PROPERTY & LOCATION
The Fenix Gold Project (16,050 Ha) is located in Atacama Region, in the Copiapo Province - Chile, specifically in the Maricunga Mineral Belt, approximately 160 kilometers northeast of Copiapo by International Road CH-31. It is the largest undeveloped gold heap leach project in the Americas.
This is a well-known mining district that contains over 70 million ounces of gold and hosts the La Coipa and Refugio mines, as well as the Volcan, Caspiche, Lobo Marte and Cerro Casale deposits.
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ALEX BLACKPresident, CEO & Director Mr. Black lives in Lima, Peru and has 35 years’ experience in the mining industry. Mr. Black holds a BSc in Mining Engineering from the University of South Australia and is a member of the Australasian Institute of Mining and Metallurgy. Prior to moving to Peru in 2000, Mr. Black was the founder and Managing Director of international mining consulting services group Global Mining Services from 1994 to 2000. In 1996, Mr. Black also founded and was Chairman of OFEX listed AGR Limited with exploration projects in Ghana and Mongolia. In 2002, Mr. Black took control of Chariot Resources Limited as a listed TSXV shell and played a key role in the acquisition of the Mina Justa Copper Project and formation of the Korean joint venture with Chariot Resources. Upon his resignation as Chairman & Executive VP of Chariot Resources in 2006, Mr. Black founded the Peruvian registered Rio Alto S.A.C. In 2009 after successfully negotiating the acquisition of the La Arena Gold Project from Iamgold Corp, Rio Alto was acquired by Mexican Silver Mines and renamed Rio Alto Mining Limited. In 2014, Rio Alto also completed the successful acquisition of Sulliden Gold and the Shahuindo Gold Project for C$300M. Mr. Black, as President & CEO of Rio Alto Mining Limited and his experienced management team built Rio Alto from a C$12M company in 2009 to a C$1.2Bn company in 2015 at the time of the acquisition by Tahoe Resources Inc.
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KLAUS ZEITLERNon Executive Chairman, Director Dr. Klaus Zeitler received his professional education at Karlsruhe University from 1959 to 1966 and obtained a PhD in economic planning. Dr. Zeitler is a member of the Canadian Institute of Mining and Metallurgy and the Prospectors and Developers Association. Dr. Zeitler financed, built and managed base metal and gold mines worldwide (Europe, Africa, North America, South America, Pacific) with a total investment value of $4.0 billion. Dr. Zeitler was a managing director of Metallgesellschaft AG, a German metals conglomerate, and in 1986 founded and was a director and the first CEO of Metall Mining (later Inmet Mining Corporation) with assets of over $4.0 billion, and base metal and gold mines in different parts of the world. After having been a director of Teck and Cominco for many years, Dr. Zeitler joined Teck in 1997 as Senior Vice President and had responsibilities for the exploration and development of mines in Peru, Mexico and the USA. Since his retirement in 2002 from Teck and in addition to being Executive Chairman and a director of Amerigo, Dr. Zeitler has been the Chairman of the Board of Directors of Rio Alto Mining Limited and is presently a director of Tahoe Resources, Inc., a director of Western Copper and Gold Corporation and Chairman of Los Andes Copper Ltd.
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SIDNEY ROBINSONDirector Mr. Robinson is currently a Corporate Director. Mr. Robinson is currently a Trustee of Chartwell Retirement Residences, a member of its Audit Committee and Chair of its Governance, Nominating and Compensation Committee. He was a senior partner of Torys LLP, a law firm, until January 2004, practicing corporate/commercial law, with emphasis on financings, mergers and acquisitions and international projects. In his practice, Mr. Robinson acted as strategic and legal advisor to senior management and boards of many large corporate issuers. Mr. Robinson was a long-time member of Torys LLP’s executive committee. Mr. Robinson is a member of the Board of Directors of Amerigo Resources Inc., where he sits on the Audit and the Nominating Committees and is Chair of the Compensation Committee, and is a former director of Rio Alto Mining Limited and of Inmet Mining Corporation. He has also served on the Board of Directors of several private corporations, is a founding partner of Butterfield & Robinson Inc., and was the first Chairman of Canada Post Corporation’s Real Estate Advisory Committee. Mr. Robinson holds an M.A. and an LL.B from the University of Toronto and an LL.M from Osgoode Hall Law School.
