RIO2 Reports First Quarter 2026 Financial Results and Operations Update
RIO2 REPORTS FIRST QUARTER 2026 FINANCIAL RESULTS AND OPERATIONS UPDATE
For Immediate Release May 15, 2026
VANCOUVER, BC - Rio2 Limited (“Rio2” or “the Company”) (TSX: RIO; OTCQX: RIOFF; BVL: RIO) reports
financial results for the three months ended March 31, 2026, highlighted by initial production and the early
stages of ramp-up at the Fenix Gold Mine (“Fenix Gold”) and initial contribution from the Condestable Copper
Mine (“Condestable”) since closing of the acquisition on January 30, 2026. Rio2’s consolidated production for
the quarter totaled 7,849 ounces of gold, 49,198 ounces of silver, and 6,403,188 pounds of copper. All
financial information in this press release is reported in U.S. dollar unless otherwise indicated.
Andrew Cox, President and Chief Executive Officer of Rio2, stated: “Q1 2026 was a milestone quarter for Rio2,
with first production from Fenix Gold and the addition of cash flows from Condestable. At Fenix Gold, the team
advanced through the initial ramp-up while addressing some unforeseen start-up challenges. Although the
ramp-up was slower than anticipated, most critical issues have now been addressed and rectified, and we are
expecting production to steadily increase to projected levels over the remaining three quarters of 2026.
Operating a new mine at high altitude in Chile is a challenging undertaking and the management team has
done a great job in resolving those challenges and keeping the mine on its path to producing more than 60,000
ounces of gold during 2026. Meanwhile, in Peru, Condestable has performed well and to our expectations
during our first two months of ownership as integration of the mine’s operating team with Rio2 continues.”
Alex Black, Executive Chairman of Rio2, stated: “The entire Rio2 and Fenix Gold team has once again
demonstrated its ‘can do’ attitude and culture to take on the challenge of starting up a new mine at high
altitude in Chile. Start-up has not been easy, but the team’s ability to methodically identify, resolve and move
past challenges reinforces my confidence that Fenix Gold is on track to reach the performance level we expect.
Condestable has continued to produce to plan in Q1, a credit to the onsite management team, as well as to
the Rio2 management team in handling the Condestable integration.”
FIRST QUARTER 2026 HIGHLIGHTS
Operational and financial results for the Condestable Mine in this section, and throughout the remainder of
this press release, are presented for the period January 30, 2026 (acquisition date) to March 31, 2026.
• Advanced Fenix Gold ramp-up with key start-up constraints identified and being addressed, while water
transport, blasting fragmentation and leach recovery performance tracked in line with expectations.
• Condestable performed well during Rio2’s first two months of ownership, providing immediate cash
flows from copper, gold and silver production.
• Income from mine operations of $24.6 million and adjusted net income1 of $12.1 million, compared to
Income from mine operations of $0 and adjusted net loss1 of $1.3 million for the three months ended
March 31, 2025.
• Maintained a strong liquidity position, ending March 31, 2026 with cash and cash equivalents of $93.1
million, including the voluntary repayment of $20 million of debt, compared to cash and cash
equivalents of $46.4 million as at December 31, 2025.
• Quarterly consolidated gold production of 7,849 ounces and gold sales of 6,654 ounces at an average
realized price1 of $4,745/oz.
• Q1 2026 total cash costs of $2,620 per ounce of gold sold1 at the Fenix Gold Mine. Fenix Gold Mine
produced 4,648 ounces of gold during the quarter.
• Quarterly copper production of 6,403,188 pounds and copper sales of 6,204,313 pounds at an average
realized price of $5.69 per pound.
• Q1 2026 total cash costs of $2.01 per pound of copper produced1 and AISC1 of $2.84 per pound of copper
produced at Condestable. The 6,403,188 pounds of copper produced was entirely at Condestable.
Condestable also produced 3,201 ounces of gold and 48,671 ounces of silver.
• Cash provided by operating activities in the quarter was $22.8 million, cash used in investing activities
of $80.3 million, and net cash provided from financing activities of $103.5 million, compared to cash
flow from operating activities in the comparative quarter ended March 31, 2025 was $19.3 million, cash
used in investing activities of $16.2 million, and net cash provided from financing activities of $0.04
million.
(1) See Non-IFRS Measures section of this press release for definitions and discussion.
