Rio2 Limited press release
Rio2 Expands in Latin America With the Acquisition of the Producing Condestable Mine
TSX - Toronto Stock Exchange · Gold · Copper · Canada
_Positions Rio2 as a Diversified Latin American Gold Miner with Copper Exposure __Concurrent C$140 Million Bought Deal Equity Financing to Support the Acquisition _
_NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES _
VANCOUVER, British Columbia, Dec. 08, 2025 (GLOBE NEWSWIRE) -- Rio2 Limited (“ Rio2 ” or the “ Company ”) (TSX: RIO; OTCQX: RIOFF; BVL: RIO) today announced that it has entered into a definitive agreement (the “ Agreement ”) with Southern Peaks Mining L.P. (“ Southern Peaks ”) to acquire its 99.1% interest in the Condestable mine (“ Condestable Mine ” or “ Condestable ”) located in Peru (the “ Transaction ”). Southern Peaks is a private business that is owned by management and funds advised by Global Natural Resource Investments.
On closing, Southern Peaks will receive total upfront consideration of US$180 million, including US$80 million in cash, US$65 million in vendor debt financing and approximately US$35 million in common shares of Rio2 (each a “ Rio2 Common Share ”). Southern Peaks will also receive total deferred consideration of US$37 million, payable between 2027 and 2030, for total consideration of US$217 million, implying a Transaction enterprise value of approximately US$241 million, including the assumption of approximately US$24 million of net debt (as at September 30, 2025).
Alex Black, Executive Chairman of Rio2, commented: “ The acquisition of Condestable marks a major moment in Rio2’s evolution – from gold developer to Latin American diversified producer. With first gold production at Fenix Gold just weeks away, Condestable brings immediate and growing cash flow to support our future growth in gold. Condestable also provides meaningful exposure to copper at a time when copper trades at historic lows relative to gold. Due to the unique transaction structure, there is minimal dilution to our growing gold business. We are particularly thrilled to expand our footprint into Peru – a very familiar country for our team and the place where we established our foundational success a decade ago with Rio Alto Mining .”
Andrew Cox, President and Chief Executive Officer of Rio2, stated: “ Condestable is a stable, well-run, cash-flowing operation that has meaningful expansion potential. We believe there is an excellent opportunity to add value at the mine and see it as a complementary component of Rio2’s growth strategy. The team at Southern Peaks has done an exceptional job over the past decade optimizing and improving the operation. We look forward to working with the Southern Peaks team to ensure a seamless transition, and value their ongoing endorsement of Condestable by becoming financial sponsors of Rio2 .”
Adolfo Vera, Chief Executive Officer of Southern Peaks, stated: “ _We are extremely proud of what Southern Peaks has accomplished at Condestable over the past twelve years, transforming it into a stable, efficient, and socially responsible operation. This transaction represents an exciting next chapter for the mine under Rio2’s stewardship, and we are confident that their team will unlock its full potential while continuing to uphold the highest standards of environmental and community engagement. Our ongoing financial participation reflects our strong belief in Condestable’s future and Rio2’s vision for growth in Latin America. _”
Acquisition Highlights
High-quality operation : Condestable is a well-established underground copper operation forecasted to produce approximately 27 ktpa copper equivalent 1 , 2 (or approximately 80 kozs on a gold equivalent basis 1 , 2 ) with expansion potential 3 and a reserve life of over ten years supported by a robust Mineral Reserve and Resource base. Pro forma, Rio2 is expected to produce approximately 180 kozs gold equivalent 1 , 2 , 4 , with a pathway to potentially produce approximately 380 kozs gold equivalent 1 , 2 per year with the potential Phase 2 expansion at Fenix Gold 5 .
Cash flow to fund growth: Condestable is projected to generate average annual EBITDA 6 of approximately US$110 million at consensus prices 7 or approximately US$145 million at spot prices 7 over the next five years, supporting the expansions at both Fenix Gold 5 and Condestable 3 . Pro forma, Rio2 is expected to generate average annual EBITDA of approximately US$330 million 8 .
Top tier mining jurisdictions: Expansion into Peru complements the Company’s established presence in Chile, placing Rio2 in two leading global mining jurisdictions, and re-anchors Rio2’s historic success base. Peru currently ranks as the third largest producer of copper in the world.
