Gold Co. Finds 'Bonanza-Grade' Structure at Fiji Project

Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) announced the discovery of a new mineralized structure with "bonanza-grade gold" 1 kilometer north of its 100%-owned Tuvatu alkaline gold project in Fiji.

Named the Lumuni occurrence, the structure was discovered on the surface approximately along strike from lodes UR1, UR2, and UR3 with a width of 0.5 meters to more than 1 meter.

The feature's strike length was measured on the surface as 150 meters, and samples included 66.83 grams per tonne gold (g/t Au) over 0.7 meters, 48.45 g/t Au over 0.7 meters, including 92.55 g/t Au over 0.3 meters; and 15.18 g/t Au over 1.1 meters, including 31.25 g/t Au over 0.3 meters.

"The discovery of Lumuni underscores the significant regional upside in the Navilawa caldera," Eight Capital analyst Felix Shafigullin wrote in an August 24 update note. "The Tuvatu resource area represents less than 5% of LIO's land claims in the caldera, and limited drilling has been done to test the previously discovered regional targets, such as Banana Creek that contains outcropping lodes similar to those seen at Tuvatu."

Shafigullin rated the stock a Buy with a CA$2.60 per share target price.

What makes the Lumuni discovery outstanding is "the continuity of the high-grade material," Lion One Chairman and Chief Executive Officer Walter Berukoff said.

"The discovery of Lumuni underscores the significant regional upside in the Navilawa caldera," Eight Capital analyst Felix Shafigullin wrote in an August 24 update note.

"It is not a single bonanza-grade sample, but rather a traceable lode of high- to very high-grade material that can be followed along at surface," Berukoff said. "The fact that these high-grade samples coincide with a steeply dipping resistivity low is even more compelling, as it provides us with immediate drill targets to pursue."

Other surface samples included 14.66 g/t Au over 1.1 meters, including 16.78 g/t Au over 0.7 meters; 17.04 g/t Au over 0.6 meters, including 30.59 g/t Au over 0.3 meters; and 10.30 g/t Au over 0.9 meters, including 13.89 g/t Au over 0.6 meters.

The company recently also released assay results from infill and grade-control drilling at Tuvatu, including a 6.6-meter interval of 83.47 g/t Au in the Main Zone of the project. Results also included 1,839.55 g/t, 934.91 g/t, and 300.47 g/t Au from Zone 5 of the deposit.

Drilling results are categorized by the average amount of gold in the ore or its ore grade, Investopedia explained. Higher-quality mines have higher-grade ore, but mining ore with lower gold density can still be profitable depending on how it is extracted.

Higher quality mines have grades of 8 g/t to 10 g/t or higher.

The Catalyst: Analog to Another Rich Mine?

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 an interview.

"Lion One is my biggest position," Bob 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.

"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.

Tuvatu is on Fiji's Viti Levu island. 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.

Seeking Drill Targets

A total of 16 rock chip samples were taken in the area along a line perpendicular to the observed Lumuni structure, the company said.

The discovery is made up of two intervals: a northern portion trending north-south and an eastern portion trending northwest-southeast. The area between is covered in thick vegetation.

ROTH Capital Partners analyst Mike Niehuser called Tuvatu "one of the highest-grade gold mines in the world" and also compared it to Vatukoula. ROTH has a Buy rating and a CA$2.50 per share target price on the stock, versus its price of CA$0.94 on Thursday.

"It is hypothesized that the two portions are part of the same curvilinear structure," Lion One said in a release.

"While the northern portion appears to pinch out to the north where a series of channel samples failed to return any grade, the eastern portion may remain open to the east with mineralization observed along its entire length," the company said. "The mineralized strike length of the entire Lumuni structure is currently >150 m, including both portions."

The structure overlies a prominent resistivity gradient found in a 2019 Controlled Source Audio-Frequency Magnetotellurics (CSAMT) survey. Additional CSAMT lines were completed this summer, but the data is not yet available.

CSAMT measures the electrical resistivity of rocks to identify areas of bedrock with contrasting electrical properties.

"The CSAMT survey data thereby provides viable drill targets to follow up the bonanza-grade surface sampling described in this news release," the company said.

Analyst: Stock 'Undervalued'

ROTH Capital Partners analyst Mike Niehuser called Tuvatu "one of the highest-grade gold mines in the world" and also compared it to Vatukoula. ROTH has a Buy rating and a CA$2.50 per share target price on the stock, versus its price of CA$0.94 on Thursday.

Shafigullin with Eight Capital wrote 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.

Ownership and Share Structure

According to Reuters, about 13% of Lion One is held by management and insiders. CEO Berukoff is the largest shareholder with 10.13%, with 20.90 million shares.

Nearly 3% is with institutional investors. Franklin Advisors Inc. has 1.57% with 3.24 million shares, Aegis Financial Corp. has 0.61% with 1.25 million shares, Gabelli Funds LLC has 0.31% with 0.63 million shares, and U.S. Global Investors Inc. has 0.24% with 0.50 million shares.

The rest is in retail.

Lion One has a market capitalization of CA$194.9 million, with 206.25 million outstanding shares. It trades in a 52-week range of CA$1.20 and CA$0.59.

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