Category Archives: Fiji

The Next Gold Mine in Tropical Paradise Obtains $40 Million Financing

Lion One Drill Pad, Tuvatu

Two projects on a mining-friendly tropical island are moving forward, one in the final ramp-up to production and one at a very early stage.

Streetwise Reports  | 12 June 2018

Thoughts of Fiji conjure up the tropics, beaches and sunshine, but the island nation is also noted for its mineral production. The Vatukoula mine, in operation for over 80 years, has produced more than seven million ounces of gold.

Vying to join its ranks on the politically stable and mining friendly island are Lion One Metals Limited  and Thunderstruck Resources Ltd., two companies at opposite ends of the spectrum.

Thunderstruck Resources is an early stage exploration company with an extensive portfolio of properties on Viti Levu, the main island of Fiji. The company is conducting exploration activities at its large land package—covering 4% of Viti Levu—of “100% owned high grade zinc, copper and gold assets,” it reported in mid-May. According to Thunderstuck, it is “building on extensive prior results that point to the potential for large mineralized systems.”

At the end of May, Thunderstruck closed an oversubscribed private placement, raising over $200,000, selling 2.2 million units at $0.09 each. Each unit contained one common share and one share purchase warrant, with the option to buy a common share for $0.15 until May 2021.

Lion One’s 100%-owned Tuvatu project is at a much more advanced stage and is on track to put into production Fiji’s next mine. The company just announced a US$40 million debt financing package to develop the mine and build a processing plant for its fully permitted project. The financing is with Sinosteel Equipment & Engineering Co. Ltd. and Baiyin International Investment Inc. Sinosteel will be the EPC (Engineering, Procurement and Construction) contractor for the project, and Baiyin will be the gold doré offtaker.

The agreement is for a five-year term at a 7.5% interest rate. There will be a principal holiday and capitalized interest for either the earlier of two years from first draw, or three months after achieving commercial production. There also will be a Net Smelter Return (NSR) royalty of 2.25% on the first 350,000 ounces of gold produced. There is also an option to increase the financing by US$10 million.

Analyst Derek Macpherson of Red Cloud Klondike Strike Inc. noted on June 4 that with the debt financing in place, Tuvatu construction is expected to ramp up and views this as “very positive.”

Macpherson also noted that the “PEA (2015) outlines initial capital investment (excluding working capital) for Tuvatu at US$48.6M. With exploitation permits in-hand and C$21.6M (US$16.6M) in cash, the company is well positioned to continue on the path to construction and production.”

Analyst Mike Niehuser of Scarsdale Equities wrote on June 6, “The PEA assumed modest capital costs and efficient mining of high-grade gold resources, resulting in significant cash flow, which may rapidly repay capital and fund mine development and additional exploration of prospective gold targets.”

Niehuser also stated, “We expect that Lion One will announce an updated capital cost budget that should be within expected variances of the PEA. It appears that the facility should be adequate to cover the construction and capital costs with cash on hand. The terms appear to be competitive and do not include hedging or prepayment fees. Lion One continues exploration activities for which we believe could be a long-lived mine.”

Scarsdale Equities maintains a Buy rating and a target price of CA$1.40 on Lion One, which is currently trading at around CA$0.63.

While Lion One has been securing financing for the project, it also has continued exploration activities. Following the release of an off-the-charts surface sample of 502 g/t gold over 0.70 meters in February, on June 7, the company announced that follow-up work has mapped “more than 20 previously undefined mineralized structures at the Jomaki-Ura Creek prospect areas and identified potential geological extensions on the main mineralized zones inside the Tuvatu Mining Lease.”

Stephen Mann, Lion One’s managing director, stated, “In the Tuvatu resource area, approximately half of the 40 veins identified to date have sufficient sample data from drilling to merit inclusion in a resource estimate. We’ve now identified more than 20 mineralized veins at surface in the Jomaki-Ura Creek area where strong multi-element anomalism suggests potential scale and signature comparable and possibly larger than the main resource area at Tuvatu.”

Lion One has about 102 million shares outstanding, 109 million fully diluted. Management owns 22% of the shares and Donald Smith & Co owns 14%, Franklin Precious Metals Fund 9.99% and JP Morgan Asset Management UK 6%.

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Fiji Ministry to investigate creek slip

Minister for Waterways Dr Mahendra Reddy inspects drainage at Dreketi Irrigation area. Picture: SERAFINA SILAITOGA

Serafina Silaitoga | The Fiji Times | 5 June, 2018

THE Ministry of Waterways will investigate possibilities that mining or roadworks may have caused portions of soil to slip into a creek in Dreketi, Macuata. In an interview with this newspaper, Minister for Waterways Dr Mahendra Reddy said he would speak to stakeholders regarding this matter.

