TIDMTHX
RNS Number : 9870X
Thor Explorations Ltd
02 May 2023
NEWS RELEASE
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR
DISTRIBUTION TO U.S. WIRE SERVICES
May 2, 2023 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 MONTHSING DECEMBER 31, 2022
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, 2022 ("Q4 2022") and the audited financial
results for the year ending December 31, 2022 ("Year" or "FY
2022").
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, 2022, are
available on Thor Explorations' website at
https://thorexpl.com/investors/financials/ .
All figures are in US dollars ("US$") unless otherwise
stated.
Operational Highlights
Segilola Production
-- Gold production for the Year totaled 98,006 ounces ("oz")
o 2022 was the Company's first full calendar year of production
with commercial production declared at Segilola on January 1,
2022
o Gold production was at the top end of the FY 2022 guidance
range of 90,000 to 100,000oz of gold
-- All of the main operating units of the process plant
performed as expected, and the plant consistently operated above
nameplate capacity
Segilola Near-Mine Exploration
-- Acquisition of additional exploration tenures, expanding the Company's Nigeria portfolio
-- Exploration activities ramped up across the Company's
portfolio, delineating drill targets for 2023
Douta
-- A successful 26,000 metre reverse circulation ("RC") drilling
program was completed to upgrade certain areas of the existing
resource and to target higher grade parts of the deposit
-- New discovery of the Sambara Prospect
Financial Highlights
-- 92,489 oz of gold sold with an average gold price of US$1,767 per oz
-- Cash operating cost of US$821 per oz sold and all-in
sustaining cost ("AISC") of US$1,091 per oz sold
o The higher than budget AISC was a result of materially
increased prices of ammonium nitrate and diesel during 2022
-- FY 2022 revenue of US$165.2m (FY 2021: US$6m)
-- FY 2022 EBITDA of US$71.7m (FY 2021: loss of US$1.8m)
-- FY 2022 net profit of US$25.4m (FY 2021: loss of US$2.1m)
-- Cash and cash equivalents of US$6.7m (FY 2021: US$1.3m)
-- Senior debt facility significantly reduced from US$54m to US$28.4m as at December 31, 2022
-- Net debt of US$31m (FY 2021: US$ 65.6m)
Environment, Social and Governance
-- Transition from diesel to compressed natural gas ("CNG")
generators is progressing. Once fully operational they will reduce
greenhouse gas emissions at the Segiola Mine Project by 53%. Total
emissions (Scope 1) for 2022 at 31,781 tons
-- Livelihood restoration projects initiated, including fish and vegetable farms
-- Community Development Agreements ("CDA") have funded local
Youth and Women Initiative programs focusing on practical
skill-based courses. CDA's have also funded annual school
scholarships to enable children from vulnerable backgrounds to
remain in school
-- In Senegal, quarterly water quality (surface and ground)
monitoring commenced in Q4 2022 and the Company has been assisting
with the economic development of local communities as well as
providing funding to a women's initiative program
Post FY 2022 Highlights
-- Segilola gold production of 20,629 oz during Q1 2023
-- Identification of new high grade quartz vein system within
15km of Segilola, with multiple high grade drillhole intercepts
including 1m at 310 g/t gold which equates to 10 oz of gold per
tonne
-- Senior debt facility with Africa Finance Corporation amended
and restated to facilitate the Company's growth opportunities
o Senior debt facility reduced to US$27.9 million as at 31 March
2023
-- Mineral Resource Estimate at Douta updated to approximately
1.78 million oz of gold, an increase of 144%
o Updated Douta Resource encompasses the Makosa, Makosa Tail and
the recently discovered Sambara prospects, all of which remain open
along strike and down dip
o Drilling is ongoing at Douta with a further 40,000 metre
drilling programme to be completed in 2023, consisting of diamond
drilling and reverse circulation drilling
Outlook
-- Production guidance set at 85,000 to 95,000 oz for 2023 with
an AISC guidance of US$1,150 to US$1,350 per oz
-- Advance exploration programs across the portfolio, including
near mine and underground projects at Segilola, extension and
infill programs at Douta and the assessment of potential targets in
Nigeria
-- Completion of the Douta preliminary feasibility study ("PFS") in Q4 2023
Segun Lawson, President & CEO, stated:
"2022 proved to be a significant year for Thor Explorations,
being our first full calendar year of commercial production at our
flagship asset, the Segilola Gold mine, producing 98,006 oz of gold
and selling 92,489 oz of gold at an average price of US$1,767 per
oz. Despite the global supply chain issues that Thor faced, which
contributed to a higher than budgeted AISC, the Company still
managed to achieve an annual operating profit of US$40 million and
a net profit of US$25.4 million. This highlights the quality and
operating efficiency of Segilola and the value that it has to
offer. Importantly, it provides us with a solid platform from which
to grow.
"We also continue to develop the Douta Gold Project and, during
the year, carried out a 26,000m drilling programme that led to the
announcement of a 144% resource increase subsequent to the year
end. We will continue to advance the Douta project towards a PFS in
2023 as we believe that it has the potential to provide significant
value to shareholders.
"Regrettably, during the year, a tragic accident at Segilola
resulted in the death of Mr Muyideen Adegboyega, our thoughts and
condolences go out to his family and friends. Since the incident,
we have put in place additional measures to ensure that this does
not happen again and that the safety of everyone working at, or
otherwise affected by, the Segilola project is prioritised, as
determined by our ESG policy.
"ESG remains an integral part of our business strategy and we
have made considerable progress with our community development
projects. We have commenced livelihood restoration programs, in the
form of fish farms and market gardens. We have provided funding,
equipment, training and assisted with the construction of these
projects which presented cash-positive projects to the communities
so that they can produce goods to be sold at local markets. We have
also commissioned and supervised many youth programs and training
workshops to develop and enhance necessary and transferable skills.
We will continue to progress our projects to help the development
of local communities.
"Looking to the future, our production guidance for 2023 is set
at 85,000 - 95,000 ounces and I look forward to seeing what we will
be able to accomplish in 2023."
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 / Thomas Diehl
Tel: +44 (0) 20 7523 8000
Hannam & Partners (Broker)
Andrew Chubb / Matt Hasson / Jay Ashfield / Franck Nganou
Tel: +44 (0) 20 7907 8500
Fig House Communications (Investor Relations)
Tel: +1 416 822 6483
Email: investor.relations@thorexpl.com
Ibu Lawson (Investor Relations)
Tel: +447909825446
Email: ibu.lawson@thorexpl.com
BlytheRay (Financial PR)
Tim Blythe / Megan Ray / Said Izagaren
Tel: +44 207 138 3203
Management Discussion & Analysis for Q4 2022 and Full Year
2022
CHAIRMAN'S STATEMENT
We are extremely pleased to have completed our first full
calendar year as a commercial gold producer, with the 98,006 ounces
produced during the year being at the top end of the Company's Full
Year 2022 guidance. This progress has seen the Company transition
from an explorer, to a developer and ultimately a gold producer,
building and successfully operating Nigeria's first large scale
commercial gold mine within a five year period. This required
significant effort from a large number of people from our various
stakeholders and the Board wishes to express its thanks to everyone
involved.
This year saw a highly regrettable loss of life. We were sorry
to suffer a fatal injury incident leading to the tragic death of Mr
Muyideen Adegboyega. Our condolences go out to his family and
friends. Following this tragic incident, the Company has put into
place additional measures that ensure the safety of anyone working
or otherwise affected by the Segilola Project, including the
ongoing work towards achieving ISO45001. Environmental, Social and
Governance ("ESG") was at the heart of our business in 2022.
Engagement with local stakeholders happened at all levels, from
national government through to local communities. This remains a
priority for the Company.
Community development projects have made significant progress
throughout the year. We have commenced livelihood restoration
programmes in the form of fish farms and market gardens. By funding
and assisting with the construction of these projects, providing
necessary equipment, maintenance materials and training, the
communities are now presented with cash-positive projects that can
produce goods to sell at local markets and to the Segilola mine. We
have also commissioned and supervised various community youth
programmes and skills training workshops throughout the year that
focussed on developing and enhancing transferable skills.
2022 has been a year where the company has consolidated itself
as an operator. Production for the first full year of operations
has been commendable, with an achievement of over 98,000 ounces. We
also continued to advance exploration in Nigeria and Senegal, and
look forward to accelerating exploration in both countries in
2023.
I would like to thank all our shareholders who have been
supportive through our transition. We believe we have created a
strong foundation to deliver further value in the coming years and
look forward to 2023.
Adrian Coates
Chairman
CEO'S STATEMENT
2022 proved to be a year of significant milestones for Thor. The
Company officially declared commercial production from its Segilola
Gold Mine on 1 January 2022 and after this, successfully produced
98,006 ounces by the end of the year. This was a successful year in
terms of gold production; however, the year was not without its
challenges. Global supply chain shortages following the COVID-19
pandemic persisted, resulting in materially increased prices of
essential consumables and supplies such as ammonium nitrate, diesel
and spare parts contributing to a higher than budget AISC for the
Segilola Gold Mine of US$1,091 per ounce. Despite these challenges,
we were able to demonstrate operational efficiency, resulting in
positive cash flows and a maiden annual operating profit of US$40
million and net profit of US$25.4 million.
In the full year 2022, Segilola produced 98,006 ounces and sold
92,489 ounces of gold with an average gold price sold of US$1,767
per ounce. Significantly, our senior debt facility was reduced from
US$54 million to US$28.4 million as at December 31, 2022.
I reiterate the comments of our Chairman and also extend my
condolences to the friends and family of Mr Muyideen Adegboyega,
who was tragically killed. A thorough incident investigation was
undertaken (in line with company procedures) with senior managers
involved as well as the Ministry of Mines and Steel Development as
is standard practice. The lessons learnt from this fatality
triggered immediate and long-lasting actions to prevent the
reoccurrence of such an event, to improve protection of SROL and
Project staff and to protect and respect local community resident's
health, safety and security.
Our focus turns to achieving global best practice in health and
safety with ESG continuing to be a priority for the Company. We
continue to be extremely proud of our community engagement and
throughout the period we invested heavily in a number of long-term
initiatives, specifically in the areas of food and agriculture,
health, education, water and sanitation and local economic
development.
The Company also completed a successful year of exploration at
the Douta Project in Senegal. This project continues to be of high
priority for the Company and is well positioned to deliver
significant value to our shareholders. During the year, the major
activity carried out was a 26,000 metre exploration drilling
program which was successful and culminated in the announcement of
a 144% resource increase post the period end. We look forward to
completing a preliminary feasibility study of the Douta Project in
2023.
I would like to finish by saying we are proud of our first
calendar year as a producer, achieving the top end of our guidance.
We are now very well positioned to grow the company and continue
its evolution through exploration whilst continuing to deliver
further on gold production and generation of strong cash flow. I
would like to thank our entire team of incredible employees for
their commitment and tireless work during the year without whom we
would be unable to operate. We look forward to the years ahead and
growing Thor into a sustainable, multi- asset, mining company.
Segun Lawson
Chief Executive Officer
OVERVIEW
Thor Explorations Ltd. ("Thor" or the "Company") is a gold
production, development and 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 Company's main assets include its flagship producing Segilola
Gold mine in Nigeria and the advanced exploration project, Douta,
in Senegal. The Company also 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.
Our strategy is to operate, develop and explore mineral
properties where our expertise can substantially increase
shareholder value. The Company 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 2022 AND YEARED
DECEMBER 31, 2022
Operating results remained in line with expectations for the
quarter and the year highlighted by the selling of 92,489 ounces of
gold during the Year at a cash operating cost ([1]) of US$821 per
oz sold. AISC(1) for the Year was above guidance at US$1,091 per oz
sold.
Commercial production was declared at Segilola on January 1,
2022, and the Facility Taking Over Certificate from the EPC
contractor was received on January 31, 2022. The EPC Contractor
confirmed that it would cooperate with the Company by extending the
payment period of the final EPC invoices by allowing the Company to
make payment of the final EPC invoices from available cashflow. As
at the date of publishing this document, all EPC invoices due had
been settled in full.
The Company's performance in Q4 2022 builds on its performance
during the previous quarters and provides good direction for 2023.
The Company has set its production guidance to 85,000 to 95,000 oz,
while AISC(1) guidance for 2023 is set at US$1,150 per ounce to
US$1,350 per ounce.
