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Thor Explorations Ltd. — Interim / Quarterly Report 2023
May 30, 2023
46471_rns_2023-05-29_8a52f391-575c-47eb-afe7-497868ca644c.pdf
Interim / Quarterly Report
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Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2023, and 2022
(in United States Dollars)
1
THOR EXPLORATIONS LTD.
March 31, 2023 (Unaudited)
Table of contents
Condensed interim consolidated statements of financial position ............................................................... 4 Condensed interim consolidated statements of comprehensive income .................................................... 5 Condensed interim consolidated statements of cash flows......................................................................... 6 Condensed interim consolidated statements of changes in equity ............................................................. 7 Notes to the condensed interim consolidated financial statements ....................................................... 8-30
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NOTICE TO READER
Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of condensed interim consolidated financial statements by an entity’s auditor.
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THOR EXPLORATIONS LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In United States dollars (unaudited)
M arch 31, Decem ber 31, M arch 31,
2023 2022 2022
Note $ $ $
(restated)
ASSETS
Current assets
Cash 4,505,071 6,688,037 6,276,376
Inventory 4 25,080,808 19,901,262 16,534,943
Am ounts receivable 5 240,009 220,442 191,876
Prep aid exp enses, advances and deposits 6 8,221 ,563 10 ,476,923 918,219
Total current assets 38,047,451 37,286,664 23,921,414
Non-current assets
Deferred incom e tax assets 89,061 87,797 84,794
Prepaid expenses, advances and deposits 6 244,331 282,825 103,790
Right-of-use assets 7 15,667,650 16,849,402 19,707,915
Property, plant and equipm ent 12 148,063,401 149,513,917 149,421,654
Intang ible assets 13 20,718 ,491 19 ,231,208 15 ,773,637
Total non-current assets 184,782 ,934 185 ,965,149 185 ,091,790
TOTAL ASSETS 222,830,385 223,251,813 209,013,204
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 14 60,555,348 56,337,289 31,834,095
Deferred incom e - 6,581,743 6,233,347
Lease liabilities 7 4,815,512 4,811,991 4,854,714
Gold stream liability 8 9,979,413 10,187,630 12,889,957
Loans and borrowings 9 11,790 ,796 888 ,141 28 ,441,348
Total current liabilities 87,141,069 78,806,794 84,253,461
Non-current liabilities
Accounts payable and accrued liabilities 14 - - 1,031,309
Lease liabilities 7 9,649,679 10,597,294 12,587,430
Gold stream liability 8 13,528,574 14,852,135 16,860,524
Loans and borrowings 9 16,191,684 27,254,513 25,733,198
Provisions 11 4,971 ,736 4 ,959,638 5 ,341,369
Total non-current liabilities 44,341,673 57,663,580 61,553,830
SHAREHOLDERS' EQUITY
Com m on shares 15 80,439,693 80,439,693 79,949,297
Option reserve 15 3,351,133 3,351,133 3,455,454
Currency translation reserve 15 (2,278,054) (2,512,911) (3,690,038)
Retained earnings/(deficit) 15 9,834 ,871 5 ,503,524 (16 ,508,800)
Total shareholders' eq uity 91,347 ,643 86 ,781,439 63 ,205,913
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 222,830,385 223,251,813 209,013,204
These condensed interim consolidated financial statem ents were approved for issue by the
Board of Directors on May 29, 2023, and are signed on its behalf by:
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(Signed) "Adrian Coates" (Signed) "Olusegun Lawson" Director Director
The accom panying notes are an integral part of these condensed interim consolidated financial statem ents.
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THOR EXPLORATIONS LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, In United States dollars (unaudited)
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2023 2022
Note $ $
Continuing operations (restated)
Revenue 3 40,287,830 24,865,482
Production costs 3 (18,306,502) (8,219,530)
Transportation and refining 3 (342,291) (502,222)
Royalties 3 (768,282) (550,765)
Amortization and depreciation of operational assets - owned
3
assets (6,893,372) (4,732,780)
Amortization and depreciation of operational assets - right of
3
use assets (1,159,537) (1,158,255)
Cost of sales (27,469,984) (15,163,552)
Loss on forward sale of commodity contracts (750,482) (294,922)
Gross profit from operations 12,067,364 9,407,008
Amortization and depreciation - owned assets 3 (272,151) (271,837)
Amortization and depreciation - right of use assets 3 (35,050) -
Other administration expenses 3 (4,054,939) (1,883,401)
Impairment of Exploration & Evaluation assets 13 (3,096) (2,701)
Profit from operations 7,702,128 7,249,069
Interest expense (3,370,781) (3,758,131)
Net profit before income taxes 4,331,347 3,490,938
Income Tax - -
Net profit for the period 4,331,347 3,490,938
Attributable to:
Equity shareholders of the Company 4,331,347 3,490,938
Net profit for the period 4,331,347 3,490,938
Other comprehensive profit
Foreign currency translation profit (loss) attributed to
equity shareholders of the company 234,857 (800,528)
Total comprehensive income profit for the period 4,566,204 2,690,410
Net profit per share
Basic 16 $ 0.007 $ 0.005
Diluted 16 $ 0.007 $ 0.005
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The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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THOR EXPLORATIONS LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOW S FOR THE THREE MONTHS ENDED MARCH 31, In United States dollars (unaudited)
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Note 2023 2022
(restated)
Cash flows from/(used in):
Operating
Net profit $ 4,331,347 3,490,938
Adjustments for:
Impairment of unproven mineral interest 13 3,096 2,701
Amortization and depreciation 3 8,360,110 5,004,617
Loss on forward sale commodity contracts 750,482 294,923
Unrealized Foreign exchange (gains)/losses 3 (3,800,994) 865,075
Interest expense 3,370,781 3,752,766
13,014,822 13,411,020
Changes in non-cash working capital accounts
Inventory (5,179,546) 41,150
Receivables (19,567) (340,269)
-
Current prepaid expenses, advances and deposits 2,223,366
-
Non-current prepaid expenses, advances and deposits 38,494
Accounts payable and accrued liabilities 15,718,522 (5,663,278)
Deferred income (6,581,743) 6,204,508
Net cash flows from operating activities 19,214,348 13,653,131
Investing
Restricted cash - 3,495,992
Purchase of intangible assets 13 (6,733) (169)
Assets under construction expenditures 12 - -
Property, Plant & Equipment 12 (14,453,933) (10,556,466)
Exploration & Evaluation assets expenditures 13 (1,054,802) (1,022,773)
Net cash flows used in investing activities (15,515,468) (8,083,416)
Financing
Share subscriptions received 15 - 919,162
(Repayment of) / Proceeds from loans and borrowings 10 (3,533,772) (230,446)
-
Arrangement fees paid (126,874)
Interest paid 10 (1,059,954) (1,214,587)
Payment of lease liabilities 7 (1,255,729) (1,213,678)
Net cash flows (used in)/from financing activities (5,976,329) (1,739,549)
Effect of exchange rates on cash 94,483 1,169,940
Net change in cash $ (2,182,966) 5,000,106
Cash, beginning of the period $ 6,688,037 1,276,270
Cash, end of the period $ 4,505,071 6,276,376
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The accompanying notes are an integral part of these condensed interim consolidated financial
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THOR EXPLORATIONS LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY In United States dollars (unaudited)
| Note Common shares |
Option reserve |
Currency translation reserve |
(Deficit)/ Retained earnings |
Total shareholders' equity |
|
|---|---|---|---|---|---|
| Balance on December 31, 2021 | 79,027,183 $ |
4,513,900 $ |
(2,889,510) $ |
(21,058,184) $ |
59,593,389 $ |
| Net profit for the period | - | - | - | 3,490,938 | 3,490,938 |
| Other comprehensive loss | - | - | (800,528) | - | (800,528) |
| Total comprehensiveprofit for theperiod | - | - | (800,528) | 3,490,938 | 2,690,410 |
| Options exercised | 19 922,114 |
(1,058,446) | - | 1,058,446 | 922,114 |
| Balance on March 31, 2022 (restated) | 79,949,297 $ |
3,455,454 $ |
(3,690,038) $ |
(16,508,800) $ |
63,205,913 $ |
| Balance on December 31, 2022 | 80,439,693 $ |
3,351,133 $ |
(2,512,911) $ |
5,503,524 $ |
86,781,439 $ |
| Net profit for the period | - | - | - | 4,331,347 | 4,331,347 |
| Other comprehensive income | - | - | 234,857 | - | 234,857 |
| Total comprehensiveprofit for theperiod | - | - | 234,857 | 4,331,347 | 4,566,204 |
| Balance on March 31, 2023 | 80,439,693 $ |
3,351,133 $ |
(2,278,054) $ |
9,834,871 $ |
91,347,643 $ |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
1. CORPORATE INFORMATION
Thor Explorations Ltd. (the “Company”), together with its subsidiaries (collectively, “Thor” or the “Group”) is a West African focused gold producer and explorer, dually listed on the TSX-Venture Exchange (THX.V) and AIM Market of the London Stock Exchange (THX.L).