Dr Reddy described such a situation as a continuous problem his team would face if nothing was done now.

“We can desilt the drain, clean the culverts but if the surface run-off is continuous then it will be a continuous problem,” he said.

“So we will talk to stakeholders about this issue and there are a lot of issues regarding other ministries which we need to attend to.

“The Ministry of Agriculture is a major stakeholder we need to consult following farming issues that affect our waterways.”

At the affected creek, Dr Reddy also explained to his team that any works done in the waterway areas needed to be made known to his ministry.

Dr Reddy, who visited the North last week, assured farmers that their grievances regarding waterway issues would be dealt with effectively by his team.

He told farmers that their concerns and complaints would not sit with his team in the office but they would act upon receiving it.

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Lion One Announces US$40 Million Debt Financing for Construction of the Tuvatu Gold Project in Fiji

Acting Prime Minister and Minister for Lands and Mineral Resources Faiyaz Koya (centre) officiates at the groundbreaking ceremony of Tuvatu Gold Mine processing plant civil works. Picture: REINAL CHAND

Lion One Metals | Geology for Investors | June 4, 2018

Lion One Metals Limitedis pleased to announce it has entered into an indicative term sheet with Sinosteel Equipment & Engineering Co., Ltd. of China and Baiyin International Investment Ltd. The term sheet incorporates an EPC and gold doré off-take financing facility totalling US$40 million for mine development and construction of the processing plant for the Company’s 100% owned and fully permitted Tuvatu Gold Project, located near the Nadi International Airport in the Republic of Fiji.

Lion One intends to engage Sinosteel as the project EPC Contractor and Baiyin as the doré off-taker, and be provided with a US$40 million Facility. Closing of the Facility is subject to satisfactory due diligence, board approvals, and final documentation, with closing expected to close in the third quarter of 2018.

Highlights of the Facility include the following key terms:

  • Term of 5 years at annual interest rate of 7.5%
  • Principal holiday and capitalized interest for the earlier of 2 years from first draw, or 3 months after achieving commercial production, followed by 12 equal quarterly repayments
  • Net Smelter Return (NSR) royalty of 2.25% on the first 350,000 ounces of gold produced

Lion One will have the option, subject to mutual agreement, of increasing the principal of the Facility by an additional $10 million with the same interest rate, repayment schedule, security, and pro-rata royalty as the Facility. Lion One will also have the right to obtain a new facility of up to $10 million freely, provided it is not secured against the security under the Facility.

Walter H. Berukoff, Chairman and CEO of Lion One commented “We are pleased to cooperate with Baiyin and Sinosteel for the long-term financing, which will provide low-cost capital and maximum flexibility in the development of Fiji’s next high grade gold project at Tuvatu.”

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Fiji’s mining and quarring industry a problem sector: Dr Gangopadhyay

Mining of bauxite in Bua. The mining and quarrying industry in Fiji has been labelled as a “problem sector” by Australian-based consultant Dr Partha Gangopadhyay. Picture: FT FILE

Mere Naleba | The Fiji Times | 26 May, 2018

THE mining and quarrying industry in Fiji has been labelled as a “problem sector” by Australian-based consultant Dr Partha Gangopadhyay who was hired by Government to conduct a review on the national minimum wage.

Dr Gangopadhyay a Professor in the School of Business at the Western Sydney University made the comments while discussing the 10 sectorial industries at a consultation organised by the Ministry of Employment, Productivity, and Industrial Relations.

“I don’t have to tell you but this is a problem sector by now, most of the mines have been depleted, exhausted. Resources have been taken away or have gone too deep, productivity rate is very slow, productivity growth since last year is 0.5 per cent and our concern is this sector brought a lot of resources, a lot of money to Fiji, a lot of employment, a lot of skill development and today it is a struggling sector,” Dr Gangopadhyay said.

The proposed minimum wage for those in the mining and quarry industries is to have a wage increase by 1.029 per cent.

The current national minimum wage is $2.68.

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Fiji landowners to receive 80% of mining royalties

Big Win For Landowners

Losirene Lacanivalu | Fiji Sun | 17 May 2018

They will, for the first time, get royalties from mineral mining – 80% and Govt retains 20%

All landowners will, for the first time, be able to access a fair share of royalties from mineral mining.

This comes after the Fi­jiFirst Government man­aged to get the Fare Share of Mineral Royalties Bill passed and enacted in Par­liament last night.

Acting Prime Minister and Attorney-General Ai­yaz Sayed-Khaiyum said under the new Act land­owners would receive 80 per cent of all the royal­ties while the State would retain only 20 per cent.

He said once the Act came into place, the first pay­ment of royalty of around $1m would be made from the Trust to the landown­ers.

The landowners referred to were owners of freehold land, iTaukei landowners, Rotuman and Rabi Island landowners, he said.

