Interview with Alex Black, Executive Chairman of Rio2 and Peter Akerley, President & CEO of Erdene Resource Development.

Recording date: 3rd July 2024

As the gold market continues to attract investor attention, two junior mining companies are standing out from the crowd: Rio2 Limited and Erdene Resource Development. Both companies are on the cusp of transitioning from developers to producers, offering investors a unique opportunity to gain exposure to nearterm gold production with significant upside potential.

Rio2 Limited: Bringing the Phoenix Gold Project to Life
Rio2 is advancing its flagship 5 million ounce Phoenix Gold project in Chile. Led by a management team with a proven track record in building and operating heap leach gold mines, Rio2 is applying a conservative approach to project design that goes beyond regulatory requirements. This strategy not only mitigates operational risks but also positions the company favorably with local authorities and communities.

Key points for investors:
Advancedstage project with nearterm production potential
Experienced management team with relevant expertise
Operating in Chile, a stable mining jurisdiction
Conservative project design approach, reducing operational risks

Rio2's Executive Chairman, Alex Black, emphasizes the importance of a strong balance sheet and meticulous risk management. The company is targeting construction resumption in October, potentially catalyzing a significant stock rerating as it transitions towards producer status.

Erdene Resource Development: Pioneering a New Gold District in Mongolia
Erdene Resource Development offers investors exposure to a different but equally compelling opportunity. As a firstmover in an unexplored portion of the gold belt in Southwestern Mongolia, Erdene has already discovered four deposits and is advancing its first project towards production.

Key points for investors:
Firstmover advantage in a new, highly prospective mining district
Multiple discoveries providing a pipeline of development opportunities
Diversified commodity exposure beyond gold
Strong local partnership with Mongolia's largest mining company (MMC)

Erdene's CEO, Peter Acleto, highlights the company's 27year history in Mongolia and its success in navigating the country's evolving regulatory landscape. The partnership with MMC provides crucial local expertise, financial support, and operational capabilities.

Common Strengths and Investment Thesis
Both Rio2 and Erdene share several attributes that strengthen their investment case:
Experienced management teams with longterm commitment to their projects
Focus on building strong community relationships and maintaining social license to operate
Approaching the production phase, which typically leads to value rerating
Operating in jurisdictions with substantial geological potential
Conservative approach to project development and risk management

For investors, these companies offer exposure to the gold sector with the potential for significant value creation as they transition from developers to producers. The nearterm production timelines provide a clear path to cash flow, while the additional exploration and development opportunities in their districts offer longterm growth potential.

Risks and Considerations
While both companies present compelling opportunities, investors should be aware of the risks associated with junior mining investments:
Execution risk as the companies transition to production
Potential for additional financing needs and share dilution
Commodity price volatility affecting project economics
Geopolitical and regulatory risks in their respective jurisdictions

Investment Strategy
For investors interested in gaining exposure to these opportunities, consider the following approach:
Conduct thorough due diligence, including review of technical reports and management track records
Start with a modest position size, aligned with your risk tolerance
Be prepared for potential volatility as the companies approach key development milestones
Monitor progress closely, particularly around construction timelines and budget adherence
Consider averaging in over time as development milestones are achieved

In conclusion, Rio2 and Erdene Resource Development represent intriguing opportunities in the junior gold mining sector. Their advancedstage projects, experienced management teams, and strategic approaches to development position them well for potential success. However, as with any junior mining investment, careful consideration of the risks and ongoing progress monitoring are essential.

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