An independent Preliminary Economic Assessment (PEA) for Lion One Metals Limited’s fully permitted Tuvatu Gold Project on the island of Viti Levu demonstrates robust economic potential. It reveals that low capital and operating costs will enable rapid payback of capital even at current low gold prices.
Utilizing a base case gold price of US$1200 per ounce, the PEA highlights pre-tax Net Present Value (NPV) of $117 million (5% discount rate) on the current resource of the Tuvatu project; a pre-tax Internal Rate of Return (IRR) of 67%; pre-production capital costs of $48.6 million including 14.5% contingency; and operating costs of $567 per ounce with all-in sustaining costs of $779 per ounce.
It estimates first gold production following a development and construction period of 15 months. The PEA outlines a 1.5 year payback period, followed by production of 91,229 ounces in year 2 averaging 16.5 grams/tonne and 92,056 ounces averaging 14.40 grams/tonne in year 3.
Overall gold production of 352,931 ounces over 7.4 years at an average grade of 11.3 grams/tonne is estimated from a current indicated resource of 1.1 million tonnes @ 8.46 grams/tonne for 299,500 ounces and an inferred resource of 1.5 million tonnes @ 9.7 grams/tonne for 468,000 ounces at a cut-off grade of 3.0 grams/tonne.
In addition to the favourable economic profile outlined in the PEA, there are numerous opportunities to enhance value in the project through further resource expansion and optimization work at Tuvatu.
The Tuvatu site is accessed via a 17km road from Nadi international airport. The road is in good condition, but the last few kilometres closer to the plant site will require upgrading and appropriate maintenance to accommodate larger loads and to ensure reliable access during the wet season.
The project will be required to generate its own power due to insufficient power being available on the Fijian grid system. A containerized diesel power station, including switchgear and transformers, is proposed for the project with a capacity of 4MW in an N+2 configuration. This will ensure supply reliability and provide enough reserve to start the larger ball mill motors. Power supply costs are based on a delivered diesel fuel cost of US$0.90/litre for a total cost of US$0.24/kWh.
Reclaim, run-off and mine dewatering will supply water for the project site. The mine dewatering from underground pumping will be used to provide the raw water requirements to service the project needs. The Coreshed Fault, one of the major fault structures identified on site, is a significant water bearing structure and can provide a supply during the dry season. It has been determined that raw water can further be managed by controlling the flows from the tailings facility catchment to allow storage of raw water make-up to the process in the impoundment.
The Tailings Storage Facility will be about 2km southwest of the proposed plant site. The compacted rock-fill embankment will be constructed with the design utilizing ridges to reduce the volume of embankment construction materials required. The facility has been designed to store a total of 1.2 million tonnes of tailings at an average process plant discharge rate of 600 tonnes/day, with sufficient capacity to contain wet year supernatant and runoff events.
Lion One’s chairman and CEO Walter Berukoff said, “We view Tuvatu as a near-term development and production opportunity in Fiji’s major goldfield, with long-term production potential in our substantial tenement holding.”