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LIO: Ramping Gold Production with Big Exploration Upside

What you need to know:
• Lion One is an under-the-radar high-grade gold producer with its Fiji-based Tuvatu mine producing ~14.7Koz in FY25, and production rates are expected to double over the next year.
• Tuvatu hosts a high-grade gold resource of 514Koz at 7.89 g/t Au and shows substantial growth potential near existing resources as well as regional exploration.
• LIO trades at 0.2x NAV compared to its peers at 0.5x NAV.

Lion One Metals Ltd. (LIO:TSXV, LOMLF:OTC) is a Canadian-based gold producer and exploration company focused on unlocking the full potential of its 100%-owned Tuvatu Gold Project in Fiji. Tuvatu is host to a 514Koz gold resource at a high average grade of 7.89 g/t but shows substantial exploration potential, having reported some of the best gold intercepts around the globe (20.86 g/t Au over 76m and 35.25 g/t Au over 37m). The project is in production, albeit at modest mining rates (~350tpd), having produced 6.4Koz in FY24 and 14.7Koz in FY25. LIO is focused on the ramping of mining operations from 350tpd to 600tpd by 2027, as well as exploration, both underground for near-term production and regional exploration across the Navilawa Caldera. We are initiating coverage on Lion One Metals Ltd. with a BUY rating and target price of $0.60/share.

Investment Thesis Summary
High-Grade Underground Gold Mine in Production. The Tuvatu Gold Mine, having commenced production in late 2023, produced 14.7Koz in FY25 and is taking advantage of the surging gold prices.

Expansion Imminent – Doubling Production. LIO’s current milling rate is ~350tpd, but the Company has plans to expand this capacity to 600tpd by 2027. We estimate that gold production will ramp from ~14Koz in 2025 to over 33Koz by 2027. There exists upside to this based on mine and mill improvements, such as minimizing dilution and improving recovery rates.

High-Grade Resource. Tuvatu currently hosts a high-grade gold resource of 514Koz at 7.89 g/t (3.0 g/t cut-off). Of which, 175Koz is in the indicated category at 8.48 g/t Au, and the remaining is in the inferred category at 7.62 g/t Au. At a 4.0 g/t Au cut-off, the average grade increased to just below 10 g/t Au.

Massive Exploration Upside. Roughly 50% of current mine production is occurring outside of the defined resource, highlighting significant upside to further resource growth. With new underground access established (due to the accelerated underground development), infill and grade control drilling has ramped up, targeting veins and zones that could be incorporated into the near-term mine plan. In addition to near-mine resource growth, LIO’s broader land package across the Navilawa Caldera offers substantial regional exploration potential.

Discount to Peers. LIO trades at a substantial discount compared to small gold-producing peers at 0.2x NAV vs. peers at 0.5x NAV. We value the Company at 0.4x NAV, which is equivalent to 4.0x FY27E OCF.