It might only be a handful of bricks but Thor Explorations’ (THX) first gold pour on Friday marked a milestone for Nigeria. The Opec member country produces around 1.7m barrels of oil per day but before the Segilola mine started operations, its mining industry was limited largely to artisanal operations.
It might only be a handful of bricks but Thor Explorations’ (THX) first gold pour on Friday marked a milestone for Nigeria. The Opec member country produces around 1.7m barrels of oil per day but before the Segilola mine started operations, its mining industry was limited largely to artisanal operations.
The company is also distinguished from other junior miners by its ownership - more than half of its shareholders (59 per cent) come from Nigeria. These are still large institutional shareholders but present a change from the Europe, UK and North American-dominated registers of other gold miners. Lagos-based Africa Finance Corporation, 17 per cent shareholder, also largely funded the mine build through a $78m deal that included a $54m loan.
Thor’s chief executive Segun Lawson said the company had a “unique advantage” in a “country where no one has really looked in recent times”.
Segilola will produce an average of 85,000 ounces (oz) a year when up-and-running, although it only has an official mine life of five years. Lawson said there was plenty of opportunity to add to the reserve base, which is the estimated amount of gold that can be mined profitably from the deposit.
“We haven't drilled this resource out [exhaustively] by any means,” he said, adding some of the best drill hits, or intersections, were below the openpit.
Gold miners have largely not performed well this year as gold prices have dipped while most other industries have benefitted from the Covid-19 recovery. The global iShares Gold Producers UCITS ETF is down 8 per cent this year, for example, while the FTSE 350 has climbed 10 per cent in the same period. Profits have remained strong, however, with new London arrival Endeavour Mining (EDV) forecast to report earnings per share of 236¢ for the full year, according to FactSet, almost triple the 2020 figure.
It’s not just Thor and its shareholders backing Segilola. The Nigerian government has put much store in the success of the mine, as part of an effort to broaden the state’s tax take, which is currently dominated by oil and gas.
A handful of junior miners have tried to build projects in recent years without success, meaning that Thor reaching the gold pour stage (which comes before full production is declared) is a big moment for the country.
Fellow West African countries Ghana, Cote d’Ivoire and Mali have big mining industries, with gold production in the millions of ounces. Ghana is even working on listing a vehicle for the government’s gold royalties in London, although this has plenty of opposition at home as it is effectively selling off future government revenue.
The region has also been a hotbed for consolidation in recent years. Endeavour bought out two regional competitors last year and the struggling Resolute Mining (RSG) spent $305m on private company Toro Gold in 2019.
Lawson said his focus was on growing organically, through the company’s two exploration projects in Senegal and Burkina Faso. Thor would be more of a target than a buyer, given its £118m market capitalisation, although buyouts have slowed in recent months after a run of mergers and acquisitions in West Africa and Russia last year.
