share price pulled back recently, thereby presenting "a buying opportunity for investors to get exposure to one of our Top Picks among the precious metals explorers/developers," reported Eight Capital analyst Felix Shafigullin in a May 23 research note.
"We view Lion One as undervalued relative to other gold developers under our coverage," Shafigullin added.
277% Possible Gain
The drop in Lion One's share price, by about 34% since the beginning of May, is due to the decline in the gold spot price from its 2023 peak, Shafigullin noted. Now, the Canadian explorer is trading at about CA$0.69 per share, and Eight Capital's target price on it is CA$2.60 per share.
The difference between the current and target prices implies a significant potential return for investors of 277%. Lion One remains a Buy.
Reasons for Top Pick Status
Shafigullin cited four key reasons why Lion One is one of Eight Capital's Top Picks.
1) Its project Tuvatu is high grade, fully permitted for an underground operation, and supported by the government of the mining-friendly jurisdiction, Fiji. Tuvatu's total current resource stands at 2,300,000 tons of 8.8 grams per ton gold (660,000 ounces of gold), plus it has "substantial upside potential in both size and grade," the analyst described.
2) The start of production at Tuvatu is less than a year away. The company has started mining at the URA1 and URW1 lodes and stockpiling the extracted ore. This will be fed into the pilot processing plant when it is finished being built, which is expected by year-end. Now, construction is about 60–70% done.
"The pilot plant would allow Lion One to generate cash inflows while developing a better understanding of the Tuvatu ore body, including the multiple high-grade feeder structures located below the resource boundary that extends to a depth of 300–400 meters," wrote Shafigullin.
3) The feeder structures, outside the Tuvatu resource boundary and open at depth, could substantially increase the existing resource, as drilling has shown the presence of "exceptional high-grade intercepts," Shafigullin wrote. Indeed, the next mineral resource estimate update, expected by the end of Q2/23, should encompass these deep feeder zones.
4) Significant potential exists for regional exploration on Lion One's Fiji property, which includes the Navilawa caldera. The bulk, or 95%, of the land package, remains open for discovery as Tuvatu only accounts for 5% of it. Further, some testing the company did in the caldera returned positive results, suggesting it may contain multiple zones of gold mineralization, similar to Tuvatu.
"We model the regional upside [at] 500,000 ounces of gold, which is a conservative figure, in our view, given the abundance of underexplored regional targets in the caldera," Shafugullin wrote.
|Want to be the first to know about interesting Gold and Base Metals investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.||Subscribe|
- Lion One Metals is a billboard sponsor of Streetwise Reports and has paid SWR a sponsorship fee between US$3,000 and US$5,000.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
For additional disclosures, please click here.
Disclosures for Eight Capital, Lion One Metals Ltd., May 23, 2023
This research report (as defined in IIROC Rule 3400) is issued and approved for distribution in Canada by Eight Capital. Eight Capital accepts responsibility for the dissemination of this report. Non-client recipients of the research report should not rely solely on the investment recommendations contained herein and should consult their own professional advisors. Eight Capital will not treat any non-client receiving this report as its own. Institutional clients who require additional information on securities discussed in this report should contact a qualified sales person at Eight Capital. Eight Capital accepts no liability whatsoever for any loss arising from any use or reliance on this research report or the information contained herein. This research report is being provided only to institutional clients of Eight Capital and is intended for informational purposes only. This research report is not an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. The information contained in this research report is prepared from publicly available information, internally developed data and other sources believed to be reliable, but has not been independently verified by Eight Capital. Eight Capital makes no representations or warranties with respect to the accuracy, correctness or completeness of such information and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this research report and are subject to change without notice. Eight Capital does not accept any obligation to update, modify or amend this research report or to otherwise notify a recipient of this research report in the event that any estimates, opinions and recommendations contained herein change or subsequently become inaccurate or if this research report is subsequently withdrawn. Past performance is not a guarantee of future results, and no representation or warranty, expressed or implied, is made regarding future performance of any security mentioned in this research report. The price of the securities mentioned in this research report and the income they generate may fluctuate and/or be adversely affected by market factors or exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. Nothing in this research report constitutes legal, accounting or tax advice. Investors should consult with his or her independent legal or tax adviser in this regard. Neither Eight Capital, nor our affiliate VIII Capital Corp. is affiliated in any way with Eight Capital Management LLC, an Indiafocused investment firm.