Opportune time to invest in copper: Copper currently trades at historic lows relative to gold. Condestable will add modest copper exposure while maintaining Rio2’s core business in gold. Copper is expected to be less than 30% 9 of near-term revenue (spot prices), and with the potential development of Fenix Gold Phase 2 5 , gold will comprise over 80% of future revenue contribution (long-term consensus prices) 5 , 10 .
Accretive acquisition: Rio2 is acquiring Condestable at approximately 2x 11 EBITDA 6 . The Transaction is expected to deliver a strong all-in internal rate of return 6 and is structured to minimize equity dilution, driving accretion across all key financial and operating per-share metrics.
Leading ESG credentials: Condestable was recognized with the Copper Mark accreditation through its implementation of internationally-accepted responsible practices and contributions to the UN Sustainable Development Goals. Condestable’s use of 100% renewable electricity significantly reduces its carbon footprint.
Overview of Condestable
Located approximately 90 km south of Lima, Peru, Condestable is a long-life underground copper operation with over 60 years of continuous production history. The mine and its 8,400 tpd processing plant produce a clean concentrate with no penalties. Its coastal location at sea level provides excellent infrastructure access, low logistics risk, and strong operational stability.
There is potential to expand underground mining capacity to 12,000 tpd 3 and potential for open pit development that could materially increase annual production, positioning Condestable as a mid-scale copper operation with strong growth optionality.
Condestable is situated within a highly prospective IOCG (iron oxide copper-gold) belt hosting several major Peruvian copper systems. Condestable has demonstrated consistent year-over-year growth in reserves and resources, the deposit remains open both along strike and at depth, and the large land package of over 45,000 hectares is underexplored. Several high-quality exploration targets have been identified in near-mine and regional areas, supporting resource replacement and growth over the long term. Condestable along with Marcobre, owned and operated by Minsur / Alxar, are the only two IOCG mines currently operating in Peru today.
Condestable is Copper Mark certified and operates using 100% renewable electricity from hydro, and fleet electrification is currently underway. The operation has a well-established history of community engagement and social investment, reinforcing its strong social licence to operate.
A brief video of the Condestable mine, including an aerial fly-over of the site and footage of the mining and processing operations, is available at the following link: https://youtu.be/G-1g8eHfbIo.
Transaction Summary:
Under the terms of the Agreement, Rio2 will acquire all of the issued and outstanding shares of certain subsidiaries of Southern Peaks, including Ariana Management Corporation S.A.C., which ultimately holds a 99.1% interest in Condestable.
As consideration for the acquisition, Southern Peaks will receive:
US$80 million in cash (the “ Cash Consideration ”) on closing; US$65 million aggregate principal amount of vendor debt financing (“ Vendor Debt ”); approximately 21.9 million Rio2 Common Shares on closing, representing US$35 million; and total deferred consideration of US$37 million (the “ Deferred Consideration ”), on the following schedule: US$5 million on or before December 31, 2027; US$10 million on or before December 31, 2028; US$5 million on or before December 31, 2029; and US$17 million on or before December 31, 2030.
Rio2 shall have the right to pay the Deferred Consideration in cash or shares (or a combination thereof), subject to certain conditions.
Rio2 anticipates that closing of the Transaction will occur in January 2026. The Agreement may be terminated by mutual consent, for unmet closing conditions, for uncured material breach, or if completion of the Transaction becomes legally prohibited, and it does not provide for any other termination rights. The Transaction has been approved by the board of Rio2 and is not subject to shareholder approval. The Toronto Stock Exchange (“ TSX ”) has accepted notice of the Transaction and conditionally approved the listing of the Rio2 Common Shares issuable thereunder (subject to customary conditions). The Transaction’s closing is subject to certain customary closing conditions for a transaction of this nature, and the receipt of a Peruvian tax certificate.
Transaction Financing
Rio2 has arranged an approximate US$165 million financing package to finance the Transaction, comprising:
US$65 million aggregate principal amount in Vendor Debt (as described below); and Approximately US$100 million from a “bought deal” equity financing (the “ Equity Financing ”).
Vendor Debt
Rio2 has agreed to deliver to Southern Peaks (i) a secured promissory note in the amount of US$55 million (the “ Vendor Senior Promissory Note ”) and (ii) a secured mezzanine promissory note in the amount of US$10 million (the “ Mezzanine Promissory Note ”), both with six-year terms.
