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Rio2 Ltd (2)
Symbol RIO
Shares Issued 259,568,913
Close 2024-04-08 C$ 0.43
Market Cap C$ 111,614,633
Recent Sedar Documents

Rio2 gets RCA resolution for Fenix, arranges placement

2024-04-08 19:10 ET - News Release

Mr. Alex Black reports

RIO2 ANNOUNCES RECEIPT OF RCA RESOLUTION FOR THE FENIX GOLD PROJECT & C$10 MILLION PRIVATE PLACEMENT

Rio2 Ltd.'s Chilean subsidiary, Fenix Gold Ltd., has received the formal Resolucion de Calificacion Ambiental (Environmental Qualification Resolution, or RCA) for its Fenix gold project located in the Maricunga mineral belt of the Atacama region, Chile.

The RCA has been issued following the approval of the project's Environmental Impact Assessment previously announced on Dec. 20, 2023.

The receipt of the RCA now allows Fenix Gold to advance permitting activities for the project. There are four principal sectorial permits required before construction can commence at the project: 1) mining methods; 2) process plant; 3) waste dumps and stockpiles; and 4) closure plan and work on these permits is well under way. The current timing for receipt of these principal permits is by the end of July, 2024.

Project financing update

Following the announcement of the filing of an independent technical report dated Oct. 16, 2023, entitled "NI 43-101 Technical Report on the Feasibility Study for the Fenix Gold Project," Rio2 has been working with its financial adviser, Endeavour Financial, to develop the optimum financing solution for the project.

The initial phase involved Endeavour reviewing the feasibility study technical and financial information and issuing a project marketing document to prospective financiers to solicit interest in providing project related debt financing. The company is seeking to finance a substantial component of the initial capital costs by way of project related debt.

This initial phase is now complete and has resulted in a shortlist of institutions who will now move forward to the next phase. Prospective project financiers include a mix of commercial banks, export credit agencies and specialist finance providers.

Prospective financiers have been provided with additional information relating to the company and project through a virtual data room with the objective of obtaining formal expressions of interest (EOIs). Following receipt of EOIs, Endeavour and the company intend to select a small group of preferred financiers to move forward into the detailed due diligence phase.

The project finance process is expected to take several months. The company is targeting early Q2 2024 for receipt of EOIs followed by the selection of preferred financiers with due diligence progressing through Q2 2024, with the aim of completing the financing in Q3 2024.

Once project financing is secured, management's principal focus will be achieving the project's construction timeline and budget objectives to produce dore as set out in the 14-month project execution plan detailed in the feasibility study.

The company will provide updates on the financing process as it progresses.

Mine expansion study

Estimated resources for the project (including mineral reserves constrained within a $1,650 pit shell), which remain open at depth and along strike, are 4.75 million ounces of gold in the measured and indicated category and 960,000 oz of gold in the inferred category constrained within a $1,800 pit shell. This large, mineralized resource coupled with the potential for resource growth through further drilling, provides an excellent opportunity to increase annual production and extend the mine life of the Fenix gold mine.

Rio2 is planning a two-stage development strategy for the project, with the 20,000-tonne-per-day feasibility study representing the first stage of production. Conceptually, the second stage will incorporate the expansion of ore mining from 20,000 tonnes per day to 80,000 to 100,000 tonnes per day, with industrial water and/or desalinated water being transported to site via a pipeline and project power being sourced from the nearby grid with estimated annual gold production rising to more than 250,000 oz per annum for at least 10 years. A study into the expansion of the mine will be launched during 2024 to determine the most optimal water option, the related operating expenditures and capital expenditures and the timing of the proposed mine expansion.

Private placement

The company has entered into an engagement letter agreement with Eight Capital to act as lead agent and sole bookrunner, on behalf of a syndicate of agents, pursuant to which the agents will act as agents for the company on a best efforts agency basis in connection with a private placement of up to 25.64 million common shares of the company at a price of 39 cents per share for gross proceeds to the company of up to $9,999,600.

Subject to compliance with applicable regulatory requirements and in accordance with National Instrument 45-106 -- Prospectus Exemptions, the offering is being made to purchasers resident in each of the provinces of Canada, except Quebec, pursuant to the listed issuer financing exemption under Part 5A of NI 45-106, and otherwise in those jurisdictions where the offering can lawfully be made. The shares offered under the offering will not be subject to a statutory hold period in accordance with applicable Canadian securities laws.

There is an offering document related to the offering that can be accessed under the company's profile at SEDAR+ and on the company's website. Prospective investors should read this offering Document before making an investment decision.

The company plans to use the net proceeds from the offering for working capital and general corporate purposes, to undertake a mine expansion study, to carry out environmental monitoring, to purchase certain equipment for the project, permitting, community relations, and concession fees.

The offering is scheduled to close on or about April 17, 2024, or such other date(s) as the company and Eight Capital may agree and completion of the offering is subject to certain conditions including, but not limited to, the entering into of a definitive agency agreement between the company and the agents with respect to the offering and the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.

The scientific and technical content of this news release has been reviewed, approved and verified by Ian Dreyer, BAppSc, MAIG, a consultant to Rio2, who is a qualified person under National Instrument 43-101. For additional information regarding the project, including key parameters, assumptions and risks associated with its development, see the independent technical report entitled "NI 43-101 Technical Report on the Feasibility Study for the Fenix Gold Project" pursuant to National Instrument 43-101 -- Standards of Disclosure for Mineral Projects. The technical report is dated Oct. 16, 2023, with an effective date of Oct. 16, 2023, a copy of which document is available under Rio2's SEDAR+ profile.

About Rio2 Ltd.

Rio2 is a mining company with a focus on development and mining operations with a team that has proven technical skills as well as a successful capital market record. Rio2 is focused on taking its Fenix gold project in Chile to production in the shortest possible time frame based on a staged development strategy. Rio2 and its wholly owned subsidiary, Fenix Gold Ltda., are companies with the highest environmental standards and responsibility with the firm conviction that it is possible to develop mining projects that respect the three axes (social, environment and economics) of sustainable development. As related companies, Rio2 reaffirms its commitment to apply environmental standards beyond those that are mandated by regulators, seeking to protect and preserve the environment of the territories that the company operates in.

We seek Safe Harbor.

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