RIO2 Outlines Plans FOR Completion of Fenix GOLD MINE Financing
RIO2 OUTLINES PLANS FOR COMPLETION OF FENIX GOLD MINE FINANCING
For Immediate Release March 9, 2023
Vancouver, BC - Rio2 Limited (“Rio2” or “the Company”) (TSXV: RIO; OTCQX: RIOFF; BVL: RIO) is
providing an outline of its plans to complete the financing for the construction of the Fenix Gold
Project (“the Project”) in Chile.
The plan includes appointing an independent f inancial advisor, completing a Feasibility Study on the
development of the Fenix Gold Project, reviewing and restructuring the precious metals purchase
agreement with Wheaton Precious Metals International Ltd and re -engaging with lenders for the
senior project debt facility of the Project construction financing.
APPOINTMENT OF INDEPENDENT FINANCIAL ADVISOR
Rio2 has appointed Endeavour Financial (“Endeavour”) to provide financial advisory services with
respect to the financing and construction of the Fenix Gold Mine.
Endeavour will work closely with Rio2 board and management in developing the optimum financing
solution for the Fenix Gold Project given the Project's current status . Endeavour will p rovide a full-
service approach to the financial advisory, which includes the review and restructuring of the existing
precious metals purchase agreement, technical guidance during the completion of the Feasibility
Study and dealing with lenders on the debt component of the financing.
FENIX GOLD FEASIBILITY STUDY
An updated Pre-Feasibility Study was prepared for the Fenix Gold Project in August 2019 and amended
and restated on August 3, 2021.
Since that date, and over the course of H1 2022, the Company completed detailed engineering and
updated cost estimates for the purpose of financing discussions with lenders for the construction of
the Project. Discussions with lenders were halted on July 5, 2022, when the approval of the Project’s
Environmental Impact Assessment (“EIA”) was formally declined by the Chilean Government. Given
the Project's current status, the Company has decided to incorporate the detailed engineering into a
new study and update operating and capital costs to reflect today’s cost environment. The gold price
will also be updated to a more appropriate level, given the August 2019 study was based on a gold
price of $1,250. This new study will be completed to a Feasibility level and is expected to be completed
and published by the end of Q2, 2023. The Feasibility Study will be a key document for consideration
by the Project’s potential lenders.
PRECIOUS METALS PURCHASE AGREEMENT
On March 29, 2022, Rio2 announced that it had received a deposit payment of US$25,000,000 from
Wheaton Precious Metals International Ltd. (“WPMI”) in connection with the previously announced
precious metals purchase agreement on Rio2’s Fenix Gold Project in Chile (the “Gold Stream”).
Under the Gold Stream, WPMI will purchase 6.0% of the gold production until 90,000 ounces of gold
have been delivered, thereafter dropping to 4.0% of the gold production until 140,000 ounces of gold
have been delivered, after which the Gold Stream will reduce to 3.5% of the gold production for the
life of mine from the Fenix Gold Project. In addition, WPMI will make ongoing production payments
for gold ounces delivered equal to 18% of the spot gold price until the value of gold delivered to WPMI
less the production payments is equal to the total upfront consideration payable by WPMI under the
Gold Stream of US$50 million, at which point the production payment will increase to 22% of the spot
gold price. As part of the agreement, a second deposit of US$25,000,000 was to be paid to Rio2
following the receipt of the EIA approval for the Fenix Gold Project, and subject to the satisfaction of
certain other customary conditions.
As the approval of the EIA was declined by the Chilean Government on July 5, 2022, the timing and
completion dates of the construction and eventual production of the Fenix Gold Project are currently
unknown. Given this uncertainty, Rio2, in close consultation with Endeavour Financial, is planning to
revise and restructure the agreement with WPMI as soon as practicable.
DISCUSSIONS WITH LENDERS
Discussions with potential lenders w ere well advanced prior to the negative EIA decision by the
Chilean Government on July 5, 2022.
Technical due diligence was almost completed by independent experts acting on behalf of the lenders
before July. On receipt of the negative EIA decision, i t was decided with the lenders that th e due
diligence work be put on hold , with reactivation expected once the planned Feasibility Study is
completed.
Despite the suspension of activities pertaining to the construction of the Project, Rio2 is encouraged
that lenders are still showing interest in participating in financing the Fenix Gold Mine construction.
