*****NEWS*****
Lion One hires Ansteel for Tuvatu engineering
2016-08-24 16:37 ET - News Release
Mr. Walter Berukoff reports
LION ONE ANNOUNCES MOU FOR EPC CONTRACT AND VENDOR FINANCING WITH ANSTEEL-CAPITALASIA FOR CONSTRUCTION OF THE TUVATU GOLD PROJECT
Lion One Metals Ltd. has signed a non-binding memorandum of understanding for an EPC (engineering, procurement and construction) contract and vendor financing agreement with Ansteel-CapitalAsia Global Engineering Inc. covering a comprehensive engineering, procurement, construction and financing package for the development of the company's 100-per-cent-owned and fully permitted Tuvatu gold project in Fiji.
The scope of the EPC contract covers the design, construction, start-up testing and commissioning of the Tuvatu gold-processing plant. Ansteel will also furnish all materials, equipment, machinery, tools and consumables, provide quality control and administration, and will develop the project health and safety plan at the project site. In addition to the EPC contract, Ansteel will also provide vendor financing for up to 80 per cent of the anticipated value of the EPC contract in the form of a deferred payment amount of approximately $39-million (U.S.) to $44-million (U.S.). The company will finance a minimum of $10-million (U.S.) or approximately 20 per cent of the anticipated value of the EPC contract. The deferred payment will be a senior secured obligation of the company guaranteed by the company's assets, to be serviced through a deferred payment plan with 7-per-cent annual interest payable in quarterly instalments. In connection with the down payment, Lion One will issue, subject to TSX Venture Exchange approval, warrants in the amount of approximately 10 per cent of the loan facility at a price of $1.42 per share for a period extending to the maturity date of the earlier of the final scheduled payment under the deferred payment plan or five years from closing. Early repayment of the deferred payment amount may occur any time without charge.
The company and Ansteel will proceed to preparing definitive binding agreements for the transactions contemplated by the MOU and are targeting completing the transaction in the fourth quarter of 2016.
The EPC contractor, Ansteel-CapitalAsia Global Engineering, is a joint venture company of Ansteel Group Engineering Technology Development Company Ltd. and CapitalAsia Consulting (Canada) Inc. The Ansteel group is based in Liaoning province in northern China and is that country's largest iron ore miner and third-largest steelmaker, with a production capacity exceeding 38 million tons of raw steel and pig iron. Ansteel's steel unit is focused on products such as hot and cold rolled and galvanized steel sheets, colour-coating plates, silicon steel, wire rods, steel pipes, and large steel products widely used in automobile manufacturing, construction, shipbuilding, home electrical appliances and in the manufacture of railways, pipelines, bridges and power plants. The company operates several large iron ore mines and more than a dozen steel-rolling and steel production plants worldwide. Ansteel exports its products to over 30 countries, including the United States, United Kingdom, Japan and Australia, and is listed on the Hong Kong and Shenzen stock exchanges. In 2015, Ansteel was ranked No. 451 on Fortune's Global 500 list.
The Tuvatu gold project is located 17 kilometres from the Nadi International Airport on the main island of Viti Levu in Fiji. Discovered in 1987, Tuvatu was advanced by previous owners through underground exploration and development from 1997 through to the completion of a feasibility study in 2000. Acquired by Lion One in 2011, the project has over 100,000 metres of drilling completed to date in addition to 1,600 metres of underground development. Tuvatu is a high-grade, low-sulphidation, epithermal gold deposit hosted inside a South Pacific-style volcanic caldera, along the Viti Levu lineament, Fiji's own corridor of high-grade gold deposits. In January, 2016, Prime Minister of Fiji V. Bainimarama formally presented the previously granted Tuvatu mining lease to Lion One, concluding the permitting process for the development of an underground gold mine and processing plant at Tuvatu, demonstrating strong government support for Fiji's 85-year-old gold-mining industry.
The company envisages a low-cost underground gold-mining operation producing 352,931 ounces of gold at head grades of 11.30 grams per tonne gold over an initial seven-year mine life, including 262,000 ounces at 15.30 g/t through year three, at cash costs of $567 (U.S.) per ounce with all-in sustaining costs of $779 (U.S.) per ounce. Total capex of $48.6-million (U.S.) includes a contingency of $6.1-million (U.S.) with an 18-month preproduction schedule and 18-month payback on capital. At a $1,200 (U.S.) gold price, the project generates net cash flow of $112.66-million (U.S.) and an internal rate of return of 52 per cent (after tax). Tuvatu is situated upon a five-hectare footprint inside a larger 384-hectare mining lease that contains numerous high-grade prospects proximal to Tuvatu, at depth, and up to 1.2 kilometres along strike from the resource area, giving the project near-term production potential and further discovery upside inside one of Fiji's underexplored volcanic goldfields.
The information in this report, which relates to the exploration results or mineral resources, is based upon, and fairly represents, information and supporting documentation compiled by Stephen Mann, who is an officer and director of the company and is a member of the Australasian Institute of Mining and Metallurgy. Mr. Mann has sufficient experience relevant to the style of mineralization and type of deposit under consideration and the activity in which he is undertaking to qualify as a competent person under the 2012 edition of the Australasian code for reporting exploration results, mineral resources and ore reserves (Joint Ore Reserves Committee code). Mr. Mann consents to the inclusion in this news release of the matters based on his information in the form and context in which it appears. The company confirms that it is not aware of any new information or data that materially affect the information included in previous news releases referred to above, and confirms that the form and context in which the findings are presented have not been materially modified from the original news releases. Albert Siega, PEng, a full-time employee of the company and a qualified person as defined by NI 43-101, has reviewed and approved the technical content of this release.
For more information on Lion One, including technical reports, please visit the company's website or the SEDAR website.
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