Lion One Announces Robust Updated PEA for Tuvatu
Lion One Announces Robust Updated PEA for
Tuvatu
North Vancouver, British Columbia--(Newsfile Corp. - September 25, 2020) -
Lion One Metals Limited
(TSXV: LIO) (OTCQX: LOMLF) (ASX: LLO)
("Lion One" or the "Company")
is pleased to announce
that it has completed an updated Preliminary Economic Assessment (the "Report" or the "PEA") for the
Company's 100% owned Tuvatu Gold Project ("Tuvatu" or the "Project") located on the island of Viti
Levu in Fiji.
The Report has been prepared in connection with the Company's Annual Information Form
for the year ended June 30, 2020.
The Report represents an update of the Project to comply with applicable disclosure regulations and is
not the attainment of a new milestone for the development of the Project. In particular, the mineral
resource estimate used in the PEA is from 2018 and does not include any new drilling completed by the
Company in its 2019 - 2020 drill programs. Furthermore, the potential development model set out in the
PEA is confined to the current mineral resource inside the permitted mine lease area (SML 62) and
does not reflect the expanded Project area following the grant of the adjoining Navilawa Caldera
tenement (SPL 1512) in 2019.
"The PEA for Tuvatu demonstrates robust economic potential for a
low-cost, high-grade gold operation
with low upfront capital costs, enabling rapid payback of capital even at a gold price
of US $1,400 per
ounce ," stated Lion One Chairman and CEO Walter Berukoff. "We are encouraged about Tuvatu's
potential for a near-term development and production opportunity, with further exploration and expansion
potential as we continue our current drill programs to extend the known mineralization of Tuvatu and the
surrounding Navilawa Caldera."
PEA Highlights (all amounts are quoted in USD utilizing a base case gold price of $1,400 per
oz.):
Pre-tax Net Present Value ("NPV") of $155.8 million (5% discount rate)
Pre-tax Internal Rate of Return ("IRR") of 60.3%
Operating costs of $503 per oz.; All-in sustaining costs (AISC) of $586 per oz. (pre-tax)
1.5 year payback period (pre-tax) on $66.8 million capex
Gold production of 331,369 oz. at an average grade of 8.6 g/t Au
PEA Summary
Production Mine Life (Years)
5
Total Au Produced (oz.)
331,369
Average Au Annual Production (oz.)
77,969
Average Au Head Grade LOM (g/t)
8.6
Total Mill Feed Mined (tonnes)
1,384,000
Nominal Production Rate (tonnes/annum)
330,000
Average Gold Recovery
87.3%
Summary Economics at USD$1,400 per oz. Gold Price
Total Initial LOM Revenue (millions)
$463.9
Total LOM Pre-Tax Cash Flow (millions)
$202.8
Average Annual Pre-Tax Cash Flow (millions)
$47.7
Total LOM After-Tax Cash Flow (millions)
$160.8
Average Annual After-Tax Cash Flow (millions)
$37.8
Cash Costs per oz. Au (Pre-tax)
$503
All-In Sustaining Cash Costs per oz. Au (Pre-tax)
$586
All-In Costs per oz. Au (Pre-tax) including initial capital costs
$788
Pre-Tax NPV (millions, 5% discount rate)
$155.8
Pre-Tax IRR
60.3%
Pre-Tax Payback (Years)
1.5
After-Tax NPV (millions, 5% discount rate)
$121.7
After-Tax IRR
50.9%
After-Tax Payback (Years)
1.7
A PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too
speculative geologically to have economic considerations applied to them that would enable them to be
categorized as Mineral Reserves. Furthermore, there is no certainty that the PEA will be realized.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Production Summary
Year 1
Year 2
Year 3
Year 4
Year 5
Totals
Total Mill
Feed Mined
t
330,000
331,000
330,000
330,000
63,000
1,384,000
Gold Grade
Milled
g/t
7.60
8.93
10.49
7.70
6.42
8.57
Gold Milled
oz.
80,588
94,985
111,238
81,643
13,078
381,532
Gold
Recovery
%
86.5
87.5
87.5
87.5
87.5
87.3
Gold
Recovered,
including
refining
loss
oz.