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RAM RAMACHANDRANDirector Mr. Ramachandran has over 25 years of financial reporting experience in a multitude of capacities. During the past 15 years Ram has consulted extensively on financial reporting and regulatory matters for public companies, accounting and law firms. Mr. Ramachandran's contributions to the capital markets include authoring and launching the "Canadian Securities Reporter", a proprietary public company subscription service currently available through the CICA's Knotia website. Mr. Ramachandran has previously served as Associate Chief Accountant and Deputy Director, Corporate Finance at the Ontario Securities Commission and served as a senior member in the national office of an international accounting firm. Mr. Ramachandran was also a member of the OSC's Continuous Disclosure Advisory Committee (2004-2007) and has completed the IFRS Certification program offered by the Institute of Chartered Accountants in England & Wales. Mr. Ramachandran originally qualified as a Chartered Accountant in England & Wales in 1978 and subsequently in Ontario in 1984. Mr. Ramachandran has served as the Chief Financial Officer of Purepoint Uranium Group Inc. since June, 2004.
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DAVID THOMASDirector Mr. Thomas spent the last 10 years of his career developing the Toromocho Copper Project, owned by Chinalco Mining Corporation International, in Peru. He held the positions of Executive Vice President and Chief Operation Officer, Vice President of Operations, as well as serving as an advisor and consultant to the company, until his retirement at the end of 2014. Mr. Thomas was a director of Rio Alto Mining Limited from 2008 to 2009. From 2002 to 2004, he worked as the Managing Director of Volta Aluminum Company, an aluminum smelter in Ghana, owned by Kaiser Aluminum and Alcoa. During this time, he was also a director of Anglesey Aluminum, a joint venture company of Kaiser Aluminum and Rio Tinto in Wales. From 2000 to 2002, Mr. Thomas was Vice President, Technical Services of PT Freeport Indonesia. Previously, Mr. Thomas worked for over 10 years for Southern Peru Copper Corporation where he served as Vice President, Operations, Chief Engineer, Area Manager and Mine Manager. From 1996 to 1999, Mr. Thomas served as a director of Resource Pacific Pty Ltd (Australia). Mr. Thomas obtained a BS Degree in Mining Engineering from the University of Utah and a MS Degree from the University of Minnesota in Mineral Resources Engineering. bio with a background summary. It’s also a great opportunity to highlight how this person is an asset to the team.
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DANIEL KENNEYDirector Daniel Kenney has been a partner with the law firm of DLA Piper (Canada) LLP since September 2004, practicing in the areas of securities, mining, oil and gas and general corporate/commercial matters. Mr. Kenney served as a director and Corporate Secretary of Rio Alto Mining Limited.
MINERAL RESOURCES & RESERVES
MEASURED & INDICATED
5MOZ
PROVEN & PROBABLE
1.8MOZ
INFERRED
1.4MOZ
The mineral resource estimate was updated in 2019, based on data collected from 91 diamond drill holes (30,533 m of core) and 291 reverse circulation holes (84,101 m of RC cuttings) which is all the drilling completed on the project between 2010 and 2019. Surface samples (860 two-meter trench samples) have been used for the first time in the resource estimate.