Table 2.1 Key Operating and Financial Statistics
Year ended Year ended
December December
31, 2022 31, 2021
Operating
--------------------------- ------ ---------------- ------------
Gold Sold Au 92,489 3,425
Average realised
gold price(1) $/oz 1,767 1,753
Cash operating cost(1) $/oz 821 -
AISC (all-in sustaining 1,091 -
cost)(1) $/oz
EBITDA $/oz 775 -
Financial
--------------------------- ------ --- ------------ --------------
Revenue $ 165,174,531 6,049,485
EBITDA(1) $ 71,680,022 (1,799,068)
Net Income/(Loss) $ 25,398,941 (2,069,195)
Cash and cash equivalents $ 6,688,037 1,276,270
Deferred Income $ 6,581,743 -
Net Debt(1) $ 31,650,722 65,555,984
Segilola Gold Mine, Nigeria
During the year, there continued to be global supply chain
issues resulting in shortages and increased prices for a number of
essential consumables and supplies such as ammonium nitrate, diesel
and spare parts contributing to a higher than target AISC of
US$1,091. The Company was able to partially mitigate these risks
through the bulk purchase of most supply chain items. Despite these
challenges, we were able to demonstrate operational efficiency,
resulting in positive cash flows and annual operating profit of
US$40 million and net profit of US$25.4 million.
Gold Production
During the year ended December 31, 2022 the Segilola Mine
produced 98,006 ounces of gold doré (2021: 9,888 ounces).
The Company exported gold regularly throughout the year selling
92,489 ounces of gold and 5,329 ounces of silver in the year and
had a further gold dore inventory of 1,884 ounces and gold in
circuit of 1,031 ounces on hand. These ounces have all been sold in
the first quarter of 2023.
Mining
During the year ended December 31, 2022, 16,106,033 tonnes of
material were mined, equivalent to mining rates of 43,956 tonnes of
material per day. In this period, 1,057,996 tonnes of ore were
mined, equivalent to mining rates of 2,890 tonnes of ore per day,
at an average grade of 3.56g/t.
Processing
During the year ended December 31, 2022, a total of 929,760
tonnes of ore, equivalent to a throughput rate of 2,719 tonnes per
day, were processed.
The mill feed grade was 3.45g/t gold and recovery was 95.12% for
a total of 98,006 ounces of gold doré produced. We continue to
review the process plant to optimize throughput and recoveries.
All of the main operating units of the process plant are
performing as expected, and the plant is consistently operating
above nameplate capacity. We continue to carry out further
optimization activities for the gold recovery process.
Table 2.2: Production Metrics
Units FY 2022 FY 2021
Mining
----------------------------- -------- ----------- ----------
Total Ore Mined Tonnes 1,057,996 309,641
Ore Processed Tonnes 929,760 145,999
Waste Mined Tonnes 15,048,436 6,179,443
Total Mined Tonnes 16,106,033 6,489,014
Total Ore Mined Gold g/t
Grade Au 3.56 2.47
g/t
Ore Processed Au 3.45 2.65
Processing
----------------------------- -------- ----------- ----------
Ore Milled Tonnes 929,760 145,999
Daily Throughput Rate
(average) Tpd 2,719 86
Daily Throughput/ Nameplate % 136.34 96.64
Capacity
Ore Processed Gold
Grade
----------------------------- -------- ----------- ----------
Recovery % 95.12 83.90
Gold doré Recovered Oz 98,006 9,888
NON-IFRS MEASURES
This MD&A refers to certain financial measures, such as
average realized gold price, cash operating costs, all-in
sustaining costs ("AISC"), net debt and earnings before interest,
taxes, depreciation and amortisation ("EBITDA") 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 Company's financial statements because the Company
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 Company 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 statement 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
Units Year Ended December Year Ended December
31, 2022 31, 2021
---------------------------- -------- -------------------------------- ---------------------------
Revenues $ 165,174,531 6,049,485
By product revenue $ (114,211) (3,727)
---------------------------- -------- -------------------------------- ---------------------------
Gold Revenue $ 165,060,320 6,045,758
---------------------------- -------- -------------------------------- ---------------------------
Gain/(Loss) on forward
sale of commodity (43,295)
contracts $ (1,587,524)
---------------------------- -------- -------------------------------- ---------------------------
Gold Revenue $ 163,472,796 6,002,463
---------------------------- ------------ -------------------------------- --------------------------
oz
Gold ounces sold Au 92,489 3,425
-------------------------------- --------------------------
Average realised price
per ounce sold $ 1,767 1,753
---------------------------- -------- -------------------------------- --------------------------
Cash operating cost per ounce
Cash operating cost per oz sold, combined with revenues, can be
used to evaluate the Company's performance and ability to generate
operating income and cash flow from operating activities. The
Company 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
Year Ended
December 31,
2022
--------------------------------------- ------- --------------
Production costs $ 68,907,249
Transportation and refining $ 3,419,333
Royalties $ 3,696,527
By product revenue $ (114,211)
--------------------------------------- ------- --------------
Cash Operating costs $ 75,908,898
--------------------------------------- ------- --------------
Gold ounces sold recognised in income
statement Oz Au 92,489
--------------------------------------- ------- --------------
Cash operating cost per ounce sold $/oz 821
--------------------------------------- ------- --------------
All-in sustaining cost per ounce
AISC provides information on the total cost associated with
producing gold.
The Company 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 includes 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. For the year ended December
31, 2022, this was deemed to be 50%.
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
Year Ended
December 31,
2022
------------------------------------------- ------- --------------
Cash operating costs(1) $ 75,908,898
Adjusted other administration expenses(2) $ 14,042,505
Sustaining capital(3) $ 10,917,636
Total all-in sustaining cost $ 100,869,039
------------------------------------------- ------- --------------
Gold ounces sold Oz Au 92,489
------------------------------------------- ------- --------------
All-in sustaining cost per ounce
sold $/oz 1,091
------------------------------------------- ------- --------------
1 Refer to Table - 3.2 Cash operating
costs.
2 Exclude expenses not related
to the Segilola mine
3 Refer to Table - 3.3a Sustaining
and Non-Sustaining Capital
The Company'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 Company'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 standardised 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
Year Ended
December 31,
2022
----------------------------------------- --- --------------
Property, plant and equipment additions
during the year $ 24,757,723
Non-sustaining capital expenditures(1) $ (18,722,873)
Payment for sustaining leases $ 4,882,786
Sustaining capital $ 10,917,636
----------------------------------------- --- --------------
([1]) Includes EPC and other construction costs for the Segilola
Mine.
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
measure is used by management to measure the Company's debt
leverage. The Company considers that in addition to conventional
measures prepared in accordance with IFRS, net debt is useful to
evaluate the Company's performance.
Table 3.4: Net Debt
Year Ended Year Ended
December 31, December
2022 31, 2021
------------------------------- --- -------------- ------------
Loans from the Africa Finance
Corporation $ 24,459,939 46,859,966
Due to EPC contractor $ 10,196,105 13,762,221
Deferred element of EPC
contract $ 3,682,715 6,210,067
Less:
Cash (6,688,037) (1,276,270)
Net Debt $ 31,650,722 65,555,564
------------------------------- --- -------------- ------------
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)
Year Ended
December 31,
2022
---------------------------------------- ------- --------------
Net profit/(loss) for the period $ 25,398,941
---------------------------------------- ------- --------------
Amortisation and depreciation -
owned assets $ 26,928,156
Amortisation and depreciation -
right of use assets $ 4,724,101
Impairment of Exploration & Evaluation
assets $ 12,014
Interest expense $ 14,616,810
EBITDA $ 71,680,022
---------------------------------------- ------- --------------
Gold ounces sold Oz Au 92,489
---------------------------------------- ------- --------------
EBITDA per ounce sold $/oz 775
---------------------------------------- ------- --------------
OUTLOOK AND UPCOMING MILESTONES
This Section 5 of the MD&A contains forward looking
information as defined by National Instrument 51-102. Refer to
Section 16 of this MD&A for further information on forward
looking statements.
We are focussed on advancing the Company's strategic objectives
and near-term milestones which include:
2023 Operational Guidance and Outlook
Gold Production Oz 85,000-95,000
US$/oz Au
All-in Sustaining Cost ("AISC") sold 1,150 - 1,250
Capital Expenditure US$ 8,000,000 - 10,000,000
Exploration Expenditure:
Nigeria(1) US$ 4,200,000
Senegal US$ 3,000,000
--------------------------------- ----------- -----------------------
1 This includes purchase of licenses
-- 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 project towards preliminary feasibility study ("PFS")
-- 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
$ 2022 Q4 2022 Q3 2022 Q2 2022 Q1
Dec 31 Sep 30 Jun 30 Mar 31
------------------------ ----------- ----------- ----------- -----------
Revenues 43,251,204 55,703,098 41,354,747 24,865,482
Net profit for period 14,908,460 4,126,066 6,163,942 200,473
Basic profit per share
(cents) 2.21 0.65 0.01 0.00
------------------------ ----------- ----------- ----------- -----------
$ 2021 Q4 2021 Q3 2021 Q2 2021 Q1
Dec 31 Sep 30 Jun 30 Mar 31
------------------------- ---------- -------- ------------ ---------
Revenues 6,049,485 - - -
Net profit/(loss) for
period 3,116,416 463,844 (5,582,090) (67,365)
Basic profit/(loss) per
share (cents) 0.47 0.07 (0.87) (0.01)
------------------------- ---------- -------- ------------ ---------
The Company reported a net profit of $14,908,460 (2.21 cents per
share) for the three month period ended December 31, 2022, as
compared to a net profit of $3,116,416 (0.47 cents per share) for
the year ended December 31, 2021. The increase in profit for the
period was largely due to:
sales during the period of $43,251,204 (Q4 2021: $6,049,485)
These were offset partially by:
Amortisation and depreciation of $12,250,612 (Q4 2021: $15,720);
and
Interest of $3,265,120 (Q4 2021: $16,713)
No interest was earned during the three months period ended
December 31, 2022, and 2021.
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.
For the year ended December 31 December 31 December 31
2022 2021 2020
------------------------------- --- ------------ ------------ ------------
Total revenues $ 165,174,531 6,049,485 -
Net profit/(loss) $ 25,398,941 (2,069,195) (2,886,145)
Profit/(loss) per share
(cents)
Basic 3.81 (0.33) (0.52)
Diluted 3.86 (0.33) (0.52)
Total assets $ 223,251,813 212,238,762 111,596,899
Total non-current liabilities $ 57,663,580 63,406,824 36,530,000
Table 7.1: Selected annual information
RESULTS FOR THE YEARED DECEMBER 31, 2022 and 2021
The Company reported a net profit of $25,398,941 (3.86 cents per
share) for the year ended December 31, 2022, as compared to a net
loss of $2,069,195 (0.33 cents per share) for the year ended
December 31, 2021. The move to profit for the year was largely due
to:
-- Sales during the year of $165,174,531 (2021: $6,049,485)
These were offset partially by:
-- Amortisation and depreciation of $31,652,257 (2021: $106,191); and
-- Interest of $14,616,810 (2021: $64,877)
No interest was earned during the year ended December 31, 2022,
and 2021.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2022, the Company had cash of $6,688,037
(2021: $1,276,270) and 1,884 ounces of gold dore in inventory to be
sold (2021: 6,626 ounces), and a working capital deficit of
$29,116,915 (2021: deficit of $45,542,373).
The increase in cash from December 31, 2021 is due mainly to
gold sales revenue of $165,174,531, offset by instalment payments
on the loan facility of $28,865,778, the purchase of property plant
and equipment of $26,754,964 and operational costs and corporate
overheads of $91,906,985. This cash expenditure was financed by
operational cashflow and existing cash balances.
The total EPC amount has been finalized with our EPC contractor,
and we have paid all outstanding EPC payments at the date of this
report.
Working Capital Calculation
The Working Capital Calculation excludes $10,187,630 (2021:
$12,837,633) of gold stream liabilities, and $2,215,585 (2021:
$7,115,207) in third party royalties included in current accounts
payable, that are contingent upon the achievement of the revised
gold sales forecast of 85,000 to 95,000 ounces for the year ending
December 31, 2023.
Included in working capital, in accounts payable and accrued
liabilities, is a balance of $10,196,105 (2021: $13,762,221) due to
our EPC contractors. As of the date of this report, the Company has
made all outstanding due payments in relation to the EPC
contract.
