Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) announced it has completed a magnetotellurics survey at its 100%-owned Tuvatu alkaline gold project in Fiji.
Fourteen new Controlled Source Audio-Frequency Magnetotellurics (CSAMT) survey lines were completed, including seven across the main deposit area. Three lines from a 2019 CSAMT survey were extended, the company said.
The results of the work should be available next month, Chairman and Chief Executive Officer Walter Berukoff said.
"The 2019 survey was invaluable in helping us to discover the feeder zone underlying Tuvatu and led us directly to the 500 Zone, where we intersected 75.9 meters of 20.86 (grams per tonne gold) g/t Au," Berukoff said. "The 2022-2023 survey will complement the 2019 survey and will dramatically improve survey resolution across the property, where we have already identified numerous exciting and untested prospects."
The results will help the company find drill targets under those prospects for later in 2023.
Technical analyst Clive Maund of CliveMaund.com wrote Tuesday that "Lion One looks ready to break out upside."
The "breakout move could be quite big given the prolonged tight standoff," he wrote.
"A restraining influence over the past year is that a fund had 11 to 12 million shares and has been selling during this period, but they now have no more to sell," Maund has noted.
Tuvatu is just miles away from Fiji's highest-producing gold mine, Vatukoula, and could promise comparable riches, Bob Moriarty of 321gold.com said in a recent interview.
"Lion One is my biggest position. I am going to go into the placement because absolutely, if you're buying Lion One at these prices, you're stealing," Moriarty said. "But what everybody's missing . . . there's an identical mine 40 miles to the northeast" that has produced more than 7 million ounces (Moz) Au over nearly nine decades.
Vatukoula, which means "gold rock" in Fijian, shares the same geological setting as Tuvatu, an alkaline-epithermal gold deposit. Vatukoula has a resource of 3.8 Moz Au.
The Catalyst: 'Incredible Upside'
In a follow-up interview, Moriarty said Lion One believes that because of the way fractures are oriented in the system, "no matter how they drill it, they're going to underestimate the gold. … They are going to see incredible upside, like two or three times the upside."
The company said increased resolution of the CSAMT survey will help generate those drill targets. Improvements in the survey from 2019 to this year include a doubling of station density from 100 meters to 50 meters and halving the line spacing from an average of 560 meters to an average of 300 meters. A total of about 33 line-kilometers were surveyed.
CSAMT measures the electrical resistivity of rocks to identify areas of bedrock with contrasting electrical properties.
"CSAMT surveys are highly beneficial in identifying subsurface structures," the company said in a release. "In alkaline gold deposits such as Tuvatu, it is these deep-rooted structures that provide the conduits for fluid flow to rise up in the earth's crust and in which gold is deposited."
A Top Pick for One Analyst
Workers have begun extracting material from one of two new lodes at Tuvatu, URA1, and will begin extracting from the other, URW1, soon, the company has said.
Tuvatu is on the island of Viti Levu in the archipelago nation. A September 2020 Preliminary Economic Assessment (PEA) outlined an indicated resource of 1,007,000 tonnes grading 8.48 g/t Au for 274,600 ounces 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.
ROTH Capital Partners analyst Mike Niehuser also compared Tuvatu to Vatukoula, calling Tuvatu "one of the highest-grade gold mines in the world."
ROTH has a Buy rating and a CA$2.50 per share target price on the stock, which would be more than four times its current price of CA$0.665.
The stock sank 17% from CA$1.05 when the company announced a private placement on May 3, a drop which prompted Eight Capital analyst Felix Shafigullin to write that Lion One presented "a buying opportunity for investors to get exposure to one of our Top Picks among the precious metals explorers/developers."
"We view Lion One as undervalued relative to other gold developers under our coverage," he wrote in a May update note.
Streetwise Ownership Overview*
Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX; LY1:FSE)
Eight Capital rated the stock a Buy with a CA$2.60 per share target price, a potential return of nearly 300%.
Ownership and Share Structure
About 14% of the company is held by insiders, about 6% by institutions, about 20% by other investors, and about 60% is retail.
The CEO, Berukoff, owns about 11.8% or 20.9 million shares, according to Reuters. Franklin Advisers Inc. owns 4.27% or 7.56 million shares.
Lion One's market cap is CA$137.15 million, with about 206 million shares outstanding, about 185 million of the free-floating. It trades in a 52-week range of CA$1.53 and CA$0.59.
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