Management says it sees clear potential to expand throughput to 12,000 tonnes per day from the underground operation, coupled with possible open-pit additions. The mine operates on 100 per cent renewable hydroelectric power, holds Copper Mark accreditation and is rolling out the electrification of its mining fleet.
Across the next five years, the mine is forecast to generate average annual EBITDA of US$110 (A$166) million at consensus copper prices. However, at the current booming spot levels of US$5.35 per pound, the company says the mine could spit out as much as US$145 (A$220) million per year in EBITDA, which would be enough to easily fund the expansions at both its Fenix Gold project in Chile and Condestable.
Once the acquisition is completed and coupled with the company’s existing Fenix Gold mine, the combined operations are expected to deliver a total production of about 180,000 gold-equivalent ounces a year for Rio2, with a pathway to 380,000 ounces once the planned phase two expansion at Fenix is completed.
The acquisition adds a second top-tier jurisdiction alongside Rio2’s flagship Fenix Gold project in Chile, where construction is 80 per cent complete and first gold remains on schedule for January next year.
In one strike, Rio2 appears to have rewritten its corporate narrative. The Condestable acquisition brings immediate cash flow, exposure to a long-life copper asset and the financial firepower to self-fund growth, while Fenix transitions from developer to producer.
If management then also delivers on its expansion plans at Fenix, Rio2 will likely have the scale, cash generation and clean-energy credentials to punch well above its current market standing.
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