Table 8.1: Working Capital
December 31, December 31,
2022 2021
------------------------------------------ --- ------------- -------------
Current Assets
Cash and Restricted Cash $ 6,688,037 4,772,262
Inventory $ 19,901,262 18,146,558
Amounts receivable, prepaid expenses,
advances and deposits $ 10,697,365 824,516
Total Current Assets for Working
Capital $ 37,286,664 23,743,336
------------------------------------------ --- ------------- -------------
Current Liabilities
Accounts Payable and accrued liabilities $ 56,337,289 43,567,750
Deferred Income 6,581,743 -
Lease Liabilities $ 4,811,991 4,849,088
Gold Stream Liability $ 10,187,630 12,837,633
Loan and other borrowings $ 888,141 27,984,078
$ 78,806,794 89,238,549
less: Current Liabilities contingent
upon future gold sales $ (12,403,215) (19,952,840)
Working Capital Deficit $ (29,116,915) (45,542,373)
------------------------------------------ --- ------------- -------------
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 2022 December 31
2021
------------------------------ --- ----------------- ------------
Plant spares and consumables $ 4,751,922 1,337,792
Gold ore in stockpile $ 11,869,168 8,663,728
Gold in circuit $ 1,160,237 1,614,267
Gold dore (1) $ 2,119,935 6,530,771
------------------------------ --- ----------------- ------------
$ 19,901,262 18,146,558
---------------------------------- ----------------- ------------
1:Gold dore is valued at cost ($1,125/oz), which comprises
production cost, depreciation and amortisation.
Liquidity and Capital Resources
The Company has generated strong operating cash flow during Q4
2022 and the year ended December 31, 2022 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, 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, 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, 2022 December 31, 2021
-------------------------------------------- -----------------------------------------------
Measured Measured Total Measured Measured Total
at amortised at fair at amortised at fair
cost value through cost value
profit through
and loss profit
and loss
-------------- --- -------------- -------------- ------------ ------------- ------------- -----------------
Assets
Cash and cash
equivalents $ 6,688,037 - 6,688,037 1,276,270 - 1,276,270
Restricted
cash $ - - - 3,495,992 3,495,992
Amounts
receivable $ 220,442 - 220,442 237,651 - 237,651
-------------- --- -------------- -------------- ------------ ------------- ------------- -----------------
Total assets $ 6,908,479 - 6,908,479 5,009,913 - 5,009,913
-------------- --- -------------- -------------- ------------ ------------- ------------- -----------------
Liabilities
Accounts
payable
and accrued
liabilities $ 54,121,704 2,215,585 56,337,289 38,024,962 7,106,979 45,131,941
Loans and
borrowings $ 28,142,654 - 28,142,654 53,738,603 - 53,738,603
Gold stream
liability $ - 25,039,765 25,039,765 - 30,262,279 30,262,279
Lease
liabilities $ 15,409,285 - 15,409,285 18,274,374 - 18,274,374
-------------- --- -------------- -------------- ------------ ------------- ------------- -------------------
Total
liabilities $ 97,673,643 27,255,350 124,928,993 110,037,939 37,369,258 147,407,197
-------------- --- -------------- -------------- ------------ ------------- ------------- -------------------
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Company
ensures that there is sufficient capital in order to meet
short-term business requirements, after taking into account the
Company's holdings of cash. The Company's cash is held in business
accounts and are available on demand with the exception of
restricted cash which was only available to be applied against the
cost of the construction of the Segilola Gold Mine until
construction is completed, at which point it then became available
on demand.
In the normal course of business, the Company enters into
contracts and performs business activities that give rise to
commitments for future minimum payments.
The following tables summarize the Company's significant
remaining contractual maturities for financial liabilities at
December 31, 2022, and December 31, 2021. The tables show projected
cashflows including interest payments.
Table 9.4: Contractual maturity analysis
Contractual maturity analysis as at December 31, 2022
Less than 3 - 12 1 - 5 Longer
3 months Months Year than Total
$ $ $ 5 years $
$
-------------------------- ----------- ----------- ----------- --------- --------------
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
-------------------------- ----------- ----------- ----------- --------- --------------
Contractual maturity analysis as at December 31, 2021
Less than 3 - 12 1 - 5 Longer
3 months Months Year than Total
$ $ $ 5 years $
$
-------------------------- ----------- ----------- ----------- --------- ------------
Accounts payable
and accrued liabilities 38,699,814 4,862,676 1,952,408 - 45,514,898
Lease liabilities 1,213,678 3,641,035 16,991,498 - 21,846,211
Gold Stream Liability 2,237,631 10,614,896 33,955,921 46,808,448
Loans and borrowings 1,984,714 26,031,054 32,400,920 - 60,416,688
44,135,837 45,149,661 85,300,747 - 174,586,245
-------------------------- ----------- ----------- ----------- --------- ------------
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 12 of the
2022 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 2022, 93% of the Group's cash balances
were invested in AA rated financial institutions (2021: 93%), 2% in
AA- rated financial institutions (2021: 1%), 1% in A+ rated
financial institutions (2021: 1%) and 4% in B rated institutions
(2021: 5%).
The Group sells its gold to large international organisations
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 2022 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 Company'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 Company does not enter into currency derivative
financial instruments to manage its exposure, the Company 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 644,696,185 common
shares issued and outstanding stock options to purchase a total of
26,901,000 common shares.
Authorized Common Shares
Table 14.1: Common shares issued
December 31, December 31,
2022 2021
---------------------- ------------- -------------
Common shares issued 644,696,185 632,358,009
----------------------- ------------- -------------
Warrants
There were no warrants that were outstanding at December 31,
2022, and as at the date of this report.
During the quarter ended December 31, 2022, no warrants were
issued.
During the year ended December 31, 2018, 44,453,335 warrants
were issued to subscribers as a part of the private placement
("closing options") that closed on August 31, 2018. These warrants
were issued with an exercise price of $0.28 per share with an
exercise period of three years from the date of closing. In
addition, the Company issued a total of 1,497,867 broker warrants
plus 166,667 broker warrants as an advisory fee, each broker
warrant being exercisable for a common share at C$0.18 for a period
of three years from the date the closing options were issued.
During the three months ended June 30, 2021, 1,664,534 broker
warrants were exercised and converted into common shares at C$0.18
each.
During the three months ended December 31, 2021, 8,287,500
placement warrants were exercised and converted into common shares
at C$0.28 each, and 36,165,835 placement warrants expired during
the period ended December 31, 2021.
Stock Options
The number of stock options that were outstanding and the
remaining contractual lives of the options at December 31, 2022,
were as follows.
Table 14.2: Options outstanding
Exercise Price Number Weighted Average Expiry Date
Outstanding Remaining Contractual
Life
---------------- ------------- ----------------------- ---------------
C$0.145 12,111,000 0.19 March 12, 2023
October 5,
C$0.140 750,000 0.76 2023
January 16,
C$0.200 14,040,000 2.05 2025
---------------- ------------- ----------------------- ---------------
Total 26,901,000
---------------- ------------- ----------------------- ---------------
The Company has granted employees, consultants, directors and
officers share purchase options. These options were granted
pursuant to the Company's stock option plan.
No options were issued during the year ended December 31, 2022,
and a total of 9,250,000 options were exercised at a price of
C$0.12 each and 689,000 at a price of C$0.145.
Under the Company's Omnibus Incentive Plan approved by
shareholder on December 17, 2021, 44,900,000 common shares of the
Company are reserved for issuance upon exercise of options or other
securities.
During the year ended December 31, 2022, 2,399,176 Restricted
Share Units ("RSUs") were granted to members of Executive
Management under the Company's Long Term Incentive Plan
("LTIP").
In April 2023, the Board resolved to extend the expiry date of
12,111,111 shares with exercise price of C$0.145 past its original
expiry date of March 12, 2023 up until June 15, 2023.
Audited Financial Results for the Year Ended 31 December
2022
CONSOLIDATED
STATEMENT OF
FINANCIAL
POSITION
In United States
dollars
------------------- ---- ----------------------------------- ------------------------- ---------------------------
December 31, December January 1,
31,
Note 2022 2021 2021
$ $ $
------------------- ---- ----------------------------------- ------------------------- ---------------------------
(restated) (restated)
ASSETS
Current assets
Cash 6,688,037 1,276,270 22,181,737
Restricted cash 6 - 3,495,992 3,500,555
Inventory 7 19,901,262 18,146,558 -
Amounts receivable 8 220,442 237,651 44,506
Prepaid expenses,
advances and
deposits 9 10,476,923 586,865 433,796
------------------- ---- ----------------------------------- ------------------------- ---------------------------
Total current
assets 37,286,664 23,743,336 26,160,594
Non-current assets
Deferred income tax
assets 87,797 86,795 36,628
Prepaid expenses,
advances and
deposits 9 282,825 105,683 153,273
Right-of-use assets 10 16,849,402 20,843,612 69,066
Property, plant and
equipment 15 149,513,917 152,113,917 72,079,922
Intangible assets 16 19,231,208 15,345,419 13,097,416
------------------- ---- ----------------------------------- ------------------------- ---------------------------
Total non-current
assets 185,965,149 188,495,426 85,436,305
------------------- ---- ----------------------------------- ------------------------- ---------------------------
TOTAL ASSETS 223,251,813 212,238,762 111,596,899
------------------- ---- ----------------------------------- ------------------------- ---------------------------
LIABILITIES
Current liabilities
Accounts payable
and accrued
liabilities 17 56,337,289 43,567,750 8,555,799
Deferred income 18 6,581,743 - -
Lease liabilities 10 4,811,991 4,849,088 30,648
Gold stream
liability 11 10,187,630 12,837,633 4,812,872
Loans and other
borrowings 12 888,141 27,984,078 53,590
------------------- ---- ----------------------------------- ------------------------- ---------------------------
Total current
liabilities 78,806,794 89,238,549 13,452,909
Non-current
liabilities
Accounts payable
and accrued
liabilities 17 - 1,564,191 -
Lease liabilities 10 10,597,294 13,425,286 -
Gold stream
liability 11 14,852,135 17,424,646 19,895,701
Loans and other
borrowings 12 27,254,513 25,754,525 16,147,799
Provisions 14 4,959,638 5,238,176 486,500
------------------- ---- ----------------------------------- ------------------------- ---------------------------
Total non-current
liabilities 57,663,580 63,406,824 36,530,000
SHAREHOLDERS'
EQUITY
Common shares 19 80,439,693 79,027,183 76,858,769
Share purchase
warrants - - 375,895
Option reserve 19 3,351,133 4,513,900 4,626,427
Currency
translation
reserve (2,512,911) (2,889,510) (769,690)
Retained earnings 5,503,524 (21,058,184) (19,477,411)
------------------- ---- ------------------------- ---------------------------
Total shareholders'
equity 86,781,439 59,593,389 61,613,990
------------------- ---- ----------------------------------- ------------------------- ---------------------------
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY 223,251,813 212,238,762 111,596,899
------------------- ---- ----------------------------------- ------------------------- ---------------------------
These consolidated financial statements were approved for
issue by the
Board of Directors on May 1, 2023, and are signed on its
behalf by:
(Signed) "Adrian (Signed) "Olusegun
Coates" Lawson"
Director Director
The accompanying
notes are an
integral
part of these
consolidated
financial
statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
FOR THE YEARSED DECEMBER 31,
In United States dollars
--------------------------------------------------- ---- ------------------------- -------------------
2022 2021
Note $ $
--------------------------------------------------- ---- ------------------------- -------------------
Continuing operations (restated)
Revenue 165,174,531 6,049,485
------------------------- -------------------
Production costs 5 (68,907,249) (3,907,825)
Transportation and refining 5 (3,419,333) (50,985)
Royalties 5 (3,696,527) (108,258)
Amortisation and depreciation of operational
assets - owned assets 5 (25,673,590) -
Amortisation and depreciation of operational
assets - right of use assets 5 (4,638,775) -
--------------------------------------------------- ---- ------------------------- -------------------
Cost of sales (106,335,474) (4,067,068)
Loss on forward sale of commodity contracts (1,587,524) (43,295)
Gross profit (loss) from operations 57,251,533 1,939,122
--------------------------------------------------- ---- ------------------------- -------------------
Amortisation and depreciation - owned
assets 5 (1,254,566) (65,018)
Amortisation and depreciation - right
of use assets 5 (85,326) (41,173)
Other administration expenses 5 (15,883,876) (3,294,820)
Impairment of Exploration & Evaluation
assets 16 (12,014) (99,059)
Profit (loss) from operations 40,015,751 (1,560,948)
--------------------------------------------------- ---- ------------------------- -------------------
Interest expense 5 (14,616,810) (64,877)
Foreign exchange - gain/(loss) - 881,069
AIM listing costs - (1,377,261)
---- ------------------------- -------------------
Net profit (loss) before income taxes 25,398,941 (2,122,017)
--------------------------------------------------- ---- ------------------------- -------------------
Income Tax 5 - 52,822
Net profit (loss) for the year 25,398,941 (2,069,195)
--------------------------------------------------- ---- ------------------------- -------------------
Attributable to:
Equity shareholders of the Company 25,398,941 (2,069,195)
Net profit (loss) for the period 25,398,941 (2,069,195)
--------------------------------------------------- ---- ------------------------- -------------------
Other comprehensive profit (loss)
Foreign currency translation profit (loss) attributed
to
equity shareholders of the company 376,599 (2,119,820)
Total comprehensive income profit (loss)
for the period 25,775,540 (4,189,015)
--------------------------------------------------- ---- ------------------------- -------------------
Net profit (loss) per share
Basic 20 $ 0.040 $ (0.003)
Diluted 20 $ 0.039 $ (0.003)