STATUS OF ADMINISTRATIVE APPEAL PROCESS
On August 31, 2022, Rio2’s local subsidiary Fenix Gold Limitada (“Fenix Gold”), decided to exercise its
right to file an administrative appeal before the Ministries Committee. The Ministries Committee is
composed of the Ministries of Environment (Chairman), Health, Economy, Agriculture, Energy and
Mining. The national director of the Environmental Assessment Service (“SEA”) is the secretary of the
Committee.
The basis of the administrative appeal is based on the following key findings:
(a) The Fenix Gold Project was presented for environmental assessment through an EIA, which
is the most stringent instrument contemplated by Chilean Environmental Law. The EIA also
included a successful public consultation process and successful special consultation process
for indigenous communities, under the rules of the OIT No. 169 International Convention .
The rejection of the EIA is not based on legal incompatibilities that cannot be overcome, but
on the need, according to the authorities´ view, to provide additional information to discard
potential impacts to Chinchilla chinchilla, Lama guanicoe and Vicugna vicugna;
(b) Fenix Gold provided quality information in the EIA to demonstrate there were no significant
risks to the aforementioned fauna species. This finding was incrementally strengthened and
supported during the process through additional monitoring campaigns and data
compilation, in direct response to the authorities’ requests;
(c) The monitoring campaigns and technical information produced by Fenix Gold and its external
advisors were prepared using the methodologies and guidelines established by the
authorities and consistent with similar precedents in the area;
(d) Certain requests or observations from the authorities, incorrectly referred to by SEA as “not
addressed” by Fenix Gold, were made after the assessment process was closed, in which it is
not legally possible for the Company to present additional answers. Making requests or
observations after the EIA process is closed is not consistent with the nature and rules of the
environmental impact assessment process.
As a result of these key findings, Rio2 is of the view that the rejection of the Project is not consistent
with the environmental assessment process that took place, and, therefore, the Company believes
there are strong legal and technical grounds for seeking the review of the rejection of the EIA before
the Ministries Committee, which has the faculties to reverse the decision made at the regional level.
It should be noted that the administrative appeal is not a judicial process, and the decision of the
Ministries Committee may be subjective and not consider the technical and legal argument s of the
EIA decision being appealed. Should Rio2 receive a negative decision from the appeal, the Company
will take the matter to a judicial level and vigorously defend its legal rights to having the decision
overturned.
In parallel with the administrative process, Rio2 is conducting additional monitoring studies of the
fauna in the Project area to provide supporting information for the appeal process. A list of additional
voluntary commitments has been developed to hel p address any remaining concerns that the
authorities may require to guarantee the sustainable execution of the Project. The Company believes
this additional work will provide a positive contribution during the administrative appeal process.
Timing for the administrative appeal has yet to be formally communicated to Rio2 management.
FENIX GOLD PROJECT
The Fenix Gold P roject is one of the largest undeveloped gold oxide, heap leach projects in the
Americas, hosting a Measured and Indicated mineral resource (as such term is defined in National
Instrument 43-101 -Standards of Disclosure for Mineral Projects, “NI 43-101”) of 5 Million ounces of
gold which the Company believes will make a positive contribution to the Atacama Region and Chile.
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. The
Project represents a significant investment in the gold mining business in Chile by a ju nior mining
company of approximately US$210M of initial and sustaining capital and will generate employment
for at least 1,200 people during the construction phase and 550 people during the 17 years operations
phase. The mine being contemplated at the Proj ect will be a run -of-mine heap leach operation ; no
crushing or tailings storage facilities are required, thereby minimizing the overall impact and footprint
of the Project.
TECHNICAL INFORMATION
The scientific and technical content of this news release has been reviewed, approved and verified by
Enrique Garay, MSc. P. Geo (AIG Member), a consultant to Rio2 Limited, who is a QP under NI 43-101
has also reviewed, approved and verified the scientific and technical content of this news release. For
additional information regarding the Project, including key parameters, assumptions and risks
associated with its development, see the independent technical report entitled “ Updated Pre-
Feasibility Study for the Fenix Gold Project, Atacama, III Region, Chile” dated August 3, 2021, with an
effective date of August 15, 2019, a copy of which document is available under Rio2’s SEDAR profile
at www.sedar.com
ABOUT RIO2 LIMITED
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 markets track record. Rio2 is focused on taking its
Fenix Gold Project in Chile to production in the sho rtest possible timeframe based on a staged
development strategy. Rio2 and its wholly owned subsidiary, Fenix Gold Limitada, are companies with
the highest environmental standards and responsibility with the firm conviction that it is possible to
develop mining project s that respect the three axes (Social, Environment, and Economics) of
sustainable development. As related companies, we reaffirm our commitment to apply environmental
standards beyond those that are mandat ed by regulators , seeking to protect an d preserve the
environment of the territories that we operate in.
