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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 equivalent1,2 (or approximately 80 kozs on a gold equivalent basis1,2) with expansion potential3 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 equivalent1,2,4, with a pathway to potentially produce approximately 380 kozs gold equivalent1,2 per year with the potential Phase 2 expansion at Fenix Gold5.
Cash flow to fund growth: Condestable is projected to generate average annual EBITDA6 of approximately US$110 million at consensus prices7 or approximately US$145 million at spot prices7 over the next five years, supporting the expansions at both Fenix Gold5 and Condestable3. Pro forma, Rio2 is expected to generate average annual EBITDA of approximately US$330 million8.
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 25, gold will comprise over 80% of future revenue contribution (long-term consensus prices)5,10.
Accretive acquisition: Rio2 is acquiring Condestable at approximately 2x11 EBITDA6. The Transaction is expected to deliver a strong all-in internal rate of return6 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 tpd3 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 ...
