Earnings call transcript: Thor Explorations Q4 2024 sees record revenue

Thor Explorations Ltd (THX) reported a strong financial performance in Q4 2024, achieving record revenue and profit levels. The company's stock saw an 8% increase, reflecting investor optimism driven by robust earnings and strategic advancements. Thor Explorations' annual revenue reached $193 million, with a net profit of $91 million, underscoring its competitive position in the gold mining industry. According to InvestingPro data, the company maintains an excellent financial health score of 3.96 and trades at an attractive P/E ratio of 4.2, suggesting the stock may be undervalued compared to its Fair Value.

Key Takeaways

• Thor Explorations achieved record revenue and profit in Q4.
• The company's stock rose by 8% following the earnings call.
• Thor introduced a quarterly dividend, yielding over 11.5%.
• The company fully repaid its senior debt, enhancing financial flexibility.
• Thor is advancing multiple exploration projects in West Africa.

Company Performance

Thor Explorations demonstrated significant growth in Q4 2024, achieving record levels in revenue, profit, and EBITDA. The company has fully repaid its senior debt to Africa Finance Corporation, which strengthens its balance sheet and positions it for future growth. The introduction of a maiden dividend further highlights Thor's strong cash flow and commitment to returning value to shareholders. InvestingPro analysis reveals an impressive return on equity of 37% and a healthy free cash flow yield of 19%, with 15+ additional ProTips available to subscribers.

Financial Highlights

• Annual Revenue: $193 million
• EBITDA: $133 million
• Net Profit: $91 million
• Q4 marked a record quarter for revenue, profit, and EBITDA

Outlook & Guidance

Thor Explorations has set ambitious targets for 2025, aiming to produce between 85,000 and 95,000 ounces of gold. The company plans to maintain production costs between $800 and $1,000 per ounce. Exploration budgets are set at $7.5-10 million for Nigeria and $5-7.5 million for Senegal and Cote D'Ivoire. Thor is also focused on extending the mine life at Segulola and advancing the Duta project in Senegal. For detailed analysis of Thor's growth potential and comprehensive valuation metrics, investors can access the full Pro Research Report available on InvestingPro, which covers 1,400+ top stocks with expert insights and actionable intelligence.

Executive Commentary

CEO Shagan emphasized the company's strategic position, stating, "We're at the start of the next phase in our evolution." He highlighted the company's debt-free status and strong cash flow, noting, "No debt, strong cash flow, growing portfolio, a lot of upside to unlock through exploration."

Risks and Challenges

• Fluctuating gold prices could impact revenue and profitability.
• Exploration projects carry inherent geological risks.
• Political and regulatory changes in West Africa could affect operations.
• Potential supply chain disruptions could increase costs.
• Competition in the gold mining sector remains intense.

Thor Explorations' Q4 2024 results reflect its strong operational performance and strategic focus on growth. With a robust exploration portfolio and a favorable market environment, the company is well-positioned to capitalize on opportunities in the gold mining industry.

Full transcript - Thor Explorations Ltd (THX) Q4 2024:

Shagan, Company Executive/CEO, ForExplorations Limited: Achieved our revised guidance of 85,000 ounces. We sold, just under 85,000 ounces. There's a significant milestone being the fact that we fully repaid our senior debt with the Africa Finance Corporation, and that has completely taken away the burden of every quarter servicing these large debt amounts and has put you put us in a much stronger position to fund larger budgets for exploration and and also build up cash, particularly in this high gold price environment. You can see that the highlights of the year last year in terms of financial performance, our revenue was hundred and $93,000,000 with an EBITDA of hundred and $33,000,000 and a net profit of $91,000,000. So it was a very strong year financially.

