REG - Thor Explorations Ld - SECOND QUARTER 2022 FINANCIAL & OPERATING RESULTS
30/08/2022 07:16
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RNS Number : 4747X Thor Explorations Ltd 30 August 2022
NEWS RELEASE
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR
DISTRIBUTION TO U.S. WIRE SERVICES
August 30, 2022 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 SECOND QUARTER 2022 FINANCIAL AND OPERATING
RESULTS, FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2022
Thor Explorations Ltd. (TSXV / AIM: THX) ("Thor Explorations" or the
"Company") is pleased to provide an operational and financial review for its
mineral properties located in Nigeria, Senegal and Burkina Faso for the three
("Q2 2022" or the "Period") and six months to June 30, 2022 ("H1 2022").
The Company's Condensed Consolidated Interim Financial Statements together
with the notes related thereto, as well as the Management's Discussion and
Analysis for the three and six months ended June 30, 2022, are available on
Thor Explorations' website https://thorexpl.com/investors/financials/
(https://thorexpl.com/investors/financials/)
Operational Highlights of the Period and H1 2022
· Achievement of commercial production with 23,785 oz of gold
produced at Segilola in the Period (H1 2022: 45,128 oz)
o Average mill feed grade during the Period was 3.66 grammes per tonne
("g/t") gold and recovery was 95.5%
o The Company exported the gold regularly throughout the Period selling
22,172 oz (H1 2022: 38,830 oz) of gold and 1,351 oz (H1 2022: 2,273 oz) of
silver in the Period
· Gold dore inventory of 2,065 ounces on hand, with 6,069 ounces in
transit as at the end of Q2 2022
· Zero Lost Time Incidents during Q2 2022
· The Company has funded a range of livelihood restoration
programmes to aid the local community members who lost assets (crops and
trees) and land within the mine's footprint
· Community development included support for women's programmes,
school scholarships for children from vulnerable families, road upgrades and
construction of local market facilities
Financial Highlights of the Period and H1 2022
· Net profit for the period US$6.163m
· Gold sales in the Q2 2022 generating revenues of US$41,354,747
(H1 2022: US$66,220,229)
· As at June 30, 2022, the Company had cash of US$5,055,930
· Sales of 22,172 oz (H1 2022: 38,830 oz) at a cash operating cost
of US$922 per oz (H1 2022: US$788 per oz) sold and an all-in sustaining cost
("AISC") of US$956 per oz sold (H1 2022: US$852 per oz)
· As at June 30, 2022, the Company had Net debt of US$37,306,971
(Q1 2022: US$50,463,920)
· In the Period, the Company repaid US$14,461,938 million,
principal and interest, of its Senior Secured Debt Facility with Africa
Finance Corporation ("AFC")
· Instalment payments on the AFC Senior Secured Debt Facility of
US$9,740,959 are due by December 31, 2022. These will be paid from cashflows
during the year
· The payment of the final EPC invoices has been extended by the
EPC Contractor following the delay in commercial production experienced in Q4
2021 and will be paid from cash flows during H2 2022
· In Q1 2022, the Company changed its presentation currency to the
United States dollar ("$"). This being the functional currency for the
Company, and the currency of the primary economic environment in which the
Company operates.
Post Period Highlights
Senior Management Appointments
The Company has confirmed the permanent appointment of Chris Omo-Osagie, as
Chief Financial Officer effective immediately following his position over the
last three months as Acting Chief Financial Officer. Chris will report
directly to the CEO and is not joining the Company's board.
Chris (47 years old) has served in various senior executive roles across North
America, Europe, the Caribbean and Africa with PricewaterhouseCoopers,
Deloitte, Centrica, Molson Coors and more recently as Deputy Regional Chief
Finance Officer for Dangote Cement Plc in Nigeria. Chris has led and sponsored
numerous business transformational projects and has extensive experience in
financial reporting, finance operations, mergers and acquisitions, controls
and assurance, and treasury management and also financial advisory and
corporate finance services to organizations, with transaction values from
US$30 million to US$45 billion, including supporting new listings on the TSX.V
(Toronto Stock Exchange) and the Irish Stock Exchange. Chris was a director of
Autonomy Business Solutions Limited within the five years prior to his
appointment. He is a Chartered Accountant and Fellow of the Institute of
Chartered Accountants in England and Wales, and member of the Institute of
Chartered Accountants of Ontario, Canada.
There is no further information required to be disclosed under Rule 17 or
paragraph (g) of Schedule 2 of the AIM Rules for Companies.
Outlook
· Further revision of 2022 production guidance to 90,000 to 100,000
oz of gold (previously 85,000 to 100,000 oz of gold) at an AISC of US$850-950
per oz
· Continue to advance the Douta project to preliminary feasibility
study ("PFS")
· Advance exploration programmes across the portfolio, focusing on
near mine and underground exploration at Segilola, extension drilling at Douta
as well as accessing regional targets in Nigeria
Segun Lawson, President & CEO, stated:
"This has been a milestone quarter for the Company, generating a net profit of
over US$6m for the period. We are pleased to have completed another strong
quarter at the upper end of our guidance, improving on our performance in the
first quarter of the year. Significantly, the Company repaid its largest
scheduled debt repayment in the period reducing its facility by 29% in the
first six months of commercial production.
"We have also continued to prioritise our Environmental, Social and Governance
efforts in and around the local communities and have funded a range of
projects as agreed in our Community Development Agreements.
"This has been a very encouraging first six months of the year and, as such,
we are pleased to narrow our full year production guidance for the second time
to 90,000 to 100,000 ounces within a cost guidance of US$850 - US$950 per
ounce."
Further details can be found on the Company's website: www.thorexpl.com
(http://www.thorexpl.com)
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 / Thomas Diehl
Tel: +44 (0) 20 7523 8000
Hannam & Partners (Broker)
Andrew Chubb / Matt Hasson / Nilesh Patel / Franck Nganou
Tel: +44 (0) 20 7907 8500
Fig House Communications (Investor Relations)
Tel: +1 416 822 6483
Email: investor.relations@thorexpl.com
BlytheRay (Financial
PR)
Tim Blythe / Megan Ray / Rachael Brooks
Tel: +44 207 138 3203
Q2 2022 Operational Review
Segilola Project, Nigeria
During the Period, there continued to be global supply chain issues resulting in shortages and increased prices for a number of essential consumables and supplies such as ammonium nitrate, diesel and spare parts. The Company has mitigated these risks through the bulk purchase of most supply chain items and anticipates that its production guidance and costs for the year remain in line.
Gold Production
During the three months ended June 30, 2022 the Segilola Mine produced 23,785
ounces of gold (Q1: 21,343 ounces).
The Company exported the gold regularly throughout the period selling 22,172
ounces of gold and 1,351 ounces of silver in the period and had a further gold
dore inventory of 2,065 ounces on hand, with 6,069 ounces in transit. These
ounces have all been sold in the third quarter of 2022.
Mining
During the three months ended June 30, 2022, 4,031,584 tonnes of material was
mined, equivalent to mining rates of 44,795 tonnes of material per day. In
this period, 284,079 tonnes of ore were mined, equivalent to mining rates of
3,122 tonnes of ore per day, at an average grade of 3.63g/t.
The stockpile balance at the end of the period was 249,281 tonnes of ore at an
average of 1.46g/t.
Processing
During the three months ended June 30, 2022, a total of 211,582 tonnes of ore,
equivalent to a throughput rate of 2,351 tonnes per day, was processed.
The mill feed grade was 3.66g/t gold and recovery was 95.5% for a total of
23,785 ounces of gold produced. We continue to review the process plant to
optimize throughput and recoveries.
For the month of June, the Segilola process plant continued to operate at a
steady state, above design mill throughput, with 87,021 tonnes of ore
processed at an average head grade of 3.88g/t and an overall gold recovery of
95.5% for a total of 10,363 ounces of gold produced.
All of the main operating units are performing as expected, and the plant is
consistently operating above nameplate capacity. Optimization of the gold
recovery process is ongoing, and the start-up issues encountered have been
addressed.
Production Metrics
Units Q2 2022 Q1 2022
Mining
Total Ore Mined Tonnes 284,079 226,314
Ore Processed Tonnes 211,582 221,900
Low Grade Ore Stockpiled Tonnes 249,281 179,758
Waste Mined Tonnes 3,747,504 3,533,610
Total Mined Tonnes 4,031,584 3,759,524
Total Ore Mined Gold Grade g/t Au 3.63 2.68
Ore Processed g/t Au 3.66 3.18
Low Grade Ore Stockpiled g/t Au 1.46 1.23
Processing
Ore Milled tonnes 211,582 221,920
Daily Throughput Rate (average) tpd 2,784 2,760
Daily Throughput / Nameplate Capacity % 141% 128%
Ore Processed Gold Grade g/t Au
Recovery % 95.5 94.1
Gold Recovered oz 23,785 21,343
Environment and Social Summary Q2 2022
The main achievements with respect to the Company's environment and social
activities for Q2 2022 were focused on Thor Explorations' corporate governance
aspects in finalising Thor policies (12 new and/or updated policies) and
establishing an independent and free whistle blower hotline. Thor's 2021
Sustainability Report was progressed and metrics devised for measuring
implementation of key sustainability parameters across the material topics of
Corporate Governance, People, Health and Safety, Social and Community
Development, Cultural Governance and Environment. The report will be completed
in early Q3 2022.
During Q2 2022, significant progress has been made on the Segilola Gold Mine
Project's Greenhouse Gas ("GHG") Procedure and Tool. The Procedure sets out
how carbon equivalent (CO(2) e) calculations will be undertaken for the
project and how they will be reported. This has involved back casting and
forecasting for the Life of Mine ("LOM") within the GHG Tool (spreadsheet)
which is updated monthly. The GHG Procedure and Tool is now signed off and was
operational in Q2 2022. Monthly figures are being reported in SROL's monthly
reports. A key milestone was also achieved in May 2022 when Segilola Mine
Projects' power supply was switched over to compressed natural gas ("CNG").
The 6 MW CNG generators reduce GHG by 53% over that generated by diesel
generators. This is a key step in SROL's reduction of its carbon footprint.
HSE statistics to end Q2 2022
Safety topic for the week: CLOSE CALLS 30-Jun M-T-D Y-T-D P-T-D
HSE Statistics - Reactive (Lagging) Indicators
Number of Man Shifts Worked (Total) 826 22567 139,390 427,660
Man Hours 7450 216,054 1,258,103 3927506
Lost Time Injury (LTI) recorded 0 0 1 1
Fatality (FAT) recorded 0 0 0 1
Medical Treatment Case(MTC) reported 0 0 4 15
Near Miss (NM) reported 0 4 15 34
First Aid Case (FAC) reported 0 1 5 40
Property Damage (PD) reported 0 5 17 19
HSE Statistics - Proactive (Leading) Indicators
Number of Safety Inductions conducted 2 45 274 659
Toolbox Meeting conducted 10 274 1417 2,783
HSE Meetings conducted 0 7 38 84
HSE Inspections conducted 0 4 97 211
HSE Trainings conducted 1 10 35 344
Number of Unsafe Conditions reported 4 39 151 3,680
Number of Unsafe acts reported 5 65 299 3,288
LTI Free Days 1 30 114
Celebrations were held at site in Q2 2022 to commemorate World Safety at Work
Day. It was an occasion that celebrated SROL Safe Heroes and Departmental HSE
Champions.
The ISO 45001 Health and Safety Certification process is ongoing with gap
analysis and audit undertaken. The SROL Safety Committee across all
Departments was inaugurated chaired by the Security Manager.
Additional water quality testing commenced south of the mining footprint to
provide information on environmental issues triggered by illegal mining in a
local community. SROL is part of the task force to address illegal mining
issues in the locality.
An EIA for a helipad within the existing Segilola mine site is progressing and
will be submitted to the Federal Ministry of Environment in Q3 2022.
Social and community development parameters for the Segilola Project were also
progressed in Q2 2022. Of significance was detailed costings for seed funded
livelihood restoration programmes to aid those local community members who
lost assets (crops and trees) and land within the mine's footprint. Fish farms
and vegetable plots have been designed to be constructed on land surrounding
the water storage dam and bill of quantities prepared. Land clearing has
occurred and construction is slated to commence in Q3 through to Q4 2022.
