Rio2 to raise up to US$135 million for Fenix gold mine construction

With it sights set on taking its 100%-owned Fenix gold project in Chile towards production in the shortest possible timeframe, Rio2 (TSXV: RIO; US-OTC: RIOFF) has arranged a financing of about US$125-$135 million for the mine’s construction.

The financing package comprises a non-binding term sheet with Wheaton Precious Metals (TSX: WPM; NYSE: WPM; LSE: WPM) for a US$50 million gold purchase agreement, a senior project debt facility of US$50-$60 million through BNP Paribas, a marketed public offering of about $25 million (US$19.6 million) and a non-brokered private placement to Wheaton Precious Metals (or an affiliate) for proceeds of US$5 million.

The financing package would allow Rio2 to commence pre-construction activities at the Fenix project, prior to receiving Environmental Impact Assessment (EIA) approval and permits for its planned 20,000 tonne-per-day run of mine.

Since the outset, Rio2’s primary focus has been to accelerate the Fenix  project to production, the Vancouver-based miner said, adding that the mine financing package would allow the company to maintain its current schedule for first gold production in the fourth quarter of 2022.

According to Rio2 CEO Alex Black, the Fenix project hosts “the largest undeveloped gold heap leach project in the Americas.” 

“The mine financing package is transformational for Rio2 as it will provide the resources to execute on our plans for the development of the mine,” Jose Luis Martinez, Rio2’s executive vice president and chief strategy officer, commented in the news release.

The Fenix project is located in Chile’s Copiapo province and lies within the Maricunga mineral belt. This mining district 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.

A 2019 feasibility study for Fenix showed that 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 three years of production, giving a total mine life of 16 years.

Once in operation, the mine will produce an average of 93,000 oz. gold per year in the first 13 years, followed by 50,000 oz. gold during the final years of production.