Lion Selection Group Limited (ASX: LSX) is an Australian based investment company that has focus on junior mining space with speculative returns and LSX aims to benefit from five key investments in its portfolio.
The Pani Gold project located in Sulawesi, Indonesia, is a key project for the group. This reported 0.39 m oz gold as measured in the area with a 1.13 g/t grade. Although, LSX is associated with the project since its first investment made in One Asia in 2012, LSX acquired a 33.3% stake in the joint venture with One Asia in April 2018 further acquiring direct ownership in August 2018.
On 5 November 2018, Pt Merdeka Copper Gold tbk (Merdeka), an Indonesian gold mining company, became a new partner in the Pani JV by paying USD 55 million, an amount equivalent to buy 66% stake in the JV. LSX interest in the JV got uplifted by AUD 22.01 million reaching to AUD 39 million, further increasing LSX’s Net Tangible Assets (NTA) from 29 cents in September to 43 cents at the end of October 2018. There is an excellent potential for a large volume of Gold reserve amenable to bulk mining. It is targeting to get the permit and license to the Pani IUP mining area along with the road access corridor and AMDAL (Indonesian environmental and social approval). Further, it will be conducting a Definitive Feasibility Study (DFS).
Lion also has stake in Nusantara and lately PT Indika Energy acquired a 19.9% stake in the Nusantara Resources Limited working towards the Awak Mas Gold Project. As per the DFS released in October 2018, it has a reserve of 100,000 oz gold pa for 11 years with a capex of USD 146 m, NPV of USD 152 m, and all in sustaining cost of 758/oz. It has a recovery rate of 91% with 3.5/1 scrip ratio. Nusantara reported a cash balance of USD 2.9 m as at 30 September 2018. As at December 14, 2018, the group has reduced the stake in Nusantara to about 25% from about 32%.
Other investments by LSX include the investment in Yaramoko gold project of Roxgold Inc. that reported 30,532 oz gold extracted in Q3 driven by processing throughput of 78,357 tonnes. It is expecting to achieve its 2018 production guidance of 120,000 to 130,000 oz gold. It reported a cash balance of USD 71.0 m as at 30 September 2018.
Then, you have the Rothsay gold project of Egan Street Resources Ltd. that recently completed its 16-hole diamond drilling program confirming an extension to high-grade mineralization beyond the current 401,000 oz Rothsay reserve. It reported a cash balance of AUD 9.0 m as at 30 September 2018.
The Khundii gold district of the Erdene Resource Development Corp. is another significant investment and the Erdene group filed an updated technical report regarding the mineral resource estimate of its 100% owned Bayan Khundii gold deposit for which a Preliminary Economic Assessment study is scheduled in 4Q 2018. It reported working capital of USD 2.3 m as at 9 November 2018.
The annualized TSR for LSX was calculated at -26.3% as compared to 8.6% for ASX small resources. Over the past six months, the scrip price has increased by 21.31%. While director, Robin Anthony Widdup grabbed 100,000 ordinary shares lately, the stock is not witnessing any movement as at December 14, 2018.
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