One analyst believes a 10-year extension of a mining lease at a high-grade gold project in Fiji could put a junior gold play in the crosshairs of companies looking to add ounces.
Both investors and Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX; LY1:FSE) executives can breathe a little easier now that the mining lease at the company’s promising 100%-owned Tuvatu alkaline gold project in Fiji has been extended through February 2035.
The official 10-year extension is the cornerstone document that will allow Lion One to build what will be the country’s second commercial gold mine, about 25 kilometers from the town of Nadi, on the island of Viti Levu in Fiji.
In an Aug. 8 research report, Roth Capital Partners Analyst Mike Niehuser calls Tuvatu “one of the highest-grade gold mines in the world” and writes that the lease extension could put Lion One squarely in the crosshairs of larger gold companies.
“We believe that Tuvatu is competitive with Fiji’s Vatukoula, which has operated for over 85 years,” Niehuser wrote. “The granting of the Tuvatu Mining Lease (SML 62) de-risks the project, making it attractive to major mining companies.”
Vatakoula, operated by Vatukoula Gold Mines (Vatukoula means gold Rock in Fijian), has operated almost continuously since 1935. The alkaline-epithermal gold deposit — a geological setting shared with Tuvatu — has so far produced some 7 million ounces (7 Moz) gold.
Vatukoula currently has a resource of 3.8 Moz gold.
A Big Deal in Fiji
Granting of the extension was a big deal in the tiny archipelago nation where gold is one of the country’s most valuable exports.
Lion One CEO Walter Berukoff and more than 300 local officials attended a ceremony to mark the official signing of the lease extension.
“Lion One has made a strong commitment to making Tuvatu the new foremost gold mine in Fiji, and with the recent grant of the mining lease extension, Fiji has shown Lion One its resounding support to see this come to fruition,” Crescat Capital Geologic and Technical Director Quinton Hennigh told Streetwise Reports. Hennigh also acts as an advisor to Lion One.
Initial production at Tuvatu could start as early as the second half of 2023. The company has already built a 1-kilometer decline into the project to take metallurgical samples and conduct ongoing drilling
Engineer and COO Patrick Hickey will lead the team building the Tuvatu mine. He has helped build similar-sized mines with Newmont Mining Corp. (NEM:NYSE) and Kinross Gold Corp. (K:TSX; KGC:NYSE).
Six Drills Turning
Six drill rigs continue to turn at Tuvatu, where earlier this year, drill hole TUG-141 hit 20.86 grams per tonne gold (20.86 g/t Au) over almost 76 meters — the longest, highest-grade gold intercept to date at Tuvatu.
An up-close examination of the TUG-141 core reveals a number of high-grade intervals along the intercept, including: 138.15 g/t Au over 0.3 meter from 450.9-451.2 meters downhole; 396.16 g/t Au over 0.3 meter from 479.1-479.4 meters; 340.07 g/t Au over 0.30 meter from 498.9-499.2 meters; 600.42 g/t Au over 0.30 meter from 499.5-499.8 meters; and 244.37 g/t Au over 0.3 meter from 502.5-503.1 meters.
‘The granting of the Tuvatu Mining Lease (SML 62) de-risks the project, making it attractive to major mining companies.’
— Roth Capital Partners Analyst Mike Niehuser
TUG-141 is below the current resource outlined at Tuvatu’s 500 Zone, a network of high-grade structures that is inside the mining concessions covered by the recent extension.
A September 2020 Preliminary Economic Assessment on the 100% owned Tuvatu outlined an indicated resource of 1,007,000 tonnes grading 8.48 g/t Au for 274,600 oz Au (274.6 Koz Au) and an inferred resource of 1,325,000 tonnes grading 9 g/t Au for 384,000 Koz Au. The study used a cut-off grade of 3 g/t Au.
Lion One envisages a low-cost, high-grade underground gold mine operation at Tuvatu. There is also significant exploration upside in its concessions covering the entire Navilawa Caldera, a highly prospective alkaline gold system that stretches across about 7 kilometers (4.4 miles).
“(Lion One) hit a whole bunch of high-grade intervals down deep on the 500 zone and the other associated lodes down there. (The company is) starting to develop a picture of what’s going on. They see four lodes all tied together, like a network of high-grade lodes. And then they’ve also hit high-grade gold down to 1,150 meters below surface — a skinny interval, but it tells you there’s high-grade down there,” Hennigh told Streetwise Reports earlier this year.
All the drill core is being examined at an on-site analytical sampling and assay lab built by Lion One. Having the lab nearby allows for much faster turnaround times for core sampling.
Berukoff founded Miramar Mining, which developed the 10 Moz Hope Bay gold project in Canada’s Arctic. Berukoff eventually sold Miramar to Newmont in 2007 in an all-cash deal worth CA$1.5 billion. That deal came on the heels of Berukoff and his team selling Northern Orion Resources to Yamana Gold for a little more than CA$1 billion.
Reuters reports that Berukoff owns 13.6% of Lion One, while Franklin Advisers Inc. owns about 4.5%; Invesco Advisers Inc. owns around 4%; Mackenzie Financial owns roughly 1.21%, and Aegis Financial owns 0.80%.
Niehuser gives Lion One a Buy rating with a 12-month target of CA$2.50
The junior has 156 million shares outstanding and trades in a 52-week range of CA$0.88 and CA$1.66.
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1) Brian Sylvester wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.
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