NEWS RELEASE
NOT FOR
DISSEMINATION IN THE UNITED STATES OR FOR
DISTRIBUTION TO U.S. WIRE SERVICES
29 April, 2024
|
TSXV/AIM: THX
|
This Announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR"). Upon
the publication of this Announcement, this inside information is
now considered to be in the public domain.
THOR EXPLORATIONS ANNOUNCES AUDITED FINANCIAL
AND OPERATING RESULTS FOR THE FULL YEAR AND THREE MONTHS ENDING DECEMBER
31, 2023
Thor Explorations Ltd. (TSXV / AIM: THX) ("Thor
Explorations", "Thor" or the "Company") is pleased to provide an
operational and financial review for its Segilola
Gold Mine, located in Nigeria ("Segilola"), and for the
Company's mineral exploration
properties located in Nigeria, Senegal and Burkina
Faso for the three months
ending December 31, 2023 ("Q4 2023") and the audited financial
results for the year ending December 31, 2023 (the "Year" or "FY
2023").
The Company's Consolidated Audited Financial
Statements together with the notes related thereto, as well as the
Management's Discussion and Analysis for the year ending December
31, 2023, are available on Thor Explorations' website at https://thorexpl.com/investors/financials/.
All figures are in US dollars ("US$") unless
otherwise stated.
FY 2023 Financial
Highlights
· 73,356 ounces ("oz")
of gold sold with an average realised price of US$1,907 per
oz
· Cash operating cost of
US$1,006 per oz sold and all-in sustaining cost ("AISC") of
US$1,313 per oz sold
· FY 2023 revenue of
US$141.2 million ("m") (FY 2022: US$165.2m)
· FY 2023 EBITDA of
US$55.3m (FY 2022:US$84.2m - restated)
· FY 2023 net profit of
US$10.8m (FY 2022: US$37.9m - restated)
· Cash and cash
equivalents of US$7.8m (FY 2022: US$6.7m)
· Senior debt facility
significantly reduced from US$54.0m to US$22.6m as at December 31,
2023
o Payment of US$8.2 m
towards the outstanding senior debt facility paid in the post
period
· Net debt of US$15.9m
(FY 2022: US$31.6m)
FY 2023 Operational
Highlights
Segilola
Production
· Gold production for
the Year totaled 84,609 oz
o Gold recovered
during the Year includes approximately 11,210 oz of Gold In-Circuit
("GIC")
· Successfully completed
push back of the Segilola Western Wall
· Successfully upgraded
the process plant elution and electrowinning system
Segilola
Near-Mine Exploration
· Expansion of
exploration tenure to a total area of 1,542 square kilometres
("km2"). This tenure comprises 16 granted permits that
are 100% owned by Thor, together with nine granted permits held
under options agreements with seven third parties
· In addition to
near-mine exploration, activities on the ground have focused on
these main areas: Western Prospects - Igila, Aye-Ile and Central
Prospects - Kajola
Western
Prospects
· The Western Prospects
are located approximately 15 kilometres ("km") directly west from
the Segilola Gold Mine and comprises several exploration permits
that are held under exercised option agreements
· Initial results from
the soil geochemistry programme returned values of 6.50 grammes per
tonne gold ("g/tAu") and 10g/tAu towards the southeast portion of
this area. Rock chip sampling returned high grade values including
65.1g/tAu in the central part of the area and several samples in
excess of 30g/tAu located towards the northwest
· Based on these
results, an initial drill testing programme comprising both diamond
core and reverse circulation ("RC") drilling was completed in
2023
Southern
Prospects
· The Southern prospects
cover an area that is located to the south of the Segilola Gold
Mine. Regional stream sediment sampling located an area of interest
at what is now referred to as the Kajola target located
approximately 20km from the Segilola Mine
· Drill testing of this greenfield target intersected several
zones of interest including 11 metres grading 22g/tAu
· Ongoing exploration is focused on generating additional
targets in the general area
Douta
· During the Year an
updated mineral resource estimate ("MRE") was announced. The 2023
MRE encompasses the Makosa, Makosa Tail and Sambara zones, which
are collectively named the Douta Resource
o An initial Indicated Mineral Resource of 20.2 million tonnes
("Mt") grading 1.3 g/t Au for 874,900 oz Au; and
o Inferred Mineral Resource of 24.1 Mt
grading 1.2 g/t Au for 909,400 oz Au
· The Douta Resource is
supported by a total of 64,567 metres of drilling
· Workstreams designed
to advance the project to the prefeasibility stage ("PFS") have
commenced and are expected to be completed by H2 2024. This
included a diamond drilling programme that was designed to obtain
sufficient core samples for comprehensive metallurgical test work
and mineralogical studies
Lithium
Exploration
· Thor, through its
wholly owned subsidiary Newstar Minerals Limited ("Newstar"),
secured over 600km2 of granted tenure in Nigeria that
form Oyo State, Kwara State and Ekiti State Lithium Project
Areas
· The Oyo State Lithium
Project comprises approximately 38km2 of exploration
tenure that is located towards the westernmost border of Nigeria
and within 200km of the commercial capital of Lagos
· In the Oyo Prospect, a
programme of RC drilling targeted an identified pegmatite trend
that is developed within northerly trending mafic sequence that is
surrounded by granitoid-gneiss terrain.
· In the Ekiti Prospect,
nine RC holes were completed
· Significant
intersections previously reported include 11 metres grading 1.53%
lithium oxide ("Li2O"), 9 meters grading 2.42% Li2O and 11 metres
grading 2.61% Li2O
· Following the drilling
campaigns, follow up soil sampling and mapping continued to
generate anomalous targets which have been identified for drilling
in Q2 2024
Environment, Social
and Governance
· Completed
significant community and Livelihood Restoration projects in the
three host communities around the Segilola Gold Mine, including
school refurbishment, a 33kV transformer installation, and the
launch of commercial fish and vegetable farms, directly benefiting
over 11,000 residents
· Enhanced local
workforce capacity and diversity, achieving a 98% Nigerian staffing
level, a 50% increase in local hires, and promoting gender
diversity by integrating women into traditionally male
roles
· Environmental
standards compliance was maintained across air, dust, noise, and
water quality, with biodiversity improvements noted in annual
surveys
· Successfully
renewed two Community Development Agreements, facilitating 26
impactful community projects, including educational scholarships
and youth training programmes
· Conducted a
Biodiversity Survey for the Douta Exploration License area,
identifying environmental sensitivities, and continued quarterly
water quality monitoring to manage elevated chromium and cadmium
levels
· Supported local
community and economic development through initiatives such as a
vegetable garden and academic excellence awards at local
schools
· Baseline data
collection is underway for the Douta Gold Project's economic
assessment
Post FY 2023
Highlights
· Segilola gold
production of 19,589 oz during Q1 2024
· Successfully upgraded
and commissioned three additional CIL tanks in the process plant
with drawdown of excess gold in circuit successfully commenced in
March 2024
· Additional near
Segilola mine drilling targets delineated with drilling having
commenced in April 2024
· The Company acquired
additional licences in Senegal, which included the contiguous
Douta-West licence and commenced exploration activities. Initial
results have delineated anomalies which will be drilled in Q2 2024
as part of the Company's Douta exploration plan
· Exploration on the
Company's lithium licences in Nigeria continued during Q1 2024 and
was successful in generating a number of drill targets. The Company
will commence a 4,000 metre drilling programme in May 2024
· Payment of US$8.2m
towards outstanding senior debt facility, leaving a balance of
US$15.2m to be paid in 2024
· Cash balance
(unaudited) as at 31 March 2024 of US$3.1m
Outlook
· Production guidance
set at 95,000-100,000 oz for 2024 with an AISC guidance of US$1,100
to US$1,200 per oz
· Advance exploration
programmes across the portfolio, including near mine and
underground projects at Segilola, the regional Segilola exploration
programme, extension and infill programmes at Douta and the
assessment of potential regional targets in Nigeria
· Continue to advance
the Douta Gold Project towards PFS for publication in H2 2024
Segun Lawson,
President & CEO, stated:
"The end of 2023 marks two calendar years of
commercial gold production at our flagship asset, the Segilola Gold
Mine. Thinking back to the original mine plan in the Definitive
Feasibility Study, we knew as a management team that the second
year of production was going to be an operationally challenging
year, requiring the pushback of the western wall of the pit and
mining of waste material in order to access the orebody efficiently
in the subsequent years.
"Despite the
operational challenges, we are pleased to have produced
approximately 85,000 ounces of gold in 2023 versus the original
mine plan projection of 72,000 ounces. This was achieved whilst
carrying out certain plant upgrades which would also optimize gold
production for the remainder of the Segilola mine life. In addition
to this, we were able to deliver our operations in a safe and
responsible manner, with an improved safety performance in 2023. We
continue to prioritize safety and best practice standards and aim
to continuously improve.
"Personally, I am
pleased we managed to achieve our operational objectives. We
refreshed the leadership at the mine site with the appointment of a
new General Manager in October 2023 and executed necessary upgrades
to the process plant whilst ending the year having achieved an
all-in sustaining cost for the Segilola Gold Mine of $1,313 per
ounce.
"The Company is
now strongly positioned for repayment of its long-term debt during
2024, and growth, primarily coming from strong cash flow at
Segilola, and also through exploration and the development of the
Douta Gold Project in Senegal.
"We are also
continuing to prioritize our Environmental, Social and Governance
standards, particularly as we are in a country where we must set an
example as pioneers in the industry.
"Furthermore, in
2023, we began to capitalise on our first mover advantage in
Nigeria through the acquisition of over 600 square kilometres of
lithium-bearing ground. We believe our first mover advantage allows
us to quickly and professionally assess value accretive
opportunities for our shareholders. Having successfully carried out
early-stage exploration on our lithium portfolio, we are able to
provide our shareholders with significant value optionality that
can be funded by the Company's existing cash flow and human
resources in Nigeria.
"In 2024, the
Company's strategy will be focused on growth. The first priority is
to extend the Segilola Mine life where there is currently an
underground resource of over 100,000 ounces that has not been
incorporated into the existing mine plan. At the current prevailing
high gold prices, we aim to assess our options in re-optimising the
Segilola Pit to produce gold from this resource prior to
transitioning into an underground mine. We also aim to carry out
further exploration at depth aimed at increasing the existing
underground resource which has not been closed out.
"In Senegal, the
Douta Gold Project continues to provide blue sky exploration upside
potential. The Douta Gold Project is undergoing a PFS and
subsequent to the year, we acquired additional contiguous ground
with potential to scale the Douta Gold Project.
"Our strategy in
Senegal in 2024 is to focus on increasing the oxide component of
the existing Douta resource in parallel with the PFS
workstreams. We will be carrying out drilling programmes across various
geochemical targets on both the Douta and Douta-West licences. The
aim is to increase the oxide resource, where high recoveries are
metallurgically straightforward, to a target of 500,000
ounces.
"We ended 2023
with our Segilola gold mine well positioned to produce
approximately 100,000 ounces per year for the next three years. The
Company will also be deleveraged in 2024 and will continue to
strengthen its balance sheet in the historically high gold price
environment.
"Looking further
ahead, our ambition to continue to grow through mine life extension
at Segilola and exploration across our entire portfolio remains
unchanged, and we will also be well-positioned for future
opportunities that may accelerate our growth into a more mature
gold producer.
"I am proud of
what we achieved in 2023, which is all the result of the hard work
and commitment of our people. I am equally excited about the
opportunities we have in front of us as we continue to build a
uniquely positioned African-focused gold
producer."
About Thor
Explorations
Thor Explorations Ltd. is a mineral exploration
company engaged in the acquisition, exploration, development and
production of mineral properties located in Nigeria, Senegal and
Burkina Faso. Thor Explorations holds a 100% interest in the
Segilola Gold Project located in Osun State, Nigeria and has a 70%
economic interest in the Douta Gold Project located in
south-eastern Senegal. Thor Explorations trades on AIM and the TSX
Venture Exchange under the symbol "THX".
THOR EXPLORATIONS LTD.
Segun Lawson
President & CEO
For further
information please contact:
Thor Explorations Ltd
Email: info@thorexpl.com
Canaccord Genuity (Nominated Adviser &
Broker)
Henry Fitzgerald-O'Connor / James Asensio / Harry
Rees
Tel: +44 (0) 20 7523 8000
Hannam & Partners (Broker)
Andrew Chubb / Matt Hasson / Jay Ashfield / Franck
Nganou
Tel: +44 (0) 20 7907 8500
BlytheRay (Financial
PR)
Tim Blythe / Megan Ray / Said Izagaren
Tel: +44 207 138 3203
Yellow Jersey PR (Financial
PR)
Charles Goodwin / Shivantha
Thambirajah / Zara McKinlay
Tel: +44 (0) 20 3004
9512
Management Discussion & Analysis for Q4 2023 and Full
Year 2023
CHAIRMAN'S STATEMENT
Dear fellow shareholders, I am
pleased to report that 2023 was a year in which Thor Explorations
successfully navigated through a technically challenging year and
delivered its target gold production of approximately 85,000
ounces. I would like to thank all our employees, Leadership team
and Board for their continued hard work and dedication in the year,
and our investors for their continued support.
In Nigeria, where we are a pioneer
in the mining sector, we have also recognised that we need to take
a long-term view of building a local mining skill-base, and as a
result, we have invested in youth, undergraduate and graduate
programmes as well as post-secondary school apprenticeship schemes
in our host communities and regions. We remain committed to labour
excellence through managing employee job satisfaction in the local
community.
We have also continued to enjoy a
healthy and cooperative relationship with our host communities. In
2023, we completed our first two livelihood restoration programmes
which had 135 direct beneficiaries. In total, 4,479 community
members have benefited from our Community Development Agreement
programs and an impressive 11,122 people have directly benefited
from our Corporate Social Responsibility programmes.
Following the regrettable loss of
life of an individual as a result of our
operations in 2022, we are reassured
that the measures put in place to guarantee the safety of all our
employees and stakeholders we interact with during our operations,
continue strictly prioritised and effected. This resulted in a
fatality free year with our employment practices being recognised
and rewarded with the Labour Award at the 2024 Mining Indaba,
selected by the Mining Indaba Sustainability Committee.
Operationally, we continue to be
strategically driven. The addition of our early-stage lithium
licences to our portfolio demonstrates our ability to move quickly
and with flexibility in-country to capitalise on value accretive
opportunities in Nigeria.
Looking ahead, 2024 promises to be
a year of delivery. With upgrades to the Segilola processing plant
complete and completion of the pushback of the west wall of the
Segilola pit, we are confident that the Company is well positioned
to grow through gold production and value creation through
exploration success in Nigeria.
We are confident of our strategy
in Nigeria and West Africa in 2024 and thank you for your support
for Thor Explorations in 2023. Please be assured that the Board and
Leadership Team are resolutely focused on delivering our strategy
and creating value for our shareholders and all of our
stakeholders.
Adrian Coates
Chairman
CEO'S STATEMENT
The end of 2023 marks two calendar
years of commercial gold production at our flagship asset, the
Segilola Gold Mine. Thinking back to the original mine plan in the
Definitive Feasibility Study, we knew as a management team that the
second year of production was going to be an operationally
challenging year, requiring the pushback of the western wall of the
pit and mining of waste material in order to access the orebody
efficiently in the subsequent years.
Despite the operational
challenges, we are pleased to have produced approximately 85,000
ounces of gold in 2023 versus the original mine plan projection of
72,000 ounces. This was achieved whilst carrying out certain plant
upgrades which would also optimise gold production for the
remainder of the Segilola mine life. In addition to this, we were
able to deliver our operations in a safe and responsible manner,
with an improved safety performance in 2023. We continue to
prioritise safety and best practise standards and aim to
continuously improve.
Personally, I am pleased we
managed to achieve our operational objectives. We refreshed the
leadership at the mine site with the appointment of a new General
Manager in October 2023 and executed necessary upgrades to the
process plant whilst ending the year having achieved an all-in
sustaining cost ("AISC") for the Segilola Gold Mine of
$1,313 per ounce.
The Company is now strongly
positioned for repayment of the Company's long term debt during 2024 and
growth, primarily coming from strong cash flow at Segilola, and
also through exploration and the development of the Douta Gold
Project in Senegal.
We are also continuing to
prioritise our Environmental, Social and Governance ("ESG")
standards, particularly as we are in a country where we must set an
example as pioneers in the industry.
Furthermore, in 2023, we began to
capitalise on our first mover advantage in Nigeria through the
acquisition of over 600 square kilometres of lithium-bearing
ground. We believe our first mover advantage allows us to quickly
and professionally assess value accretive opportunities for our
shareholders. Having successfully carried out early-stage
exploration on our lithium portfolio, we are able to provide our
shareholders with significant value optionality that can be funded
by the Company's existing cash flow and human resources in
Nigeria.
In 2024, the Company's strategy
will be focussed on growth. The first priority is to extend the
Segilola Mine life, where there is currently an underground
resource of over 100,000 ounces, that has not been incorporated
into the existing mine plan. At the current prevailing high gold
prices, we aim to assess our options in re-optimising the Segilola
Pit to produce gold from this resource prior to transitioning into
an underground mine. We also aim to carry out further exploration
at depth, aimed at increasing the existing underground resource
which has not been closed out.
In Senegal, the Douta Gold Project
continues to provide blue sky exploration upside potential. The
Douta Gold Project is undergoing a preliminary feasibility study
("PFS") and subsequent to the year, we acquired additional
contiguous ground with potential to scale the Douta Gold
Project.
Our strategy in Senegal in 2024 is
to focus on increasing the oxide component of the existing Douta
resource in parallel with the PFS workstreams. We will be carrying
out drilling programs across various geochemical targets on both
the Douta and Douta-West licences. The aim is to increase the oxide
resource, where high recoveries are metallurgically
straightforward, to a target of 500,000 ounces.
We ended 2023 with our Segilola
Gold mine well positioned to produce approximately 100,000 ounces
per year for the next three years. . The
Company will also be completely deleveraged in 2024 and will
continue to strengthen its balance sheet in the historically high
gold price environment.