--------------------------------------------------- ---- ------------------------- -------------------
The accompanying notes are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARSED DECEMBER 31,
In United States dollars
Note 2022 2021
------------------------------------------------ ---- ------------------------- -----------------------
(restated)
Cash flows from/(used in):
Operating activities
Net profit / (loss) $ 25,398,941 $ (2,069,195)
Adjustments for: -
Impairment of unproven mineral interest 16 12,014 99,059
Share-based compensation 451,964 -
Amortisation and depreciation 5 31,652,256 106,191
Loss on forward sale commodity contracts 1,587,524 43,295
Unrealized Foreign exchange (gains)/losses 5 1,633,496 1,282,492
Interest expense 5 14,616,810 64,877
Income tax - (52,822)
------------------------------------------------ ---- ------------------------- -----------------------
75,353,005 (526,103)
Changes in non-cash working capital accounts
Inventory 7 (1,754,704) (18,510,206)
Receivables 8 17,209 (42,131)
Current prepaid expenses, advances and deposits (10,095,887) (346,917)
Non-current prepaid expenses, advances and
deposits (177,142) (17,139)
Accounts payable and accrued liabilities 17 14,464,283 1,274,316
Deferred income 18 6,581,743 -
Net cash flows from/(used in) operating
activities 84,388,507 (18,168,180)
------------------------------------------------ ---- ------------------------- -----------------------
Investing
Restricted cash 6 3,495,992 812
Purchase of intangible assets 16 (43,599) (175,423)
Assets under construction expenditures 15 (1,884,352) (27,546,130)
Mobilisation of mining fleet 10 - (2,785,055)
Property, Plant & Equipment 15 (26,754,964) (2,086,123)
Exploration & Evaluation assets expenditures 16 (5,366,778) (2,741,758)
Net cash flows used in investing activities (30,553,701) (35,333,677)
------------------------------------------------ ---- ------------------------- -----------------------
Financing
Proceeds from issuance of equity securities - 2,039,790
Borrowing costs paid - (510,838)
Share subscriptions received 19 960,546 -
(Repayment of) / Proceeds from loans and
borrowings 13 (39,864,224) 31,178,558
Interest paid 13 (4,645,014) (65,602)
Payment of lease liabilities 10 (4,882,786) (2,811,315)
Net cash flows (used in)/from financing
activities (48,431,478) 29,830,593
------------------------------------------------ ---- ------------------------- -----------------------
Effect of exchange rates on cash 8,439 2,765,797
Net change in cash $ 5,411,767 $ (20,905,467)
------------------------------------------------ ---- ------------------------- -----------------------
Cash, beginning of the period $ 1,276,270 $ 22,181,737
------------------------------------------------ ---- ------------------------- -----------------------
Cash, end of the period $ 6,688,037 $ 1,276,270
------------------------------------------------ ---- ------------------------- -----------------------
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
In United
States dollars
-------------- ---- ------------------------- --------------- ------------------- -------------------- ---------------------- ---------------------
Note Common shares Share purchase Option reserve Currency (Deficit)/ Total shareholders'
warrants translation Retained equity
reserve earnings
-------------- ---- ------------------------- --------------- ------------------- -------------------- ---------------------- ---------------------
Balance on
December 31,
2020
(restated) $ 76,858,769 $ 375,895 $ 4,626,427 $ (769,690) $ (19,477,411) $ 61,613,990
Net loss for
the year - - - - (2,069,195) (2,069,195)
Other
comprehensive
loss - - - (2,119,820) - (2,119,820)
Total
comprehensive
loss for
the year - - - (2,119,820) (2,069,195) (4,189,015)
-------------- ---- ------------------------- --------------- ------------------- -------------------- ---------------------- ---------------------
Reinstatement
of warrants 19 - 45,899 - - (45,899) -
Exercise of
warrants 19 2,073,451 (421,794) - - 421,794 2,073,451
Options
exercised 19 94,963 - (112,527) - 112,527 94,963
Balance on
December 31,
2021
(restated) $ 79,027,183 $ - $ 4,513,900 $ (2,889,510) $ (21,058,184) $ 59,593,389
Net profit for
the period - - - - 25,398,941 25,398,941
Other
comprehensive
income - - - 376,599 - 376,599
Total
comprehensive
loss for
the year - - - 376,599 25,398,941 25,775,540
-------------- ---- ------------------------- --------------- ------------------- -------------------- ---------------------- ---------------------
Options
exercised 19 1,412,510 - (1,162,767) - 1,162,767 1,412,510
Balance on
December 31,
2022 $ 80,439,693 $ - $ 3,351,133 $ (2,512,911) $ 5,503,524 $ 86,781,439
-------------- ---- ------------------------- --------------- ------------------- -------------------- ---------------------- ---------------------
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 organised under the
Business Corporations Act ( British Columbia ) ( BCBCA) with its
registered office at 550 Burrard St, Suite 2900 Vancouver, BC, CA,
V6C 0A3. The Company evolved into its current form in August 2011
following a reverse takeover and completed the transformational
acquisition of its flagship Segilola Gold Project in Nigeria in
August 2016.
2. BASIS OF PREPARATION
a) Statement of compliance
These 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$"). Prior years consolidated financials have
been previously presented in Canadian dollars ("C$") refer to note
3 (c) for further details on the change of presentational
currency.
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 judgement 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 judgement. Actual
results may differ from these estimates. The areas involving a
higher degree of judgement 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, 2022, the Group had cash of $6,688,037 and
inventory of 1,884 ounces of gold dore. During the year ended
December 31, 2022, the Group sold 92,489 ounces of gold, in line
with Management's production targets of 90,000 to 100,000 ounces
for the year which yielded net cash flow to the Group of
$84,388,507.
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 85,000 - 95,000 ounces of gold for 2023
include consensus analyst gold prices (between $1,800 per ounce and
$2,050 per ounce), reduced debt servicing requirements following
the amendments noted below, effective cost control of key
production elements, production volumes in line with annual
guidance and continuing support from our EPC contractor allowing
the group to settle balances by Q2 2023. 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.
In January 2023, post year end, the Group entered into an
agreement with the AFC amending the terms of its senior debt
facility. Certain covenants and restrictions were released, and the
payment timetable re-scheduled to reallocate a higher percentage of
the repayments to a later period in the Facility's term. The
updated agreement provides the Group with increased cashflow in the
shorter term and less covenant and default provisions requiring
assessment. For the purpose of the going concern review period the
updated covenants and default provisions were reviewed with no
cases of potential breach noted.
The Directors have also considered various scenarios that may
impact cashflow including adverse changes in gold price (down to
$1,600 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 Groups 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, 2022.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies described below have been applied
consistently to all periods presented in these consolidated
financial statements unless otherwise stated.
a) Consolidation principles
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
------------------------------------- ---------------- ----------------- ---------
Thor Investments (BVI) Ltd. British Virgin September 30,
("Thor BVI") Islands 2011 100%
African Star Resources Incorporated British Virgin September 30,
("African Star") Islands 2011 100%
Segilola Resources Incorporated British Virgin
("SR BVI") Islands March 10, 2020 100%
Thor Gold Ventures Ltd ("Thor February 11,
GV") United Kingdom 2022 100%
African Star Resources SARL
("African Star SARL") Senegal July 14, 2011 100%
Argento Exploration BF SARL September 15,
("Argento BF SARL") Burkina Faso 2010 100%
AFC Constelor Panafrican
Resources SARL ("AFC Constelor December 9,
SARL") Burkina Faso 2011 100%
Segilola Resources Operating
Limited
("SROL") Nigeria August 18, 2016 100%
Segilola Gold Limited ("SGL") Nigeria August 18, 2016 100%
Newstar Minerals Limited
("Newstar") Nigeria July 5, 2022 100%
------------------------------------- ---------------- ----------------- ---------
The only changes to ownership interest from the previous year
was the incorporation of Thor Gold Ventures Ltd in February 2022
and Newstar Minerals Limited in July 2022.
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 is 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). The Company has changed its presentation
currency from Canadian Dollars to US Dollars as detailed in note
26.
During the year management has assessed the functional currency
of the Company and its subsidiary SROL and concluded that from
January 1, 2022 the functional currency of both entities changed to
the US dollar from the Canadian dollar and Nigerian Naira,
respectively. The assessment for the change in functional currency
is detailed in note 4.b.iii.
Exchange rates published by Oanda were used to translate the
Thor GV, Thor BVI, 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, SGL and Newstar are
recognized in other comprehensive income (loss). Exchange
differences arising on the net investment in subsidiaries are
recognised in other comprehensive income.
Foreign currency transactions
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing on the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit and
loss. Fluctuations in the value of the local currencies of our
subsidiaries, with most notably the US dollar will result in
foreign exchange gains and losses as assets and liabilities
denominated in US dollar are revalued in the Subsidiary's local
currency at reporting dates.
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 recognised 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.
Amortised 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 recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Impairment provisions for current and non-current trade
receivables are recognised 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 the 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 recognised 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 amortised 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 recognised 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 recognised at fair value net of any
transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently
measured at amortised 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 are
initially recognised at fair value and are subsequently carried at
amortised 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.
Revenue from the streaming arrangement was recognised under IFRS
15 when the customer obtained control of the gold and the Group
satisfied its performance obligations. The revenue recognised
reduced the contract liability balance.
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. This agreement
triggered a modification to the contract liability, resulting in
the liability to be accounted for in accordance with IFRS 9 whereby
the liability is classified as a financial liability measured at
fair value through profit or loss.
Capitalisation of borrowing costs
Interest on borrowings directly relating to the financing of
qualifying capital projects under construction is
added to the capitalised cost of those projects during the
construction phase, until such time as the assets
are substantially ready for their intended use or sale which, in
the case of mining properties, is when they
are capable of commercial production. Where funds have been
borrowed specifically to finance a project, the amount capitalised
represents the actual borrowing costs incurred. Where the funds
used to finance a project form part of general borrowings, the
amount capitalised is calculated using a weighted average of rates
applicable to relevant general borrowings of the Group during the
period. All other borrowing costs are recognised in the income
statement in the period in which they are incurred.
e) Property, plant and equipment
Recognition and Measurement
On initial recognition, property, plant and equipment is valued
at cost, being the purchase price and directly attributable cost of
acquisition or construction required to bring the asset to the
location and condition necessary to be capable of operating in the
manner intended by the Group, including appropriate borrowing costs
and the estimated present value of any future unavoidable costs of
dismantling and removing items. The corresponding liability is
recognised within provisions. Property, plant and equipment is
subsequently measured at cost less accumulated depreciation, less
any accumulated impairment losses, with the exception of land which
is not depreciated. When parts of an item of property, plant and
equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and
equipment.
Subsequent Costs
The cost of replacing part of an item of property, plant and
equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part
will flow to the Group and its cost can be measured reliably. The
carrying amount of the replaced part is derecognized. The costs of
the day-to-day servicing of property, plant and equipment are
recognized in profit or loss as incurred.
Gains and Losses
Gains and losses on disposal of an item of property, plant and
equipment are determined by comparing the proceeds from disposal
with the carrying amount and are recognized net within other income
in profit or loss.
Stripping costs
Capitalisation of waste stripping requires the Group to make
judgements and estimates in determining the amounts to be
capitalised. In open pit mining operations, it is necessary to
incur costs to remove overburden and other mine waste materials in
order to access the ore body ("stripping costs"). During the
development of a mine, stripping costs are capitalised and included
in the carrying amount of the related mining property. During the
production phase of a mine, stripping costs will be recognised as
an asset only if the following conditions are met:
-- It is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity.
-- The entity can identify the component of the ore body (mining
phases) for which access has been improved.
-- The costs relating to the stripping activity associated with
that component can be measured reliably.
Stripping costs incurred and capitalised during the development
and production phase are depleted using the unit-of production
method over the reserves and, in some cases, a portion of resources
of the area that directly benefit from the specific stripping
activity. Costs incurred for regular waste removal that do not give
rise to future economic benefits are considered as costs of sales
and included in operating expenses.