And, you know, we announced earlier this week alongside with our results that we are going to pay maiden dividend in May. On May 16 is the payment date with the record date being May 2. The alongside the maiden dividend payment, we have adopted a dividend policy, which has been approved by our board, which is a payment of one and a quarter Canadian cents every three months on a court so on a quarterly basis. And we believe, you know, we are well positioned to build up cash and build up sufficient cash to fund all our organic ambitions and also provide buffer provision in case any inorganic compelling opportunities do come our way. And in addition to that, return our cash to shareholders.

I mean, the timing of when we announced this dividend, it was a yield north of 11 and a half percent, which is extremely competitive compared to our peer group. So we're pleased to do that. We know that, you know, as well as our capital growth, which we believe that there are the fundamentals to continue going very strongly. We are well positioned to transition into a dividend paying yield performing company, and we're we're pleased to have announced that. I I will add that this dividend is for a minimum initial two years, and the 1.25 Canadian cents is a is a minimum amount we will pay each quarter with the ability to increase this should there be stronger cash flows in any particular quarter, you know, based on the spike in the gold price and, you know, better better balance sheet positions at the end of each quarter.

So looking at the production summary last year, you can see that, you know, we we we had a very strong fourth quarter. We mined just over 380,000 tons of ore grading at 2.3 grams per ton. You know, through the course of of the year in in general in q one, q '2, and particularly q three where we had operational challenges, you know, we we knew we had to finish strongly in the year. And I I think I would take this opportunity to thank the team for, you know, all all the hard work that went through the course of last year. And we were very pleased with not only just the the the mining, the the performance of the process plant as well.

If you compare last year to the year before, yes, we were down in terms of recovery rate percentage, but we are looking to to pick that up through the course of this year. What we did see last last year was that we were getting into higher grade as we were going deeper, higher grade areas of the ore body compared to 2023. One thing to note here is we are growing a a very sizable stockpile, you know, at just under one gram per ton. You know, 40,000 ounces here is is very high value, and it's worth noting at the end of the documented mine life, all this will be processed at at a an operating cost, which doesn't involve mining. Those costs are being sunk at the moment.

So that's also, you know, a a material amount of gold that does have to pass through the mill at some point in time. I spoke at a high level on the financial summary, and you can see in q four, this was really where there was a a a bumper quarter, a record quarter in terms of revenue, profit, and EBITDA translating across the bringing the the average for the whole year up. You know? So, you know, our our cash operating costs and all in sustaining costs in 2024 was significantly lower than the previous year. There are three key reasons for this.

I would say the first one is the fact that we are using more compressed natural gas versus diesel to power our process plant. We do still use diesel for our total mining fleet. However, the the oil price in in Nigeria, the the diesel prices have reduced significantly, which has translated to a lower cost there. And and lastly, there has been good recoveries from gravity as opposed to the CIL, which has required less power. And then we have seen a stabilization in costs for some of our key inputs like ammonium nitrate globally, which we locked in at some point last year.

So that has managed to keep our cost down. And we believe, you know, our cost control practices that we put in place last year, we're carrying through to 2025, and we expect and anticipate that 2025, we should be on top of our costs as well. I I've previously highlighted the fact that we have the social license to operate. I without going into every single detail here, I would say we pride ourselves on international best practice, social responsibility, and and our commitments to the communities around us. And you can see that being reflected in who we hire, the projects we do.

We've completed over 40 projects. We've we have a community development agreement, which we've rolled out benefits from right from the exploration phase through construction and currently during production. I will take this opportunity to quickly mention the state issue we had in September, October '20 '20 '4 where there were a number of allegations made against us. We are pleased to press release earlier this year and publish the outcome of the fact finding committee, which showed all the allegations to be unsubstantiated. So our operations haven't been affected.

We continue our dialogue with the state. We are, you know, physically located in that state, and we want a good amicable relationship to continue there. And we have an open dialogue there, but we think it's very important to stress to investors that we we have been exonerated at the federal level, the the the regulator in the mining sector in Nigeria, and we continue our operations there uninterrupted. Key for us and easily the most the the the highest priority for us as a company is to extend the Segulola mine life. We had last year completed an initial 12 hole drilling program and having continued that drilling through the course of this year, 2025.

