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Canada's Thor wins $78 million in financing for Nigeria's first large-scale gold project

London — TSX-listed Canadian mineral exploration company Thor Explorations said Monday it has received committee-level approval for $78 million of financing from the Africa Finance Corp. for development of its Segilola gold project, described as the first large-scale commercial gold mine project in Nigeria.

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Finalization of the deal with AFC, a multi-lateral financial institution supporting private sector projects, will be subject to documentary approvals and other conditions, Thor said in a statement.

Thor will also need to raise a further $18 million to proceed with the Segilola project, designed to produce 80,000 oz/year over a five-year mine life, Segun Lawson, Thor CEO, said in an interview with S&P Global Platts. The company will seek to raise the $18 million, probably in equity, over the next 10 weeks, and is holding "conversations with various parties," including mining and institutional investors in North America and London, he said.

With the preliminary economic assessment (PEA) study completed in February, construction at Segilola, located 120 km from the country's capital, Lagos, is expected to start in the second quarter of 2019 and last 18 months. Thor plans to put out tenders within the next three months for mining services and has a shortlist of contractors, including some from Nigeria, Ghana and Mali, Lawson said. The plant and infrastructure will be provided on a turnkey basis by China's Norinco.

Gold production in the open-pit mine is expected to start in the second half of 2020 with an expected cash cost of $662/oz, "in the bottom quartile of global costs," as much of the high-grade ore can be recovered by gravity processes alone, according to Segun. After the initial five years of open-pit mine life, the plan is to undertake underground mining at the site, he said.

AFC will be the main offtaker of the production.

Lawson said Nigeria's current economic policy to move away from dependency on oil and natural gas and "kick-start mining and other sectors" means that incentives are being offered in this area, such as a corporate tax rate of zero on production for the first five years of operations and the right for foreign enterprises to hold 100% ownership of their operations in the country, Lawson said. Thor will be paying royalties of $13/oz, he said.

"The Mining Act is very enabling," he said.

As well as holding other exploration licenses in the Segilola area, Thor Explorations also has a gold project in Senegal and a joint-venture in Burkina Faso as a minority stakeholder with Acacia Mining.

-- Diana Kinch, diana.kinch@spglobal.com

-- Filip Warwick, filip.warwick@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com