Depreciation
Depreciation on property plant & equipment is recognised in
profit or loss except where depreciation is directly attributable
to mineral properties owned by the Group that are classified as
either Exploration & Evaluation or Assets Under Construction
("AUC"). Depreciation in this instance is capitalised to the value
of the mineral property asset (refer to Note 15). Upon commencement
of commercial production, the value of AUC is reclassified as
Mining and Plant assets (together "Mining Property") within
Property, Plant & Equipment. Mining Property is depreciated
using the unit of production method based on proven and probable
reserves. Units of production are significantly affected by
resources, exploration potential and production estimates together
with economic factors, commodity prices, foreign currency, exchange
rates, estimates of costs to produce reserves and future capital
expenditure.
Depreciation of Mining and Other Equipment is provided on a
straight-line basis over the estimated useful life of the assets as
follows:
Description within Mining and
Other Equipment Rate
------------------------------- -------
Motor vehicles 20-33%
Plant and machinery 20-25%
Office furniture 20-33%
Depreciation methods, useful lives and residual values are
reviewed at each financial year-end and adjusted if
appropriate.
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 capitalised
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. Assets under construction
are not depreciated.
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 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
realizable 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-categorised 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 recognised 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) Income taxes
Income tax expense is comprised of current and deferred income
taxes. Current and deferred income taxes are recognized in profit
and loss, except for income taxes relating to items recognized
directly in equity or other comprehensive income.
Current income tax, if any, is the expected amount payable or
receivable on the taxable income or loss for the year, calculated
in accordance with applicable taxation laws and regulations, using
income tax rates enacted or substantively enacted at the end of the
reporting period, and any adjustments to amounts payable or
receivable relating to previous years.
Deferred income taxes are provided using the liability method
based on temporary differences arising between the income tax bases
of assets and liabilities and their carrying amounts in the
consolidated financial statements. Deferred income tax is
determined using income tax rates and income tax laws and
regulations that have been enacted or substantively enacted at the
end of the reporting period and are expected to apply when the
related deferred income tax asset is realized or the deferred
income tax liability is settled.
Deferred income tax assets are recognized to the extent that it
is probable that future taxable income will be available against
which the temporary differences can be utilized. To the extent that
the Group does not consider it probable that a deferred tax asset
will be recovered, the deferred tax asset is reduced.
The following temporary differences do not result in deferred
tax assets or liabilities:
-- the initial recognition of assets or liabilities, not arising
in a business combination, which do not affect accounting or
taxable profit
-- goodwill
-- investments in subsidiaries, associates and jointly
controlled entities where the timing of reversal of the temporary
differences can be controlled and reversal in the foreseeable
future is not probable.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis. The Group has
tax losses for which no deferred tax asset has been recognised.
i) Revenue recognition
The Group enters into forward sales contracts for the sale of
gold at a pre-determined and agreed price with an agent who remits
the cash proceeds to the Group.
The Group recognises the sale upon delivery at which point
control of the product has been transferred to the Customer.
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 Customer.
j) 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 Dore is exported from Nigeria for refining.
Royalties paid to the Nigerian government are recognised as cost of
sales in the Consolidated Statement of Comprehensive Income/(Loss)
at the point that the gold is exported.
The Group also has 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") are capped at $7.5 million. Royalties are 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 have been assessed to be contingent
consideration in the acquisition of the Segilola Gold Mine and
accounted as an asset acquisition. In accordance with the Group's
accounting policy the contingent consideration has been recognised
as a financial liability at the point there was considered to be
certainty over the payment arising (commencement of production).
The discount will be unwound over the estimated time it will take
to pay the entire $7.5 million obligation. The value of the
royalties will be depreciated over the estimated life of the mine,
and royalty payments will be 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 Statement of Comprehensive Income/(Loss).
k) 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 labour 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 labour costs and production overheads.
l) 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.
m) 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).
n) 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
* Risk-free interest rate
* Expected life of the award
Expected volatility
When equity instruments are modified, if the modification
increases the fair value of the award, the additional cost must be
recognised over the period from the modification date until the
vesting date of the modified award.
o) 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 capitalised
within property, plant and equipment on initial recognition. The
capitalised cost is amortised on a unit of production basis.
Unwinding of the discount is recognised as a 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 programmes to prevent and control pollution and
to rehabilitate the environment are charged to profit or loss as
incurred.
p) Leases
The Group accounts for a contract, or a portion of a contract,
as a lease when it conveys the right to use an asset for a period
of time in exchange for consideration. Leases are those contracts
that satisfy the following criteria:
-- There is an identified asset;
-- The Group obtains substantially all the economic benefits from use of the asset; and,
-- The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive
substitution rights. If the supplier does have those rights, the
contract is not identified as giving rise to a lease. In
determining whether the Group obtains substantially all the
economic benefits from use of the asset, the Group considers only
the economic benefits that arise from use of the asset. In
determining whether the Group has the right to direct use of the
asset, the Group considers whether it directs how and for what
purpose the asset is used throughout the period of use. If the
contract or portion of a contract does not satisfy these criteria,
the Group applies other applicable IFRSs rather than IFRS 16.
All leases are accounted for by recognizing a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless this is not readily determinable, in which case
the Group's incremental borrowing rate on commencement of the lease
is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or
rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in the
period to which they relate.
On initial recognition, the carrying value of the lease
liability also includes:
-- Amounts expected to be payable under any residual value guarantee;
-- The exercise price of any purchase option granted in favour
of the Group if it is reasonably certain to assess that option;
and,
-- Any penalties payable for terminating the lease, if the term
of the lease has been estimated based on termination option being
exercised.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- Lease payments made at or before commencement of the lease;
-- Initial direct costs incurred; and,
-- The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease.
When the Group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments
dependent on a rate or index is revised, except the discount rate
remains unchanged. In both cases an equivalent adjustment is made
to the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease
term. If the carrying amount of the right-of-use asset is adjusted
to zero, any further reduction is recognised in profit or loss.
q) Interest income
Interest income is recognized as earned, provided that
collection is assessed as being reasonably assured.
r) Provisions
Provisions are recognised when the Group has a present
obligation, legal or constructive, resulting from past events and
it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the obligation.
s) 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
recognised 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.
t) 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 January 1, 2022.
Their adoption has not had any material impact on the disclosures
or on the amounts reported in these financial statements.
-- Amendments to IFRS 3 Reference to the Conceptual Framework
-- Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
-- Annual Improvements to IFRS Accounting Standards 2018-2020 Cycle
The Group elected to early adopt the Amendments to IAS 16
Property, Plant and Equipment-Proceeds before Intended Use on the
consolidated financial statements for the year ended December 31,
2021.
u) Future accounting pronouncements
At the date of authorisation 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.
IFRS 17 (including the June Insurance Contracts
2020 and December 2021 Amendments
to IFRS 17)
Amendments to IFRS 10 and IAS28 Sale or Contribution of Assets between
an Investor and its Associate or
Joint Venture
---------------------------------------
Amendments to IAS 1 Classification of Liabilities as
Current or Non-current
---------------------------------------
Amendments to IAS 1 and IFRS Disclosure of Accounting Policies
Practice Statement 2
---------------------------------------
Amendments to IAS 8 Definition of Accounting Estimates
---------------------------------------
Amendments to IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction
---------------------------------------
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 judgements 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 reviewed the terms of the Gold Sale Agreement
and determined that it constituted 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. The buy-out
option contained in the Gold Sale Agreement has been estimated at
nil.
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
US$1,812 /oz at December 31, 2022. A 5% change in gold production
estimates would result in an impact of less than $0.7 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 recognises 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 (2021: $0.25 million) on the
provision for environmental and site restoration. The value of the
period-end restoration provision is disclosed within Note 14.
(v) Inventories
Expenditures incurred, and depreciation and amortisation 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 dore 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 dore 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 dore inventories.
b) Critical accounting judgements
Information about critical judgements 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 judgements 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 $12,014 has been
charged to the Consolidated Statement of Comprehensive Loss. 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
capitalisation 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.
(iii) Functional currency
An analysis of functional currency under IAS 21 was undertaken
on the Company and Segilola Resources Operations Limited ("SROL")
in order to determine if significant changes to operational
activities provide indicators that the functional currency for IFRS
purposes should be reviewed and changed. Under IAS 21 an entity's
functional currency reflects the underlying transactions, events
and conditions that are relevant to it. Accordingly, once
determined, the functional currency is not changed unless there is
a change in those underlying transactions, events and
conditions.
The principal focus of the analysis was on the continuing
applicability of the Nigerian Naira ("NGN") as the functional and
reporting currency for SROL. Potential indicators of a change in
functional currency for SROL were the commencement of the Mining
Contract at Segilola and commencement of gold sales from Segilola,
both denominated in US Dollars. The financial impact of a change in
functional currency of SROL to US dollars was assessed at each of
the dates where potential indicators of a change in functional
currency could be considered to have been determined and it was
concluded that a change in functional currency to US Dollars would
best reflect the underlying transactions, events and conditions
that are most relevant to the Company's operations.
(iv) Commercial production
The Segilola Gold Mine in Nigeria achieved its first gold sales
in December 2021, with production starting in October 2021.
However, production during Q4 2021 was below operating capacity and
not consistent with the mine plan. After careful consideration
Management has determined that mining operations to December 31,
2021, were not at sustainable commercial levels and that the
correct classification of Segilola was Assets under
construction.
Production and recovery rates improved in January 2022 and have
remained consistent with the mine plan during 2022, therefore,
Management considered that commercial production was achieved from
January 1, 2022 and has transferred Segilola`s Assets under
construction to Segilola Mine assets and Processing plant.
5. COST OF SALES
Year Ended
December 31,
2022 2021
------------------------------------ ---- ----------------------- --- --------------------
Mining contract 37,133,315 1,717,573
Contractors and consultants 1,223,074 56,572
Professional fees 709,376 32,812
Drilling and assays 6,206,210 287,064
Salaries 6,834,866 316,142
Materials and consumables 22,376,335 1,035,000
Drilling operations 382,082 17,673
Maintenance 5,681,735 262,804
Security 1,771,671 81,947
Foreign exchange (gains)/losses (15,578,520) -
on production costs*
Other 2,167,105 100,238
Production costs $ 68,907,249 $ 3,907,825
Transportation and refining 3,419,333 50,985
Royalties 3,696,527 108,258
Amortisation and depreciation of 25,673,590 -
operational assets - owned assets
Amortisation and depreciation of 4,638,775 -
operational assets - right of use
assets
------------------------------------ ---- ----------------------- --- --------------------
Cost of sales 106,335,474 4,067,068
------------------------------------------ ----------------------- --- --------------------
(* The total foreign exchange gain for the current year was
$15,578,520, which comprises of realized foreign exchange gains of
$17,212,016 and unrealized foreign exchange losses of $1,633,496.
During the year, SROL purchased its local currency on a spot basis.
The foreign exchange gains and losses from these trades are
generated from the differences between the local currency values
achieved on the trades versus the currency translation rate at the
time of the trade..)
5a. AMORTISATION AND DEPRECIATION
Year Ended
December 31,
2022 2021
--------------------------------------- ---- ----------- ---------
Amortisation and depreciation of 25,673,590 -
operational assets - owned assets
Amortisation and depreciation of 4,638,774 -
operational assets - right of use
assets
Amortisation and depreciation -
owned assets 1,254,566 65,018
Amortisation and depreciation -
right-of-use assets 85,326 41,173
--------------------------------------- ---- ----------- ---------
$ 31,652,256 $ 106,191
--------------------------------------- ---- ----------- ---------
5b. OTHER ADMINISTRATION EXPENSES
Year Ended
December 31,
2022 2021
Note
--------------------------------------- ------ ----------- ----------------------
Audit and legal 463,694 279,944
Bank charges 266,924 204,385
Consulting fees 1,262,943 350,963
Directors fees 21 404,097 358,465
Equipment hire 0 -
Investor relations and transfer agent
fees 473,284 246,218
Listing and filing fees 32,362 30,189
Camp costs 4,093,086 -
Near mine exploration 0 -
Office and miscellaneous 3,834,177 372,436
Salaries and benefits 4,261,912 1,285,606
Travel 791,397 166,614
--------------------------------------- ------ ----------- ----------------------
$ 15,883,876 $ 3,294,820
--------------------------------------- ------ ----------- ----------------------
5c. INTEREST EXPENSE
Year Ended
December 31,
Note 2022 2021
------------------------------------------ ----- ----------- ----------------------
Interest on loan from the Africa Finance
Corporation 12 6,465,751 1,714,041
Interest on deferred element of EPC
contract 12 472,811 250,402
Interest on goldstream liability 11 6,311,927 6,562,830
Interest on leases 10 1,052,329 782,088
Interest on provisions 14 108,164 -
Other 205,828
Total Interest 14,616,810 9,309,361
========================================== ===== =========== ======================
(-) Interest capitalised -9,244,484
Interest expense $ 14,616,810 $ 64,877
========================================== ===== =========== ======================
5d. 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,
2022 2021
------------------------------- ---- ------------ ------------
Profit/(Loss) before income
taxes 25,398,941 (2,122,017)
-------------------------------------- ------------ ------------
Applicable Canada tax rate 27% 27%
Tax at applicable tax rate (6,857,714) 572,945
Adjustments for different
tax rates in the Group 5,980,026 (60,391)
Losses carried forward not
recognized 877,688 (459,731)
Income tax credit/(charge) $ - 52,822
-------------------------------- --- ------------ ------------
During the years ended December 31, 2022, and 2021 the Canadian
federal corporate income tax rate remained unchanged at 15%. The
British Columbia provincial corporate income tax also remained
unchanged at 12%.
