If the studies hang together, the expansion plan could deliver 80,000 tonnes of ore per day to the heap leach pad, with a whopping production target of at least 300,000 gold ounces per year for 10 years.
Rio2 Limited president and chief executive Andrew Cox said: “This is a significant milestone for the planned future expansion of the Fenix Gold mine and we are very pleased to have got to this position with the two potential water providers.”
Fenix Gold is already a monster deposit, hosting 389 million tonnes of ore at a grade of 0.38 grams per tonne (g/t) gold for 4.8 million measured and indicated ounces of gold.
Rio2 is already deep into phase one construction of the mine and is scheduled to tip US$235 million (A$355 million) of initial and sustaining capital into the build, with the first gold pour due in January next year.
Using a simple, low-cost heap leach process, the mine is forecast to churn out 91,000 ounces of gold a year at a higher grade of 0.54g/t for the first 12 years and average 82,000 ounces a year at 0.48g/t over its 17-year life.
A 2023 feasibility study valued the project at a US$210.3 million (A$333 million) after-tax net present value (NPV) using a conservative US$1750 an ounce gold price to deliver a quick 3.5-year payback.
However, with gold now fetching more than double that, the economics look jaw-dropping. Even at a modest US$2250 an ounce, Rio2’s updated modelling shows the NPV rocketing to US$546 million (A$824 million), with a blistering 64 per cent internal rate of return, underlining the mine’s serious upside.
The project has already been touted as one of the largest undeveloped gold oxide, heap-leach assets in the Americas, with minimal environmental footprint thanks to its run-of-mine approach. The company says its mining process involves no crushing, no tailings and a design shaped around modern environmental and social best practices.
With water security long seen as the Achilles’ heel of mining in northern Chile, Rio2’s strategy to sign up water companies to study the potential for a constant supply of desalinated water could give it a serious edge.
If Rio2 can turn the taps on at Fenix Gold, it won’t just quench the project’s thirst. It could cement the mine as one of the most transformative gold stories in South America.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