The Company was formed in 1968 and is organized under the Business Corporations Act (British Columbia) (BCBCA) with its registered office at 550 Burrard St, Suite 2900 Vancouver, BC, CA, V6C 0A3. 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 condensed interim consolidated financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").
These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, which have been prepared in accordance with IFRS.
These interim financial statements were authorized for issue by the Board of Directors on May 29, 2023.
b) Basis of measurement
These interim financial statements are presented in United States dollars (“US$”).
These interim financial statements have been prepared on a historical cost basis, except for certain financial instruments that are measured at fair value at the end of each reporting period.
The Group’s accounting policies have been applied consistently to all periods in the preparation of these interim financial statements. In preparing the Group 's interim financial statements for the three months ended March 31, 2023, the Group applied the critical judgments and estimates as disclosed in note 3 of its annual financial statements for the year ended December 31, 2022.
These interim financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company, which is defined as having the power over the entity, rights to variable returns from its involvement with the entity, and the ability to use its power to affect the amount of returns. All intercompany transactions and balances are eliminated on consolidation. The Company's subsidiaries at March 31, 2023 are consistent with the subsidiaries as at December 31, 2022 as disclosed in note 3 to the annual financial statements.
None of the new standards or amendments to standards and interpretations applicable during the period has had a material impact on the financial position or performance of the Group. The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
2. BASIS OF PREPARATION (continued)
c) Nature of operations and going concern
The Board of Directors have performed an assessment of whether the Company and Group would be able to continue as a going concern until at least May 2024. In their assessment, the Group has taken into account its financial position, expected future trading performance, its debt and other available credit facilities, future debt servicing requirements, its working capital and capital expenditure commitments and forecasts.
At March 31, 2023, the Group had a cash position of $4.5 million and a net debt position of $24.9 million, calculated as total debt adjusted for unamortized deferred financing charges less cash and cash equivalents and short-term investments. Cash flows from operating activities for the three months ended March 31, 2023 were inflows of $19.2 million.
The Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for at least the next twelve months and that, as at the date of this report, there are no material uncertainties regarding going concern
The Board of Directors is satisfied that the going concern basis of accounting is an appropriate assumption to adopt in the preparation of the interim financial statements as at, and for the period ended March 31, 2023.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
3. PROFIT FROM OPERATIONS
3a. REVENUE
| 3a. REVENUE | ||||
|---|---|---|---|---|
| Three Months Ended | ||||
| March 31, | ||||
| 2023 | 2022 | |||
| Gold revenue | 40,244,057 | 24,849,962 | ||
| Silver revenue | 43,773 | 15,520 | ||
| $ | 40,287,830 | $ | 24,865,482 |
The Groups revenue is generated in Nigeria. All sales are made to the Groups only customer.
3b. COST OF SALES
| Three Months Ended | Three Months Ended | |||
|---|---|---|---|---|
| March 31, | ||||
| 2023 | 2022 | |||
| Mining | 20,037,387 | 7,698,414 | ||
| Processing | 4,108,785 | 926,517 | ||
| Support services and others | 1,405,062 | 1,778,410 | ||
| Foreign exchange (gains)/losses on production costs* | (7,244,732) | (2,183,811) | ||
| Production costs | $ | 18,306,502 | $ | 8,219,530 |
| Transportation and refining | 342,291 | 502,222 | ||
| Royalties | 768,282 | 550,765 | ||
| Amortization and depreciation - operational assets - owned assets |
6,893,372 | 4,732,780 | ||
| Amortization and depreciation - operational assets - right of use assets |
1,159,537 | 1,158,255 | ||
| Cost of sales | 27,469,984 | 15,163,552 |
- The total foreign exchange gain for the current period was $7,244,732, which comprises of realized foreign exchange gains of $3,443,738 and unrealized foreign exchange gains of $3,800,994. During the period, SROL purchased its local currency on a spot basis. The foreign exchange gains and losses from these trades are generated from the differences between the local currency values achieved on the trades versus the currency translation rate at the time of the trade.
3c. AMORTISATION AND DEPRECIATION
| Three Months Ended | Three Months Ended | |||
|---|---|---|---|---|
| March 31, | ||||
| 2023 | 2022 | |||
| Amortization and depreciation - operational assets - owned assets |
6,893,372 | 4,732,780 | ||
| Amortization and depreciation - operational assets - right of use assets |
1,159,537 | 1,158,255 | ||
| Amortization and depreciation – owned assets | 272,151 | 271,837 | ||
| Amortization and depreciation–right-of-use assets | 35,050 | - | ||
| $ | 8,360,110 | $ | 6,162,872 |
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
3d. OTHER ADMINISTRATION EXPENSES
| Three Months Ended | Three Months Ended | ||||
|---|---|---|---|---|---|
| March 31, | |||||
| Note | 2023 | 2022 | |||
| Audit and legal | 150,806 | 47,173 | |||
| Bank charges | 93,476 | 29,974 | |||
| Consulting fees | 503,400 | 324,354 | |||
| Directors’ fees | 17 | 137,472 | 90,328 | ||
| Investor relations and transfer agent | 126,887 | 111,226 | |||
| Listing and filing fees | 12,186 | 5,556 | |||
| Camp costs | 1,356,729 | 418,047 | |||
| Office and miscellaneous | 765,226 | 364,203 | |||
| Salaries and benefits | 693,299 | 325,986 | |||
| Travel | 215,458 | 166,554 | |||
| $ | 4,054,939 | $ | 1,883,401 |
4. INVENTORY
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Plant spares and consumables | $ | 9,146,279 | $ | 4,751,922 |
| Gold ore in stockpile | 12,479,805 | 11,869,168 | ||
| Gold in CIL | 3,454,724 | 1,614,267 | ||
| Gold Dore | - | 2,119,935 | ||
| $ | 25,080,808 | $ | 19,901,262 |
There were no write downs to reduce the carrying value of inventories to net realizable value during the periods ended March 31, 2023 and 2022.
