Q & A with Thor Mining plc (LON/ASX:THR) Executive Chairman Mick Billing

4 January 2018

2018 has been a poor year for resource juniors, how are you feeling about 2018 and significantly 2019?

Mick Billing:
We started 2018 at 2.9p, managed to reach 4.375p in trading in February, and as at today we are sat at 1.3p. That means we increased 50% plus from January to February. Then declined 55% from the opening share price at the start of the year and 70% from our year high share price.

This is the stock market, so any period of share price declines are not good periods for investors. On that basis 2018 was poor.

That’s not all of the story though. In 2018 the Thor business advanced more than any other calendar year in our history across all key projects areas. At a project level, we believe we have made outstanding progress. This means the inherent worth of Thor is higher than January or February 2018, but our market value is not.

For 2019, we should expect a period of the market playing catch up for the Thor share price and its valuation. I can’t guarantee that will happen, as I don’t control the markets.

I have however seen many examples of market conditions in the resource sector swinging from negative to positive and the market valuations of companies just like Thor moving in tandem.

We are not entirely market condition dependent, because we have real assets in our business, not just interests that consume cash and require a lot of investment to move to points of value. In other words we much more than just pure exploration which does tend to be more heavily linked to market conditions.

If we assume conditions in the resource sector become more conducive to proper valuations what do you see as the 2019 drivers that could help your share price recover?

Mick Billing:
Looking at our key projects from the most advanced to the earliest stage. Here are the share price drivers I see. The market may find others and I may be wrong of course.

Molyhil – Tungsten, Molybdenum (Australia)(THR 100%)

This is our most advanced project, permitted to mine subject to project level financing and submission of the final updated Mining Management Plan (already prepared pending financing conclusion).

Our updated Definitive Feasibility Study findings announced on 23 August 2018 demonstrated project revenues of over A$500 million, an all equity Net Present Value of A$101 million and an Internal Rate of Return of 59%. By normalised industry assessment of the project technicals, we believe this is a highly robust and valuable project.

Investors want to see construction starting so that announcement when it arrives will be a major positive as people will know from our announcements, construction is only a 12-month process and the forecast revenues that Molyhil will produce could make our Company self-financed.

I look forward to the commencement of construction announcement, and the commencement of production announcement even more. These inflexion points of value are what we are striving towards as soon as possible.

To get there Molyhil needs project-level financing.

Project level financing announcements will, I believe, be further key drivers as the commitment of third parties to finance Molyhil or take products through offtakes will mark commercial viability far more than technical studies or corporate belief, particularly in the low sentiment environment we have experienced of late.

We have made an effort in announcements to point out the range of interest we have received on Molyhil. And the various potential structures of any deal have included joint ventures, acquisitions and offtakes.

To help us with this process on 20 November 2018 we announced the appointment of Argent Partners to help with completion of off-take and financing arrangements for Molyhil. There are times when you should look to more experienced hands to help navigate the process and this was one.

It has taken us time to get to this point and our approach has always been best described as careful filtering and diligence. The reason is that Molyhil in production is without question a transformational step for the company and the underlying financing package that enables that to happen must be carefully constructed to provide considerable and fair upside for financial partners and for our shareholders.

Financing discussions are deliberately cautious, even though we are looking to finalise this and get Molyhil producing.

Investors should be aware that there are often multiple elements to financing, including project equity, project-level debt and offtake arrangements. Where commercially possible, and subject to sensitivities where we always have to protect shareholders’ commercial interests, we will be announcing each development. I would like to start that process as soon as possible.

Pilot Mountain – Tungsten, Copper, Silver, Zinc (USA)(THR:100%)

Thor has been moving forward the Pilot Mountain project for a few years and the step change additions of value have been notable.
Investors will likely now understand the criticality of tungsten supply in the United States and that Pilot Mountain is the most advanced JORC compliant tungsten project in the country.

Strategically Pilot Mountain is perfectly positioned in place and time. It is earlier stage than Molyhil and on 7 September 2018 we announced the finding from our Scoping Study for the project with pre-tax profit expectations ranging from US125 million base case to US317million. This is a substantial project.

More recently on 13 December 2018 we announced an increased mineral resource estimate for the Desert Scheelite deposit including tungsten, copper, silver and, for the first time, zinc.

Including Garnet deposit Pilot Mountain has inferred and mainly indicated JORC compliant resources of 34,290 tonnes of tungsten, 16,000 tonnes of copper, 207 tonnes of silver and 40,300 tonnes of zinc. As I said this is a substantial project.

We are undertaking some technical work at the moment which although ostensibly may not seem too interesting for investors, actually helps determine the extent of value we have on offer at Pilot Mountain, as well as providing guidance for the path forward.
Therefore successful technical work news announcements should add materially to the inherent value of the project and be a share price and value driver.