ABOUT ENDEAVOUR FINANCIAL
Endeavour Financial, with offices in London, UK, George Town, Cayman Islands and Vancouver, British
Columbia, is one of the top mining financial advisory firms, with a record of success in the mining
industry, specializing in arranging multi-sourced funding solutions for development-stage companies.
Founded in 1988, Endeavour Financial has a well-established reputation of achieving success with over
US$500 million in royalty and stream finance, US$4 billion in debt finance and US$28 billion in mergers
and acquisitions. The Endeavour Financial team has diverse experience in both natural resources and
finance, including investment bankers, geologists, mining enginee rs, cash flow modelers and
financiers.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information (collectively
“forward-looking information”) within the meaning of applicable securities laws relat ing to Rio2’s
planned development of the Project and other aspects of Rio2’s anticipated future operations and
plans. In addition, without limiting the generality of the foregoing, this news release contains forward-
looking information pertaining to t he following: the development of financing solution for the Fenix
Gold Project given the Project's current status ; the preparation of a new study in respect of the
feasibility of the Fenix Gold Project; the potential revision and restructuring of the Gold Stream;
discussions with potential lenders who may participate in the financing of the Fenix Gold Project; Rio2’s
appeal of the decision of the SEA to not approve Rio2’s EIA and the related undertaking of additional
studies of the fauna in the area of the Fenix Gold Project; the potential development of a mine at the
Project and the expected capital investment required for such mine; development and operating plans;
certain anticipated economic benefits of a mine at the Project to the local region and ot her matters
ancillary or incidental to the foregoing.
All statements included herein, other than statements of historical fact, may be forward- looking
information and such information involves various risks and uncertainties. Forward- looking
information is often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”,
“continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”,
“could”, “might”, “should”, “believe”, and similar expressions. The forward -looking information is
based on certain key expectations and assumptions made by Rio2’s management which may prove to
be incorrect, including but not limited to: expectations concerning the preparation and timing for
completion of the new study in respect of the Fenix Gold Project; expectations concerning revision and
restructuring of the Gold Stream; expectations concerning the appeal of the decision of the SEA to not
approve Rio2’s EIA; expectations regarding the availability of debt financing; expectations concerning
prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws;
capital efficiencies; legislative and regulatory environment of Chile; future production rates and
estimates of capital and operating costs; estimates of reserves and resources; anticipated results of
capital expenditures; the sufficiency of capital expenditures in carrying out planned activities;
performance; the availability and cost of financing, labor and services; and Rio2’s ability to access
capital on satisfactory terms.
Rio2 believes the expectations reflected in these forward -looking statements are reasonable, but no
assurance can be given that these expectations will prove to be correct and such forward- looking
statements in this news release should not be unduly relied upon. A description of assumptions used
to develop such forward- looking information and a description of risk factors that may cause actual
results to differ materially from forward- looking information can be found in Rio2's disclosure
documents on the SEDAR website at www.sedar.com . These risks and uncertainties include, but are
not limited to: risks and uncertainties relating to the completion of the financings as described herein,
and management’s ability to anticipate and manage the factors and risks referred to herein. Forward-
looking statements included in this news release are made as of the date of this news release and such
information should not be relied upon as representing its views as of any date after the date of this
news release. Rio2 has attempted to identify importa nt factors that could cause actual results,
performance or achievements to vary from those current expectations or estimates expressed or
implied by the forward-looking information. However, there may be other factors that cause results,
performance or achievements not to be as expected or estimated and that could cause actual results,
performance or achievements to differ materially from current expectations. Rio2 disclaims any
intention or obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly required by applicable securities
legislation.
To learn more about Rio2 Limited, please visit: www.rio2.com or Rio2's SEDAR profile at
www.sedar.com.
ON BEHALF OF THE BOARD OF RIO2 LIMITED
Alex Black
Executive Chairman
Email: [email protected]
Tel: +51 99279 4655
Kathryn Johnson
Executive Vice President, CFO & Corporate Secretary
Email: [email protected]
Tel: +1 604 762 4720
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts the responsibility for the adequacy or accuracy of this
release.