Every few years I come across a company that has extraordinary potential.
I've just found another one and it may be one of the best yet.
NOVAGOLD
Resources Inc. (NG:TSX; NG:NYSE.MKT) was the first I came across. They
were about $1 when I first wrote about them in 2001. They went to
nearly $20 a share. Then dropped to $0.46 in the crash of 2008. I believe
junior exploration companies should be thought of as a combination of a
lottery ticket and a baseball trading card. The share price has an expiration
date and you have to trade them as the major gold cycle goes up and down.
NovaGold is a perfect example of my thesis that if you don't sell at a
profit you are going to be forced to sell at a loss. NovaGold was both the
biggest opportunity for bulls between a low of $0.13 in mid-2001 and a high
near $20 in 2007 and the greatest short from 2007 until 2008 as it dropped
95%. Same management, same projects.
And to date Novo Resources Corp. (NVO:TSX.V; NSRPF:OTCQX) has been my
all time favorite. I was buying at $0.25 a share when the company first went
public before picking up the WA assets from Mark Creasy. I sat patiently on
my hands up until the summer of 2012 when I could finally write about them. In
the piece I said they could go up 10 to 100 fold. Oh well, so far they only
went up 20 fold from the price in that piece. And I wasn't really sitting
patiently; I was chomping at the bit to write about them.
I love Irving
Resources Inc. (IRV:CSE; IRVRF:OTCBB). I think that is obvious. I did an
interview and talked about them at the end of 2016. The share price was
about $0.45. Irving was putting out press releases showing surface samples as high as
fifteen ounce gold and three hundred ounce silver. That's $24,000-$26,000
a ton rock depending on the price of gold and silver. The shares had managed to get up to a blistering $0.70 a share.
After many trials and tribulations Irving is finally drilling in Japan. I
suspect things are about to get interesting. Quinton Hennigh and his
world-class crew of Japanese geologists are drilling a sinter first. My
favorite target is the mine where we took the ultra-high grade samples from
surface. A drunken monkey could spot those drill holes.
How could I ignore Keith Barron, Aurania
Resources Ltd. (ARU:TSX.V), and his saga about the Lost Cities of Gold project in Ecuador? Keith is the
brains behind the discovery of the 14 million ounce Fruta
del Norte gold deposit. Barbara and I have known and loved Keith for
almost twenty years after he began his series of articles
about resource companies. I took the first half of the 21 articles and
compiled them into a book. If you want an interesting read from one of the
greats in the mining business go here. It's fascinating to realize he got it well
before he got rich and handsome.
He told us about the Lost Cities many years ago. And I'll admit I was at
first skeptical. But Keith pressed on and is drilling now. The market values
his company over $100 million and he has yet to release a single drill hole.
If he doesn't hit on the first targets, I'm not at all concerned; he has 16
more bulls to shoot at.
Putting together a world-class mining company requires a lot of different
pieces and, like a fine Swiss timepiece, they all have to fit together to
work perfectly. Let me give you a little background first.
We don't normally think of Fiji as being home to a premier gold mine but
it was. Baron de Este first discovered gold in Fiji in 1872. It took until
1934 before a real mine was established in the Vatukoula district containing
the Tavua caldera named the Emperor Gold Mine. Between 1934 and 2006 the Emperor Gold
Mine produced over seven million ounces of gold. The Vatukoula mine still
contains an additional known
four million ounces.
A coup took place in December of 2006. Emperor Mines Limited shut down at
once and sold their operations to a private Australian company named Westech
International. The Vatukoula Gold Mine was later sold to a Chinese group in
2009 and is now back into production. Westech morphed into Lion One Metals
and retained a similar large caldera located 40 km to the South West of
Vatukoula named Tuvatu.
Wally Berukoff formed Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX) and ended
up with the assets of the former Emperor Mines after they left Fiji. After
selling Vatukoula, Wally retained Tuvatu that had been part of the
development pipeline of Emperor. It's a very large and potentially rich
alkaline gold system similar to that of Cripple Creek (28 million ounces), Lihir
(40 million ounces), Porgera (25 million ounces) and Vatukoula
(11 million ounces).
Mr. Berukoff has been advancing the project at a slow but steady pace. One
of the problems of giant gold projects is that they can easily consume giant
amounts of money moving to production. The EIA found approval in 2013, the
surface lease was complete in 2014, the Environmental Management and
Operational plans were approved in 2014 and Mining Lease issued by the Fiji PM
in 2016.
