Rio2 Limited (“Rio2” or the “Company”) (TSXV: RIO; OTCQX: RIOFF; BVL: RIO) today announces the results of the updated mineral resource estimate (“MRE”) and Pre-Feasibility Study (“PFS”) for its 100% owned Fenix Gold Project (“Fenix Gold” or the “Project”) located in the Maricunga Mineral Belt of the Atacama Region, Chile. This updated PFS is the Company’s base case to accelerate development and start production in the shortest possible time.

All amounts in this news release are in US dollars unless otherwise indicated. Base case economics for this PFS were calculated using a $1,300 per oz gold price.

The updated MRE for the Project is 5.0 million oz of gold in the measured and indicated category and 1.4 million oz of gold in the inferred category constrained within a $1,500 gold price pit shell. The mineral resource remains open at depth and along strike.

This PFS is strategically focused on an optimally configured mine plan which will facilitate the shortest possible timeline to construction/production, a lower initial capex, higher grades initially being mined, and a lower initial strip ratio as compared with the 2014 PFS. The PFS focuses on a low-cost heap leach gold mine with 1.83 million ounces (“oz”) of gold reserves that will produce 1.37 million oz of gold.

The PFS contemplates mining ore at a rate of 20,000 tonnes per day (“tpd”) with water for the project being trucked from Copiapo. This compares with the ore mining rate of the 2014 PFS which was a constant 80,000 tpd with water for the project being piped from Copiapo. To maximize cash-flow, high-grade ore will be placed on the leach pad during the initial 13 years of production and low-grade ore will be stockpiled for leaching in the subsequent 3 years of production giving a total mine life of 16 years. Average annual gold production during the first 13 years will be 93,000 oz and 50,000 oz during the final 3 years of production as stockpiled ore is being crushed and leached.

With a large mineralized resource and potential for resources to grow through further drilling, there remains considerable opportunity to increase annual production and extend the mine life of the Fenix Gold Project. Timing to increase production will depend on transporting a greater volume of water via a pipeline, alternative water solutions closer to the project and changes to the gold price during the initial years of production.

The previously completed Pre-Feasibility Study on the Project, titled “NI 43-101 Technical Report on the Cerro Maricunga Project Pre-Feasibility Study Atacama Region, Chile” dated October 6, 2014 with an effective date of August 19, 2014 (the “2014 PFS”), is available on SEDAR under Rio2’s SEDAR profile at www.sedar.com. The Cerro Maricunga Project was renamed the Fenix Gold Project by Rio2 in 2018.

PFS HIGHLIGHTS

1.83 million ounces (“oz”) of Proven & Probable Mineral Reserves grading 0.49 grams per tonne ("g/t") gold
High-grade to leach pad – 81.9 million tonnes grading 0.57 g/t gold
Low-grade to stockpile – 33.1 million tonnes grading 0.30 g/t gold
$222 million after-tax life of mine ("LOM") cumulative cash flow (unlevered)
$997 / oz average LOM all-in sustaining costs ("AISC")
1.37 million oz LOM gold production
93,000 oz average annual gold production during initial 13 years
50,000 oz average annual gold production during final 3 years
$121 million after-tax net present value discounted at 5% (“NPV5”) or ($241 million at $1,500 per oz gold)
27.4% internal rate of return ("IRR") (44.3% at $1,500 per oz gold)
Capital costs of $111 million with LOM sustaining capital costs of $95 million
Construction currently targeted for Q4 2021 and first gold production in Q4 2022
16 year mine life at initial 20,000 tpd mining rate with expansion potential subject to additional water options and changes to the gold price

Alex Black, President & CEO of Rio2, stated, “Our highly skilled and experienced management team has taken great strides since the acquisition of the Fenix Gold Project just over 12 months ago. We have completely re-imagined and re-engineered the project with a focus on shortening the timeline to construction/production, simplifying the approval process and permitting of the project, lowering initial capex, concentrating on higher grades during early years of production and optimally minimizing the initial strip ratio. We also thought outside of the box to arrive at an innovative solution of trucking water to the project with the sole purpose of fast-tracking and simplifying the approvals process and permitting of the project. Together with our highly experienced environmental and permitting consultants in Chile, Minería y Medio Ambiente Limitada (MyMA), we have now set an achievable timetable to construction in Q4 2021. With a large mineralized resource base and a modest project production rate, as indicated in this PFS, we are confident we can expand the mine quickly and optimally after achieving initial production. Once the Fenix Gold Project achieves commercial production it will be the only gold oxide heap leach gold mine in operation in Chile and achieving a unique milestone.”

OVERVIEW

This PFS focuses on the development of the Fenix Gold Project on a throughput of 20,000 tpd. The primary reason Rio2 has elected to start at this rate of production is to allow for the trucking of water from Copiapo which will expedite and simplify the approval and permitting process of the mine. By choosing the option of trucking water to the mine site, the Company has reduced the timeline to construction from five years to two years. Once the project is in production, the Company will focus on the logistics and timing of constructing the previously planned water pipeline from Copiapo (outlined in the 2014 PFS) which will sustain a mining rate of up to 80,000 tpd, four times of what is contemplated in this PFS.

Under the PFS mine plan, the Project will be able to produce for sixteen years with average annual production of 85,000 oz of gold for total LOM production of 1.37 million oz. LOM AISC is estimated at $997/oz. The Project demonstrates strong returns with an after-tax NPV5 of $121 million and an after-tax IRR of 27.4% using the base case gold price of $1,300/oz ($241 million and 44.3% at $1,500/oz gold price). The Project is expected to generate average annual after-tax net operating cash flow of $15.1 million with cumulative LOM after-tax net cash flow of $222 million. At $1,500/oz gold, the Project would average more than $25 million in after-tax net operating cash flow annually and generate more than $422 in cumulative after-tax net cash flow over the 16-year mine life.

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