5. AMOUNTS RECEIVABLE
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Accounts receivable | $ | 60,569 | $ | 67,084 |
| GST | 1,673 | 993 | ||
| Other receivables | 177,767 | 152,365 | ||
| $ | 240,009 | $ | 220,442 |
The value of receivables recorded on the balance sheet is approximate to their recoverable value and there are no expected material credit losses.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
6. PREPAID EXPENSES, ADVANCES AND DEPOSITS
| March 31, | March 31, | December 31, | ||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Current: | ||||
| Gold Stream liability arrangement fees | 33,186 | 33,186 | ||
| Advance deposits to vendors | 163,012 | 9,625,204 | ||
| Otherprepayments | 8,025,365 | 818,533 | ||
| $ | 8,221,563 | 10,476,923 | ||
| Non-current: | ||||
| Gold Stream liability arrangement fees | - | 74,667 | ||
| Otherprepayments | 244,331 | 208,158 | ||
| $ | 244,331 | 282,825 |
Included in Advance deposits to vendors, are payment deposits towards key equipment, materials and spare parts, with longer lead times to delivery, which are of critical importance to maintain efficient operations of the mine and process plant. These were made to mitigate against price volatility and inflation currently affecting the sector.
7. LEASES
The Group accounts for leases in accordance with IFRS 16. The definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019. The Group has elected not to recognize right-of-use assets and lease liabilities for leases which have low value, or short-term leases with a duration of 12 months or less. The payments associated with such leases are charged directly to the income statement on a straight-line basis over the lease term. There were no such leases for the periods ended March 31, 2023 and 2022.
Leases relate principally to corporate offices and the mining fleet at the Segilola mine. Corporate offices are depreciated over 5 years and mining fleet over the life of mine of Segilola.
The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position for the period ended March 31, 2023, were as follows:
| Right of use | Lease liability | Income | ||||
|---|---|---|---|---|---|---|
| asset | statement | |||||
| Carrying value December 31, 2022 | $ | 16,849,402 | $ | (15,409,285) | $ | |
| New leases entered in to during the period | - | - | - | |||
| Depreciation | (1,194,587) | - | (1,194,587) | |||
| Interest | - | (298,438) | (298,438) | |||
| Lease payments | - | 1,255,729 | - | |||
| Foreign exchange movement | 12,835 | (13,197) | (13,197) | |||
| Carrying value at March 31, 2023 | $ | 15,667,650 | $ | (14,465,191) | $ | (1,506,222) |
| Current liability | (4,815,512) | |||||
| Non-current liability | (9,649,679) |
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
7. LEASES (continued)
The key impacts on the Statement of Comprehensive Loss and the Statement of Financial Position for the year ended December 31, 2022, were as follows:
| Right of use | Lease liability | Income | ||||
|---|---|---|---|---|---|---|
| asset | statement | |||||
| Carrying value December 31, 2021 | $ | 20,843,612 | $ | (18,274,374) | $ | - |
| New leases entered in to during the period | 660,064 | (660,064) | - | |||
| Depreciation | (4,724,100) | - | (4,724,100) | |||
| Interest | - | (1,052,329) | (1,052,329) | |||
| Lease payments | - | 4,882,786 | - | |||
| Foreign exchange movement | 69,826 | (305,304) | (305,304) | |||
| Carrying value at December 31, 2022 | $ | 16,849,402 | $ | (15,409,285) | $ | (6,081,733) |
| Current liability | (4,811,991) | |||||
| Non-current liability | (10,597,294) |
8. GOLD STREAM LIABILITY
| Gold stream liability March 31, 2023 December 31, 2022 |
|
|---|---|
| Balance at Beginning of period $ 25,039,765 $ 30,262,279 Repayments (2,940,730) (11,534,441) Interest at the effective interest rate 1,408,952 6,311,927 |
|
| Balance at End ofperiod $ 23,507,987 $ 25,039,765 |
|
| Current liability 9,979,413 10,187,630 |
|
| Non-current liability 13,528,574 14,852,135 |
On April 29, 2020, the Group announced the closing of project financing for its flagship Segilola Gold Project (“Segilola”) in Osun State, Nigeria. The financing included a $21 million gold stream upfront deposit (“the Prepayment") over future gold production at Segilola under the terms of a Gold Purchase and Sale Agreement (“GSA”) entered into between the Group’s wholly owned subsidiary SROL and the AFC. The Prepayment is secured over the shares in SROL as well as over SROL’s assets and is not subject to interest. The initial term of the GSA is for ten years with an automatic extension of a further ten years. The AFC will receive 10.27% of gold production from the Segilola ML41 mining license until the $21 million Prepayment has been repaid in full. Thereafter, the AFC will continue to receive 10.27% of gold production from material mined within the ML41 mining license until a further $26.25 million is received, representing a total money multiple of 2.25 times the value of the Prepayment, at which point the GSA will terminate. The AFC are not entitled to receive an allocation of gold production from material mined from any of the Group’s other gold tenements under the terms of the GSA.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
8. GOLD STREAM LIABILITY (continued)
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 the 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 will be expensed through the Condensed Interim Consolidated Statement of Income (Loss).
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.
The following table represents the Group’s loans and borrowings measured and recognised at fair value.
| Level 1 | Level 2 | Level3 | Total | |||
|---|---|---|---|---|---|---|
| Financial liability at fair value throughprofit or loss |
$ | - | - | 23,507,987 | 23,507,987 |
The liabilities included in the above table are carried at fair value through profit and loss.
9. LOANS AND BORROWINGS
| March 31, 2023 December 31, 2022 |
March 31, 2023 December 31, 2022 |
|---|---|
| Current liabilities: Loans payable to the Africa Finance Corporation less than 1 year $ 10,828,365 $ 356,155 Deferred element of EPC contract 962,431 531,986 |
|
| $ 11,790,796 888,141 |
|
| Non-current liabilities: Loans payable to the Africa Finance Corporation more than 1 year $ 13,429,381 $ 24,103,784 Deferred element of EPC contract 2,762,303 3,150,729 |
|
| $ 16,191,684 $ 27,254,513 |
|
| Loans from the Africa Finance Corporation |
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Balance at Beginning of period | $ | 24,459,939 | $ | 46,859,966 |
| Drawdown | - | - | ||
| Principal repayments | (526,538) | (24,220,764) | ||
| Arrangement fees | (126,874) | - | ||
| Interest paid | (986,800) | (4,645,014) | ||
| Unwinding of interest in the period | 1,438,019 | 6,465,751 | ||
| Foreign exchange movement | - | - | ||
| Balance at End ofperiod | $ | 24,257,746 | $ | 24,459,939 |
| Current liability | 10,828,365 | 356,155 | ||
| Non-current liability | 13,429,381 | 24,103,784 |
14
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
9. LOANS AND BORROWINGS (continued)
On December 1, 2020, the Group announced that its subsidiary Segilola Resources Operating Limited (“SROL”) had completed the financial closing of a $54 million project finance senior debt facility (“the Facility”) from the Africa Finance Corporation (“AFC”) for the construction of the Segilola Gold Project in Nigeria. The Facility could be drawn down at the Group’s request in minimum disbursements of $5 million. As at December 31, 2022, SROL has received total disbursements of $52.6 million (2021: $52.6 million), with $nil drawn down in 2022 (2021: $31.2 million) and the remaining $1.35m undrawn facility cancelled by the Group during the period under review (2021: $nil). 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 SOFR plus 9% and is payable on a quarterly basis in arrears.
