Rio2 stock soars on environmental approval for Fenix gold project in Chile

Canadian gold junior Rio2 (TSXV: RIO) ascended to its highest in over a year after the company announced the successful approval of the environmental impact assessment (EIA) for its Fenix project in Chile.

In a press release Wednesday, Rio2 said it welcomes the decision in Chile by the committee of ministers to approve the EIA, which now allows the company to advance the Fenix gold project through statutory permitting, financing and the planned restart of construction activities during 2024.

The environmental approval marks a turn of fortunes for the company, which saw its EIA rejected in July 2022 by a regional evaluation commission because it contained “insufficient information” on the project’s negative impacts on certain wildlife species. An appeal was subsequently made to the committee.

Located in the Atacama region of northern Chile, Fenix represents one of the largest undeveloped gold oxide, heap leach projects in the Americas, boasting 4.75 million oz. of measured and indicated resources contained within 389.2 million tonnes grading 0.38 g/t gold, the company said.

According to Rio2, the project is an example of modern gold mining where a full complement of technical, environmental, and social considerations has been consulted on and designed in from the outset. It also represents a significant investment in Chile’s gold sector by a junior mining company, with approximately $235 million of initial and sustaining capital.

“We have designed Fenix Gold as an example of the very best of modern mining bringing not only significant investment and jobs to the Atacama region, but also extensive protection of the environment with a particular focus on flora and fauna in the area we will be operating,” Alex Black, executive chairman of Rio2, said in a statement.

Over a 17-year project life, Fenix is expected to produce 1.32 million oz. of gold, averaging 91,000 oz. annually over the first 12 years. As outlined in the September 2023 feasibility study, the Fenix project would have a $210.3 million after-tax net present value discounted at 5%, with a 28.5% internal rate of return.

Shares of Rio2 soared 31.7% to C$0.40 apiece by 2:15 p.m. ET Wednesday, having reached a 52-week high of C$0.43 earlier in the session. The company’s market capitalization is C$102.4 million.