Looking further ahead, our
ambition to continue to grow through mine life extension at
Segilola and exploration across our entire portfolio remains
unchanged, and we will also be well-positioned for future
opportunities that may accelerate our growth into a more mature
gold producer.
I am proud of what we achieved in
2023, which is all the result of the hard work and commitment of
our people. I am equally excited about the opportunities we have in
front of us as we continue to build a uniquely positioned
African-focussed gold producer.
Segun Lawson
Chief Executive
Officer
OVERVIEW
Thor Explorations Ltd. (the
"Company"), together with its subsidiaries (collectively, "Thor" or
the "Group") is a gold production, development and mineral
exploration company focussed on West Africa and dual-listed on the
TSX Venture Exchange TSX-V (THX: TSX-V) and the AIM market of the
London Stock Exchange (THX: AIM). The Group's main assets
include its flagship producing Segilola Gold mine in Nigeria and
the advanced exploration project, Douta, in Senegal. The Group has
a growing portfolio of prospective exploration licences on the
unexplored Ilesha schist belt in near proximity to the Segilola
gold mine and further exploration licences in Nigeria and Burkina
Faso.
As part of the Group's strategy
in identifying high-value mineral resource
opportunities, Thor, through its wholly owned subsidiary Newstar
Minerals Ltd ("Newstar"), completed the acquisition of significant
tenure in south-west Nigeria that covers both known lithium-bearing
pegmatite deposits and a large unexplored prospective
pegmatite-rich belt.
Our strategy is to operate,
develop and explore mineral properties where our expertise can
substantially increase shareholder value. The Group operates with
transparency and in accordance with international best practices
and is committed to delivering value to its shareholders through
responsible development, providing economic and social benefit to
our host communities and operating in a manner where health and
safety and the environment are integral to our operations and
development approach.
Figure 1.1: Thor's Properties in West
Africa
HIGHLIGHTS AND ACTIVITIES -
FOURTH QUARTER 2023 AND YEAR ENDED DECEMBER 31, 2023
Operating results for the year
were highlighted by the selling of 73,356 ounces ("oz") of gold
during the period at a cash operating cost of $1,006 per oz sold,
with an all-in sustaining cost ("AISC") of $1,313 per oz
sold.
Gold recovered for the quarter was
21,798 ounces. The Group has set its production guidance for 2024
to 95,000 to 100,000 oz, while AISC guidance for 2024 is set at
US$1,100 per ounce to US$1,200 per ounce.
Table 2.1 Key Operating and Financial
Statistics
|
|
Three months period
ended
|
Year ended
|
|
|
December 31,
2023
|
September 30,
20231
|
June
30,
20231
|
March
31,
20231
|
December 31,
20221
|
December 31,
2023
|
December 31,
20221
|
Operating
|
|
|
|
|
|
|
|
|
Gold sold
|
Au
|
11,930
|
19,021
|
20,852
|
21,553
|
24,918
|
73,356
|
92,489
|
Gold recovered
|
Au
|
21,798
|
19,104
|
23,078
|
20,629
|
26,523
|
84,609
|
98,006
|
Average realised gold
price2
|
$/oz
|
1,927
|
1,910
|
1,971
|
1,832
|
1,657
|
1,907
|
1,767
|
Cash operating
cost2
|
$/oz
|
1,451
|
1,193
|
628
|
961
|
342
|
1,006
|
685
|
AISC (all-in sustaining cost)
2
|
$/oz
|
1,706
|
1,392
|
916
|
1,408
|
610
|
1,313
|
954
|
EBITDA2
|
$/oz
|
266
|
624
|
1,227
|
683
|
1,035
|
755
|
911
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
22,998,429
|
36,594,900
|
41,364,169
|
40,287,830
|
43,251,204
|
141,245,328
|
165,174,531
|
Net (Loss)/Profit
|
$
|
(8,847,842)
|
2,270,508
|
14,458,095
|
2,988,685
|
10,715,034
|
10,869,446
|
37,996,903
|
EBITDA2
|
$
|
3,175,024
|
11,862,271
|
25,589,910
|
14,722,672
|
25,800,397
|
55,349,877
|
84,277,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2023
|
September 30,
2023
|
June
30, 2023
|
March
31, 2023
|
December 31,
2022
|
Cash and cash
equivalents
|
$
|
7,839,757
|
8,264,796
|
11,149,491
|
4,505,071
|
6,688,037
|
Deferred Income
|
$
|
11,838,898
|
-
|
865,173
|
-
|
6,581,743
|
Net Debt2
|
$
|
15,926,289
|
19,374,507
|
16,807,972
|
24,940,762
|
31,650,722
|
1 The figures for the
production costs and net profit have been restated in connection
with the restatement of the financial statements. Refer to note 25
of the financial statements for further details.
2 This is a non-IFRS measure. Refer to the non-IFRS measures
section.
Segilola Gold Mine, Nigeria
Mining
During the three months ended
December 31, 2023, 5,483,291 tonnes of material were mined, equivalent
to a mining rate
of 59,601 tonnes of material per day. This was higher than the mine
plan due to some resequencing of mining areas and demonstrated a
maintained increase in material mined since the end of Q1 2023 in
order to efficiently mine the required waste material in the west
wall of the southern end of the pit.
In this period, 451,360 tonnes of
ore were mined, equivalent to a
mining rate of 4,906 tonnes of ore per day, at an
average grade of 1.93g/t. Completion of the west wall pushback has
meant production areas are increasing,
which allows maintaining higher production rates than was in the
annual plan. Grade was lower than Q3 2024
due to increased low grade material identified during grade control
drilling increasing the stockpiles for processing at the end of the
mine's life.
The stockpile balance at the end
of the period increased by 59.8% to 541,151 tonnes of ore at an
average grade of 1.04g/t. This comprised 1,003 tonnes (8.47g/t) at high
grade, 18,648 tonnes (2.15g/t) at medium grade, 521,501 tonnes
(0.99g/t) at low grade and 4,563 tonnes
(3.34g/t) on the coarse ore stockpile between the crusher and
mill.
The Group ended the year with a
gold recovery of 84,609 oz vs the year end guidance of 85,000 oz.
Gold recovered during the year includes approximately 11,250 oz of
Gold In-Circuit ("GIC").
Processing
During the three months ended
December 31, 2023, a total of 262,439 tonnes of ore, equivalent to
a throughput rate of 2,852 tonnes per day, were processed with no
significant downtime periods. The process plant maintained the Q3,
higher than design, throughput rates with all the main operating
units continuing to perform better than expected.
The Q3 2024 mill feed ore tonnes
were maintained and recovered ounces of 21,798 were achieved at an
average grade of 2.77g/t gold and at an improved recovery of
93.4%.
A leach circuit tank upgrade was
ongoing during the period with a projected full commissioning
during Q2 2024, to improve processing recovery and efficiency which
will reduce the gold in circuit through 2024.
Table 2.2: Production Metrics
|
Units
|
Q4 - 2023
|
Q3 - 2023
|
Q2 -2023
|
Q1 - 2023
|
Q4 - 2022
|
Q3 - 2022
|
Q2 - 2022
|
Q1 - 2022
|
|
|
|
|
|
|
|
|
|
|
Mining
|
|
|
|
|
|
|
|
|
|
Total Mined
|
Tonnes
|
5,483,291
|
5,673,193
|
5,633,688
|
4,194,689
|
4,296,494
|
4,018,431
|
4,031,584
|
3,759,524
|
Waste Mined
|
Tonnes
|
5,031,932
|
5,370,279
|
5,355,105
|
3,996,264
|
3,974,073
|
3,793,249
|
3,747,504
|
3,533,610
|
Ore Mined
|
Tonnes
|
451,360
|
302,915
|
278,583
|
198,425
|
322,421
|
225,182
|
284,079
|
226,314
|
Grade
|
g/t Au
|
1.93
|
2.44
|
2.43
|
2.85
|
3.51
|
4.43
|
3.63
|
2.68
|
Daily Total Mining Rate
|
Tonnes/Day
|
59,601
|
61,665
|
61,909
|
46,608
|
46,701
|
43,679
|
44,303
|
41,772
|
Daily Ore Mining Rate
|
Tonnes/Day
|
4,906
|
3,292
|
3,061
|
2,205
|
3,505
|
2,448
|
3,122
|
2,515
|
|
|
|
|
|
|
|
|
|
|
Stockpile
|
|
|
|
|
|
|
|
|
|
Ore Stockpiled
|
Tonnes
|
541,151
|
338,558
|
297,060
|
270,215
|
300,531
|
229,909
|
249,281
|
179,758
|
Ore Stockpiled
|
g/t Au
|
1.04
|
0.99
|
1.06
|
1.14
|
1.48
|
1.19
|
1.46
|
1.23
|
Ore Stockpiled
|
Oz
|
18,141
|
10,756
|
10,124
|
9,904
|
14,300
|
8,796
|
11,701
|
7,109
|
|
|
|
|
|
|
|
|
|
|
Processing
|
|
|
|
|
|
|
|
|
|
Ore Processed
|
Tonnes
|
262,439
|
261,671
|
255,231
|
231,001
|
254,824
|
241,434
|
211,582
|
221,900
|
Grade
|
g/t Au
|
2.77
|
2.46
|
2.99
|
2.95
|
3.38
|
3.58
|
3.66
|
3.18
|
Recovery
|
%
|
93.4
|
92.3
|
94
|
94.1
|
95
|
95.5
|
95.5
|
94.1
|
Gold Recovered
|
Oz
|
21,798
|
19,104
|
23,078
|
20,629
|
26,331
|
26,523
|
23,785
|
21,343
|
Milling Throughput
|
Tonnes/Day
|
2,852
|
2,844
|
2,805
|
2,567
|
2,770
|
2,624
|
2,325
|
2,466
|
|
|
|
|
|
|
|
|
|
|
|
NON-IFRS MEASURES
This MD&A refers to certain
financial measures which are not recognized under IFRS and do not
have a standardized meaning prescribed by IFRS. These measures may
differ from those made by other companies and accordingly may not
be comparable to such measures as reported by other companies.
These measures have been derived from the Group's financial
statements because the Group believes that, with the achievement of
gold production, they are of assistance in the understanding of the
results of operations and its financial position.
Average realised gold price per ounce sold
The Group believes that, in
addition to conventional measures prepared in accordance with GAAP,
the average realised gold price, which takes into account the
impact of gain/losses on forward sale of commodity contracts, is a
metric used to better understand the gold price realised during a
period. Management believes that reflecting the impact of these
contracts on the Group's realised gold price is a relevant measure
and increases the consistency of this calculation with our peer
companies.
In addition to the above, in
calculating the realised gold price, management has adjusted the
revenues as disclosed in the consolidated financial statements to
exclude by product revenue, relating to silver revenue, and has
reflected the by product revenue as a credit to cash operating
costs. The revenues as disclosed in the consolidated financial
statements have been reconciled to the gold revenue for all periods
presented.
Table 3.1: Average annual realised price per ounce
sold
|
|
Three Months period
ended
|
Year ended
|
|
Units
|
December 31,
2023
|
September 30,
2023
|
June
30, 2023
|
March 31,
2023
|
December 31,
2022
|
December 31,
2023
|
December 31,
2022
|
Revenues
|
$
|
22,998,429
|
36,594,900
|
41,364,169
|
40,287,830
|
43,251,204
|
141,245,328
|
165,174,531
|
By product revenue
|
$
|
(40,063)
|
(56,244)
|
(68,587)
|
(43,773)
|
(32,845)
|
(208,667)
|
(114,211)
|
Gold revenue
|
$
|
22,958,366
|
36,538,656
|
41,295,582
|
40,244,057
|
43,218,359
|
141,036,661
|
165,060,320
|
|
|
|
|
|
|
|
|
|
Gain/(Loss) on forward sale of
commodity contracts
|
$
|
26,261
|
(205,323)
|
(200,534)
|
(750,482)
|
(1,925,754)
|
(1,130,078)
|
(1,587,524)
|
Adjusted gold revenue
|
$
|
22,984,627
|
36,333,333
|
41,095,048
|
39,493,575
|
41,292,605
|
139,906,583
|
163,472,796
|
|
|
|
|
|
|
|
|
|
Gold ounces sold
|
Oz
Au
|
11,930
|
19,021
|
20,852
|
21,553
|
24,918
|
73,356
|
92,489
|
Average realized price per ounce
sold
|
$
|
1,927
|
1,910
|
1,971
|
1,832
|
1,657
|
1,907
|
1,767
|
Cash operating cost per ounce
Cash operating cost per oz sold,
combined with revenues, can be used to evaluate the Group's
performance and ability to generate operating income and cash flow
from operating activities. The Group believes that, in addition to
conventional measures prepared in accordance with GAAP, certain
investors may find this information useful to evaluate the costs of
production per ounce.
By product revenues are included
as a credit to cash operating costs.
Table 3.2: Average annual cash operating cost per ounce of
gold
|
|
Three Months period
ended
|
Year ended
|
|
Units
|
December 31,
2023
|
September 30,
20231
|
June
30,
20231
|
March
31,
20231
|
December 31,
20221
|
December 31,
2023
|
December 31,
20221
|
Production costs
|
$
|
16,743,415
|
22,032,471
|
11,249,777
|
19,649,164
|
6,272,403
|
69,674,827
|
56,309,287
|
Transportation and
refining
|
$
|
613,813
|
712,258
|
810,080
|
342,291
|
971,849
|
2,478,442
|
3,419,334
|
Royalties
|
$
|
(4,835)
|
-
|
1,102,308
|
768,282
|
1,317,417
|
1,865,755
|
3,696,527
|
By product revenue
|
$
|
(40,063)
|
(56,244)
|
(68,587)
|
(43,773)
|
(32,845)
|
(208,667)
|
(114,211)
|
Cash Operating costs
|
$
|
17,312,330
|
22,688,485
|
13,093,578
|
20,715,964
|
8,528,824
|
73,810,357
|
63,310,937
|
|
|
|
|
|
|
|
|
|
Gold ounces sold
|
Oz
Au
|
11,930
|
19,021
|
20,852
|
21,553
|
24,918
|
73,356
|
92,489
|
Cash operating cost per ounce
sold
|
$/oz
|
1,451
|
1,193
|
628
|
961
|
342
|
1,006
|
685
|
1 The figures for the
production costs have been restated in connection with the
restatement of the financial statements. Refer to note 25 of the
financial statements for further details
All-in sustaining cost per ounce
AISC provides information on the
total cost associated with producing gold.
The Group calculates AISC as the
sum of total cash operating costs (as described above), other
administration expenses and sustaining capital, all divided by the
gold ounces sold to arrive at a per oz amount.
Other administration expenses
include administration expenses directly attributable to the
Segilola Gold Mine plus a percentage of corporate administration
costs allocated to supporting the operations of the Segilola Gold
Mine. From June 30, 2023, this was deemed to be 33%, for prior
periods, including 2022, it was considered to be 50%. The change is
reflective of the increase in the Group`s exploration
activities.
Other companies may calculate this
measure differently as a result of differences in underlying
principles and policies applied.
Table 3.3: Average annual all-in sustaining cost per ounce of
gold
|
|
Three Months period
ended
|
Year ended
|
|
Units
|
December 31,
2023
|
September 30,
20231
|
June
30,
20231
|
March
31,
20231
|
December 31,
20221
|
December 31,
2023
|
December 31,
20221
|
Cash operating
costs2
|
$
|
17,312,330
|
22,688,485
|
13,093,578
|
20,715,964
|
8,528,824
|
73,810,357
|
63,310,937
|
Segilola mine - other
administration expenses
|
$
|
2,323,963
|
806,394
|
1,093,344
|
3,775,777
|
6,171,107
|
7,999,478
|
14,042,505
|
Sustaining
capital3
|
$
|
714,793
|
2,979,303
|
4,914,550
|
5,864,894
|
500,040
|
14,473,540
|
10,917,636
|
Total all-in sustaining
cost
|
$
|
20,351,086
|
26,474,182
|
19,101,472
|
30,356,635
|
15,199,971
|
96,283,375
|
88,271,078
|
|
|
|
|
|
|
|
|
|
Gold ounces sold
|
oz
Au
|
11,930
|
19,021
|
20,852
|
21,553
|
24,918
|
73,356
|
92,489
|
All-in sustaining cost per ounce
sold
|
$/oz
|
1,706
|
1,392
|
916
|
1,408
|
610
|
1,313
|
954
|
1 The figures for the cash
operating costs have been restated in connection with the
restatement of the financial statements. Refer to note 25 of the
financial statements for further details.
2 Refer to Table - 3.2 Cash
operating costs.
3 Refer to Table - 3.3a
Sustaining and Non-Sustaining Capital
The Group's all-in sustaining
costs include sustaining capital expenditures which management has
defined as those capital expenditures related to producing and
selling gold from its on-going mine operations. Non-sustaining
capital is capital expenditure related to major projects or
expansions at existing operations where management believes that
these projects will materially benefit the operations. The
distinction between sustaining and non-sustaining capital is based
on the Group's policies and refers to the definitions set out by
the World Gold Council.
This non-GAAP measure provides
investors with transparency regarding the capital costs required to
support the on-going operations at its operating mine, relative to
its total capital expenditures. Readers should be aware that these
measures do not have a standardized meaning. It is intended to
provide additional information and should not be considered in
isolation, or as a substitute for measures of performance prepared
in accordance with IFRS.
