Offering To Help Gold Co. Develop, Explore Bonanza Grades in Fiji

May 5, 2023 (Investorideas.com Newswire) Lion One Metals Ltd. has entered into a CA$27 million "bought deal" offering of units with a syndicate of underwriters for the development and exploration of its Tuvatu project in Fiji.

After reporting multiple bonanza-grade zones and visible gold at its Tuvatu project in Fiji, Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX; LLO:ASX) has entered into a CA$27 million "bought deal" offering of units with a syndicate of underwriters.

Net proceeds from the sale of 29.35 million units of the company at CA$0.92 per unit will be used for development and exploration at Tuvatu, working capital, and general corporate purposes, the company said.

Lion One has already begun extracting material for its processing facility at Tuvatu from one lode, URA1, and is expected to begin extracting from another recently discovered lode, URW1, soon.

"This remains one of my favorite stories, and I believe that . . . the very high grades being revealed will result in some very robust operating margins," wrote newsletter author Jay Taylor of J Taylor's Gold, Energy & Tech Stocks. "Then, when the markets finally wake up to the enormous exploration potential for this alkaline project, I think Lion One could be one of the biggest winners in 2023."

Results from grade-control drilling close to a newly discovered mineralized zone at the project included 88.07 grams per tonne gold (g/t Au) over 5.7 meters, including 1,396 g/t Au over 0.3 meters; 27.52 g/t Au over 5.55 meters; 20.93 g/t Au over 7.2 meters; 16.12 g/t Au over 9.3 meters; 16.48 g/t Au over 9.6 meters; 14.6 g/t Au over 6.6 meters; 14.97 g/t Au over 5.4 meters; and 10.85 g/t Au over 6.9 meters.

Visible gold was also seen in several drill holes, the company said.

Source: Lion One Metals Ltd.

Mining at URW1 is expected to begin soon while workers have already extracted 475 tonnes from 14 cuts at the URA1 lode, the company said.

To date, 34 diamond drill holes totaling 3,538 meters have been sunk in the URW1 lode system.

The URW1 "system represents the next main area of mining and extraction of high-grade mineralization at Tuvatu," the company wrote in a release. "Development has commenced with first-grade control and mapping expected shortly."

After the release of the results from URW1, technical analyst Clive Maund of CliveMaund.com posted that the stock was an "immediate speculative Buy."

"Its recent performance has been rather lackluster compared to many stocks across the sector, which has been due to a supply overhang that we can see on longer-term charts," Maund wrote. "But as they say, 'Past performance is not always a guide to future performance.'"

The Catalyst: A Syndicate of Underwriters

Eight Capital is the lead underwriter and sole book runner for the bought deal on behalf of a syndicate of underwriters, the company said.

Each unit will consist of one common share in the capital of the company and one-half of one common share purchase warrant of the company. Each warrant shall be exercisable for one common share at a price per warrant share of CA$1.25 for a period of 30 months from the offering's closing date, which is expected to be on or about May 11.

The company has also agreed to grant the underwriters an option, exercisable in whole or in part, for a period of 30 days after the closing of the offering, to purchase up to an additional 15% of the number of units sold on the same terms as the offering.

Earlier this year, Lion One announced a US$37 million financing facility provided by Nebari Gold Fund 1 LP, Nebari Natural Resources Credit Fund I LP, and Nebari Natural Resources Credit Fund II LP. It said has received US$25 from the first tranche of the funding and Nebari's completion of a US$2 million equity private placement in the company.

The money will be used to fund mine and mill construction at Tuvatu, Taylor wrote.

One of the World's 'Highest-Grade Gold Mines'

When the company's mining lease at the project was extended last year through February 2035, ROTH Capital Partners analyst Mike Niehuser called Tuvatu "one of the highest-grade gold mines in the world."

"We believe that Tuvatu is competitive with Fiji's Vatukoula, which has operated for over 85 years," Niehuser wrote in a December note. "The granting of the Tuvatu Mining Lease (SML 62) de-risks the project, making it attractive to major mining companies."

ROTH has a Buy rating and a CA$2.50 per share target price on the stock, which would be nearly three times Thursday's price of CA$0.86 per share.

Lion One plans to operate the plant at an initial production capacity of 300 tonnes per day for the first 18 months before increasing capacity to 500 tonnes per day in mid-2025. Initial mining will focus on the near-surface resource while advancing underground development.

The drilling campaign at Tuvatu this year will be focused on grade control of the near-term production blocks, identifying separate mineralized systems within the greater Navilawa caldera, and completing geophysical surveys to delineate further drill targets, the company said.

Tuvatu is on the island of Viti Levu in the archipelago nation. 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.

Ownership and Share Structure

About 14% of the company is held by insiders, about 6% by institutions, about 20% by other investors, and about 60% is retail.

The CEO Berukoff owns about 11.8% or 20.9 million shares, according to Reuters. Franklin Advisers Inc. owns 4.27% or 7.56 million shares.

Lion One's market cap is CA$152.13 million with 176.9 million shares outstanding, 155.66 million of the free-floating. It trades in a 52-week range of CA$1.66 and CA$0.59.

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