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ALEX BLACKPresident, CEO & Director Mr. Black lives in Lima, Peru and has 35 years’ experience in the mining industry. Mr. Black holds a BSc in Mining Engineering from the University of South Australia and is a member of the Australasian Institute of Mining and Metallurgy. Prior to moving to Peru in 2000, Mr. Black was the founder and Managing Director of international mining consulting services group Global Mining Services from 1994 to 2000. In 1996, Mr. Black also founded and was Chairman of OFEX listed AGR Limited with exploration projects in Ghana and Mongolia. In 2002, Mr. Black took control of Chariot Resources Limited as a listed TSXV shell and played a key role in the acquisition of the Mina Justa Copper Project and formation of the Korean joint venture with Chariot Resources. Upon his resignation as Chairman & Executive VP of Chariot Resources in 2006, Mr. Black founded the Peruvian registered Rio Alto S.A.C. In 2009 after successfully negotiating the acquisition of the La Arena Gold Project from Iamgold Corp, Rio Alto was acquired by Mexican Silver Mines and renamed Rio Alto Mining Limited. In 2014, Rio Alto also completed the successful acquisition of Sulliden Gold and the Shahuindo Gold Project for C$300M. Mr. Black, as President & CEO of Rio Alto Mining Limited and his experienced management team built Rio Alto from a C$12M company in 2009 to a C$1.2Bn company in 2015 at the time of the acquisition by Tahoe Resources Inc.
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KLAUS ZEITLERNon Executive Chairman, Director Dr. Klaus Zeitler received his professional education at Karlsruhe University from 1959 to 1966 and obtained a PhD in economic planning. Dr. Zeitler is a member of the Canadian Institute of Mining and Metallurgy and the Prospectors and Developers Association. Dr. Zeitler financed, built and managed base metal and gold mines worldwide (Europe, Africa, North America, South America, Pacific) with a total investment value of $4.0 billion. Dr. Zeitler was a managing director of Metallgesellschaft AG, a German metals conglomerate, and in 1986 founded and was a director and the first CEO of Metall Mining (later Inmet Mining Corporation) with assets of over $4.0 billion, and base metal and gold mines in different parts of the world. After having been a director of Teck and Cominco for many years, Dr. Zeitler joined Teck in 1997 as Senior Vice President and had responsibilities for the exploration and development of mines in Peru, Mexico and the USA. Since his retirement in 2002 from Teck and in addition to being Executive Chairman and a director of Amerigo, Dr. Zeitler has been the Chairman of the Board of Directors of Rio Alto Mining Limited and is presently a director of Tahoe Resources, Inc., a director of Western Copper and Gold Corporation and Chairman of Los Andes Copper Ltd.
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SIDNEY ROBINSONDirector Mr. Robinson is currently a Corporate Director. Mr. Robinson is currently a Trustee of Chartwell Retirement Residences, a member of its Audit Committee and Chair of its Governance, Nominating and Compensation Committee. He was a senior partner of Torys LLP, a law firm, until January 2004, practicing corporate/commercial law, with emphasis on financings, mergers and acquisitions and international projects. In his practice, Mr. Robinson acted as strategic and legal advisor to senior management and boards of many large corporate issuers. Mr. Robinson was a long-time member of Torys LLP’s executive committee. Mr. Robinson is a member of the Board of Directors of Amerigo Resources Inc., where he sits on the Audit and the Nominating Committees and is Chair of the Compensation Committee, and is a former director of Rio Alto Mining Limited and of Inmet Mining Corporation. He has also served on the Board of Directors of several private corporations, is a founding partner of Butterfield & Robinson Inc., and was the first Chairman of Canada Post Corporation’s Real Estate Advisory Committee. Mr. Robinson holds an M.A. and an LL.B from the University of Toronto and an LL.M from Osgoode Hall Law School.
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RAM RAMACHANDRANDirector Mr. Ramachandran has over 25 years of financial reporting experience in a multitude of capacities. During the past 15 years Ram has consulted extensively on financial reporting and regulatory matters for public companies, accounting and law firms. Mr. Ramachandran's contributions to the capital markets include authoring and launching the "Canadian Securities Reporter", a proprietary public company subscription service currently available through the CICA's Knotia website. Mr. Ramachandran has previously served as Associate Chief Accountant and Deputy Director, Corporate Finance at the Ontario Securities Commission and served as a senior member in the national office of an international accounting firm. Mr. Ramachandran was also a member of the OSC's Continuous Disclosure Advisory Committee (2004-2007) and has completed the IFRS Certification program offered by the Institute of Chartered Accountants in England & Wales. Mr. Ramachandran originally qualified as a Chartered Accountant in England & Wales in 1978 and subsequently in Ontario in 1984. Mr. Ramachandran has served as the Chief Financial Officer of Purepoint Uranium Group Inc. since June, 2004.