The Senegalese and Burkina Faso income tax rates remained
unchanged at 30% and 28% 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 $14,575,000 (2021: $13,808,000). 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 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. RESTRICTED CASH
December December 31,
31, 2021
----------------- --- -------------
2022
--------------------- --------- -------------
Restricted cash $ - $ 3,495,992
----------------- --- --------- -------------
Under the terms of the $54 million project finance senior debt
facility ("the Facility") from the Africa Finance Corporation
(refer to note 12 for details on the Facility), the Group was
required to place a total of US$3.5 million into a cost overrun
bank account that could only be used for expenditure on the
development of the Segilola Gold Project in the event of
construction costs exceeding budget. Upon receipt of the
Certificate of Completion on January 31, 2022, the cash ceased to
be treated as restricted.
7. INVENTORY
December December 31,
31, 2022 2021
------------------------------- ----------------- -------------
Plant spares and consumables $ 4,751,922 $ 1,337,792
Gold ore in stockpile 11,869,168 8,663,728
Gold in CIL 1,160,237 1,614,267
Gold Dore 2,119,935 6,530,771
$ 19,901,262 $ 18,146,558
------------------------------- ----------------- -------------
There were no write downs to reduce the carrying value of
inventories to net realizable value during the years ended December
31, 2022 and 2021.
The cost of inventories recognised as expense in the year ended
December 31, 2022 was $89,382 thousand and was included in cost of
sales (2021 - $nil).
8. AMOUNTS RECEIVABLE
December 31, 2022 December 31, 2021
--------------------- --- ------------------ ------------------
Accounts receivable $ 67,084 $ 20,495
GST 993 3,715
Other receivables 152,365 213,441
$ 220,442 $ 237,651
------------------------- ------------------ ------------------
The value of receivables recorded on the balance sheet is
approximate to their recoverable value and there are no expected
material credit losses.
9. PREPAID EXPENSES, ADVANCES AND DEPOSITS
September December
30, 31, 2021
---------------------------------------- --- ----------
2022
-------------------------------------------- ----------- ----------
Current:
Gold Stream liability arrangement fees 33,186 38,829
Advance deposits to vendors 9,625,204 235,408
Other prepayments 818,533 312,628
--------------------------------------------- ----------- ----------
$ 10,476,923 586,865
-------------------------------------------- ----------- ----------
Non-current:
Gold Stream liability arrangement fees $ 74,667 87,310
Other prepayments 208,158 18,373
--------------------------------------------- ----------- ----------
$ 282,825 105,683
-------------------------------------------- ----------- ----------
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.
10. 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 recognise 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 year ended December 31, 2022 and 2021.
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,
2022, were as follows:
Right of Lease liability Income
use asset statement
----------------------------- --- ------------ ---------------- ------------
Carrying value December 31,
2021 $ 20,843,612 $ (18,274,374) $ -
New leases entered in to
during the period 660,064 (660,064) -
Depreciation (4,724,100) - (4,724,100)
Interest - (1,052,329) (1,052,329)
Lease payments - 4,882,786 -
Foreign exchange movement 69,826 (305,304) (305,304)
----------------------------------- ------------ ---------------- ------------
Carrying value at December
31, 2022 $ 16,849,402 $ (15,409,285) $ (6,081,733)
------------------------------ ------------ ---------------- ------------
Current liability (4,811,991)
Non-current liability (10,597,294)
----------------------------------- ------------ ---------------- ------------
The key impacts on the Statement of Comprehensive Loss and the
Statement of Financial Position for the year ended December 31,
2021, were as follows:
Right-of- Lease liability Income
use asset statement
----------------------------- --- ------------ ---------------- -----------
Carrying value December 31,
2020 $ 69,066 $ (30,648) $ -
New leases entered in to
during the year 22,612,362 (19,668,810) -
Depreciation (2,355,674) - (41,173)
Interest - (782,088) (563)
Lease payments - 2,811,315 -
Foreign exchange movement 517,858 (604,143) (86,285)
------------------------------------ ------------ ---------------- -----------
Carrying value at December
31, 2021 $ 20,843,612 $ (18,274,374) $ (128,021)
------------------------------- ------------ ---------------- -----------
Current liability (4,849,088)
Non-current liability (13,425,286)
------------------------------------ ------------ ---------------- -----------
The total depreciation for the year ended December 31, 2021
under IFRS 16 was $2,355,674, of that total $41,173 was charged to
the Consolidated Statements of Comprehensive Income and $2,314,501
was capitalized into the Segilola Mine Asset.
11. GOLD STREAM LIABILITY
Gold stream liability
December December
31, 2022 31, 2021
Total Total
------------------------------------------- --- ------------- --- -----------
Balance at Beginning of period $ 30,262,279 $ 24,708,573
Interest at the effective interest rate 6,311,927 6,562,830
Repayments (11,534,441) (443,915)
Foreign exchange movement - (565,209)
------------------------------------------------ ------------- --- -----------
Balance at End of period $ 25,039,765 $ 30,262,279
------------------------------------------- --- ------------- --- -----------
Current liability 10,187,630 12,837,633
------------------------------------------------ ------------- --- -----------
Non-current liability 14,852,135 17,424,646
------------------------------------------------ ------------- --- -----------
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 represented interest on the Prepayment. A
calculation of the implied interest rate was made as at drawdown
date with interest being apportioned over the expected life of the
Stream Facility. The principal input variables used in calculating
the implied interest rate and repayment profile were the production
profile and gold price. The future gold price estimates were based
on market forecast reports for the years 2021 to 2025 and, the
production profile was based on the latest life of mine plan model.
The liability was to be re-estimated on a periodic basis to include
changes to the production profile, any extension to the life of
mine plan and movement in the gold price. Upon commencement of
production, any change to the implied interest rate will be
expensed through the Consolidated Statement of Income (Loss).
Interest expense of $6,311,927 was recognised for the Year Ended
December 31, 2022 and has been expensed to the Consolidated
Statement of Income. Prior to the commencement of commercial
production on January 1, 2022, interest was capitalized and
included in the value of the Segilola Gold Mine (Refer to Note 15).
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 recognised at fair value.
Level Level 2 Level 3 Total
1
---------------------------- --- ------- --------- ------------ ------------
Financial liability at
fair value through profit
or loss $ - - 25,039 ,765 25,039 ,765
---------------------------- --- ------- --------- ------------ ------------
The liabilities included in the above table are carried at fair
value through profit and loss.
The valuation is based on a cash flow model with the following
key inputs:
-- Production profiles based on Segilola life-of-mine forecasts
-- Gold price ranging from $1,600/oz to 1,735/oz
-- Interest rate of 22.61%
The sensitivities performed are described in Note 4.a.i
12. LOANS AND BORROWINGS
December 31, December
31, 2021
2022
------------------------------------------------- ---- -------------- --- -----------
Current liabilities:
Loans payable to the Africa Finance Corporation
less than 1 year $ 356,155 $ 24,192,518
Deferred element of EPC contract 531,986 3,122,990
Short term advances - 668,570
------------------------------------------------------- -------------- --- -----------
$ 888,141 27,984,078
------------------------------------------------------ -------------- --- -----------
Non-current liabilities:
Loans payable to the Africa Finance Corporation
more than 1 year $ 24,103,784 $ 22,667,448
Deferred element of EPC contract 3,150,729 3,087,077
------------------------------------------------------- -------------- --- -----------
$ 27,254,513 $ 25,754,525
------------------------------------------------------ -------------- --- -----------
Loans from the Africa Finance Corporation
December December 31,
31, 2021
2022 Total
Total
--------------------------------------- ---- ------------- --- --------------
Balance at Beginning of period $ 46,859,966 $ 14,267,114
Drawdown - 31,153,833
Repayments (28,865,778) -
Arrangement fees - (508,856)
Unwinding of interest in the period 6,465,751 1,714,041
Foreign exchange movement - 233,834
--------------------------------------------- ------------- --- --------------
Balance at End of period $ 24,459,939 $ 46,859,966
--------------------------------------- ---- ------------- --- --------------
Current liability 356,155 24,192,518
--------------------------------------------- ------------- --- --------------
Non-current liability 24,103,784 22,667,448
--------------------------------------------- ------------- --- --------------
On December 1, 2020, the Group announced that its subsidiary
Segilola Resources Operating Limited ("SROL") had completed the
financial closing of a $54 million project finance senior debt
facility ("the Facility") from the Africa Finance Corporation
("AFC") for the construction of the Segilola Gold Project in
Nigeria. The Facility could be drawn down at the Group's request in
minimum disbursements of $5 million. As at December 31, 2022, SROL
has received total disbursements of $52.6 million (2021: $52.6
million), with $nil drawn down in 2022 (2021: $31.2 million) and
the remaining $1.35m undrawn facility cancelled by the Group during
the period under review (2021: $nil). Total disbursements received
represent 97% of the Facility. The Facility is secured over the
share capital of SROL and its assets, with repayments commencing in
March 2022 and to conclude in March 2025.
Repayment of the aggregate Facility will be made in instalments
over a 36-month period by repaying an amount on a series of
repayment dates, as set out in the Facility Agreement, which
reduces the amount of the outstanding aggregate Facility by the
amount equal to the relevant percentage of Loans borrowed as at the
close of business in London on the date of Financial Close.
Interest accrues at SOFR plus 9% and is payable on a quarterly
basis in arrears.
In conjunction with the granting of the Facility, Thor issued
33,329,480 bonus shares to the AFC. Thor also incurred transaction
costs of $4,663,652 in relation to the loan facility. The fair
value of the liability was determined at $45,822,943 taking into
account the transaction costs and equity component and recognised
at amortised cost using an effective rate of interest, with the
fair value of the shares issued in April 2020 of $5,666,011
recognised within equity.
Interest paid during the year ended December 31, 2021, of
$3,667,835 has been capitalised to the cost of the Segilola Gold
Mine. (Refer to Note 15).
On 31 January 2023, the Group entered into an agreement with the
AFC amending the terms of its senior debt facility. (See Note
27)
Certain covenants and restrictions were released, and the
payment timetable re-scheduled to reallocate a higher percentage of
the repayments to a later period in the Facility's term.