The initial program was a proof of concept drill program. We are now expanding the scope of that drilling program to test both the shallow dipping plunges and the steeper shoots, which we have interpreted here. I think I will go back to the point where I mentioned earlier in the presentation that we have now, having paid off our senior debt, have a lot more budget to throw at drilling here in in Nigeria. We're looking to hopefully extend the mine life and do that, you know, in in material fashion. And one of the ways we're looking to do that is doing our own drilling.

So we've purchased our own drill rigs, which should be in country in the middle of this quarter, and that would add to the current third party drill contractors we're using to increase the rate of which we drill here. We're anticipating we drill for quite an extended period of time. And when I say that, I mean, the course of the next two quarters, q two and q three, whilst updating the market with the drill results as they come in to start the fourth quarter with all the data we've we've acquired from the drilling and push that into push that into an updated mine life. We I I I will stress that, you know, whilst we haven't had an official mine life update, we are we we have drilled beneath the pit. We have drilled mineral mineralized mineable intersections underneath the pit.

So we are carrying out this program because we are encouraged by the initial drill results that we have had. So there is a 7,500 meter drilling program which has commenced and which can we which we are well positioned to increase based on the success of the the drilling. Still on exploration, there's several areas we have now identified and drilled historically, and they have been earmarked for follow-up drilling particularly to the South Of Segolola where we have drilled very high grade intersections. And, again, the use of our own rigs is extremely important in terms of our strategy here in in Nigeria. One thing we had embarked on last year was looking at a regional regional scale exploration, and we found consistent an area which has been had a consistent gold anomalism over a 10 kilometer by five kilometer square area, about 52 kilometers to the South of Segolola.

That's what you see in yellow in in this presentation. And we have actually been working on this over the last three, four months where the work we're carrying out is soil geochemistry, stream sediment sampling. We're doing some magnetic surveys and also some rock chip sampling. We're very keen to get this data so we can update the market sometime in the next few months. And then, look, this is something should all this data stack up, we're very excited to drill.

You know, there there is it is a very large area of of gold anomalism, and we're actually looking forward to see if we can delineate some drill targets over the next few months. So that's something where we've put on our priority list to update the market with as well. I will move on to the Duta project, which I mentioned we've now expanded into two separate licenses in a very strategic position on this huge share zone in the in Southeast Senegal. You know, we are surrounded by gold deposits and gold discoveries. We have been putting a lot of work into advance preliminary feasibility study here on what was the Mecosa Mecosa East deposit we we we had found.

This project, as you can see on the image on the right hand side, had a has a strike length of about seven kilometers with the Mecosa East being running slightly parallel with the shorter strike length to the main Mecosa body. We then discovered a couple of hundred thousand ounces in Mecosa tail and had been advancing all this through the p preliminary feasibility study stage. So we're working out the process flow sheet. We've submitted our environmental impact assessment. We have been completed all our our geotech work.

However, you know, fairly late in the in the game when we were carrying out some exploration on on our new due to west permit, we did identify a lot of anomalism to the south, which was called which we named the Baraka Three target. And this was characterized by a structure that extended and we mapped for over three kilometers. It had a soil anomaly on this footprint. And not just in the soils, there were some fantastic rock chip soil geochemical results, you know, from nine and a half grams per ton, six grams per ton, 3.67 grams per ton, and just under three grams per ton, extending the entire strike length of this. And we've we, planned a few drill lines, from the south extending all the way to the north of the structure.