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DAVID THOMASDirector Mr. Thomas spent the last 10 years of his career developing the Toromocho Copper Project, owned by Chinalco Mining Corporation International, in Peru. He held the positions of Executive Vice President and Chief Operation Officer, Vice President of Operations, as well as serving as an advisor and consultant to the company, until his retirement at the end of 2014. Mr. Thomas was a director of Rio Alto Mining Limited from 2008 to 2009. From 2002 to 2004, he worked as the Managing Director of Volta Aluminum Company, an aluminum smelter in Ghana, owned by Kaiser Aluminum and Alcoa. During this time, he was also a director of Anglesey Aluminum, a joint venture company of Kaiser Aluminum and Rio Tinto in Wales. From 2000 to 2002, Mr. Thomas was Vice President, Technical Services of PT Freeport Indonesia. Previously, Mr. Thomas worked for over 10 years for Southern Peru Copper Corporation where he served as Vice President, Operations, Chief Engineer, Area Manager and Mine Manager. From 1996 to 1999, Mr. Thomas served as a director of Resource Pacific Pty Ltd (Australia). Mr. Thomas obtained a BS Degree in Mining Engineering from the University of Utah and a MS Degree from the University of Minnesota in Mineral Resources Engineering. bio with a background summary. It’s also a great opportunity to highlight how this person is an asset to the team.
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DANIEL KENNEYDirector Daniel Kenney has been a partner with the law firm of DLA Piper (Canada) LLP since September 2004, practicing in the areas of securities, mining, oil and gas and general corporate/commercial matters. Mr. Kenney served as a director and Corporate Secretary of Rio Alto Mining Limited.
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GEOLOGY & MINERALIZATION
Gold oxide mineralization at the Fenix Gold Project is sub vertical and is of a bulk, disseminated style. It is controlled by NW-SE faulting and the gold mineralization occurs in Black Banded Quartz veins, hosted in complex breccias and bound by fault structures.
Based on the geological features observed, the project is classified as Low Sulphidation type of mineralization. The mineralization is 2,500 m long, up to 600 wide and up to depths of 600 m. The mineralization remains open at depth and to the North East.
Metallurgical studies indicate that gold is usually fine and occurs in both native form and as submicroscopic gold in iron oxides. Gold composition is of high purity which is on average > 99% Au.
The Fenix Gold Project mineralization is comparatively clean with trace occurrences of copper, sulphur and mercury, even at depths of 600m below the surface. This makes the Fenix Gold Project unique in the Maricunga region as it is a pure oxide gold deposit with no transitional or sulphide mineralization.
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METALLURGICAL TEST WORK
Several metallurgical testing campaigns have been carried out on the Fenix Gold Project ore since 2010 in order to evaluate its metallurgical behavior in a conventional heap leach process. In addition, in 2017, some mineralogical studies, in the form of gold deportment, were conducted to explain the metallurgical results. This test work was undertaken by Kappes, Cassiday and Associates (KCA) and AMTEL Laboratories.
Cyanide leach tests were carried out through bottle roll and column percolation tests under different conditions of residence time and crush/grind size. Data used for the 2019 PFS, based on column tests, was performed on eleven composite samples. The tests were conducted at different crush sizes, from P80 of 100 mm to P80 of 9.5 mm, and at different residence times from 57 to 113 days and at different sample sizes from approximately 40 kg to 580 kg. All other conditions such as cyanide concentration and pH values were maintained equal for all of the tests. Conclusions from the tests are that gold extractions of 80% can be achieved, for material with a grade of 0.40 g/t Au and at P80 19 mm crush size. Test-work conducted in 2017 suggested that primary crushing (only) to 100 mm will produce 75% metallurgical recovery of the ore. Optimization studies of crush size/recovery vs capex are ongoing. Limited testing of material sized to 6” (150 mm) suggested that recoveries over 70% were possible.
