Lion One Metals (TSXV: LIO; US-OTC: LOMLF) has released an updated preliminary economic assessment (PEA) for its wholly owned Tuvatu alkaline gold project in Fiji, which suggests a high-grade, 1,000-tonne-per-day underground operation.
The proposed five-year mine would generate an average of 77,969 oz. gold annually, at all-in sustaining costs (AISCs) of US$713 per ounce. With an initial capital cost estimate of US$66.8 million and based on US$1,400 per oz. gold, the after-tax net present value for the proposed build stands at US$121.7 million, at a 5% discount rate, with a 50.9% internal rate of return and a 1.7-year payback.
"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," Walter Berukoff, Lion One's chairman and CEO, said in a statement. "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."
When compared with the prior PEA from 2015, the study incorporates a resource updated in 2018, in addition to a stronger production profile with a slightly shorter mine life.
The statement also noted additional upside to the early-stage study from last year's expansion of the project area.
With permits now in place, Lion One is evaluating potential pilot plant configurations, and the company has completed the majority of the earthworks required for a starter operation.
Tuvatu resources, at a 3 gram gold per tonne cutoff grade, stand at 1 million indicated tonnes, at 8.5 grams gold per tonne, containing 274,600 oz. gold, and 1.3 million inferred tonnes, at 9 grams gold, for a further 384,000 oz. gold.
This year's exploration program at the project is targeting feeder pathways to the gold system.
As part of its tenements, Lion One holds the entirety of the Navilawa Caldera, which is a 7-km diameter alkaline gold system.