Commitments to livelihood programmes were outlined in SROL's Livelihood
Restoration Plan. The programmes are expected to be self-sustaining within a
two year period and operate beyond the lifetime of the mine. An agricultural
expert has been seconded into the SROL team to assist in the development of
the agricultural programmes. Through funding agreed via Community Development
Agreements ("CDA") signed with the three communities surrounding the Segilola
Mine, community programmes were progressed in Q2 2022. These included road
upgrades (grading of local roads and reconstruction of one main road) and
construction of local market facilities. Local employment targets were also
set within with the CDAs and local employment makes up ~20% of Segilola's site
employment component, exceeding the CDA target. CSR programmes were also
progressed in 2022 including the maiden edition of the Segilola football
tournament held in May at Iperindo and Odo-Ijesha football fields. The
popular sporting event is aimed at promoting youth development and fostering
unity amongst Host Communities and SROL.
Compensation for the Segilola project footprint continued in Q2 2022. The
compensation budget for the Project sits at $3.8 million in line with the
overall compensation budget for the Project. This provides compensation for
277 landowners and 1113 asset owners (June 2022). Additionally, compensation
for temporary loss of assets and lands impacted by exploration activities (at
10 explorations sites across 3 states in Nigeria) stands at $297,000 for 445
asset and 7 landowners (as of June 2022).
Social listening continues (monitoring SROL and Thor mentions in Nigerian
media) across electronic, TV and printed media and findings are shared with
key departments in SROL. Most media coverage has been positive.
Exploration Activity Summary Q2 2022
Nigeria
Introduction
The high grade Segilola gold deposit is located on the major regional shear
zone that extends for several hundred kilometres through the gold-bearing
Ilesha schist belt (structural corridor) of Nigeria.
Thor's exploration tenure now comprises nine explorations licences and five
joint venture partnership exploration licences. Together with the mining
lease over the Segilola Gold Deposit, Thor's total exploration tenure amounts
to over 1,268 km(2).
Exploration Activity
Exploration during the quarter comprised on-going regional stream sediment
sampling, surface soil sampling, auger soil sampling, trench sampling and
termite mound sampling in the exploration lease located both north and south
of the Segilola Gold Deposit and reverse circulation drilling on two high
priority targets within a 15 kilometre radius of the Segilola Mine.
Figure 1: Segilola Tenement Map showing Geochemical Sample Locations
Reverse circulation ("RC") and Diamond drilling commenced during the quarter.
The main objectives of this programme are:
1. To test the geochemical and structural targets generated by auger soil
sampling and trenching in EL 20776 and EL23573. The drilling was also
targeting the occurrence of gold mined in shallow pits mined by artisanal
miners.
2. To test the gold-in soil anomalies generated by auger soil and trench
sampling at Odo within EL19066, 3km north of Segilola deposit.
Assay results are pending for the majority of the drilled holes with no
significant results received on assays received to date.
Post Period, the Exploration Lab arrived on site. The Lab is expected to be
fully operational from September 1, 2022 and will allow the Company to fully
implement its exploration drilling program and critically, will significantly
reduce assay turnaround times.
Senegal
Introduction
The Douta Gold Project is a gold exploration permit, E02038, which covers an
area of 58km(2) and is located within the Kéniéba inlier, eastern Senegal.
The northeast-trending licence (Figure 2) has an area of 58 km(2). Thor,
through its wholly-owned subsidiary African Star Resources Incorporated
("African Star"), has a 70% economic interest in partnership with the permit
holder International Mining Company SARL ("IMC"). IMC has a 30% free carried
interest in its development until the announcement by Thor of a Probable
Reserve.
The Douta licence is strategically positioned 4km east of the Massawa North
and Massawa Central deposits, which form part of the world-class
Sabadola-Massawa Project owned by Endeavour Mining (Figure 2). The Makabingui
deposit, belonging to Bassari Resources Ltd, is immediately located east of
the northern portion of E02038.
The Douta Gold Project has an initial inferred resource estimate of 15 million
tonnes ("Mt") grading 1.53g/t gold for 730,000 ounces gold. The resource
encompasses the Makosa, Makosa North and Makosa Tail zones, which are
collectively named the Makosa Resource.
Exploration Activity
Following a first phase ("Phase 1") of drilling to test the northern extension
of the Makosa Resource, the focus of the quarter has been a 12,000 metre RC
drilling programme.
The main objectives of this programme are :
- to test infill, lateral and down-dip extension of gold
mineralisation of the new Sambara target;
- infill and upgrade the categorization of the Makosa and Makosa
Tail discoveries; and
- further test additional targets generated through the auger
drilling programme.
Phase 1 RC drilling programme started on 7 March and finished on 15 April. A
total of 122 holes were drilled for 8,083m comprising:
· Sambara: 46 holes were drilled for 3,036m.
· Makosa North 76 holes drilled for 5,047m.
Prospect Number of Holes Total Metres Number of Samples
Makosa North 76 5,047 545
Sambara 46 3,036 5,935
Total 122 8,083 9,509
Table 2.4: Douta RC Drilling Statistics
Figure 2: Douta Project Location Map
Results
Makosa North Extension
Whilst the drilling programme shows the continuity of the gold-bearing
structure along the Makosa corridor in the northern part (Figure 3), the low
grade nature of the mineralisation resulted in focussing the Phase 2 drilling
programme on upgrading high grade areas of Makosa and Makosa tail.
Sambara Target
Gold mineralisation is associated with greywacke with smoky quartz,
disseminated pyrite, sericite and silica stockworks.
Significant intersections received to date are shown in Table 2.5.
The location of these results are shown in Figure 4.
Figure 3: Makosa north drilling results showing the continuity of the
gold-bearing.
Figure 4: Sambara prospect early drilling results demonstrating the presence
of gold mineralisation
Douta RC Drilling Results
HOLE ID Easting Northing Elevation Length Azimuth Dip From (m) To (m) Downhole Interval (m) True Width (m) Average Grade (Aug/t) Prospect
DTRC369 178301 1439467 198 66 130 -50 NSR Makosa North
DTRC370 178272 1439494 200 66 130 -50 NSR Makosa North
DTRC371 178243 1439522 198 66 130 -50 NSR Makosa North
DTRC372 178220 1439541 197 60 130 -50 37 38 1 0.8 0.51 Makosa North
DTRC373 178188 1439562 199 54 130 -50 30 35 5 4 1.13 Makosa North
DTRC374 178157 1439586 197 66 130 -50 NSR Makosa North
DTRC375 178410 1439648 192 66 130 -50 NSR Makosa North
DTRC376 178383 1439671 189 60 130 -50 NSR Makosa North
DTRC377 178360 1439690 186 60 130 -50 NSR Makosa North
DTRC378 178328 1439713 180 70 130 -50 NSR Makosa North
DTRC379 178296 1439737 178 54 130 -50 38 44 6 4.8 0.63 Makosa North
DTRC380 178273 1439757 177 90 130 -50 78 89 11 8.8 0.85 Makosa North
DTRC381 178516 1439816 175 66 130 -50 NSR Makosa North
DTRC382 178484 1439841 174 66 130 -50 NSR Makosa North
DTRC383 178452 1439865 172 66 130 -50 21 23 2 1.6 0.53 Makosa North
DTRC384 178421 1439889 172 40 130 -50 NSR Makosa North
DTRC385 178398 1439908 172 72 130 -50 66 67 1 0.8 0.71 Makosa North
DTRC386 178560 1440038 171 66 130 -50 2 3 1 0.8 1.24 Makosa North
and 52 53 1 0.8 0.65 Makosa North
DTRC387 178537 1440057 169 54 130 -50 32 33 1 0.8 0.77 Makosa North
DTRC388 178506 1440082 167 72 130 -50 NSR Makosa North
DTRC389 178591 1440012 172 66 130 -50 NSR Makosa North
DTRC390 178621 1439985 173 66 130 -50 NSR Makosa North
DTRC391 178651 1439960 175 66 130 -50 NSR Makosa North
DTRC392 178682 1439934 177 66 130 -50 NSR Makosa North
DTRC393 178712 1439908 178 66 130 -50 NSR Makosa North
DTRC394 178746 1440144 172 66 130 -50 NSR Makosa North
DTRC395 178715 1440169 171 72 130 -50 NSR Makosa North
DTRC396 178684 1440193 170 72 130 -50 NSR Makosa North
DTRC397 178652 1440217 169 66 130 -50 NSR Makosa North
DTRC398 178854 1440317 172 66 130 -50 NSR Makosa North
DTRC399 178822 1440341 170 66 130 -50 20 22 2 1.6 0.53 Makosa North
and 37 38 1 0.8 1.18 Makosa North
DTRC400 178790 1440365 168 66 130 -50 NSR Makosa North
DTRC401 178759 1440390 166 66 130 -50 NSR Makosa North
DTRC402 178732 1440411 165 60 130 -50 NSR Makosa North
DTRC403 178813 1440220 173 66 130 -50 NSR Makosa North
DTRC404 178775 1440244 168 72 130 -50 6 9 3 2.4 0.58 Makosa North
and 69 70 1 0.8 0.62 Makosa North
DTRC405 178738 1440271 169 84 130 -50 67 69 2 1.6 0.66 Makosa North
DTRC406 178712 1440290 169 60 130 -50 NSR Makosa North
DTRC407 187763 1451550 134 66 130 -50 NSR Sambara
DTRC408 187734 1451577 133 66 130 -50 NSR Sambara
DTRC409 187703 1451603 134 66 130 -50 NSR Sambara
DTRC410 187672 1451628 136 66 130 -50 NSR Sambara
DTRC411 187981 1451724 140 66 130 -50 2 3 1 0.8 3.12 Sambara
and 17 18 1 0.8 0.83 Sambara
DTRC412 187950 1451748 140 66 130 -50 21 22 1 0.8 0.88 Sambara
and 58 59 1 0.8 1.7 Sambara
and 64 66 2 1.6 1.49 Sambara
DTRC413 187919 1451773 138 66 130 -50 25 26 1 0.8 1.31 Sambara
DTRC414 187885 1451795 138 100 130 -50 71 72 1 0.8 1.44 Sambara
and 82 83 1 0.8 1.17 Sambara
and 94 95 1 0.8 0.7 Sambara
DTRC415 187854 1451819 141 66 130 -50 NSR Sambara
DTRC416 187823 1451844 142 66 130 -50 NSR Sambara
DTRC417 187792 1451870 143 78 130 -50 NSR Sambara
DTRC418 187761 1451894 144 66 130 -50 NSR Sambara
DTRC419 187730 1451918 146 66 130 -50 NSR Sambara
DTRC420 187697 1451942 148 66 130 -50 NSR Sambara
DTRC421 188401 1451404 144 34 130 -50 NSR Sambara
DTRC422 188379 1451423 145 78 130 -50 NSR Sambara
DTRC423 188089 1451888 153 66 130 -50 NSR Sambara
DTRC424 188063 1451911 152 60 130 -50 NSR Sambara
DTRC425 188029 1451931 147 72 130 -50 1 2 1 0.8 1.45 Sambara
and 19 20 1 0.8 0.5 Sambara
and 24 25 1 0.8 5.42 Sambara
DTRC426 187999 1451958 146 72 130 -50 29 30 1 0.8 0.62 Sambara
and 45 47 2 1.6 3.33 Sambara
incl 45 46 1 0.8 5.98 Sambara
and 56 57 1 0.8 1.63 Sambara
and 65 71 6 4.8 2.48 Sambara
incl 70 71 1 0.8 10.1 Sambara
DTRC427 187967 1451983 146 66 130 -50 NSR Sambara
DTRC428 187935 1452008 146 66 130 -50 54 55 1 0.8 0.65 Sambara
DTRC429 187904 1452032 147 78 130 -50 NSR Sambara
DTRC430 188196 1452051 149 66 130 -50 NSR Sambara
DTRC431 188165 1452076 150 84 130 -50 1 4 3 2.4 1.39 Sambara
and 7 8 1 0.8 0.9 Sambara