In conjunction with the granting of the Facility, Thor issued 33,329,480 bonus shares to the AFC. Thor also incurred transaction costs of $4,663,652 in relation to the loan facility. The fair value of the liability at inception was determined at $45,822,943 taking into account the transaction costs and equity component and recognized at amortized cost using an effective rate of interest, with the fair value of the shares issued in April 2020 of $5,666,011 recognized within equity.
On 31 January 2023, the Group entered into an agreement with the AFC amending the terms of its senior debt facility.
The amended facility removes the project finance cash sweep requirement and allows for free distributions from SROL (subject to a 20% distribution sweep to the senior debt facility), as well as releasing the Group from restrictions regarding acquisitions, distribution of dividends and certain indebtedness covenants. The payment timetable was also re-scheduled to reallocate a higher percentage of the repayments to a later period in the Facility’s term.
Deferred payment facility on EPC contract for the construction of the Segilola Gold Mine
The Group has constructed its Segilola Gold Mine through an engineering, procurement, and construction contract (“EPC Contract”). 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 March 31, 2023, a total of $2,762,303 (December 31, 2022: $3,682,715) was deferred under the facility. The 10% deferred element is repayable in instalments over a 36-month period by repaying an amount on a series of repayment dates, as set out in the Deferred Payment Facility. Repayments commenced in March 2022 and will conclude in 2025. Interest on this element of the EPC deferred facility accrues at 8% per annum from the time the Facility taking-over Certificate was issued.
| as issued. | ||||
|---|---|---|---|---|
| March 31, | December 31, | |||
| 2023 | 2022 | |||
| Balance at beginning of period | $ | 3,682,715 | $ | 6,210,090 |
| Offset against EPC payment | - | 440,263 | ||
| Principal repayments | (66,504) | (3,440,449) | ||
| Interest paid | (73,154) | - | ||
| Unwinding of interest in the period | 181,677 | 472,811 | ||
| Balance period end | $ | 3,724,734 | $ | 3,682,715 |
| Current liability | 962,431 | 531,986 | ||
| Non-currentliability | 2,762,303 | 3,150,729 |
15
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
10. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
| March 31, 2023 | Gold stream | AFC loan | EPC | Total | |
|---|---|---|---|---|---|
| liability | deferred | ||||
| facility | |||||
| January 1, 2023 | $ | 25,039,765 | 24,459,939 | 3,682,715 | 53,182,419 |
| Cash flows: | |||||
| (Repayment of) / Proceeds from loans and borrowings |
(2,940,730) | (526,538) | (66,504) | (3,533,772) | |
| Arrangement fees | - | (126,874) | - | (126,874) | |
| Interest paid | - | (986,800) | (73,154) | (1,059,954) | |
| Non-cash changes: | |||||
| Unwinding of interestinthe year | 1,408,952 | 1,438,019 | 181,677 | 3,028,648 | |
| March31,2023 | $ | 23,507,987 | 24,257,746 | 3,724,734 | 51,490,467 |
| December 31, 2022 | Gold stream | Short term | AFC loan | EPC | Total | |
|---|---|---|---|---|---|---|
| liability | advance | deferred | ||||
| facility | ||||||
| January 1, 2022 | $ | 30,262,279 | 668,570 | 46,859,966 | 6,210,090 | 84,000,905 |
| Cash flows: | ||||||
| (Repayment of) / Proceeds from loans and borrowings |
(11,534,441) | (668,570) | (24,220,764) | (3,440,449) | (39,864,224) | |
| Interest paid | - | - | (4,645,014) | - | (4,645,014) | |
| Non-cash changes: | ||||||
| Unwinding of interest in the year | 6,311,927 | - | 6,465,751 | 472,811 | 13,250,489 | |
| Offset againstEPC payment | - | - | - | 440,263 | 440,263 | |
| December 31,2022 | $ | 25,039,765 | - | 24,459,939 | 3,682,715 | 53,182,419 |
11. PROVISIONS
| March 31, 2023 | Fleet | |||||||
|---|---|---|---|---|---|---|---|---|
| demobilization | Restoration | |||||||
| Other | costs | costs | Total | |||||
| Balance at Beginning of period | $ | 18,157 | $ | 173,442 | $ | 4,768,039 | $ | 4,959,638 |
| Initial recognition of provision | - | - | - | - | ||||
| Changes in estimates | - | - | ||||||
| Unwinding of discountof | - | - | 11,701 | 11,701 | ||||
| Foreign exchange movementse | 397 | - | - | 397 | ||||
| Balance atperiod end | $ | 18,554 | $ | 173,442 | $ | 4,779,740 | $ | 4,971,736 |
| Current liability | - | - | - | - | ||||
| Non-current liability | 18,554 | 173,442 | 4,779,740 | 4,971,736 |
16
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
11. PROVISIONS (continued)
| December 31, 2022 | Fleet | |||||||
|---|---|---|---|---|---|---|---|---|
| demobilization | Restoration | |||||||
| Other | costs | costs | Total | |||||
| Balance at Beginning of period | $ | - | $ | 173,241 | $ | 5,064,935 | $ | 5,238,176 |
| Initial recognition of provision | 18,415 | - | - | 18,415 | ||||
| Changes in estimates | - | - | (404,859) | (404,859) | ||||
| Unwinding of discountof | - | 201 | 107,963 | 108,164 | ||||
| Foreign exchange movementse | (258) | - | - | (258) | ||||
| Balance atperiod end | $ | 18,157 | $ | 173,442 | $ | 4,768,039 | $ | 4,959,638 |
| Current liability | - | - | - | - | ||||
| Non-current liability | 18,157 | 173,442 | 4,768,039 | 4,959,638 |
The restoration costs provision is for the site restoration at Segilola Gold Project in Osun State Nigeria. The value of the above provision is measured by unwinding the discount on expected future cash flows using a discount factor that reflects the credit-adjusted risk-free rate of interest. It is expected that the restoration costs will be paid in US dollars, and as such US forecast inflation rates of 2.9% and the interest rate of 4% on 5-year US bonds were used to calculate the expected future cash flows, which are in line with the life of mine. The provision represents the net present value of the best estimate of the expenditure required to settle the obligation to rehabilitate environmental disturbances caused by mining operations at mine closure.
The fleet demobilization costs provision is the value of the cost to demobilize the mining fleet upon closure of the mine.