Table 3.3a: Sustaining and Non-Sustaining
Capital
|
|
Three months period
ended
|
Year ended
|
|
Units
|
December 31,
2023
|
September 30,
2023
|
June
30, 2023
|
March
31, 2023
|
December 31,
2022
|
December 31,
2023
|
December 31,
2022
|
Property, plant and equipment
additions
|
$
|
220,954
|
2,020,081
|
10,132,049
|
5,719,158
|
8,663,986
|
18,092,242
|
24,757,723
|
Non-sustaining capital
expenditures1
|
$
|
(762,818)
|
(298,248)
|
(6,474,490)
|
(1,109,993)
|
(9,096,788)
|
(8,645,549)
|
(18,722,873)
|
Payment for sustaining
leases
|
$
|
1,256,657
|
1,257,470
|
1,256,991
|
1,255,729
|
932,842
|
5,026,847
|
4,882,786
|
Sustaining
Capital2
|
$
|
714,793
|
2,979,303
|
4,914,550
|
5,864,894
|
500,040
|
14,473,540
|
10,917,636
|
|
|
|
|
|
|
|
|
|
1 Includes EPC and other
construction costs for the Segilola mine
2 Includes capitalized
production stripping costs of $9,446,693 (2022:
$6,034,850)
Net Debt
Net debt is calculated as total
debt adjusted for unamortized, deferred, financing charges less
cash and cash equivalents
and short-term investments at the
end of the reporting period. This metric is used by management to
measure the
Group's debt leverage. The Group
considers that in addition to conventional measures prepared in
accordance with IFRS, net debt is useful to evaluate the Group's
performance.
Table 3.4: Net Debt
|
|
December 31,
2023
|
September 30,
2023
|
June
30, 2023
|
March
31, 2023
|
December 31,
2022
|
Project Loan
|
|
20,360,657
|
23,853,406
|
24,187,306
|
24,257,746
|
24,459,939
|
EPC Payments
|
|
-
|
-
|
-
|
1,463,353
|
10,196,105
|
Deferred EPC Facility
|
|
3,405,389
|
3,785,897
|
3,770,157
|
3,724,734
|
3,682,715
|
Less: Cash and cash
equivalents
|
|
(7,839,757)
|
(8,264,796)
|
(11,149,491)
|
(4,505,071)
|
(6,688,037)
|
Net Debt
|
|
15,926,289
|
19,374,507
|
16,807,972
|
24,940,762
|
31,650,722
|
Earnings Before Interest, Taxes, Depreciation and
Amortisation (EBITDA)
EBITDA is calculated as the total
earnings before interest, taxes, depreciation and amortisation.
This measure helps management assess the operating performance of
each operating unit.
Table 3.5: Earnings Before Interest, Tax, Depreciation and
Amortization (EBITDA)
|
|
Three months period
ended
|
Year ended
|
|
Unit
|
December 31,
2023
|
September 30,
20231
|
June
30,
20231
|
March
31,
20231
|
December 31,
20221
|
December 31,
2023
|
December 31,
20221
|
Net profit for the
period
|
$
|
(8,847,842)
|
2,270,508
|
14,458,095
|
2,988,685
|
10,715,034
|
10,869,446
|
37,996,903
|
Amortisation and depreciation -
owned assets
|
$
|
4,524,892
|
5,087,535
|
6,679,708
|
7,165,523
|
10,571,705
|
23,457,658
|
26,928,156
|
Amortisation and depreciation -
right of use assets
|
$
|
1,195,517
|
1,196,936
|
1,195,213
|
1,194,587
|
1,246,105
|
4,782,253
|
4,724,100
|
Impairment of Exploration &
Evaluation assets
|
$
|
2,588
|
2,622
|
3,365
|
3,096
|
2,433
|
11,671
|
12,014
|
Buy-out of gold sale agreement`s
option
|
$
|
3,154,454
|
-
|
-
|
-
|
-
|
3,154,454
|
-
|
Interest expense
|
$
|
3,145,415
|
3,304,670
|
3,253,529
|
3,370,781
|
3,265,120
|
13,074,395
|
14,616,810
|
EBITDA
|
$
|
3,175,024
|
11,862,271
|
25,589,910
|
14,722,672
|
25,800,397
|
55,349,877
|
84,277,983
|
|
|
|
|
|
|
|
|
|
Ounces sold
|
Oz
Au
|
11,930
|
19,021
|
20,852
|
21,553
|
24,918
|
73,356
|
92,489
|
EBITDA per ounce sold
|
$
|
266
|
624
|
1,227
|
683
|
1,035
|
755
|
911
|
1 The net profit for the
period has been restated in connection with the restatement of the
financial statements. Refer to note 25 of the financial statements
for further details.
OUTLOOK AND UPCOMING MILESTONES
This Section 5 of the MD&A
contains forward looking information as defined by National
Instrument 51-102. Refer to Section 16 of this MD&A for further
information on forward looking statements.
We are focussed on advancing the
Company's strategic objectives and near-term milestones which
include:
· 2024
Operational Guidance and Outlook
Gold Production
|
oz
|
95,000-100,000
|
All-in Sustaining Cost
("AISC")
|
US$/oz
Au sold
|
$1,100 -
$1,200
|
Capital Expenditure
|
US$
|
2,000,000 - 4,000,000
|
Exploration Expenditure:
|
|
|
Nigeria1
|
US$
|
4,000,000 - 6,500,000
|
West Africa
|
US$
|
3,500,000 - 4,500,000
|
1 This includes purchase of
licences
· The
critical factors that influence whether Segilola can achieve these
targets include:
o Segilola's ability to maintain an adequate supply of
consumables (in particular ammonium nitrate, flux and cyanide) and
equipment.
o Fluctuations in the price of key consumables, in particular
ammonium nitrate, and diesel
o Segilola's workforce remaining healthy
o Continuing to receive full and on-time payment for gold
sales
o Continuing to be able to make local and international
payments in the ordinary course of business
· Continue to advance the Douta Gold Project towards PFS for
publication in H2 2024
· Continue to advance exploration programmes across the
portfolio:
o Segilola near mine exploration
o Segilola underground project
o Segilola regional exploration programme
o Douta extension programme
o Douta infill programme
o Assess regional potential targets in Nigeria
SUMMARY OF QUARTERLY RESULTS
The table below sets forth
selected results of operations for the Company's eight most
recently completed quarters.
Table 6.1: Summary of quarterly results
$
|
2023
Q4
Dec
31
|
2023
Q3
Sep
301
|
2023
Q2
Jun
301
|
2023
Q1
Mar
311
|
Revenues
|
22,998,429
|
36,594,900
|
41,364,169
|
40,287,830
|
Net (loss)/profit for
period
|
(8,847,842)
|
2,270,508
|
14,458,095
|
2,988,685
|
Basic (loss)/earnings per share
(cents)
|
(1.35)
|
0.35
|
2.24
|
0.46
|
$
|
2022
Q4
Dec
311
|
2022
Q3
Sep
301
|
2022
Q2
Jun
301
|
2022
Q1
Mar
311
|
Revenues
|
43,251,204
|
55,703,098
|
41,354,747
|
24,865,482
|
Net profit for period
|
10,715,034
|
10,712,996
|
9,928,444
|
6,640,429
|
Basic earnings per share
(cents)
|
1.67
|
1.68
|
1.56
|
1.04
|
1 The net profit for the period has been restated
in connection with the restatement of the financial statements.
Refer to note 25 of the financial statements for further
details.
The Company reported a net loss of
$8,847,842 (1.35 cents per share) for the three months period ended
December 31, 2023, as compared to a net profit of $10,715,034 (1.67
cents per share) for the three months period ended December 31,
2022. The decrease in profit for the period was largely due
to:
· Sales during the period of $22,998,429 (Q4 2022:
$43,251,204); and
· Production costs of $16,743,415 (Q4 2022:
$6,272,403)
· Buy-out of gold sale agreement`s option of $3,154,454 (Q4
2022: Nil)
· Gold-in-circuit of 11,210 oz (Q4 2022: 1,031 oz)
These were offset partially
by:
· Amortization and depreciation of $5,720,409 (Q4 2022:
$11,817,810); and
· Interest of $3,145,415 (Q4 2022: $3,265,120)
No interest was earned during the
three months period ended December 31, 2023, and 2022.
SELECTED ANNUAL FINANCIAL INFORMATION
The review of the results of
operations should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto.
Table 7.1: Selected annual information
For the year ended
|
|
December
31, 2023
|
December
31, 2022
|
December
31, 2021
|
Total revenues
|
$
|
141,245,328
|
165,174,531
|
6,049,485
|
Net profit/(loss)
|
$
|
10,869,446
|
37,996,903
|
(2,069,195)
|
Profit/(loss) per share
(cents)
|
|
|
|
|
Basic
|
|
1.67
|
5.92
|
(0.33)
|
Diluted
|
|
1.66
|
5.84
|
(0.33)
|
Total assets
|
$
|
259,114,169
|
235,849,775
|
212,238,762
|
Total non-current
liabilities
|
$
|
19,895,396
|
57,663,580
|
63,406,824
|
|
|
|
|
|
RESULTS FOR THE YEAR ENDED DECEMBER 31, 2023 and
2022
The Company reported a net profit
of $10,869,446 (1.67 cents per share) for the year ended December
31, 2023, as compared to a net profit of $37,996,903 (5.92 cents
per share) for the year ended December 31, 2022. The reduction in
profit for the year was largely due to:
sales during the year of
$141,245,328 (2022: $165,174,531); and
Production costs of $69,674,827
(2022: $56,309,287)
These were offset partially
by:
Amortization and depreciation of
$28,239,911 (2022: $31,652,256); and
Interest of $13,074,395 (2022:
$14,616,810)
No interest was earned during the
year ended December 31, 2023, and 2022.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2023, the
Company had cash of $7,839,757 (2022: $6,688,037) and 4,405 ounces
of gold dore in inventory to be sold (2022: 1,884 ounces), and a
working capital deficit of $57,140,196 (2022: deficit of
$16,518,953).
The increase in cash from December
31, 2022, is due mainly to cash generated in operations of
$63,8379,783 offset by cash used in investing and financing
activities of $37,838,419 and $25,067,047, respectively.
The increase working capital
deficit is mainly due to the transfer of $22,359,551 of loans and
other borrowings from non-current to current as these are due
within 12 months from December 31, 2023.
Working Capital Calculation
The Working Capital Calculation
excludes $12,343,232 (2022: $10,187,630) of gold stream
liabilities, and nil (2022: $2,215,585) in third party royalties
included in current accounts payable, that are contingent upon the
achievement of the gold sales forecast of 95,000 to 100,000 ounces
for the year ending December 31, 2024.
The Company carried out upgrades
to the Segilola Processing Plant in Q3 and Q4 of 2023, including
the upgrade of the elution circuit. This was done to ensure more
efficient gold recoveries for the remainder of the mine life.
During this period, there was a significant accumulation of
gold-in-circuit of over 11,000 ounces, with a market value at
December 31, 2023, of approximately $23 million. Following the
period and the completion of the upgrades, the Company expects to
drawdown this gold in circuit during the course of 2024.
Table 8.1: Working Capital
|
Unit
|
December
31, 2023
|
September 30, 20231
|
June
30,
20231
|
March
31,
20231
|
December
31, 20221
|
Current Assets
|
|
|
|
|
|
|
Cash
|
$
|
7,839,757
|
8,264,796
|
11,149,491
|
4,505,071
|
6,688,037
|
Inventory
|
$
|
41,770,046
|
47,576,396
|
37,862,168
|
36,336,108
|
32,499,224
|
Amounts receivable, prepaid
expenses, advances and deposits
|
$
|
7,930,772
|
10,276,196
|
8,612,279
|
8,461,572
|
10,697,365
|
Total Current Assets for Working
Capital
|
$
|
57,540,575
|
66,117,388
|
39,822,730
|
49,302,751
|
49,884,626
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts Payable and accrued
liabilities
|
$
|
74,773,828
|
69,964,009
|
59,595,451
|
60,555,348
|
56,337,289
|
Deferred income
|
$
|
11,838,898
|
-
|
865,173
|
-
|
6,581,743
|
Lease Liabilities
|
$
|
4,820,353
|
4,813,352
|
4,819,439
|
4,815,512
|
4,811,991
|
Gold Stream Liability
|
$
|
12,343,232
|
10,686,862
|
9,319,784
|
9,979,413
|
10,187,630
|
Loan and other
borrowings
|
$
|
23,247,692
|
23,757,835
|
20,235,386
|
11,790,796
|
888,141
|
|
$
|
127,024,003
|
109,222,058
|
94,835,233
|
87,141,069
|
78,806,794
|
less: Current Liabilities
contingent upon future gold sales
|
$
|
(12,343,232)
|
(10,686,862)
|
(9,355,262)
|
(10,785,214)
|
(12,403,215)
|
Working capital deficit
|
$
|
(57,140,196)
|
(32,417,808)
|
(45,657,241)
|
(27,053,104)
|
(16,518,953)
|
1 The inventory balances have
been restated in connection with the restatement of the financial
statements. Refer to note 25 of the financial statements for
further details.
Inventory
Gold inventory is recognised in
the ore stockpiles and in production inventory, comprised
principally of ore stockpile and doré at site or in transit to the
refinery, with a component of gold-in-circuit.
Table 8.2: Inventory
|
|
December
31, 2023
|
September 30, 20231
|
June
30,
20231
|
March
31,
20231
|
December
31,
20221
|
Current
|
|
|
|
|
|
|
Plant spares and
consumables
|
|
8,681,433
|
8,185,909
|
7,072,420
|
9,146,279
|
4,751,922
|
Gold ore in stockpile
|
|
20,768,112
|
30,218,334
|
26,535,360
|
25,097,817
|
23,569,801
|
Gold in CIL
|
|
8,405,429
|
9,025,408
|
4,254,388
|
2,092,012
|
956,864
|
Gold dore2
|
|
3,915,072
|
146,745
|
-
|
-
|
3,220,637
|
|
$
|
41,770,046
|
47,576,396
|
37,862,168
|
36,336,108
|
32,499,224
|
Non-current
|
|
|
|
|
|
|
Gold ore in stockpile
|
|
15,891,089
|
-
|
-
|
-
|
-
|
|
$
|
15,891,089
|
-
|
-
|
-
|
-
|
1 The inventory balances have
been restated in connection with the restatement of the financial
statements. Refer to note 25 of the financial statements for
further details.
2 Gold dore is valued at cost
($889/oz), which comprises production cost, depreciation and
amortization.
Liquidity and Capital Resources
The Company has generated positive
operating cash flow during Q4 2023, and the year ended December 31,
2023, and expects to continue to do so based on its production and
AISC guidance. This strong operating cash flow will support debt
repayments, regional exploration and underground expansion drilling
at Segilola, planned capital expenditures and corporate overhead
costs.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Group's financial instruments
consist of cash, amounts receivable, accounts payable, accrued
liabilities, gold stream liability, loans and other borrowings and
lease liabilities.
Fair value of financial assets and
liabilities
Fair values have been determined
for measurement and/or disclosure purposes. When applicable,
further information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or
liability.
The carrying amount for cash,
amounts receivable, and accounts payable, accrued liabilities,
loans and borrowings and lease liabilities on the statement of
financial position approximate their fair value because of the
limited term of these instruments.
Financial risk management objectives and
policies
The Group has exposure to the
following risks from its use of financial instruments
· Interest rate risk
· Credit risk
· Liquidity and funding risk
· Market risk
In common with all other
businesses, the Group is exposed to risks that arise from its use
of financial instruments. This note describes the Group's
objectives, policies, and processes for managing those risks and
the methods used to measure them. Further quantitative information
in respect of these risks is presented throughout these
consolidated financial statements.
There have been no substantive
changes in the Group's exposure to financial instrument risks, its
objectives, policies, and processes for managing those risks or the
methods used to measure them from previous years unless otherwise
stated in these notes.
The Board of Directors has overall
responsibility for the establishment and oversight of the Group's
risk management framework. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without
unduly affecting the Company's competitiveness and flexibility.
Further details regarding these policies are set out
below.
Financial instruments by category
The accounting policies for
financial instruments have been applied to the line items
below:
Table 9.3: Financial instruments by
category
|
|
December 31, 2023
|
|
December 31, 2022
|
|
|
Measured at amortized cost
|
Measured at fair value through profit and loss
|
Total
|
|
Measured at amortized cost
|
Measured at fair value through profit and loss
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
7,839,757
|
-
|
7,839,757
|
|
6,688,037
|
-
|
6,688,037
|
Amounts receivable
|
$
|
280,731
|
-
|
280,731
|
|
220,442
|
-
|
220,442
|
Total assets
|
$
|
8,120,488
|
-
|
8,120,488
|
|
6,908,479
|
-
|
6,908,479
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
$
|
74,773,828
|
-
|
74,773,828
|
|
54,121,704
|
2,215,585
|
56,337,289
|
Loans and borrowings
|
$
|
23,766,046
|
-
|
23,766,046
|
|
28,142,654
|
-
|
28,142,654
|
Gold stream liability
|
$
|
-
|
20,042,997
|
20,042,997
|
|
-
|
25,039,765
|
25,039,765
|
Lease liabilities
|
$
|
11,490,070
|
-
|
11,490,070
|
|
15,409,285
|
-
|
15,409,285
|
Total liabilities
|
$
|
110,029,944
|
20,042,997
|
130,072,941
|
|
97,673,643
|
27,255,350
|
124,928,993
|
Liquidity risk
Liquidity risk is the risk that
the Group will not be able to meet its financial obligations as
they fall due. The Group ensures that there is sufficient capital
in order to meet short-term business requirements, after taking
into account the Group's holdings of cash. The Group's cash
is held in business accounts and are available on
demand.
In the normal course of business,
the Group enters into contracts and performs business activities
that give rise to commitments for future minimum
payments.
The following tables summarize the
Group's significant remaining contractual maturities for financial
liabilities at December 31, 2023, and December 31, 2022. The
tables show projected cashflows including interest
payments.