and 12 18 6 4.8 3.6 Sambara
incl 15 16 1 0.8 9.03 Sambara
and 27 28 1 0.8 27 Sambara
DTRC432 188134 1452102 150 66 130 -50 NSR Sambara
DTRC433 188104 1452127 150 72 130 -50 26 27 1 0.8 2.35 Sambara
DTRC434 188073 1452153 150 66 130 -50 NSR Sambara
DTRC435 188042 1452178 150 66 130 -50 23 24 1 0.8 0.55 Sambara
DTRC436 188477 1452094 132 66 130 -50 NSR Sambara
DTRC437 188445 1452118 132 66 130 -50 NSR Sambara
DTRC438 188415 1452144 133 66 130 -50 NSR Sambara
DTRC439 188382 1452166 134 66 130 -50 NSR Sambara
DTRC440 188358 1452184 135 60 130 -50 NSR Sambara
DTRC441 188333 1452198 138 50 130 -50 NSR Sambara
DTRC442 188305 1452223 143 66 130 -50 NSR Sambara
DTRC443 188461 1452361 145 78 130 -50 45 46 1 0.8 1.43 Sambara
DTRC444 188493 1452336 146 66 130 -50 NSR Sambara
DTRC445 188429 1452385 144 78 130 -50 15 16 1 0.8 5.1 Sambara
DTRC446 188396 1452408 144 66 130 -50 NSR Sambara
DTRC447 188366 1452435 145 66 130 -50 NSR Sambara
DTRC448 188333 1452460 146 62 130 -50 NSR Sambara
DTRC449 188302 1452483 147 66 130 -50 NSR Sambara
DTRC450 188466 1451481 145 42 130 -50 NSR Sambara
DTRC451 188417 1451390 144 24 130 -50 NSR Sambara
DTRC452 188440 1451370 144 66 130 -50 NSR Sambara
DTRC453 179030 1440426 184 66 130 -50 31 32 1 0.8 0.94 Makosa North
DTRC454 179001 1440453 182 66 130 -50 NSR Makosa North
DTRC455 178972 1440480 177 66 130 -50 NSR Makosa North
DTRC456 178943 1440507 172 66 130 -50 12 14 2 1.6 1.38 Makosa North
DTRC457 178915 1440535 171 66 130 -50 31 33 2 1.6 0.7 Makosa North
DTRC458 179305 1440728 180 66 130 -50 65 66 1 0.8 0.5 Makosa North
DTRC459 179272 1440751 177 66 130 -50 NSR Makosa North
DTRC460 179239 1440777 174 66 130 -50 NSR Makosa North
DTRC461 179210 1440799 169 66 130 -50 NSR Makosa North
DTRC462 179177 1440822 167 90 130 -50 52 53 1 0.8 0.64 Makosa North
DTRC463 180427 1442136 163 66 130 -50 50 56 6 4.8 0.96 Makosa North
DTRC464 180395 1442160 162 66 130 -50 NSR Makosa North
DTRC465 180366 1442187 160 66 130 -50 NSR Makosa North
DTRC466 180331 1442213 160 66 130 -50 NSR Makosa North
DTRC467 180297 1442239 160 66 130 -50 NSR Makosa North
DTRC468 180267 1442261 165 66 130 -50 NSR Makosa North
DTRC469 180761 1441379 167 66 130 -50 NSR Makosa North
DTRC470 180729 1441402 168 66 130 -50 NSR Makosa North
DTRC471 180699 1441425 168 66 130 -50 NSR Makosa North
DTRC472 180216 1441793 173 66 130 -50 NSR Makosa North
DTRC473 180186 1441819 171 66 130 -50 9 12 3 2.4 0.75 Makosa North
DTRC474 180153 1441843 169 66 130 -50 43 46 3 2.4 0.6 Makosa North
and 60 62 2 1.6 0.6 Makosa North
DTRC475 180122 1441868 168 66 130 -50 NSR Makosa North
DTRC476 180092 1441890 167 66 130 -50 NSR Makosa North
DTRC477 179971 1441479 172 66 130 -50 NSR Makosa North
DTRC478 179939 1441503 171 66 130 -50 NSR Makosa North
DTRC479 179910 1441530 168 66 130 -50 NSR Makosa North
DTRC480 179878 1441554 167 66 130 -50 9 10 1 0.8 0.55 Makosa North
DTRC481 179850 1441575 166 78 130 -50 33 34 1 0.8 0.57 Makosa North
and 50 51 1 0.8 0.74 Makosa North
DTRC482 179728 1441156 188 66 130 -50 NSR Makosa North
DTRC483 179699 1441184 186 71 130 -50 NSR Makosa North
DTRC484 179668 1441209 182 66 130 -50 NSR Makosa North
DTRC485 179637 1441233 178 66 130 -50 NSR Makosa North
DTRC486 179605 1441257 179 66 130 -50 10 18 8 6.4 0.85 Makosa North
incl 15 18 3 2.4 1.1 Makosa North
25 26 1 0.8 0.56 Makosa North
DTRC487 179581 1441023 184 66 130 -50 NSR Makosa North
DTRC488 179548 1441047 180 66 130 -50 NSR Makosa North
DTRC489 179517 1441073 177 72 130 -50 NSR Makosa North
DTRC490 179486 1441097 174 66 130 -50 7 8 1 0.8 0.52 Makosa North
and 13 14 1 0.8 0.54 Makosa North
COVID-19 Pandemic
The COVID-19 pandemic continued in 2022 and has had a significant impact on
businesses through restrictions put in place by governments around the world
including the jurisdictions in which we conduct our business. Over the last
two years, aspects of the Company's operations have been impacted by COVID-19
for a variety of reasons, such as government and other restrictions on
transportation and the mobility of personnel and mandatory quarantine periods
and border closures.
As of the date of this MD&A, it is not possible to determine the extent of
the impact that this pandemic will have on our activities as the impacts will
depend on future developments which themselves are uncertain and cannot be
predicted with confidence. These uncertainties arise from the inability to
predict the ultimate geographic spread of the disease, its extent and
intensity, the duration of the outbreak, and possible government, societal,
and individual responses to the situation.
Possible impacts of the continuing or worsening spread of COVID-19, including
new variants of the virus, may include mandated or voluntary closures of
operations, illness among the Company's workforce, restricted mobility of
personnel, interruptions in the Company's logistics and supply chain, delay at
or closure of the Company's refining and smelting service providers and global
travel restrictions, all of which could disrupt the Company's operations and
negatively impact its financial performance.
SUBSEQUENT EVENTS
There are no material subsequent events to report.
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:
· Maintain our rigorous health and safety protocols
· 2022 Operational Guidance and Outlook
Gold Production oz 90,000-100,000
All-in Sustaining Cost ("AISC") US$/oz Au sold $850 - $950
Capital Expenditure US$ 9,243,000
Exploration Expenditure:
Nigeria US$ 4,200,000
Senegal US$ 2,000,000
· The critical factors that influence whether Segilola can achieve
these targets include:
o Segilola's ability to maintain an adequate supply of consumables (in
particular ammonium nitrate, flux and cyanide) and equipment, particularly if
there is any resurgence in the COVID-19 pandemic
o Fluctuations in the price of key consumables, in particular ammonium
nitrate, and diesel
o Segilola's workforce remaining healthy
o Continuing to receive full and on-time payment for gold sales
o Continuing to be able to make local and international payments in the
ordinary course of business
· Continue to advance the Douta project towards preliminary
feasibility study ("PFS")
· Continue to advance exploration programmes across the portfolio:
o Segilola near mine exploration
o Segilola underground project
o Segilola regional exploration programme
o Douta extension programme
o Douta infill programme
o 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.
Summary of quarterly results
$ 2022 Q2 2022 Q1 2021 Q4 2021 Q3
Jun 30 Mar 31 Dec 31 Sep 30
Revenues 66,220,229 24,865,482 6,205,345 -
Net profit/(loss) for period 6,305,101 200,473 2,665,653 460,745
Basic and fully diluted profit/(loss) per share (cents) 0.01 0.00 0.40 0.08
$ 2021 Q2 2021 Q1 2020 Q4 2020 Q3
Jun 30 Mar 31 Dec 31 Sep 30
Revenues - - -
Net profit/(loss) for period (5,582,090) (67,365) (1,560,694) (1,030,715)
Basic and fully diluted profit/(loss) per share (cents) (0.90) (0.05) (0.25) (0.17)
RESULTS FOR SIX MONTHS ENDED JUNE 30, 2022
The review of the results of operations should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto.
The Company reported a net profit of $6,305,101 ($0.01 profit per share) for
the six months to June 30, 2022, as compared to a net (loss) of
($5,103,924($0.90 loss per share) for the six months ended June 30, 2021. The
move to profit for the six months was largely due to:
· sales in H1 2022 of $66,220,229 in H1 2021 (nil);
· foreign exchange gains of $5,824,295 from loss of $2,372,083 in
H1 2021
These were offset partially by:
· Amortisation and depreciation of $13,027,616; and
· Interest of $7,693,863
The Company recorded sales revenue of $66,220,229 for the six months ended
June 30, 2022, and $nil for the six months to June 30,2021. No interest was
earned during the six months ended June 30, 2022, and 2021.
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2022, the Company had cash of $5,055,930, 6,069 ounces of gold
in transit and 2,066 ounces of gold dore in inventory to be sold, and a
working capital deficit of ($28,790,194).
The increase in cash from December 31, 2021 (cash of $1,276,270) is due mainly
to gold sales revenue of $66,220,299, offset by instalment payments on the
loan facility of $14,461,938, the purchase of property plant and equipment
of $5,662,492 and operational costs and corporate overheads of $26,946,453.
This cash expenditure was financed by operational cashflow and existing cash
balances.
As previously announced, the EPC Contractor has confirmed that it will support
the Company by extending the payment period of the final EPC invoices and has
acknowledged that the Company will make payment of the final EPC invoices from
available cashflow.
Unaudited Financial Statements
THOR EXPLORATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In United States dollars (unaudited)
June 30, December 31,
Note 2022 2021
$
$
ASSETS
Current assets
Cash 5,055,930 1,276,270
Restricted cash 6 3,495,992
-
Inventory 7 24,046,025 18,146,558
Amounts receivable 8 705,799 237,651
Prepaid expenses, advances and deposits 9 1,961,307 586,865
Total current assets 31,769,061 23,743,336
Non-current assets
Deferred income tax assets 79,771 86,795
Prepaid expenses, advances and deposits 9 287,338 105,683
Right-of-use assets 10 19,361,972 20,843,612
Property, plant and equipment 15 141,445,926 147,373,656
Intangible assets 16 15,497,414 15,345,419
Total non-current assets 176,672,421 183,755,165
TOTAL ASSETS 208,441,482 207,498,501
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 17 39,128,410 38,827,489
Deferred income 18 10,147,435 -
Lease liabilities 10 4,007,843 4,849,088
Gold stream liability 11 11,753,417 12,837,633
Loans and other borrowings 12 15,779,820 27,984,078
Total current liabilities 80,816,925 84,498,288
Non-current liabilities
Accounts payable and accrued liabilities 17 354,459 1,564,191
Lease liabilities 10 13,135,582 13,425,286
Gold stream liability 11 17,323,911 17,424,646
Loans and other borrowings 12 26,207,109 25,754,525
Provisions 14 5,358,322 5,238,176
Total non-current liabilities 62,379,383 63,406,824
SHAREHOLDERS' EQUITY
Common shares 19 79,949,297 79,027,183
Option Reserve 19 3,455,454 4,513,900
Currency translation reserve (4,464,940) (2,889,510)
Retained earnings (13,694,637) (21,058,184)
Total shareholders' equity 65,245,174 59,593,389
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 208,441,482 207,498,501
These consolidated financial statements were approved for issue by the
Board of Directors on August 29 , 2022, and are signed on its behalf by:
(Signed) "Adrian Coates" (Signed) "Olusegun Lawson"
Director Director
The accompanying notes are an integral part of these consolidated financial
statements.
