This is an updated response to my previous blog on Thor Mining plc ASX:LON: THR. This article represents my own research, future outlook and personal views of the company. If you haven’t already, I would recommend reading the previous article here, to understand Thor Mining as a company and a more detailed assessment of its projects.
Thor Mining plc is an exploration and development company dual listed on AIM and the ASX markets. It has direct exposure to the commodities Tungsten (W), Copper (Cu) and Silver (Ag). It also has exposure to Molybdenum(Mo) and Vanadium (V) potential.
Thor has recently seen a flurry of news flow including a Definitive Feasibility Study for Molyhil and a significant A$2.8million grant to assist with the recent resource upgrade at the Kapunda Copper Mine. We are also close to Pilot Mountain’s Scoping Study. A news-rich period now looks set for the company to detail its latest developments on its core assets.
The company currently has 653million shares in issue and a market capitalization of £13.07million. Notwithstanding the above, the retrace in recent times from its high of 4.375p back to 2p has created an opportunity to reflect on the company’s progress towards its goal of commercialising its projects and to provide an update to my initial article.
The company has also built a strong base of investors with AIM-listed company Metal Tiger holding 10.65% and representation on the Thor board. The current director holdings are 6.46% and former Non-Executive Director and serial investor, Paul Johnson also holds 5.4% highlighting the potential and appeal of Thor as a company. One thing to highlight is that Thor Mining is fully funded well into 2019 (Letter to shareholders 18 June 2018).
We had touched on Thor Mining having a number of projects that are at an advanced stage for near-term development. These projects are fairly unique and are why this company interested me to take a much deeper look in the first place. It’s core assets consist of:
– Molyhil – Tungsten, Molybdenum, potential Vanadium at Bonya, Northern Territory Australia
– Pilot Mountain – Tungsten, Copper & Silver, Nevada, USA
– Kapunda Copper Mine, Copper, Australia
The significant interest in Tungsten, as mentioned previously, was a shrewd one.
Molyhil and Bonya JV – Tungsten and Molybdenum, Australia Northern Territory.
The recent Definitive Feasibility Study (DFS)released on Thor Mining’s Molyhil project (23rd Aug 2018 ASX) highlighted the overall potential of the mine, including total revenues of A$500millionover its 7-year mine life and an EBITDA (Earnings before interest, tax, depreciation and amortization) of A$245million. With a financial requirement of only US$42million, it makes it a viable and economic project at an exceptionally low-cost expenditure. Note that the 7-year mine life does not include the underground mining potential.
One aspect that particularly caught my attention on the DFS was the Life of Mine C1 Cash Cost. This is the amount of expenditure incurred at each processing stage, from mining through to recoverable metal delivered to market. The cost of Tungsten for Molyhil is at $90/mtu. A Metric ton unit (mtu) equates to 10kg with Tungsten usually being quoted in this metric. So to run through the numbers, Tungsten is currently trading around $300 /per mtu, which means the $90/mtu mining cost provides a significant margin vs the commodity price.
With the demand in Tungsten remaining bullish (Tungsten holding price of $300/mtu), getting Molyhil financed for production would mean multiples of the current share price. The company has mentioned that 2020 would see the commencement of Molyhil production and with Thor’s lowly Market Cap of just over £10million, any JV, sale, or offtake agreement would help to re-rate the company’s share price to a value which would reflect this key milestone.
Mick Billing, Thor’s CEO has dedicated years to the Molyhil project, the recent acquisition of the Bonya deposits (RNS 19 April 2018) has added both scale and operating life to Molyhil. It also includes high-grade Copper which adds extra value as the processing plant will also be suitable for Copper floatation.
As well as Copper, Tungsten and Molybdenum present in these deposits, Bonya also has been pinpointed for Vanadium, attracting plenty of suitors to the area. Privately owned Vanadium Mining’s Pty Ltd is also situated next to Bonya and has the Wollagalong and Chisholm Vanadium Projects parallel to Thor Minings Bonya JV deposits. ASX listed Hardey Resources Limited (ASX: HDY) recently conducted due diligence in this area indicating these projects are in “the right Vanadium neighbourhood” which further increases Thor’s potential of hitting a large Vanadium deposit.
One of the key indicators that Molyhil is at near stage commercialisation is from the recent ANN (23rd Aug 2018 ASX), which states the company will “continue to engage with third parties who have expressed a specific interest in the project”. With the DFS completed we would expect the next update on Molyhil to be around financing this into production.