Table 9.4: Contractual maturity analysis
Contractual maturity analysis as at December 31,
2023
|
|
Less
than
3
months
$
|
3 -
12
Months
$
|
1 -
5
Year
$
|
Longer
than
5
years
$
|
Total
$
|
Accounts payable and accrued
liabilities
|
63,950,634
|
10,823,194
|
-
|
-
|
74,773,828
|
Lease liabilities
|
1,213,678
|
3,236,476
|
7,282,070
|
-
|
11,732,224
|
Gold Stream Liability
|
3,484,102
|
10,553,647
|
9,317,278
|
-
|
23,355,027
|
Loans and borrowings
|
9,182,048
|
18,253,920
|
932,379
|
-
|
28,368,347
|
|
77,830,462
|
42,867,237
|
17,531,728
|
-
|
138,229,426
|
Contractual maturity analysis as at December 31,
2022
|
|
Less
than
3
months
$
|
3 -
12
Months
$
|
1 -
5
Year
$
|
Longer
than
5
years
$
|
Total
$
|
Accounts payable and accrued
liabilities
|
55,368,069
|
1,001,983
|
-
|
-
|
56,370,052
|
Lease liabilities
|
1,255,581
|
3,766,744
|
12,681,521
|
-
|
17,703,846
|
Gold Stream Liability
|
2,986,708
|
8,475,973
|
23,420,334
|
-
|
34,883,015
|
Loans and borrowings
|
1,642,151
|
4,810,033
|
33,337,237
|
-
|
39,789,421
|
|
61,252,509
|
18,054,733
|
69,439,092
|
-
|
148,746,334
|
|
|
|
|
|
|
|
|
Interest rate risk
Interest rate risk is the risk
that the value of financial instruments will fluctuate due to
changes in market interest rates. The Group's income and operating
cash flows will be impacted by changes in market interest rates as
the Group's secured loans from the AFC incurs Interest at SOFR plus
9% (Refer to Note 11 of the 2023 Audited Financial Statements). The
Group's management monitors the interest rate fluctuations on a
continuous basis and assesses the impact of interest rate
fluctuations on the Group's cash position and acts to ensure that
sufficient cash reserves are maintained in order to meet interest
payment obligations.
Credit risk
Credit risk is the risk of an
unexpected loss if a counterparty to a financial instrument fails
to meet its contractual obligations.
The Group manages the credit risk
associated with cash by investing these funds with highly rated
financial institutions, and by monitoring its concentration of cash
held in any one institution. As such, the Group deems the credit
risk on its cash to be low. At 31 December 2023, 78% of the Group's
cash balances were invested in AA rated financial institutions
(2022: 93%), 1% in AA- rated financial institutions (2022: 1%), 1%
in A+ rated financial institutions (2022: 1%), 17% in A- rated
financial institutions (2022: nil) and 3% in B rated institutions
(2022: 4%).
The Group sells Its gold to large
international organizations with strong credit ratings, and the
historical level of customer defaults is minimal. As a result, the
credit risk associated with gold trade receivables at 31 December
2023 is considered to be negligible.
Market risk
The Group is subject to normal
market risks including fluctuations in foreign exchange rates and
interest rates. While the Group manages its operations in order to
minimize exposure to these risks, the Group has not entered into
any derivatives or contracts to hedge or otherwise mitigate this
exposure.
Foreign currency risk
The Group's primary operations are
in Nigeria and Senegal. Revenues generated and expenditures
incurred are primarily denominated in United States Dollars, as are
its loan facilities.
Although the Group does not enter
into currency derivative financial instruments to manage its
exposure, the Group tries to manage this risk by maintaining most
of its cash in United States dollars.
DISCLOSURE OF OUTSTANDING SHARE DATA
As at the date of this MD&A,
there were 656,064,724 common shares issued and outstanding stock
options to purchase a total of 14,040,000 common shares.
Authorized Common Shares
Table 14.1: Common shares issued
a)
|
|
December
31, 2023
|
December
31, 2022
|
Common shares issued
|
|
656,064,724
|
644,696,185
|
Warrants
There were no warrants that were
outstanding at December 31, 2023, and as at the date of this
report.
During the quarter ended December
31, 2023, no warrants were issued.
Stock Options
The number of stock options that
were outstanding and the remaining contractual lives of the options
at December 31, 2023, were as follows.
Table 14.2: Options outstanding
Exercise Price
|
Number
Outstanding
|
Weighted
Average Remaining Contractual Life
|
Expiry
Date
|
C$0.200
|
14,040,000
|
1.05
|
January
16, 2025
|
Total
|
14,040,000
|
|
|
The Company has previously
granted employees, consultants, directors and officers share
purchase options. These options were granted pursuant to the
Company's stock option plan. No new options have been granted in
2023.
During the year ended December 31,
2023, the following options were exercised:
· 1,500,000 options exercised at a price of CAD$0.145 per share
on June 5, 2023;
· 9,118,539 options exercised at a price of CAD$0.145 per share
on June 14, 2023; and,
· 750,000 options exercised at a price of CAD$0.14 per share on
September 28, 2023
Audited Financial Results for the Year Ended 31 December
2023
Independent Auditor's
Report
To the Shareholders of Thor Explorations
Limited
Opinion
We have audited the consolidated
financial statements of Thor Explorations Limited and its
subsidiaries (the Group), which comprise the consolidated
statements of financial position as at December 31, 2023 and 2022,
and the consolidated statements of comprehensive income,
consolidated statements of cash flows, and the consolidated
statements of changes in equity for the years then ended, and notes
to the consolidated financial statements, including material
accounting policy information.
In our opinion, the accompanying
consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at
December 31, 2023 and 2022, and its consolidated financial
performance and its consolidated cash flows for the years then
ended in accordance with International Financial Reporting
Standards (IFRSs).
Basis for Opinion
We conducted our audit in
accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in
Canada, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those
matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements
of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that
we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key audit
matter
|
How the scope of our audit
addressed the key audit matter
|
Valuation of Inventory (see Note 6)
There are a number of key
judgements and estimates which are applied in assessing the
valuation of inventory including the volumetrics of each type of
inventory, the stage of completion and the allocation of
overheads.
Valuation of inventory has been
raised as a significant risk. During course of the audit, we have
challenged management on the model utilized for the valuation of
gold in stockpile, gold in CIL (Carbon-In-Leach) and Gold dore and
as a result of this challenge, the Group identified an error in the
prior year model used for valuation of gold Dore, gold in CIL and
stockpiles.
The error has led to an adjustment
to inventory balances as at 31 December 2022 amounting to
$12,730,276 (note 6 and note 25).
In accordance with IAS 8
"Accounting Policies, Changes in Accounting Estimates and Errors",
the comparative disclosures (December 31, 2022), have been restated
(note 25) by recording an increase in Inventory (note 6) and an
equal decrease in cost of sales (note 5b).
Due to the material significance
of the amount of inventory on the statement of financial position
at year end we consider the valuation of inventory to be a key
audit matter.
|
Our specific audit testing in this
regard included:
In respect of the valuation of
inventory for December 31, 2023
· Obtaining an understanding of the processes around stockpile,
gold dore and gold in CIL measurement, survey and any
reconciliations performed to reconcile tonnes mined through each of
the stages of production where inventory arises.
· Attending the physical stock count as at year end and
observing surveys and counts where applicable for all phases of
production including but not limited to gold in stockpiles, gold in
CIL and gold dore.
· Assessing the competence and independence of management
experts (surveyors).
· Obtaining Management's model and calculation for the value of
the gold in stockpile, gold in CIL and gold dore and checking the
mathematical accuracy of the model and assessing the reasonableness
of the inputs into the calculation against current year production
and industry knowledge and experience within the team.
· Assessing the reasonableness of the split between long-term
and short-term stockpiles by comparing to future production plans
included in the life of mine reporting prepared by a third
party.
· Assessing the accuracy and appropriateness of costs absorbed
into the different phases of production through reference back to
relevant accounting standard guidance and industry knowledge and
experience.
· Testing of the net realizable value for both the long term
and short-term stockpiles by comparing the total costs, plus
anticipated future costs to completion to current market prices for
gold taken from third party data sources.
In respect of the prior period
error, we have performed procedures including:
· Challenging the margins within the underlying financial
information compared to expectations and the mine plan which we
raised challenge to management where there were inconsistencies
with expectations.
· Obtaining Management's model and calculation for the value of
the gold in stock pile, gold in CIL and gold dore and ensured
mathematical accuracy of the model and assessed the reasonableness
of the inputs into the calculation. Ensuring that the key inputs
audited in the prior year have remained unchanged in the
calculation for example volumes and density.
· Assessing the reasonableness of the split between long-term
and short-term stockpiles by comparing to future production plans
included in the life of mine reporting prepared by a third
party.
· Assessing the accuracy and appropriateness of costs absorbed
into the different phases of production through reference back to
relevant accounting standard guidance and industry knowledge and
experience.
· Testing of the net realizable value for both the long term
and short-term stockpiles by comparing the total costs, plus
anticipated future costs to completion to current market prices for
gold taken from third party data sources.
· Reviewed and assessed the adequacy of the disclosures in the
financial statements to check that they were prepared in accordance
with the requirements of the accounting standards.
|
|
Completeness of liabilities
During the audit of the financial
statements for 31 December 2023, we identified discrepancies
between balances confirmed by suppliers and balances recorded in
the draft financial statements which led to additional
testing being performed to ensure that the completeness and cut-off
of liabilities is appropriate. We also note there were prior period
adjustments in respect of the completeness of liabilities impacting
the prior year financial statements.
We therefore consider
the impact of cut-off and completeness of liabilities
in the financial statements in the current period to be a
significant risk for the December 31, 2023 audit and accordingly a
key audit matter.
|
Our specific audit testing in this
regard included:
· Obtaining an understanding of the system to assess whether
Management had implemented controls and processes to prevent or
detect an error such as that arose in the prior year from
reoccurring.
· Obtaining the schedule of accruals as at December 31,
2023 and checking the arithmetical accuracy of the
schedule.
· Obtaining confirmations for a sample of suppliers and
agreeing balances confirmed to balances recorded and obtaining
reconciliations for any differences noted. We have assessed the
reasonableness of all reconciling items noted.
· Agreeing the expenses to source documentation and internal
cost to contract reconciliations for the Group's key
suppliers
· Selecting a sample of post year end payments until one week
before sign off date and agreeing to source documentation to ensure
the related expense has been recognised in the correct financial
year.
· Selecting a sample of post year end transactions from the
detailed ledger until one week before the date of signing these
financial statements and agreeing it to source documentation to
check that the related expense has been recognised in the correct
financial year.
· Reviewing the list of accruals for reasonableness based on
our understanding of the entity and a retrospective review as the
business has not changed from prior year.
|
Other Information
Management is responsible for the
other information. The other information comprises the information
included in the Management's Discussion & Analysis.
Our opinion on the consolidated
financial statements does not cover the other information and we do
not and will not express any form of assurance conclusion
thereon.
In connection with our audit of
the consolidated financial statements, our responsibility is to
read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent
with the consolidated financial statements, or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated.
We obtained the Management's
Discussion & Analysis prior to the date of this auditor's
report. If, based on the work we have performed on this other
information, we conclude that there is a material misstatement of
this other information, we are required to report that fact in this
auditor's report. We have nothing to report in this
regard.
Responsibilities of Management and Those Charged with
Governance for the Consolidated Financial
Statements
Management is responsible for the
preparation and fair presentation of the consolidated financial
statements in accordance with IFRSs, and for such internal control
as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated
financial statements, management is responsible for assessing the
Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are
responsible for overseeing the Group's financial reporting
process.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements
Our objectives are to obtain
reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements.
As part of an audit in accordance
with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements,
whether due to fraud or error, design and perform audit procedures
responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is
higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the
override of internal control.
· Obtain an understanding of internal control relevant to the
audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the
effectiveness of the Group's internal control.
· Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting
estimates and related disclosures made by management.
· Conclude on the appropriateness of management's use of the
going concern basis of accounting and,
based on the audit evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant doubt on the Group's ability
to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to
draw attention in our auditor's
report to the related disclosures in the consolidated financial
statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to
the date of our auditor's report. However, future events or
conditions may cause the Group to cease
to continue as a going concern.
· Evaluate the overall presentation, structure and content of
the consolidated financial statements,
including the disclosures, and whether the consolidated financial
statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
· Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or
business activities within the Group to express an opinion on the
consolidated financial statements.
We are responsible for the direction, supervision and performance
of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged
with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with
governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with
those charged with governance, we determine those matters that were
of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report
unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
The engagement partner on the
audit resulting in this independent auditor's report is Anne
Sayers.
BDO LLP
Chartered Professional
Accountants
London, UK
27 April 2024
Notes to the Audited Financial Statements
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.
2. BASIS OF
PREPARATION
a) Statement of compliance
These consolidated financial
statements, including comparatives, have been prepared using
accounting policies consistent with International Financial
Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board
b) Basis of measurement
The consolidated financial statements are presented in United
States dollars ("US$").
These consolidated financial
statements have been prepared on a historical cost basis and are
presented in United States dollars, except for the valuation of
certain financial instruments that are measured at fair value at
the end of each reporting period as explained in the accounting
policies below.
The preparation of financial
statements in compliance with IFRS requires management to make
certain critical accounting estimates. It also requires management
to exercise judgment in applying the Group's accounting policies. A
precise determination of many assets and liabilities is dependent
upon future events, the preparation of consolidated financial
statements for a period involves the use of estimates, which have
been made using careful judgment. Actual results may differ from
these estimates. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are
significant to the financial statements are discussed in Note
4.
c) Nature of operations and going
concern
As at December 31, 2023, the Group
had cash of $7,839,757 and inventory of 4,405 ounces of gold doré,
as well as 11,210 ounces of gold-in-circuit inventory.
During the year ended December 31,
2023, the Group sold 73,356 ounces of gold and generated a net cash
flow from operating activities to the Group of
$63,837,783.
The Board has reviewed the
detailed cash flow forecast prepared by management, for the
twelve-month period from the date of this report.
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.
Key assumptions underpinning this
forecast in addition to estimated production of 95,000 - 100,000
ounces of gold for 2024 include, gold prices between $2,000 per
ounce and $2,095 per ounce, effective cost control of key
production elements and production volumes in line with annual
guidance. This is considered to be the Group's base case scenario
which demonstrates the Group has sufficient cash and working
capital to continue operations for a period of no less than twelve
months from the date of approval of these financial
statements.
The Directors have also considered
various scenarios that may impact cashflow including adverse
changes in gold price (down to $1,950 per ounce), inflationary
pressures on key cost elements (up to 5%), and adverse positions
regarding the Facility covenants. The Directors are satisfied that
these stress test scenarios have appropriate planned mitigating
actions, which will be sufficient to maintain the Group's going
concern status if in the unlikely event, any of these eventualities
occurred.
The Directors are therefore
satisfied that the going concern basis of accounting is an
appropriate assumption to adopt in the preparation of the
consolidated financial statements as at December 31,
2023.
3. MATERIAL ACCOUNTING POLICY
INFORMATION
The accounting policies described
below have been applied consistently to all periods presented in
these consolidated financial statements unless otherwise
stated.
a) Consolidation principles
The assets, liabilities, revenues
and expenses of the subsidiaries are recognized in accordance with
the Group's accounting policies. Intercompany transactions and
balances are eliminated upon consolidation.
b) Details of the Group
In addition to the Company, these
consolidated financial statements include all subsidiaries of the
Company. Subsidiaries are all corporations over which the Company
has power over the Subsidiary, and it is exposed to variable
returns from the Subsidiary, and it has the ability to use its
power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a
change in any of these elements of control. The consolidated
financial statements present the results of the Company and its
subsidiaries as if they formed a single entity, with subsidiaries
being fully consolidated from the date on which control is acquired
by the Company. They are de-consolidated from the date that control
by the Company ceases.
The subsidiaries of the Company
are as follows:
Company
|
Location
|
Incorporated
|
Interest
|
Functional
currency
|
Thor Investments (BVI) Ltd. ("Thor
BVI")
|
British
Virgin Islands
|
September 30, 2011
|
100%
|
USD
|
African Star Resources Incorporated
("African Star")
|
British
Virgin Islands
|
September 30, 2011
|
100%
|
GBP
|
Segilola Resources Incorporated ("SR
BVI")
|
British
Virgin Islands
|
March
10, 2020
|
100%
|
USD
|
Thor Gold Ventures Ltd ("THX
GV")
|
United
Kingdom
|
February 11, 2022
|
100%
|
GBP
|
African Star Resources SARL
("African Star SARL")
|
Senegal
|
July
14, 2011
|
100%
|
CAF
|
Argento Exploration BF
SARL
("Argento BF SARL")
|
Burkina
Faso
|
September 15, 2010
|
100%
|
CAF
|
AFC Constelor Panafrican Resources
SARL ("AFC Constelor SARL")
|
Burkina
Faso
|
December 9, 2011
|
100%
|
CAF
|
Segilola Resources Operating
Limited
("SROL")
|
Nigeria
|
August
18, 2016
|
100%
|
USD
|
Segilola Gold Limited
("SGL")
|
Nigeria
|
August
18, 2016
|
100%
|
NGN
|
Newstar Minerals Limited
("Newstar")
|
Nigeria
|
July 5,
2022
|
100%
|
USD
|
Enorm Mining Limited
("Enorm")
|
Nigeria
|
August
20, 2023
|
51%
|
USD
|
Ngnira Gold SARL
("Ngnira")
|
Cote
D'Ivoire
|
April
22, 2023
|
100%
|
USD
|
c) Foreign currency translation
Functional and presentation
currency
The Company's functional and
presentation currency is the United States dollar ("$"). The
functional currency for the Company being the currency of the
primary economic environment in which the Company operates. The
individual financial statements of each of the Company's wholly
owned subsidiaries are prepared in the currency of the primary
economic environment in which it operates (its functional
currency).
Exchange rates published by Oanda
were used to translate the THX GV, African Star, SR BVI, African
Star SARL, Argento BF SARL, AFC Constelor SARL and SGL's financial
statements into the United States dollar in accordance with IAS 21
The Effects of Changes in Foreign
Exchange Rates. This standard requires, on consolidation,
that assets and liabilities be translated using the exchange rate
at period end, and income, expenses and cash flow items are
translated using the rate that approximates the exchange rates at
the dates of the transactions (i.e., the average rate for the
period). The foreign exchange differences on translation of
subsidiaries Thor GV, Thor BVI, African Star, SR BVI, African Star
SARL, Argento BF SARL, AFC Constelor SARL and SGL are recognized in
other comprehensive income (loss). Exchange differences
arising on the net investment in subsidiaries are recognized in
other comprehensive income.