Deferred payment facility on EPC contract for the construction
of the Segilola Gold Mine
The Group has constructed its Segilola Gold Mine through an
engineering, procurement, and construction contract ("EPC
Contract") 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
Payment Facility") of 10% of the fixed price. As at December 31,
2022, a total of $3,682,715 (December 31, 2021: $6,210,067) 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 December
31, 31, 2021
2022 Total
Total
---------------------------------------- --- ------------ --- ----------
Balance at beginning of period $ 6,210,090 $ 1,934,275
Offset against EPC payment 440,263 3,999,815
Repayments (3,440,449) -
Unwinding of interest in the period 472,811 250,402
Foreign exchange movement - 25,575
--------------------------------------------- ------------ --- ----------
Balance period end $ 3,682,715 $ 6,210,067
---------------------------------------- --- ------------ --- ----------
Current liability 531,986 3,122,990
--------------------------------------------- ------------ --- ----------
Non-current liability 3,150,729 3,087,077
--------------------------------------------- ------------ --- ----------
Short term advances
December December
31, 31, 2021
2022 Total
Total
----------------- ----------------------------------- ----------
Balance at beginning of period $ 668,570 $ -
-------------------------------- --- ----------- ---- ----------
Drawdowns - 679,294
Repayments (668,570) -
Foreign exchange movement - (10,724)
Balance period end $ - $ 668,570
-------------------------------- --- ----------- ---- ----------
13. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
ACTIVITIES
December 31, 2022 Gold stream Short term AFC loan EPC deferred Total
liability advance facility
------------------------------ --- ------------- ----------- ------------- ------------- -------------
January 1, 2022 $ 30,262,279 668,570 46,859,966 6,210,090 84,000,905
Cash flows:
(Repayment of) / Proceeds
from loans and borrowings (11,534,441) (668,570) (24,220,764) (3,440,449) (39,864,224)
Interest paid - - (4,645,014) - (4,645,014)
Non-cash changes:
Unwinding of interest
in the year 6,311,927 - 6,465,751 472,811 13,250,489
Offset against EPC payment - - - 440,263 440,263
December 31, 2022 $ 25,039,765 - 24,459,939 3,682,715 53,182,419
------------------------------ --- ------------- ----------- ------------- ------------- -------------
December 31, 2021 Gold stream Short term AFC loan EPC deferred Total
liability advance facility
------------------------------ --- ------------ ----------- ----------- ------------- ------------
January 1, 2021 $ 24,708,573 - 14,267,114 1,934,275 40,909,962
Cash flows:
(Repayment of) / Proceeds
from loans and borrowings ( 443,915) 679,294 30,943,179 - 31,178 ,558
Interest paid - - - - -
Transaction costs - ( 510,838) - ( 510,838)
Non-cash changes:
Unwinding of interest
in the year 6,562,830 - 1,738,601 250,402 8,551,833
Foreign exchange movements (565,209) (10,724) 421,910 25,575 (128,448)
Offset against EPC payment - - - 3,999,815 3,999,815
----------------------------------- ------------ ----------- ----------- ------------- ------------
December 31, 2021 $ 30,262,279 668,570 46,859,966 6,210,067 84,000,882
------------------------------ --- ------------ ----------- ----------- ------------- ------------
14. PROVISIONS
December 31, 2022 Fleet demobilisation
costs Restoration
Other costs Total
---------------------------- ---- -------- --------------------- -------------- ----------
Balance at Beginning
of period $ - $ 173,241 $ 5,064,935 $ 5,238,176
Initial recognition
of provision 18,415 - - 18,415
Changes in estimates - - (404,859) (404,859)
Unwinding of 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
---------------------------------- -------- --------------------- -------------- ----------
December 31, 2021 Fleet demobilisation
costs Restoration
costs Total
---------------------------- ---- --------------------- -------------- --- ----------
Balance at Beginning
of year $ - $ 486,500 $ 486,500
Initial recognition
of provision 173,241 - 173,241
Increase in provision - 4,628,124 4,628,124
Foreign exchange movements - (49,689) (49,689)
---------------------------------- --------------------- -------------- --- ----------
Balance at year end $ 173,241 $ 5,064,935 $ 5,238,176
Current liability - - -
---------------------------- ---- --------------------- -------------- --- ----------
Non-current liability 173,241 5,064,935 5,238,176
---------------------------------- --------------------- -------------- --- ----------
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.
15. PROPERTY, PLANT AND EQUIPMENT
(* Refer to note 26 for details on the prior year
restatement)
A summary of depreciation capitalized is as follows:
Year Ended December Total depreciation
31, capitalized
December December
2022 2021 31, 2022 31, 2021
Exploration expenditures 116,108 85,358 620,352 504,244
Total $ 116,108 $ 85,358 $ 620,352 $ 504,244
a) Segilola Project, Osun Nigeria:
Classification of Expenditure on the Segilola Gold Project
On January 1, 2022, the Group achieved Commercial Production at
the Segilola Gold Project in Nigeria ("the Project") Upon achieving
Commercial Production, the Assets under Construction was
reclassified within Property, Plant and Equipment, and transferred
to Mining Asset, Processing Plant and Decommissioning Asset.
Decommissioning Asset
The decommissioning asset relates to estimated restoration costs
at the Group's Segilola Gold Mine as at December 31, 2022. Refer to
Note 14 for further detail.
Impairment assessment
During the year ended December 31, 2022, 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 2022.
16. INTANGIBLE ASSETS
The Group's exploration and evaluation assets costs are as
follows:
Douta Gold Central Houndé Exploration
Project, Project, Burkina licenses,
Senegal Faso Nigeria Software Total
Balance,
December 31,
2020 $ 12,783,387 $ - $ 89,395 $ 224,634 $ 13,097,416
Acquisition
costs - - 74,897 - 74,897
Exploration
costs 2,037,122 106,614 742,145 - 2,885,881
Additions - - - 178,885 178,885
Amortisation - - - (167,648) (167,648)
Impairment - (106,692) - - (106,692)
Foreign
exchange
movement (600,527) 78 (11,136) (5,735) (617,320)
Balance,
December 31,
2021 $ 14,219,982 $ - $ 895,301 $ 230,136 $ 15,345,419
Acquisition
costs - - 24,103 - 24,103
Exploration
costs 3,745,803 12,014 1,693,863 - 5,451,680
Additions - - - 43,599 43,599
Amortisation - - - (122,988) (122,988)
Impairment - (12,014) - - (12,014)
Foreign
exchange
movement (1,427,912) - (70,679) - (1,498,591)
Balance,
December 31,
2022 $ 16,537,873 $ - $ 2,542,588 $ 150,747 $ 19,231,208
Impairment assessment
During the year ended 31 December 2022, 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
700km east of the capital city Dakar.
The Group is party to an option agreement (the "Option
Agreement") with International Mining Company ("IMC"), by which the
Group has acquired a 70% interest in the Douta Gold Project located
in southeast Senegal held through African Star SARL.
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 km(2) located
within the Houndé belt, 260 km southwest of the capital
Ouagadougou, in western Burkina Faso.
(ii) Ouere Permit, Central Houndé Project, Burkina Faso:
Argento BF SARL holds a 100% interest in the Ouere gold permit,
covering an area of approximately 241 km(2) located within the
Houndé belt.
The three permits together cover a total area of 474km(2) over
the Houndé Belt which form the Central Houndé Project.
(iii) Barrick Option Agreement, Central Houndé Project, Burkina Faso:
On April 8, 2015, the Group entered into the Acacia Option
Agreement with Acacia Mining plc ("Acacia"), whereby Acacia will
have the exclusive option to earn up to a 51% interest in Central
Houndé Project by satisfying certain conditions over a specified
4-year period and then the right to acquire an additional 29%, for
an aggregate 80% interest in the Central Houndé Project, upon
declaration of a Pre-Feasibility Study. Acacia met the minimum
spending requirement for the Phase 1 Earn-in in September 2018.. As
a result, Acacia earned a 51% interest in the Central Houndé
Project. The Group currently holds a 49% interest in the Central
Houndé Project.
In 2019, Barrick Gold Corporation ("Barrick") completed an
acquisition of Acacia through the purchase of the ordinary share
capital of Acacia that Barrick did not already own. The acquisition
did not affect work undertaken at the Central Houndé Gold Project
in Burkina Faso where Barrick continued its
exploration work as per its Joint Operation with Thor.
In April 2021, Thor re-acquired Barrick's 51% ownership of the
Project in exchange for a 1% Net Smelter Royalty. Thor now holds
100% of the Central Houndé Project.
Following the unsuccessful attempt by Barrick Gold to dispose of
its 51% interest in the licenses, the Group carried out an
impairment assessment at December 31, 2020, and determined that the
unsuccessful sale attempt was an indication for impairment. It is
the Group's intention to focus on Segilola development and Douta
exploration in the short term, and it does not plan to undertake
significant work on the license areas in the near future. As a
result, the decision was taken to impair fully the value of the
Central Houndé Project.
c) Exploration Licenses, Nigeria
The high grade Segilola gold deposit is located on the major
regional shear zone that extends for several hundred kilometres
through the gold-bearing Ilesha schist belt (structural corridor)
of Nigeria. Thor's exploration tenure currently comprises 13
exploration licenses and four joint venture partnership exploration
licenses. Together with the mining lease over the Segilola Gold
Deposit, Thor's total exploration tenure amounts to 1,400 km(2).
The Group's exploration strategy includes further expansion of its
Nigerian land package as and when attractive new licenses become
available.
17. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
December December 31,
31,
2022 2021
(restated*)
--- --------------------
Trade payables $ 46,914,333 $ 36,962,841
Accrued liabilities 6,213,977 3,058,121
Other payables 3,208,979 5,110,979
--------------------
$ 56,337,289 $ 45,131,941
--------------------------
Current liability 56,337,289 43,567,750
--------------------
Non-current liability - 1,564,191
--------------------
(* Refer to note 26 for details on the prior year
restatement)
Accounts payable and accrued liabilities are classified as
financial liabilities and approximate their fair values.
Included in trade payables is a balance of $10,196,105 due to
our EPC contractor. The total EPC amount has been finalized with
our EPC contractor, and this balance has been paid at the date of
release of these financial statements.
Also included in trade payables is a total of $2,215,585 (2021:
$7,115,207) that relates to third party royalties that will become
payable upon future gold sales. All these royalties' creditors are
included in current liabilities (refer to Note 3j for further
detail).
The following table represents the Group's trade payables
measured and recognised at fair value.
Level Level 2 Level Total
1 3
------------------------ --- ------- ---------
Trade payables
Third party royalties $ - - 2,215,585 2,215,585
------------------------ --- ------- ---------
The valuation is based on a cash flow model with the following
key inputs:
-- Production profiles based on Segilola life-of-mine forecasts
-- Gold price ranging from $1,660/oz to 1,735/oz
-- Discount rate of 5.25%
There are no material impacts on the valuation from a
sensitivity analysis.
18. DEFERRED INCOME
December December 31,
31,
2022 2021
---------- --- -------------
Deferred income $ 6,581,743 $ -
---------- --- -------------
The deferred income relates to advance sales of 3,687 oz of Gold
that were delivered in January 2023.
19. CAPITAL AND RESERVES
a) Authorized
Unlimited common shares without par value.
b) Issued
December December December December
31, 31, 31, 31,
2022 2022 2021 2021
Number Number
------------ ----------- ------------ -----------
As at start of the
year 632,358,009 $ 79,027,183 621,405,975 $ 76,858,769
Issue of new shares:
- Share options exercised
i 9,939,000 960,546 - -
- RSU awards vested
ii 2,399,176 451,964 - -
- Share warrants
exercised iii - - 9,952,034 2,073,450
- Share options exercised
iv - - 1,000,000 94,964
644,696,185 $ 80,439,693 632,358,009 $ 79,027,183
i Value of 9,250,000 options exercised at a price of CAD$0.12
per share and 289,000 options exercised at a price of CAD$0.145 per
share, both on January 19, 2022, and 400,000 options exercised at a
price of CAD$0.145 per share on December 13, 2022.
ii Value of 2,399,176 RSU awards that were granted and vested on
October 11, 2022, at a deemed price of CAD$0.26 per share.
i ii Value of 1,664,534 warrants exercised on June 8, 2021, at a
price of CAD$0.18 per share, and 8,287,500 warrants exercised on
August 31, 2021, at a price of CAD$0.28 per share.
iv Value of 500,000 options on July 5, 2021, and 500,000 options
on December 41, 2021, all exercised at a price of CAD$0.12 per
share.
c) Share-based compensation
Stock option plan
The Group has granted directors, officers and consultants share
purchase options. These options were granted pursuant to the
Group's stock option plan.
Under the current Share Option Plan, 44,900,000 common shares of
the Group are reserved for issuance upon exercise of options.
-- On January 16, 2020, 14,250,000 stock options were granted at
an exercise price of C$0.20 per share for a period of five years.
The options vested immediately.
-- On October 5, 2018, 750,000 stock options were granted at an
exercise price of C$0.14 per share for a period of five years.
-- On March 12, 2018, 12,800,000 stock options were granted at
an exercise price of C$0.145 per share for a period of five
years.
All of the stock options were vested as at the balance sheet
date. These options did not contain any market conditions and the
fair value of the options were charged to the statement of
comprehensive loss or capitalized as to assets under construction
in the period where granted to personnel's whose cost is
capitalized on the same basis. The assumptions inherent in the use
of these models are as follows:
Vesting First Expected Risk Exercise Volatility Fair Options Options Expiry
period vesting remaining free price of share value vested granted
(years) date life (years) rate price
5 12/03/2018 0.19 2.00% $ 0.145 105.09% $0.14 12,800,000 12,800,000 12/03/2023
5 05/10/2018 0.76 2.43% $ 0.14 100.69% $0.14 750,000 750,000 05/10/2023
5 16/01/2020 2.05 1.49% $ 0.20 66.84% $0.07 14,250,000 14,250,000 16/01/2025
In Canadian Dollars
The Group has elected to measure volatility by calculating the
average volatility of a collection of three peer companies'
historical share prices for the exercising period of each parcel of
options. Management believes that given the transformational change
that the Group has undergone since the acquisition of the Segilola
Gold Project in August 2016, the Group's historical share price is
not reflective of the current stage of development of the Group,
and that adopting the volatility of peer companies who have
advanced from exploration to development is a more accurate measure
of share price volatility for the purpose of options valuation.
