This Gold Mine Was Gaining Momentum. Then the Snow Hit.

1. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Rio2 Ltd. (RIO:TSX; RIOFF:OTCQX; RIO:BVL) reported financial and operating results for the three months ended June 30, 2026, with consolidated quarterly production of 13,539 ounces of gold, 75,437 ounces of silver, and 9,296,883 pounds of copper from its Fenix Gold Mine and Condestable Copper Mine.

The company reported consolidated revenue of US$105.3 million for the quarter, including US$52.2 million from copper sales, US$47.0 million from gold sales, and US$4.3 million from silver sales. Net income attributable to Rio2 shareholders was US$46.8 million, or US$0.08 per diluted share, compared with a net loss of US$1.2 million for the three months ended June 30, 2025.

Adjusted net income, a non-IFRS measure, was US$17.1 million, or US$0.03 per diluted share, compared with an adjusted net loss of US$0.9 million in the year-earlier period. EBITDA, also a non-IFRS measure, was US$76.2 million and adjusted EBITDA was US$46.5 million, compared with negative US$1.3 million and negative US$1.0 million, respectively, in the second quarter of 2025.

Income from mine operations totaled US$39.2 million. Rio2 ended the quarter with US$49.7 million in cash and cash equivalents, compared with US$46.4 million at Dec. 31, 2025. Cash provided by operating activities was US$0.3 million, while US$12.4 million was used in investing activities and US$31.0 million was used in financing activities.

"Q2 2026 was the second quarter of ramp-up for Rio2 at Fenix Gold, supported by steady production and cash flows from Condestable," President and Chief Executive Officer Andrew Cox stated in the company news release. "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."

Fenix Gold produced 9,088 ounces of gold and 1,063 ounces of silver during the quarter. Gold sales totaled 6,814 ounces at an average realized price of US$4,163 per ounce. The mine reported cash costs of US$2,701 per gold ounce sold, all-in sustaining costs of US$2,873 per ounce sold and all-in costs of US$3,392 per ounce sold. These measures are non-IFRS measures.

As of June 30, 3,343 ounces of gold remained in dore inventory and had not been sold. Rio2 stated that the unsold inventory resulted in higher reported cash costs, all-in sustaining costs, and all-in costs per ounce sold than would otherwise have been reported.

Fenix Gold mined 2.57 million tonnes during the quarter, including 1.63 million tonnes of ore, while 1.30 million tonnes were stacked on the leach pad. The head grade was 0.462 grams per tonne gold, with 19,325 contained ounces placed on the pad.

The mine continued through its production ramp-up during the quarter. Space constraints at Fenix South were resolved, allowing three mining fleets to operate, while mining access was established at Fenix Central and a preliminary break-in bench was prepared. The company also said challenges encountered during the first quarter in employing truck drivers had been resolved through retention bonuses and roster changes.

The transition of the mining fleet was completed in June, replacing 35-tonne rental trucks with 42-tonne trucks owned by principal mining contractor STRACON. Ore mining increased from 13,600 tonnes per day in April to 16,100 tonnes per day in June.

Processing plant performance also increased during the quarter, with an average of 16,300 cubic meters per day of leach solution processed during June compared with 10,700 cubic meters per day during March. Rio2 reported no serious mechanical stoppages from failures during the period.

Freezing temperatures in May affected leaching on parts of the pad. Following trials of drip-line covers, Rio2 adjusted the leach pad covers to a double-layer black cover that generated an approximately 12-degree Celsius difference between ambient temperatures and temperatures within the pad.

Water trucking from Copiapo consistently delivered more than 1,000 cubic meters per day during the quarter, including a one-day record of 1,800 cubic meters during a three-shift trucking trial. Rio2 reported that the mine was not water-constrained, with 45,000 cubic meters of total on-site water inventory at the end of June.

Cold weather became a larger operating issue late in the quarter. Executive Chairman Alex Black stated in the news release that significant localized snowstorms and extremely low temperatures began affecting Fenix Gold production late in Q2 and continued into July and August.

"Our priority during these storms has been the safety of our people," Black stated. "Mining operations were halted when necessary, and we are evaluating the impact of these events to gold production and the ramp-up."

