“Meet at Bottega Dasso in San Isidro,” says Alex Black, the Australian-born mining engineer who built gold group Rio Alto from the ground up, turning its low-grade La Arena project in Peru into a high-margin gold mine, much-loved by Canadian investors. “5pm.”
     Inside, sitting in a bar in a leafy district of Lima, Black's roaring with laughter. “This is our office,” he says. “One of our offices. We're keeping our overheads down. I'm supposed to be joining a conference call that is not important so I'm going to bail out, let me just send a message.”

Rio Alto

     Black moved to Lima 15 years ago. He had been working as a mining engineer in Perth, “but in 1999 it was the bottom of the bust and I thought it was a mug's game. I decided, I'm going to go to Peru, and I just packed up.”
     Black did a short stint in Toronto, before founding Rio Alto in Lima in 2006, buying La Arena in a $48m deal, with only $1m upfront.
     Unknown and out of the spotlight, the company took some daring shortcuts. Black's proud, he says, to have bought La Arena without a geologist. “It was a no-brainer. There were a bunch of holes in the ground, it outcropped at surface, the metallurgy looked good and we didn't have to drill it out any further.” Rio Alto then raced through its permitting process. “We took some calculated risks. Because we weren't a company the size of Barrick, we could fly under the radar.”
     But for a foreign company, Rio Alto also took an unusually hands-on approach to operating in Peru: its first two fundraisings were in Peru and Chile, it was headquartered in Lima, and Black modelled the company on how a Peruvian family would operate. “We said okay, how would they go about doing this? Forget that we're a Canadian company. We're a Peruvian company. And we ran as fast as we could.”
     Alex Black's no-nonsense approach was partly foisted on him by the market. Rio Alto had closed the acquisition in 2007, “then in 2008, the financial crisis happened and we had to come up with the money and we were in this global, financial black hole. Everyone thought it was the end of the world.”
     Canadian banks meanwhile didn't believe in the asset. “You're going to build an open-pit
 


mine for fifty million bucks and it's half gram dirt? How many mines have you built before? Well none, I said.”
     “We were essentially ignored by the mine financing establishment in Canada. We were unproven nobodies. There was this bit of disbelief and nobody was really interested.”
     So Rio Alto built La Arena as quickly as possible, with the smallest operation possible, to make money, rather than raise it. In 2012, its first year of commercial production, the company made $100m in post-tax profit. Investors including GMP Securities in Canada, JPMorgan in London and Red Kite in New York had meanwhile piled in.
     “We started to print money. The high-grade portion of the orebody outcropped at surface, the rock was just unbelievably good, it was very porous, very rapid-leaching, Mother Nature was definitely on our side and the gold price was going up at the same time, so we creamed it.”
     Having initially raised money at 36 cents, Rio Alto's shares hit six dollars in 2013. “A lot of people made a lot of money. It was a lot of fun.”

Tahoe Resources

     In 2014, Rio Alto swallowed its neighbour, Sulliden Gold and its Shahuindo gold deposit. Then in February 2015, Rio Alto agreed to a C$1.2bn takeover by silver group Tahoe Resources, which owned the high-grade Escobal silver mine in Guatemala.
     Tahoe was run by Kevin McArthur, the former CEO of Vancouver-based gold group Goldcorp. “What comes out of this is a cash flow machine,” McArthur told Reuters at the time.
     McArthur moved from CEO to chairman, whilst Black, by now popular with Canadian investors and banks as a money-making mine-builder embedded in South America, took the group's reigns as CEO. He lasted four months in the role.
     “Four months,” Black says, roaring with laughter. “The bottom line is, Kevin wasn't completely honest with me. He said it's your baby, you do what you want and off you go, and then he changed the rules.”
     Black spent his time at Tahoe analysing the company, before putting a proposal to the board. Sources involved say Black wanted to roll-out “a lean-and-mean structure, similar to David Garofalo at Goldcorp, where he's decentralised


and put responsibility at each project at the mine-level.”
     “There were certain things I wanted to do, and wanted to change,” Black says, calling over a waiter in Spanish. “But I was the CEO, right?” He put his new strategy forward, “then very shortly after I said goodbye.”

Rio2

     Earlier this month, after several years of tension with local groups, Guatemala's Supreme Court upheld a decision to indefinitely halt Escobal, sending Tahoe's shares into free-fall. Having left the group, Black has put back together his former management team from Rio Alto, swallowing a shell company and renaming it Rio2 Limited.
     Rio2 has kept out of the news, but has bid for several assets that have been sold-off in recent months. In Peru, Rio2 has entered an option with mining group Milpo over seven exploration-stage gold prospects covering 19,000 hectares, where Black will begin drilling this year “to hopefully show there's some smoke in those assets.” In Nicaragua, Rio2 has staked ground and is negotiating a partnership with the country's pro-mining government.
     But the new company's big-splash-deal is yet to come, and could be anywhere in the Americas. “We've always got about two to four assets or companies that we're looking at,” Black says. “We're in Peru and Nicaragua on an exploration basis, but that's not our core business. Mining's our core business. We've got a management team, we can implement mining systems, information systems, reporting systems, and we're just going to go copy-paste. What we want is a portfolio of precious metals assets in the Americas.”
     When Black kicked off Rio Alto, the company had a $6m market cap. Now, Black is beginning with a platform ten times the size. Thanks to his reputation, Rio2 is already valued at C$60m ($47m), with around C$8m of cash in the bank.
     It's a big premium to pay for one man's reputation. So should investors be piling into Rio2's stock? “You can't,” Black says, once again bellowing with laughter. Nearly two-thirds of the shares are already held by Black and his immediate business partners, leaving few in the open market. “There's no stock out there. Investors will have to wait for our first deal.”