OPERATIONS
Fenix Gold Mine
Mine Production - the Fenix Gold Mine continued through its initial production ramp-up during Q1 2026. While
planned tonnes and grade were not achieved during the quarter, the key drivers were identified early and
corrective actions have been implemented or are underway. Those factors include:
• Blasting permit delay – the blasting permit was expected to be issued by mid-November 2025 and was
received in late-December 2025, effectively setting the mine plan for 2026 back by 6 weeks.
• Opening up Fenix South – initial mining at the peak of Fenix South required careful sequencing between
drilling, blasting and mining activities in a constrained area. Operating space has now been created,
which is expected to support more efficient mining going forward. Fenix South is a newer area within
the Fenix Gold mine plan which began contributing ore to the leach pad during Q1, 2026.
• Operator availability - A tight labor market in Chile with high metal prices and increased mining activity,
created challenges for our contractor STRACON in retaining personnel, particularly truck drivers willing
to work at a high altitude mine such as Fenix Gold. STRACON And Rio2 have been actively addressing
the turnover and absenteeism that impacted trucking during Q1. By the end of March, the operator and
truck availability were improving, and it is expected that these issues will be satisfactorily resolved in Q2
2026.
• Truck fleet transition - the initial mine truck fleet consisted of rented 35-tonne capacity trucks from local
providers, originally mobilized during construction of the plant and pad facilities and not optimized for
steady-state mine operations. These trucks are being phased out and replaced by a new fleet of 42-
tonne capacity trucks that have been purchased by STRACON specifically for mine operations. This fleet
of new trucks will start arriving in May 2026 and will be maintained on site by STRACON’s maintenance
team.
Lower tonnes moved reduced ore availability and affected head grade to the plant, resulting in lower grade ore
being sent to the pad. Management took the decision not to high-grade mining until planned production rates
can be achieved. Mining of higher-grade material (greater than 0.4g/t) is expected to resume during H2 2026,
at which time lower grade material will be sent to stockpile. To further increase mine production flexibility,
management has also decided to bring forward the commencement of mining at Fenix Central which will now
start in Q2, 2026.
The processing plant experienced initial start-up issues with the elution solution pump failing three times causing
delays in the desorption process. A replacement pump arrived in March, and this issue has now been resolved.
Water transport ramp-up has been very successful with trucking consistently delivering over 1,000 m3 per day,
and up to 1,500 m3 on occasions. The mine has not been water constrained and at the end of March the mine
water storage was overstocked for a total on-site water inventory of 45,000 m3.
Blasting fragmentation of mineralized material has also performed to expectation with a P80 of 4 inches being
achieved for the quarter.
Analysis of the leaching of material on the pad versus the gold being absorbed in carbon in the processing plant
indicates that the projected gold recovery of 75% at 90 days leaching is being achieved.
Based on current ramp-up progress, Rio2 anticipates achieving commercial production at Fenix Gold in Q4 2026.
Gold production guidance for 2026 is 60,000 – 65,000 gold ounces, with efforts being made to bring forward the
mining production rate to 20,000 tonnes per day in Q2 2026 and for the remainder of the year, to recover the
reduced tonnes and ounces production experienced during Q1 2026.
Key performance data for the Fenix Gold Mine for Q1 2026 is summarized as follows:
Q1 2026 Q1 2025(2)
Total tonnes mined tonne 901,264 tonne N/A
Ore mined tonne 807,590 tonne N/A
Ore stacked in pad tonne 657,112 tonne N/A
Head Grade (g/t Au) g/t 0.452 g/t N/A
Contained ounces in pad oz 9,554 oz N/A
Gold ounces produced oz 4,648 oz N/A
Gold ounces sold oz 3,934 oz N/A
Cash cost per gold ounce sold (1) $/oz 2,620 $/oz N/A
All-in Sustaining cost per gold ounce sold (1) $/oz 3,131 $/oz N/A
All-in Cost per gold ounce sold (1) $/oz 3,151 $/oz N/A
Silver ounces produced $/oz 527 $/oz N/A
Silver ounces sold $/oz 514 $/oz N/A
Average realized price per gold ounce (1) $/oz 4,750 $/oz N/A
Average realized price per silver ounce (1) $/oz 83.77 $/oz N/A
(1) See Non-IFRS Measures section of this press release for definitions and discussion.
(2) This information was not available (“N/A”) for Q1 2025 or not applicable as the Company’s only asset was the Fenix Gold Mine and
it did not have production or sales during Q1 2025.