69,359
82,696
96,847
71,081
11,385
331,369
Note: Numbers may not total due to rounding
Cash Flow Summary at US $1,400 per oz. Gold Price
Project Cash Flow
Cash costs
($ millions)
Cost per
tonne
Cost per
oz. Au
Mine Operating Costs
65.39
47.24
197.33
Processing Cost
58.64
42.37
176.97
G&A and Site Service Cost
11.66
8.43
35.20
Smelting and Refining Costs
0.96
0.70
2.91
Royalties
30.15
21.79
91.00
Total Cash Operating Cost
166.81
120.52
503.40
Revenue
463.92
335.18
1,400.00
Operating Cash Flow
297.11
214.66
896.60
Initial Capital Cost
66.82
48.28
201.65
Sustaining Capital Costs
27.44
19.83
82.82
Total Capital Cost
94.27
68.11
284.47
All in Sustaining Cost (Pre-tax)
194.26
140.35
586.22
All in Costs (Pre-tax)
261.08
188.63
787.88
Estimated Income Tax
42.02
30.36
126.82
All in Sustaining Cost (After-tax)
236.28
170.71
713.04
All in Costs (After-tax)
303.10
218.99
914.69
Note: Numbers may not total due to rounding
Sensitivity of NPV and IRR to Variations in Gold Price
Tetra Tech prepared an economic evaluation of the Project using the gold price of US$1,400/oz (base
case), the following financial parameters were calculated:
Pre-tax IRR of 60.3% and After-tax IRR of 50.9%
Pre-tax NPV of $155.8 million and After-tax NPV of $121.7 million (5% discount rate)
1.5-year payback (pre-tax) and 1.7-year (after-tax) on $66.8 million of initial capital
The economic evaluation of the Project includes a sensitivity analysis to variations in gold price (see
table below).
At $2,000 per Au oz., the following financial parameters were calculated:
Pre-tax IRR of 99.3% and After-tax IRR of 85.0%
Pre-tax NPV of $307.9 million and After-tax NPV of $243.4 million (5% discount rate)
0.88-year payback (pre-tax) and 1.04 year (after-tax) on $66.8 million of initial capital
Sensitivity of Pre-tax and After-tax NPV and IRR to Variations in Gold Price:
Gold
Price
per
oz.
Pre-Tax
NPV5%
$ millions
Pre-Tax
IRR
After-Tax
NPV5%
$ millions
After-Tax
IRR
Years
Payback
After-tax
Pre-Tax
Cash Flow
undiscounted
$ millions
After-Tax
Cash Flow
undiscounted
$ millions
1,000
54.4
27.1%
40.0
22.1%
2.61
79.0
61.1
1,200
105.1
44.7%
80.9
37.4%
2.09
140.9
111.1
1,400
155.8
60.3%
121.7
50.9%
1.67
202.8
160.8
1,600
206.5
74.4%
162.2
63.2%
1.38
264.7
210.3
1,800
257.2
87.3%
202.8
74.5%
1.19
326.6
259.9
2,000
307.9
99.3%
243.4
85.0%
1.04
388.5
309.4
2,200
358.7
110.5%
284.0
94.9%
0.91
450.4
358.9
2,400
409.4
121.1%
324.5
104.3%
0.80
512.3
408.4
Mineral Resources
The Mineral Resource models and estimates, and the site visit were conducted by Mr. Ian Taylor, B.Sc.
(Hons), G.Cert. Geostats, M.AusIMM (CP) (Qualified Person [QP]) of Mining Associates Pty Ltd. ("MA").
The Mineral Resource estimate was completed in January 2018 following the completion of the
2016/2017 diamond drilling program and field exploration.
This Mineral Resource estimate does not
include the 2019-2020 diamond drilling program.
The Mineral Resource has been estimated for each vein individually using Ordinary Kriging (OK) of width
and grade, the latter using accumulations, into a three-dimensional (3D) block model. The Mineral
Resource has been estimated for each vein individually based on the current drill hole database, historic
block models, and geological wireframes. The effective date for the Mineral Resource estimate is
January 8, 2018 (See sensitivity of Mineral Resource to cut-off grade in Table Below).
Cut off
(g/t Au)
Indicated Resource
Inferred Resource
Tonnes
g/t Au
oz. Au
Tonnes
g/t Au
oz. Au
2.0
1,283,000
7.2
296,400
1,822,000
7.2
423,300
3.0
1,007,000
8.5
274,600
1,325,000
9.0
384,000
5.0
687,000
10.60
234,300
788,000
12.5
317,500
The reader is cautioned that the Report includes the use of Inferred Mineral Resources, which are
considered too speculative geologically to have the economic considerations applied to them that would
enable them to be categorized as Mineral Reserves, and as such, there is no certainty the economic
results presented in the Report will be realized. The PEA is preliminary in nature and uses Inferred
mineral resources.
Capital Cost Estimates
Tetra Tech prepared a capital cost estimate for the PEA with inputs from Entech, Wood, and Lion One.
Tetra Tech established the capital cost estimate using a hierarchical work breakdown structure. The
accuracy range of the estimate is +35%/-30%. The base currency of the estimate is Canadian dollars.
The total estimated initial capital cost for the design, construction, installation, and commissioning of the
Project is USD$66.8 million (CDN$89.1 million), including an average contingency of approximately
16% of the total direct costs. See Estimated Capital Costs table below:
Estimated Initial Capital Costs
Direct Costs
($millions)
Underground Mining
20.8
Process
13.7
Tailings Storage Facility
4.1
Overall Site
3.2
On-site Infrastructure
1.8
Direct Costs Subtotal
43.6
Project Indirect Costs
11.5
Owner's Costs
4.8
Indirect Costs Subtotal
16.3
Contingencies
6.9
Total Capital Costs
$66.8
Operating Cost Estimates
The on-site average operating costs, at a mill feed rate of 1,000 t/d were estimated to be USD$97.35/t
(CDN$129.81/t) of material processed. The operating costs are defined as the direct operating costs
including mining, processing, site servicing, and G&A costs, including related freight costs.