Rio2 said approximately 265,000 tonnes of ore mining were deferred because mining ceased during heavy snow events, resulting in the deferral of approximately 5,000 ounces of gold production. The company said the snow events did not affect its reported Q2 production results because they occurred late in the quarter, but they were factored into its outlook for the remainder of 2026. Rio2 consequently Rio2 consequently deferred its previous 2026 Fenix Gold production guidance of 60,000 to 65,000 ounces. 

Exploration drilling at Fenix Gold resumed for the first time since 2014. The 2026 program consists of 23,190 meters of drilling, including 9,250 meters of reverse-circulation drilling and 13,940 meters of diamond drilling, supported by a US$9.5 million budget. The program was 50% complete at the end of Q2. It was designed to upgrade Inferred resources to Measured and Indicated categories and expand mineral resources below the reserve pit and as much as 100 meters beneath the current resource shell.

Condestable produced 9.30 million pounds of copper, 4,451 ounces of gold, and 74,374 ounces of silver during the second quarter, all contained in concentrate. Copper sales totaled 9.30 million pounds at an average realized price of US$5.94 per pound.

The mine processed 725,970 tonnes during the quarter at average grades of 0.66% copper, 0.24 grams per tonne gold, and 3.88 grams per tonne silver. Copper recovery was 88.05%, gold recovery was 79.70%, and silver recovery was 82.23%.

Condestable reported cash costs of US$2.34 per pound of copper produced, all-in sustaining costs of US$3.10 per pound, and all-in costs of US$3.64 per pound. Rio2 said copper grades were below plan because of higher internal dilution in certain stopes, particularly during June, while higher-grade material partly offset the impact through higher gold production.

The company maintained its 2026 Condestable production guidance of 21,500 to 23,500 tonnes of payable copper equivalent for the February-to-December period.

Rio2 also reported that Condestable's 46,480-meter underground diamond drilling program was 45% complete at the end of Q2. The program's primary objective was to replace and augment mineral resources and conduct infill drilling for short-term reserve models. Additional work was aimed at delineating near-surface resources in the Condestable and Raul areas, while geological-structural mapping and drone magnetometry formed part of a broader exploration program across the mine's 46,000 hectares of concessions.

Copper, Gold, and Silver Prices Climb as Metals Markets Gain Ground

Trading Economics reported on August 17 that copper futures had moved above US$6.70 per pound and were approaching record highs as global supply conditions tightened. According to the report, China's refined copper output was expected to decline for a second consecutive month in August as shortages of copper concentrate and other smelter feedstocks affected operating rates. It also cited reduced availability of VAT-compliant recycled copper following tighter domestic tax-invoice regulations. "Copper futures jumped above US$6.7 per pound on Monday, moving toward fresh record highs amid further signs of tightening global supply," Trading Economics wrote. Copper had gained 49.92% over the preceding year.

Precious metals also recorded substantial year-over-year gains. Trading Economics reported August 17 that silver had risen toward US$66 per ounce, representing a 72.81% increase over the preceding year and a 16.52% increase over the preceding month. "Silver rose toward US$66 an ounce on Monday, extending gains from the previous session as subdued US economic data reduced expectations for an imminent Federal Reserve interest rate hike," according to Trading Economics. The report noted that silver had both industrial and investment applications, including uses in electronics, solar panels, and medical technologies.

Gold had risen toward US$4,400 per ounce on August 17, according to Trading Economics, and had gained 31.98% over the preceding year and 9.73% over the preceding month. "Gold rose toward US$4,400 an ounce on Monday, extending gains from the previous session as subdued US economic data reduced expectations for an imminent Federal Reserve interest rate hike," the report stated. Trading Economics also described gold as serving both investment and consumer markets, with demand coming from financial markets, jewelry consumption, and industrial applications.

Analysts Saw Continued Fenix Progress Despite Deferred Guidance

In an August 13 research note, Atrium Research analysts Ben Pirie and Nicholas Cortellucci maintained a BUY rating on Rio2 and an unchanged CA$5.75 per-share target price. They wrote that "Fenix continues to take positive steps in its ramp up; however, extreme storms have added unpredictability in the coming months, and RIO has deferred 2026 guidance as a result." The analysts added that "commercial production remains on track for Q4" and said Condestable had continued to deliver consistent cash flows.

