Business Enquirer Issue 108 | Lion One Metals | Nov'22

Rising Mining

Discovering Fiji

A Rising Mining Destination in the South Pacific

BY WRITTEN BY Gary Smith Frew Murdoch

Lion One Metals

Lion One Metals Limited achieves roaring results as it explores the mining island paradise of Fiji’s alkaline gold system.

Thegorgeous turquoise waters and white sandy beaches surrounding Fiji are not the only features that contribute to the country’s sparkle. The island nation has a history of mining, dating back to the 1860s when gold was first discovered there.

Located in the South Pacific Ocean, the archipelago is situated along the Pacific Ring of Fire, also known as the Circum-Pacific Belt, a 40 000 km U-shaped network of incredible volcanic arcs, belts, and underwater trenches famed for its mineral deposits.

Fiji’s first recorded commercial gold mining operation began in 1868 on the island of Viti Levu. However, it was not until the 1930s that large-scale mining began with the birth of the Vatukoula gold mine, which even today could be considered the cornerstone of Fiji’s gold mining industry.

‘Vatukoula’, meaning ‘gold rock’ in Fijian, was one of the largest gold mines in the world at that time and by the 80s, it had been mining gold, silver, and tellurium from the Tavua basin in the Vatukoula region for 45 years. The mine remains a top player in the Fiji mining sector with over seven million ounces of gold produced.

In recent years, there has been increasing interest and investment in Fiji as a mining destination. The country’s rich resources have attracted the attention of companies from around the world.

Lion One Metals Limited (Lion One), a Canadian-based exploration and development company, has been collecting headlines in Fiji news media of late. The organization is developing the Tuvatu alkaline high-grade gold

project, which has the potential to make the company the highest-grade gold producer in the world.

“The Tuvatu project is absolutely fascinating. First of all, it’s in a unique location - the Fiji Islands in the middle of the Pacific. It is part of the Circum-Pacific Belt, which hosts many of the world’s largest gold and base metal deposits,” said Sergio Cattalani, Senior Vice President Exploration at Lion One.

“It’s what we call an alkaline gold system. It’s basically a gold system driven by magmas that came up in the ground about four and a half million years ago that were rich in alkaline metals,” followed up Dr. Quinton Hennigh, Technical Advisor at Lion One and renowned economic geologist.

“When people in our business hear about alkalines, they think about large, deep, and high grade. Much like real estate, not ‘location, location, location’ but ‘grade, grade, grade,’” added Walter Berukoff, Chief Executive Officer at Lion One Metals.

Despite the pandemic’s best and worst efforts, Lion One has weathered the storm and continued to grow during these tumultuous times. Certainly, there was a mass of relieved exhales when in August 2022, Lion One received news on its mining lease extension.

Walter remarked to The Fiji Times: “I am proud to say that it is with great elation that the

CEO Mr. Berukoff

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Government of Fiji has renewed our special mining lease for the Tuvatu Alkaline Gold Project for another ten years.”

Walter believes that the extension demonstrates Fiji’s openness to public markets that can access the necessary capital to allow for sustainable mining projects to be built.

“Responsible mining will enhance the local socio-economic conditions for all Fijians,” said Walter. To date, Lion One has invested over $145 million into the country’s economy.

Another of Lion One’s leadership team, Chief Operating Officer Patrick Hickey, stated the extension of the lease also serves as a stamp of approval for the company’s economic and environmental, social, and governance (ESG) outlook.

Quoted by The Fiji Times, Patrick said: “We are very pleased to have been granted this extension after the rigorous assessment process that factored not only the geological and economic potential of Tuvatu, but our environmental risk management strategy, and local landowners and community relationships.

“This milestone demonstrates the tremendous

support the Fiji Government has for both Lion One and its mining industry as we continue our commitment to the communities that we operate in to provide direct employment opportunities and peripheral economic stimulus.”

Sharing in social responsibility

In September 2022, EY Global Mining & Metals Leader Paul Mitchell had an article published detailing the top business risks and opportunities for the mining sector in 2023.