Foreign currency
transactions
Foreign currency
transactions are accounted for as follows:
· Property, plant and equipment and intangible assets using the
rates at the time of acquisition;
· Other assets and liabilities using the closing exchange rate
as at the balance sheet date with translation gains and losses
recorded in other income/expense; and
· Income and expenses using the average exchange rate for the
period, except for expenses that relate to non-monetary assets and
liabilities measured at historical rates, which are translated
using the same historical rate as the associated non-monetary
assets and liabilities are translated into the functional currency
using the exchange rates prevailing on the dates of the
transactions.
d) Financial instruments
Financial
assets
The Group classifies its financial
assets into one of the categories discussed below, depending on the
purpose for which the asset was acquired. The Group's accounting
policy for each category is as follows:
Fair value through profit
or loss
This category comprises
in-the-money derivatives and out-of-money derivatives where the
time value offsets the negative intrinsic value (see "Financial
liabilities" section for out-of-money derivatives classified as
liabilities). They are carried in the statement of financial
position at fair value with changes in fair value recognized in the
consolidated statement of comprehensive income in the finance
income or expense line. Other than derivative financial instruments
which are not designated as hedging instruments, the Group does not
have any assets held for trading nor does it voluntarily classify
any financial assets as being at fair value through profit or
loss.
Amortized
cost
These assets arise principally
from the provision of goods and services to customers (e.g., trade
receivables), but also incorporate other types of financial assets
where the objective is to hold these assets in order to collect
contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognized
at fair value plus transaction costs that are directly attributable
to their acquisition or issue and are subsequently carried at
amortized cost using the effective interest rate method, less
provision for impairment.
Impairment provisions for current
and non-current trade receivables are recognized based on the
simplified approach within IFRS 9 using a provision matrix in the
determination of the lifetime expected credit losses. During
this process the probability of non-payment of the trade
receivables is assessed. This probability is then multiplied
by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the trade
receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the
loss being recognized in profit or loss. On confirmation that the
trade receivable will not be collectable, the gross carrying value
of the asset is written off against the associated
provision.
The Group's financial assets
measured at amortized cost comprise cash, restricted cash, amounts
receivable as well as prepaid expenses, advances and deposits in
the consolidated statement of financial position. Cash
includes cash in hand, deposits held at call with banks, other
short term highly liquid investments with original maturities of
three months or less, and - for the purpose of the statement of
cash flows - bank overdrafts. Bank overdrafts are shown within
loans and borrowings in current liabilities on the consolidated
statement of financial position.
Financial
liabilities
The Group classifies its financial
liabilities into one of two categories, depending on the purpose
for which the liability was acquired. The Group's accounting policy
for each category is as follows:
Fair value through profit
or loss
This category comprises
out-of-the-money derivatives where the time value does not offset
the negative intrinsic value (see "Financial assets" for
in-the-money derivatives and out-of-money derivatives where the
time value offsets the negative intrinsic value). They are carried
in the consolidated statement of financial position at fair value
with changes in fair value recognized in the consolidated statement
of comprehensive income. The Group does not hold or issue
derivative instruments for speculative purposes, but for hedging
purposes. Other than these derivative financial instruments, the
Group does not have any liabilities held for trading nor has it
designated any financial liabilities as being at fair value through
profit or loss.
Other financial
liabilities
Other financial liabilities
include the following items:
Borrowings are initially
recognized at fair value net of any transaction costs directly
attributable to the issue of the instrument. Such interest-bearing
liabilities are subsequently measured at amortized cost using the
effective interest rate method, which ensures that any interest
expense over the period to repayment is at a constant rate on the
balance of the liability carried in the consolidated statement of
financial position. For the purposes of each financial liability,
interest expense includes initial transaction costs and any premium
payable on redemption, as well as any interest or coupon payable
while the liability is outstanding.
Accounts payable and other
short-term monetary liabilities, which are initially recognized at
fair value and subsequently carried at amortized cost using the
effective interest method.
Fair Value measurement
hierarchy
IFRS 13 "Fair Value Measurement"
requires certain disclosures which require the classification of
financial assets and financial liabilities measured at fair value
using a fair value hierarchy that reflects the significance of the
input used in making the fair value measurement.
The fair value hierarchy has the
following levels:
· Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1);
· Input other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived prices (level 2);
and,
· Inputs for the asset or liability that are not based on
observable market data (unobservable input) (level 3).
The level in the fair value
hierarchy within which the financial asset or financial liability
is categorized is determined on the basis of the lowest level input
that is significant to the fair value measurement. Financial assets
and financial liabilities are classified in their entirety into
only one of the three levels.
Gold Stream
arrangement
On April 29, 2020, the Group
announced the completion of financing requirements for the
development of the Segilola Gold Project in Nigeria. The financing
included a $21 million gold stream prepayment pursuant to a Gold
Stream Arrangement ("GSA") entered into with the Africa Finance
Corporation ("AFC").
Under the terms of the GSA an
advance payment of $21 million was received. Upon the commencement
of production at Segilola the AFC had the right to receive 10.27%
of gold produced from the Group's ML41 mining license. Once the
initial liability has been repaid in full any further
gold
production will be delivered under
the terms of the GSA up to the money multiple limit of 2.25 times
the initial advance. The total maximum amount payable to the AFC
under this agreement is $47.25m including the repayment of the
initial US$21 million advance. The advanced payment has been
recorded as a contract liability based on the facts and terms of
the arrangement and own use exemptions
considerations.
The maximum $26.25 million
payable, after the initial $21 million has been settled, has been
identified as a significant financing component. The deemed
interest rate is calculated at inception, using the
production plan and gold price
estimates and released over the term of the arrangement as interest
expense in the income statement upon commencement of
production. The deemed interest rate is recalculated at each
reporting period and restated based on changes to the expected
production profile and gold price estimates.
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 for repayment of the gold stream
arrangement. Therefore, the liability is accounted for in
accordance with IFRS 9 whereby the liability is classified as a
financial liability measured at fair value through profit or
loss. The fair value measurement for the
GSA is considered to be a level 3 under the hierarchy established
by IFRS 13 for the years ended December 31 2023 and
2022.
Capitalization of borrowing costs
The Group capitalizes interest costs for qualifying
assets. Qualifying assets are assets that require a significant
amount of time to prepare for their intended use, including
projects that are in the exploration and evaluation, development or
construction stages. Qualifying assets also include significant
expansion projects at our operating mines. Capitalized interest
costs are considered an element of the cost of the qualifying asset
which is determined based on gross expenditures incurred on an
asset. Capitalization ceases when the asset is substantially
complete or if active development is suspended or ceases. Where the
funds used to finance a qualifying asset form part of general
borrowings, the amount capitalized is calculated using a weighted
average of rates applicable to the relevant borrowings during the
period. Where funds borrowed are directly attributable to a
qualifying asset, the amount capitalized represents the borrowing
costs specific to those borrowings.
e) Property, plant and
equipment
Motor Vehicles, Plant and
Machinery and Office Furniture
At acquisition, the Group records Motor Vehicles,
Plant and Machinery and Office Furniture at cost, including all
expenditures incurred to prepare an asset for its intended use.
These expenditures consist of: the purchase price; brokers'
commissions; and installation costs including architectural, design
and engineering fees, legal fees, survey costs, site preparation
costs, freight charges, transportation insurance costs, duties,
testing and preparation charges. These are depreciated on a
straight-line basis over their expected useful life, which
commences when the assets are considered available for use. Once
buildings, plant and equipment are considered available for use,
they are measured at cost less accumulated depreciation and
applicable impairment losses. Depreciation on equipment utilized in
the development of assets, including exploration assets, is
recapitalized as development costs attributable to the related
asset.
Estimated useful lives of
asset categories
|
Rate
|
Motor vehicles
|
20-33%
|
Plant and machinery
|
20-25%
|
Office furniture
|
20-33%
|
Mineral
Properties
Mineral properties consist of: Segilola Mine,
Processing Plant and Decommissioning Asset. In addition, the Group
incurs project costs which are generally capitalized when the
expenditures result in a future benefit.
In open pit mining operations, it
is necessary to remove overburden and other waste materials to
access ore from which minerals can be extracted economically. The
process of mining overburden and waste materials is referred to as
stripping. Stripping costs incurred in order to provide initial
access to the ore body (referred to as pre-production stripping)
are capitalized as open pit mine development costs. Pre-production
stripping costs are capitalized until commercial production levels
are achieved, after which time such costs are either capitalized to
inventory or, if it qualifies as an open pit stripping activity
that provides a future benefit, to property, plant and equipment.
Stripping costs incurred during the production stage of an open pit
are accounted for as costs of the inventory produced during the
period that the stripping costs are incurred, unless these costs
are expected to provide a future economic benefit to an
identifiable component of the ore body. Components of the ore body
are based on the distinct development phases identified by the mine
planning engineers when determining the optimal development plan
for the open pit. Production phase stripping costs generate a
future economic benefit when the related stripping activity: (1)
improves access to a component of the ore body to be mined in the
future; (2) increases the fair value of the mine (or open pit) as
access to future mineral reserves becomes less costly; and (3)
increases the productive capacity or extends the productive life of
the mine (or open pit). Production phase stripping costs that are
expected to generate a future economic benefit are capitalized as
open pit mine development costs. Capitalized open pit mine
development costs are depreciated on a UOP basis whereby the
denominator is the estimated ounces of gold in proven and probable
reserves and the portion of resources considered probable of
economic extraction based on the current LOM plan that benefit from
the development and are considered probable of economic
extraction.
Assets under construction
Assets under construction comprise
development projects and assets in the course of construction at
both the mine development and production phases.
Development projects comprise
interests in mining projects where the ore body is considered
commercially recoverable, and the development activities are
ongoing. Expenditure incurred on a development project is recorded
at cost, less applicable accumulated impairment losses. Interest on
borrowings, incurred for the purpose of the establishment of mining
assets, is capitalized during the construction phase.
The cost of an asset in the course
of construction comprises its purchase price and any costs directly
attributable to bringing it into working condition for its intended
use, at which point it is transferred from assets under
construction to other relevant categories and depreciation
commences. Depreciation commences once the asset is
complete, commissioned and available for use.
f) Exploration and evaluation
expenditures
Acquisition
costs
The fair value of all
consideration paid to acquire an unproven mineral interest is
capitalized, including amounts due under option agreements.
Consideration may include cash, loans or other financial
liabilities, and equity instruments including common shares and
share purchase warrants.
Exploration and evaluation
expenditures
All costs incurred prior to
obtaining legal title are expensed in the consolidated statement of
comprehensive loss in the year in which they are incurred. Once the
legal right to explore a property has been acquired, costs directly
related to exploration and evaluation expenditures are recognized
and capitalized, in addition to the acquisition costs. These
direct expenditures include such costs as materials used, surveying
costs, drilling costs, payments made to contractors and
depreciation on plant and equipment during the exploration phase.
Costs not directly attributable to exploration and evaluation
activities, including general administrative overhead costs, are
expensed in the year in which they occur.
When a project is deemed to no
longer have commercially viable prospects to the Group, exploration
and evaluation assets in respect of that project are deemed to be
impaired. As a result, those exploration and evaluation assets, in
excess of estimated realisable value, are written off to the
statement of comprehensive income (loss).
At such time as commercial
feasibility is established, project finance has been raised,
appropriate permits are in place and a development decision is
reached, the costs associated with that property will be
transferred to and re-categorized as Assets under
construction.
Farm-in
agreements
As is common practice in the
mineral exploration industry, the Group may acquire or dispose of
all, or a portion of, an exploration and evaluation asset under a
farm-in agreement. Farm-in agreements typically call for the
payment of cash, issue of shares and/or incurrence of exploration
and evaluation costs over a period of time, often several years,
entirely at the discretion of the party farming-in. The Group
recognizes amounts payable under a farm-in agreement when the
amount is due and when the Group has no contractual rights to avoid
making the payment. The Group recognizes amounts receivable under a
farm-in agreement only when the party farming-in has irrevocably
committed to the transfer of economic resources to the Group, which
often occurs only when the amount is received. Amounts received
under farm-in agreements reduce the capitalized costs of the
optioned unproven mineral interest to nil and are then recognized
as income.
g) Impairment of non-current
assets
Impairment tests for non-current
assets are performed when there is an indication of impairment. At
each reporting date, an assessment is made to determine whether
there are any indications of impairment. Prior to carrying out
impairment reviews, the significant cash generating units are
assessed to determine whether they should be reviewed under the
requirements of IAS 36 - Impairment of Assets for property plant
and equipment, or IFRS 6 - Exploration for and Evaluation of
Mineral Resources.
Impairment reviews performed under
IAS 36 are carried out on a periodic basis to ensure that the value
recognized on the Statement of Financial Position is not greater
than the recoverable amount. Recoverable amount is defined as the
higher of an asset's fair value less costs of disposal, and its
value in use.
Impairment reviews performed under
IFRS 6 are carried out on a project-by-project basis, with each
project representing a potential single cash generating unit. An
impairment review is undertaken when indicators of impairment
arise; typically, when one of the following circumstances
applies:
(i) sufficient data
exists that render the resource uneconomic and unlikely to be
developed
(ii) title to the
asset is compromised
(iii) budgeted or planned
expenditure is not expected in the foreseeable future
(iv) insufficient discovery
of commercially viable resources leading to the discontinuation of
activities
If any indication of impairment
exists, an estimate of the non-current asset's recoverable amount
is calculated. The recoverable amount is determined as the higher
of fair value less direct costs to sell and the asset's value in
use. If the carrying value of a non-current asset exceeds its
recoverable amount, the asset is impaired, and an impairment loss
is charged to the statement of comprehensive loss so as to reduce
the carrying amount of the non-current asset to its recoverable
amount.
h) Revenue recognition
The Group enters into forward
sales contracts for the sale of gold at a pre-determined and agreed
price with costumers who remit the cash proceeds to the Group on
the same day. The advance cash payment received is treated as a
contract liability without significant financing component. The
Group recognizes the sale upon delivery at which point control of
the product has been transferred to the customers. Transfer of
control generally takes place when refined gold is credited to the
metals account at the refinery of the customer who has sold the
gold via forward sale. Revenue is measured based on the
consideration to which the Group expects to be entitled under the
terms of the Agreement with the customers.
i) Royalties
The Group has royalty payment
obligations from production from its Segilola Gold Mine in Nigeria.
A royalty is payable to the Nigerian government at a rate of 16,218
Nigerian Naira (prior to May 1, 2022: 5,400 Nigerian Naira) per
ounce produced. The royalty is paid before the doré is exported
from Nigeria for refining. Royalties paid to the Nigerian
government are recognized as cost of sales in the Consolidated
Statements of Comprehensive Income/(Loss) at the point that the
gold is exported.
The Group also had royalty
obligations to three former owners of the Segilola Gold Project at
rates of between 0.375% to 1.5% on the value of sales. Total
royalties to the former owners ("third party royalties") were
capped at $7.5 million in aggregate. Royalties were calculated
using the outturn date as reference point, whereby the number of
ounces outturned are multiplied using the London Bullion Market
Association ("LBMA") p.m. rate on the outturn date to establish a
deemed sales value. The applicable royalty rate for each former
owner is applied to the deemed sales value to determine the royalty
payable.
Third party royalties were
assessed to be contingent consideration in the acquisition of the
Segilola Gold Mine under IFRS 3. In accordance with the Group's
accounting policy the contingent consideration was recognized as a
financial liability at the point where there was considered to be
certainty over the payment arising (commencement of production).
The discount has been unwound over the estimated time it has taken
to pay the entire $7.5 million obligation. The value of the
royalties has been depreciated over the estimated life of the mine,
and royalty payments have been applied in discharge of the
financial liability. The financial liability was initially measured
at fair value with subsequent fair value re-measurement to be
recorded in the Consolidated Statements of Comprehensive
Income/(Loss). The final payment under the third-party royalties'
arrangement was made in July 2023. The
fair value of the third party royalties as at December 31, 2022 was
$2,215,585 and was considered to a level 3 under the hierarchy
established by IFRS 13.
j) Inventory
Stores and consumables are stated
at the lower of cost and net realizable value. The cost of stores
and consumables includes expenditure incurred in acquiring the
inventories and bringing them to their existing location and
condition.
Gold ore stockpiles are valued at
the lower of weighted average cost and net realizable value. Cost
includes direct materials, direct labor costs and production
overheads.
Gold bullion and gold in process
are stated at the lower of weighted average cost and net realizable
value. Cost includes direct materials, direct labor costs and
production overheads.
k) Basic and diluted income or loss per
share
Earnings per share calculations
are based on the weighted average number of common shares issued
and outstanding during the period. Diluted earnings per share is
calculated using the treasury stock method, whereby the proceeds
from the exercise of potentially dilutive common shares with
exercise prices that are below the average market price of the
underlying shares are assumed to be used in purchasing the
Company's common shares at their average market price for the
period.
l) Comprehensive income
(loss)
Comprehensive income (loss) is
defined as the change in equity from transactions and other events
from non-owner sources. Other comprehensive income refers to items
recognized in comprehensive income (loss) that are excluded from
net earnings (loss). The main element of comprehensive income
(loss) is the foreign exchange effect of translating the financial
statements of the subsidiaries from local functional currencies
into US dollars upon consolidation. Movements in the exchange rates
of the Canadian Dollar, Pound Sterling, Nigerian Naira and West
African Franc to the US dollar will affect the size of the
comprehensive income (loss).
m) Share-based payments
Where options are awarded for
services, the fair value at the grant date of equity-settled share
awards is either charged to income or loss, or capitalized to
assets under construction where the underlying personnel cost is
also capitalized, over the period for which the benefits of
employees and others providing similar services are expected to be
received. The corresponding accrued entitlement is recorded
in the Options reserve. The amount recognized as an expense is
adjusted to reflect the number of share options expected to vest.