And as we press released earlier, the first two lines confirmed what we thought, you know, and a wide, shallow, pretty high grade for this area discovery in Baraka West, which gave us a a bit of a problem internally in terms of sequencing the preliminary feasibility study. The reason being, this mineralization was all in the oxide, you know, where we our MET test has has previously shown recoveries of 90 to 96% shallow from surface, so very little blasting required. And if this mineralization, which we had in the first two lines continued for the entire three kilometer strike length, then this is a significant material amount of gold vis a vis the size of the project. And given the fact that it's in the oxide, would probably, in terms of the the mine planning, would be right at the front of the mining and processing. So we had to take that decision to complete this drilling first and see how we could incorporate this into the preliminary feasibility study because this could be the early ounces at this grade with high recoveries, easy to mine, and this could have a material potentially material economic effects on on the due to project as a whole.

So we're drilling here. The plan is to have three drill rigs here and try and have this all completed as quickly as possible. We're accelerating an 8,000 meter drill program across the entire strike length of this structure, which has been shown to be gold bearing in soils and the rock chips and the first few first couple of hundred meters. And once that's done, we're going to incorporate that into our total global resource and then update the market on the timing of the completion of the preliminary feasibility study. And then Cote D'Ivoire.

Last year, we we had been in Cote D'Ivoire for the course of a year doing a lot of reconnaissance work that ended up in Us picking up three licenses, one northeast, northwest, and in the South. Cote Nevoir, needless to say, has been a success story in terms of gold discoveries, construction of gold mines, support from the from the government. It's underlain by a lot of the West African perspective, perimean, green stone belt that probably hosts over 90% of all the gold discoveries in West Africa. We like the jurisdiction. We like the the the mining code.

And, you know, exploration work commenced here in in q four last year, early stage exploration work. And we are very encouraged by the results of the exploration work. The first project I will quickly touch on is the the the Gwichu project, which we acquired from Endeavor, and that already had 11,000 meters of drilling already carried out in it. We've done we started doing our own work here and divided this into three clusters of gold anomalism around a couple of different structures on two two main prospects. These targets remain open along strike and down plunge.

We are we we have our team there in getting this drill ready in terms of following our own interpretation. So we're very excited about this. There has been gold drilled here with some some very encouraging intersections already, and we look forward to to advancing this. Our second project, which I'm particularly excited about, is the Marahui project. It's a 250 square kilometer permit in the Northeast of the country.

You can see we the work we did here, we did a permit wide survey just to see what the signatures were saying. And we we have picked up a number of structures, which you can see have been outlined in red across the entire anomaly. But the most interesting of which is down in the Southeast of the permit itself where we identified two structures. The the larger one being four kilometers long and in the widest area is about 200 meters wide, and this is sitting on top of some Burmian Greenstone, the the best rocks you can find for gold in in West Africa. So we're we're very excited about this.

You can see the not just the soils define this anomaly. This was coincident on on the the magnetic structure and the the perimian green stone and the rock chips, which we have sampled from here. So it's the gold hasn't been transferred to the rock chips have shown this this gold values for the entire four kilometer strike length. So more work is being done here. We're we're carrying out some some magnetic surveys, and then some trenching, and we will be looking forward to drilling this.

And this is something we're we're we're very excited about. And also following up on the additional targets within this license. So I'll finish off by saying what our outlook and and catalysts are this year. I've mentioned, you know, we we do have a target of 85,000 to 95,000 ounces this year at a cost between 800 and a thousand dollars per ounce. We've increased our exploration expenditure in the group.

So in Nigeria, we're we're looking to spend between 7 and a half and 10 million dollars, and that will get the drilling done underneath the Seguela Pit, the targets around it as well. In Senegal and in Cote D'Ivoire, we're looking to spend between 5 and 7 and a half million dollars, and that will get us the drilling done on Baraka 3, the remaining any outstanding items on the PFS drilling program in drilling programs in Cote D'Ivoire where we're we're looking to have our maiden resource this year. And then, you know, obviously, be advancing our exploration across all our portfolio. So the the the program in Nigeria is ongoing. The program in Senegal is ongoing as well.