Pirie and Cortellucci described the deferral of Fenix guidance as appropriate under the circumstances. "We see the deferral of guidance at Fenix as the right decision given the circumstances, which remains out of RIO's control," they wrote. They said Rio2 had continued to make steady progress toward commercial production and identified achieving 20,000 tonnes per day at Fenix as "a key metric we will be watching for in Q3 to enable commercial production." They also noted that results from three potential desalinated-water providers were expected in Q3 and that selection of a provider would allow Rio2 to complete the prefeasibility study for an expansion to 80,000 tonnes per day, with completion anticipated in Q4.

Atrium also commented positively on Condestable. "We are encouraged that the operation continues to deliver to plan, and the Company continues to make progress on its ore sorting trial program," Pirie and Cortellucci wrote. They noted that the pilot plant was expected to arrive before November and that Rio2 continued to expect approval of its EIA modification during the quarter, allowing capacity to increase to 10,000 tonnes per day.

Also on August 13, Jeff Clark and Daniel Flynn wrote in a Paydirt Prospector update that Rio2's Q2 results were "a mixed bag," while pointing to operational progress at Fenix. "On the one hand, there are clear signs of progress," they wrote, noting that Q2 gold production had nearly doubled from the first quarter and that earlier ramp-up issues were being addressed. They added, "So, operationally, the mine is moving in the right direction."

Clark and Flynn also addressed the deferred production guidance, writing that extreme cold and heavy snow had affected the ongoing Fenix ramp-up. "So, while Q2 was better than Q1, Fenix has now lost some momentum," they wrote. "That doesn't break the long-term thesis, of course, but it does make the near-term story more volatile." They also pointed to Condestable's contribution, stating that the mine had continued to provide production and cash flow while Fenix ramped up.

The Paydirt Prospector authors maintained a HOLD recommendation. Clark and Flynn wrote, "Rio2 remains a strong two-asset producer with gold production, copper exposure, and long-term growth potential." They said they continued to like the long-term setup but would hold off on new buying.

Several Operational Milestones Remain Ahead in 2026

At Fenix Gold, Rio2 expects ore production to reach 20,000 tonnes per day during Q3 2026 after increasing from 13,600 tonnes per day in April to 16,100 tonnes per day in June. Mining at Fenix Central is also now planned to begin during Q3, while mining of higher-grade material above 0.4 grams per tonne gold is expected to resume during the second half of the year. Rio2 anticipates achieving commercial production at Fenix Gold in Q4 2026.

The 23,190-meter Fenix Gold exploration program was 50% complete at the end of Q2, with completion expected by late August. The US$9.5 million program is designed to upgrade Inferred resources to Measured and Indicated and expand mineral resources below the reserve pit and up to 100 meters beneath the current resource shell. A mineral resource and reserve update is on track for year-end.

Work is also continuing on the potential Fenix Gold expansion to 80,000 tonnes per day. Three potential desalinated-water providers are preparing initial capital cost, operating cost, and connection timeline estimates, with formal results expected toward the end of Q3. Selection of a provider will support completion of the expansion prefeasibility study, which is now expected in Q4 2026. Baseline work has also begun for the expanded mine-site environmental impact assessment.

At Condestable, Rio2 continues to expect approval during Q3 2026 for the modification to the mine environmental impact assessment, including approval for increased processing capacity to 10,000 tonnes per day. Basic engineering, cost estimates, and scheduling for the plant expansion are continuing, while third-party consultants are advancing a preliminary evaluation of the 10,000-tonne-per-day expansion. The dry-stack tailings system entered commissioning in April, with full commercial operations expected during Q3 2026.  

The Condestable ore-sorting program is advancing following execution of a pilot-plant contract in mid-July. Preliminary infrastructure work is underway, with the pilot plant expected to arrive before November 2026. Separately, the 46,480-meter underground diamond drilling program was 45% complete at the end of Q2. Rio2's latest update said the near-surface drilling program for the Condestable and Raul areas would be defined and budgeted during Q3, with execution planned for 2027, revising the schedule outlined in its June resource update, which had called for the program to be defined during the first half of 2026 and executed during the second half of 2026.

Ownership & Share Information¹

As of August 17, Rio2 Ltd. had a market capitalization of CA$1.41 billion, with 548.47 million shares outstanding. The company's 52-week trading range was CA$1.36 to CA$4.09.

Institutions own 20.19% of shares, while Management & Insiders own 6.93%. The remaining 72.88% of shares are held by Retail.