Pilot Mountain, Tungsten, Copper & Silver, Nevada, USA,
Whilst Molyhil provides a fantastic opportunity to add significant value to Thor Mining, we all know investors want the excitement of an in-demand tier one project.
Pilot Mountain is the asset with the potential to transition Thor towards it mid-tier aspirations. It’s not as advanced in terms of Molyhil but recent developments in the world to date, have made this now arguably one of the most exciting assets on AIM. As well as Tungsten it also has copper and silver.
Since my last update, we have seen the recent introduction of the US ‘Critical Minerals List’ which infers Tungsten as a fundamental commodity to U.S. National Security and economic growth. This list highlights 35 commodities as a vital source of the USA’s plans for expansion, which are to be sourced locally.
Pilot Mountain is a real gemstone in this instance. The US has no viable operating Tungsten mines, previously sourcing this mineral via recycling (50%) and importation (50%). Both expensive and unfavourable to Donald Trump’s vision to drastically increase USA’s self-sufficiency in resources.
With the scoping study due to near term, it will be interesting to see exactly how this can fit into the US federal government’s picture for acquiring economic mines that fulfil its Critical Mineral requirements. This has now drastically sped up the time frame for Pilot Mountain being looked at as a serious commercial option for US-sourced Tungsten.
Being the only asset that is of that magnitude in the US currently, I suspect it will be only a matter of time before something happens here. The scoping study will detail how much pre-development efforts are warranted and we will get a more robust plan of action but I suspect that as with Molyhil we will exceed expectations.
Kapunda Copper Project, Copper, Australia.
The baby in the corner is now not such a baby. The Kapunda Copper Mine was as previously mentioned in my last post, was the first operating Copper Mine in Australia. It has huge historical value for the country and is well known. In February 2018, Thor released an Inferred JORC Resource Estimate for Kapunda of 119,000 tonnes of contained copper. The relatively low cost of the operation from the near surface deposits make this a highly desirable asset. If we are to have a shortage of copper come 2022, then it’s exactly this kind of project which will be looked at due to the accessibility and minimal financial risk for copper exposure.
To make this even more noteworthy, the Australian Government of Ministry for Science, Jobs and Innovation has provided Environmental Copper Recovery SA Pty Ltd (ECR) research funding of A$2,851,303, over a 30-month period. To put this in context, ECR holds 75% of the Kapunda Copper Mine with Thor Mining having the right to earn into 60% of ECR. Therefore, Thor has the option to earn into 45% of Kapunda Copper Mine through ECR, which is significant due to the impending scale of the project. This grant is a real validation towards the economic development of the project in the near term. It also means Thor has more capital to deploy elsewhere and its investment in developing Kapunda become more sustainable.
One of the interesting aspects around Kapunda is its In-Situ Recovery (ISR) which is about metal production in a clean and environmentally friendly manner. In context, the operation is designed to perform a clean-up of the copper which is scattered all over the former Kapunda mine. Giving a valuable but currently stranded resource. If the process is developed well, then I would expect there will be multiple opportunities for ECR and THR to pursue. This is a very large multi-project opportunity and fairly unique compared to the tier one copper plays most people go after, hence the significant government grant. The market is yet to realise the exact potential of this project. You can follow the progress of this on Twitter via @Envirocopper.
USA Lithium Pty Ltd, Lithium, USA,
Thor had an interest in Lithium through USA Lithium Pty Ltd. However the company has decided to dispose of its 125million shares through Hawkstone Mining Limited (ASX: HWK), subject to certain criteria. On the 6th Aug 2018, Hawkstone held a general meeting to approve the transaction which was passed.
A lot has happened in a year for Thor Mining and although not reflected in the share price, the company progress has been nothing short of phenomenal. The development stages are often quiet due to the sensitive nature of transactions. The release of Molyhil DFS, an expected Pilot Mountain Scoping Study, the increase in Kapunda Copper and the A$2.8million grant has, in my humble opinion, pushed Thor to the edge of real transformational change.
The progress of all the projects and the focus given to these demonstrates Mick Billings belief in the commercial potential of all three projects.
Each could be a potential company maker which is what excites me about this stock. Most companies don’t have one viable project, but with three that are all at key development stages, we might just see this lead the way in the near future.
Disclaimer: I currently hold Thor and all research and opinion is my own and not of the company.
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