Lionsgold Limited (AIM:LION) Mining and Exploration Assets Update

Lionsgold (LSE: LION), the gold company focused on the exploration, production and retail application of physical gold, including the development of physical gold as a currency, is pleased to provide the following update in relation to its gold exploration and mining interests.

Over the course of 2018, Lionsgold has continued to support its partners in both India and Finland; one being a leading Indian gold exploration company, Geomysore Services India Limited (“Geomysore”), and the other Lionsgold’s Finnish Joint Venture (“JV”) company, Kalevala Gold Oy (“Kalevala”).

Cameron Parry, Chief Executive Officer, commented: “It has been a constructive year in relation to our two most developed projects, being Jonnagiri in India, and Kuikka in Finland. The teams on the ground have each achieved significant progress, albeit at times under challenging circumstances.

At Jonnagiri, lengthy neogiations with some 600 landowners have advanced to Geomysore now having completed lease agreements and payments for approximately 1,300 acres with circa 150 acres to conclude. In addition, Geomysore has now received consent letters for the purchase of approximately 227.5 acres at commercially acceptable prices, out of the 350 acreas intended to be acquired to commence the mine build – noting that of the balance remaining, 27 acres is government land and Geomysore owns 6 acres, thus there is 90 acres left to secure.

In Finland, the licence application process continues with regard to a 5,000 – 7,000 tonne bulk sample being taken at Kuikka and processed, whilst concurrently application is progressing for small scale underground mining of the high grade deposit at Kuikka. In relation to the 200 tonnes of gold ore approved for equipment testing use, after overcoming some personal health issues encountered by the two team leaders, Kalevala is now in the process of melting and pouring the gold concentrate at their facility near Joensuu and members of the Lionsgold team are visiting next week to observe the process and discuss plans for 2019.

Lionsgold has continued to provide its share of funding support during the course of this calendar and has increased its shareholding in Geomysore to 21.92% and increased its shareholding in Kalevala to 32.4%. We are pleased and proud of our partners in India and thankful to the team in Finland for all of their efforts this year and what they have achieved. We look forward to continuing our work together in the new year.”

India Gold Summary

Lionsgold has a diversified set of interests in exploration and mining projects in India through its 21.92% shareholding in Geomysore Services India Pvt Limited. Geomysore holds exploration rights covering in excess of 900km2 in India including a granted 30-year mining lease (“ML”) at Jonnagiri covering 6km2. The Jonnagiri Gold Project (“Jonnagiri Mine”) is situated in the state of Andhra Pradesh and is Geomysore’s most advanced project. An NI 43‐101 compliant Feasibility Study was completed in late 2017 (“Feasibility Study”) resulting in a decision to mine. The team are focused on securing and structuring the required finance to facilitate the purchase of the ML area and development of mine and associated infrastructure, to see the Jonnagiri mine be the first privately owned and operated gold mine in India. At full production Jonnagiri is forecast to produce approximately 25,000 ounces of gold per annum.

As detailed in the Feasibility Study, the Jonnagiri Mine Base Case production profile is based on the 151,020 Probable Reserve gold ounces currently and shows a Net Present Value of USD$28.2 million (pre-tax) (based on USD$1 = INR67.08 at time of the study) applying an 8.48% discounted cash flow rate. The Internal Rate of Return (IRR) for the Base Case is 24.0% pre-tax and 17.8% post-tax.

Further detailed in the Feasibility Study, the Jonnagiri Mine Total Production Case, which includes the processing of low grade stockpiles and the Inferred Resource within the optimised pit shell, produces an NPV of USD$34.9 million (pre-tax) applying an 8.48% discounted cash flow rate. The IRR for the Total Production Case is 28.0% pre-tax and 20.9% post-tax.

In addition to Jonnagiri, Geomysore’s portfolio contains numerous exploration and development targets and its South Kolar Project (“South Kolar”), situated in the Southern part of the Kolar Gold Field (which historically produced 25 million ounces of gold over 100 years of operation), located in the state of Andhra Pradesh, represents the next target contemplated for mine development. The South Kolar target has been refined to an area covering approximately 10km2, and Geomysore has signed a Memorandum of Understanding with the government of Andhra Pradesh to progress development of the area into commercially viable mine and Geomysore is currently pursuing its Mining Lease Application with the Ministry of Mines in New Delhi.

Finland Gold Summary

Lionsgold’s Finnish JV company, Kalevala, holds approximately 1,500km2 of gold prospective ground in Finland, including over 90% of the Suomussalmi Greenstone Belt and significant coverage of the Kuhmo Greenstone Belt. Located immediately south of the Suomussalmi Greenstone Belt where Kalevala’s Kuikka Gold Deposit is hosted, the Kuhmo Greenstone Belt is the largest Archaean greenstone belt in Finland, being up to 10km wide and more than 100km from north to south.

The Kuikka Gold Deposit (“Kuikka”) is located within the Syrjälä Project area on the prospective Suomussalmi Greenstone Belt. Originally defined by 4,359m of diamond core drilling undertaken by the Geological Survey of Finland (GTK) and the Finnish company Outokumpu Mining, Kuikka was subject to a further 937 metres of infill RAB drilling carried out by Lionsgold JV partner Mineral Exploration Network (Finland) Ltd (“MENF”) in 2016.

During 2017 work at Kuikka concentrated on detailed planning, mapping and further grade confirmation drilling as part of the environmental permitting and optimisation of the bulk sampling programme. An additional 22 inclined RAB drill holes were drilled to help refine understanding of the morphology of the central vein and parallel gold mineralisation, to a depth of up to 10m, within the envelope of the planned bulk sample. This work was completed ahead of equipment testing that took place in 2018 on 200 tonnes of gold ore and a targeted box-cut bulk sampling programme. A small-scale high-grade underground mining will be potentially permitted to occur in 2019.

The technical information in this statement which relates to the Feasibility Study on Jonnagiri is based on information compiled by Mr Gordon Cunningham who is a full-time consultant with Turnberry Projects Pty Ltd (Johannesburg, South Africa), a Professional Engineer with the Engineering Council of South Africa and a Fellow of the South African Institute of Mining and Metallurgy. Mr Cunningham, as lead FS consultant, consents to the publishing of the information in relation to the FS in the form and context in which it appears.


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