The nation of Fiji, which comprises some 330 small islands in the South Pacific Ocean, is most readily associated with bottled water in consumers’ minds. Indeed, the nation’s high-end bottled water business has been a figurative gold mine for its creators.
However, pristine water is not the nation’s only source of primary industry wealth. A great example of this variety is the Tuvatu gold mine. Operated by Lion One Metals Ltd., (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX; LY1:FSE) a mining company based in Canada, the Tuvatu mine is a high-grade, underground gold mine on Viti Levu, one of the islands in the archipelago.
The Tuvatu mine was discovered in the late 1990s by a geologist working for Lion One's predecessor company. Initial exploration and drilling confirmed the presence of a significant gold deposit at the site. In 2013, Lion One Metals acquired the rights to the mine and has been working to bring it into production.
This mine is located in a region of Fiji with a long gold mining history. Gold was first discovered on Viti Levu in the late 19th century, and for many years it was the largest gold producer in the Pacific. However, gold mining in Fiji declined in the 20th century, and the Tuvatu mine is the first new gold mine to be developed in the country in many years.
Tuvatu Mine Shows Very High Concentration of Gold
The Tuvatu mine is rare among gold mines in that it has a very high grade of gold that is located near the surface, which makes it easier and less expensive to access the ore. Gold at the mine is found in a quartz vein, a feature formed when hot fluids carrying dissolved gold minerals move through cracks and fractures in the rock. The gold is then deposited as the fluids cool and solidify, forming thin, vein-like structures that are rich in gold. These types of formations are rare, and almost all of them are owned by major mining companies.
Lion One is currently completing the construction of a processing plant and other infrastructure at the site and has obtained the necessary permits and approvals from the government of Fiji.
Once the mine is in production, its expected lifespan is at least 10 years. During this time, it is estimated that the mine will produce approximately 150,000 ounces of gold per year, making it one of the largest gold mines in the Pacific region.
Technical analyst Clive Maund said that "Lion One is looking most attractive here, so anyone holding should stay long, and this is a good point at which to make fresh purchases."
The company is working closely with the Fijian government and local communities to ensure that the development of the mine is sustainable and has a positive impact by providing jobs and training for local workers, purchasing supplies and services from local businesses, and supporting community development initiatives.
To access the gold at the Tuvatu mine, Lion One will use a combination of underground mining methods. The initial phase of mining will involve the use of long-hole open stopping, in which large holes are drilled into the rock, and explosives are used to blast the ore free. At the surface, the ore will be crushed and ground into a fine powder, then mixed with water and chemicals to create a slurry, which will be fed into a series of tanks where the gold will be extracted using cyanide leaching.
The gold in the slurry will be separated from the other minerals using carbon-in-pulp. In this process, the slurry is mixed with activated carbon, which binds to the gold and other precious metals, allowing them to be separated from the rest of the slurry.
The Catalyst: Updated Mineral Resource Estimate Coming Q1 2023
Over the past six months, the company's stock price has been highly volatile, fluctuating significantly. One of the primary reasons for the fluctuations is the overall performance of the gold market. Gold is a highly sensitive commodity, and its price is influenced by a wide range of factors, including economic and political events, interest rates, and currency exchange rates.
In recent months, the gold market has been particularly volatile, with prices moving considerably daily. This volatility has directly impacted the stock price of Lion One Metals, as the company's revenues are heavily dependent on the value of gold.
The company has released a number of updates on its exploration and development activities over the past year, and these updates have had an impact on the stock price. For example, in June, Lion One Metals announced the successful completion of a drill program at Tuvatu, which resulted in a significant price increase.
Similarly, in October, the company announced rich new assays, which also led to an increase in the stock price. “These latest results underscore the continuous, high-grade nature of the mineralization at Tuvatu,” explains CEO Walter Berukoff. “Each batch of drill results adds enormous value to the project in both addition of ounces to the total metal budget as well as clarification of important upside potential. We are defining what looks to be the next major high-grade discovery and world-class gold deposit right here in Fiji.”
If next quarter’s scheduled update is as bullish, the stock could be poised for a considerable and rapid upswing.
In recent months, the mining industry has faced several challenges, including trade tensions between the United States and China and concerns over the global economic slowdown. These challenges have put downward pressure on the stock prices of many mining companies, including Lion One Metals.
Gold may appear to be volatile in the near term. Still, it remains the world's reserve metal, and a glance at its five-year price chart reveals the value of holding gold or gold-backed assets (such as gold mining company shares) as a hedge against economic uncertainty.
Despite fleeting market challenges, there are many reasons to be optimistic about Lion One Metals' future. In addition to the Tuvatu Project, the company owns several other Fiji exploration properties on other islands, including Namena, Navilawa, and Vanua Levu.
In addition, the company has a solid financial position, with a strong balance sheet and a healthy cash flow. Given its extensive claim and fully-permitted operation, Lion One Metals is ripe for acquisition by a larger player in the mining field. It will likely appear riper once it issues its Updated Mineral Resource Estimate & PEA in Q1 2023, provided the numbers continue to stack up as they have in the past.
Analysts Onboard
As Winston Miles of Eight Capital explained in a recent email, “It’s rare you see a company rapidly ramping to >100k ozs of production in elephant country with an Alkaline system looking more and more like its freaky-geology nearby cousins by the day . . . Alkaline systems are extremely rare, and when they materialize, they tend to be huge (+10mm oz).”
He goes on to point out that “Vatukoula, a world-class gold mine is under 40km away. It’s produced >7mm ozs. NEM, ABX, and NCM all own Alkaline deposits, so to see corporate activity here would be far from surprising.”
In general, he’s optimistic: “This one is higher risk but has true grand slam potential; high grade, underground, multi-million-ounce situation. And at this level, you get a few splashy holes, and this can really dance.”
Analyst Clive Maund concurred in a recent email to subscribers. He explained that “On the 1-year chart, we can see that Lion One has halved in price from its June peak, even after its gains from its October lows, and it looks like good value here . . . the conclusion is that Lion One is looking most attractive here, so anyone holding should stay long, and this is a good point at which to make fresh purchases.”
Ownership and Share Structure
Lion One Metals management owns 22 million shares or roughly 14% of the total outstanding. Institutional investors include Franklin Precious Metals Fund, Amati Global Strategic Metals Fund, Gabelli Gold Fund, MacKenzie Financial, US Global Investors, and Delbrook Resource Fund. Some 60% of investment is retail, and the last major seller was Invesco Precious Metals Fund, which sold a 6,000,000 share position earlier this year.
The company has a market cap of US$150,000,000, with 173,769,893 shares outstanding, including 13,015,000 options and 9,714,880 warrants at US$1.05, each expiring in 2025. It has CA$31,000,000 in the bank, with a monthly burn rate of CA$4,000,000, and is operating eight rigs to drill 2,500 to 3000 meters each month.
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1) Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. They members of their household own securities of the following companies mentioned in the article: None. They or members of their household are paid by the following companies mentioned in this article: None.
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