Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Lion One Metals (TSXV: LIO) (ASX: LLO) stock plunged on Friday despite the company upsizing in its recently announced private placement from C$7.5 million to C$10 million to boost its working capital.
Under the upsized placement, led by Eight Capital as lead agent and sole bookrunner, Lion One will issue approximately 27 million units of the company at a price of C$0.37 per unit, instead of 20.3 million units at the same price.
Each unit will still consist of one common share of Lion One plus one common share purchase warrant with an exercise price of C$0.50 for a period of three years.
Lion One has also removed the 15% overallotment option granted to Eight Capital in the previous arrangement, which could have taken the gross proceeds to around C$8.6 million. Now, the company is seeking to raise C$10 million without overallotment.
However, the financing announcements did little to boost shareholder confidence, as Lion One Metals plummeted over 20% during the early hours of trading in Toronto to as low as C$0.33, setting a new 52-week low and less than a third of its 52-week high of C$1.04.
By 11:10 a.m. ET, the stock traded at $0.36 with a market capitalization of C$81 million. Trading volume hovered around 1.2 million shares, which was over 10 times its daily average.
The financing comes a week after the company announced its operating results for the second quarter, the first in which the plant at its Tuvatu gold mine in Fiji operated at full capacity. For the period, the miner recovered 3,551 oz., almost triple that of Q1 2024.
“We are just beginning to see the potential at Tuvatu and we’re excited as we look forward to doubling the plant capacity from 300 tonnes per day to 600-700 tonnes,” CEO Walter Berukoff said in a July 12 release.
He previously compared Tuvatu to other prominent gold deposits mined by majors, such as Barrick Gold’s (TSX: ABX; NYSE: GOLD) Porgera mine in Papua New Guinea.
Berukoff, who also founded Miramar Mining and La Mancha Resources, is currently Lion One’s most prominent shareholder with an approximate 10% holding.