12. PROPERTY, PLANT AND EQUIPMENT
| Motor | Plant and | Office | Decommissioning | Decommissioning | Processing | Processing | Assets under | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| vehicles | machinery | furniture | Land | Asset | Plant | Segilola Mine | construction | Total | ||||||||||
| Costs | ||||||||||||||||||
| Balance, December 31, 2021 | $ | 2,059,982 |
$ | 489,374 |
$ | 1,175,069 |
$ | 16,808 |
$ | 5,064,935 |
$ | - |
$ | - |
$ | 144,577,201 |
153,383,369 | |
| Transfers | - | - | - | - | - | 60,687,651 | 83,889,550 | (144,577,201) | - | |||||||||
| Additions | 148,862 | 5,649,341 | 668,936 | - | - | 7,459,467 | 8,946,765 | 1,884,352 | 24,757,723 | |||||||||
| Revisions to decommisioning assets | - | - | - | - | (404,859) | - | - | - | (404,859) | |||||||||
| Disposals | - | - | - | - | - | - | - | - | - | |||||||||
| Foreign exchange movement | (40,004) | (12,091) | (9,118) | - | - | - | - | - | (61,213) | |||||||||
| Balance, December 31, 2022 | $ | 2,168,840 |
$ | 6,126,624 |
$ | 1,834,887 |
$ | 16,808 |
$ | 4,660,076 |
$ | 68,147,118 |
$ | 92,836,315 |
$ | 1,884,352 |
$ | 177,675,020 |
| Transfers | - | 105,968 | - | - | - | - | - | (105,968) | - | |||||||||
| Additions | 246,126 | 83,818 | 210,047 | - | - | - | 5,179,167 | - | 5,719,158 | |||||||||
| Disposals | - | - | - | - | - | - | - | - | - | |||||||||
| Foreign exchange movement | 1,127 | 3,343 | 31,333 | - | - | - | - | - | 35,803 | |||||||||
| Balance, March 31, 2023 | $ | 2,416,093 |
$ | 6,319,753 |
$ | 2,076,267 |
$ | 16,808 |
$ | 4,660,076 |
$ | 68,147,118 |
$ | 98,015,482 |
$ | 1,778,384 |
$ | 183,429,981 |
| Accumulated depreciation and impairment | ||||||||||||||||||
| losses | ||||||||||||||||||
| Balance, December 31, 2021 | $ | 754,516 |
$ | 263,647 |
$ | 251,289 |
$ | - |
$ | - |
$ | - |
$ | - |
$ | - |
1,269,452 | |
| Depreciation | 457,259 | 354,275 | 306,542 | - | 952,322 | 10,247,764 | 14,603,113 | - | 26,921,275 | |||||||||
| Disposals | - | - | - | - | - | - | - | - | - | |||||||||
| Foreign exchange movement | (14,966) | (11,780) | (2,878) | - | - | - | - | - | (29,624) | |||||||||
| Balance, December 31, 2022 | $ | 1,196,809 |
$ | 606,142 |
$ | 554,953 |
$ | - |
$ | 952,322 |
$ | 10,247,764 |
$ | 14,603,113 |
$ | - |
$ | 28,161,103 |
| Depreciation | 136,665 | 332,811 | 91,508 | - | 214,785 | 2,641,685 | 3,775,226 | - | 7,192,680 | |||||||||
| Disposals | - | - | - | - | - | - | - | - | - | |||||||||
| Foreign exchange movement | (912) | 3,066 | 10,643 | - | - | - | - | - | 12,797 | |||||||||
| Balance, March 31, 2023 | $ | 1,332,562 |
$ | 942,019 |
$ | 657,104 |
$ | - |
$ | 1,167,107 |
$ | 12,889,449 |
$ | 18,378,339 |
$ | - |
$ | 35,366,580 |
| Carrying amounts | ||||||||||||||||||
| Balance,December31,2022 | $ | 972,031 | $ | 5,520,482 | $ | 1,279,934 | $ | 16,808 | $ | 3,707,754 | $ | 57,899,354 | $ | 78,233,202 | $ | 1,884,352 | $ | 149,513,917 |
| Balance, March 31, 2023 | $ | 1,083,531 |
$ | 5,377,734 |
$ | 1,419,163 |
$ | 16,808 |
$ | 3,492,969 |
$ | 55,257,669 |
$ | 79,637,143 |
$ | 1,778,384 |
$ | 148,063,401 |
17
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
12. PROPERTY, PLANT AND EQUIPMENT (continued)
A summary of depreciation capitalized is as follows:
| Three months ended | Three months ended | Three months ended | Total depreciation | Total depreciation | Total depreciation | |||
|---|---|---|---|---|---|---|---|---|
| March 31, | Capitalized | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | 2022 | 2022 | |||||
| Exploration expenditures | 55,718 | 23,418 | 676,070 | 620,352 | ||||
| Total | $ | 55,718 | $ | 23,418 | $ | 676,070 | $ | 620,352 |
a) Segilola Project, Osun Nigeria:
Classification of Expenditure on the Segilola Gold Project
On January 1, 2022, the Group 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 March 31, 2023. Refer to Note 11 for further detail.
EPC payments
During the three-month period ended March 31, 2023, the Group paid $8,732,752 (December 31, 2022: $4,321,856) to the EPC contractor in relation to the construction of the Segilola Mine and processing plant.
13. INTANGIBLE ASSETS
The Group’s exploration and evaluation assets costs are as follows:
| Douta Gold Project, Senegal Central Hounde Project, Burkina Faso Exploration licenses, Nigeria Software Total |
Douta Gold Project, Senegal Central Hounde Project, Burkina Faso Exploration licenses, Nigeria Software Total |
|---|---|
| Balance, December 31, 2021 14,219,982 $ - $ 895,301 $ 230,136 $ 15,345,419 $ |
|
| Acquisition costs - - 24,103 - 24,103 Exploration costs 3,745,803 12,014 1,693,863 - 5,451,680 Additions - - - 43,599 43,599 Amortisation - - - (122,988) (122,988) Impairment - (12,014) - - (12,014) Foreign exchange movement (1,427,912) - (70,679) - (1,498,591) |
|
| Balance, December 31, 2022 16,537,873 $ - $ 2,542,588 $ 150,747 $ 19,231,208 $ |
|
| Acquisition costs - - - - - Exploration costs 749,926 3,096 348,301 - 1,101,323 Additions - - - 6,733 6,733 Amortisation - - - (28,561) (28,561) Impairment - (3,096) - - (3,096) Foreign exchange movement 263,121 - 147,763 - 410,884 |
|
| Balance, March 31, 2023 17,550,920 $ - $ 3,038,652 $ 128,919 $ |
20,718,491 $ |
18
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
13. INTANGIBLE ASSETS (continued)
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 Group is party to an option agreement (the “Option Agreement”) with International Mining Company (“IMC”), by which the Group has acquired a 70% interest in the Douta Gold Project located in southeast Senegal held through African Star SARL.
Pursuant to the terms of the Option Agreement, IMC’s 30% interest will be a “free carry” interest until such time as the Group announces probable reserves on the Douta Gold Project (the “Free Carry Period”). Following the Free Carry Period, IMC must either elect to sell its 30% interest to African Star at a purchase price determined by an independent valuer commissioned by African Star or fund its 30% share of the exploration and operating expenses.
b) Central Houndé Project, Burkina Faso:
- (i) Bongui and Legue gold permits, Burkina Faso:
AFC Constelor SARL holds a 100% interest in the Bongui and Legue gold permits covering an area of approximately 233 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 holds 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.
The Group carried out an impairment assessment of the Central Houndé Project at December 31, 2020, and a decision was taken to fully impair the value of the Central Houndé Project. It is the Group’s intention to focus on Segilola development and Douta exploration in the short term, and it does not plan to undertake significant work on the license areas in the near future.
c) Exploration Licenses, Nigeria
The high grade Segilola gold deposit is located on the major regional shear zone that extends for several hundred kilometers through the gold-bearing Ilesha schist belt (structural corridor) of Nigeria. The Group’s gold exploration tenure currently comprises 16 wholly owned exploration licenses and nine joint venture partnership exploration licenses. Together with the mining lease over the Segilola Gold Deposit, Thor’s total gold exploration tenure amounts to 1,542 km². The Group’s exploration strategy includes further expansion of its Nigerian land package as and when attractive new licenses become available.