This work includes trialling of the planned flotation process and an assessment of the recovery of zinc sulphides. Various other activities are planned or underway with Pilot Mountain and we have promised to provide a more detailed update on this to help the market understand where the project sits in the development and commercialisation pathway.

I believe that 2019 holds multiple points where we can add considerably to the interpreted value of Pilot Mountain and look forward to updating investors through our formal market announcements.

Kapunda – Copper (Australia) (THR earning into 45%)

The Australian Government are extremely supportive of resource project development in Australia and the Kapunda project, and the technology behind it received an A$2.85 million research grant as announced on 30 July 2018. Aside from the cash injection into this project, the grant was an important validation of Thor and its partners’ work at Kapunda.

On 22 February 2018, the Company announced the inferred copper resource at Kapunda of 119,000 tonnes of contained copper within 100 metres of surface. This is another substantial project.

Importantly Kapunda is an in-situ recovery process (“ISR”) which means the injection of essentially benign solutions into the ground to extract the copper within. This is not traditional mining and is much less disruptive and significantly less costly in terms of up-front capex or ongoing operational expenditure.

Even more importantly, if the ISR process is shown to be commercially viable the technical process may be transferable to a number of copper recovery projects in Australia, and elsewhere.

With this in mind, it was extremely positive that on 18 December 2018 we were able to announce that “Proof of Concept” has been achieved which means on the basis of the work to date the process for copper recovery is proving to be viable.

There will be more announcements on the technical progress in relation to the ISR process, the development of Kapunda and the potential application of this ISR approach to other opportunities, in 2019. Each positive step forward announced should without question be a share price driver for Thor.

Bonya – Tungsten, Copper, Vanadium (Australia)(Thor 40% & 100%)

Bonya is a project some 30 kilometres from Molyhil and we announced the acquisition of an interest on 28 March 2018. The project consists of EL29701 (40% Joint Venture with Arafura Resources (ASX:ARU)60%) and EL29599 (100% Thor).

The Bonya licence area is not just perspective, the perspective it hosts known deposits of tungsten, copper and vanadium. The tungsten is important as with Molyhil just 30 kilometres away, ore can be added to the Molyhil production plant and we believe could significantly extend the life of the Molyhil mine.

There are numerous smaller copper deposits that we have identified and on 26 November 2018, we announced a JORC compliant resource for the first deposit. There will likely be a number more of these to come. These copper deposits can be processed at Molyhil with no additional plant facilities, therefore they very quickly enhance the value of Molyhil.

In addition, there is material documented historical drilling to demonstrate the presence of what we believe may be significant Vanadium mineralisation.
Overall Bonya offers the Company a unique mix of opportunity. First, to bolster throughput and mine life for the Molyhil production plant we will be building and also upside exploration potential including notably vanadium mineralisation.

During 2019 news announcements will be covering tungsten, copper and vanadium developments at Bonya, with drilling of the tungsten deposits projected in the first quarter, and we anticipate this project could deliver a number of share price drivers during the year.

The sector conditions have made it difficult to raise finance for operations and that makes it challenging for junior resource companies to make operational progress and deliver news. How are you doing in this regard?

Mick Billing:
We are fortunate here and have the financial resources to feel secure corporately and aggressive operationally. When Molyhil is producing the forecast cash flow generated will provide considerable finance for our Company.

In the interim, we have a strong cash position bolstered recently by a significant amount of warrants converted prior to their expiry in late 2018. In addition, further financial resources may be generated from commercial transactions related to our existing assets.
As soon as possible we want to be seen by investors as financially self-sufficient and we know that will give investors additional confidence in the company.

The irony is we have received numerous offers of equity finance from certain institutions over the last year or so. We are grateful for their interest and apparently, they have a number of investors who are very interested in our developing business. We have of course politely turned such proposals down.

How confident are you in Thor’s future and potential ability to generate returns for shareholders?

Mick Billing:
I am more confident than ever before. That’s not to say we don’t have a lot more work to do to maximise our business potential, because we do.
However, the commodity focus of our business is looking very well timed.

The strategic nature of our projects, geographically and commercially, is just about perfect given the way the world is progressing.
And across Molyhil/Bonya, Kapunda and Pilot Mountain we have three substantial interests with further substantial growth potential.
We have a strong balance sheet and an aggressive development plan.

From our strategic & operational planning work, and from the information available to us as we close out 2018, we think 2019 could be an extremely exciting year for the company and our shareholders.

Happy New Year to you all at Sharetalk, to our shareholders and to investors generally reading this article.


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