Nigeria’s first industrial gold project is on course to enter production next year, and its success will be crucial for boosting mining in Africa’s biggest oil producer, the country’s mines minister said.

Thor Explorations Ltd. is spending $98 million to develop the project, which will have an annual average output of 80,000 ounces. The Canada-based company’s Segilola mine in the southwest should yield gold by the end of the first quarter of 2021, Minister of Mines and Steel Development Mr Olamilekan Adegbite told reporters in Abuja on Friday.

Nigeria has sizable untapped deposits of metals including iron ore, gold, zinc and lead, but almost all extraction is done on a small-scale or manual basis. The government wants to increase mining’s contribution to gross domestic product to 3% by 2025, from less than 0.1% currently.

Thor is “the proverbial company that dares to jump in the shark-infested water and see whether it survives,” Adegbite said. Progress at Segilola will be key to attracting other mining companies to Nigeria, which offers incentives including tax holidays and customs waivers on imported equipment, he said.

Successive administrations have pledged to grow mining’s role in the economy since Nigeria restored multi-party democracy in 1999. Legislation to expand the sector was passed more than a decade ago.

Lagos-based Africa Finance Corp. is backing Thor through a $86 million debt-equity financing package.

Bloomberg