THOR EXPLORATIONS LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
In United States dollars (unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
Note 2022 2021 2022 2021
Continuing operations
Revenue $ 41,354,747 $ - $ 66,220,229 $ -
Production costs 5 24,262,437 - 37,649,096 -
Transportation and refining 604,991 - 1,107,213 -
Royalties 946,252 - 1,497,017 -
Loss on forward sale of commodity contracts (471,403) - (176,480) -
Gross profit from operations 16,012,470 - 26,143,383 -
Amortisation and depreciation - owned assets 5 5,789,009 2,323 10,793,626 8,499
Amortisation and depreciation - right of use assets 5 1,075,735 11,164 2,233,990 22,517
Other administration expenses 5 2,684,016 735,778 4,933,877 1,460,836
Impairment of Exploration & Evaluation assets 16 4,520 1,373 7,221 97,847
Profit (loss) from operations 6,459,190 (750,637) 8,174,669 (1,589,698)
Interest expense (3,935,732) (195) (7,693,863) (521)
Foreign exchange gains 3,640,484 (3,527,676) 5,824,295 (2,372,083)
Extra-ordinary expenses (1,141,621) (1,141,621)
Net profit (loss) for the period 6,163,942 (5,420,131) 6,305,101 (5,103,924)
Attributable to:
Non-controlling interest
Equity shareholders of the Company 6,163,942 (5,420,131) 6,305,101 (5,103,924)
Net profit (loss) for the period 6,163,942 (5,420,131) 6,305,101 (5,103,924)
Other comprehensive profit (loss)
Foreign currency translation loss attributed to (775,718) (1,575,430)
equity shareholders of the company*
Total comprehensive income profit (loss) for the period 5,388,224 (5,420,131) 4,729,671 (5,103,924)
Net profit (loss) per share - basic and diluted 20 $ 0.010 $ (0.009) $ 0.010 $ (0.008)
Weighted average number of common shares 637,605,227 621,808,390 636,603,895 621,506,029
outstanding - basic and diluted
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
THOR EXPLORATIONS LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
In United States dollars (unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
Note 2022 2021 2022 2021
Cash flows from (used in):
Operating activities
Net profit / (loss) $ 6,163,942 $ (5,420,131) $ 6,305,101 $ (5,103,924)
Adjustments for:
Impairment of unproven mineral interest 16 4,519 1,373 7,221 97,847
Amortisation and depreciation 6,864,744 13,486 13,027,616 31,016
Loss on forward sale commodity contracts (471,403) - (176,480) -
Settlement of gold stream obligation - -
Foreign exchange (gain) loss 837,517 (52,668) 1,552,511 138,972
Interest income / expense 3,935,732 - 7,693,863 -
Net operating cash flows 17,335,051 (5,457,939) 28,409,832 (4,836,088)
Changes in non-cash working capital accounts
Restricted cash 464 - 3,467,617 -
Receivables (517,146) - (475,996) -
Prepaid expenses and deposits (961,870) (1,312,037)
Deferred income 3,910,703 10,144,050
Inventory (7,485,612) (6,038,731)
Prepaids long term (240,767) (230,869)
Repayment of goldstream liabilities (2,997,495) (4,804,185)
Accounts payable and accrued liabilities 7,422,248 - 1,065,330
Cash utilized in operations 16,465,576 1,685,810 30,225,011 (907,491)
Adjustment to net loss for cash items
Realized foreign exchange (320,849) - (170,769) -
Total operating 16,144,727 30,054,242
Investing
Purchase of intangible assets - (24,484) (169) (136,060)
Assets under construction expenditures - (22,061,396) (31,436,600)
Property, Plant & Equipment (1,247,464) (687,749) (7,808,673) (1,573,441)
Exploration & Evaluation assets expenditures (509,280) (662,470) (1,097,588) (1,249,946)
Total investing (1,756,744) (23,436,099) (8,906,430) (34,396,047)
Financing
Proceeds from issuance of equity securities 284,585 284,585
Share subscriptions received 2,952 922,114
(13,440,749) 21,047,283 (15,424,675) 21,047,283
(Repayment of)/Proceeds from loans and borrowings
Net proceeds from short term currency swaps 594,748 2,348,228
Interest paid (1,329,281) (2,543,868)
Payment of lease liabilities (1,365,480) (12,151) (2,579,159) (24,393)
Total Financing (15,537,810) 21,319,717 (17,277,360) 21,307,475
Effect of exchange rates on cash (70,618) (927,151) (90,792) (620,686)
Net change in cash $ (1,220,445) $ (1,319,410) $ 3,779,660 $(14,924,072)
Cash, beginning of the period $ 6,276,375 $ 8,760,354 $ 1,276,270 $ 22,365,016
Cash, end of the period $ 5,055,930 $ 7,440,944 $ 5,055,930 $ 7,440,944
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
THOR EXPLORATIONS LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
In United States dollars (unaudited)
Note Common Shares Option Reserve Currency translation reserve Deficit Total shareholders' equity
Balance on December 31, 2020 $ 76,858,769 $ 4,626,426 $ (594,661) $(19,562,232) $ 61,704,198
Reinstatement of warrants 19 - - - (45,899) -
Net loss for the period - - - (67,364) (67,364)
Loss - - (804,019) - (804,019)
Balance on June 30, 2021 $ 76,858,769 $ 4,626,426 $ (1,398,680) $(19,675,495) $ 60,832,815
Exercise of warrants 19 2,073,451 - - 421,794 2,073,451
Options exercised 19 94,963 (112,527) - 112,527 94,963
Net loss for the period - - - (1,917,010) (1,917,010)
Comprehensive loss - - (1,490,830) - (1,490,830)
Balance on December 31, 2021 $ 79,027,183 $ 4,513,900 $ (2,889,510) $(21,058,184) $ 59,593,389
Share issuance costs 19 - - - - -
Issue of share options 19 - - - - -
Options exercised 19 922,114 (1,058,446) - 1,058,446 922,114
Net profit for the period - - - 6,305,101 6,305,101
Comprehensive loss - - (1,575,430) - (1,575,430)
Balance on June 30, 2022 $ 79,949,297 $ 3,455,454 $ (4,464,940) $(13,694,637) $ 65,245,174
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022, AND 2021
In United States dollars, except where noted (unaudited)
1. CORPORATE INFORMATION
Thor Explorations Ltd. is a West African focused gold producer and explorer,
dually listed on the TSX-V (THX.V) and AIM Market of the London Stock Exchange
(THX.L).
The Company was formed in 1968 and is organised under the BCBCA with its
registered office at 550 Burrard St, Suite 2900 Vancouver, BC, CA, V6C 0A3.
The Company evolved into its current form in August 2011 following a reverse
takeover and completed the transformational acquisition of its flagship
Segilola Gold Project in Nigeria in August 2016.
2. BASIS OF PREPARATION
a) Statement of compliance
These unaudited condensed consolidated interim 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
These unaudited condensed consolidated interim financial statements have been
prepared on a historical cost basis and are presented in United States
dollars, unless otherwise indicated.
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 Company'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 unaudited condensed financial
statements are discussed in Note 4.
c) Nature of operations and going concern
As at June 30, 2022, the Company had cash of $5,055,930, and inventory of
2,275 ounces of gold to be sold, with 6,069 ounces in transit. During the six
months period ended June 30, 2022, the Company produced 45,128 ounces of gold
(Q2 2022: 23,785 ounces) and post period end, the Company has continued
production from its Segilola Gold Mine. The Company sold 38,830 ounces of gold
from 1 January 2022 to the end of Q2 2022.
The Board has reviewed the Group's cash flow forecasts for the twelve-month
period from the date of this report including revised forecast production of
85,000 - 100,000 ounces of gold for 2022. The Board is satisfied that the
Group will generate sufficient financial resources from its operational cash
flow to meet commitments for at least the next twelve months.
The Board has considered the operational disruption that could be caused by
factors such as interruptions to production at commercial levels, illness
amongst workforce caused by global and regional pandemics, and potential
disruptions to supply chains. The forecast cashflows are based on a gold price
of US$1,836/oz and the all-in sustaining cost at Segilola of US$850 -
$US950/oz during the period under review (Refer to section 3 of the Q2 2022,
MD&A).
The final EPC invoices are recorded as due and payable and constitute a
material amount of the net working capital deficit. The EPC Contractor has
confirmed that it will support the Company by extending the payment period of
the final EPC invoices and has acknowledged that the Company will make payment
of the final EPC invoices from available cashflow.
As at June 30, 2022, the Group had a net working capital deficit of
$28,790,194 which includes its Senior Secured Facility, Deferred Payment
Facility (refer to note 12), Mining Contractor invoices which become due three
months after being invoiced, final EPC invoices which became due post EPC
handover, which occurred on January 31, 2022 and a Deferred Income component,
less related inventory, which was earned in July 2022 (See note 18 for
details). The working capital calculation excludes $11,753,417 of gold stream
liabilities, and $4,854,968 in third party royalties included in current
accounts payable, that are contingent upon revised gold sales forecast of
85,000-100,000 ounces for the year ending December 31, 2022.
In Q2, 2022, the Company made its second scheduled debt repayment to the
Africa Finance Corporation of $14,461,938 consisting of principal and
interest, in accordance with the terms of its Senior Secured Facility.
At June 30, 2022, total principal repayments and cancellations amount to
$15,825,971, 29% of the original $54m Facility.
Having reviewed the cash flow forecast, the Board anticipates that continued
production at expected levels from its Segilola Gold Mine will provide
sufficient cash generation to enable the Group to service future debt
repayment obligations.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies described below have been applied consistently to all
periods presented in these unaudited condensed consolidated interim financial
statements unless otherwise stated.
a) Consolidation principles
Assets, liabilities, revenues and expenses of the subsidiaries are recognized
in accordance with the Company's accounting policies. Intercompany
transactions and balances are eliminated upon consolidation.
b) Details of the group
In addition to the Company, these unaudited condensed consolidated interim
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 audited consolidated financial statements present the
results of the Company and its subsidiaries ("the Group") 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
Thor Investments (BVI) Ltd. ("Thor BVI") British Virgin Islands June 30, 2011 100%
African Star Resources Incorporated ("African Star") British Virgin Islands June 30, 2011 100%
Segilola Resources Incorporated ("SR BVI") British Virgin Islands March 10, 2020 100%
Thor Gold Ventures Ltd ("THX GV") United Kingdom February 11, 2022 100%
African Star Resources SARL ("African Star SARL") Senegal July 14, 2011 100%
Argento Exploration BF SARL Burkina Faso September 15, 2010 100%
("Argento BF SARL")
AFC Constelor Panafrican Resources SARL ("AFC Constelor SARL") Burkina Faso December 9, 2011 100%
Segilola Resources Operating Limited Nigeria August 18, 2016 100%
("SROL")
Segilola Gold Limited ("SGL") Nigeria August 18, 2016 100%
The only change to ownership interest from the previous year was the
incorporation of Thor Gold Ventures Ltd in February 2022.
c) Foreign currency translation
Functional and presentation currency
The Company's 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 Thor BVI, African
Star, SR BVI, African Star SARL, Argento BF SARL, AFC Constelor SARL, SROL 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, African Star, African Star
SARL, Argento BF SARL, AFC Constelor SARL, SROL and SGL are recognized in
other comprehensive income (loss). Exchange differences arising on the net
investment in subsidiaries are recognised in other comprehensive income.
Foreign currency transactions
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing on the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at period-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit and
loss. Fluctuations in the value of the local currencies of our subsidiaries,
with most notably the US dollar will result in foreign exchange gains and
losses as assets and liabilities denominated in US dollar are revalued in the
Subsidiary's local currency at reporting dates.
d) Financial instruments
Financial assets and financial liabilities are recognised in the consolidated
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities are added to or deducted
from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
The effective interest method is a method of calculating the amortised cost of
a financial asset/liability and of allocating interest income/expense over the
relevant period. The effective interest rate is the rate that discounts
estimated future cash receipts/payments through the expected life of the
financial asset/liability or, where appropriate, a shorter period. Costs
directly relating to financing facilities are initially recognised against the
loan balance, and subsequently released to the income statement over the term
of the facility.
Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of
a group of similar financial assets) is derecognised when:
- the rights to receive cash flows from the asset have expired;
- the Group retains the right to receive cash flows from the asset,
but has assumed an obligation to pay them in full without material delay to a
third party under a 'pass through' arrangement; or
- the Group has transferred its rights to receive cash flows from the
asset and either (a) has transferred substantially all the risks and rewards
of the asset, or (b) has neither transferred nor retained substantially all
the risks and rewards of the asset but has transferred control of the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised
in profit or loss.
Financial Assets
Under IFRS 9, the Group classifies its financial assets into the following
categories: those to be held at amortised cost, and those to be measured
subsequently at fair value through profit and loss.
Classification depends on the business model for managing the financial assets
and the contractual terms of the cash flows. Management determines the
classification of financial assets at initial recognition. The Group's
business model is primarily that of "hold to collect" (where assets are held
in order to collect contractual cash flows).
Amortised cost: these assets arise principally from the provision of goods
and services to customers, 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 recognised at fair value plus
transaction costs that are directly attributable to their acquisition or issue
and are subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment.
Amounts receivables are measured at amortised cost using the effective
interest rate method, less impairment.
Cash and cash equivalents
Cash and cash equivalents represent cash balances held at bank and on demand
deposits. Cash and cash equivalents are measured at amortised cost.
Restricted cash represented cash balances held in bank accounts that are ring
fenced to be applied to the construction costs at the Company's Segilola Gold
Mine in Nigeria.
The Group does not hold any financial assets that meet conditions for
subsequent recognition at fair value through other comprehensive income.
As at June 30, 2022, the Company had $nil that is accounted for separately
from cash and cash equivalents (December 31, 2021, $3.5 million). All the
Company's cash is now freely available for the Company's use and is no longer
classified as restricted cash. Refer to Note 6.
Impairment of Financial Assets
The Group recognizes a loss allowance for expected credit losses ("ECL") on
financial assets that are measured at amortised cost which comprise mainly of
receivables. The amount of expected credit losses is updated at each reporting
date to reflect changes in credit risk since initial recognition of the
respective financial instrument. Impairment provisions for other receivables
are recognised based on a forward-looking expected credit loss model. The
methodology used to determine the amount of the provision is based on whether
there has been a significant increase in credit risk since initial recognition
of the financial asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are recognised. For
those for which credit risk has increased significantly, lifetime expected
credit losses along with the gross interest income are recognised. For those
that are determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are recognised.
