New figures showing more than twice the potential gold in Thor Explorations' (TSXV: THX; LSE: THX) Douta project in Senegal means "greater confidence" it will be the company's second mine in West Africa, analysts said.
Douta holds an indicated resource of 20.2 million tonnes grading 1.3 gram gold per tonne for 874,900 oz. contained metal and an inferred resource of 24.1 million tonnes grading 1.2 grams gold for 909,400 oz. contained metal, the company said in a news release on Monday.
The updated estimate's 1.78 million oz. of contained gold is a 144% increase compared with an initial resource in November 2021 that outlined inferred resources totalling 730,000 oz. of gold in 15.3 million tonnes grading 1.5 grams gold.
Echelon Capital Markets called the new figures "impressive" for Douta, which lies in in the far southeast of Senegal and is 70% owned by Thor while the rest is held by local partner International Mining Co. More drilling is planned for this year as Thor prepares a preliminary feasibility study for what could be an open-pit operation.
"The impressive resource growth illustrates the potential for Douta to become Thor's second operating asset in West Africa, potentially largely funded via internal cash flow, which should help de-risk the story and ultimately help close the valuation gap with peers," Ryan Walker, a mining analyst for Echelon, wrote in a note on Monday.
Thor, which is registered in Vancouver but does most of its business in London, trades at a discount to similar companies, Echelon said. Its share price-to-cash-flow ratio is 3.6 compared with 7.5 for peers, while its price-to-net-asset-value is 0.45 versus 0.84 for similar companies, the analyst said.
The miner also generally outperforms peers regarding the growth of its cash flow and its all-in sustaining costs. Thor operates the Segilola gold mine in Nigeria, about 200 km northeast of Lagos, which has produced 98,000 oz. of gold, the company said.
"We expect such discounts to narrow as Thor gains market exposure, continues to consistently perform on an operational basis and continues to demonstrate exploration success at both Segilola and Douta," Walker said.
The updated Douta resource includes the Makosa, Makosa Tail and the Sambara prospects, all of which remain open along strike and down-dip after 64,567 metres of drilling, the company said. The estimate used a cut-off grade of 0.5 gram gold per tonne within optimized open-pit shells using a gold price of US$2,000 per ounce.
A further 40,000 metres of diamond and reverse circulation drilling is planned for Douta this year. Mineralization remains open along strike between the prospects with growth potential along 20 km of prospective strike length, it said.
"We are now focusing our exploration efforts towards expanding the resource along the prospective corridor that runs along the full 30 km length of our exploration licence," Segun Lawson, president and CEO, said in the release. "Priority will be given to extensional drilling at Makosa, Maka, Mansa and the newly discovered Sambara prospects."
Its partner on Douta, International Mining Co., has a 30% free carried interest in the project until Thor declares a probable reserve. At that point, International Mining must either sell its interest to Thor or fund its pro-rata share of exploration and operating expenses. Thor didn't immediately reply to an email seeking clarification on the ownership of International Mining.
The 58-sq.-km Douta project is located in the K?(C)ni?(C)ba inlier, 4 km east of the Sabadola-Massawa project owned by Endeavour Mining (TSX: EDV; LSE: EDV). Bassari Resources (ASX: BSR) is developing the Makabingui project immediately to the east.
Preliminary tests indicate that Douta's oxide material may be recovered using gravity and carbon-in-leach methods, Echelon said. Biological oxidation and pressure oxidation methods are also being assessed. Endeavour's Massawa achieved gold recoveries of 88% for similar rocks using biological oxidation processing, Echelon said.
Shares in Thor gained 1.7% in Toronto on Monday to 30 ? each, within a 52-week range of 18 ? to 35 ?, valuing the company at $196.5 million.