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Rio2 Executing on Fenix Gold Optimization Plans With the Purchase of Strategic Infrastructure

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Rio2 Executing on Fenix Gold Optimization Plans With the Purchase of Strategic Infrastructure

 

 

 

 

 

Rio2 Limited (TSX-V: RIO) (OTCQX: RIOFF) (BVL: RIO) announces that it has completed the strategic acquisition of Compañía Minera Paso San Francisco S.A. MPSF owns strategic mining infrastructure and facilities located adjacent to Rio2’s Fenix Gold Project in Chile.

 

MPSF has been acquired by Rio2 for USD 1.5 million cash from Inversiones Alxar S.A. a subsidiary of Empresas Copec S.A., a large Chilean industrial conglomerate.

 

The existing MPSF processing plant was established in the early 1990s by a previous owner to process gold and silver ore from the nearby Can-Can, Arqueros and Caique mines. Processing of ore from those mines ceased in 2005 and between 2008 and 2013, the plant reprocessed the tailings produced from previous ore processing at the production rate of 800 tonnes per day. In 2013, MPSF acquired the processing plant and associated infrastructure which have remained inactive since then.

 

The acquisition of MPSF brings several strategic benefits to Rio2 and its optimization plans for the development of its nearby Fenix Gold Project, currently guided to commence construction in Q4 2021.

 

These strategic benefits include:

 

  • The facilities at MPSF are located less than 2 kilometres from the currently proposed location of the Fenix Gold Camp, 22 kilometres from the future Fenix Gold Mine site, and 1.5 hours drive from Copiapo.
  • The facilities at MPSF have a camp, connection to grid power, permitted water, a fuel station that will be reactivated, internet access, plus several hectares of free space available to expand infrastructure and facilities.
  • The existing camp at MPSF provides a comfortable base to work from at an elevation of 3,200m above sea level and it has a current capacity for 250 people that with refurbishment, can act as the Fenix Gold Project’s construction camp.This will assist in accelerating the startup of the construction of the Fenix Gold Project.
  • Rio2 will evaluate the viability of modifying its current plan to build a standalone camp and instead utilize the infrastructure and facilities at MPSF to save on capital costs and construction time.

 

The potential future conversion of the power supply at the Fenix Gold Project, from generated power to grid power, can be simplified with MPFS’s existing power and infrastructure agreements. Access to the power grid will have a positive impact on the currently estimated energy costs for the Fenix Gold Project.

The facilities at MPSF include a water bore which has permitted usage of 5 litres per second which is 20% of the water requirements for the current configuration of the Fenix Gold mine, at a throughput rate of 20,000 tonnes per day. Access to this water will have a positive impact on the water costs currently estimated for the Fenix Gold Project.

 

FINANCIAL STATUS

 

The acquisition of MPSF has been funded from existing cash reserves.

 

As of December 31, 2019, Rio2 had working capital of CAD 15,819,198.

 

The Company remains prudent with its cash as it advances the Fenix Gold Project to the construction stage in Q4 2021. In addition, Rio2 terminated its exploration earn-in agreement in December 2019 with Nexa Peru S.A.A. The termination of this agreement enabled the Company to save USD 1.5 million which it was scheduled to expend in 2020.

 

Based on current budgeting and projections, the Company is funded through to at least the end of Q1 2021. A technical and corporate update will be provided over the coming weeks regarding the progress being made for the development of the Fenix Gold Project.

 

ABOUT RIO2 LIMITED

Rio2 is a mining company with a focus on development and mining operations with a team that has proven technical skills as well as a successful capital markets track record. Rio2 is focused on taking its Fenix Gold Project in Chile to production in the shortest possible timeframe based on a staged development strategy. In addition to the Fenix Gold Project in development in Chile, Rio2 Limited continues to pursue additional strategic acquisitions where it can deploy its operational excellence and responsible mining practices to build a multi-asset, multi-jurisdiction, precious metals company focused in the Americas.

 

Posted April 15, 2020

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