Metals One (MET1) is making a strategic investment of up to US$1.8 million in Lions Bay Resources by way of convertible loan notes.
Lions Bay is a private company jointly owned by Lions Bay Capital, a company in which Metals One holds a 19.1% stake, and by the Salamander Mining management team headed by Graham Briggs, the former CEO of Harmony Gold, Lloyd Birrell, the founder of Theta Gold.
Lions Bay has secured a US$1.36 million option over a large cogeneration plant in the Karbochem Industrial Park, Newcastle, South Africa.
Research and planning has commenced around modifying the plant to produce power and steam whilst also roasting refractory gold concentrates, common to mines in the region.
Metals One and LBR have recently conducted due diligence on the plant and have agreed to apply part of the funds from the convertible note to exercising the option.
The plant was inspected and verified by Terravista Solutions in October 2025 and ascribed a replacement value of US$39.6 million.
Subject to receipt of a competent persons report, to be funded from the proceeds of the convertible note, it is expected that the plant will require approximately US$4.5 million to restart production of steam and power.
A large chrome smelter operation adjacent to the plant, requiring power and steam, has been engaged and discussions around a mutually beneficial offtake agreement are underway.
Pending confirmatory research and studies, Lions Bay plans to reconfigure the plant to include a gold concentrate roasting complex, an alternative solution to exporting gold-bearing concentrate from South Africa to Asian smelters.
This process has the potential to create a further revenue stream for the plant by toll processing material from regional mines, while sustaining production of steam and power. At the election of Metals One, part of the proceeds from the loan note will be applied to commissioning a further technical report on the reconfiguration of the plant to include a gold roaster.
The region is host to numerous multi-million-ounce gold deposits and tailings resources, the mining of which generate concentrate. In addition to the larger mining complexes, there are several small deposits which are unable to satisfy the high capital requirements of standalone operations that would benefit from a large centralised roasting facility.
The near-term strategy for Lions Bay is to acquire regional gold mining and tailings assets as potential feedstock for the gold roaster.
Metals One has conditionally agreed to subscribe for up to US$1.8 million CLNs in LBR in tranches, subject to the satisfaction of certain conditions in respect of each tranche, as below.
The first tranche of the loan note will be for US$175,000, to be followed by one for US$1.625 million. It will also receive 5% of the equity in Lions Bay.
Until conversion or redemption, the loan note attracts a 10% coupon that compounds annually that is to be rolled up and become payable in cash on the relevant maturity date or convertible into Lions Bay shares, at the election of Metals One.
The loan notes are to be secured, amongst other things, by first ranking security over the assets of LBR.
"South Africa is historically the world's largest gold producer, and we believe it has the perfect ingredients of abundant resources, infrastructure and mining expertise to become a leader once again,” said Dan Maling, managing director of Metals One.
“With the acquisition of the gold roaster and associated infrastructure, alongside the experienced mining team at Salamander, Lions Bay Resources has the foundations to be a significant, vertically integrated South African gold company. Metals One remains well financed, with over £9 million in cash and liquid investments. Our network and ready access to capital enables us to facilitate downstream acquisitions such as this.”
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This looks a useful deal for Metals One, providing it with exposure to cashflow from potential gold production as well as revenue from power generation. No better time to be moving into gold, and interesting to see Metals One broadening its portfolio again. The company has built a real strength in depth to its asset base, and is well poised to benefit from the ongoing resurgence in the mining sector.