19
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Trade payables | $ | 51,912,663 | $ | 46,914,333 |
| Accrued liabilities | 6,273,782 | 6,213,977 | ||
| Otherpayables | 2,368,903 | 3,208,979 | ||
| $ | 60,555,348 | $ | 56,337,289 | |
| Current liability | 60,555,348 | 56,337,289 | ||
| Non-current liability | **- ** | - |
Accounts payable and accrued liabilities are classified as financial liabilities and approximate their fair values.
Included in trade payables is a balance of $1,463,353 due to our EPC contractor (December 31, 2022: $10,196,105). The total EPC amount has been finalized with our EPC contractor, and this balance has been paid at the date of release of these interim financial statements.
Also included in trade payables is a total of $805,801 (2021: $$2,215,585) that relates to third party royalties that will become payable upon future gold sales. All these royalties’ creditors are included in current liabilities.
The following table represents the Group’s trade payables measured and recognized at fair value.
| Level 1 | Level 2 | Level3 | Total | |||
|---|---|---|---|---|---|---|
| Trade payables Third partyroyalties |
$ | - | - | 805,801 | 805,801 |
15. CAPITAL AND RESERVES
a) Authorized
Unlimited common shares without par value.
b) Issued
| b) Issued | ||||||
|---|---|---|---|---|---|---|
| March 31, | March 31, | December 31, | December 31, | |||
| 2023 | 2023 | 2022 | 2022 | |||
| Number | Number | |||||
| As at start of the year | 644,696,185 | $ | 80,439,693 | 632,358,009 | $ | 79,027,183 |
| Issue of new shares: | ||||||
| - Share options exercisedi | - | - | 9,939,000 | 960,546 | ||
| - RSU awardsvestedii | - | - | 2,399,176 | 451,964 | ||
| 644,696,185 | $ | 80,439,693 | 644,696,185 | $ | 80,439,693 |
i Value of 9,250,000 options exercised at a price of CAD$0.12 per share and 289,000 options exercised at a price of CAD$0.145 per share, both on January 19, 2022, and 400,000 options exercised at a price of CAD$0.145 per share on December 13, 2022.
ii Value of 2,399,176 RSU awards that were granted and vested on October 11, 2022, at a deemed price of CAD$0.26 per share.
20
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
15. CAPITAL AND RESERVES (continued)
c) Share-based compensation
Stock option plan
The Group has granted directors, officers and consultants share purchase options. These options were granted pursuant to the Group’s stock option plan.
Under the current Share Option Plan, 44,900,000 common shares of the Group are reserved for issuance upon exercise of options.
-
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. 689,000 of these stock options were exercised during 2022.
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 | 12/03/2018 | 0.21 | 2.00% | $ 0.145 | 105.09% | $0.14 | 12,111,000 | 12,111,000 | 15/06/2023 |
| 5 | 05/10/2018 | 0.52 | 2.43% | $ 0.14 | 100.69% | $0.14 | 750,000 | 750,000 | 05/10/2023 |
| 5 | 16/01/2020 | 1.80 | 1.49% | $ 0.20 | 66.84% | $0.07 | 14,250,000 | 14,250,000 | 16/01/2025 |
| In | Canadian Dollars |
The Group 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 Group has undergone since the acquisition of the Segilola Gold Project in August 2016, the Group’s historical share price is not reflective of the current stage of development of the Group, 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, 2023, to March 31, 2023, and the outstanding and exercisable options at March 31, 2023:
21
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 In United States dollars, except where noted (unaudited)
15. CAPITAL AND RESERVES (continued)
c) Share-based compensation (continued)
==> picture [468 x 119] intentionally omitted <==
----- Start of picture text -----
Contractual January 1, March 31, March 31, 20223
Lives 2023 During the year 2023 Number of Options
Grant Expiry Exercise Remaining Opening Expired / Closing Vested and
Date Date Price (Years) Balance Granted Exercised Forfeited Balance Exercisable Unvested
12-Mar-2018 15-Jun-2023 $0.145 0.21 12,111,000 - - - 12,111,000 12,111,000 -
5-Oct-2018 5-Oct-2023 $0.14 0.52 750,000 - - - 750,000 750,000 -
16-Jan-2020 16-Jan-2025 $0.20 1.80 14,040,000 - - - 14,040,000 14,040,000 -
Totals 1.05 26,901,000 - - - 26,901,000 26,901,000 -
Weighted Average Exercise Price $0.174 - - - $0.174 $0.174 -
In Canadian Dollars
----- End of picture text -----
The following is a summary of changes in options from January 1, 2022, to December 31, 2022, and the outstanding and exercisable options at December 31, 2022:
==> picture [458 x 108] intentionally omitted <==
----- Start of picture text -----
Contractual January 1, December 31, December 31, 2022
Lives 2022 During the year 2022 Number of Options
Grant Expiry Exercise Remaining Opening Expired / Closing Vested and
Date Date Price (Years) Balance Granted Exercised Forfeited Balance Exercisable Unvested
16-Jan-2017 16-Jan-2022 $0.12 - 9,250,000 - (9,250,000) - - - -
12-Mar-2018 12-Mar-2023 $0.145 0.19 12,800,000 - (689,000) - 12,111,000 12,111,000 -
5-Oct-2018 5-Oct-2023 $0.14 0.76 750,000 - - - 750,000 750,000 -
16-Jan-2020 16-Jan-2025 $0.20 2.05 14,040,000 - - - 14,040,000 14,040,000 -
Totals 1.18 36,840,000 - (9,939,000) - 26,901,000 26,901,000 -
Weighted Average Exercise Price $0.160 $0.000 $0.122 - $0.174 $0.174 -
----- End of picture text -----
In Canadian Dollars
d) Nature and purpose of equity and reserves
The reserves recorded in equity on the Group’s statement of financial position include ‘Reserves,’ ‘Currency translation reserve,’ ‘Retained earnings’ and ‘Deficit.’
‘Option reserve’ is used to recognize the value of stock option grants prior to exercise or forfeiture.
‘Currency translation reserve’ is used to recognize the exchange differences arising on translation of the assets and liabilities of foreign branches and subsidiaries with functional currencies other than US dollars.
‘Deficit’ is used to record the Group’s accumulated deficit.
‘Retained earnings’ is used to record the Group’s accumulated earnings.
22
THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
16. EARNINGS PER SHARE
Diluted net earnings per share was calculated based on the following:
| March 31, | March 31, | |
|---|---|---|
| 2023 | 2022 | |
| Basic weighted average number of shares outstanding | 644,696,185 | 635,508,743 |
| Stock options | 10,747,624 | - |
| Diluted weighted average number of shares outstanding | 655,443,809 | 635,508,743 |
| Total common shares outstanding | 644,696,185 | 641,897,009 |
| Total potential diluted common shares | 671,597,185 | 669,198,009 |
17. 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 8, and the secured loan as disclosed in Note 9.
b) Compensation of key management personnel
The remuneration of directors and other members of key management during the three months ended March 31, 2023, and 2022 were as follows:
| Three months ended | Three months ended | ||||
|---|---|---|---|---|---|
| March | 31, | ||||
| 2023 | 2022 | ||||
| Salaries | |||||
| Current directors and officers | (i) (ii) | $ | 236,662 | $ | 161,487 |
| Former directors and officers | $ | - | $ | 36,818 | |
| Directors’ fees | |||||
| Current directors and officers | (i) (ii) | $ | 137,472 | $ | 90,328 |
| $ | 374,134 | $ | 288,633 |
(i) Key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the three months ended March 31, 2023, and 2022.
