Rio2 Ltd. said Sept. 4 that an updated pre-feasibility study slashed the posttax net present value, discounted at 5%, of its flagship Fenix gold project in Chile to US$121 million from US$409 million previously outlined in 2014.
The project, formerly named Cerro Maricunga, was the focus of last year's merger between Rio2 and Atacama Pacific Gold Corp.
Rio2 said the latest study envisaged an ore mining rate of 20,000 tonnes per day, compared to the 80,000 tpd contemplated in the past study, as it was focused on bringing the project into production in the shortest possible time.
The project now has an after-tax internal rate of return of 27.4%, with initial capital costs of US$111 million and sustaining costs of US$95 million over a 16-year mine life.
The study, based on gold prices of US$1,300 per ounce, projected an average annual gold output of 93,000 ounces for the first 13 years as high-grade ore will be placed on the leach pad during the period. For the last three years, it will decrease to 50,000 ounces per year as stockpiled low-grade ore will be used.
Cash cost and all-in sustaining cost came in at US$927 per ounce and US$997/oz, respectively. Construction is targeted in the fourth quarter of 2021, with first gold production scheduled in the fourth quarter of 2022.
The latest study also included an updated resource estimate that includes proven and probable reserves of 116 million tonnes grading 0.49 g/t gold for 1.8 million ounces of contained gold and 1.4 Mt of recoverable gold, based on a 0.24 g/t gold cutoff.
Measured and indicated resources stood at 410.7 Mt grading 0.38 g/t of gold for 5.0 Moz of gold, at a 0.15 g/t gold cutoff. Inferred resources were pegged at 136.6 Mt grading 0.32 g/t of gold for 1.4 Moz of gold.