Financial Liabilities
The classification of financial liabilities at initial recognition depends on
the purpose for which the financial liability was issued and its
characteristics.
Financial liabilities are initially recorded on trade date, being the date on
which the Group becomes party to the contractual requirements of the financial
liability. Unless otherwise indicated the carrying amounts of the Group's
financial liabilities approximate to their fair values.
The Group's financial liabilities consist of financial liabilities measured at
amortised cost. These comprise
Loans and borrowings, short term advances pursuant to outstanding settlement
of currency exchange swaps undertaken in the normal course of operations,
accounts payable, accrued liabilities and deferred payment. Loans and
borrowings are initially recognised at fair value, net of transaction costs
incurred. They are subsequently stated at amortised cost with any difference
between the proceeds (net of transaction costs) and the redemption value
recognised in the statement of comprehensive loss over the period of the loans
and borrowings using the effective interest rate method. If estimates of
future payments are revised, the carrying amount of the financial liability is
adjusted to reflect actual and revised estimated cash flows.
Where financial liabilities are settled through the issue of shares, the
difference between the carrying amount of the financial liability and the fair
value of the equity instruments issued, is recognised in profit or loss.
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 Company 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 in to 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.
Revenue from the streaming arrangement was recognised under IFRS 15 when the
customer obtained control of the gold and the Group satisfied its performance
obligations. The revenue recognised reduced the contract liability balance.
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. This agreement triggered a modification to the contract
liability, resulting in the liability to be accounted for in accordance with
IFRS 9 whereby the liability is classified as a financial liability measured
at fair value through profit or loss.
Capitalisation of borrowing costs
Interest on borrowings directly relating to the financing of qualifying
capital projects under construction is
added to the capitalised cost of those projects during the construction phase,
until such time as the assets
are substantially ready for their intended use or sale which, in the case of
mining properties, is when they
are capable of commercial production. Where funds have been borrowed
specifically to finance a project, the amount capitalised represents the
actual borrowing costs incurred. Where the funds used to finance a project
form part of general borrowings, the amount capitalised is calculated using a
weighted average of rates applicable to relevant general borrowings of the
Group during the period. All other borrowing costs are recognised in the
income statement in the period in which they are incurred.
e) Property, plant and equipment
Recognition and Measurement
On initial recognition, property, plant and equipment is valued at cost, being
the purchase price and directly attributable cost of acquisition or
construction required to bring the asset to the location and condition
necessary to be capable of operating in the manner intended by the Company,
including appropriate borrowing costs and the estimated present value of any
future unavoidable costs of dismantling and removing items. The corresponding
liability is recognised within provisions. Property, plant and equipment is
subsequently measured at cost less accumulated depreciation, less any
accumulated impairment losses, with the exception of land which is not
depreciated.
When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of
property, plant and equipment.
Subsequent Costs
The cost of replacing part of an item of property, plant and equipment is
recognized in the carrying amount of the item if it is probable that the
future economic benefits embodied within the part will flow to the Company and
its cost can be measured reliably. The carrying amount of the replaced part is
derecognized. The costs of the day-to-day servicing of property, plant and
equipment are recognized in profit or loss as incurred.
Gains and Losses
Gains and losses on disposal of an item of property, plant and equipment are
determined by comparing the proceeds from disposal with the carrying amount
and are recognized net within other income in profit or loss.
Depreciation
Depreciation on property plant & equipment is recognised in profit or loss
except where depreciation is directly attributable to mineral properties owned
by the Group that are classified as either Exploration & Evaluation or
Assets Under Construction ("AUC"). Depreciation in this instance is
capitalised to the value of the mineral property asset (refer to Note 15).
Upon commencement of commercial production, the value of AUC will be
reclassified as Mining and Plant assets (together "Mining Property") within
Property, Plant & Equipment. Mining Property will be depreciated using the
unit of production method based on proven and probable reserves. Units of
production are significantly affected by resources, exploration potential and
production estimates together with economic factors, commodity prices, foreign
currency, exchange rates, estimates of costs to produce reserves and future
capital expenditure. Refer to Note 3f for further analysis of classification
of AUC for the year to December 31, 2021.
Depreciation of Mining and Other Equipment is provided on a straight-line
basis over the estimated useful life of the assets as follows:
Description within Mining and Other Equipment Rate
Motor vehicles 20-33%
Plant and machinery 20-25%
Office furniture 20-33%
Depreciation methods, useful lives and residual values are reviewed at each
financial year-end and adjusted if appropriate.
f) 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 capitalised
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.
Assets under construction are not depreciated.
Upon commercial production being achieved on January 1, 2022, assets under
construction were re-categorized as Mining Property.
g) 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 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 Company, 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-categorised as Assets under construction.
Farm-in agreements
As is common practice in the mineral exploration industry, the Company 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 Company recognizes amounts payable
under a farm-in agreement when the amount is due and when the Company has no
contractual rights to avoid making the payment. The Company 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 Company,
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.
h) 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 recognised 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.
i) Income taxes
Income tax expense is comprised of current and deferred income taxes. Current
and deferred income taxes are recognized in profit and loss, except for income
taxes relating to items recognized directly in equity or other comprehensive
income.
Current income tax, if any, is the expected amount payable or receivable on
the taxable income or loss for the year, calculated in accordance with
applicable taxation laws and regulations, using income tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustments
to amounts payable or receivable relating to previous years.
Deferred income taxes are provided using the liability method based on
temporary differences arising between the income tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. Deferred income tax is determined using income tax rates and
income tax laws and regulations that have been enacted or substantively
enacted at the end of the reporting period and are expected to apply when the
related deferred income tax asset is realized or the deferred income tax
liability is settled.
Deferred income tax assets are recognized to the extent that it is probable
that future taxable income will be available against which the temporary
differences can be utilized. To the extent that the Company does not consider
it probable that a deferred tax asset will be recovered, the deferred tax
asset is reduced.
The following temporary differences do not result in deferred tax assets or
liabilities:
· the initial recognition of assets or liabilities, not arising in
a business combination, that do not affect accounting or taxable profit
· goodwill
· investments in subsidiaries, associates and jointly controlled
entities where the timing of reversal of the temporary differences can be
controlled and reversal in the foreseeable future is not probable.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and
liabilities on a net basis.
j) Revenue recognition
The Group enters in to forward sales contracts for the sale of gold at a
pre-determined and agreed price with an agent who remits the cash proceeds to
the Group.
The Group recognises the sale upon delivery at which point control of the
product has been transferred to the Customer 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 Agreements with the Customer.
k) 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 (March 31, 2022: 5,400 Nigerian Naira) per ounce
produced. The royalty is paid before the Dore is exported from Nigeria for
refining. Royalties paid to the Nigerian government are recognised as cost of
sales in the Consolidated Statement of Comprehensive Loss at the point that
the royalty payments are made.
The Group also has 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") are capped at $7.5
million. Royalties are 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 have been assessed to be contingent consideration in the
acquisition of the Segilola Gold Mine under IAS 3. In accordance with the
Group's accounting policy the contingent consideration has been recognised as
a financial liability at the point there was considered to be certainty over
the payment arising (commencement of production). The royalties have been
discounted using a rate of 4.7% and the discounted value of the third parties'
royalties has been included in the value of Assets Under Construction and
recognised as a financial liability in the Consolidated Statement of Financial
Position. The discount will be unwound over the estimated time it will take to
pay the entire $7.5 million obligation. The value of the royalties will be
depreciated over the estimated life of the mine, and royalty payments will be
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 Statement of Comprehensive Income/(Loss).
l) 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 labour 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 labour
costs and production overheads.
m) Basic and diluted income or loss per share
Basic loss per share is computed by dividing the loss for the year by the
weighted average number of commons shares outstanding during the year. Diluted
income per share reflects the potential dilution that could occur if
potentially dilutive securities were exercised or converted to common stock.
Fully diluted amounts are not presented when the effect of the computations
are anti-dilutive due to the losses incurred. Accordingly, there is no
difference in the amounts for the basic and diluted loss per share.
n) 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).
o) 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 · Risk-free interest rate
Expected volatility
When equity instruments are modified, if the modification increases the fair
value of the award, the additional cost must be recognised over the period
from the modification date until the vesting date of the modified award.
p) 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 capitalised within property, plant and equipment on initial
recognition. The capitalised cost is amortised on a unit of production basis.
Unwinding of the discount is recognised 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 programmes to prevent
and control pollution and to rehabilitate the environment are charged to
profit or loss as incurred.
q) Leases
The Group accounts for a contract, or a portion of a contract, as a lease when
it conveys the right to use an asset for a period of time in exchange for
consideration. Leases are those contracts that satisfy the following criteria:
· There is an identified asset;
· The Group obtains substantially all the economic benefits from
use of the asset; and,
· The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights.
If the supplier does have those rights, the contract is not identified as
giving rise to a lease. In determining whether the Group obtains substantially
all the economic benefits from use of the asset, the Group considers only the
economic benefits that arise from use of the asset. In determining whether the
Group has the right to direct use of the asset, the Group considers whether it
directs how and for what purpose the asset is used throughout the period of
use. If the contract or portion of a contract does not satisfy these criteria,
the Group applies other applicable IFRSs rather than IFRS 16.
All leases are accounted for by recognizing a right-of-use asset and a lease
liability except for:
· Leases of low value assets; and
· Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless this is not
readily determinable, in which case the Group's incremental borrowing rate on
commencement of the lease is used. Variable lease payments are only included
in the measurement of the lease liability if they depend on an index or rate.
In such cases, the initial measurement of the lease liability assumes the
variable element will remain unchanged throughout the lease term. Other
variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes:
· Amounts expected to be payable under any residual value
guarantee;
· The exercise price of any purchase option granted in favour of
the Group if it is reasonably certain to assess that option; and,
· Any penalties payable for terminating the lease, if the term of
the lease has been estimated based on termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
· Lease payments made at or before commencement of the lease;
· Initial direct costs incurred; and,
· The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted
using a revised discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is recognised in profit or
loss.
r) Interest income
Interest income is recognized as earned, provided that collection is assessed
as being reasonably assured.
s) Provisions
Provisions are recognised when the Group has a present obligation, legal or
constructive, resulting from past events and it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the obligation.
t) 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 recognised
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.
u) Application of new and revised International Financial Reporting
Standards
There were no new standards or interpretations effective for the first time
for periods beginning on or after January 1, 2022, that had a significant
effect on the Group's financial statements.
v) Future accounting pronouncements
There are no standards issued by IASB, but not yet effective, that are
expected to have a material impact
of the group.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Company 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 Company 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. The buy-out option contained in the Gold Sale
Agreement has been estimated at nil.
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 US$1,817 /oz at June 30, 2022. A 1%
change in gold production estimates would result in an impact of less than
$0.8 million on the Gold Stream liability.
(ii) 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 recognises
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 (2021: $0.25 million) on the provision
for environmental and site restoration. The value of the period-end
restoration provision is disclosed within note 14.
(iii) Inventories
Expenditures incurred, and depreciation and amortisation 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 dore 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 dore the Company 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 Company's ore in stockpiles, ore in mill
and gold dore 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 $7,221 has been charged to the Consolidated Statement of
Comprehensive Loss. 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) Impairment of property, plant and equipment
The Company has determined that there were no impairment indicators present in
respect of the Segilola Gold Mine in accordance with IAS 36 and determined
that no impairment was required to be recognised.
(iii) Functional currency
An analysis of functional currency under IAS 21 was undertaken on Segilola
Resources Operations Limited ("SROL") in order to determine if significant
changes to operational activities provide indicators that the functional
currency for IFRS purposes should be reviewed and changed. Under IAS 21 an
entity's functional currency reflects the underlying transactions, events and
conditions that are relevant to it. Accordingly, once determined, the
functional currency is not changed unless there is a change in those
underlying transactions, events and conditions.
The principal focus of the analysis was on the continuing applicability of the
Nigerian Naira ("NGN") as the functional and reporting currency for SROL.
Potential indicators of a change in functional currency for SROL were the
commencement of the Mining Contract at Segilola and commencement of gold sales
from Segilola, both denominated in US Dollars. The financial impact of a
change in functional currency of SROL to US dollars was assessed at each of
the dates where potential indicators of a change in functional currency could
be considered to have been determined and it was concluded that a change in
functional currency to US Dollars would best reflect the underlying
transactions, events and conditions that are most relevant to the Company's
operations.