Following a six-quarter grace period (the “ Grace Period ”), quarterly principal repayments will total US$2.5 million and US$550,000 for the Vendor Senior Promissory Note and the Mezzanine Promissory Note, respectively. The interest rate applicable to the Vendor Senior Promissory Note will be the prime rate of interest quoted by a leading U.S. commercial bank from time to time (“ U.S. Prime ”) plus a margin of 5.0% during the Grace Period, and the U.S. Prime plus a margin of 4.0% thereafter. The interest rate applicable to the Mezzanine Promissory Note will be U.S. Prime plus a margin of 9.0% during the Grace Period, and U.S. Prime plus a margin of 11.0% thereafter. The Vendor Senior Promissory Note will have security over Condestable that is subordinate to the gold and silver stream held by an affiliate of Franco-Nevada Corporation (the “ FN Stream ”) prior to the deposit depletion and pari passu with the FN Stream after the deposit depletion. The Mezzanine Promissory Note will have security over Condestable that is subordinate to both the FN Stream and the Vendor Senior Promissory Note.
Equity Financing
Rio2 has entered into an agreement with Raymond James Ltd., Stifel Nicolaus Canada Inc. and BMO Capital Markets as joint bookrunners (collectively, the “ Underwriters ”), pursuant to which the Underwriters have agreed to purchase on a “bought deal” basis 63,064,000 subscription receipts of the Company (the “ Subscription Receipts ”) at an issue price of C$2.22 per Subscription Receipt (the “ Issue Price ”) for total gross proceeds of C$140 million or approximately US$100 million. The Company has granted the Underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the Equity Financing, to purchase an additional 15% of the Equity Financing to cover over-allotments, if any.
Net proceeds of the Equity Financing will be used to fund the Cash Consideration and the balance will be used for working capital and general corporate purposes.
Each Subscription Receipt will entitle the holder to receive, without payment of additional consideration and without further action, one Rio2 Common Share (a “ Subscription Receipt Share ”), subject to customary adjustment provisions, upon the satisfaction or waiver of certain release conditions, including the satisfaction or waiver of all conditions to the completion of the Transaction substantially in accordance with the terms of the Agreement, other than the payment of the purchase price (the “ Release Conditions ”).
The Equity Financing is expected to close on or about December 15, 2025, subject to certain customary closing conditions, including the receipt of all necessary approvals from the TSX.
In connection with the Equity Financing, the Company will file a prospectus supplement to its short form base shelf prospectus dated October 16, 2024, as amended pursuant to amendment no. 1 to such short form base shelf prospectus dated December 3, 2025 (the “ Base Shelf Prospectus ”). The prospectus supplement will be filed with the securities regulatory authorities in each of the provinces and territories of Canada, except Quebec.
The Base Shelf Prospectus and the prospectus supplement will be accessible on Rio2’s issuer profile on SEDAR+ at www.sedarplus.ca. Copies of the Base Shelf Prospectus and prospectus supplement relating to the Equity Financing, when available, may be obtained without charge upon request in Canada by contacting Raymond James Ltd. and providing the contact with an email address or address, as applicable. Before investing, prospective investors should read the Base Shelf Prospectus and the prospectus supplement, when available, and the documents incorporated by reference therein.
The Subscription Receipts and the Subscription Receipt Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any applicable securities laws of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company, nor shall there be any offer or sale of any securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
The gross proceeds from the sale of the Subscription Receipts, less (i) 50% of the Underwriters’ fee that is payable on closing of the Equity Financing; and (ii) the Underwriters’ reasonable out-of-pocket expenses and the reasonable fees, taxes and disbursements of the Underwriters’ legal counsel, will be deposited and held in escrow by a subscription receipt agent to be chosen by the Company and the Underwriters, pending the satisfaction or waiver of the Release Conditions. If (i) closing of the Transaction does not occur on or before March 31, 2026 (the “ Acquisition Outside Time ”) and the Agreement is terminated in accordance with its terms; or (ii) the Agreement is terminated in accordance with its terms for any reason prior to the Acquisition Outside Time (each, a “ Termination Event ”), then an amount per Subscription Receipt equal to the Issue Price plus a pro rata share of any earned interest, calculated from the closing of the Equity Financing to, but excluding, the time of a Termination Event, net of any applicable withholding, will be returned to the holders of the Subscription Receipts, and the Subscription Receipts will be cancelled.
