VANCOUVER, British Columbia — Rio2 Limited reported its first-quarter 2026 financial results on May 15, marking a milestone with initial gold production at the Fenix Gold Mine in Chile and the first contributions from the newly acquired Condestable Copper Mine in Peru.
The company produced 7,849 ounces of gold, 49,198 ounces of silver and 6,403,188 pounds of copper during the three months ended March 31. All figures are in U.S. dollars unless otherwise noted. The results reflect operations at Fenix Gold during its early ramp-up phase and two months of output from Condestable following its acquisition on January 30.
President and Chief Executive Officer Andrew Cox described the quarter as transformative. “Q1 2026 was a milestone quarter for Rio2, with first production from Fenix Gold and the addition of cash flows from Condestable,” Cox said. “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.”
Cox noted the difficulties of operating at high altitude in Chile but expressed confidence in the team’s progress. The company expects Fenix Gold to produce more than 60,000 ounces of gold for the full year. Executive Chairman Alex Black echoed that sentiment, praising the workforce for its methodical approach to resolving issues. “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,” Black said.
At Fenix Gold, lower tonnes moved during the quarter reduced ore availability and affected head grade delivered to the processing plant. Management decided against high-grading and plans to resume mining material grading above 0.4 grams per tonne in the second half of the year. The processing plant faced repeated failures of the elution solution pump, which delayed desorption; a replacement pump arrived in March and resolved the problem. Water trucking performed well, consistently delivering over 1,000 cubic meters per day and building an on-site inventory of 45,000 cubic meters by month-end.
Leaching performance on the pad met expectations, with projected gold recovery of 75 percent after 90 days appearing achievable. Rio2 now anticipates commercial production at Fenix Gold in the fourth quarter. Full-year gold guidance remains 60,000 to 65,000 ounces, with efforts underway to accelerate mining rates to 20,000 tonnes per day starting in the second quarter to recover lost production.
The company also launched its first exploration drilling program at Fenix Gold since 2014. A total of 23,190 meters of reverse circulation and diamond drilling is budgeted at $9.5 million, aimed at upgrading resource categories and expanding the mineralized footprint. Drilling is scheduled to begin in the second quarter.
In response to diesel price increases of up to 60 percent linked to the Iran War, Rio2 secured nine commodity call options covering 1,575,000 gallons from April through December. The hedges had a market value of $770,000 at March 31 and rose to $1,037,000 by April 30, including both realized and unrealized gains.
Work continues on alternatives for desalinated water supply to support a potential expansion to 80,000 tonnes per day. Two providers are expected to submit cost and timeline estimates by June, after which a prefeasibility study could be completed in the third quarter. Permitting work for an expanded environmental impact assessment has already begun.
At the Condestable mine in Peru, operations from late January through March processed more than 470,000 tonnes of ore at an average copper grade of 0.70 percent, 0.24 grams per tonne gold and 4.10 grams per tonne silver. The mine produced 6,403,188 pounds of copper, 3,201 ounces of gold and 48,671 ounces of silver contained in concentrate. Unit costs came in better than expected at $38.90 per tonne. Full-year payable copper-equivalent guidance for February through December is 21,500 to 23,500 tonnes.
Condestable has initiated a three-part exploration program, including 45,000 meters of underground diamond drilling already underway. Laboratory tests on low-grade stockpiles and historical waste showed copper grade increases of 1.4 to 1.6 times with 30 to 45 percent rejection rates, prompting plans for a 12-month pilot plant using ore sorting technology. An updated mineral resource and reserve estimate is expected in the second quarter.
Workforce totals stand at 1,401 people at Fenix Gold, 94 percent Chilean, and 1,984 at Condestable, 99 percent Peruvian. Safety performance included one lost-time injury at Fenix Gold and four at Condestable during the quarter.
Rio2 said it will fund remaining 2026 capital expenditures from cash reserves and operating cash flow, focusing on completing deferred items to support steady 20,000-tonne-per-day rates entering 2027. The company continues to evaluate expansion options at both operations while integrating the Condestable team.