The cost estimates in this section are based on the consumable prices and labour salaries/wages from
Q2 2020, or information from Tetra Tech and other consulting firms' in-house database. The expected
accuracy range of the operating cost estimate is +35%/-30%. It is assumed that operation personnel will
reside in towns or villages nearby. There will be no accommodation or catering services provided at site.
Personnel will be bussed to site by the Owner. The operating costs exclude shipping and refining
charges for the doré produced; these costs are included in the financial analysis.
Operating Cost Estimates (per tonne milled)
Description
Operating
Cost ($per
tonne )
Mining**
47.24
Process
41.49
Reclaim Water Handling
0.30
G&A
6.66
Site Services
1.66
Total Operating Cost Estimate *
97.35
Notes: *Numbers may not total due to rounding.
**LOM average, excluding pre-production related costs.
Preliminary Economic Assessment Parameters - Cautionary Statement
A PEA should not be considered a prefeasibility or feasibility study, as the economics and technical
viability of the Project have not been demonstrated at this time. A PEA is preliminary in nature and
includes Inferred Mineral Resources that are considered too speculative geologically to have economic
considerations applied to them that would enable them to be categorized as Mineral Reserves.
Furthermore, there is no certainty that the conclusions or results reported in the Technical Report will be
realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
The Report is based on low accuracy level technical and economic assessments and is insufficient to
support estimation of mineral reserves or to provide assurance of an economic development case at this
stage; or to provide certainty that the conclusions of the Preliminary Economic Assessment will be
realized.
Qualified Person
The scientific and technical content of this news release has been reviewed, prepared, and approved by
Mr. Stephen Mann, P. Geo, Managing Director of Lion One, who is a qualified person pursuant to
National Instrument 43-101 - Standards of disclosure for Mineral Projects ("NI-43-101).
About Lion One Metals Limited
Lion One's flagship asset is 100% owned, fully permitted high grade Tuvatu Alkaline Gold Project,
located on the island of Viti Levu in Fiji. Lion One envisions a low-cost high-grade underground gold
mining operation at Tuvatu coupled with exciting exploration upside inside its tenements covering the
entire Navilawa Caldera, an underexplored yet highly prospective 7km diameter alkaline gold system.
Lion One's CEO Walter Berukoff leads an experienced team of explorers and mine builders and has
owned or operated over 20 mines in 7 countries.
As the founder and former CEO of Miramar Mines,
Northern Orion, and La Mancha Resources, Walter is credited with building over $3 billion of value for
shareholders.
On behalf of the Board of Directors of
Lion One Metals Limited
"
Walter Berukoff
"
Chairman and CEO
For further information
Contact Investor Relations
Toll Free (North America) Tel: 1-855-805-1250
Email:
Web:
www.liononemetals.com
Leo Karabelas
Focus Communications Inc.
Tel: 416-543-3120
Email:
Web:
www.focusir.ca
Neither the TSX Venture Exchange nor its Regulation Service Provider accepts responsibility
for the adequacy or accuracy of this release.
This press release may contain statements that may be deemed to be "forward-looking statements"
within the meaning of applicable Canadian securities legislation. All statements, other than
statements of historical fact, included herein are forward looking information. Generally, forward-
looking information may be identified by the use of forward-looking terminology such as "plans",
"expects" or "does not expect", "proposed", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words
and phrases, or by the use of words or phrases which state that certain actions, events or results may,
could, would, or might occur or be achieved. This forward-looking information reflects Lion One Metals
Limited's current beliefs and is based on information currently available to Lion One Metals Limited
and on assumptions Lion One Metals Limited believes are reasonable. These assumptions include,
but are not limited to, the actual results of exploration projects being equivalent to or better than
estimated results in technical reports, assessment reports, and other geological reports or prior
exploration results. Forward-looking information is subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of activity, performance or achievements of
Lion One Metals Limited or its subsidiaries to be materially different from those expressed or implied
by such forward-looking information. Such risks and other factors may include, but are not limited to:
the stage development of Lion One Metals Limited, general business, economic, competitive,
political and social uncertainties; the actual results of current research and development or
operational activities; competition; uncertainty as to patent applications and intellectual property
rights; product liability and lack of insurance; delay or failure to receive board or regulatory approvals;
changes in legislation, including environmental legislation, affecting mining, timing and availability of
external financing on acceptable terms; not realizing on the potential benefits of technology;
conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals.
Although Lion One Metals Limited has attempted to identify important factors that could cause actual
results to differ materially from those contained in forward-looking information, there may be other
factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should
not place undue reliance on forward-looking information. Lion One Metals Limited does not undertake
to update any forward-looking information, except in accordance with applicable securities laws.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/64656