US Residents: Eight Capital is not a U.S. registered Broker Dealer and therefor is not governed by U.S. laws, rules or regulations applicable to U.S. broker-dealers. Consequently, the persons responsible for the content of this publication are not licensed in the U.S. as research analysts in accordance with applicable rules promulgated by the U.S. self-regulatory organizations. Any US Institutional investor wishing to effect trades in any securities referred to herein should contact VIII Capital Corp., a U.S. Broker-dealer affiliated to Eight Capital.
Registration of Non-US Analyst: The authoring non-US research analyst employed by Eight Capital who contributes to this report is not registered/qualified as a research analyst with FINRA; and the authoring non-US analyst is not subject to the requirements of FINRA rule 2241 regarding restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Dissemination of Research: Eight Capital’s Research is distributed electronically through email, website (password protected) or hard copy. Dissemination of initial research reports and any subsequent research reports is made simultaneously to a pre-determined list of clients of Eight Capital’s Institutional Sales and Trading representatives.
Conflicts of Interest: Eight Capital has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria, the quality of research and the value of the services they provide to clients of Eight Capital. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts and associates do not receive compensation based upon revenues from specific investment banking transactions. Eight Capital generally restricts any research analyst/associate and any member of his or her household from executing trades in the securities of a company that such research analyst covers, with limited exception. Should this research report provide web addresses of, or contain hyperlinks to, third party web sites, Eight Capital has not reviewed the contents of such links and takes no responsibility whatsoever for the contents of such web sites. Web addresses and/or hyperlinks are provided solely for the recipient's convenience and information, and the content of third party web sites is not in any way incorporated into this research report. Recipients who choose to access such web addresses or use such hyperlinks do so at their own risk. Unless publications are specifically marked as research publications of Eight Capital, the views expressed therein (including recommendations) are those of the author and, if applicable, any named issuer or Investment Dealer alone, and have not been approved by, nor are they necessarily those of, Eight Capital. Eight Capital expressly disclaims any and all liability for the content of any publication that is not expressly marked as a research publication of Eight Capital. Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by the author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Research
Analyst Certification: Each Research Analyst and/or Associate who is involved in the preparation of this research report hereby certifies that:
• the views and recommendations expressed herein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report;
• his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report; • they have not affected a trade in a security of any class of the issuer whether directly or indirectly through derivatives within the 30-day period prior to the publication of this research report;
• they have not distributed or discussed this Research Report to/with the issuer, investment banking at Eight Capital or any other third party except for the sole purpose of verifying factual information; and
• they are unaware of any other potential conflicts of interest.
The Research Analyst involved in the preparation of this research report does not have any authority whatsoever (actual, implied or apparent) to act on behalf of any issuer mentioned in this research report. Informal Comment Informal Comments are analysts’ informal comments that are posted on the Eight Capital website. They generally pertain to news flow and do not contain any change in analysts' opinion, estimates, rating or target price. Any rating(s) and target price(s) in an Informal Comment are from prior formal published research reports. A link is provided in any Informal Comment to all company specific disclosures and analyst specific disclosures for companies under coverage, as well as general disclosures and disclaimers.
Presentations: Presentations do not include disclosures that are specific to analysts and specific to companies under coverage. Please refer to formal published research reports for company specific disclosures, analyst specific disclosures and valuation methodologies used in determining target prices for companies under coverage.
Idea of Interest: Eight Capital has not initiated formal and continuous coverage of the companies mentioned in these publications, and maintains no recommendation, price target or earnings forecast. Statements and analysis in these publications are introductory in nature and may be published from time to time based on publicly available information.
IIROC Rule 3400 Disclosures: A link (here) is provided in all research reports delivered by electronic means to disclosures required under IIROC Rule 3400, including disclosures for sector research reports covering six or more issuers.
Eight Capital is a member of the Investment Industry Regulatory Organization of Canada (‘IIROC’) and the Canadian Investor Protection Fund (‘CIPF’). Please click on the following link for all disclosures and disclaimers. Disclosures