Rude awakening for ThorRebecca LawsonFriday, 27 April 2007THOR...

Rude awakening for Thor
Rebecca Lawson
Friday, 27 April 2007

THOR Mining is on the hunt for a new partner for its Molyhil tungsten-molybdenum project following a fax received from Hunan Nonferrous Metals Holding Group (HNG), which had signed an exclusive memorandum of understanding agreement, stating it would not participate in developing the project.

Thor chief executive John Young told MiningNews.net the company received a fax first thing yesterday morning from the Chinese major producer – which had received an extension to conduct due diligence – that gave no reasons for walking away from the project.

"Obviously we're quite disappointed," Young said.

"I mean there had been a lot of effort put in by ourselves and in particular some of the parties Hunan had employed to conduct due diligence.

"We would have liked a bit more communication with them and of course we were trying to get them to come to Perth to go through things with us and they just refused to."

Learning from its lesson, Young said Thor would not sign any more exclusivity agreements with other companies, which have been waiting on the sidelines to conduct due diligence.

"I think we've gone through that phase where we go [with] someone with an exclusive opportunity and I don't think it's necessary now for that. People have had the data for quite a while so they either want the deals or don't," Young said.

Thor will meet with Penfold Marketing next week to go through all the other companies – which have had the project's data but were not allowed to come onsite to conduct due diligence – and will then re-start negotiations and due diligence.

Young said Thor is essentially looking for a partner to sign an offtake agreement over Molyhil and also help fund and develop the project.

He added that companies have approached Thor concerning just an offtake agreement, which is ultimately Thor's fallback position.

Should that scenario arise, Young said Thor will fund the project by either using convertible notes or draw up a bank debt facility, which is the least preferred option.

However, the end result for Thor is that the due diligence process has now been delayed around a couple of months thanks to HNG's withdrawal.

"Unfortunately what we've thought was a very good opportunity for Hunan has probably delayed us a couple months in the end," Young said.

"The end result is we're probably two months behind where we would have been with other parties."

News of HNG signing an MoU with Thor in mid-March has seen the company's share price on an upward climb from 26c to an all-time high of 51c, but today's news saw the share price drop up to 30% to an intraday low of 31c in trading this morning.

The stock has since gained some momentum though, with share prices now trading at 37c.

The Molyhil deposit contains a JORC-compliant resource of 2.4 million tonnes grading 0.8% combined tungsten and molybdenum to a vertical depth of 150m.

Thor is hopeful of extending the initial four-year mine life through further exploratory drilling this year, both within the planned pit designs and at depth.