A Canadian company, Thor Explorations Limited has renewed interest in boosting Nigeria’s efforts to persuade investors that it could become a mining destination for metals in West Africa.
While gold miners face the death of new discoveries across the globe, the Vancouver-based firm, which is listed on Toronto Stock Exchange, is interested in joining a rush for the commodity in Africa, seeing Nigeria as a new frontier.
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What it means
The most populous nation in Africa could be on the cusp of getting its first industrial-scale gold mine from Thor that is developing a project capable of producing 80,000 ounces per year in Osun State, Nigeria targeting to start operations early 2021.
Also, Africa Finance Corporation, which is backed by the Central Bank of Nigeria and a group of local banks, is investing in the Thor project through a $78 million debt-equity financing package.
Head, Natural Resources, AFC, Osam Iyahem, said, “The project, which is low-hanging fruit, would prove to the Nigerian government and the international financing community that mining can be a viable proposition in Nigeria.”
Chief Executive Officer, Thor Exploration, Segun Lawson, disclosed that Nigeria’s reputation poses a major obstacle for traditional mining financiers.
He said, “When I presented this project, it was very difficult to even get meetings with investors, let alone convince them to put money in it. Nigeria is not a known mining jurisdiction.”
Where Nigeria stands
Mining made up between 4% and 5% of Nigeria’s gross domestic product in the 1960s and 1970s before foreign operators left the country and oil dominated the government’s agenda for obvious reasons. Now, metal ores account for less than 0.1%, while crude exploration makes up 8% to 10% of GDP and brings in 90% of export earnings.
Call for law reform
Experts have called on the government to reform its laws to encourage investors to carry out exploration throughout the country as witnessed in the Democratic Republic of Congo and Zambia in the early 2000s.
A mining analyst at South Africa-based Mergence Corporate Solutions, Peter Major, said, “After both countries dramatically altered their legislation, mining and exploration investment exploded.”
Going forward: However, the Federal Government has promised to increase mining’s contribution to GDP to 3% by 2025.
Minister of Mines and steel development, Olamilekan Adegbite, explained that the government is building a databank to provide easy access to prospective investors on potential areas to target for exploration and has also put in place incentives, including a tax holiday of as long as five years for projects entering production and the removal of import duties on mining equipment.
He said, “As gold producers and prospectors are pouring money into the region, larger mines than Thor’s have either recently commenced production or are scheduled to do so early next decade in Burkina Faso, Ivory Coast and Ghana. The share of exploration investment that Nigeria has so far attracted is “abysmally low.
“Africa’s largest oil producer has sizeable untapped deposits of metals including iron ore, gold, zinc and lead but almost all extraction is done on a small-scale or manual basis. These are people who hardly pay any revenue to government.”
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About Thor
Thor Explorations Limited is a gold exploration company with a focus on early-stage gold exploration projects located in highly prospective underexplored regions of West Africa.
Thor Explorations (“Thor”) aims to increase its shareholder value through the development of its prospective exploration and development portfolio which were acquired through a continued selection of high-quality projects.
Focusing on West Africa, Thor evaluates existing and under-explored highly prospective geological regions of West Africa, seeking to access opportunities early on in the exploration value chain.
Thor trades on the TSX Venture Exchange (Toronto Stock Exchange) under the symbol “THX”.