Human Resources – A total of 1,401 personnel (including contractors) are currently employed at Fenix Gold in
mine operations, construction and exploration. 94 % of the workforce is comprised of Chileans, with
42% from the Atacama Region, and 12% are female.
Health & Safety – A total of 650,424 person-hours has been worked at the mine in Q1 2026, with one LTI from
a twisted ankle which occurred in March 2026 for an LTIFR rate of 0.6.
Exploration – For the first time since 2014, exploration drilling has commenced at Fenix Gold. In total, 9,250 m
of reverse circulation drilling and 13,940 m of diamond drilling will be carried out, for a total of 23,190 m. The
budget for this drilling program is $9.5 million. The objectives of the 2026 drilling program are to upgrade the
classification of mineral resources from inferred to indicated and/or measured, and to increase mineral
resources below the reserve pit and to 100 m below the current resource pit. Drill rigs were mobilized during
March for drilling in Q2.
Fuel Hedging – As a consequence of the Iran War, diesel prices in Chile during Q1 2026 have increased by up to
60%. As the transition from construction to full operations at Fenix Gold progresses, diesel consumption for the
mining fleet and infrastructure will remain an important operating expense. In early March 2026, Rio2 secured
a portfolio of 9 commodity call options (hedges) used to lock in prices to protect against the risk of rising fuel
costs at the mine. These hedge contracts span a nine-month period from April through December 2026, covering
a total volume of 1,575,000 gallons. The protected monthly volume scales up over time, starting at 150,000
gallons in the spring, increasing to 175,000 in the summer, and peaking at 200,000 gallons per month through
the end of the year. The upfront premium paid to secure these nine positions was $622,000.
As of March 31, 2026 valuation date, their combined market value was $770,000, including an unrealized gain
of $148,000. As of April 30, 2026 valuation date, their combined market value has risen to $1,037,000 for a total
gain of $415,000 which included a realized gain of $131,000 in April 2026 plus an unrealized mark-to-market
gain of $284,000 on the remaining open contracts.
Mine Expansion Study – Work on desalinated water alternatives continues with two potential providers selected
to provide initial estimates for capital and operating costs, and timelines for connecting Fenix Gold project to
desalinated water from Copiapó. Results from both providers are now expected to be delivered by June. The
selection of one of these providers to supply desalinated water to Fenix Gold will then enable the prefeasibility
study for the expansion case to increase the production rate to 80,000 tonnes per day to be completed. Timing
for the release of that study is now expected to be Q3 2026. In anticipation of this study, the Fenix Gold
permitting team have started work on the baseline study for the expanded mine site EIA, which includes
expansion to the existing pits at Fenix north, central and south to form one combined pit, the expansion of the
adsorption, desorption and recovery plant (“ADR plant”), piped water supply, the expanded leach pad footprint,
the expanded waste dump footprint, additional water ponds, grid power connection, a truck shop for a large
equipment fleet, and other support infrastructure.
Construction Activities – In 2025, Rio2 expended the critical capital necessary to bring Fenix Gold into gold
production to begin generating cash flow. For 2026, the plan is to complete the deferred capital expenditures
required for the mine to enter 2027 at a consistent production rate of 20,000 tonnes per day of ore to pad.
During Q1 2026, deferred capital expenditures included completing items around the ADR plant and restarting
leach pad construction for pad expansion.
The remaining capital planned to be expended in 2026 which will be funded out of cash reserves and cashflow
is summarized as follows:
TOTAL
USD
Construction 32,499,385
Access roads 240,927
ADR Plant 4,354,926
Leach Pad Construction 11,330,033
Lime Plant 1,178,177
Power Generation 2,071,877
Electric Power distribution 1,287,022
Communications infrastructure 137,252
Reagents first fill 342,172
Onsite laboratory 1,710,000
Truck Work Shop 9,847,000
Sustaining Construction 1,369,732
Preliminary Works -
Camp Infrastructure 20,000
Leach Pad expansion 1,349,732
Total USD 33,869,117
Condestable Mine
Mine Production - Condestable delivered solid operating performance in February and March, processing over
470,000 tonnes of ore at an average copper grade of 0.70%, 0.24 g/t gold and 4.10 g/t silver. Although copper
grades were partly below planned grades, this was compensated by higher gold production through higher
grades and recoveries. Unit production costs were better than expected at $38.90/t due to a higher mix of ore
being extracted from upper levels of the mine and exchange rates being more favorable than initially estimated.
