Rio2 Limited is targeting early 2026 for a first gold pour at the company’s Fenix Gold project in Chile’s Atacama region. Construction is currently 19 per cent complete and on budget at one of the Americas’ biggest undeveloped oxide gold plays.

A total of US$30.1 million has been spent so far, just a smidgen under the company’s US$30.5M forecast budget to this point, with major construction milestones already checked off and a string of other developments still to come this year.

Perched high in Chile’s legendary Maricunga gold belt at a lofty 4500 metres, Rio2’s Fenix Gold project spans 2000 hectares and hosts 389 million tonnes of ore going at 0.38 grams per tonne (g/t) gold for a whopping 4.8 million ounces of gold in the measured and indicated category.

The company’s initial plan - expected to cost US$135M (A$211M) in initial investment capital - is to produce 91,000 ounces a year at a higher grade 0.54g/t gold for 12 years. The mine is forecast to average 82,000 ounces a year at 0.48g/t gold over a 17-year life.

Underpinning the project’s healthy economics, the all-in sustaining cost of extracting the gold is forecast to run at a cheap US$1250 per ounce, thanks to an ultra-low 0.85:1 stripping ratio.

In a departure from traditional large mining projects, Rio2 is building a run-of-mine heap leach operation at Fenix Gold to process the ore.

Heap leaching is a system of piling ore on a thick polyethylene pad and spraying it with a chemical solution to dissolve and extract the gold. Since the need for crushing and a tailings dam is eliminated, the mine’s footprint and environmental load should be dramatically reduced.

The company’s focus in the past five months has zeroed in on critical path infrastructure, including upgrades to access its roads and the installation of a pregnant leach solution pond.

The 10ha leach pad is due to be finished next month, complete with over-liner materials.

An adsorption-desorption-recovery plant is already well underway and is set to be sealed and winter-ready shortly. Rio2 has pencilled in plant commissioning for November.

Management says all long-lead procurement items have either been acquired and placed in storage or locked in for delivery, smoothing the way for the project’s next development phase.

A grade control drilling program has begun across the initial pit areas to cover the first three years of planned production, which is aimed at de-risking the early years of the mine plan.

Rio2’s 2023 feasibility study put a conservative US$210.3m (A$333m) after-tax net present value (NPV) at a 5 per cent discount rate on its Chilean gold project, assuming a gold price of just US$1750 an ounce. This is enough to deliver a solid 3.5-year payback.

With gold now trading at close to double that price, Rio2’s upside looks massive. Rio2’s modelling shows the NPV will blast to US$546M (A$854M) at a gold price of US$2250, with the project throwing off a stunning 64 per cent internal rate of return.

Rio2 is also running a ruler over a phase two expansion plan that could turbocharge output to 250,000–300,000 ounces of gold a year by lifting daily processing rates at the project from 20,000t to 80,000t. The study is slated for a December reveal.

The site is now a hive of activity with 1240 personnel - including contractors - employed on construction works. Rio2 says it has taken particular care to focus on recruiting a local workforce, 94 per cent of whom are Chilean with 41 per cent hailing from the local Atacama region. Eleven per cent of the site’s team is female, which is in line with ESG standards for gender diversity in mining.

With boots on the ground and strict standards in place, the company’s commitment to safe, responsible development appears clear. Fenix Gold has so far logged more than 657,000 hours with only one lost time incident coming from a finger injury - resulting in a lost time incident frequency rate of 1.52.

For a junior such as Rio2, Fenix Gold is an ambitious and transformative venture. However, with timelines holding firm and milestones falling into place, the project appears to be shaping up as a flagship example of modern, responsible mining in South America.

Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au