Although supply chain disruption is a new addition to the top ten list (in comparison to EY’s 2022 version) and there has been some shuffling up the ranks for “geopolitics” - no surprise there - and “costs and productivity”thank you, inflation - the number one risk and opportunity remains stoic and unmoved; that of ESG.

When it comes to managing environmental, social, and governance risks and opportunities, many organizations are playing the laggard. The good news is that there is no time like the present for miners to get on board with ESG. As Paul Mitchell writes:

“In our conversations with investors, a consistent

Aerial View of Tuvatu Processing Plant Site

Elisha Engineering Company Pte Ltd is a wholly owned Fijian Company, which commenced operations in 1976 which operates

Fiji’s leading Engineering and Fabrication workshop in Fiji.

The company built on an intrinsic value, personal reward and financial reward in producing tangible products and services that offer customers excellent value for money. We, meaning each employee of Elisha Engineering Company Pte Ltd, succeed because our customers succeed. We are part of a much larger community to which we are compelled to act responsibly. We act responsibly when we help protect our environment, provide economic opportunity fairly, work safely and consider the person in all of our business affairs. Our central focus is the production of steel fabrications and assemblies using structural steel components including beams, channels, angles and structural tubing. Our services include flexible lead times acceptable to customers, custom design by application, and design for low cost manufacturing, custom delivery schedules

and administrative support.

We maintain our presence in a variety of markets including but not limited to; construction, mining, Timber & furniture making, hotels, agricultural equipment and mechanical. In short, we are a robust company that adapts to the ups and downs in individual industries to meet customer demands so our customers can depend on us to be there when they need us, in good or bad times.

From the start, the shareholders of the company had set out a goal to provide a high level of service in the construction, mining and sugar industries, Hotel, Timber that meets the demands of today’s quality conscious customers.

Location

Elisha Engineering Company Pte Ltd is situated at 36-38 Nabeka Street, Ba, Fiji Islands. At our workshop and engineering facilities, we operate a fully equipped general engineering workshop. We also mobilize for onsite work as required on a 24-hour basis during emergencies in support of customer requirements.

message has emerged: they want to see evidence that companies are committed to making a positive difference on society and the environment — not just because it’s the right thing to do but also because they believe it will lead to better long-term business results.”

It is no longer enough for companies to simply have an ESG program in place; rather, mines need to be able to show the material difference that initiatives are making.

Walter, who founded the Tuvatu Gold Project 17 years ago, has been actively involved in promoting responsible and sustainable mining for decades. In comments to the Fiji Sun, he shares that the island nation’s gold deposit is exceptional and that the island wields a wealth of skilled talent to match.

“The Tuvatu project is world-class in terms of its deposit, as well as the skill sets which have

kept us here, and the work ethic of our local Fijian workforce...

“There is an incredible talent pool in Fiji with diverse skill sets, and education directly applicable to our business, which makes our localization efforts of hiring very straightforward.

“Lion One mining practices will be in alignment with both national law and international best practices. The people of Fiji are very keen and active to maximize the local benefits that responsible mining brings to the table.

“We are confident that Tuvatu will become similar to million-ounce gold mines such as Vatukoula just north of here, and Porgera in Papua New Guinea,” said Walter.

The Tuvatu Gold Project is Fiji’s second

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largest gold mine after Vatukoula and employs approximately 200 locals. Patrick says that they have plans in place to boost this number to 300 by the middle of 2023.

“Job creation will have a direct supply chain multiplier effect in the communities, which will have an impact to help the Fijian economy continue to grow. Our mine will stimulate local commerce by purchasing local supplies and materials wherever possible. Our lease fee payments will directly compensate local landowners for the use of their lands,” Patrick shared with FBC News.

Lion One’s results and differentiators

Similar to the Vatukoula gold mine, Tuvatu is an epithermal, low-sulfidation deposit in an alkaline gold system. The project has an estimated mine life of 13 years and is projected to produce a substantial output of over 200 000 ounces of gold per year.

