Interview with Alex Black, Executive Chairman of Rio2 Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/rio2-rio-eia-recommendation-explained-vote-is-friday-2177

Recording date: 21st December 2023

Rio2 Limited has finally received long-awaited approval from Chilean authorities, clearing the path for the development of its flagship Fenix Gold Project. However, the delays have led to increased costs and a pushed-back timeline. With construction now targeted for late 2024, Rio2 must secure financing and remaining permits before major activities can begin.

The Fenix Gold Project remains compelling, anchored by a 1.77M ounces of proven and probable gold mineral reserves grading 0.48 grams per tonne, and 4.8M ounces in the Measured and Indicated category. The planned open pit, run-of-mine heap leach operation expects to produce an average of 91,000 ounces during the initial 12 years, and a further 54,000 ounces in the final 5 years. 

But the company has its work cut out to regain lost time and value. The repeated delays in Chile caused Rio2’s share price to decline over 80%, falling as low as C$0.12 before recovering to the C$0.30-0.40 range after approval was finally granted in late 2023. Financing partners are still engaged but a deteriorating mining finance environment means the cost of capital is substantially higher.

With the project economics remaining positive but attempted timelines unrealistic, Rio2 chose to batten down the hatches and fight another day. Cost reductions and asset sales allowed the company to survive without requiring additional dilutive equity financings. Creditors came to agreements to ease strained liquidity. Now the focus shifts to methodical project advancement.

Alex Black remains confident in ultimately delivering the vision for Fenix Gold, aiming to join SSR Mining's Marigold project and Kinross's Bald Mountain as the only large-scale run-of-mine heap leach producers. But gone are the days of easy money, with swarming investors throwing cash at half-baked gold projects. Today’s markets require realism, patience, and credible management plans.

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View Rio2's company profile: https://www.cruxinvestor.com/companies/rio2-limited

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