In an Oct. 23 research note, analyst Ryan Walker reported that his firm Echelon Wealth Partners added Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX) to its Watch List after meeting with the company’s management at the recent Precious Metals Summit.
Lion One’s flagship asset is Tuvatu, the alkaline high-grade gold project on Fiji’s Viti Levu island. The current existing resource consists of diluted Indicated resources of 1.1 million tons at 8.46 grams per ton (8.46 g/t) gold, based on a 3 g/t cutoff grade. The Inferred resource totals 1.5 million tons at 9.7 g/t, or 468,000 ounces.
“Importantly,” Walker pointed out, “about 80% of the existing resource is within just 200 meters (200m) of surface. Yet past drilling was done primarily within 300m from surface and only a small fraction went below 400m down.
Accordingly, the Canadian exploration company, earlier this year, launched a four-hole drill program to test for deep feeders to Tuvatu’s existing high-grade resource.
Also noteworthy is that a preliminary economic assessment of Tuvatu, completed in 2015, showed robust economics, noted Walker. The report outlined an underground mine producing a total of 352,931 ounces of 11.31 g/t gold over the first seven years. The payback period was estimated to be 1.1 years.
This scenario would result in a post-tax net present value 5% of US$150 million and an internal rate of return (IRR) of 79% at a US$1,500 per ounce gold price. “We note the still robust 33% after-tax IRR even at $1,000 per ounce gold,” Walker commented.
Further, Tuvatu is fully permitted for development, construction and mining by the Fiji government, and Lion One has a 21-year surface lease agreement at the project with local landowners and the iTaukei Land Trust.
Lion One’s stock is currently trading at CA$0.90 per share.
