Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) hit upon a bonanza-grade regional gold structure north of its Tuvatu gold project on Fiji, called Lumuni, reported Eight Capital analyst Felix Shafigullin in an Aug. 24 research note.
"The discovery of Lumuni underscores the significant regional upside in the Navilawa caldera," Shafigullin wrote.
Compelling return
Upon this news, Eight Capital reiterated its CA$2.60 target price on the Canadian mining company, currently trading at about CA$0.93 per share, noted Shafigullin. The difference between these two prices implies a significant return for investors, of 180%.
Lion One is a Buy.
About the structure
Shafigullin described Lumuni. About 1 kilometer north of Tuvatu, the mineralized structure is thought to be along strike from the flagship project's mineralized lodes UR1, UR2 and UR3 in the Main zone.
Lumuni has an estimated true width of 0.6 meters (0.6m) and encompasses two parts, Shafigullin continued. One is a northern area striking north-south and steeply dipping to the west. The other is an eastern interval striking northwest-southeast and dipping to the southwest. Company management believes both portions belong to one continuous mineralized lode structure, spanning 150m in length.
Lumuni remains open to the southeast.
How it was found
Shafigullin reported that Lion One discovered Lumuni via surface channel sampling on its land package in Fiji's Navilawa caldera. The gold grades the company encountered "compared favorably" to that of the Tuvatu Measured & Indicated resource of 8.78 grams per ton (8.78 g/t).
Some of the recent standout surface sampling results from were:
- 66.83 g/t Au over 0.7m, from channel CH3851
- 48.45 g/t Au over 0.7m, including 92.55 g/t Au over 0.3m, from channel CH3849
On the CSAMT, or controlled-source audio-frequency magnetotellurics, geophysical survey done in 2019, Lumuni was shown to "overlie a subvertical resistivity gradient" and dip steeply, described Shafigullin. As such, Lion One's management believes the identified mineralization at Lumuni is associated with a deep-rooted mineralized structure like the one at Tuvatu.
Given the results of the sampling and the CSAMT survey, Lumuni is a likely drill target.
Potential further upside
Of Lion Brand's total land claims in the Navilawa caldera, Tuvatu comprises a mere 5%. Drilling to test previously identified targets such as the Banana Creek has been minimal. Thus, Shafigullin highlighted, upside potential outside of Tuvatu is material.
"We currently model a regional upside of 500,000 ounces of gold, a conservative figure, in our view, given the abundance of underexplored regional targets in the Navilawa caldera," the analyst added.
Key near-term events
Investors should watch for drill results from Lion One's regional drilling as well as its infill and stepout drilling at Tuvatu, Shafigullin noted. Additional upcoming stock catalysts are Tuvatu construction updates and an updated Tuvatu mineral resource estimate.
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