Where warrants are awarded in connection with the issue of common
shares the fair value, at the grant date, is transferred from
common shares with the corresponding accrued entitlement recorded
in the share purchase warrants reserve. The fair value of options
and warrants awards is calculated using the Black-Scholes option
pricing model which considers the following factors:
· Exercise price
|
· Current market price of the underlying shares
|
· Expected life of the award
· Expected volatility
|
· Risk-free interest rate
|
|
|
When equity instruments are
modified, if the modification increases the fair value of the
award, the additional cost must be recognized over the period from
the modification date until the vesting date of the modified
award.
n) Decommissioning, site rehabilitation and
environmental costs
The Group is required to restore
mine and processing sites at the end of their producing lives to a
condition acceptable to the relevant authorities and consistent
with the Group's environmental policies. The net present value of
estimated future rehabilitation costs is provided for in the
financial statements and capitalized within property, plant and
equipment on initial recognition. The capitalized cost is amortized
on a unit of production basis. Unwinding of the discount is
recognized as finance cost in the statement of comprehensive income
as it occurs. Changes in estimates are dealt with on a prospective
basis as they arise. The costs of on-going programs to prevent and
control pollution and to rehabilitate the environment are charged
to profit or loss as incurred.
o) Leases
Lease
liabilities
Lease liabilities recognized on
balance sheet. On inception, the lease liability is recognized as
the present value of the expected future lease payments, discounted
using interest rate implicit in the lease. Lease payments included
in the lease liability consist of each of the following:
· Fixed payments, including in-substance fixed
payments;
· Payments whose variability is dependent only upon an index or
a rate, measured initially using the index or rate at the
lease commencement date. The lease liability is revalued when there
is a change in future lease payments arising from a change in an
index or rate
· Any
amounts expected to be payable under a guarantee of residual
value
The lease liability is measured at
amortized cost using the effective interest method. It is
remeasured when there is a change to the forecast lease payments.
When the lease liability is remeasured, an adjustment is made to
the corresponding right-of-use asset.
Leased right-of-use
assets
Leased right-of-use assets are
included within Right-of-use assets, and on inception of the lease
are recognized at the amount of the corresponding lease liability,
adjusted for any lease payments made at or before the lease
commencement date, plus any direct costs incurred and an estimate
of costs for dismantling, removing, or restoring the underlying
asset and less any lease incentives received. The right-of-use
asset is depreciated on a straight-line basis over the term of the
lease, or, if shorter, the useful life of the asset.
p) Contingent liabilities
Contingent liabilities are
possible obligations whose existence will be confirmed by uncertain
future events that are not wholly within the control of the
Group.
Contingent liabilities also
include obligations that are not recognized because their amount
cannot be measured reliably or because settlement is not probable.
Contingent liabilities do not include provisions for which it is
certain that the Group has a present obligation that is more likely
than not to lead to an outflow of cash or other economic resources,
even though the amount or timing is uncertain.
Unless the possibility of an
outflow of economic resources is remote, a contingent liability is
disclosed in the notes to the financial statements.
q) Application of new and revised International
Financial Reporting Standards
In the current year, the Group has
applied a number of amendments to IFRS Accounting Standards issued
by the International Accounting Standards
Board (IASB) that are mandatorily effective for an accounting
period that begins on or after 1 January
2023. Their adoption has not had any material impact on the
disclosures or on the amounts reported in
these financial statements.
· IFRS
17 Insurance Contracts
· Amendments to IAS 1 Presentation of Financial
Statements
· Amendments to IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
· Amendments to IAS 12 Income Taxes
r) Future accounting
pronouncements
At the date of authorization of
these financial statements, the Group has not applied the following
new and revised IFRS Accounting Standards that have been issued but
are not yet effective.
Amendments to IFRS 16
|
Liability in a Sale and
Leaseback
|
Amendments to IAS 1
|
Classification of Liabilities as
Current or Non-current
|
Amendments to IAS 1
|
Non-current Liabilities with
Covenants
|
Amendments to IAS 7
|
Supplier Finance
Arrangements
|
The directors do not expect that
the adoption of the Standards listed above will have a material
impact on the financial statements of the Group in future
periods.
4. CRITICAL ACCOUNTING
ESTIMATES AND JUDGEMENTS
The Group makes estimates and
assumptions about the future that affect the reported amounts of
assets and liabilities. Estimates and judgments are continually
evaluated based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual
experience may differ from these estimates and
assumptions.
The effect of a change in an
accounting estimate is recognized prospectively by including it in
net and/or comprehensive loss in the year of the change, if the
change affects that year only, or in the year of the change and
future years, if the change affects both.
a) Critical accounting
estimates
Significant assumptions about the
future and other sources of estimation uncertainty that management
has made at the financial position reporting date, that could
result in a material adjustment to the carrying amounts of assets
and liabilities, relate to, but are not limited to, the
following:
(i) Accounting treatment of Gold Stream
Liability
Determining the appropriate
accounting treatment for the Gold Stream Liability is not an
accounting policy choice, rather it is an assessment of the
specific facts and circumstances and requires judgement. The Group
has reviewed the terms of the Gold Sale Agreement and determined
that it constitutes a commodity arrangement as it is an arrangement
to deliver an amount of the commodity from the Group's own Segilola
Gold Project operation and does not constitute a contract liability
under IFRS 15.
In 2021 the arrangement was
modified to allow the Group to settle the Gold Stream Liability in
cash which led to the arrangement being reclassified as a financial
liability.
The principal accounting estimates
in calculating the value of the Gold Stream Liability are
production plan, gold price, the implied interest rate and future
repayment profile.
In calculating the deemed interest
rate for interest expense that will be released over the term of
the Agreement, estimates of both the production plan and gold price will be the key variables. The
deemed interest rate is calculated at each reporting period and
restated based on changes to the expected production profile and
gold price estimates, which will result in a revision to estimated
future payments. Any change in future payments will result in a
revision of the deemed interest rate.
The period-end Gold Stream
obligation uses forward curve information based on the period-end
gold spot price, which was US2,025 /oz at December 31, 2023. A 5%
change in gold production estimates would result in an impact of
$0.1 million on the Gold Stream liability.
(ii) Estimated recoverable
ounces
The carrying amounts of the
Group's mining interests are depleted based on the estimated
recoverable ounces. Changes to estimates of recoverable ounces due
to revisions to the Group's mine plans and changes in gold price
forecasts can result in a change to future depletion
rates.
(iii) Mineral reserves
Mineral reserves and mineral
resources are determined in accordance with Canadian Securities
Administrator's National Instrument 43-101 Standards of Disclosure
for Mineral Projects. Mineral reserve and resource estimates
include numerous estimates. Such estimation is a subjective
process, and the accuracy of any mineral reserve or resource
estimate is dependent on the quantity and quality of available data
and on the assumptions made and judgements used in engineering and
geological interpretation. Changes to management's assumptions
including economic assumptions such as gold prices and market
conditions could have a material effect in the future on the
Group's financial position and results of operations.
(iv) Restoration, site rehabilitation and
environmental costs
The Group's mining and exploration
activities are subject to various laws and regulations governing
the protection of the environment. The Group recognizes
management's best estimate of the rehabilitation costs in the
period in which they are incurred. This estimate includes
judgements from management in respect of which costs are expected
to be incurred in the future, the timing of these costs and their
present value. Actual costs incurred in future periods could differ
materially from the estimates. Additionally, future changes to
environmental laws and regulations, life of mine estimates and
discount rates could affect the carrying amount of this provision.
Such changes could similarly impact the useful lives of assets
depreciated on a straight-line-basis, where those lives are limited
to the life of mine. A 1% change in the discount rate on the
Group's rehabilitation estimates would result in an impact of $0.25
million (2022: $0.25 million) on the provision for environmental
and site restoration. The value of the period-end restoration
provision is disclosed within Note 13.
(v) Inventory
Expenditures incurred, and
depreciation and amortization of assets used in mining and
processing activities are deferred and accumulated as the cost of
ore in stockpiles, ore in mill, and finished gold doré inventories.
These deferred amounts are carried at the lower of average cost or
net realizable value.
Their measurement involves the use
of estimation to determine the tonnage, the attainable gold
recovery, and the remaining costs of completion to bring inventory
to its saleable form. Changes in these estimates can result in a
change in mine operating costs of future periods and carrying
amounts of inventories.
In determining the net realizable
value of ore in stockpiles, ore in mill, and gold doré the Group
estimates future metal selling prices, production forecasts,
realized grades and recoveries, and timing of processing to convert
the inventories into saleable form. Reductions in metal price
forecasts, increases in estimated future production costs,
reductions in the number of recoverable ounces, and a delay in
timing of processing can result in a write down of the carrying
amounts of the Group's ore in stockpiles, ore in mill and gold doré
inventories.
b) Critical accounting
judgments
Information about critical
judgments in applying accounting policies that have the most
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities recognized in the financial
statements within the next financial year are discussed
below:
(i)
Impairment of exploration and evaluation assets
In accordance with IFRS 6
Exploration for and Evaluation of Mineral Resources, management is
required to assess impairment in respect of the intangible
exploration and evaluation assets. In making the assessment,
management is required to make judgments on the status of each
project and the future plans towards finding commercial reserves.
The nature of exploration and evaluation activity is such that only
a proportion of projects are ultimately successful, and some assets
are likely to become impaired in future periods.
Management has determined that it
is appropriate to impair fully the value of the Central Houndé
Project in Burkina Faso following the unsuccessful attempt by
Barrick Gold to dispose of its 51% interest in the license. An
impairment charge of $11,671 (2022: $12,014) has been charged to
the Consolidated Statement of Comprehensive Income. There were no
impairment indicators present in respect of any of the other
exploration and evaluation assets and as such, no additional
impairment test was performed.
(ii)
Indicators of impairment of property, plant and
equipment
The Group considers both internal
and external information in its process of determining whether
there are any indicators for impairment of the Segilola Gold mine.
Management considers the following external factors to be relevant:
Changes in the market capitalization of the entity, changes in the
long-term gold price expectations, or changes in the technological,
market, economic or legal environment in which the entity operates,
or in the market to which the asset is dedicated. Management
considers the following internal factors to be relevant: changes in
the estimates of recoverable ounces, significant movements in
production costs and variances of actual production costs when
compared to budgeted production costs, production patterns and
whether production is meeting planned budget targets, changes in
the level of capital expenditures required at the mine site,
changes in the expected cost of dismantling assets and restoring
the site, particularly towards the end of a mine's life. Refer to
note 15 for details of impairment assessments performed during the
year.
5. PROFIT FROM
OPERATIONS
5a. REVENUE
|
Year Ended
December
31,
|
|
|
2023
|
|
2022
|
Gold revenue
|
|
141,036,661
|
|
165,060,320
|
Silver revenue
|
|
208,667
|
|
114,211
|
|
$
|
141,245,328
|
$
|
165,174,531
|
The Group`s revenue is generated
in Nigeria. All sales are made to the Group`s two customers,
one of these customers representing approximately 96% of
sales. However, because gold can be sold
through numerous gold market traders worldwide (including a large
number of financial institutions), the Group is not economically
dependent on a limited number of customers for the sale of its
product.
5b. COST OF SALES
|
Year Ended
December
31,
|
|
|
2023
|
|
2022
(restated1)
|
Mining
|
|
61,864,380
|
|
53,031,977
|
Processing
|
|
17,849,409
|
|
8,440,022
|
Support services and
others
|
|
9,042,212
|
|
9,620,511
|
Foreign exchange gains on
production costs2
|
|
(19,081,174)
|
|
(15,578,520)
|
Production costs
|
$
|
69,674,827
|
$
|
55,513,990
|
Transportation and
refining
|
|
2,478,442
|
|
3,419,334
|
Royalties
|
|
1,865,755
|
|
3,696,527
|
Amortization and depreciation -
operational assets - owned assets
|
|
22,777,712
|
|
25,673,590
|
Amortization and depreciation -
operational assets - right-of-use assets
|
|
4,638,774
|
|
4,638,774
|
Cost of sales
|
|
101,435,510
|
|
92,942,215
|
1 Refer to note 25 for details
on the prior year restatement
2 The total foreign exchange
movements for the year ended December 31, 2023, were $19,081,174
gains (2022: gains of $15,578,520). These comprise of realized
foreign exchange gains of $16,664,920 (2022: gains of $17,212,016)
and unrealized foreign exchange gains of $2,416,254 (2022: loss of
$1,643,496). During the years ended December 31, 2023, and 2022,
SROL entered into spot currency trades to support funding of its
operations in Nigeria. 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 as at the time of the trade. All local currency
obtained from these spot currency trades are utilized wholly and
exclusively for the purchase of raw materials, spare parts and
other operational inputs required to support and maintain local
operations.
5c. AMORTIZATION AND DEPRECIATION
|
Year Ended
December
31,
|
|
|
2023
|
|
2022
|
Amortization and depreciation -
mining and operational assets - owned assets
|
|
22,777,712
|
|
25,673,590
|
Amortization and depreciation -
mining and operational assets - right-of-use assets
|
|
4,638,774
|
|
4,638,774
|
Amortization and depreciation -
owned assets
|
|
679,946
|
|
1,254,566
|
Amortization and depreciation -
right-of-use assets
|
|
143,479
|
|
85,326
|
|
$
|
28,239,911
|
$
|
31,652,256
|
5d. OTHER ADMINISTRATION EXPENSES
|
Year Ended
December
31,
|
|
|
2023
|
|
2022
|
Employee compensation
|
|
3,883,477
|
|
4,666,009
|
Professional services
|
|
1,894,777
|
|
1,726,637
|
Other corporate
expenses
|
|
4,968,095
|
|
9,491,230
|
|
$
|
10,746,349
|
$
|
15,883,876
|
5e. INTEREST
EXPENSE
|
|
Year Ended
December
31,
|
|
Note
|
|
2023
|
|
2022
|
Interest on loan from the Africa
Finance Corporation
|
11
|
|
5,735,251
|
|
6,465,751
|
Interest on deferred element of
EPC contract
|
11
|
|
738,183
|
|
472,811
|
Fair value movements on Gold
stream liability
|
10
|
|
5,244,531
|
|
6,311,927
|
Interest on leases
|
9
|
|
1,078,217
|
|
1,052,329
|
Interest on provisions
|
13
|
|
46,981
|
|
108,164
|
Other
|
|
|
264,957
|
|
205,828
|
Interest expense
|
|
|
13,074,395
|
|
14,616,810
|
5f. BUY-OUT OF GOLD SALE AGREEMENT'S OPTION
On April 15, 2020, SROL entered into the Offtake
Agreement for the Sale and Purchase of Gold ("Offtake Agreement")
with the AFC. The Offtake Agreement gives the AFC the right
to purchase up to 89.73%, to a maximum of 375,376 ounces of SROL's
gold production at a "Low Reference Price," being the lowest gold
price per the London Bullion Market Association ("LBMA") platform
over an 8-day look back period from the date of delivery of the
gold.
The cost of the Offtake Agreement to SROL will
potentially increase during periods of gold price volatility
covering the 8-day look back period, increasing the variability of
income and reducing the average realized gold price earned by
SROL.
In November 2023, the Group exercised and paid off
the buy-out option contained in the Offtake Agreement valued at
$3,154,454, which was also deemed to be its fair value at that
date.
Following the exercise of the option, the Group is
no longer liable to incur further losses on forward sale
of commodity contracts relating to the Low Reference
Price.
5g. INCOME TAX
The difference between tax expense
for the year and the expected income taxes based on the Canadian
statutory income tax rate is as follows:
|
|
Year Ended
December
31,
|
|
|
|
2023
|
|
2022
|
Profit before income taxes
|
|
|
10,869,446
|
|
38,792,200
|
Applicable
Nigeria tax rate
|
|
|
0%
|
|
0%
|
Tax at
applicable tax rate
|
|
|
-
|
|
-
|
Adjustments for
different tax rates in the Group
|
|
|
(893,704)
|
|
(877,688)
|
Losses carried
forward not recognized
|
|
|
893,704
|
|
877,688
|
Income tax credit/(charge)
|
|
$
|
-
|
|
-
|
During the years ended December 31,
2023, and 2022 the Canadian federal corporate income tax rate
remained unchanged at 15%. The British Columbia provincial
corporate income tax rate also remained unchanged at
12%.
The Senegalese, Burkina Faso and
Cote D'Ivoire income tax rates remained unchanged at 30%, 28% and
25% respectively.
The Nigerian corporate income tax
rate remained unchanged at 30% however the Group companies in
Nigeria are exempt from income tax during the first three years of
operations under Section 36 of the Companies Income Tax Act of
Nigeria.
The Company has available
non-capital losses in Canada of approximately $17,546,000 (2022:
$14,575,000). The Canadian non-capital losses may be utilized to
offset future taxable income and have carry forward periods of up
to 20 years. The losses, if not utilized, expire through
2040.
The only potential benefits of
carry-forward non-capital losses and deductible temporary
differences that have been recognized in these financial statements
relate to the Company's Senegalese subsidiary African Star
Resources S.A.R.L. No other potential benefits have been recognized
as it is not considered probable that sufficient future taxable
profit will allow the deferred tax asset to be
recovered.
6. INVENTORY
|
|
December 31,
2023
|
|
December 31, 2022
(restated)
|
|
January
01, 2022
(restated)
|
Current:
|
|
|
|
|
|
|
Plant spares and
consumables
|
$
|
8,681,433
|
$
|
4,751,922
|
$
|
1,337,792
|
Gold ore in stockpile
|
|
20,768,112
|
|
23,569,801
|
|
6,209,548
|
Gold in CIL
|
|
8,405,429
|
|
956,864
|
|
1,943,042
|
Gold doré
|
|
3,915,072
|
|
3,220,637
|
|
7,860,879
|
|
$
|
41,770,046
|
$
|
32,499,224
|
$
|
17,351,261
|
Non-current:
|
|
|
|
|
|
|
Gold ore in stockpile
|
$
|
15,891,089
|
$
|
-
|
$
|
-
|
|
$
|
15,891,089
|
$
|
-
|
$
|
-
|
There were no write downs to reduce
the carrying value of inventory to net realizable value during the
years ended December 31, 2023, and 2022.