Mr Sayed-Khaiyum said it had always been known that all minerals belonged to the State and surface land belonged to the landowners. He said through the provision of the 2013 Constitution there was a require­ment for a fair share of royalties.

He said a fair share of royalties would be given to the landowners.

Mr Sayed-Khaiyum revealed that a similar provision, not exactly the same as this, ex­isted in the 1997 Constitution (section 186), stating that Parliament must make provi­sions granting to the owners of land or reg­istered custom fishing rights an equitable share of royalties.

He said the Sitiveni Rabuka SVT govern­ment and the Laisenia Qarase SDL Govern­ment failed to bring about any law to give ef­fect to the 1997 provision on section 186.

He said similarly there was a provision in the 1990 Constitution put in place by the Rabuka Government.

He said from 1997 to 2006, the Rabuka and Qarase Governments had the opportunity to make the law but they didn’t.

“Nine years and they are complaining to us about three years, let’s put things into per­spective, appreciate what the Bill is doing and stop playing politics.”

He said the FijiFirst Government had now put in place the law for the share of royalty.

Mr Sayed-Khaiyum further revealed that even though by law the minerals belonged to the state, the landowners through this Act would receive 80 per cent of all the royalties while the state would retain only 20 per cent.

He said from Independence, from the Ratu Mara Government, they had the opportuni­ty to change the percentage of royalties but none of them did.

He said SODELPA MP Ratu Naiqama Lala­balavu was the Minister for Lands and Min­eral Resources in the Qarase Government and why they did not do it then?

Minister for Productivity, Employment and Industrial Relations Jone Usamate sup­ported the Bill and said this was a historic moment.

He said a lot had been said about the shar­ing of royalties in the past.

He also reiterated similar sentiments as Mr Sayed-Khaiyum’s that the similar provi­sions were there in previous constitutions.

But nothing was done by previous Govern­ment

“So many times there were sentiments from the other side that the Government does not seem to care about the landowners, but then why was it, that those previous governments did not do anything about this.”

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VGM awaits board of inquiry results in Fiji

Felix Chaudhary | The Fiji Times | 15 May, 2018

ANY steps that could be taken to increase safety at Vatukoula Gold Mines PLC (VGM) will be highlighted during a board of inquiry into the death of Avinesh Ram, a miner who allegedly lost his life during an underground incident last week Wednesday.

This was the word from VGM corporate services manager and special adviser to general manager Dinny Laufenboeck in response to questions raised by this newspaper.

“A board of inquiry under the chairmanship of an independent official appointed by the Mineral Resources Department continues into the fatality which occurred underground at the Vatukoula Gold Mines on May 2, 2018,” she said.

“As this is a legal process mandated by the Mining Act, please address any requests for information to the PS (permanent secretary) for Lands and Mineral Resources.

“Recommendations on what more VGM could do in managing risk to employees at Vatukoula will be provided as an outcome from the board of inquiry.”

Mr Ram allegedly died after he fell into a sinkhole in the R1 underground shaft on May 2 and became trapped under 20m of rock and soil.

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Geopacific Resources raises $10m for Woodlark gold exploration

Woodlark Island

Ewen Hosie | Australian Mining | May 2, 2018

Gold explorer Geopacific Resources has raised $10 million in exploration funding for its Woodlark gold project in Milne Bay, Papua New Guinea.

The funds were raised in a placement of 280 million shares at $0.036 cents each, a 5.3 per cent discount on the company’s closing price before making the announcement.

Geopacific hopes to establish a drill program to define the project’s wider potential beyond near-pit reserve drilling. The company is targeting an aspirational resource of 5 million ounces (Moz) of gold, a significant expansion on the current resource figure of 1.57Moz.

“Any new discoveries have the potential to ultimately improve the forecast gold production profile in excess of the current 100,000oz per annum and extend the mine life,” said Geopacific managing  director Ron Heeks.

“Having established Woodlark as a robust gold development project it’s encouraging to see strong financial support for our strategy to finalise the definitive feasibility study (DFS) and bring a significant exploration program online to continue to grow the project,” he added.

More than half of the $10 million will go towards resource development and drilling at $5.6 million overall; $900,000 is budgeted for completion of Woodlark’s DFS, $1.1 million for exploration costs at company projects in Cambodia and Fiji, and the remaining $2.4 million will be for working capital, offer and other project costs.

In addition to Woodlark, Geopacific’s projects include the Kou Sa copper-gold project in Cambodia and five gold projects in various stages of exploration in Fiji, being the island nation’s largest licence holder. These include the Nabila, Sabeto, Vuda, Rakiraki and Cakaudrove projects.

In March, completion of a pre-feasibility study (PFS) on Woodlark allowed Geopacific to increase its interest in the project to 93 per cent under agreement terms with joint venture partner Kula Gold.

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