AMN - NIGERIA: Segilola proceeds to construction

Thor Explorations Ltd has executed its definitive documents with the Africa Finance Corporation (AFC) to reach full funding of the Segilola Gold Project in Nigeria. The company has also made the Final Investment Decision to proceed with construction of the project.

The decision to proceed with construction has been made following implementation of COVID-19 procedures at the project, established in accordance with industry best practice and the guidelines set out by the Osun State Government and the Ministry of Mines and Steel Development.

Construction work began in February 2020 and first gold production is scheduled for the first quarter of 2021.

The executed definitive documents include a subscription agreement with AFC regarding a private placement of common shares of the company to AFC of C$5,643,150 through the issuance of 28,215,750 shares at a price of C$0.20 per share. This follows the tranche 1 closing on December 5, 2019, of C$15.8 million.

The company has also announced the proposed issuance of 34.75 million common shares against US$5 million of invoices under its EPC schedule. In the aggregate, the company expects to close an anticipated total of C$13 million (US$9.25 million) through the issuance of 62,965,750 shares at a price of C$0.20 per share.  The Tranche 2 shares will be subject to a hold period of four months and one day after the day of such issuance.

The company, through its wholly-owned subsidiary Segilola Resources Operating Limited, has signed definitive documents with the AFC on a US$21 million Stream Agreement and signed definitive documentation for the provision of US$54 million senior secured credit facility. This facility represents the balance of the funding required for the construction of the project and drawdown is subject to satisfaction of customary conditions precedent.

In connection with the facility, the company will issue to AFC 33,329,480 shares at a deemed price of C$0.20 per share in consideration of the risk taken by AFC. These bonus shares will be subject to a hold period of four months and one day after the day of such issuance.

Upon closing of the facility and the AFC private placement, the AFC will have provided a combined equity and debt financing package of US$86 million and hold 19.50% of the total issued and outstanding shares of Thor.

Thor will use the net proceeds from the AFC financings as the major component of the capital cost and working capital requirements to construct the project. The total funding requirement to build the project is approximately US$98 million.

Thor is pleased to appoint and welcome to its board, AFC nominee Oliver Andrews. He is an executive director and the chief investment officer at AFC. Andrews has over 35 years’ experience in investing and developing infrastructure as well as mining projects and transactions.

He is joining the Thor board as a non-executive director at an important time and is bringing significant experience and additional governance to the board.

President and CEO Segun Lawson said: "The closing of these financings will mark Thor's most significant milestone to date and the company is delighted to be in this position.

"This project is the first of its kind in Nigeria, a country where we believe there is considerable geological potential. The initial project economics are excellent and we have the right team in place to build, operate and capitalise on our first-mover advantage in Nigeria. We expect the pouring of first gold at Segilola in Q2 2021.

"The company is also delighted to welcome Oliver Andrews to its board of directors. As chief investment officer of AFC, he brings significant expertise and in-country knowledge that will further strengthen the company's board. We look forward to working with both Oliver and the AFC as we build the project and move into the production phase.

"Ensuring the health and safety of our employees, contractors and the communities in which we operate is our highest priority. Since January 2020, we have been working closely with our EPC contractor Norinco International Cooperation Limited in order to develop and implement contingency planning in relation to the outbreak of COVID-19, which the World Health Organisation categorised as a pandemic on March 11, 2020. In partnership with Norinco, we have confirmed the manufacturing capacity of our suppliers and mobilised our EPC team who have now been on-site for the last 6 weeks."

Africa Finance Corporation president and CEO Samaila Zubairu said: "As a long-term committed investor of Thor, AFC is pleased to participate in the full funding of this landmark project which represents not only a good quality asset but also sets a benchmark for the future of commercial gold mining in Nigeria.

"Additionally, we recognise the challenges that arise from the COVID-19 landscape emerging, and the effect it has on supply chains. As an institution, AFC believes the safety and well-being of the communities which we serve must come first. We, therefore, stand ready to provide the support which Thor may require to navigate these challenging times."

www.thorexpl.com