Gold Co.'s Stock Set to Break Out, Analyst Says

Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) announced the construction of its mine at its 100%-owned Tuvatu alkaline gold project in Fiji is 75% complete.

The company said the project is fully funded on track for delivery of the first gold in the fourth quarter of this year.

"Earthworks and concrete works are substantially complete, with over 3,500 (cubic meters) of concrete poured to date," the company said in a release. "Structural steel is 70% complete and is progressing rapidly. All the components required to commission the processing plant are on site and a team of 350 contractors and employees are working together to bring the project towards completion."

Technical Analyst Clive Maund of CliveMaund.com has noted that a restraining influence over the past year on the stock was that a fund had 11 to 12 million shares but has now sold them all.

"The news out from the company this morning, which is that construction of the Tuvatu mine is 75% complete and it is on track to produce its first gold in the 4th quarter, is thought likely to get the stock moving higher today after it has been scraping along at a low level in recent weeks," Maund wrote in an update note Wednesday.

Technical Analyst Clive Maund has noted that a restraining influence over the past year on the stock was that a fund had 11 to 12 million shares but has now sold them all.

Lion One plans to operate the processing plant at an initial production capacity of 300 tonnes per day (tpd) for the first 18 months of operations before increasing the capacity to 500 tpd in mid-2025.

The company said a large portion of the site infrastructure is complete, including the site office, the mine changeroom, the mine workshop, the freshwater supply system, the sewage treatment plant, and the waste rock crusher and screener. The construction of a seven-generator power plant is also in progress.

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," 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: One of Highest-Grade Gold Mines in the World

Underground mining of the URA1, URW1a, and URW1b lodes is ongoing, the company said. The main decline has reached a vertical depth of 99.4 m below surface and a total length of 344 meters from the mine portal.

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.

"Lion One is my biggest position," 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.

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.

Eight Capital rated the stock a Buy with a CA$2.60 per share target price, a potential return of nearly 300%.

CSAMT Survey Completed

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."

Earlier this month, the company announced it had completed a magnetotellurics survey of Tuvatu to help generate those drill targets.

ROTH Capital Partners analyst Mike Niehuser also compared Tuvatu to Vatukoula, calling Tuvatu "one of the highest-grade gold mines in the world."

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."

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."

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$140.25 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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