In Cote D'Ivoire, we have probably a couple more months to have these targets fully drilled ready, and then we'll we will start start the drilling there as well. So we're we're extremely excited about where we are in terms of unlocking value through the expiration. We've now put ourselves financially in a position where we're building up cash on a weekly basis. We've paid off our senior debt. We have if you look on the slide if you have the opportunity to follow-up and look on the slide on our financial performance last year, we've significantly reduced our accounts payable by the year end last year In q one as well, that's been reduced even further.

And in in through the course of this quarter now, that accounts payable will be will be current on in terms of ninety day payment basis. So we've we're confident, and that's why we've been confident enough and comfortable enough to adopt our dividend policy. So that's a snapshot and overview of my presentation, and I'm happy to go through the questions now. Thank you.

Moderator/Investor Relations, ForExplorations Limited: Perfect, Shagan. That's great. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while Shaken takes a few moments just to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard.

Shagan, as you can see there, we have received a number of questions that were both presubmitted ahead of today's event as well as those that have come through throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Shagan, at this point, sir, if I may just hand back to you just to read out those questions and and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you.

Shagan, Company Executive/CEO, ForExplorations Limited: Okay. Thanks. Just one second. Okay. Yep.

I'm happy to answer all the questions I've got here. So I'll just read them out, and then I will answer. So the first question is, have you entered into new forward hedging contracts, or are you confident that the gold price remaining elevated for a long while to come? I think I'll I'll I'll start off answering that question by saying the hedges we were in last year have been completely unwound, which was also partly the reason we had a a lower sales average gold sales price in in q four, and we we completely unwound the balance in q one ahead of what we had initially planned to do. So now we're completely unhedged as we have full exposure to the gold price, which is obviously trading in near all time highs.

We haven't hedged any as of yet. It's a discussion that's going on internally. We do believe in the immediate future over the next couple of months, there is a lot of volatility, particularly what's happening in in in the White House, should I say, price at these levels. So, you know, we we haven't had any hedges. It's not something we're ruling out.

Last year around about this time last year, we we hedged about a quarter of our production for the year thinking we are all time highs, and obviously, the gold price kept rising. But the reason we did that was because we knew we had debt service obligations at at that time. We don't have that anymore this year. So, look, if there's the the gold price starts to come off a bit, we we will look at that and try and lock in some of these high margins. The next question, I know we must wait a bit longer, but are you confident we will see a couple of additional years of mine life at its at a minimum?

Look. That's that's a tricky question because I've gotta be careful in terms of making forward looking statements like that. But what I can say is the proof of concept drill program was a success, you know, intersecting gold in such a high percentage of our drill holes. We haven't closed this deposit out at depth. The drilling is ongoing where where you you we wouldn't be stepping up this drilling and spending so much money on this drilling if we didn't feel relatively confident of of it being a success.

So, you know, that's that's all I can I can really say now, and we will be updating the market with our drill results as they they come in in in batches? Given the recent goal highs, are you planning to enter another forward contract at these three k levels? Okay. So we just answered that. Have you got an ETA on providing initial mine life extension figure for Segolola when the additional drew drilling of Dutto will be finished, when the Dutto PFS will be released following the new drill results.

So the first one, providing an initial mine life extension. So we we do plan on drilling very going hard at it over the next two quarters and then coming up with the position in q four to to come up with something an an initial number. That's what we're working towards. The second question was the due to PFS. Due to PFS, we will update as soon as we as soon as we can we we have all the results in from this drilling.

We expect this 8,000 meters of drilling to take to be completed in May in about four or five weeks. I would say there there is a a a time constraint which we don't have control over, which is the turnaround time from the labs. Obviously, we keep as much pressure on them to get this turn turnaround as quickly as possible, and, you know, we'll be able to give a timeline then. So once we have all the assay results back, we will but the drilling program is going to be completed over the next four weeks. Next question.