Provided that the Release Conditions are met prior to a Termination Event, the subscription receipt agent will release the remaining 50% of the deposited Underwriters’ fee together with all interest earned thereon to the Underwriters, and the balance of the escrowed funds shall be released to the Company (or as directed by the Company).
Private Placement
Rio2 has also entered into an agreement with KALLPA Securities Sociedad Agente de Bolsa S.A. (“ KALLPA ”) in connection with a private placement (the “ Private Placement ”) for aggregate gross proceeds of up to C$14 million (or approximately US$10 million) through the sale of up to 6,306,300 Rio2 Common Shares (the “ Private Placement Shares ”) at the Issue Price.
The Private Placement Shares will be offered on a “commercially reasonable best efforts” brokered private placement basis in Peru, Colombia and Chile. The net proceeds from the sale of the Private Placement Shares will be used for working capital and general corporate purposes.
Closing of the Private Placement is expected to occur on or around December 23, 2025, or such other date as Rio2 and KALLPA may agree, and remains subject to certain conditions, including receipt of all necessary approvals of the TSX. Completion of the Private Placement is not a closing condition for the Agreement.
Update to Fenix Gold Project
As at November 30, 2025, construction at Rio2’s 100%-owned Fenix Gold Project was 80% complete and remains on track and on budget for first gold production in January 2026. A full ramp-up to 100,000 ounces of gold per annum is expected to be achieved by the end of 2026.
Timelines for the proposed expansion of the Fenix Gold Project are projected to be as follows:
Completion of a pre-feasibility study – Q1, 2026 Mineral reserve and resource update – Q4, 2026 Completion of a feasibility study – H2, 2027 Capital expenditure approvals and commitment for the expansion – Q1, 2029 Completion of desalinated water supply works and completion of project capital works – H2, 2030 Commencement of ramp-up to higher rate of production – H2, 2030
Timing is indicative and may vary based on permitting and other regulatory approval processes. The Company will provide regular progress updates and advise of any revisions to projected timelines. In connection with the planned expansion of the Fenix Gold Project, the Company is targeting a goal rate of production of 80,000 tonnes of ore per day, with a view to producing at least 300,000 oz of gold per annum for approximately 10 years.
Advisors
Edgehill Advisory Ltd. is acting as financial advisor to Rio2, and McMillan LLP and Dentons (Peru) are acting as legal counsel in regard to the Transaction. DLA Piper (Canada) LLP is acting as legal counsel in regard to the Equity Financing and Private Placement.
BMO Capital Markets is acting as financial advisor to Southern Peaks, and Stikeman Elliott LLP, Echecopar and Maples and Calder are acting as legal counsel.
Blake, Cassels & Graydon LLP is acting as legal counsel to the Underwriters in regard to the Equity Financing.
Technical Information
The independent technical report for Condestable entitled “NI 43-101 Technical Report on the Condestable Mine, Lima Department, Peru, dated April 12, 2024, effective date December 31, 2022” (the " Technical Report "), prepared by SLR Consulting (Canada) Ltd. in accordance with National Instrument 43-101 - _Standards of Disclosure for Mineral Projects _(" NI 43-101 "), will be filed on SEDAR+ under the Company's profile at www.sedarplus.ca and will be available on the Company's website at www.rio2.com.
Qualified Persons
The Technical Report was prepared by SLR Consulting (Canada) Ltd., with contributions from a team of Qualified Persons (" QP ") as defined under NI 43-101. The QPs are independent of Rio2 and Southern Peaks and have reviewed and confirmed that this news release fairly and accurately reflects, in the form and context in which it appears, the information contained in the respective sections of the Technical Report for which they are responsible.
For additional information regarding the Fenix Gold Project, including key parameters, assumptions and risks associated with its development, see the independent technical report entitled “NI 43-101 Technical Report on the Feasibility Study for the Fenix Gold Project” (the “ Feasibility Study ”) pursuant to NI 43-101. The Feasibility Study is dated October 16, 2023, with an effective date of October 16, 2023, a copy of which document is available under Rio2’s SEDAR+ profile at www.sedarplus.ca .
The scientific and technical content of this news release has been reviewed and approved by Enrique Garay, MSc P.Geo/FAIG, who is a QP under NI 43-101. The QP has verified the information disclosed herein using standard verification processes, including the sampling, preparation, security and analytical procedures underlying such information, and is not aware of any significant risks and uncertainties or any limitations on the verification process that could be expected to affect the reliability or confidence in the information discussed herein.