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Murray Ward
Diversified producer Rio2 has flexed its production muscle in South America, delivering a solid June quarter from its dual-asset portfolio that churned out a consolidated 13,539 ounces of gold, 75,437 ounces of silver and 9.3 million pounds of copper.
The impressive production figures from the company’s Fenix gold mine in Chile and its Condestable copper-gold-silver mine in Peru generated a handsome US$76.2 (A$107.5) million in earnings before interest, tax, depreciation and amortisation for the three months ended June 30. Adjusted EBITDA came in at a still-hefty US$46.5M(A$65.5M).
The company’s Condestable mine in Peru continued its role as the steady cash-generating workhorse, delivering solid operating performance and processing over 700,000 tonnes of ore. For the quarter, it produced 9.29 million pounds of copper, 4451 ounces of gold and 74,374 ounces of silver, contained in concentrate.
The operation is underpinned by a recently updated mineral reserve estimate that points to a serious long-term asset. A June update outlined total proven and probable reserves of 36.5 million tonnes grading 0.73 per cent copper, 0.15 grams per tonne (g/t) gold and 4.28g/t silver.
‘Q2 2026 was the second quarter of ramp-up for Rio2 at Fenix Gold, supported by steady production and cash flows from Condestable.’
Rio2 Limited president and chief executive officer Andrew Cox
Notably, those reserves support a robust post-tax net present value of US$710 million (A$1B) at an eight per cent discount rate and a 14-year life of mine.
Notwithstanding this solid foundation, Rio2 is already exploring ways to expand the Peruvian mine. It has launched a three-part exploration program for 2026, including a 46,480-metre underground diamond drilling campaign to replace and augment resources. The company is also looking to improve the grades through ore sorting and is planning a plant expansion to 10,000 tonnes per day.
Meanwhile, at the Fenix gold mine in Chile, Rio2’s major growth project, the ramp-up is progressing well with the company on track to achieve full commercial production in the fourth quarter of this year.The project lies in the prolific Maricunga gold beltand recently transitioned from development into production. The heap leach operation hosts a staggering 389 million tonnes of ore grading 0.38g/t gold, for a total of 4.8 million measured and indicated ounces.
The heap leach operation produced 9088 ounces of gold during the quarter, with ore mining rates increasing from 13,600 tonnes per day in April to 16,100 tonnes per day in June. The company expects to hit a 20,000-tonne-per-day ore processing rate during the current quarter.
Rio2 says key start-up constraints have been identified and addressed, including the successful transition to a new larger-capacity mining fleet. Unusually cold weather and significant snowfall presented some challenges late in the quarter, however, management says the onsite crew is handling the conditions well, maintaining leaching and plant operations.
Rio2 Limited president and chief executive officer Andrew Cox said “ At Fenix Gold, operational performance continued to improve during the quarter with more work areas opened, more people employed and the arrival of the principal mining contractor’s mining equipment, all of which we anticipate will make a meaningful impact to productivities and costs during Q3. At Condestable, operations continued to deliver to plan.”
With the ramp-up well in hand, Rio2 has also fired up the drill rigs at Fenix for the first time since 2014, kicking off a significant US$9.5 (A$13.4) million exploration program. The 23,190-metre campaign is designed to upgrade resource classifications and expand mineralisation, with a resource and reserve update on track for year-end.
Financially, Rio2 looks to be in a solid position, ending the quarter with a strong liquidity position of US$49.7 (A$70) million in cash and cash equivalents. The company posted consolidated revenue of US$105.3 (A$148.2) million, an income from mine operations of $39.2M ($A55M) and an adjusted net income of US$17.1 (A$24) million for the quarter.
While its South American operations are the current engine room, Rio2 also holds an intriguing exploration asset in another jurisdiction altogether – the Kalzas tungsten play in Canada’s Yukon. The project sits within the prolific Selwyn tungsten belt, one of the country’s most established regions for the critical metal. Although dormant since 2008, a deep dive into the historical data shows a compelling picture, with past work by Union Carbide in the early 1980s highlighting a massive 1.5-kilometre-long tungsten-in-soil anomaly.
With two producing assets firing on multiple cylinders – one providing a robust cash flow and a long mine life, the other a major growth project barrelling towards full commercial production, Rio2 appears to be methodically building a significant precious metals and copper production house in South America.
As Fenix Gold hits its production stride in the coming months and the drill rods start to spin at both South American projects, things could get very interesting indeed.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
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