Regarding lithium, do you plan to find a JV partner similar to other lithium explorers to develop potential within the area. Progress on this progress this on the side, so it will potentially explore and sell onto fund funds to accelerate gold projects. So the the lithium portfolio is something that's come from us being a first mover in Nigeria. We are a gold company. That is our priority.

We think that's what our shareholders want to see. We we believe that's going to unlock significant value. So with the lithium, we are we do want to get to a critical point before making any major strategic decisions, and that critical point will involve us drilling with our own drill rigs rather than pay the the higher cost of using third party contractors. Next question. Accounts payable were 46,000,000 end of year.

In 2024, OpEx was 60,000,000. How was it possible to have such a long period of payment? How do you expect accounts payables to go down further in 2025? Look. Like I mentioned in the presentation, the accounts payables have been even further reduced over q one and should be completely removed during the course of the next few months.

So, yeah, I I believe I already mentioned that in the presentation. Given how cheap the company trades on a PE multiple wire buybacks not being commenced, we did consider share buybacks. The price has rallied. We were in a closed period with year end results, so we can initiate a a buyback during the closed period within forty five days of announcing our results. We have been keen on returning money to shareholders whether it was a buyback or a dividend.

We evaluated both. The fact that we're listed on AIM and the and the TSXV, the number of the the regulations regarding a buyback based on our average volume of shares would have meant it would have taken about six or seven months to buy back a million dollars worth of shares, which we just thought, you know, a more effective way of returning money to our shareholders was through a dividend rather than such a slow buyback over six months. With the high grade hits north and south of Seguela, how much open pit life remains? And are you considering a move to underground? Yes.

We are considering a move to underground. There will be a natural inflection point based on the gold price and and based on the drilling we do. We're still basing ourselves on the the the DFS mine life. So another three years and then hopefully, well, before the end of this year, announcing what an updated my life would would look like. You have announced dividends.

Can you explain why you prefer dividends to buybacks? Consider the company especially as you consider the company undervalued. I think I just answered that on a based on a previous question. The next three questions I've already answered regarding my life my life again, buybacks again. Previously, you've mentioned hundred and 75,000,000 as a rough estimate of CapEx for data.

Is this still the case if majority of the ore is refractory? So the not the 175,000,000 number was back of the envelope. We we we based on, you know, all the work we've been doing with our contractors, our EPC contractor, that number hasn't changed. Will due to be fully debt financed? No.

I think I I don't think it'd be full complete leverage. I think we there will be a component to that. We we pay from our own balance sheet as well, but there will be a a large debt facility to to to finance this as well. I think I've answered everything.

Moderator/Investor Relations, ForExplorations Limited: Perfect. Shaken, if I may just jump back in there. Thank you very much indeed for being so generous of your time then addressing all of those questions that came in, for investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Shagan, perhaps before now, just really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company.

If I could please just ask you for a few closing comments just to wrap up with, that'd be great.

Shagan, Company Executive/CEO, ForExplorations Limited: Yeah. Look. I I think I'll close by saying I'm I'm pleased with where we are now as a company. You know, we're we're at the start of the next phase in our evolution. No debt, strong cash flow, growing portfolio, a lot of upside to unlock through exploration, some significant milestones to achieve this year in three different countries and, you know, significant exploration potential in all three countries.

So we're we're very excited. And, you know, the fact that we've transitioned into a dividend paying company shows our commitment to returning money to shareholders in a sustainable way. So, look, we're I'm I'm personally very excited about 2025. I think there's a lot more to come. As I speak now, the drill rig's turning on two of our projects.

In a couple of months, it'll be on all three of our projects. And, yeah, look, we're doing all of this with no debt and in an all time high gold price environment. So it's an exciting time for us as a company, and we're very much looking forward to 2025.

Moderator/Investor Relations, ForExplorations Limited: Perfect, Shagan. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session? You will now be automatically redirected the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of ForExpirations Limited, we would like to thank you attending today's presentation. That now concludes today's session. So

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