In late 2020, Fenix Gold initiated activity with HLC (Heap Leach Consulting) and Farmesa Chile to obtain blasted material from each of the 3 pits, Fenix North, Fenix Central and Fenix South. Three blast projects of 500 m3 were drilled and shot to provide the material for a pilot ROM leach pad.
The material was excavated and blended at a ratio consistent with the 2019 PFS LOM contribution of the three pits. (18%/48%/34%). The amount of material placed of the pad for the ROM leach trial was 426 tons. The pilot trial was conducted at the Lince Plant site (25 km from the operation) at an altitude of 3,200 masl, using industrial water from the Nueva Atacama plant in Copiapo.
Sampling of the blended material gave a head grade of 0.464 gm/t, after completing 85 days of leaching, the leached material was resampled and returned a grade of 0.118 gm/t, indicating a recovery of 75%, consistent with the calculated recovery from solution grade and flow measurements.
The ROM trial heap demonstrated lime consumption was 2.95kg/t and cyanide consumption was 0.175 kg/t, both reductions over the PFS numbers.
A recent theoretical blasting fragmentation study by Farmesa (Chile) in August 2021 shows that a P80 of material passing 3 1/3” or 8 cm is achievable in Fenix Mineral, supporting the size distribution observed during the ROM leach trial.
Based on the results of the ROM trial heap, Rio2 have decided to remove the crushing circuit from the startup of the Project, reducing capital and simplifying the operation. Achieving 75% recovery from ROM, whilst removing crushing costs is an improved economic case from the 2019 PFS study. Ongoing test work and results from mining operations will determine if there is a case for introducing crushing in the future.
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PROCESSING
High grade ROM ore will be mined and transported directly to the heap leach by trucks. Lime will be added to the trucks in route to the leach pad. Lower grade material is stockpiled for processing at the end of the Project’s life.
Processing operations will treat the solutions from the heap leach facility operating in a new ADR (adsorption, desorption and refining) plant capable of treating 20,000 tpd of ore to pad or 1,058 cubic meters per hour of pregnant solution to produce doré bars. The plant layout is designed to be upgradeable to 40,000 tpd and 80,000 tpd respectively.
Due to the removal of material re-handling, crushing circuit and lower ratios of lime and Cyanide required for the process there will be a reduction in processing costs originally estimated at $4.10/t for life of mine in the 2019 PFS.
GOLD EXTRACTION IN PILOT LEACH PAD
HEAP LEACH PAD
The leach pad area will be prepared and covered with an impermeable liner. Corrugated, perforated drainage piping will be laid on the liner for collection of the pregnant leach solution. A protective layer of finely crushed, permeable ore will be placed on top of the liner to prevent damage from the mobile equipment and during ore loading. The ore will be stacked on the pad in 10m lifts.
The pad will be developed in four stages with a stacking volume of 10.3 Mt for Stage 1, 30.6 Mt for Stage 2, 27.7 Mt for Stage 3 and 60.7 Mt for the final stage. The total pad capacity will be 129 Mt. The irrigation system will uniformly apply cyanide solution directly onto the levelled surface of the leach pile through a drip irrigation system, at an irrigation rate of 10 L/hm2 with an irrigation cycle of 90 days.
Once the mineral placed on the pad is saturated and in leach, the pregnant solution will drain to the base of the pad, and via gravity will be piped directly to the ADR Plant Adsorption Circuit. The PLS Pond will be built and used for storage of solution as required.
POWER
The power supply for the project will be generated through diesel generators. There will be 4 generators, 3 in constant use, and a 4th in standby for programmed maintenance.
Grid power is located within 25 km of the mine site and connection to the grid will be considered as the Fenix Gold Mine is expanded.
MINING
During Year 1 the mine production rate will be ramped up to 20,000 tpd of high-grade ore (> 0.40 g/t) for estimated gold production of 80,000 oz. The life of mine strip ratio (waste: ore) is estimated to be 0.81:1.
