More High-Grade Gold Found as Fiji Project Starts Mechanized Production

Source: Streetwise Reports 06/10/2024

Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) announced significant new high-grade drilling results as mechanized production has started at its Tuvatu gold mine in Fiji. Read why one analyst says it is undervalued and on the cusp of breaking out.

Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) announced significant new high-grade drilling results as mechanized production has started at its Tuvatu gold mine in Fiji, a style of mining that has not taken place in the island nation until now.

The company released assay results from nearly 5,000 meters of new drilling in 36 holes in the Zone 5 area. Highlights included 393.01 grams per tonne of gold (g/t Au) over 1.2 meters, including 1,568.55 g/t Au over 0.3 meters, 215.86 g/t Au over 0.6 meters, and 49.85 g/t Au over 1.2 meters, including 63.35 g/t Au over 0.3 meters.

Lion One said the first remote bogging at Tuvatu occurred on May 16, and the first long hole stop blast was on May 18, both firsts for the country of Fiji, the company said.

“This is a major milestone for the company as it represents the transition from predominantly development mining to predominantly production mining,” the company said in a release.

Last month, Technical Analyst Clive Maund wrote that the stock “was and is” undervalued. He said he was staying long on Lion One and rated it as a Strong Buy for all timeframes.

“It is underpriced and undervalued here with further discovery potential,” he wrote. “Its potential for revaluation is likely to be greatly augmented by the continuation and acceleration of the major PM (precious metal) sector bull market that has just begun.”

The Catalyst: Explored Targets Set to Be Mined

Lion One said all of the assay results released Thursday were “proximal to underground development in the near-surface portion of the mine.”

Last month, Technical Analyst Clive Maund wrote that the stock “was and is” undervalued. He said he was staying long on Lion One and rated it as a Strong Buy for all timeframes.

Drilling was focused to the north and south of the Cabex fault, which is a carbonate-healed, deposit-scale structure. The primary targets for these drill holes were the down-dip and southern extensions of the UR2 and URW3 lodes, which are scheduled to be mined throughout the next 12 months.

The Cabex fault is a postmineralization fault that strikes approximately east-southeast and dips approximately 65 degrees to the south-southwest, the company said. It is interpreted to be a late caldera collapse structure that is healed with carbonate. The purpose of the Zone 5 infill and grade control drill program is to enhance the mine model and inform stope design in advance of mining.

Lion One also noted that the Tuvatu processing plant can now sustainably process over 400 tonnes per day (tpd), which is above the plant’s nameplate capacity of 300 tpd. The increased throughput is possible due to operational improvements and debottlenecking initiatives completed by the mill team.

Gold Bull Market: Miners Should Benefit

The price of gold hit a new all-time high of US$2,449.89 per ounce on May 20, but had settled to US$2,358.76 on Thursday.

Some are predicting a prolonged and substantial gold bull market. Adam Rozencwajg, managing partner at Goehring & Rozencwajg, predicted that prices could go as high as US$5,000 to US$7,000 an ounce before it’s all over.

A recent report by global investment bank UBS raised its gold price forecasts to US$2,800 per ounce by the end of 2025 on persistent demand driven by macroeconomic uncertainty, geopolitical risks, and increased safe-haven allocations, Mining Feeds reported.

The site said UBS also upgraded several gold mining stocks to a “Buy” rating and increased their target prices.

“With central banks increasing their gold purchases and investors yet to fully allocate to gold, the outlook for the precious metal remains bullish, with prices expected to reach new highs by 2025 if UBS analysis holds over the coming 18 months,” the site noted. “As the mining industry shifts its focus toward growth and cost optimization, gold mining stocks are should also benefit from these market conditions.”

Research firm Metals Focus predicted that eventual monetary policy easing from the Federal Reserve would drive gold prices even higher later this year, Kitco reported on Thursday. [OWNERSHIP_CHART-3674]

“Later this year, we expect prices will rise again, with a new all-time high likely,” said Neil Meader, Director of Gold and Silver at Metals Focus, according to Kitco. “After all, the recent (US)$2,450 peak is lower, in real terms, than the 1980 one, which would have been around (US)$3,000 in today’s prices.”

Ownership and Share Structure

Reuters provided a breakdown of the company’s ownership and share structure, where management and insiders own approximately 9.21% of the company.

According to Reuters, Chairman, and CEO Walter H. Berukoff owns 9.06%, Director Kevin Puil owns 0.08%, CFA Tony Young owns 0.04%, and Director Richard J. Meli owns 0.02%.

Reuters reports that institutional investors own 5.34% of the company, as Franklin Advisers, Inc., owns 4.58%, Aegis Financial Corporation owns 0.51%, and U.S. Global Investors Inc. owns 0.22%.

According to Reuters, there are 230.55 million shares outstanding and 209.32 million free float traded shares, while the company has a market cap of CA$133.72 million and trades in the 52-week period between CA$0.38 and CA$1.04.

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( Companies Mentioned: LIO:TSX.V; LOMLF:OTCQX; LLO:ASX, )