Rio2 aims for success with Chile's Fenix gold mine

Toronto-based Rio2 Ltd is preparing to launch a new gold mining operation at its Fenix mine in Chile, aiming to replicate the success it had with the La Arena mine in Peru. The Fenix mine is expected to produce 4.8 million ounces of gold using a method called heap leaching. This technique involves stacking crushed ore and spraying it with chemicals to extract gold. While this method is common among smaller miners, Rio2 plans to use it on a much larger scale. Rio2’s Fenix deposit has an estimated 389 million tonnes of ore, with an average gold grade of 0.38 grams per tonne. The company plans to begin production at a rate of 91,000 ounces of gold annually at a higher grade of 0.54 grams per tonne. For the entire 17-year project, the average annual output is projected to be 82,000 ounces at a grade of 0.48 grams per tonne. The company’s CEO, Alex Black, has experience in developing similar projects. He previously helped develop Rio Alto Mining, which successfully implemented heap leaching at the La Arena mine. Rio2 considers Fenix to be the largest fully financed gold heap leach project in the Americas. Despite some setbacks, including delays from environmental permits and the COVID-19 pandemic, Rio2 is now poised to begin production at a time when gold prices are near their highest levels ever. A recent feasibility study estimated a post-tax net present value of $210.3 million, considering a gold price of $1,750 per ounce. The company’s calculations suggest potential profit could grow significantly if gold prices increase further. Rio2 has successfully secured funding for its project, with a total of $149 million from various sources, including a $100 million financing package. The planned construction budget is $174 million, which will cover essential infrastructure and mining operations. In addition to starting production, Rio2 is looking at expanding output to between 250,000 and 300,000 ounces of gold per year in the future. The project is designed to be cost-efficient, with low operational costs highlighting its economic viability. With the experience and strategies in place, Rio2's Fenix gold project is on track to become a significant contributor to the gold industry, especially if market conditions remain favorable.