Rio2 banks US$50m from Wheaton to fuel Chilean mine build

An overhead view of Rio2 Limited’s Fenix Gold project in Chile’s Atacama region, which is nearing the end of its construction phase. Credit: File

Canadian-listed Rio2 Limited (TSX: RIO) has closed the book on its funding deal with global streaming giant Wheaton Precious Metals after banking a final US$50 million (A$77m) tranche to power ahead with mine construction at its flagship Fenix Gold project in Chile’s Atacama Desert.

The latest payment marks the fourth and final deposit under the amended precious-metals purchase and pre-pay agreement between the two companies.

The partnership structure allows Wheaton Precious Metals International to purchase a portion of the gold produced from Fenix at a fixed, discounted price, providing Rio2 with upfront cash while maintaining exposure to future upside through retained production.

The cash completes a major US$175 million (A$269m) funding package designed to help bring the gold development online as one the largest undeveloped gold oxide, heap-leach projects in the Americas.

Construction at site is charging toward the finish line, with 63 per cent of the build already wrapped up by the end of September and the first gold pour looming just weeks away. Every critical component has landed on site, allowing the company to move from developer to producer as early as the new year.

The US$235 million (A$363 million) development is running like clockwork – on time and on budget – a rare feat in today’s inflation-driven construction climate. So far, Rio2 has outlaid US$86.7 million on the mine and processing facilities, almost exactly matching the budgeted US$86.6 million, showcasing the company’s disciplined approach to execution.

Perched high in Chile’s fabled Maricunga gold belt at a staggering 4500 metres above sea level, Fenix is shaping up as a monster of the modern mining age.

The 2000-hectare deposit holds 389 million tonnes grading 0.38 grams per tonne (g/t) gold, converting to 4.8 million measured and indicated ounces. In mining circles, they’re the kind of number that get pulses racing – especially when tied to a simple, low-cost heap-leach setup that can turn dirt into dollars fast.

Heap leaching involves piling ore on a thick polyethylene pad and soaking it with a mild chemical solution that dissolves the gold. The liquid is then collected and processed to recover the precious metal – a method renowned for its low capital intensity and quick returns.

In its first 12 years, Fenix is forecast to churn out around 91,000 ounces of gold per annum at 0.54g/t, before averaging 82,000 ounces a year across the mine’s 17-year life.

A feasibility study completed in 2023 pegged the after-tax value of the project at US$210 million (A$323 million) based on a conservative gold price of US$1750 (A$2697) an ounce and a payback of just 3.5 years.

Modelling last year using a updated, but still wildly conservative gold price estimate of US$2250 (A$3467), sent the forecast numbers surging, with the project’s net present value (NPV) rising to US$546 million (A$841 million) and the internal rate of return (IRR) to 64 per cent.

With gold now soaring past US$4000 (A$6000) an ounce – nearly double those 2024 assumptions – Fenix Gold’s economics have gone from strong to spectacular. Every ounce produced under current prices could deliver margins that would be high enough to turn even the thin Atacama air thick with excitement.

As a run-of-mine heap-leach operation, Fenix Gold’s process eliminates the need for crushing or tailings storage, sharply reducing its environmental footprint. The 17-year mine life is expected to support about 1,200 jobs during construction and 550 throughout operations, providing a major economic boost to Chile’s Atacama region.

Management says the project reflects years of consultation with local communities and regulators, integrating environmental and social safeguards from the outset.

With funding now secured, permits in hand and construction nearing completion, Rio2 is closing in on its long-held goal of bringing Fenix Gold into production in the heart of Chile’s world-famous Atacama gold belt.

Fully financed through its US$175 million streaming deal with Wheaton Precious Metals and perfectly positioned to capitalise on record gold prices, Rio2’s timing could hardly be better.

When the first doré bars emerge in January, the company will move from builder to producer, delivering a low-cost and environmentally conscious heap-leach operation high in the Andes.

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