 

 

25.  PRIOR YEAR RESTATEMENT

 

During the preparation of the current financial statements, the Group has refined its methodology and estimates for the valuation of Inventory stockpiles. The change in estimates apply to better management information being available to the Group such as improved density calculations for the determination of the mass of the stockpiles. These revisions have increased the amount of ore in the stockpiles by approximately 118,000 tonnes and 3,500 contained ounces as at December 31, 2023. Such changes in estimates have been applied prospectively in accordance with accounting guidance.

 

As part of this assessment, the Group has also identified an error in the methodology used to calculate the cost of its stockpile in previous periods. The error relates to calculating costs based on tonnes of ore mined as opposed to ounces. Considering this revision, the balance of Inventory as at December 31, 2022 increased by $12,597,962 and as at January 1, 2022 decreased by $795,297.

 

Therefore, in accordance with "IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors", the Consolidated statements of financial position, Consolidated statements of comprehensive income and Consolidated statements of cash flows for the year ended December 31, 2022, have been restated. The impact of the restatement on these statements is demonstrated below:

 

 

 

 

 

 

26.  SUBSEQUENT EVENTS

 

On April 3, 2024, the Company announced that it had completed the acquisition of interests in two licences in southeast Senegal where it is currently advancing the Douta Gold Project to a Preliminary Feasibility stage. The Company acquired, at a cost of $120,000, an up to 85% interest in the strategically located Douta-West Licence which lies contiguous to the Douta Gold Project and an up to 80% interest in the Sofita Licence, at a cost of $20,000, located approximately 20 kilometers ("km") south of the Douta Gold Project.

 

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