Mining will then progress for an additional 12 years at an average annualized rate of 20,000 tpd of high-grade ore and 7,000 tpd of low-grade ore and associated waste material. The high-grade ore will be sent to the leach pad whilst the low-grade ore is stockpiled for leaching in later years of mine life.
Mine design and estimation of the mining reserves was completed using conventional open-pit design methodology. The mine design is based on a $1,225 Lerchs-Grossmann pit optimization computer analysis.
The pit design incorporates 20m benches made up of 2 x 10m mining benches utilizing a fleet of 70 tonne and 90 tonne excavators and 43 tonne dump trucks. Mining operations will be performed exclusively by a mining contractor under a mining alliance style framework for the entire life of mine.
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WATER SUPPLY
The 20,000 tpd project requires a water supply of up to 24 l/s. The Fenix Gold Project has access to water via a contract signed with Nueva Atacama, formerly known as Aguas Chañar S.A., the major water supplier to the town of Copiapo, to supply up to 20 l/s of treated town wastewater from its Piedra Colgada treatment facility located to the north of Copiapo. Additional water requirements will be topped up from the Lince water bore 5 l/s. The original plan, outlined in the 2014 PFS, was to build a pipeline with associated power line from the Nueva Atacama facilities to Fenix Gold along the existing main road, international road CH-31, from Copiapo to Argentina which passes within 20 km of the Project. This plan is still being considered for the future expansion of the Project and discussions are ongoing with infrastructure companies who are interested and able to finance and build the pipeline and other mining companies who may wish to share in the benefit of the pipeline project. The capital costs, operating costs and cost of water for the larger water solution are set out in the 2014 PFS.
The water for the 20,000 tpd project will be transported by 30 tonne capacity water tankers, loading from the Nueva Atacama facility and discharging to the process plant located at the Project, a distance of approximately 158 km. The water transport route will be via international road CH-31 which passes within 20 km of the mine site.
Water costs are estimated to be $1.56 per tonne of ore processed for the first four years of production and decrease to $1.51 per tonne for the remaining life of the project. The water cost includes the purchase price and transportation of the water to site.
The Company is currently reviewing a number of additional water options involving permitted, unused water rights which are closer to the planned mining operations with the objective of improving the economics of the water supply to the Project.
In Sector Bodega, Piedra Colgada, Copiapo
In Sector Bodega, Piedra Colgada, Copiapo
In Sector Bodega, Piedra Colgada, Copiapo
In Sector Bodega, Piedra Colgada, Copiapo
LABOR AND SUPPLIES
The Fenix Gold Project is located approximately 160 km from Copiapo, a mining town with a population of approximately 175,000 people that supports major mining operations in the area. Skilled labour, specialist services and materials for the mining operations will be sourced locally. An on-site camp for 400 people will be built for the mine operations whilst administration and logistics support will be located in Copiapo.
SOCIAL
Proposed mining activities at the Fenix Gold Project are located between 4.300m and 4.900m above sea level where the altitudinal and climatic conditions of the area impose natural restrictions for the establishment of human settlements, plants and wild animals, with predominantly arid soils.
The Colla Communities closest to the Project are located in Quebrada San Andres and Quebrada Paipote, where they carry out their main productive activities such as: animal breeding, grazing and agriculture (self-consumption), creation of handicrafts and medicinal herb collection. Occupations vary, according to each community’s perspective, as a reflection of their ancestral usage and current variants, mainly linked to ceremonial practices and transhumance practices.
ENVIRONMENTAL
AND
PERMITTING
The preparation of an Environmental Impact Declaration (DIA) for a geological (in-fill drilling), geotechnical, geo-metallurgical and condemnation drilling program began in October 2018.
In April 2019, the Environmental Impact Declaration was filed with the Environmental Assessment Service (EAS) and was approved in December 2019. The Environmental Impact Assessment (EIA) for the exploitation of the Fenix Gold Project was completed and filed with the Environmental Impact Assessment Service (SEIA) in Q2 2020.
Sectorial permit applications are currently in process. First gold production is targeted for Q4, 2022.