The cost of inventory recognized as expense in the
year ended 31 December 2023 was $97,091,313 and was included in
cost of sales (2022 - $85,826,354).
During the preparation of the
current financial statements, the Group has refined its methodology
and estimates for the valuation of Inventory stockpiles. The change
in estimates apply to better management information being available
to the Group such as improved density calculations for the
determination of the mass of the stockpiles. These revisions have
increased the amount of ore in the stockpiles by approximately
118,000 tonnes and 3,500 contained ounces as at December 31, 2023.
Such changes in estimates have been applied prospectively in
accordance with accounting guidance.
As part of this assessment, the
Group has also identified an error in the methodology used to
calculate the cost of its stockpile in previous periods. The error
relates to calculating costs based on tonnes of ore mined as
opposed to ounces. Considering this revision, the balance of
Inventory as at December 31, 2022 increased by $12,597,962 and as
at January 1, 2022 decreased by $795,297.
Please refer to note 25 of these
financial statements for further details on the
restatement.
7. AMOUNTS
RECEIVABLE
|
|
December 31,
2023
|
|
December 31, 2022
|
Accounts receivable
|
$
|
5,464
|
$
|
67,084
|
GST
|
|
4,319
|
|
993
|
Other receivables
|
|
270,948
|
|
152,365
|
|
$
|
280,731
|
$
|
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.
8. PREPAID EXPENSES, ADVANCES
AND DEPOSITS
|
|
December
31,
2023
|
|
December 31, 2022
|
Current:
|
|
|
|
|
Gold stream liability arrangement
fees
|
|
33,186
|
|
33,186
|
Advance deposits to
vendors
|
|
5,770,097
|
|
9,625,204
|
Other prepayments
|
|
1,846,758
|
|
818,533
|
|
$
|
7,650,041
|
|
10,476,923
|
Non-current:
|
|
|
|
|
Gold stream liability arrangement
fees
|
|
8,297
|
|
74,667
|
Other prepayments
|
|
212,969
|
|
208,158
|
|
$
|
221,266
|
|
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.
9. 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 years ended December 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 year ended December 31, 2023, were as follows:
|
|
|
Right-of-use asset
|
|
Lease liability
|
|
Income statement
|
Carrying value December 31,
2022
|
|
$
|
16,849,402
|
$
|
(15,409,285)
|
$
|
|
|
|
|
|
|
|
|
|
New leases entered in to during the
period
|
|
|
-
|
|
-
|
|
-
|
Depreciation
|
|
|
(4,782,253)
|
|
-
|
|
(4,782,253)
|
Interest
|
|
|
-
|
|
(1,078,217)
|
|
(1,078,217)
|
Lease payments
|
|
|
-
|
|
5,026,847
|
|
-
|
Foreign exchange movement
|
|
|
28,522
|
|
(29,415)
|
|
(29,415)
|
|
|
|
|
|
|
|
|
Carrying value at December 31,
2023
|
|
$
|
12,095,671
|
$
|
(11,490,070)
|
$
|
(5,889,885)
|
|
|
|
|
|
|
|
|
Current liability
|
|
|
|
|
(4,820,353)
|
|
|
Non-current liability
|
|
|
|
|
(6,669,717)
|
|
|
The key impacts on the Statement
of Comprehensive Income and the Statement of Financial Position for
the year ended December 31, 2022, were as follows:
|
|
|
Right-of-use asset
|
|
Lease liability
|
|
Income statement
|
Carrying value December 31,
2021
|
|
$
|
20,843,612
|
$
|
(18,274,374)
|
$
|
-
|
|
|
|
|
|
|
|
|
New leases entered into 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)
|
|
|
10. GOLD STREAM
LIABILITY
Gold stream
liability
|
|
December 31,
2023
|
|
December 31,
2022
|
Balance at beginning of
period
|
$
|
25,039,765
|
$
|
30,262,279
|
Repayments
|
|
(10,241,299)
|
|
(11,534,441)
|
Fair value
movements
|
|
5,244,531
|
|
6,311,927
|
Balance at end of period
|
$
|
20,042,997
|
$
|
25,039,765
|
Current liability
|
|
12,343,232
|
|
10,187,630
|
Non-current liability
|
|
7,699,765
|
|
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.
The $26.25 million represents
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 fair value and repayment profile
were the production profile and gold price. The future gold price
estimates were based on market forecast reports for the years 2024
to 2025 and, the production profile was based on the latest budgets
and life of mine plan model. The liability is 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.
Any changes to the fair value of the liability are charged through
the Consolidated Statements of Income (Loss).
Fair value movements of $5,244,531
were recognized for the year ended December 31, 2023 (2022:
$6,311,927) and have been charged to the Consolidated Statement of
Income. Prior to the commencement of commercial production on
January 1, 2022, these were capitalized and included in the value
of the Segilola Gold Mine (Refer to Note 14). A cumulative total of
$10,200,430 has been capitalized prior to commercial production and
included in the value of the Segilola Gold Mine.
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. Refer to Note 3d for further information on the
accounting treatment of the gold stream liability.
The following table represents the
Group's loans and borrowings measured and recognized at fair
value.
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
|
|
|
|
|
Financial liability at fair value
through profit or loss
|
$
|
-
|
-
|
20,042,997
|
20,042,997
|
The liabilities included in the
above table are carried at fair value through profit and
loss.
The fair value of the liability is
calculated by present value techniques as per the income approach
in accordance with "IFRS 13 Fair value measurement".
Key inputs to the valuations
include:
· Production profiles based on Segilola life-of-mine
forecasts
· Gold
price ranging from $1,966/oz to 2,000/oz
· Interest rate of 24.5%
11. LOANS AND
BORROWINGS
|
|
December
31,
2023
|
|
December 31, 2022
|
Current liabilities:
|
|
|
|
|
Loans from the Africa Finance
Corporation
|
|
20,360,657
|
|
356,155
|
Deferred element of EPC
contract
|
|
2,887,035
|
|
531,986
|
|
$
|
23,247,692
|
$
|
888,141
|
Non-current
liabilities:
|
|
|
|
|
Loans from the Africa Finance
Corporation
|
|
-
|
|
24,103,784
|
Deferred element of EPC
contract
|
|
518,354
|
|
3,150,729
|
|
$
|
518,354
|
$
|
27,254,513
|
Loans from the Africa
Finance Corporation
|
|
December
31,
2023
Total
|
|
December 31,
2022
Total
|
Balance at beginning of
period
|
$
|
24,459,939
|
$
|
46,859,966
|
Principal
repayments
|
|
(5,776,084)
|
|
(24,220,764)
|
Interest paid
|
|
(3,931,575)
|
|
(4,645,014)
|
Arrangement fees
|
|
(126,874)
|
|
-
|
Unwinding of interest in
the period
|
|
5,735,251
|
|
6,465,751
|
Balance at end of period
|
$
|
20,360,657
|
$
|
24,459,939
|
Current liability
|
|
20,360,657
|
|
356,155
|
Non-current liability
|
|
-
|
|
24,103,784
|
|
|
|
|
|
|
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 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. The amendment was considered a non-substantial modification
per "IFRS 9 - Financial Instruments".
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") signed with Norinco
International Cooperation Limited. 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 element of
EPC contract ") of 10% of the fixed price. As at
December 31, 2023, a total of $3,405,389 (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.
|
|
December
31,
2023
Total
|
|
December 31,
2022
Total
|
Balance at beginning of
period
|
$
|
3,682,715
|
$
|
6,210,090
|
Offset against
EPC payment
|
|
-
|
|
2,967,638
|
Principal
repayments
|
|
(731,539)
|
|
(3,440,449)
|
Interest
paid
|
|
(283,970)
|
|
-
|
Unwinding of
interest in the period
|
|
738,183
|
|
472,811
|
Balance period end
|
$
|
3,405,389
|
$
|
3,682,715
|
Current liability
|
|
2,887,035
|
|
531,986
|
Non-current liability
|
|
518,354
|
|
3,150,729
|
12. RECONCILIATION OF
LIABILITIES ARISING FROM FINANCING ACTIVITIES
December 31, 2023
|
|
Gold stream
liability
|
AFC loan
|
EPC deferred
facility
|
Total
|
January 1, 2023
|
$
|
25,039,765
|
24,459,939
|
3,682,715
|
53,182,419
|
Cash flows:
|
|
|
|
|
|
Principal repayments
|
|
(10,241,299)
|
(5,776,084)
|
(731,539)
|
(16,748,922)
|
Arrangement
fees
|
|
-
|
(126,874)
|
-
|
(126,874)
|
Interest
paid
|
|
-
|
(3,931,575)
|
(283,970)
|
(4,215,545)
|
Non-cash changes:
|
|
|
|
|
|
Unwinding of interest
in the year
|
|
-
|
5,735,251
|
738,183
|
11,717,965
|
Fair value movements
in the year
|
|
5,244,531
|
-
|
-
|
-
|
December 31, 2023
|
$
|
20,042,997
|
20,360,657
|
3,405,389
|
43,809,043
|
December 31, 2022
|
|
Gold stream
liability
|
AFC loan
|
EPC deferred
facility
|
Total
|
January 1, 2022
|
$
|
30,262,279
|
46,859,966
|
6,210,090
|
84,000,905
|
Cash flows:
|
|
|
|
|
|
Principal repayments
|
|
(11,534,441)
|
(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
|
|
-
|
6,465,751
|
472,811
|
13,250,489
|
Fair value movements
in the year
|
|
6,311,927
|
-
|
-
|
-
|
Offset against EPC payment
|
|
-
|
-
|
440,263
|
440,263
|
December 31, 2022
|
$
|
25,039,765
|
24,459,939
|
3,682,715
|
53,182,419
|
13. PROVISIONS
December 31, 2023
|
|
Other
|
|
Fleet demobilization
costs
|
|
Restoration
costs
|
|
Total
|
Balance at beginning of
period
|
$
|
18,157
|
$
|
173,442
|
$
|
4,768,039
|
$
|
4,959,638
|
Unwinding of discount
|
|
-
|
|
-
|
|
46,981
|
|
46,981
|
Foreign exchange
movements
|
|
941
|
|
-
|
|
-
|
|
941
|
Balance at period end
|
$
|
19,098
|
$
|
173,442
|
$
|
4,815,020
|
$
|
5,007,560
|
Current liability
|
|
-
|
|
-
|
|
-
|
|
-
|
Non-current liability
|
|
19,098
|
|
173,442
|
|
4,815,020
|
|
5,007,560
|
December 31, 2022
|
|
Other
|
|
Fleet demobilization
costs
|
|
Restoration
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)
|
|
|
Unwinding of discount
|
|
-
|
|
201
|
|
107,963
|
|
108,164
|
Foreign exchange
movements
|
|
(258)
|
|
-
|
|
-
|
|
(258)
|
Balance at period 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.
14. PROPERTY, PLANT AND
EQUIPMENT
A summary of depreciation
capitalized is as follows:
|
|
Year Ended December
31,
|
Total
depreciation
capitalized
|
|
|
2023
|
|
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
Exploration
expenditures
|
|
141,518
|
|
116,108
|
|
761,870
|
|
620,352
|
Total
|
$
|
141,518
|
$
|
116,108
|
$
|
761,870
|
$
|
620,352
|
a) Segilola Project, Osun
Nigeria:
Decommissioning Asset
The decommissioning asset relates
to estimated restoration costs at the Group's Segilola Gold Mine as
at December 31, 2023. Refer to Note 13 for further
detail.
Impairment assessment
During the year ended December 31,
2023, the Group performed a review for indicators of impairment for
the Segilola Gold mine and evaluated key assumptions such as
forecasts for gold prices, significant revisions to the mine plan
including current estimates of recoverable mineral reserves and
resources, recent operating results, and future expected production
based on the reserves and resources. As a result of the above, the
Group concluded that there were no indicators of impairment for the
Segilola Gold mine at 31 December 2023.
15. INTANGIBLE
ASSETS
The Group's exploration and evaluation assets costs are as follows:
Impairment assessment
During the year ended 31 December
2023, the Group performed a review for indicators of impairment of
all exploration and evaluation assets in accordance with IFRS 6,
Exploration for and Evaluation of Mineral Resources. Exploration
permits have been assessed as to whether the permits were in good
standing and/or any further activity was planned. No impairment
indicators were identified for the Group`s exploration and
evaluation assets other than for the Central Houndé project as
detailed below.
a) Douta Gold Project, Senegal:
The Douta Gold Project consists of
an early-stage gold exploration license located in southeastern
Senegal, approximately 700 km 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.
Effective February 24, 2012, the
Group exercised its option to acquire a 70% interest in the Douta
Gold Project pursuant to the terms of the Option Agreement between
the Group and IMC. As consideration for the exercise of the option,
the Group issued to IMC 11,646,663 common shares, based on a VWAP
for the 20 trading days preceding the option exercise date of
$0.2014 (or US$0.2018) per share, valued at $2,678,732 based on the
Group's closing share price on February 24, 2012. The share payment
includes consideration paid to IMC for extending the time period
for exercise of the option.
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 km2 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 km2 located within the Houndé
belt.
The three permits together cover a
total area of 474 km2 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 current 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) Lithium exploration Licenses
During 2023, the Group has
acquired over 600 km² of granted tenure in south-west Nigeria that
covers both known lithium bearing pegmatite deposits and a large
unexplored prospective pegmatite-rich belt. These are
divided into the Oyo State, Kwara State and Ekiti State Lithium
Project Areas and the Group is currently carrying out lithium
exploration activities in these areas.
d) Gold exploration Licenses
As at December 31, 2023, the
Group's gold exploration tenure currently primarily comprises 13
wholly owned exploration licenses and four partnership exploration
licenses. Together with the mining lease over the Segilola Gold
Deposit, Thor's total gold exploration tenure amounts to 1,542
km².
16. ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
|
|
December
31,
2023
|
|
December 31,
2022
|
Accounts payable
|
$
|
58,713,313
|
$
|
46,914,333
|
Accrued liabilities
|
|
14,116,212
|
|
6,213,977
|
Other payables
|
|
1,944,303
|
|
3,208,979
|
|
$
|
74,773,828
|
$
|
56,337,289
|
Accounts payable and accrued
liabilities are classified as financial liabilities and approximate
their fair values.
17. DEFERRED INCOME
|
|
|
December
31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
Deferred income
|
|
$
|
11,838,898
|
$
|
6,581,743
|
|
|
|
|
|
|
The deferred income for the years
ended December 31, 2023, and 2022 relates to cash received in
advance of delivery of gold and not recognized as
revenue.
The advance sales as at December
31, 2023, represents 5,928 oz of gold that was delivered in January
2024 (2022: 3,687 oz delivered in January 2023).
18. CAPITAL AND
RESERVES
a) Authorized
Unlimited common shares without
par value.
b) Issued
|
December
31,
2023
Number
|
|
December
31,
2023
|
December
31,
2022
Number
|
|
December
31,
2022
|
As at start of the year
|
644,696,185
|
$
|
80,439,693
|
632,358,009
|
$
|
79,027,183
|
Issue of new shares:
|
|
|
|
|
|
|
- Share options
exercised i
|
11,368,539
|
|
1,051,141
|
9,939,000
|
|
960,546
|
- RSU awards
vested
|
-
|
|
-
|
2,399,176
|
|
451,964
|
|
656,064,724
|
$
|
81,490,834
|
644,696,185
|
$
|
80,439,693
|
i. Value of:
1,500,000 options exercised at a price of CAD$0.145 per share
on June 5, 2023;
9,118,539 options exercised at a price of CAD$0.145 per share
on June 14, 2023; and,
750,000 options exercised at a price of CAD$0.14 per share on
September 28, 2023
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.
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 following is a summary of
changes in options from January 1, 2023, to December 31, 2023, and
the outstanding and exercisable options at December 31,
2023:
In Canadian dollars
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:
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 'Option
reserve,' '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)/Retained earnings' is
used to record the Group's accumulated earnings.
19. EARNINGS PER
SHARE
Diluted earnings per share was
calculated based on the following:
|
|
December
31,
2023
|
|
December 31,
2022
|
Basic weighted average number of shares
outstanding
|
|
650,707,714
|
|
641,958,083
|
Stock
options
|
|
4,492,876
|
|
8,359,009
|
Diluted weighted average number of shares
outstanding
|
|
655,200,590
|
|
650,317,092
|
|
|
|
|
|
Total common shares outstanding
|
|
656,064,724
|
|
644,696,185
|
Total potential diluted common shares
|
|
670,104,724
|
|
671,597,185
|
20. 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 buy-out of
gold sale agreement's option as disclosed on note 5f, the
Gold Stream liability as disclosed in Note 10,
and the secured loan as disclosed in Note 11.
b)
Compensation of key management personnel
The remuneration of directors and
other members of key management during the year ended December 31,
2023, and 2022 were as follows:
|
|
Year Ended December
31,
|
|
|
|
2023
|
|
2022
|
Salaries
|
|
|
|
|
|
Current directors and
officers
|
(i)
(ii)
|
$
|
1,673,029
|
$
|
1,638,597
|
Former directors and
officers
|
|
|
-
|
|
71,557
|
|
|
|
|
|
|
Directors' fees
|
|
|
|
|
|
Current directors and
officers
|
(i)
(ii)
|
|
457,997
|
|
404,097
|
|
|
|
|
|
|
Share-based payments
|
|
|
|
|
|
Current directors and
officers
|
|
|
-
|
|
296,502
|
|
|
$
|
2,131,026
|
$
|
2,410,753
|
(i) Key management
personnel were not paid post-employment benefits, termination
benefits, or other long-term benefits during the years ended
December 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 December 31,
2023, include $81,730 (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.
21. FINANCIAL
INSTRUMENTS
The Group's financial instruments
consist of cash, restricted cash, amounts receivable, accounts
payable, accrued liabilities, gold stream liability, loans and
other borrowings and lease liabilities.
Fair value of financial assets and
liabilities
Fair values have been determined
for measurement and/or disclosure purposes. When applicable,
further information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or
liability.