Wally wants to start into production small and grow both the resources and
the production. A 2015 PEA using a $1300 price of gold showed a resource of
760,000 ounces of gold with production of 352,000 ounces of 11.3-g/t gold
over six years at a 62% IRR with less than 10% of the project drilled.
Lion One has purchased their own drills and is finishing construction of a
new assay lab to be complete early 2019. Land preparation is being done for
the mine and mill and is scheduled to be finished in 2019. The project came
with tens of thousands of meters of drilling from Emperor and $40 million in
infrastructure. Lion One has raised an additional $63 million since 2011. All
of the pieces are in perfect position. All except for one, that is.
Even though geologists have made comparisons between Cripple Creek in
Colorado and the Vatukoula mine, Emperor always though of the mine as an
epithermal vein system. In general epithermal systems tend to have a short
vertical component, perhaps a few hundred meters at best. But Cripple Creek
isn't an epithermal vein system, it's an alkaline system that tends to go
much deeper and get richer with depth.
Raw gold in stockworks vein
Lion One had most of the pieces in place well before now. The management
is brilliant and has a long history of success in the mining business. But on
March 1st they made an important addition. Wally Berukoff got
together with Quinton Hennigh and appointed him a technical advisor. Quinton Hennigh is an
expert on alkaline gold systems. He looked at the core from Tuvatu and data
and said the company needed to stop thinking epithermal vein system and start
thinking alkaline system with 5-10 million ounce potential.
Quinton soon came up with a plan for development and on the 8th
of April Wally announced an aggressive plan for taking stream
samples, doing a CSAMT program and additional gravity studies in order to
generate a wider area and deeper drill hole program. The first goal will be
to expand the resource to over 1 million ounces.
On the 11th of April Lion One made an interesting press release. They have a non-core iron
asset in South Australia. The sale to Gordon Toll's Braemar Bulk
Export Project will not have an immediate cash flow benefit but the
Braemar project is a planned $5 billion dollar infrastructure program for
shipping over 1 billion tons of high-grade magnetite to China over the long
term. At today's price of iron, Lion One would receive over $200 million in a
royalty over time.
I cannot say enough good things about Wally Berukoff. He is to mining
management what Quinton is to exploration. His CV is nearly absurd. He
founded La Mancha Resources and sold for $500 million to N Sawiris in 2012,
he founded Northern Orion and sold to Yamana for $1.1 billion in 2007. He
sold Miramar Mining to Newmont for $1.5 billion in 2008. In seven different
countries he owned and operated twenty different mines. I think Lion One will
be the pinnacle for him.
Wally owns about 21% of the shares. Other insiders and funds own an
additional 35%. The company has no warrants outstanding and only about 111
million shares fully diluted. They have over $11 cash in the bank and own the
Fiji project 100% with no NSR. The Chinese operating Vatukoula are running a
marginal project and not producing much gold or profit. The Fiji government is
behind Lion One and wants them in production soon.
People who listened to me had the chance to buy Novo and Irving at $0.45 a
share albeit a few years back but have profited greatly. Aurania provided
another great opportunity to make money if you got in early. Lion One has
about a $65 million CAD enterprise value and similar 10-100 fold potential
that both Novo and Irving had years ago. You can always wait until the shares
are far higher and jump in with the "I wanna get poor in a hurry"
crowd. I don't really give a rat's ass. I made my money by buying early and
cheap.
You have a great 100% owned gold project in a friendly country run by one
of the smartest and most experienced guys in the business with the technical
assistance of one of the best geos in the business. Now all they need is
someone who can do a good job of telling the story to the market.
Hmmmm! Who do I know that could do that?
Lion One is an advertiser. I approached them, not the other way around and
I never do that. I own shares and someday when they raise money, I will
participate in the PP. I am biased. Do your own due diligence.
Lion One Metals
LIO-V $0.73 (Apr 12, 2019)
LOMLF OTCQX 102.5 million shares
Lion One website.
Bob and Barb Moriarty brought 321gold.com to the Internet
almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline,
coal, solar, wind and nuclear energy. Both sites feature articles, editorial
opinions, pricing figures and updates on current events affecting both
sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than
832 missions in Vietnam. He holds 14 international aviation records.
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