This was achieved despite some difficulties in managing the ore and waste haulage fleet due to a lack of truck
operators and larger capacity haulage equipment challenges.
Overall processing plant performance was strong. Copper recoveries were marginally below expectations due
to higher oxide material in certain near surface sections of the mine, while gold and silver recoveries were
materially better than budgeted. Condestable produced 6,403,188 pounds of copper, 3,201 ounces of gold and
48,671 ounces silver during February and March, contained in concentrate.
Production guidance for 2026 (February to December) is 21,500 – 23,500 tonnes of payable copper equivalent.
Key performance data for the Condestable Mine for Q1 2026 is summarized as follows:
Q1 2026 Q1 2025(2)
Exploration drilling m 541 m N/A
Production drilling m 6,690 m N/A
Deepening works M 656 m N/A
Ore mined tonne 486,188 tonne N/A
Ore treated tonne 474,341 tonne N/A
Cu headgrade % 0.70 % N/A
Au headgrade g/t 0.24 g/t N/A
Ag headgrade g/t 4.10 g/t N/A
Cu recovery rate % 89.55 % N/A
Au recovery rate % 81.94 % N/A
Ag recovery rate % 83.20 % N/A
Copper produced lb 6,403,188 lb N/A
Gold produced oz 3,201 oz N/A
Silver produced oz 48,671 oz N/A
Copper sold lb 6,204,313 lb N/A
Gold sold oz 2,720 oz N/A
Silver sold oz 46,588 oz N/A
Cash cost per copper pound produced (1) US$/lb 2.01 US$/lb N/A
All In Sustaining Cost (AISC) per copper pound (1) US$/lb 2.84 US$/lb N/A
All In Cost per copper pound (1) US$/lb 3.25 US$/lb N/A
Average realized price per copper pound (1) US$/lb 5.69 US$/lb N/A
Average realized price per gold ounce (1) US$/oz 4,736 US$/lb N/A
Average realized price per silver ounce (1) US$/oz 75.29 US$/lb N/A
(1) See Non-IFRS Measures section of this press release for definitions and discussion.
(2) This information was not available (“N/A”) for Q1 2025 or not applicable as the Company’s only asset was the Fenix Gold Mine and
it did not have production or sales during Q1 2025.
Human Resources – A total of 1,984 personnel (including contractors) are currently employed at Condestable in
mine operations, construction activities and exploration. 99% of the workforce is comprised of Peruvians and
7.6% are female.
Health & Safety – A total of 1,002,501 person-hours has been worked at the mine in Q1 2026, with four LTI for
an LTIFR rate of 3.99.
Exploration – Condestable has launched a three-part exploration program for 2026. In Q1, a 45,000 m
underground diamond drilling program commenced with the main objective of replacing and increasing
mineral resources, and infill drilling to generate short-term reserve models. This is an annual activity at the
mine. The second objective consists of increasing and delineating mineral resources close to surface in the
Condestable and Raúl areas. The plan is to generate a Cu-Au-Ag mineral resource that can potentially be mined
by open-pit methods. The near-surface drilling program will be defined and costed during Q2 , and its execution
will take place during H2. The third objective consists of conducting a 1:25,000 scale geological/structural
mapping of the 46,000 hectares of mining concessions. Additionally, magnetometry geophysical surveys will
be carried out using drones across the entire mining property. This new information, generated during 2026,
will be integrated with the existing multi-element surface geochemistry in the current database, with the aim
of generating new regional exploration projects. This will be the first time that an exploration program of this
kind will have been undertaken over the entire Condestable land package.
Resource/Reserve Update – Rio2 has engaged SLR Consulting to complete an updated mineral
resource/reserve estimate (“MRE”) for Condestable, to update the current technical report entitled “NI 43-
101 Technical Report on the Condestable Mine, Lima Department, Peru, dated April 12, 2024, effective date
December 31, 2022”, prepared by SLR Consulting (Canada) Ltd. in accordance with National Instrument 43-101
filed on SEDAR+ under the Company’s profile. Rio2 anticipates that the updated MRE will be announced and
filed during Q2 2026.