(ii) The Group paid consulting and director fees to both individuals and private companies controlled by directors and officers of the Group for services. Accounts payable and accrued liabilities at March 31, 2023, include $nil (December 31, 2022 - $102,092) due to directors or private companies controlled by an officer and director of the Group. Amounts due to or from related parties are unsecured, non-interest bearing and due on demand.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
18. FINANCIAL INSTRUMENTS
The Group’s financial instruments are classified as follows:
| March 31, 2023 | Measured at Measured at fair |
Measured at Measured at fair |
Total | |
|---|---|---|---|---|
| amortized cost | value through | |||
| profit andloss | ||||
| Assets | ||||
| Cash and cash equivalents | $ | 4,505,071 | - | 4,505,071 |
| Amountsreceivable | 240,009 | - | 240,009 | |
| Total assets | $ | 4,745,080 | - | 4,745,080 |
| Liabilities | ||||
| Accounts payable and accrued liabilities |
$ | 59,749,547 | 805,801 | 60,555,348 |
| Loans and borrowings | 27,982,480 | - | 27,982,480 | |
| Gold stream liability | - | 23,507,987 | 23,507,987 | |
| Leaseliabilities | 14,465,191 | - | 14,465,191 | |
| Total liabilities | $ | 102,197,218 | 24,313,788 | 126,511,006 |
| December 31, 2022 | Measured at | Measured at fair | Total | |
| amortized cost | value through | |||
| profit andloss | ||||
| Assets | ||||
| Cash and cash equivalents | $ | 6,688,037 | - | 6,688,037 |
| Amountsreceivable | 220,442 | - | 220,442 | |
| Total assets | $ | 6,908,479 | - | 6,908,479 |
| Liabilities | ||||
| Accounts payable and accrued liabilities |
$ | 54,121,704 | 2,215,585 | 56,337,289 |
| Loans and borrowings | 28,142,654 | - | 28,142,654 | |
| Gold stream liability | - | 25,039,765 | 25,039,765 | |
| Leaseliabilities | 15,409,285 | - | 15,409,285 | |
| Total liabilities | $ | 97,673,643 | 27,255,350 | 124,928,993 |
The fair value of these financial instruments approximates their carrying value.
As noted above, the Group has certain financial liabilities that are held at fair value. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques to measure fair value:
Classification of financial assets and liabilities Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
As at March 31, 2023 and December 31, 2022, all the Group`s liabilities measured at fair value through profit and loss are categorized as Level 3 and their fair value was determined using discounted cash flow valuation models, taking into account assumptions with respect to gold prices and discount rates as well as estimates with respect to production and operating results for the Segilola mine.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
19. CAPITAL MANAGEMENT
The Group manages, as capital, the components of shareholders’ equity. The Group’s objectives, when managing capital, are to safeguard its ability to continue as a going concern in order to develop and its mineral interests through the use of capital received via the issue of common shares and via debt instruments where the Board determines that the risk is acceptable and, in the shareholders’ best interest to do so.
The Group manages its capital structure, and makes adjustments to it, in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue common shares, borrow, acquire or dispose of assets or adjust the amount of cash.
20. CONTRACTUAL COMMITMENTS AND CONTINGENT LIABILITIES
Contractual Commitments
The Group has no contractual obligations that are not disclosed on the Condensed Interim Consolidated Statement of Financial Position.
Contingent liabilities
The Group is involved in various legal proceedings arising in the ordinary course of business. Management has assessed these contingencies and determined that, in accordance with International Financial Reporting Standards, all cases are considered as remote. As a result, no provision has been made in the interim financial statements for any potential liabilities that may arise from these legal proceedings.
Although the Group believes that it has valid defenses in these matters, the outcome of these proceedings is uncertain, and there can be no assurance that the Group will prevail in these matters. The Group will continue to assess the likelihood of any loss, the range of potential outcomes, and whether or not a provision is necessary in the future, as new information becomes available.
Based on the information available, the Group does not believe that the outcome of these legal proceedings will have a material adverse effect on the financial position or results of operations of the Group. However, there can be no assurance that future developments will not materially affect the Group's financial position or results of operations.
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
21. SEGMENTED DISCLOSURES
Segment Information
The Group’s operations comprise three reportable segments, being the Segilola Mine Project, Exploration Projects, and Corporate.
| Three months ended March 31, 2023 Segilola Mine Project Exploration Projects Corporate Total |
|
|---|---|
| Profit(loss) for the period $ 4,662,903 $ (163,572) $ (167,984) $ 4,331,347 -revenue 40,287,830 - - 40,287,830 -consulting fees (331,033) (117,869) (54,497) (503,400) -salaries and benefits (317,453) - (375,846) (693,299) -depreciation owned assets (7,153,854) (2,168) (9,501) (7,165,523) -impairments - (3,096) - (3,096) -interest expense (3,370,781) - - (3,370,781) |
|
| March 31, 2023 Segilola Mine Project Exploration Projects Corporate Total |
|
| Current assets $ 36,084,549 $ 42,251 $ 1,920,651 $ 38,047,451 Non-current assets Deferred income tax assets - 89,061 - 89,061 Prepaid expenses, advances and deposits 33,186 - 211,145 244,331 Right-of-use assets 15,072,816 - 594,834 15,667,650 Property, plant and equipment 147,367,956 537,791 157,654 148,063,401 Intangible assets 128,919 20,589,572 - 20,718,491 Total assets $ 198,687,426 $ 21,258,675 $ 2,884,284 $ 222,830,385 Non-current asset additions $ 10,527,299 $ 2,612,033 $ 1,337,066 $ 14,476,398 |
|
| Liabilities $ (127,519,042) $ (1,465,503) $ (2,498,197) $ (131,482,742) |
Non-current assets by geographical location:
| British | ||||||
|---|---|---|---|---|---|---|
| Virgin | United | |||||
| March 31, 2023 | Senegal | Islands | Nigeria | Kingdom | Canada | Total |
| Prepaid expenses, advances and deposits |
- | 5,619 | 33,185 | 205,527 | - | 244,331 |
| Right-of-use assets | - | - | 15,072,816 | 594,834 | - | 15,667,650.00 |
| Property, plant and equipment | 396,218 | - | 147,520,674 | 141,699 | 4,810 | 148,063,401 |
| Intangible assets | 11,452,918 | - | 9,265,573 | - | - | 20,718,491 |
| Total non-current assets | $11,849,136 | $5,619 | $171,892,248 | $942,060 | $4,810 | $184,693,873 |
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
21. SEGMENTED DISCLOSURES (continued)
| Three months ended | Segilola Mine | Exploration | Corporate | Total | ||||
|---|---|---|---|---|---|---|---|---|
| March 31, 2022 | Project | Projects | ||||||
| Profit (loss) for the period | $ | 4,634,699 | $ | (60,571) | $ | (1,083,190) | $ | 3,490,938 |