(iv) Commercial production
The Group achieved first gold sales from its Segilola Gold Mine ("Segilola")
in Osun state, Nigeria in December 2021, with first production from the Mill
occurring in October 2021. During Q4 2021 production from the Mill was
intermittent and below operating capacity per its mine plan, while overall
recovery was approximately 13% below capacity. The Group's focus during Q4
2021, was the ramp-up of production to mine plan level which was not achieved
on a consistent basis prior to year-end. After careful consideration
Management has determined that mining operations to December 31, 2021, were
not at sustainable commercial levels and that the correct classification of
Segilola was Assets under construction. Production and recovery rates reached
levels closer to mine plan in January 2022, and as such Management has
determined that commercial production was achieved from January 2022.
5. PRODUCTION COSTS
Three Months Ended Six Months Ended
June 30, June 30,
Note 2022 2021 2022 2021
Mining contract 11,958,353 - 18,489,728 -
Contractors and consultants 564,202 - 767,096 -
Professional fees 449,926 - 587,110 -
Drilling and assays 2,129,020 - 2,733,071 -
Salaries 1,466,417 - 2,702,176 -
Materials and consumables 34,565 - 55,566 -
Drilling operations 74,950 - 103,436 -
Movement in inventories 4,776,285 - 7,409,457 -
Maintenance 2,478,256 - 4,260,357 -
Other 330,463 - 541,099 -
$ 24,262,437 $ - $ 37,649,096 $ -
5b. AMORTISATION AND DEPRECIATION
Three Months Ended Six Months Ended
June 30, June 30,
Note 2022 2021 2022 2021
Amortisation and depreciation - owned assets 5,789,009 2,323 10,793,626 8,499
Amortisation and depreciation - right-of-use assets 1,075,735 11,164 2,233,990 22,517
$ 6,864,744 $ 13,487 $ 13,027,616 $ 31,016
5d. OTHER ADMINISTRATIVE EXPENSES
Three Months Ended Six Months Ended
June 30, June 30,
Note 2022 2021 2022 2021
Audit and legal 91,262 (9,300) 138,435 87,222
Bank charges 71,168 113,067 101,142 126,067
Consulting fees 685,745 73,917 1,010,099 142,563
Directors' fees 21 90,452 87,944 199,114 175,920
Equipment hire 7 - 51,589 -
Investor relations and transfer agent 105,165 55,853 216,391 105,490
Listing and filing fees 13,448 17,863 19,004 21,063
Mining property costs 927,727 - 1,294,192 -
Near mine exploration 455,467 - 762,614 -
Office and miscellaneous (223,352) 58,691 140,851 123,384
Salaries and benefits 320,795 311,339 687,760 629,627
Travel 146,132 26,404 312,686 49,500
$ 2,684,016 $ 735,778 $ 4,933,877 $ 1,460,836
6. RESTRICTED CASH
June 30, December 31, 2021
2022
Restricted cash $ - $ 3,495,992
On December 1, 2020, the Company 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 for the construction of the Segilola Gold Project
in Nigeria. The Facility can be drawn down at the Group's request in minimum
disbursements of $5 million. As at June 30, 2022, SROL has received total
disbursements of $52.6 million, with $nil drawn down during the period under
review, and the remaining $1.35m of the facility was cancelled by the Company.
Total disbursements received represent 97% of the facility. Under the terms of
the facility, the Company was required to place a total of US$3.5 million into
a cost overrun bank account that can only be used for expenditure on the
development of the Segilola Gold Project in the event of construction costs
exceeding budget. Upon receipt of the Certificate of Completion on January
31, 2022, the cash ceased to be treated as restricted.
7. INVENTORY
June 30, 2022 December 31, 2021
Plant spares and consumables $ 3,071,586 $ 1,337,792
Gold ore in stockpile 9,728,233 8,663,728
Gold in CIL 2,457,696 1,614,267
Gold Dore 8,788,510 6,530,771
$ 24,046,025 $ 18,146,558
There were no write downs to reduce the carrying value of inventories to net
realizable value during the period ended June 30, 2022.
8. AMOUNTS RECEIVABLE
June 30, 2022 December 31, 2021
Accounts receivable $ 524,926 $ 20,495
GST 15,671 3,715
Other receivables 165,202 213,441
$ 705,799 $ 237,651
The value of receivables recorded on the balance sheet is approximate to their
recoverable value and there are no expected material credit losses.
9. PREPAID EXPENSES, ADVANCES AND DEPOSITS
June 30, December 31, 2021
2022
Current:
Insurance $ 106,154 $ 53,985
Gold Stream liability arrangement fees 38,508 38,829
Advance deposits to vendors 1,585,480 235,408
Other prepayments 231,165 258,643
$ 1,961,307 586,865
Non-current:
Gold Stream liability arrangement fees $ 67,389 $ 87,310
Other prepayments 219,949 18,373
$ 287,338 $ 105,683
10. 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 recognise 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 period ended June 30,
2022.
The key impacts on the Statement of Comprehensive Income and the Statement of
Financial Position for the period ended June 30, 2022, were as follows:
Right of use asset Lease liability Income statement
Carrying value December 31, 2021 $ 20,843,612 $ (18,274,374) $ -
New leases entered in to during the period 726,019 (674,187) -
Depreciation (2,233,990) - (2,233,990)
Interest - (750,355) (750,355)
Lease payments - 2,579,159 -
Foreign exchange movement 26,331 (23,668) (2,663)
Carrying value at June 30, 2022 $ 19,361,972 $ (17,143,425) $ (2,987,008)
Total depreciation charged to the Statement of Comprehensive Income for the
period under IFRS 16 was $2.233,990.
The key impacts on the Statement of Comprehensive Income and the Statement of
Financial Position for the year ended December 31, 2021, were as follows:
Right-of- use asset Lease liability Income statement
Carrying value December 31, 2020 $ 69,066 $ (30,648) $ -
New leases entered in to during the year 22,612,362 (19,668,810) -
Depreciation (2,355,674) - (41,106)
Interest - (782,088) (563)
Lease payments - 2,800,407 -
Foreign exchange movement 517,858 (593,235) (75,743)
Carrying value at December 31, 2021 $ 20,843,612 $ (18,274,374) $ (117,412)
11. GOLD STREAM LIABILITY
Gold stream liability
June 30, 2022 December 31, 2021
Total Total
Balance at Beginning of period $ 30,262,279 $ 24,708,573
Interest at the effective interest rate 3,228,128 6,562,830
Repayments (4,804,185) (443,915)
Foreign exchange movement 391,106 (565,209)
Balance at End of period $ 29,077,328 $ 30,262,279
Current liability 11,753,417 12,837,633
Non-current liability 17,323,911 17,424,646
On April 29, 2020, the Company 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 in to between the Company'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 represented interest on the Prepayment. A calculation of
the implied interest rate was made as at drawdown date with interest being
apportioned over the expected life of the Stream Facility. The principal input
variables used in calculating the implied interest rate and repayment profile
were production profile and gold price. The future gold price estimates were
based on market forecast reports for the years 2021 to 2025 and, the
production profile was based on the latest life of mine plan model. The
liability was to be re-estimated on a periodic basis to include changes to the
production profile, any extension to the life of mine plan and movement in the
gold price. Upon commencement of production, any change to the implied
interest rate would be expensed through the Consolidated Statement of Income
(Loss).
Interest expense of $3,228,128 was recognised for the six months ended June
30, 2022 and has been expensed to the Consolidated Statement of Income. Prior
to the commencement of commercial production on January 1, 2022, interest was
capitalized and included in the value of the Segilola Gold Mine (Refer to Note
15). A cumulative total of $12,889,773 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
recognised at fair value.
Level 1 Level 2 Level 3 Total
Financial liability at fair value through profit or loss $ - 29,077,328 - 29,077,328
The liabilities included in the above table are carried at fair value through
profit and loss.
12. LOANS AND BORROWINGS
June 30, December 31, 2021
2022
Current liabilities:
Loans payable to the Africa Finance Corporation less than 1 year $ 10,301,628 $ 24,192,518
Deferred element of EPC contract 3,129,964 3,122,990
Short term advances 2,348,228 668,570
$ 15,779,820 27,984,078
Non-current liabilities:
Loans payable to the Africa Finance Corporation more than 1 year $ 23,131,927 $ 22,667,448
Deferred element of EPC contract 3,075,182 3,087,077
$ 26,207,109 $ 25,754,525
Loans from the Africa Finance Corporation
June 30, December 31, 2021
2022 Total
Total
Balance at Beginning of period $ 46,859,966 $ 14,267,114
Drawdown - 31,153,833
Repayments (14,479,808) -
Arrangement fees - (508,856)
Unwinding of interest in the period 875,396 1,714,041
Foreign exchange movement 178,001 233,834
Balance at End of period $ 33,433,555 $ 46,859,966
Current liability 10,301,628 24,192,518
Non-current liability 23,131,927 22,667,448
On December 1, 2020, the Company 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 can be drawn down at the Group's request in
minimum disbursements of $5 million. As at June 30, 2022, SROL has received
total disbursements of $52.6 million, with $nil drawn down and the remaining
$1.35m undrawn facility cancelled by the Company during the period under
review. Total disbursements received represent 97% of the Facility. The
Facility is secured over the share capital of SROL and its assets, with
repayments commencing in March 2022 and to conclude in March 2025.
Repayment of the aggregate Facility will be made in instalments over a
36-month period by repaying an amount on a series of repayment dates, as set
out in the Facility Agreement, which reduces the amount of the outstanding
aggregate Facility by the amount equal to the relevant percentage of Loans
borrowed as at the close of business in London on the date of Financial Close.
Interest accrues at LIBOR plus 9% and is payable on a quarterly basis in
arrears. The Facility also is subject to a Commitment Fee of 2.5% per annum on
the Facility with the Commitment Fee being 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 was determined
at $45,822,943 taking into account the transaction costs and equity component
and recognised at amortised cost using an effective rate of interest, with the
fair value of the shares issued in April 2020 of $5,666,011 recognised within
equity.
Interest paid during the year ended December 31, 2021, of $3,667,835 has been
capitalised to the cost of the Segilola Gold Mine. (Refer to Note 15).
The loan from the AFC has financial and non-financial covenants. These
covenants were triggered upon the first repayment obligation which took place
in March 2022.
Deferred payment facility on EPC contract for the construction of the Segilola
Gold Mine
The Company is constructing 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 Payment Facility")
of 10% of the fixed price. As at June 30, 2022, a total of $6,205,146
(December 31, 2021: $6,210,090) 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 are due to commence in March 2022 and 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 is issued.
June 30, 2022 December 31, 2021
Total Total
Deferred payment facility $ 6,205,146 $ 6,210,067
Balance period end $ 6,205,146 $ 6,210,067
Short term advances
June 30, December 31, 2021
2022 Total
Total
Balance at beginning of period $ 668,570 $ -
Drawdowns 8,295,747 678,935
Repayments (6,611,245) -
Foreign exchange movement (4,844) (10,365)
Balance period end $ 2,348,228 $ 668,570
The Company enters into currency swap agreements with third parties. As at
June 30, 2022, the currency being purchased was received before reporting date
and the currency being sold was paid to the third party and settled in full
after reporting date, on July 1, 2022. The advance outstanding at reporting
date did not incur any interest.
13. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
June 30, 2022 Gold stream liability Short term advance AFC loan EPC deferred facility Total
January 1, 2022 $ 30,262,279 668,570 46,859,966 6,210,067 84,000,882
Cash flows:
Drawdowns - 8,295,747 - - 8,295,747
Repayments (4,804,185) (6,611,245) (14,479,808) (281,141) (26,176,379)
Non-cash changes:
Unwinding of interest in the year 3,228,128 - 875,396 222,960 4,326,484
Foreign exchange movements 391,106 (4,844) 178,001 7,120 571,383
Offset against EPC payment - - - 46,140 46,140
June 30, 2022 $ 29,077,328 2,348,228 33,433,555 6,205,146 71,064,257
December 31, 2021 Gold stream liability Short term advance AFC loan EPC deferred facility Total
January 1, 2021 $ 24,708,573 - 14,267,114 1,934,275 40,909,962
Cash flows:
Drawdowns - 678,935 31,153,833 - 31,832,768
Repayments (443,915) - - - (443,915)
Transaction costs - (508,856) - (508,856)
Non-cash changes:
Unwinding of interest in the year 6,562,830 - 1,714,041 250,402 8,527,273
Foreign exchange movements (565,209) (10,365) 233,834 25,575 (316,165)
Offset against EPC payment - - - 3,999,815 3,999,815
December 31, 2021 $ 30,262,279 668,570 46,859,966 6,210,067 84,000,882
14. PROVISIONS
June 30, 2022 Fleet demobilisation costs
Restoration costs
Other Total
Balance at Beginning of period $ - $ 173,241 $ 5,064,935 $ 5,238,176
Initial recognition of provision 18,222 - - 18,222
Unwinding of discount - - 6,480 6,480
Foreign exchange movements - 440 95,004 95,444
Balance at period end $ 18,222 $ 173,681 $ 5,166,419 $ 5,358,322
Current liability - - - -
Non-current liability 18,222 173,681 5,166,419 5,358,322
December 31, 2021 Fleet demobilisation costs
Restoration costs
Total
Balance at Beginning of year $ - $ 486,500 $ 486,500
Initial recognition of provision 173,241 - 173,241
Increase in provision - 4,628,124 4,628,124
Foreign exchange movements - (49,689) (49,689)
Balance at year end $ 173,241 $ 5,064,935 $ 5,238,176
Current liability - - -
Non-current liability 173,241 5,064,935 5,238,176
The restoration costs provision is for the site restoration at Segilola Gold
Project in Osun State Nigeria. The fair 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 the 2021 US inflation rate of 4.7% and the interest rate of 1.263% on
5-year US bonds were used to calculate the expected future cash flows. 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.
