Mining company Rio2 said that its fully owned Fenix gold project located in the Atacama Region, Chile will require initial capital costs (capex) of $117m based on the findings of a feasibility study (FS).

The capex excludes the cost of pre-construction activities, which is about $29m.

The pre-construction activities completed so far include the construction of a 565-person camp, the installation of water loading infrastructure in Copiapó, procurement of long-lead items like electrical switchgear, electrical transformers, pumps, prefabricated components for the adsorption/desorption process plant, and initial earthwork preparations.

Mining consultants Mining Plus prepared the FS with updated mineral resource and mineral reserve estimates, a run of mine heap leach (ROM) operational plan, and updated capital and operating cost estimates.

Rio2 is planning a two-stage development strategy for the Fenix gold mine. The FS represents the first stage of production at the project.

It estimates the life of mine sustaining capital costs to be $88m for the Chilean gold project, which includes sufficient contingency at the feasibility level.

The average annual gold production at the Fenix project during the first 12 years is projected to be 91,000 ounces and 54,000 ounces in years 13 to 17.

According to the company, the second stage of the project will include the expansion of ore mining from 20,000 tonnes per day (tpd) to 80,000 to 100,000tpd.

In the rest of the year, Rio2 aims to conclude the financing package for the construction of the gold project and mobilise key contractors like STRACON and HLC.

The company also intends to conclude the regional permitting needed for construction and restart the construction plan.

Subject to positive outcome in the committee of ministers anticipated this year, Rio2 seeks to commence construction at the Fenix gold project in late 2023.

The FS has also set out a construction timeline of about 14 months from receipt of relevant permits and contractor mobilisation for the gold project.

Rio2 president and CEO Andrew Cox said: “With the completion of the stage one feasibility study, we are now ready to finalise the financing package to fund the capex required and our technical team is ready to advance permitting and construction of the mine subject to the receipt of approval of the Fenix Gold EIA.”

The FS estimates a post-tax net present value (NPV) of $210.3m for the Chilean project at 5% discount rate. It also projects a post-tax internal rate of return of 28.5% at a gold price of $1,750 per ounce for the Fenix gold project.