Lion One Metals Ltd. [LIO-TSXV, LOMLF-OTCQX, LLO-ASX] said Wednesday it is raising $12.5 million from a bought deal financing with proceeds earmarked for the company’s 100%-owned Tuvatu Alkaline Gold Project in the South Pacific Island of Fiji, where production is expected to start by the fourth quarter of 2023.
Lion One said it has struck a deal with underwriters who have pledged to purchase on a bought deal basis 16.2 million units of the company at 77 cents per unit. Each unit will consist of one common share and one-half of one common share purchase warrant. Each warrant can be used to acquire one common share for $1.05 for up to 36 months from the date of closing of the offering.
However, the expiry date can be accelerated if the volume weighted average trading price of the shares equals or exceeds $1.75 for any 20 consecutive trading days after the closing date of the offering.
The underwriters have been handed a green shoe option to purchase up to an additional 15% of the units sold in the offering. That option can be exercised for a period of 30 days after the closing date of the offering, which is expected to be September 28, 2022.
On Wednesday, Lion One shares were active on the news, easing 12.7% or 11 cents to 75 cents. The shares are currently trading in a 52-week range of $1.66 and 86 cents.
The Tuvatu project is located 24 kilometres northeast of the town of Nadi on the island of Viti Levu, in the Republic of Fiji. It is a large gold-bearing vein system that lies at elevations of 100 to 600 metres in the southern reaches of the Navilawa Volcano, overlooking the Sabeto River Valley.
Gold mineralization is predominantly hosted in monzonite (alkaline granite-like rocks) but also occurs in adjacent volcanics
According to a June, 2014, estimate, the project hosts an indicated resource of 1.1 million tonnes at 8.46 g/t gold or 299,500 ounces. On top of that is an inferred resource of 1.5 million tonnes at 9.70 g/t gold or 468,000 ounces.
Lion One holds a 13,619-hectare exploration license package covering the entire Nailawa volcano, with the Tuvatu mining lease at its centre. The company has said the project is fully permitted for construction, mining and processing, with a 5% government royalty and 3% export tax.
Access to the mineralization at Tuvatu will be made from two declines from surface and internal declines, with two ventilation raises to surface. It said the primary planned mining method is shrinkage stoping with limited breast stoping for flat dipping lodes.
Tuvatu is one of several epithermal gold systems associated with alkaline rocks along the northeast trending Vit Levu Lineament, Fiji’s own 250-kilometre long gold corridor. A number of gold deposits have been discovered along this trend, including Tuvatu, Vatukoula and Raki Raki. The Vatukoula or Emperor Mine has produced over seven million ounces of gold since 1937.
Lion One has said it envisages production based on a 600 tonne-per-day carbon-in-leach operation yielding recoveries of 86% with up to 40% of the gold being recovered through a gravity circuit.