15. PROPERTY, PLANT AND EQUIPMENT
A summary of depreciation capitalized is as follows:
Three months ended June 30, Six months ended June 30, Total depreciation
Capitalized
June 30, 2022 December 31, 2021
2022 2021 2022 2021
Exploration expenditures 37,306 1,732 60,724 3,461 657,840 597,117
Total $ 37,306 $ 1,732 $ 60,724 $ 3,461 $ 657,840 $ 597,117
a) Segilola Project, Osun Nigeria:
Classification of Expenditure on the Segilola Gold Project
On January 1, 2022, the Company achieved commercial production at the Segilola
Gold Project in Nigeria ("the Project") Upon achieving commercial production
the Assets under Construction was reclassified within Property, Plant and
Equipment, and transferred to Mining Asset, Processing Plant and
Decommissioning Asset.
Decommissioning Asset
The decommissioning asset relates to estimated restoration costs at the
Group's Segilola Gold Mine as at June 30, 2022. Refer to Note 14 for further
detail.
16. INTANGIBLE ASSETS
The Company's exploration and evaluation assets costs are as follows:
Classification of Expenditure on the Segilola Gold Project
Refer to note 14 for details on classification.
a) Douta Gold Project, Senegal:
The Douta Gold Project consists of an early-stage gold exploration license
located in southeastern Senegal, approximately 700km east of the capital city
Dakar.
The Company is party to an option agreement (the "Option Agreement") with
International Mining Company ("IMC"), by which the Company has acquired a 70%
interest in the Douta Gold Project located in southeast Senegal held through
African Star SARL.
Effective February 24, 2012, the Company exercised its option to acquire a 70%
interest in the Douta Gold Project pursuant to the terms of the Option
Agreement between the Company and IMC. As consideration for the exercise of
the option, the Company 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 Company'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 Company 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 held a 100% interest in the Bongui and Legue gold permits
covering an area of approximately 233 km(2) 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 held a 100% interest in the Ouere gold permit, covering an
area of approximately 241 km(2) located within the Houndé belt.
The three permits together cover a total area of 474km(2) over the Houndé
Belt which form the Central Houndé Project.
(iii) Barrick Option Agreement, Central Houndé Project, Burkina Faso:
On April 8, 2015, the Company entered into the Acacia Option Agreement with
Acacia Mining plc ("Acacia"), whereby Acacia will have the exclusive option to
earn up to a 51% interest in Central Houndé Project by satisfying certain
conditions over a specified 4-year period and then the right to acquire an
additional 29%, for an aggregate 80% interest in the Central Houndé Project,
upon declaration of a Pre-Feasibility Study. Acacia met the minimum spending
requirement for the Phase 1
Earn-in in September 2018. As a result, Acacia earned a 51% interest in the
Central Houndé Project. The Group currently holds a 49% interest in the
Central Houndé Project.
In 2019, Barrick Gold Corporation ("Barrick") completed an acquisition of
Acacia through the purchase of the ordinary share capital of Acacia that
Barrick did not already own. The acquisition did not affect work undertaken at
the Central Houndé Gold Project in Burkina Faso where Barrick continued its
exploration work as per its Joint Operation with Thor.
In April 2021, Thor re-acquired Barrick's 51% ownership of the Project in
exchange for a 1% Net Smelter Royalty. Thor now holds 100% of the Central
Houndé Project.
Following the unsuccessful attempt by Barrick Gold to dispose of its 51%
interest in the licenses, the Company carried out an impairment assessment at
December 31, 2020, and determined that the unsuccessful sale attempt was an
indication for impairment. It is the Company's intention to focus on Segilola
development and Douta exploration in the short term, and it does not plan to
undertake significant work on the license areas in the near future. As a
result, the decision was taken to impair fully the value of the Central
Houndé Project, and for the three months to June 30, 2021, recognize an
impairment charge of $121,909 through the Condensed Consolidated Statement of
Comprehensive Loss.
c) Exploration Licenses, Nigeria
The high grade Segilola gold deposit is located on the major regional shear
zone that extends for several hundred kilometres through the gold-bearing
Ilesha schist belt (structural corridor) of Nigeria. Thor's exploration tenure
currently comprises nine exploration licenses and five joint venture
partnership exploration licenses. Together with the mining lease over the
Segilola Gold Deposit, Thor's total exploration tenure amounts to 1,268 km².
The Company's exploration strategy includes further expansion of its Nigerian
land package as and when attractive new licenses become available.
17. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
June 30, December 31,
2022 2021
Trade payables $ 29,112,284 $ 32,222,580
Accrued liabilities 5,102,660 3,058,121
Other payables 5,209,427 5,110,979
$ 39,424,371 $ 40,391,680
Current liability 39,069,912 38,827,489
Non-current liability 354,459 1,564,191
Accounts payable and accrued liabilities are classified as financial
liabilities and approximate their fair values.
Included in trade payables is a total of $5,209,427 that relates to third
party royalties that will become payable upon future gold sales. $4,854,967 of
this royalties' creditors is included in current liabilities, and $354,460 is
included in non-current liabilities (refer to note 3k for further detail).
18. DEFFERED INCOME
June 30, December 31, 2021
2022
Deferred income $ 10,147,435 $ -
Deferred income liability was recorded upon receipt of funds for a gold
shipment with a delivery date of July 4, 2022, post reporting date. In
accordance with the Group's Revenue Recognition accounting policy (See note 3j
for further detail), revenue is deemed to arise at the point of delivery. This
liability will be transferred and recognised as sales revenue in Q3 2022. The
value of the gold shipment of 6,069 ounces was recognised as Gold Dore
inventory at June 30, 2022 at a cost of $1,081/oz and measured in accordance
with the Group's inventory accounting policy (refer to note 3l for further
detail).
19. CAPITAL AND RESERVES
a) Authorized
Unlimited common shares without par value.
b) Issued
June 30, June 30, December 31, December 31,
2022 2022 2021 2021
Number Number
As at start of the year 632,358,009 $ 79,027,183 621,405,975 $ 76,858,769
Issue of new shares:
- Share options exercised i 9,539,000 922,114 - -
- Share warrants exercised ii - - 9,952,034 2,073,450
- Share options exercised iii - - 1,000,000 94,964
641,897,009 $ 79,949,297 632,358,009 $ 79,027,183
i Value of 9,250,000 options exercised on January 19, 2022, at a price of
CAD$0.12 per share, and 289,000 options exercised at a price of CAD$0.145 per
share.
ii Value of 1,664,534 warrants exercised on June 8, 2021, at a price of
CAD$0.18 per share, and 8,287,500 warrants exercised on August 31, 2021, at a
price of CAD$0.28 per share.
iii Value of 1,000,000 options exercised at a price of CAD$0.12 per share.
c) Share-based compensation
The Company has granted directors, officers and consultants share purchase
options. These options were granted pursuant to the Company's stock option
plan.
Under the current Share Option Plan, 44,900,000 common shares of the Company
are reserved for issuance upon exercise of options.
· On January 16, 2020, 14,250,000 stock options were granted at an
exercise price of C$0.20 per share for a period of five years. The options
vested immediately.
· On October 5, 2018, 750,000 stock options were granted at an
exercise price of C$0.14 per share for a period of five years.
· On March 12, 2018, 12,800,000 stock options were granted at an
exercise price of C$0.145 per share for a period of five years.
·
All of the stock options were vested as at the balance sheet date. These
options did not contain any market conditions and the fair value of the
options were charged to the statement of comprehensive loss or capitalized as
to assets under construction in the period where granted to personnel's whose
cost is capitalized on the same basis. The assumptions inherent in the use of
these models are as follows:
Vesting period (years) First vesting date Expected remaining life (years) Risk free rate Exercise price Volatility of share price Fair value Options vested Options granted Expiry
5 03/12/2018 0.95 2.00% $0.145 105.09% $0.14 12,800,000 12,800,000 03/12/2023
5 10/05/2018 1.52 2.43% $0.14 100.69% $0.14 750,000 750,000 10/05/2023
5 01/16/2020 2.80 1.49% $0.20 66.84% $0.07 14,250,000 14,250,000 01/16/2025
In Canadian Dollars
The Company has elected to measure volatility by calculating the average
volatility of a collection of three peer companies historical share prices for
the exercising period of each parcel of options. Management believes that
given the transformational change that the Company has undergone since the
acquisition of the Segilola Gold Project in August 2016, the Company's
historical share price is not reflective of the current stage of development
of the Company, and that adopting the volatility of peer companies who have
advanced from exploration to development is a more accurate measure of share
price volatility for the purpose of options valuation.
`
The following is a summary of changes in options from January 1, 2022, to June
30, 2022, and the outstanding and exercisable options at June 30, 2022:
Contractual Lives January 1, During the period June 30, June 30, 2022
2022 2022 Number of Options
Grant Expiry Exercise Remaining (Years) Opening Granted Exercised Expired / Forfeited Closing Vested and Exercisable Unvested
Date Date Price Balance Balance
16-Jan-2017 16-Jan-2022 $0.12 - 9,250,000 - (9,250,000) - - - -
12-Mar-2018 12-Mar-2023 $0.145 0.70 12,800,000 - (289,000) - 12,511,000 12,511,000 -
5-Oct-2018 5-Oct-2023 $0.14 1.27 750,000 - - - 750,000 750,000 -
16-Jan-2020 16-Jan-2025 $0.20 2.55 14,040,000 - - - 14,040,000 14,040,000 -
Totals 1.67 36,840,000 - (9,539,000) - 27,301,000 27,301,000 -
Weighted Average Exercise Price $0.160 $0.000 $0.121 - $0.173 $0.173 -
In Canadian Dollars
The following is a summary of changes in options from January 1, 2020, to
December 31, 2021, and the outstanding and exercisable options at December 31,
2021:
In Canadian Dollars
(i) On July 5, 2019, the Company announced an extension of the expiry date
from January 16, 2020, to January 16, 2022. All other conditions of the
options remain the same.
(ii) On July 5, 2019, the Company announced an extension of the expiry date
from May 7, 2020, to May 7, 2022. All other conditions of the options remain
the same.
d) Nature and purpose of equity and reserves
The reserves recorded in equity on the Company's statement of financial
position include 'Reserves', 'Currency translation reserve', 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 Canadian dollars.
'Deficit' is used to record the Company's accumulated deficit.
20. EARNINGS PER SHARE
Basic and diluted profit (loss) per share is calculated by dividing the profit
(attributed to shareholders for the six months to June 30, 2022, of
$6,305,101 (June 30, 2021: loss ($5,103,924)) by the weighted average number
of shares of 636,603,895 (June 30, 2021: 621,405,975) in issue during the
period.
21. RELATED PARTY DISCLOSURES
A number of key management personnel, or their related parties, hold or held
positions in other entities that result in them having control or significant
influence over the financial or operating policies of the entities outlined
below.
a) Trading transactions
The Africa Finance Corporation ("AFC") is deemed to be a related party given
the size of its shareholding in the Company. There have been no other
transactions with the AFC other than the Gold Stream liability as disclosed in
Note 11, and the secured loan as disclosed in Note 12.
b) Compensation of key management personnel
The remuneration of directors and other members of key management during the
three and six months ended June 30, 2022, and 2021 were as follows:
Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Salaries
Current directors and officers (i) (ii) $ 163,566 $ 95,725 $ 331,995 $ 193,548
Former directors and officers 34,739 38,890 71,557 78,366
Directors' fees
Current directors and officers (i) (ii) 90,452 87,944 199,114 175,920
Share-based payments
Current directors and officers - - - -
$ 288,757 $ 222,559 $ 602,666 $ 447,0834
(i) Key management personnel were not paid post-employment benefits,
termination benefits, or other long-term benefits during the three months
ended June 30, 2022, and 2021.
