Rio2 unveils PFS for Fenix, stock slips
Chile-focused gold miner, Rio2, said Wednesday that a mine at its Fenix gold project would have a $121 million after-tax net present value discounted at 5% and an internal rate of return of 27.4%.
The company (CVE:RIO) released its pre feasibility study for Fenix in the Atacama Region of ChileProject economics assumes a $1,300 oz price per goldAll-in-sustaining cost of gold is estimated at $997 per ozLife of mine gold production is 1.37 million
As of 12:30 p.mET, the stock was off 12% to 51 cents a share
It really begs the question: who is the audience for this study? If it's fluffy and questionable, it is intended to attract retail dollarsIf it is conservative and reliable, it's intended to attract partners and acquirersIt's sad in our industry you can't have both.— Brandon Macdonald (@YukonBrandon) September 4, 2019
The company said it plans to truck water to the project, which will reduce construction from five years to two yearsAlex Black, president and CEO of Rio2, believes trucking will allow the company to mine sooner.
"We...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," said Black
"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 2021With 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."
Here are other PFS highlights listed by Rio2:
- 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)
- 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
- 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