| - revenue | 24,865,482 | - | - | 24,865,482 | ||||
| - consulting fees | (137,835) | (30,174) | (156,345) | (324,354) | ||||
| - salaries and benefits | (37,913) | - | (288,073) | (325,986) | ||||
| - depreciation owned assets | (5,000,920) | (2,234) | (1,463) | (5,004,617) | ||||
| - impairments | - | (2,701) | - | (2,701) | ||||
| - interest expense | (3,758,131) | - | - | (3,758,131) |
| December 31, 2022 Segilola Mine Project Exploration Projects Corporate Total |
|
|---|---|
| Current assets $ 36,334,005 $ 120,752 $ 831,907 $ 37,286,664 Non-current assets Deferred income tax assets - 87,797 - 87,797 Prepaid expenses, advances and deposits 74,667 - 208,158 282,825 Right-of-use assets 16,232,353 - 617,049 16,849,402 Property, plant and equipment 149,050,728 339,785 123,404 149,513,917 Intangible assets 150,747 19,080,461 - 19,231,208 Total assets $ 201,842,500 $ 19,628,795 $ 1,780,518 $ 223,251,813 Non-current asset additions $ 10,527,299 $ 2,612,033 $ 1,337,066 $ 14,476,398 |
Non-current assets by geographical location:
| British | ||||||
|---|---|---|---|---|---|---|
| Virgin | United | |||||
| December 31, 2022 | Senegal | Islands | Nigeria | Kingdom | Canada | Total |
| Prepaid expenses, advances and deposits |
- | 7,024 | 74,667 | 201,134 | - | 282,825 |
| Right-of-use assets | - | - | 16,232,354 | 617,048 | - | 16,849,402.00 |
| Property, plant and equipment | 176,645 | - | 149,230,320 | 101,491 | 5,461 | 149,513,917 |
| Intangible assets | 10,704,623 | - | 8,526,585 | - | - | 19,231,208 |
| Total non-current assets | 10,881,268 | 7,024 | 174,468,785 | 919,673 | 5,461 | 185,877,352 |
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
22. PRIOR PERIOD RESTATEMENT
Following the conclusion of the audited consolidated financial statements for the year ended December 31, 2022, the Group identified the restatements below for the Three-month period ended March 31, 2022:
1 – Capitalization of $2,983,318 of stripping costs within “Property, Plant and equipment” as these related to improved access to ore as determined by “IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine”;
2 – Capitalization of $307,147 of near mine exploration costs within “Intangible assets” as these meet the definition of an asset in accordance with “IFRS 6 - Exploration for and Evaluation of Mineral Resources”;
3 – Reclassification of $5,891,035 of amortization and depreciation of operational assets to “Cost of sales”;
4 – Reclassification of $2,183,811 of foreign exchange gains to “Production costs” as the foreign exchange resulted from the purchase of raw materials, spare parts and other operational inputs required to support and maintain the Segilola mine operations; and
5 – Reclassification of $3,495,992 of restricted cash cashflows from “Net cash flows from operating activities” to “Net cash flows used in investing activities”.
Therefore, in accordance with “IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors”, the Condensed interim consolidated statements of financial position, Condensed interim consolidated statements of comprehensive income and Condensed interim consolidated statements of cash flows for the three-month period ended March 31, 2022 have been restated. The impact of the restatements on these statements is demonstrated below:
Condensed interim consolidated statements of financial position
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----- Start of picture text -----
March 31, March 31,
2022 Restatements 2022
$ $
(reported) Ref (restated)
ASSETS
Total current assets 23,921,414 - 23,921,414
Property, plant and equipment 146,438,336 2,983,318 1 149,421,654
Intangible assets 15,466,490 307,147 2 15,773,637
Other non-current assets 19,896,499 19,896,499
Total non-current assets 181,801,325 3,290,465 185,091,790
TOTAL ASSETS 205,722,739 3,290,465 209,013,204
LIABILITIES
Total current liabilities 84,253,461 - 84,253,461
Total non-current liabilities 61,553,830 - 61,553,830
SHAREHOLDERS' EQUITY
Retained deficit (19,799,265) 3,290,465 1 - 2 (16,508,800)
Other equity 79,714,713 79,714,713
Total shareholders' equity 59,915,448 3,290,465 63,205,913
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 205,722,739 3,290,465 209,013,204
----- End of picture text -----
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
Condensed interim consolidated statements of comprehensive income
==> picture [304 x 276] intentionally omitted <==
----- Start of picture text -----
March 31, March 31,
2022 Restatements 2022
$ $
(reported) Ref (restated)
Revenue 24,865,482 - 24,865,482
Production costs (13,386,659) 5,167,129 1 - 4 (8,219,530)
Transportation and refining (502,222) - (502,222)
Royalties (550,765) - (550,765)
Amortization and depreciation of operational assets -
owned assets (4,732,780) 3 (4,732,780)
Amortization and depreciation of operational assets -
right of use assets (1,158,255) 3 (1,158,255)
Cost of sales (14,439,646) (723,906) - (15,163,552)
Loss on forward sale of commodity contracts (294,922) - (294,922)
10,130,914 (723,906) 9,407,008
Amortization and depreciation - owned assets (6,162,872) 5,891,035 3 (271,837)
Amortization and depreciation - right of use assets - - -
Other administration expenses (2,190,548) 307,147 2 (1,883,401)
Impairment of Exploration & Evaluation assets (2,701) - (2,701)
Profit from operations 1,774,793 5,474,276 7,249,069
Interest expense (3,758,131) - (3,758,131)
Foreign exchange gains 2,183,811 (2,183,811) 4 -
Net profit before taxes 200,473 3,290,465 3,490,938
Tax expense - -
Net profit for the year 200,473 3,290,465 3,490,938
Net profit (loss) per share
Basic 0.000 0.005 0.005
Diluted 0.000 0.005 0.005
----- End of picture text -----
Condensed interim consolidated statements of cash flows
| March 31, March 31, 2022 $ 2022 $ (reported) Ref (restated) 200,473 3,290,465 1 - 2 3,490,938 Restatements |
|
|---|---|
| Cash flows from/(used in): Operating |
|
| Net profit | |
| Restricted cash | 3,495,992 (3,495,992) 5 - |
| Other operatingcash flows | 10,162,193 - 10,162,193 |
| Net cash flows from operating activities | 13,858,658.00 (205,527) 13,653,131 |
| Investing | |
| Restricted cash | - 3,495,992 5 3,495,992 (7,573,148) (2,983,318) 1 (10,556,466) (715,626) (307,147) 2 (1,022,773) |
| Property, Plant & Equipment Exploration & Evaluation assets expenditures |
|
| Other investingcash flows | (169) (169) |
| Net cash flows used in investing activities | (8,288,943) 205,527 (8,083,416) |
| Financing | |
| Net cash flows used in financing activities | (1,739,549) - (1,739,549) |
| Effect of exchange rates on cash | 1,169,940 - 1,169,940 |
| Net change in cash | 5,000,106 - 5,000,106 |
| Cash, beginning of the period | 1,276,270 - 1,276,270 |
| Cash, end of the period | 6,276,376 - 6,276,376 |
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THOR EXPLORATIONS LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022 In United States dollars, except where noted (unaudited)
23. SUBSEQUENT EVENTS
EPC Contract
As of the date of these Interim financial statements, the Group has made all outstanding due payments in relation to the EPC contract. At March 31, 2023, this amounted to US$1,463,353.
30