Grade Enhancement and Mine Expansion Planning - During March and April 2026, Condestable performed
laboratory scale tests with a third-party ore sorting equipment supplier. The tests focused on low grade
stockpiles and historical waste dump material which yielded an increase in copper grade of 1.4 – 1.6x, with
rejected material of 30% - 45%, demonstrating significant potential for grade enhancement. Based on these
favorable results, Condestable’s team is now aiming to initiate a 12-month 1,000 - 1,500 tonne per day (tpd)
pilot plant program. The pilot phase will evaluate the economic and technical viability of sorting high grade ore
from low-grade material from various stockpiled sources on site. The ore sorting pilot program is one of the
potential components of the expansion plan at Condestable, together with the expansion of the underground
mine and revaluation of historical resources. The Company expects to receive approval for the modification of
the mine EIA during Q3 2026, including an approval for increased processing throughput to 10ktpd. In parallel,
the Company’s projects team is currently completing the basic engineering, capital cost estimations and timeline
for the plant expansion, which will be announced when completed.
EARNINGS AND CASH FLOW
Select Quarter Financial Information
Financial Results: (in thousands, except per share amounts) Q1 2026 Q1 2025(2)
Copper sales $ 32,512 N/A
Gold sales $ 30,689 N/A
Silver sales $ 3,855 N/A
Pricing adjustments on concentrate sales $ (1,198) N/A
Consolidated revenue $ 65,858 N/A
Net income (4) $ 22,291 $ (1,598)
Net income per share, diluted $ 0.04 $ 0.00
Adjusted net income (loss) (1) $ 12,135 $ (1,349)
Adjusted net income (loss) per share, diluted (1) $ 0.02 (0.00)
EBITDA (1) $ 40,974 (1,532)
Adjusted EBITDA (1) $ 30,818 (1,283)
Total debt (3) $ 112,563 $ 254
Operating Results:
Copper pounds produced lbs 6,403,188 N/A
Gold ounces produced oz 7,849 N/A
Silver ounces produced oz 49,198 N/A
Copper pounds sold lbs 6,204,313 N/A
Gold ounces sold oz 6,654 N/A
Silver ounces sold oz 47,102 N/A
Average realized price per copper pound $/lb 5.69 N/A
Average realized price per gold ounce $/oz 4,745 N/A
Average realized price per silver ounce $/oz 75.38 N/A
(1) See Non-IFRS Measures.
(2) Certain comparable information was not applicable (“N/A”) for Q1 2025 as the Company’s only mine was the Fenix Gold Mine during
Q1 2025 and it did not have any production or sales.
(3) Total Debt is a supplementary financial measure that does not have a standardized meaning under IFRS. The Company calculates Total
Debt as the sum of loans payable, deferred consideration, and lease liabilities, including current and non-current portions.
(4) Net income refers to net income attributable to the shareholders of Rio2 Limited. The portion attributable to non-controlling interests
arising from the Company's interest in Compañía Minera Condestable S.A. has been excluded.
NON-IFRS MEASURES
This news release refers to certain financial measures, such as all-in-sustaining costs, which are not measures
recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures may differ
from those made by other companies and, accordingly, may not be comparable to such measures as reported by
other companies. These measures have been derived from the Company's financial statements because the
Company believes that they are of assistance in understanding the results of operations and its financial position.
Certain additional disclosures for these specified financial measures have been incorporated by reference and
can be found in the Company's MD&A for Q1 2026, available on SEDAR+ at www.sedarplus.ca under the heading
“Non-IFRS Measures”.
ADJUSTED NET INCOME
Management uses Adjusted net income to evaluate the Company’s operating performance, and to plan and
forecast its operations. The Company believes the use of Adjusted net income reflects the underlying operating
performance of our core mining business and allows investors and analysts to compare results of the Company
to similar results of other mining companies. Management’s determination of the components of Adjusted net
income is evaluated periodically and is based, in part, on a review of non-IFRS financial measures used by mining
industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax
attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax
adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to
jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain
adjustments and may not apply to gains and losses equally. Adjusted net income is reconciled to Net income in
the following table:
In thousands except per share amounts Q1 2026 Q1 2025
Net income (loss) $ 22,291 $ (1,598)
Add back:
Acquisition related transaction costs $ 4,119 $ 0
Restructuring costs $ 1,941 $ 0
Share-based compensation $ 1,015 $ 249
Fair value gain on Stream Obligation $ (17,231) $ 0
Adjusted net income (loss) $ 12,135 $ (1,349)
Adjusted net income (loss) per share, Basic $ 0.02 $ 0.00
Adjusted net income (loss) per share, Diluted $ 0.02 $ 0.00