(ii) The Company paid consulting and director fees to both individuals and
private companies controlled by directors and officers of the Company for
services. Accounts payable and accrued liabilities at June 30, 2022, include
$169,695 (December 31, 2021 - $346,275) due to directors or private companies
controlled by an officer and director of the Company. Amounts due to or from
related parties are unsecured, non-interest bearing and due on demand.
22. SUPPLEMENTAL CASH FLOW INFORMATION
a) Changes in non-cash working capital are as follows:
Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Amounts receivable $ (517,146) $ 1,527,925 $ (475,996) $ (2,531,421)
Inventory (7,485,612) - (6,038,731) -
Restricted cash and deferred income 3,911,167 - 13,611,667 50
Prepaid expenses and deposits (1,202,637) (960,472) (1,542,906) (63,744)
Accounts payable and accrued liabilities 1,808,394 69,334 (5,301,764) 4,330,017
Change in non-cash working capital accounts
$ (3,485,834) $ 636,786 $ 252,270 $ 1,734,902
Relating to:
Operating activities $ (810,163) $ 1,680,292 $ 1,815,179 $ (2,463,755)
Financing activities - - - -
Investing activities (2,675,671) (1,043,505) (1,562,909) 4,198,657
$ (3,485,834) $ 636,786 $ 252,270 $ 1,734,902
Accounts payable and accrued liabilities includes $nil (December 31, 2021 -
$25,417,829) related to Assets under Construction and Exploration.
23. 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:
June 30, 2022 Measured at amortised cost Measured at fair value through profit and loss Total
Assets
Cash and cash equivalents $ 5,055,930 - 5,055,930
Restricted cash - - -
Amounts receivable 705,799 - 705,799
Total assets $ 5,761,729 - 5,761,729
Liabilities
Accounts payable and accrued liabilities
$ 34,214,944 5,209,427 39,424,371
Loans and borrowings 42,178,832 - 42,178,832
Gold stream liability - 29,077,328 29,077,328
Lease liabilities 17,143,425 - 17,143,425
Total liabilities $ 93,537,201 34,286,755 127,823,956
December 31, 2021 Measured at amortised cost Measured at fair value through profit and loss Total
Assets
Cash and cash equivalents $ 1,276,270 - 1,276,270
Restricted cash 3,495,992 - 3,495,992
Amounts receivable 237,651 - 237,651
Total assets $ 5,009,913 - 5,009,913
Liabilities
Accounts payable and accrued liabilities
$ 33,284,701 7,106,979 40,391,680
Loans and borrowings 53,738,603 - 53,738,603
Gold stream liability - 30,262,279 30,262,279
Lease liabilities 18,274,374 - 18,274,374
Total liabilities $ 105,297,678 37,369,258 142,666,936
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 LIBOR plus 9% (Refer
to Note 12). 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 Company's sensitivity to a 1% increase or
decrease in interest rates:
Interest rate Interest rate
Appreciation Depreciation
By 1% By 1%
June 30, 2022
Comprehensive income (loss)
Financial assets and liabilities $ 381,700 $ (381,700)
December 31, 2021
Comprehensive income (loss)
Financial assets and liabilities $ 413,600 $ (413,600)
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 credit risk
associated with cash and receivables is believed to be minimal.
Cash consists of cash on deposit in Canadian, UK, Mauritian, Nigerian, and
Senegalese Chartered banks that are believed to be creditworthy.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at June 30, 2022, and December
31, 2021, were as follows:
June 30, December 31,
2022 2021
Cash $ 5,055,930 $ 1,276,270
Restricted cash - 3,495,992
Amounts receivable 705,799 237,651
Total $ 5,761,729 $ 5,009,913
Liquidity and funding risk
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. The Company ensures that there is
sufficient capital in order to meet short-term business requirements, after
taking into account the Company's holdings of cash. The Company's cash is
held in business accounts and are available on demand with the exception of
restricted cash which is only available to be applied against the cost of the
construction of the Segilola Gold Mine until construction is completed, at
which point it will then be available on demand.
In the normal course of business, the Company enters into contracts and
performs business activities that give rise to commitments for future minimum
payments.
The following table summarizes the Company's significant remaining contractual
maturities for financial liabilities at June 30, 2022, and December 31, 2021.
Contractual maturity analysis as at June 30, 2022
Less than 3 - 12 1 - 5 Longer than
3 months Months Year 5 years Total
$ $ $ $ $
Accounts payable 24,796,249 3,961,576 450,218 - 29,208,043
Accrued liabilities 5,241,042 - - - 5,241,042
Other payables 5,116,764 - - - 5,116,764
Gold stream liabilities 3,158,054 8,595,363 30,250,846 42,004,263
Loans and borrowings 13,247,005 3,025,224 31,116,197 - 47,338,426
51,559,115 15,582,163 61,817,261 - 128,958,538
Contractual maturity analysis as at December 31, 2021
Less than 3 - 12 1 - 5 Longer than
3 months Months Year 5 years Total
$ $ $ $ $
Accounts payable 25,766,396 4,862,676 1,952,408 - 32,581,480
Accrued liabilities 3,076,393 - - - 3,076,393
Other payables 5,116,764 - - - 5,116,764
Gold stream liabilities 2,237,631 10,614,896 33,955,921 46,808,448
Loans and borrowings 1,984,714 26,031,054 32,400,920 - 60,416,688
38,181,898 41,508,625 68,309,249 - 147,999,772
Market risk
The Company is subject to normal market risks including fluctuations in
foreign exchange rates and interest rates. While the Company manages its
operations in order to minimize exposure to these risks, the Company 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, and UK Pounds Sterling. The Group's exposure to
foreign currency risk arises primarily on fluctuations between the United
States Dollar and the Canadian Dollar, Nigerian Naira, and UK Pounds Sterling.
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 in to at agreed rates and are not
subject to exchange rate fluctuations between 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 period ended June 30,
2022:
Functional currency
US dollar Pound West
Sterling African Total
Franc
Currency of net monetary asset/(liability) June 30, 2022 June 30, 2022 June 30, 2022 June 30, 2022
USD$ USD$ USD$ USD$
Canadian dollar (378,946) - - (378,946)
US dollar (111,725,140) - - (111,725,140)
Pound Sterling (299.637) (3,946) - (303,583)
Nigerian Naira (9,327,366) - - (9,327,366)
West African Franc - - (31,079) (31,079)
Australian dollar (104,209) - - (104,209)
Total (121,835,298) (3,946) (31,079) (121,870,324)
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, 2021:
Functional currency
Canadian US dollar Pound Nigerian West
dollar Sterling Naira African Total
Franc
Currency of net monetary asset/(liability) December 31, 2021 December 31, 2021 December 31, 2021 December 31, 2021 December 31, 2021 December 31, 2021
USD$ USD$ USD$ USD$ USD$ USD$
Canadian dollar (484,067) - - - - (484,067)
US dollar (190,391) - - (132,585,040) - (132,775,431)
Pound Sterling (361,244) - - (80,926) - (442,170)
Nigerian Naira - - - (3,910,833) - (3,910,833)
West African Franc - - - - 11,481 11,481
Australian dollar (36,626) - - (19,377) - (56,003)
Total (1,072,328) - - (136,596,176) 11,481 (137,657,023)
The following table discusses the Company's sensitivity to a 5% increase or
decrease in the United States Dollar against the Nigerian Naira:
United States United States
Dollar Dollar
Appreciation Depreciation
June 30, 2022 By 5% By 5%
Comprehensive income (loss)
Financial assets and liabilities $ 142,000 $ (142,000)
December 31, 2021
Comprehensive income (loss)
Financial assets and liabilities $ 194,000 $ (194,000)
24. CAPITAL MANAGEMENT
The Company manages, as capital, the components of shareholders' equity. The
Company'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. During the year under review the
Company made additional drawdowns from secured loan facilities in order to
advance construction of the Segilola Gold Mine.
The Company 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 Company
may attempt to issue common shares, borrow, acquire or dispose of assets or
adjust the amount of cash.
25. CONTRACTUAL COMMITMENTS AND CONTINGENT LIABILITIES
Contractual Commitments
The Group has no contractual obligation that are not disclosed on the
Consolidated Statement of Financial Position.
Contingent liabilities
As part of the nature of its business the Group on occasion receives claims
from parties. A number of such claims do exist, but these are assessed
robustly by the Group and its legal advisers and will be strongly rebutted
where claims are considered to be spurious.
26. SEGMENTED DISCLOSURES
Segment Information
The Company's operations comprise three reportable segments, being the
Segilola Mine Project, Exploration Projects, and Corporate compared to one
reportable segment, being the exploration of mineral resource properties in
the prior year. These three reporting segments have been identified based on
operational focuses of the Group following the decision to develop the
Segilola Mine Project during the period. The segment assets, liabilities and
results are as follows:
June 30, 2022 Segilola Mine Project Exploration Projects Corporate Total
Current assets $ 31,121,310 $ 67,967 $ 579,784 $ 31,769,061
Non-current assets
Deferred income tax assets - 79,725 - 79,725
Prepaid expenses and deposit 67,389 - 219,949 287,338
Right-of-use assets 18,672,610 - 689,362 19,361,972
Property, plant and equipment 141,021,632 379,736 44,558 141,445,926
Intangible assets 160,018 15,337,396 - 15,497,414
Total assets $ 191,042,959 $ 15,864,824 $ 1,533,653 $ 208,441,436
Non-current asset additions $ 7,194,054 $ 1,533,204 $ - $ 8,727,258
Liabilities $ (141,177,835) $ (79,055) $ (1,880,920) $ (143,137,810)
Profit (loss) for the period $ 8,615,786 $ (111,126) $ (2,199,559) $ 6,305,101
- consulting fees (640,676) (58,003) (311,419) (1,010,098)
- salaries and benefits (77,594) - (610,166) (646,781)
- depreciation owned assets (10,788,583) (4,468) (575) (10,793,626)
- impairments - (7,221) - (7,221)
Non-current assets by geographical location:
British Virgin Islands
Burkina Faso United Kingdom
Senegal Nigeria Canada Total
Prepaid expenses and deposit - - 9,833 57,556 201,854 18,095 287,338
Right of use assets - - - 18,672,610 689,362 - 19,361,972
Property, plant and equipment 165,485 - - 141,235,883 42,219 2,339 141,445,926
Exploration and evaluation assets 14,675,141 - - 822,273 - - 15,497,414
Total non-current assets $ 14,840,626 $ - $ 9,833 $160,788,322 $933,435 $ 20,434 $176,592,650
December 31, 2021 Segilola Mine Project Exploration Projects Corporate Total
Current assets $ 23,245,206 $ 76,104 $ 422,026 $ 23,743,336
Non-current assets
Deferred income tax assets - 86,795 - 86,795
Prepaid expenses and deposit 87,223 - 18,460 105,683
Right-of-use assets 20,843,612 - - 20,843,612
Property, plant and equipment 146,914,353 455,339 2,964 147,373,656
Intangible assets 224,808 15,120,611 - 15,345,419
Total assets $ 191,315,202 $ 15,739,849 $ 443,450 $ 207,498,501
Non-current asset additions $ 71,990,597 $ 3,999,195 $ 3,661 $ 75,993,453
Liabilities $ (146,558,941) $ (43,436) $ (1,302,735) $ (147,905,112)
Profit (loss) for the year $ 1,975,712 $ (261,559) $ (3,783,350) $ (2,069,197)
- consulting fees (8,096) (148,781) (194,086) (350,963)
- salaries and benefits (256,228) - (1,029,378) (1,285,606)
- depreciation owned assets (59,611) (4,249) (1,158) (65,018)
- impairments - (99,059) - (99,059)
Non-current assets by geographical location:
British Virgin Islands
Burkina Faso
December 31, 2021 Senegal Nigeria Canada Total
Prepaid expenses and deposit - - 12,623 74,686 18,374 105,683
Right-of-use assets - - - 20,843,612 - 20,843,612
Property, plant and equipment 201,264 - - 147,168,374 4,018 147,373,656
Intangible assets 14,529,771 - - 815,648 - 15,345,419
Total non-current assets $ 14,731,035 $ - $ 12,623 $168,902,320 $ 22,392 $183,668,370
27. SUBSEQUENT EVENTS
There are no material subsequent events to report.
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