Rio2 issues Fenix feasibility, permit decision pending

A first phase would see Fenix produce 91,000ozpa during its initial 12 years and then 54,000ozpa for the final four years at an all-in sustaining cost of US$1,237/oz Au from reserves of 1.77Moz grading 0.48g/t at a $1,750/oz gold price.

The project would yield a $210.3 million after-tax net present value at a 5% discount rate and a 28.5% internal rate of return with a 2.8-year payback following an initial capital cost of $117 million. Life-of-mine sustaining capital is estimated at $88 million.

The feasibility features similar production and economic returns figures to the 2020 prefeasibility study, although the AISC has increased 24% from $997/oz, which is more than compensated for by a 46% higher gold price assumption from $1200/oz. The project still enjoys a relatively low capital efficiency of $89/oz.

Following a 14-month construction, Fenix would see a 20,000tpd mining and heap leach operation with water trucked 158km from Copiapó. A second stage would expand mining to 80,000-100,000tpd, increasing annual gold production to more than 250,000ozpa.

Permitting

The environmental impact assessment for the project was rejected in 2022 by local environmental authorities because insufficient information was provided to rule out negative impacts to guanacos, vicuñas and chinchillas.

Rio2 exercised its right to file an administrative appeal before the Committee of Ministers, which is evaluating the project with a decision expected later this year. Rio2 declined to comment until its EIA process has concluded.

"The past 12 months have been particularly frustrating for the company's management team as it has wound down pre-construction activities in Chile and directed its efforts to deal with the administrative appeal to overturn the Chilean authority's disapproval of the Fenix gold EIA.

The team has done a great job managing financial resources during this extremely difficult time whilst conducting many productive meetings with various ministries. We are hopeful that our collective efforts with our advisors and legal counsel will result in a positive outcome at the appeal hearing in the near term," said Rio2 executive chair Alex Black.

Earlier this year, the Committee of Ministers gave the green light to the $3.5 billion integration project for Anglo-American's Los Bronces copper mine, overturning a rejection of its environmental permit application.

In the meantime, the company aims to complete the construction financing package and restart the construction plan.

Shares in Rio2 are trading at 25c, valuing the company at C$63 million.