Rio2 (RIO) - 100,000oz pa Gold Miner Pouring by End of 2022

Rio2 Limited is a mining company with a focus on development and mining operations with a strong technical team and a successful track record in the capital markets. The company's flagship project is the Fenix Gold Project in Chile. 

Matt Gordon caught up with Alex Black, President, and CEO, Rio2. Alex has invested $2.5M of his personal wealth into Rio2 and has 5% ownership of the company. He has over 4 decades of experience in the mining industry. His educational credentials include a B.Sc. in Mining Engineering from the University of South Australia. He also serves as a member of the Australasian Institute of Mining and Metallurgy. 

Company Overview

Rio2 is a mining development, and operations company. The company was founded in 1990 and is headquartered in Vancouver, Canada. Fenix Gold Limitada, Rio2 Exploraciones S.A.C and Lince S.A are the company's subsidiaries. The company is listed on the Toronto Stock Exchange (TSX-V: RIO), the OTC Markets (OTCQX: RIOFF), and the Lima Stock Exchange (BVL: RIO). 

Rio2 is focused on the Fenix Gold Project in Chile. It is the largest undeveloped gold heap leach project in the Americas. The company is currently in the process of commencing construction. It is fully financed to bring the project to production. 

Targets 2021 and Beyond

In 2021, Rio2 conducted run-of-mine test work to demonstrate the project's economic viability for advancement. The company arranged project financing through a mix of equity stream and debt. It was successful in raising sufficient capital to bring the project into production, with a major focus on project delivery. 

Rio2 has mobilized contractors and is conducting a large employment campaign in Chile. The company is building teams and is looking to instill its work culture and values for new hires. The company is currently procuring equipment and has ordered the required pipes, tanks, pumps, and steel needed for construction. It is working towards efficiently building an equipment inventory while taking into account the potential inflation in material prices. 

As per the company's guidance, an EIA (Environmental Impact Assessment) approval is expected between March-May 2022. The company is prepared for any unforeseen delays. Once the EIA is approved, the company will acquire a construction permit in the months that follow. 

The company is looking to initiate gold production by the end of 2022. In case of unforeseen delays, the company anticipates that production will start by early 2023. It is supported by senior management and highly-experienced team members. 

Rio2 has accounted for any potential contingencies that can lead to operational slowdowns in its financial planning. The company has a methodical approach towards business and seeks to execute the project with strong technical capabilities. 

The company has accounted for a potential change in administration in the upcoming Chilean elections. In an event where the new government announces a tax hike, the company has the margins to endure the changes while still running a profitable operation once it enters production. 

The Gold Market

Rio2's mining operation has a break-even gold price of $1,100. Even if the market pricing fluctuates by $200-$300, the company will still make a profit. The gold market has seen increased competition from stocks such as the NASDAQ, Dow Jones along with cryptocurrencies such as Bitcoin.  

Gold's new base price is within the $1,750-$1,850 range, which is $600 more than the previous base price. Rio2 anticipates that the future base prices will be even higher due to the fiscal damage caused around the globe in recent years. The valuation of gold mining companies has been significantly higher compared to other sectors. Major mining producers have made record profits in gold. 

The Fenix Gold Project

The Fenix Gold Project is located at the peak of a volcano. The ore body outcrops at the surface at the topmost point of the hill. The company is looking to produce 100,000oz gold in the first 12 months of operations. This comes out to an average of 9,000oz gold produced monthly. 

A PFS (Preliminary Feasibility Study) carried out by the past owner at the Fenix Gold Project indicates an 80,000t daily operation. Rio2 is aiming at a 20,000t/day operation. The company is looking for water sources to ensure uninterrupted production. When it comes to choosing a water supply, the company has multiple desalinated options in Copiapo. The company is looking for water sources that are not being used near the Fenix project area. It is currently under discussion with entities that have water rights in the region. 

Rio2's mining operation has an estimated ASIC (All-in Sustaining Cost) of $1,000/oz with a run rate of approximately 9,000oz/month. The company has plans to initiate exploration at the Fenix project in 2022. 

As per the agreement with Wheaton Precious Metals and BNP Paribas, the company is devoting equity to a project. The capital raised enabled the company to have a residual cash reserve. It intends to utilize this cash to employ 1-2 rigs for exploration drilling at the project. 

The Fenix Gold Project currently has a 5Moz M&I (Measured and Indicated) resource along with a 1.4Moz inferred resource. The company has reserved the inferred resource conversion for the future. The project has a lot of remapping, and geophysics correlating done by geologists. Upon analysis, it was found that a large number of targets around the project's perimeter haven't been drilled. Additionally, the company has identified targets that haven't been drilled at depth. In Q1 2022, Rio2 plans to initiate aggressive drill operations at these targets. The company intends to continue drilling throughout the project's lifecycle. 

10km north of the Fenix asset, the company has identified a target called Antares. This target features similar characteristics to Fenix with near-surface gold anomalies. The company has plans for a drill operation at Antares and is anticipating the presence of several hundred thousand ounces of gold. This drill operation will enable the company to increase the resource and demonstrate its growth potential. 

Project Geology

Back in November, the company's Senior Vice President of Geology, Enrique Garay presented at the NewGenGold conference in Melbourne, Australia. The company received a strong reception at the conference. One of the top 10 gold producers in the world signed a CA (Confidentiality Agreement) to learn more about the Fenix Gold Project. 

The Fenix Gold Project has a 5Moz-6oz resource. The company anticipates that it can grow to a 10Moz deposit. The company has drilled up to a 600m depth so far and does not intend on drilling deeper. 

The Fenix Gold Project was originally discovered in 2010 with a 5Moz resource. Rio2 seeks to demonstrate the potential of the project, carry out construction and enter production within the next 12 months, reaching a peak production target of 100,000oz/year.

To find out more, go to the Rio2 Website