Norinco International Cooperation Limited provides $6.75 million loan — via deferred payment arrangement — for Segilola Gold Mine Project

Norinco International Cooperation Limited provides $6.75 million loan — via deferred payment arrangement — for Segilola Gold Mine Project Thor Explorations Ltd. — a listed company incorporated in Canada — completed a pre-feasibility study in October 2017 and a definitive feasibility study (DFS) in February 2019 for the Segilola Gold Mine Project.

It subsequently obtained a $78 million financing package — consisting of a $54 million senior secured credit facility, a $9 million gold stream prepayment, and a $15 million equity investment — from Africa Finance Corporation (AFC) in April 2019.

Then, on May 31, 2019, Norinco International Cooperation Limited and Thor Explorations Ltd. signed a $6.75 million engineering, procurement, and construction (EPC) contract for the design, engineering, procurement, construction, and commissioning of the 715,000 ton per annum Segilola gold ore processing plant in Osun, Nigeria.

The EPC contract included a deferred element (‘the Deferred Payment Facility’) of 10% of the fixed price ($6.75 million). The 10% deferred element was repayable in installments over a 36-month period. Repayments were scheduled to commence in March 2022 and conclude in March 2025.

Interest on this element of the EPC deferred facility accrued at 8% per annum (from the time the Facility Taking-Over Certificate was issued). $6,210,090 was deferred under the facility as of December 31, 2021, and $6,205,146 was deferred under the facility as of June 30, 2022. The total funding package from AFC was increased from $78 million to $86 million in April 2020.

The project scope included the construction of an open pit mine and a new 625,000 tpa processing plant in Osun, Nigeria, which consists of a conventional crushing circuit, two-stage grinding, gravity, carbon-in-leach, elution, electro-winning, and smelting to produce high purity gold doré.

Upon completion of the project, the mine was originally projected to produce 100,000 ounces per annum in its first operating year and an average of 80,000 ounces per annum over the mine’s five-year open pit lifespan.

At a gold price of just $1,300 per ounce, this equates to a post-tax NPV5% $138 million, 50% IRR and payback of less than 1.4-years, producing at an all-in-sustaining-cost of $622 per ounce.

During the construction phase of the project, a 400 kW and 200 kW diesel generator was expected to be installed by the contractor at the processing plant and at the camp.

The permanent main power supply for processing was expected to be provided by seven 1.2 MW compressed natural gas (CNG) generators, five of which were to be on duty and two on stand-by. Emergency power was to be provided by a 640 kW, 50Hz diesel-powered generator.

The planned 43 ha open pit was determined through an iterative process of optimization and design work and it is 1,600 meters long, 140 meters to 430 meters wide, and ranges between 55 meters and 210 meters in depth. Three pushbacks were planned utilizing an excavator and truck fleet for both ore and waste.

A large part of the mined material was expected to require drill and blast. Norinco International Cooperation Limited was the EPC contractor responsible for implementation. Construction commenced in February 2020. By mid-May 2020, site clearance had been completed and civil works on the plant site were underway.

At that time, construction of the camp was also approaching completion and all ancillary infrastructure, including access roads and a water storage dam, were underway. The project was originally scheduled to reach completion within 18 months of its commencement date (August 2021).

Although the mine was originally expected to pour first gold in the second quarter of 2021, it was not operational until the fourth quarter of 2021. In its first full year of operation in 2022, the mine produced 98,000 ounces of gold.