Figure 1: Fiji Projects Locality Map

Figure 1: Fiji Projects Locality Map

A Vancouver-based gold junior operating in Fiji came out with a PEA this morning that has supporters of the company singing its praises. Read: Lion One Announces Robust Preliminary Economic Assessment for High Grade Gold Operation at Tuvatu Project in Fiji.

PEA Highlights (all amounts are quoted in $USD utilizing a base case gold price of $1,200 per oz.):

  • Pre-tax Net Present Value (NPV) of $117 million (5% discount rate) on the current resource of the Tuvatu Project
  • Pre-tax Internal Rate of Return (IRR) of 67%
  • Pre-production capital costs of $48.6 million including 14.5% contingency; first gold production following development and construction period of 15 months
  • Operating costs of $567 per oz.; all-in sustaining costs of $779 per oz.
  • 1.5 year payback period, followed by production of 91,229 ounces in year 2 averaging 16.5 g/t Au, and 92,056 ounces averaging 14.4 g/t Au in year 3
  • Gold production of 352,931 oz. at an average grade of 11.3 g/t Au; current resource of 1.1 Mt Indicated at 8.46 g/t Au (299,500 oz.) and 1.5 Mt Inferred at 9.7 g/t Au (468,000 oz.) at a cutoff grade of 3.0 g/t Au

“The PEA for Tuvatu demonstrates robust economic potential for a fully permitted high-grade gold operation with low capital and operating costs, enabling rapid payback of capital even at current low gold prices,” stated Lion One Chairman and CEO Walter Berukoff. Mr. Berukoff was the founder and C.E.O of Miramar Mining Corporation, Northern Orion Resources, and La Mancha Resources, and has operated or commissioned gold mines in seven countries. Mr. Berukoff is also Managing Director of Red Lion Management, a merchant banking company, and has raised over $1 billion for global mining and real estate projects. He added,“We view Tuvatu as a near term development and production opportunity in Fiji’s major goldfield, with long term production potential in our substantial tenement holding.”

The project life is 7.4 years with average annual production of about 57,400 ounces of gold. That’s not a large mine but Eric Coffin, editor of the Hard Rock Advisory newsletter, thinks there’s plenty of potential for resource growth at Tuvatu. In the May 25, 2015 issue of HRA, Mr. Coffin commented, “I expect Lion One to follow the time honoured process of getting an underground operation started then drilling ahead to replace reserves as they are mined. There is a lot of room to make the resource larger though the near term focus is sure to be pulling a financing package together to get production started as expeditiously as possible.”

Shares in Lion One, which have doubled in the past month, added a modest 4.2% on about 168,000 shares traded Monday.  James Kwantes of the Resource Opportunities newsletter expected a stronger stock market result, commenting, “In part will chalk it up to “mine will end up looking significantly different than in study” complex.”

Geologist Rob McLeod was one of two Qualified Persons responsible for overseeing the PEA. “Wally Berukoff will make the project happen; as management, he’s been off the radar from investors for awhile, but his track record is nothing but wins and making $ in mining $LIO,” Mr. McLeod said.

Geologist Cooper Quinn has worked with Mr. McLeod and Mr. Berukoff and is taking questions in CEO.CA Chat about Lion One’s Tuvatu project. Regarding Lion One’s share price movement today, Mr. Quinn commented, “a bit flat in the markets, but thats ok. we’re building a long term story, not a one day wonder.”

Lion One Metals has 60,175,608 shares outstanding which last traded at 50 cents, giving $LIO a market cap of about C $30.1 million. At March 31, 2015, the Company had working capital of $4,754,692.

Here’s today’s news release: Lion One Announces Robust Preliminary Economic Assessment for High Grade Gold Operation at Tuvatu Project in Fiji

JUNIOR MINERS ARE SPECULATIONS, NOT INVESTMENTS. THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY.