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Rio2 Limited (“Rio2” or the “Company”) (TSXV: RIO; OTCQX: RIOFF; BVL: RIO) today announces the results of the updated mineral resource estimate (“MRE”) and Pre-Feasibility Study (“PFS”) for its 100% owned Fenix Gold Project (“Fenix Gold” or the “Project”) located in the Maricunga Mineral Belt of the Atacama Region, Chile. This updated PFS is the Company’s base case to accelerate development and start production in the shortest possible time.

All amounts in this news release are in US dollars unless otherwise indicated. Base case economics for this PFS were calculated using a $1,300 per oz gold price.

The updated MRE for the Project is 5.0 million oz of gold in the measured and indicated category and 1.4 million oz of gold in the inferred category constrained within a $1,500 gold price pit shell. The mineral resource remains open at depth and along strike.

This PFS is strategically focused on an optimally configured mine plan which will facilitate the shortest possible timeline to construction/production, a lower initial capex, higher grades initially being mined, and a lower initial strip ratio as compared with the 2014 PFS. The PFS focuses on a low-cost heap leach gold mine with 1.83 million ounces (“oz”) of gold reserves that will produce 1.37 million oz of gold.

The PFS contemplates mining ore at a rate of 20,000 tonnes per day (“tpd”) with water for the project being trucked from Copiapo. This compares with the ore mining rate of the 2014 PFS which was a constant 80,000 tpd with water for the project being piped from Copiapo. To maximize cash-flow, high-grade ore will be placed on the leach pad during the initial 13 years of production and low-grade ore will be stockpiled for leaching in the subsequent 3 years of production giving a total mine life of 16 years. Average annual gold production during the first 13 years will be 93,000 oz and 50,000 oz during the final 3 years of production as stockpiled ore is being crushed and leached.

With a large mineralized resource and potential for resources to grow through further drilling, there remains considerable opportunity to increase annual production and extend the mine life of the Fenix Gold Project. Timing to increase production will depend on transporting a greater volume of water via a pipeline, alternative water solutions closer to the project and changes to the gold price during the initial years of production.

The previously completed Pre-Feasibility Study on the Project, titled “NI 43-101 Technical Report on the Cerro Maricunga Project Pre-Feasibility Study Atacama Region, Chile” dated October 6, 2014 with an effective date of August 19, 2014 (the “2014 PFS”), is available on SEDAR under Rio2’s SEDAR profile at The Cerro Maricunga Project was renamed the Fenix Gold Project by Rio2 in 2018.


  • 1.83 million ounces (“oz”) of Proven & Probable Mineral Reserves grading 0.49 grams per tonne ("g/t") gold

  • High-grade to leach pad – 81.9 million tonnes grading 0.57 g/t gold

  • Low-grade to stockpile – 33.1 million tonnes grading 0.30 g/t gold

  • $222 million after-tax life of mine ("LOM") cumulative cash flow (unlevered)

  • $997 / oz average LOM all-in sustaining costs ("AISC")

  • 1.37 million oz LOM gold production

  • 93,000 oz average annual gold production during initial 13 years

  • 50,000 oz average annual gold production during final 3 years

  • $121 million after-tax net present value discounted at 5% (“NPV5”) or ($241 million at $1,500 per oz gold)

  • 27.4% internal rate of return ("IRR") (44.3% at $1,500 per oz gold)

  • Capital costs of $111 million with LOM sustaining capital costs of $95 million

  • Construction currently targeted for Q4 2021 and first gold production in Q4 2022

  • 16 year mine life at initial 20,000 tpd mining rate with expansion potential subject to additional water options and changes to the gold price

Alex Black, President & CEO of Rio2, stated, “Our highly skilled and experienced management team has taken great strides since the acquisition of the Fenix Gold Project just over 12 months ago. We have completely re-imagined and re-engineered the project with a focus on shortening the timeline to construction/production, simplifying the approval process and permitting of the project, lowering initial capex, concentrating on higher grades during early years of production and optimally minimizing the initial strip ratio. We also thought outside of the box to arrive at an innovative solution of trucking water to the project with the sole purpose of fast-tracking and simplifying the approvals process and permitting of the project. Together with our highly experienced environmental and permitting consultants in Chile, Minería y Medio Ambiente Limitada (MyMA), we have now set an achievable timetable to construction in Q4 2021. With a large mineralized resource base and a modest project production rate, as indicated in this PFS, we are confident we can expand the mine quickly and optimally after achieving initial production. Once the Fenix Gold Project achieves commercial production it will be the only gold oxide heap leach gold mine in operation in Chile and achieving a unique milestone.”


This PFS focuses on the development of the Fenix Gold Project on a throughput of 20,000 tpd. The primary reason Rio2 has elected to start at this rate of production is to allow for the trucking of water from Copiapo which will expedite and simplify the approval and permitting process of the mine. By choosing the option of trucking water to the mine site, the Company has reduced the timeline to construction from five years to two years. Once the project is in production, the Company will focus on the logistics and timing of constructing the previously planned water pipeline from Copiapo (outlined in the 2014 PFS) which will sustain a mining rate of up to 80,000 tpd, four times of what is contemplated in this PFS.

Under the PFS mine plan, the Project will be able to produce for sixteen years with average annual production of 85,000 oz of gold for total LOM production of 1.37 million oz. LOM AISC is estimated at $997/oz. The Project demonstrates strong returns with an after-tax NPV5 of $121 million and an after-tax IRR of 27.4% using the base case gold price of $1,300/oz ($241 million and 44.3% at $1,500/oz gold price). The Project is expected to generate average annual after-tax net operating cash flow of $15.1 million with cumulative LOM after-tax net cash flow of $222 million. At $1,500/oz gold, the Project would average more than $25 million in after-tax net operating cash flow annually and generate more than $422 in cumulative after-tax net cash flow over the 16-year mine life.



Using the base case gold price of $1,300/oz and incorporating only Proven and Probable Mineral Reserves of 1,829,000 oz of gold, the Project has an after-tax NPV (5%) of $121 million and an after-tax IRR of 27.4%. The Project’s economics are most sensitive to fluctuations in the gold price and operating costs, as summarized in the tables below.


Initial Capital for the Project is estimated at $111.2 million which includes $14.2 million in contingencies. Capital cost estimates are summarized in the table below.

Operating cost estimates are summarized in the table below.

The mining cost considers the mining of ore, the mining of waste, reclaiming low-grade ore from the stockpile to the crusher, and from the crusher to the pad.

The processing cost considers crushing and leaching, recovery, and the water supply costs.


The Mineral Resource for the Fenix Gold Project has been updated with the results from a small infill reverse circulation (RC) drill program of 7,066 m completed in 2018/19, and all relevant and approved surface channel sampling have been used in the resource estimate for the first time. This resource update also marks the first time that a three dimensional (3-D) geological model has been constructed for the deposit.

The additional data, new geological model and revised modelling parameters have had no material effect on the combined measured and indicated resources when compared to the 2014 PFS. This suggests that the resource estimate is robust for bulk mining.

Inferred resources have increased markedly from the 2014 PFS due to confidence gained from the geological model and well-structured variograms. Inferred resources have been projected up to 150 m from the base of drilling, in line with ranges demonstrated in gold variograms.

The MRE presented in the following table are constrained within a $1,500/oz optimized open pit and calculated using a 0.15 g/t cut-off grade.


1. Mineral Resources reported is inclusive of mineral reserves;

2. The table includes all Measured, Indicated, and Inferred Resources contained within the “Resource Pit”, which represents the test for eventual extraction applied;

3. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves;

4. Mineral Resources are reported in accordance with Canadian Securities Administrators (CSA) National Instrument 43-101 (“Standards of Disclosure for Mineral Projects” (NI 43-101) and have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines;

5. Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding;

6. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.

The Mineral Reserves presented in the following table are constrained within a $1,225/oz optimized open pit and are reported as in-situ dry million tonnes and include 3% mining dilution and 97% mining recovery using a cut-off grade of 0.24 g/t Au.

Notes: The Mineral Reserve estimate with an effective date of August, 15 2019 is based on the Mineral Resource estimate with the same effective date that was prepared by Mario Rossi, Principal Geostatistician of GeoSystems International Inc. The Mineral Reserve was estimated by Mining Plus with supervision by Raul Espinoza, Senior Open Cut Engineer with Mining Plus Peru S.A.C. Mineral Reserves are estimated within the final designed pit which is based on the $1,225 /oz pit shell. The minimum cut-off grade was 0.24 g/t gold. Average life of mine costs are $2.42/tonne mining, $4.10/tonne processing, and $1.99/tonne processed G&A. The average process recovery was 75% for single stage crushing. Tonnes and gold ounces are both reported in millions. Small differences in total tonnage and grade may occur due to rounding. The Mineral Resource estimate is inclusive of Mineral Reserves.


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, 7,000 tpd of low-grade ore and associated waste material. The high-grade ore will be crushed via a single stage crusher to a P80 size of 4 inches then re-handled and sent to the leach pad whilst the low-grade ore is stockpiled for crushing and leaching in later years.

Metallurgical test work shows average life of mine recoveries of 75% after single stage crushing to 4 inches, with more than 50% of the gold recovered during the first 45 days of leaching.

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 optimisation 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.

Fenix Gold Project – Mine Site Layout

For a picture of the Fenix Gold Project Mine Site Layout click here.


High-grade ore will be crushed to a P80 size of 4 inches via a single stage Gyratory crusher with lime dosing occurring before the crushed ore is fed to a stockpile. Crushed ore will be re-handled and trucked from the crushed ore stockpile to the leach pad. Agglomeration of crushed ore is not required.

Low-grade ore will be mined and stockpiled for crushing and leaching in later years.

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.

Processing costs are estimated at $4.10 per tonne treated over the current life of mine which includes water purchase and water transport costs.


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 heap leach pad is located 4 km from the pit, at an elevation of 4,376m above sea level. The pad will be developed in four stages with a stacking volume for Stage 1 of 10.3 Mt; 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.

The percolation rate through the heap will depend on the viscosity and specific gravity of the solution, the mineral void space, the percentage of fines, mineral affinity for the solution and air entrapment.

Once the heap is saturated, the gold rich solution will drain to the lowest part of the pad and then into the pregnant leach solution (PLS) pond before being pumped to the ADR processing plant.


The power supply for the Project will be generated via diesel generators. Three generators, two in continuous operation and one on standby, will be installed in the power plant located in the ADR plant. There will also be two generators installed at the crusher which will also supply power to the mine workshops.

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.


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 Aguas Chañar S.A. (“Aguas Chañar”), the major water supplier to the town of Copiapo, to supply up to 80 L/s of treated town wastewater from its Piedra Colgada treatment facility located to the north of Copiapo. The original plan, outlined in the 2014 PFS, was to build a pipeline with associated power line from the Aguas Chañar facilities to Fenix Gold along the existing main road, international road CH31, 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 Aguas Chañar 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 CH31 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.


The Fenix Gold Project is located approximately 140 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 320 people will be built for the mine operations whilst administration and logistics support will be located in Copiapo.


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 (approx. 10 km from the Project), where they carry out their main productive activities such as: animal breeding, grazing and agriculture (self-consumption), creation of handicrafts and collecting medicinal herbs with the latter being the basis of their family income, their cultural manifestations and ancestral customs. Territorial occupation by the Colla Indigenous Communities is discontinuous and dispersed. Occupations vary, according to each community’s perspective, as a reflection of their ancestral usage and current variants, mainly linked to ceremonial practices and migratory habits. An ongoing social program with the various Colla Indigenous Communities is in place and developing in tandem with the environmental approval and permitting process currently in process.


The preparation of an Environmental Impact Declaration (DIA) to perform 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 is expected to be approved Q4 2019.

The environmental baseline study for the Environmental Impact Assessment (EIA) of the Fenix Gold Project has been progressing since November 2018. Engineering works and studies are in progress for inclusion in the EIA whilst the baseline study is in the information gathering stage. The EIA is expected to be completed and filed with the Environmental Impact Assessment System (SEIA) in Q1 2020 and environmental approval is expected in Q1 2021.

The preparation of sectorial permit applications is currently in process and will be submitted in conjunction with the filing of the EIA. The approval of sectorial permits is expected in Q3, 2021 and the commencement of earthworks related to the construction of the Project is expected in Q4, 2021.


The Company will be progressing the following activities in the lead up to construction at the Fenix Gold Project which is targeted for Q4 2021:

  • Complete engineering works and studies for inclusion in the EIA submission.

  • Conduct further pit geotechnical investigation and analysis to safely optimize pit wall angles.

  • Undertake a cost benefit analysis of Crushing vs Run of Mine (ROM) – A pilot trial of mining and leaching is being considered to assess the potential of ROM leaching.

  • Undertake a trade-off study of Trucking vs Conveyor system for moving ore from the crusher to the pad with a view to reducing opex.

  • Develop opex and capex for a pipeline from the proposed camp located on national road CH31 to the processing plant with the objective of reducing the trucking cost and opex for trucking the water from the road to the process plant.

  • Continue the review of alternate permitted water sources that have the potential to reduce the cost of water for the Project.

  • Continue discussions with infrastructure companies and mining companies operating in the area to participate in the building of a water pipeline from Copiapo to the Project.

The principal focus for management during the two year lead up to construction will be to optimize the estimated capital expenditure for the construction of the Project and to refine and reduce the current operating cost estimate where practicable.


This study constitutes a PFS for NI 43-101 purposes with an effective date of August 15, 2019. The PFS has been completed to a level of accuracy of +20% to -30%. No inferred resources have been taken into account in demonstrating the economic viability of the Project. Key assumptions used in the economic analysis in the PFS include the following:


The PFS was undertaken by several independent Qualified Persons (“QPs”) and was consolidated by Mining Plus (“MP”), supported by HLC (“HLC”), Anddes (“ANDDES”) and GeoSystems International Inc. (“GSI”). The Mineral Resources were prepared by GSI based on the geological and block model prepared by Rio2 Limited geologists. The Mineral Reserves, mine plan and mining sections of the study were prepared by MP with input from ANDDES, the mine geotechnical section was prepared by DERK and remains unchanged from the report used in the 2014 PFS. Environmental and permitting matters were led by Chile-based MyMA. The heap leach pad and hydrogeology aspects of the study were prepared by ANDDES and the process plant and on-site infrastructure was designed by HLC with overview from MM Consultores (MMC). Rio2 will file a technical report prepared in accordance with NI43-101 in respect of the PFS with the applicable Canadian securities’ regulatory authorities within 45 days of this release.


The scientific and technical content of this news release has been reviewed, approved and verified by the following QPs who were involved with preparation of the PFS: Raul Espinoza, (MAusIMM (CP)), Technical Services Manager South America of MP; Mario Rossi, (Fellow AusIMM, Member CIM, Member SME), Principal Geostatistician of GSI; Denys Parra, (Member SME) of ANDDES; Anthony Maycock, (P.Eng.) of HLC.

Enrique Garay, MSc. P.Geo (AIG Member), Senior Vice President Geology of Rio2 Limited, who is a QP under NI 43-101 has also reviewed, approved and verified the scientific and technical content of this news release.

For readers to fully understand the information in this news release they should read the technical report in its entirety when it is available on SEDAR, including all qualifications, assumptions, exclusions and risks that relate to the PFS. The technical report is intended to be read as a whole and sections should not be read or relied upon out of context.


Rio2 is a mine development company with a team that has proven technical skills in the development and operations of mines 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. With the Fenix Gold Project in development in Chile and gold exploration platform in Peru, Rio2 Limited will continue 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.

Forward-Looking Statements

This news release contains forward-looking statements and forward-looking information (collectively “forward-looking information”) within the meaning of applicable securities laws relating to the PFS including Rio2’s plans, strategy, objectives and other aspects of Rio2’s anticipated future operations and financial, development and operating plans and results. In addition, without limited the generality of the foregoing, this news release contains forward-looking information pertaining to the following: estimated mineral resources and reserves; timing of the commencement of construction at the Fenix Gold Project; estimated capital and operating costs, metal prices, mining and processing rates, metal production and resulting financial results for the Fenix Gold Project; the timing for the development of and production from the Fenix Gold Project; timing and outcomes of the social program with the various Colla Indigenous Communities; potential to increase resources, annual production and mine life; timing of environmental approval and permitting process and outcomes; ongoing engineering works and studies; the potential to secure water rights near to the Fenix Gold Project and the benefits of holding such rights; and other matters ancillary or incidental to the foregoing.

All statements included herein, other than statements of historical fact, may be forward-looking information and such information involves various risks and uncertainties. Forward-looking information is often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. The forward-looking information is based on certain key expectations and assumptions made by Rio2’s management, including but not limited to: expectations concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; capital efficiencies; legislative and regulatory environment of Chile; future production rates and estimates of capital and operating costs; estimates of reserves and resources; anticipated timing and results of capital expenditures; the sufficiency of capital expenditures in carrying out planned activities; results of operations; performance; the availability and cost of financing, labour and services; and Rio2’s ability to access capital on satisfactory terms.

Rio2 believes the expectations reflected in these forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements in this news release should not be unduly relied upon. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Rio2's disclosure documents on the SEDAR website at Forward-looking statements included in this news release are made as of the date of this news release and such information should not be relied upon as representing its views as of any date subsequent to the date of this news release. Rio2 has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. Rio2 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation.

To learn more about Rio2 Limited, please visit: or Rio2's SEDAR profile at


Alex Black

President, CEO & Director

Tel: 1 (604) 260-2696

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts the responsibility for the adequacy or accuracy of this release.


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