The carrying amount for cash,
restricted cash, accounts receivable, and accounts payable, accrued
liabilities, loans and borrowings and lease liabilities on the
statement of financial position approximate their fair value
because of the limited term of these instruments.
Financial risk management objectives and
policies
The Group has exposure to the
following risks from its use of financial instruments
· Interest rate risk
· Credit risk
· Liquidity and funding risk
· Market risk
In common with all other
businesses, the Group is exposed to risks that arise from its use
of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the
methods used to measure them. Further quantitative information in
respect of these risks is presented throughout these consolidated
financial statements.
There have been no substantive
changes in the Group's exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the
methods used to measure them from previous years unless otherwise
stated in these notes.
The Board of Directors has overall
responsibility for the establishment and oversight of the Group's
risk management framework. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without
unduly affecting the Group's competitiveness and flexibility.
Further details regarding these policies are set out
below.
Financial instruments by category
The accounting policies for
financial instruments have been applied to the line items
below:
December 31, 2023
|
|
Measured at amortized cost
|
Measured at fair value through profit and loss
|
Total
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
7,839,757
|
-
|
7,839,757
|
|
Amounts receivable
|
|
280,731
|
-
|
280,731
|
|
Total assets
|
$
|
8,120,488
|
-
|
8,120,488
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
$
|
74,773,828
|
-
|
74,773,828
|
|
Loans and borrowings
|
|
23,766,046
|
-
|
23,766,046
|
|
Gold stream liability
|
|
-
|
20,042,997
|
20,042,997
|
|
Lease liabilities
|
|
11,490,070
|
-
|
11,490,070
|
|
Total liabilities
|
$
|
105,379,217
|
24,693,724
|
130,072,941
|
|
|
|
|
|
|
|
|
|
December 31, 2022
|
|
Measured at amortized cost
|
Measured at fair value through profit and loss
|
Total
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
6,688,037
|
-
|
6,688,037
|
|
Amounts receivable
|
|
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
|
|
Lease liabilities
|
|
15,409,285
|
-
|
15,409,285
|
|
Total liabilities
|
$
|
97,673,643
|
27,255,350
|
124,928,993
|
|
|
|
|
|
|
|
|
|
Interest rate
risk
Interest rate risk is the risk
that the value of financial instruments will fluctuate due to
changes in market interest rates. The Group's income and operating
cash flows will be impacted by changes in market interest rates as
the Group's secured loans from the AFC incur Interest at SOFR plus
9% (Refer to Note 11). The Group's management monitors the interest
rate fluctuations on a continuous basis and assesses the impact of
interest rate fluctuations on the Group's cash position and acts to
ensure that sufficient cash reserves are maintained in order to
meet interest payment obligations.
The following table discusses the
Group's sensitivity to a 5% increase or decrease in interest
rates:
December 31, 2023
|
|
Interest rate
Appreciation
By
5%
|
|
Interest rate
Depreciation
By
5%
|
Comprehensive income (loss)
|
|
|
|
|
Financial assets and
liabilities
|
$
|
(621,973)
|
$
|
621,973
|
December 31, 2022
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
Financial assets and
liabilities
|
$
|
(2,086,408)
|
$
|
2,086,408
|
Credit
risk
Credit risk is the risk of an
unexpected loss if a counterparty to a financial instrument fails
to meet its contractual obligations.
The Group manages the credit risk
associated with cash by investing these funds with highly rated
financial institutions, and by monitoring its concentration of cash
held in any one institution. As such, the Group deems the credit
risk on its cash to be low. At 31 December 2023, 78% of the Group's
cash balances were invested in AA rated financial institutions
(2022: 93%), 1% in AA- rated financial institutions (2022: 1%), 1%
in A+ rated financial institutions (2022: 1%), 17% in A- rated
financial institutions (2022: nil) and 3% in B rated institutions
(2022: 4%).
The Group sells its gold to large
international organizations with strong credit ratings, and the
historical level of customer defaults is minimal. As a result, the
credit risk associated with gold trade receivables at 31 December
2023 is considered to be negligible.
The carrying amount of financial
assets represents the maximum credit exposure. The maximum exposure
to credit risk at December 31, 2023, and
December 31, 2022, were as
follows:
|
|
December
31,
2023
|
|
December 31,
2022
|
Cash
|
$
|
7,839,757
|
$
|
6,688,037
|
Amounts receivable
|
|
280,731
|
|
220,442
|
Total
|
$
|
8,120,488
|
$
|
6,908,479
|
Liquidity and funding
risk
Liquidity risk is the risk that
the Group will not be able to meet its financial obligations as
they fall due. The Group ensures that there is sufficient capital
in order to meet short-term business requirements, after taking
into account the Group's holdings of cash. The Group's cash is held
in business accounts and is available on demand.
In the normal course of business,
the Group enters into contracts and performs business activities
that give rise to commitments for future minimum
payments.
The following table summarizes the
Group's significant remaining contractual maturities for financial
liabilities at December 31, 2023, and December 31, 2022.
Contractual maturity analysis as at December 31,
2023
|
|
Less
than
3
months
$
|
3 -
12
Months
$
|
1 -
5
Year
$
|
Longer
than
5
years
$
|
Total
$
|
Accounts payable and accrued
liabilities
|
63,950,634
|
10,823,194
|
-
|
-
|
74,773,828
|
Lease liabilities
|
1,213,678
|
3,236,476
|
7,282,070
|
-
|
11,732,224
|
Gold stream liability
|
3,484,102
|
10,553,647
|
9,317,278
|
-
|
23,355,027
|
Loans and borrowings
|
9,182,048
|
18,253,920
|
932,379
|
-
|
28,368,347
|
|
77,830,462
|
42,867,237
|
17,531,728
|
-
|
138,229,426
|
Contractual maturity analysis as at December 31,
2022
|
|
Less
than
3
months
$
|
3 -
12
Months
$
|
1 -
5
Year
$
|
Longer
than
5
years
$
|
Total
$
|
Accounts payable and accrued
liabilities
|
55,368,069
|
1,001,983
|
-
|
-
|
56,370,052
|
Lease liabilities
|
1,255,581
|
3,766,744
|
12,681,521
|
-
|
17,703,846
|
Gold stream liability
|
2,986,708
|
8,475,973
|
23,420,334
|
-
|
34,883,015
|
Loans and borrowings
|
1,642,151
|
4,810,033
|
33,337,237
|
-
|
39,789,421
|
|
61,252,509
|
18,054,733
|
69,439,092
|
-
|
148,746,334
|
|
|
|
|
|
|
|
Market
risk
The Group is subject to normal
market risks including fluctuations in foreign exchange rates and
interest rates. While the Group manages its operations in order to
minimize exposure to these risks, the Group has not entered into
any derivatives or contracts to hedge or otherwise mitigate this
exposure.
a) Foreign
currency risk
The Group seeks to manage its
exposure to this risk by holding its cash balances in the same
denomination as that of the majority of expenditure to be incurred.
The Group also seeks to ensure
that the majority of expenditure
and cash of individual subsidiaries within the Group are
denominated in the same currency as the functional currency of that
subsidiary.
The Group's loan facilities,
certain exploration expenditures, certain acquisition costs and
operating expenses are denominated in United States Dollars,
Nigerian Naira, UK Pounds Sterling and West African Franc. The
Group's exposure to foreign currency risk arises primarily on
fluctuations between the United States Dollar and the Canadian
Dollar, Nigerian Naira, UK Pounds Sterling and West African Franc.
The Group has not entered into any derivative instruments to manage
foreign exchange fluctuations. The Group does enter into foreign
exchange agreements during the ordinary course of operations in
order to ensure that it has sufficient funds in order to meet
payment obligations in individual currencies. These agreements are
entered into at agreed rates and are not subject to exchange rate
fluctuations between the agreement and settlement dates.
The following table shows a
currency of net monetary assets and liabilities by functional
currency of the underlying companies for the year ended December
31, 2023:
|
|
Functional
currency
|
|
|
US
dollar
|
Pound
Sterling
|
Nigerian
Naira
|
West
African
Franc
|
Total
|
Currency of net monetary
asset/(liability)
|
December 31, 2023
USD$
|
December 31, 2023
USD$
|
December 31, 2023
USD$
|
December 31, 2023
USD$
|
December 31, 2023
USD$
|
Canadian dollar
|
(22,623)
|
-
|
-
|
-
|
(22,623)
|
US dollar
|
(121,108,884)
|
-
|
-
|
-
|
(121,108,884)
|
Pound Sterling
|
(348,905)
|
-
|
-
|
-
|
(348,905)
|
Nigerian Naira
|
(615,871)
|
-
|
-
|
11,855
|
(604,016)
|
West African Franc
|
-
|
-
|
70,127
|
-
|
70,127
|
Euro
|
142,835
|
-
|
-
|
-
|
142,835
|
Australian dollar
|
(80,987)
|
-
|
-
|
-
|
(80,987)
|
Total
|
(122,034,435)
|
-
|
70,127
|
11,855
|
(121,952,453)
|
|
|
|
|
|
|
|
The following table shows the
currency of net monetary assets and liabilities by functional
currency of the underlying companies for the year ended December
31, 2022:
|
|
Functional
currency
|
|
|
US
dollar
|
Pound
Sterling
|
Nigerian
Naira
|
West
African
Franc
|
Total
|
Currency of net monetary
asset/(liability)
|
December 31, 2022
USD$
|
December 31, 2022
USD$
|
December 31, 2022
USD$
|
December 31, 2022
USD$
|
December 31, 2022
USD$
|
Canadian dollar
|
42,963
|
-
|
-
|
-
|
42,963
|
US dollar
|
(107,637,605)
|
-
|
-
|
-
|
(107,637,605)
|
Pound Sterling
|
(1,961,945)
|
(411,079)
|
-
|
-
|
(2,373,024)
|
Nigerian Naira
|
(2,362,830)
|
-
|
8,132
|
-
|
(2,354,698)
|
West African Franc
|
-
|
-
|
-
|
85,029
|
85,029
|
Euro
|
(170,595)
|
-
|
-
|
-
|
(170,595)
|
Australian dollar
|
(217,333)
|
-
|
-
|
-
|
(217,333)
|
Total
|
(112,307,345)
|
(411,079)
|
8,132
|
85,029
|
(112,625,263)
|
|
|
|
|
|
|
|
The following table discusses the
Group's sensitivity to a 5% increase or decrease in the United
States Dollar against the Nigerian Naira:
December 31, 2023
|
|
United
States
Dollar
Appreciation
By
5%
|
|
United
States
Dollar
Depreciation
By
5%
|
Comprehensive income (loss)
|
|
|
|
|
Financial assets and
liabilities
|
$
|
29,327
|
$
|
(29,327)
|
December 31, 2022
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
Financial assets and
liabilities
|
$
|
112,516
|
$
|
(112,516)
|
22. 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.
23. CONTRACTUAL COMMITMENTS AND
CONTINGENT LIABILITIES
Contractual Commitments
The Group has no contractual
obligations that are not disclosed on the 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 remote. As a result, no provision has been
made in the 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.
24. SEGMENTED
DISCLOSURES
Segment
Information
The Group's operations comprise
three reportable segments, being the Segilola Mine Project,
Exploration Projects, and Corporate. These three reporting segments
have been identified based on operational focuses of the Group
following the decision to develop the Segilola Mine Project. The
following table provides the Group's results by operating segment
in the way information is provided to and used by the Group's chief
operating decision maker, which is the CEO, to make decisions about
the allocation of resources to the segments and assess their
performance.
December 31, 2023
|
|
Segilola Mine Project
|
|
Exploration Projects
|
|
Corporate
|
|
Total
|
Current assets
|
$
|
56,790,700
|
$
|
148,675
|
$
|
601,200
|
$
|
57,540,575
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Inventory
|
|
15,891,089
|
|
-
|
|
-
|
|
15,891,089
|
Deferred income tax
assets
|
|
-
|
|
90,277
|
|
-
|
|
90,277
|
Prepaid expenses, advances and
deposits
|
|
9,702
|
|
-
|
|
211,564
|
|
221,266
|
Right-of-use assets
|
|
11,593,579
|
|
-
|
|
502,092
|
|
12,095,671
|
Property, plant and
equipment
|
|
143,790,133
|
|
454,677
|
|
117,749
|
|
144,362,559
|
Intangible assets
|
|
3,050,307
|
|
25,862,425
|
|
-
|
|
28,912,732
|
Total assets
|
$
|
231,125,510
|
$
|
26,556,054
|
$
|
1,432,605
|
$
|
259,114,169
|
Non-current asset additions
|
$
|
33,345,114
|
$
|
7,598,627
|
$
|
51,564
|
$
|
40,995,305
|
Liabilities
|
$
|
(145,298,974)
|
$
|
(148,630)
|
$
|
(1,471,795)
|
$
|
(146,919,399)
|
Profit (loss) for the period
|
$
|
15,713,427
|
$
|
(43,515)
|
$
|
(4,800,466)
|
$
|
10,869,446
|
- revenue
|
|
141,245,328
|
|
-
|
|
-
|
|
141,245,328
|
- production costs
|
|
(69,674,827)
|
|
-
|
|
-
|
|
(69,674,827)
|
- royalties
|
|
(1,865,755)
|
|
-
|
|
-
|
|
(1,865,755)
|
- amortization and
depreciation
|
|
(28,048,746)
|
|
(5,793)
|
|
(185,372)
|
|
(28,239,911)
|
- other administration
expenses
|
|
(6,105,204)
|
|
(26,051)
|
|
(4,615,094)
|
|
(10,746,349)
|
- impairments
|
|
-
|
|
(11,671)
|
|
-
|
|
(11,671)
|
- interest expense
|
|
(13,074,395)
|
|
-
|
|
-
|
|
(13,074,395)
|
Non-current assets by geographical
location:
December 31, 2022
|
Senegal
|
British Virgin
Islands
|
Nigeria
|
United
Kingdom
|
Canada
|
Total
|
Inventory
|
-
|
-
|
15,891,089
|
-
|
-
|
15,891,089
|
Prepaid expenses, advances and
deposits
|
-
|
1,405
|
8,297
|
211,564
|
-
|
221,266
|
Right-of-use assets
|
-
|
-
|
11,593,579
|
502,092
|
-
|
12,095,671
|
Property, plant and
equipment
|
408,518
|
-
|
143,836,292
|
114,735
|
3,014
|
144,362,559
|
Intangible assets
|
22,719,331
|
-
|
6,193,401
|
-
|
-
|
28,912,732
|
Total non-current
assets
|
$23,127,849
|
$1,405
|
$177,522,658
|
$828,391
|
$3,014
|
$201,483,317
|
December 31, 2022
|
|
Segilola Mine Project
|
|
Exploration Projects
|
|
Corporate
|
|
Total
|
Current assets
|
$
|
48,931,967
|
$
|
120,752
|
$
|
831,907
|
$
|
49,884,626
|
|
|
|
|
|
|
|
|
|
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
|
$
|
214,440,462
|
$
|
19,628,795
|
$
|
1,780,518
|
$
|
235,849,775
|
Non-current asset additions
|
$
|
10,527,299
|
$
|
2,612,033
|
$
|
1,337,066
|
$
|
14,476,398
|
Liabilities
|
$
|
(133,370,335)
|
$
|
(1,381,629)
|
$
|
(1,718,410)
|
$
|
(136,470,374)
|
Profit (loss) for the period
|
$
|
43,686,742
|
$
|
(273,511)
|
$
|
(4,621,031)
|
$
|
38,792,200
|
- revenue
|
|
165,174,531
|
|
-
|
|
-
|
|
165,174,531
|
- production costs
|
|
(55,513,990)
|
|
-
|
|
-
|
|
(55,513,990)
|
- royalties
|
|
(3,696,527)
|
|
-
|
|
-
|
|
(3,696,527)
|
- amortization and
depreciation
|
|
(31,561,887)
|
|
(4,468)
|
|
(85,901)
|
|
(31,652,256)
|
- other administration
expenses
|
|
(11,091,717)
|
|
(257,029)
|
|
(4,535,130)
|
|
(15,883,876)
|
- impairments
|
|
-
|
|
(12,014)
|
|
-
|
|
(12,014)
|
- interest expense
|
|
(14,616,810)
|
|
-
|
|
-
|
|
(14,616,810)
|
Non-current assets by geographical
location:
December 31, 2022
|
Senegal
|
British Virgin
Islands
|
Nigeria
|
United
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
|
$174,063,926
|
$919,673
|
$5,461
|
$185,877,352
|
25. PRIOR YEAR
RESTATEMENT
During the preparation of the
current financial statements, the Group has refined its methodology
and estimates for the valuation of Inventory stockpiles. The
change in estimates apply to better management information being
available to the Group such as improved density calculations
for the determination of the
mass of the stockpiles. These revisions have
increased the amount of ore in the stockpiles by approximately
118,000 tonnes and 3,500 contained ounces as at December 31, 2023.
Such changes in estimates have been applied prospectively in
accordance with accounting guidance.
As part of this assessment, the
Group has also identified an error in the methodology used to
calculate the cost of its stockpile in previous periods. The error
relates to calculating costs based on tonnes of ore mined as
opposed to ounces. Considering this revision, the balance of
Inventory as at December 31, 2022 increased by $12,597,962 and as
at January 1, 2022 decreased by $795,297.
Therefore, in accordance with "IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors",
the Consolidated statements of financial position, Consolidated
statements of comprehensive income and Consolidated statements of
cash flows for the year ended December 31, 2022, have been
restated. The impact of the restatement on these statements is
demonstrated below:
26. SUBSEQUENT
EVENTS
On April 3, 2024, the Company
announced that it had completed the acquisition of interests in two
licences in southeast Senegal where it is currently advancing the
Douta Gold Project to a Preliminary Feasibility stage. The Company
acquired, at a cost of $120,000,
an up to 85% interest in the strategically
located Douta-West Licence which lies contiguous to the Douta Gold
Project and an up to 80% interest in the Sofita
Licence, at a cost of $20,000,
located approximately 20 kilometers ("km") south of the Douta
Gold Project.