Grant Expiry Exercise Remaining Opening Expired Closing Vested
Date Date Price (Years) Balance Granted Exercised / Forfeited Balance and Exercisable Unvested
16-Jan-2017 16-Jan-2022 $0.12 - 9,250,000 - (9,250,000) - - - -
12-Mar-2018 12-Mar-2023 $0.145 0.19 12,800,000 - (689,000) - 12,111,000 12,111,000 -
5-Oct-2018 5-Oct-2023 $0.14 0.76 750,000 - - - 750,000 750,000 -
16-Jan-2020 16-Jan-2025 $0.20 2.05 14,040,000 - - - 14,040,000 14,040,000 -
Totals 1.18 36,840,000 - (9,939,000) - 26,901,000 26,901,000 -
Weighted Average Exercise Price $0.160 $0.000 $0.122 - $0.174 $0.174 -
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
The following is a summary of changes in options from January 1,
2020, to December 31, 2021, and the outstanding and exercisable
options at December 31, 2021:
In Canadian Dollars
(i) On July 5, 2019, the Group announced an extension of the
expiry date from January 16, 2020, to January 16, 2022. All other
conditions of the options remain the same.
(ii) On July 5, 2019, the Group announced an extension of the
expiry date from May 7, 2020, to May 7, 2022. All other conditions
of the options remain the same.
Restricted share units ("RSUs")
In October 2022, the Group granted under its Long-Term Incentive
Plan ("LTIP") RSUs through issuing and allotting 2,399,176 new
common shares in the Company at a price of CAD 26 cents per
share.
The cost of $451,964 in relation to the RSU granted has been
recognised in the Consolidated Statement of Comprehensive Income
for the year ended December 31, 2022.
d) Nature and purpose of equity and reserves
The reserves recorded in equity on the Group's statement of
financial position include 'Reserves,' 'Currency translation
reserve,' 'Retained earnings' and 'Deficit.'
'Option reserve' is used to recognize the value of stock option
grants prior to exercise or forfeiture.
'Currency translation reserve' is used to recognize the exchange
differences arising on translation of the assets and liabilities of
foreign branches and subsidiaries with functional currencies other
than US dollars.
'Deficit' is used to record the Group's accumulated deficit.
'Retained earnings' is used to record the Group's accumulated
earnings.
20. EARNINGS PER SHARE
Diluted net earnings per share was calculated based on the
following:
December December
31, 31, 2021
2022
Basic weighted average number of shares
outstanding 641,958,083 625,373,103
----------------------------------------------
Stock options 8,359,009 -
Diluted weighted average number of shares
outstanding 650,317,092 625,373,103
Total common shares outstanding 644,696,185 632,358,009
Total potential diluted common shares 671,597,185 669,198,009
21. RELATED PARTY DISCLOSURES
A number of key management personnel, or their related parties,
hold or held positions in other entities that result in them having
control or significant influence over the financial or operating
policies of the entities outlined below.
a) Trading transactions
The Africa Finance Corporation ("AFC") is deemed to be a related
party given the size of its shareholding in the Company. There have
been no other transactions with the AFC other than the Gold Stream
liability as disclosed in Note 11, and the secured loan as
disclosed in Note 12.
b) Compensation of key management personnel
The remuneration of directors and other members of key
management during the year ended December 31, 2022, and 2021 were
as follows:
Year Ended December 31,
2022 2021
Salaries
Current directors and
officers (i) (ii) $ 1,638,597 $ 306,036
Former directors and officers 71,557 -
Directors' fees
Current directors and
officers (i) (ii) 404,097 211,947
Share-based payments
Current directors and
officers (iii) 296,502 -
$ 2,410,753 $ 517,983
(i) Key management personnel were not paid post-employment
benefits, termination benefits, or other long-term benefits during
the years ended December 31, 2022, and 2021.
(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, 2022, include $102,092 (December 31,
2021 - $346,275) 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.
(iii) RSU granted on October 11, 2022. Refer to note 19.c for
further information.
22. 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, 2022 Measured at amortised Measured at Total
cost fair value
through profit
and loss
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
---------------
December 31, 2021 Measured at Measured at Total
amortised fair value
cost through profit
and loss
------------
Assets
Cash and cash equivalents $ 1,276,270 - 1,276,270
Restricted cash 3,495,992 - 3,495,992
Amounts receivable 237,651 - 237,651
------------
Total assets $ 5,009,913 - 5,009,913
------------
Liabilities
Accounts payable and
accrued liabilities $ 38,024,962 7,106,979 45,131,941
Loans and borrowings 53,738,603 - 53,738,603
Gold stream liability - 30,262,279 30,262,279
Lease liabilities 18,274,374 - 18,274,374
------------
Total liabilities $ 110,037,939 37,369,258 147,407,197
------------
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 12). 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:
Interest Interest
rate rate
Appreciation Depreciation
December 31, 2022 By 5% By 5%
Comprehensive income (loss)
Financial assets and liabilities $ (2,086,408) $ 2,086,408
December 31, 2021
Comprehensive income (loss)
Financial assets and liabilities $ (2,162,336) $ 2,162,336
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 2022, 93% of the Group's cash balances
were invested in AA rated financial institutions (2021: 93%), 2% in
AA- rated financial institutions (2021: 1%), 1% in A+ rated
financial institutions (2021: 1%) and 4% in B rated institutions
(2021: 5%).
The Group sells its gold to large international organisations
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 December 31, 2022 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, 2022, and December 31, 2021, were as follows:
December December 31,
31,
2022 2021
----
Cash $ 6,688,037 $ 1,276,270
Restricted cash - 3,495,992
Amounts receivable 220,442 237,651
Total $ 6,908,479 $ 5,009,913
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
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.
Liquidity and funding risk (continued)
The following table summarizes the Group's significant remaining
contractual maturities for financial liabilities at December 31,
2022, and December 31, 2021.
Contractual maturity analysis as at December 31, 2022
Less than 3 - 12 1 - 5 Longer
3 months Months Year than Total
$ $ $ 5 years $
$
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
Contractual maturity analysis as at December 31, 2021
Less than 3 - 12 1 - 5 Longer
3 months Months Year than Total
$ $ $ 5 years $
$
----------- ---------
Accounts payable
and accrued liabilities 38,699,814 4,862,676 1,952,408 - 45,514,898
Lease liabilities 1,213,678 3,641,035 16,991,498 - 21,846,211
Gold Stream Liability 2,237,631 10,614,896 33,955,921 46,808,448
Loans and borrowings 1,984,714 26,031,054 32,400,920 - 60,416,688
44,135,837 45,149,661 85,300,747 - 174,586,245
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 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, 2022:
Functional currency
US dollar Pound Nigerian West
Sterling Naira African Total
Franc
Currency of December December December December 31, December 31,
net monetary 31, 2022 31, 2022 31, 2022 2022 2022
asset/(liability) USD$ USD$ USD$ USD$ 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 shows the currency of net monetary assets
and liabilities by functional currency of the underlying companies
for the year ended December 31, 2021:
Functional currency
Canadian US dollar Pound Nigerian West
dollar Sterling Naira African Total
Franc
Currency of December December December December December December
net monetary 31, 2021 31, 2021 31, 2021 31, 2021 31, 2021 31, 2021
asset/(liability) USD$ USD$ USD$ USD$ USD$ USD$
----------
Canadian dollar (484,067) - - - - (484,067)
US dollar (190,391) - - (132,585,040) - (132,775,431)
Pound Sterling (361,244) - - (80,926) - (442,170)
Nigerian Naira - - - (3,910,833) - (3,910,833)
West African
Franc - - - - 11,481 11,481
Australian dollar (36,626) - - (19,377) - (56,003)
----------
Total (1,072,328) - - (136,596,176) 11,481 (137,657,023)
The following table discusses the Group's sensitivity to a 5%
increase or decrease in the United States Dollar against the
Nigerian Naira:
United States United States
Dollar Dollar
Appreciation Depreciation
December 31, 2022 By 5% By 5%
Comprehensive income (loss)
Financial assets and liabilities $ 112,516 $ (112,516)
December 31, 2021
Comprehensive income (loss)
Financial assets and liabilities $ 194,000 $ (194,000)
23. 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.
24. 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 as 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.
25. 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, 2022 Segilola Exploration Corporate Total
Mine Project Projects
Current assets $ 36,334,005 $ 120,752 $ 831,907 $ 37,286,664
Non-current assets
Deferred income tax
assets - 77,797 - 77,797
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 - 17,954,291
Total assets $ 201,842,500 $ 19,628,795 $ 1,780,518 $ 223,251,813
Non-current asset additions $ 10,527,299 $ 2,612,033 $ 1,337,066 $ 14,476,398
Liabilities $(133,370,335) $(1,381,629) $(1,718,410) $(136,470,374)
Profit (loss) for the
period $ 27,939,847 $ (273,511) $(2,267,395) $ 25,398,941
- revenue 165,174,531 - - 165,174,531
- consulting fees (510,656) (164,563) (587,724) (1,262,943)
- salaries and benefits (1,468,610) - (2,793,302) (4,261,912)
- depreciation owned
assets (26,907,422) (8,672) (12,062) (26,928,156)
- impairments - (12,013) - (12,013)
- interest expense (14,616,810) - - (14,616,810)
Non-current assets by geographical location:
British
Burkina Virgin United
Senegal Faso Islands Nigeria Kingdom Canada Total
December 31, 2022
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 - - 149,635,179 101,491 5,461 149,918,776
Intangible assets 10,704,623 - - 8,526,585 - - 17,954,291
Total non-current
assets 10,881,268 - 7,024 174,468,785 919,673 5,461 186,282,211
The Group`s total revenue of $165,174,531 (2021: $6,049,485) is
fully generated in Nigeria and comprise of $165,060,320 gold sales
(2021: 6,049,485) and $114,211 silver sales (2021: $nil). All sales
are done to the Group`s only customer.
December 31, 2021 Segilola Exploration Corporate Total
Mine Project Projects
Current assets $ 23,245,206 $ 76,104 $ 422,026 $ 23,743,336
Non-current assets
Deferred income tax
assets - 86,795 - 86,795
Prepaid expenses, advances
and deposits 87,223 - 18,460 105,683
Right-of-use assets 20,843,612 - - 20,843,612
Property, plant and
equipment 151,655,614 455,339 3,964 152,114,917
Intangible assets 224,808 15,120,611 - 15,345,419
Total assets $ 196,056,463 $ 15,738,849 $ 444,450 $ 212,238,762
Non-current asset additions $ 71,990,597 $ 3,999,195 $ 3,661 $ 75,993,453
Liabilities $(151,299,202) $ (43,436) $(1,302,735) $(152,645,373)
Profit (loss) for the
year $ 1,975,712 $ (261,559) $(3,783,348) $ (2,069,195)
- revenue 6,049,485 - - 6,049,485
- consulting fees (8,096) (148,781) (194,086) (350,963)
- salaries and benefits (256,228) - (1,029,378) (1,285,606)
- depreciation owned
assets (59,611) (4,249) (1,158) (65,018)
- impairments - (99,059) - (99,059)
- interest expense (64,877) - - (64,877)
Non-current assets by geographical location:
British
Burkina Virgin
December 31, Senegal Faso Islands Nigeria Canada Total
2021
Prepaid expenses,
advances and
deposits - - 12,623 74,686 18,374 105,683
Right-of-use
assets - - - 20,843,612 - 20,843,612
Property, plant
and equipment 201,264 - - 151,198,170 4,018 151,403,452
Intangible assets 14,529,771 - - 815,648 - 15,345,419
Total non-current
assets 14,731,035 - 12,623 172,932,116 22,392 187,698,166
26. PRIOR YEAR RESTATEMENT
During the preparation of the current financial statements, the
Group identified invoices for contracted services provided during
2021, amounting to $4,740,261, in relation to the construction of
the Segilola Gold Mine that had not been accounted for in the prior
period financial statements.
Therefore, in accordance with "IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors", the Consolidated
Statement of Financial Position for the year ended December 31,
2021 has been adjusted by recording an increase of $4,740,261 in
the "Property, Plant and Equipment" account and an equal increase
in the "Accounts Payable and Accrued Liabilities" account.
There are no impacts on the Consolidated Statements of
Comprehensive Income nor Cash Flows, as well as on years ended
prior to December 31, 2021.
The presentation currency of the Group has also been changed to
United States Dollars (US$) to align with the functional currency
of the parent entity and SROL and applied this change
retrospectively resulting in the restatement of prior periods.
27. SUBSEQUENT EVENTS
Amendment and rescheduling of senior debt facility
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.
In addition, the amortization schedule of the facility has been
re-scheduled per the below. No material accounting implications are
expected as a result of this amendment.
EPC Contract
As of the date of these Financial Statements, the Company has
made all outstanding due payments in relation to the EPC contract.
At December 31, 2022, this amounted to US$10,196,105.
[1] Refer to "Non-IFRS Measures" section
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