In September 2022, Lion One Metals closed a $13.4 million bought deal to fund the company’s Tuvatu Gold Mine flagship project as a low-cost high-grade underground gold mining operation. At present, the project has full permits in place for underground mining operations and is in the drilling stage, with promising results.

“You look at our recent results, they’re spectacular. This is a really good one: 20.6 grams over 7.5 meters; including 89 grams over 1.5 meters; 227 grams over one third of a meter. This one recently reported ranks right up there at the top of the world. 379.6 grams over 1.8 meters, which included 1616 grams over 0.4 meters…That’s a lot of gold,” assured Walter.

Asides from its recent closed deal, renewed lease, and globally significant mineral intercepts, the Tuvatu Alkaline Gold Project also has other hallmarks of investment. The mine is 25 km from the Nadi International Airport, has approximately $36 million in working capital, holds a 136 km² exploration license area, operates eight rigs

with a 30 000 meter drilling capacity, and features a 12 000 assay lab monthly sampling capacity.

“In 2018, Lion One commissioned its own lab, which is an enormous asset for us in exploration. Typically, you would have to wait three to four months for results to come back from a commercial lab. We wait from our own lab no more than two weeks,” explained Sergio.

Walter believes that this is what distinguishes Lion One Metals from other companies: “Such a glorious thing to pull a core, see wire gold in it and have it assayed the next day. It’s absolutely incredible.”

“Lion One has made some really good decisions. By buying their own drill rigs they keep the cost of drilling low. They keep the access to the rigs

- they’re not being pulled off on other contractsand they bought their own lab. It’s one of the best decisions I’ve seen in the mining industry,” asserted Patrick.

Investment highlights

Lion One Metal’s largest investors include the Donald Smith Value Fund, Franklin Precious Metals, Invesco Gold Fund, and Walter Berukoff. Institutional investors feature the likes of RBC Global Precious Metals, Aegis Value Fund, CI Precious Metals, Gabelli Gold Fund, and Mackenzie Precious Metals.

As mentioned, but not yet fully illustrated, Fiji is a desirable mining jurisdiction for investors. There are several elements that work together in making this island nation paradise such a favorable climate for investment.

The mining sector is crucial to the national economy as gold constitutes one of Fiji’s key exports. Viti Levu’s expansive mining history, courtesy of companies such as Vatukoula Gold Mines PLC and Lion One, and the Fijian public, has helped to forge a skilled domestic workforce that provides a ready pool of talent for mining activities.

Another positive factor is the attitude of the country’s leadership to mining. Fiji is a democratic republic with a government that continually reiterates its openness to

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investment from foreign companies and the job creation opportunities that mining affords. In addition, the mining sector’s regulatory framework has British mining law at its foundations. This means companies can reap the benefits of a 20 percent corporate tax rate and a five percent gross profit royalty.

Infrastructure is also favorable to mining activities as a result of the fully operational hydroelectric dam and seaport that offers access to Asian growth markets.

These factors are all conducive to investment, but nothing more so than the prolificness of that precious metal gold itself. As the leadership team at Lion One Metals attests, there is gold to be had here.

“It’s very hard to walk on the project [Tuvatu] without finding gold. It’s just there,” remarked Walter.

Dr. Quinton elaborated: “These are exceptionally high-grade deposits that could end up being multimillion ounces.”

“I fully expect that this deposit will produce for at least a decade once we get going and it will be a significant money-maker for the company,” said Sergio.

Lion One Metal’s leadership has a clear understanding of Fiji and the Tuvatu Gold Project’s value. If they continue to make astute decisions, such as those demonstrated through the commissioning of their own assay lab and purchase of drilling equipment, the company will be in an excellent position to take up a lion’s share of gold production in Fiji and positively shape the country’s economic landscape for the next decade.

“We have a real jewel of a mine here. It’s dynamic, it’s happening, it’s just an amazing place to be,” finished Patrick.

www.liononemetals.com

Underground drilling

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