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Thor Mining PLC: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Thor Mining looks well set to start “turning resources into money”

Thor Mining has a strong pipeline of projects across an attractive range of commodities
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INVESTMENT OVERVIEW: THR The Big Picture
Tungsten prices have been on the rise

Thor Mining PLC (LON:THR) is in the enviable position for a junior miner of having removed virtually all exploration risk.

The position is even more enviable as it applies not just across one project, but across three, all with commodities that are currently enjoying a strong pricing run.

“We have three projects, each of which is likely to be mined at some stage in the not too distant future,” explains chief executive Mick Billing.

“Of the three deposits we have resource estimates on two.”

The most advanced is the Molyhil tungsten project in Australia’s Northern Territory, where the company recently released an updated definitive feasibility study (DFS).

READ: Thor Mining's new DFS for Molyhil projects earnings of A$239mln over seven year life of mine

Coming along behind Molyhil is the Pilot Mountain tungsten project in Nevada, which already boasts a combined resource across two deposits of nearly 12mln tonnes of mineralised material.

That resource is likely to be followed by a maiden estimate on the Kapunda copper project in Australia, for which Billing also has high hopes.

In support are an Australian lithium project, and a royalty on an old Thor project called Spring Hill, now being developed by private Australian vehicle PC Gold.

Making a mountain of cash out of Molyhil

Like all good mining executives, Billing is keeping his options open as regards to the future of his leading projects.

“A lot of the risk associated with grass roots projects is now gone,” he says.

“We’re now in the process of turning resources into money. We can do that in one of several ways. We can package our assets up for sale and sell them for quite a few multiples of what we’ve spent to get them to where they are now, or we can take a development approach to each of Molyhil, Pilot Mountain and Kapunda. The two are not mutually exclusive.”

All that being said, it seems clear that the near-term focus of investors is likely to relate to Molyhil.

The DFS points to underlying earnings (EBITDA) of A$239mln over the current seven-year life of mine at Molyhil with a project payback period of fewer than 18 months after payment of royalties and taxation. The first production is targeted for early 2020.

The DFS postulates a net present value (NPV) of A$101mln at a discount rate of 5% with an internal rate of return of 59% after payment of taxes and royalties.

The project finance requirement has been put at US$43mln.

Note that all of that relates purely to the open pit operation; Thor believes the tungsten and molybdenum project offers substantial upside potential from subsequent underground mining at Molyhil and from the nearby Bonya tungsten deposits.

The next stage now is to secure finance. Billing has been through this process before, so he knows what’s required. Once-upon-a-time, a short mine life at Molyhil had proved a stumbling block but that mine life has now been pushed out and tungsten prices are much higher. It all makes for a much more welcoming finance market.

"Molyhil is 100% owned by Thor Mining and is construction ready subject to submission of an acceptable mining management plan and finalisation of project level mine construction financing. Upon finalisation of project-level financing, (which the company hopes to conclude in the next few months), the construction phase for Molyhil is estimated at 12 months,” Billing said in August.

Molyhil should eventually support the development of the other projects

Once up and running, Molyhil will be in a position to provide welcome support to Thor’s other advancing projects.

At Pilot, metallurgical test-work has already demonstrated that the project can produce saleable scheelite and copper concentrates. Accordingly, Billing is comfortable that Thor will be able to take this project, too, into production but it will take time.

“There’s a process we have to go through in Nevada,” he says. “You don’t short-cut that.”

With Molyhil moving forward though, Thor can afford to spend the time doing things right at Pilot.

Meanwhile, Kapunda, is also likely to provide interest along the way.

READ: Thor Mining secures research grant for recovery process at Kapunda project

In late July, Thor secured a research grant from the Australian government to help fund research of recovery processes at its Kapunda project in South Australia.

The grant, awarded over a 30-month period, will be used to cover the costs of a demonstration of an in-situ recovery (ISR) process as part of its ISR copper and gold recovery trial at the project.

That should prove Kapunda to be one of the few viable in-situ copper projects in the world, and as such it ought to garner significant attention.

It seems likely, too, that investors will increasingly be drawn to Thor on ongoing positive news flow, since the company is unlikely to dilute any time soon as it is financed well into 2019.

READ: Thor Mining says it is financed “well into 2019” as projects progress

Of course, if additional opportunities come along, then things might change but for the time being, Thor has plenty to do and is well positioned to get it done.

 

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