Andrew Cox, President and Chief Executive Officer of Rio2, stated: "Q1 2026 was a milestone quarter for Rio2, with first production from Fenix Gold and the addition of cash flows from Condestable. 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. Operating a new mine at high altitude in Chile is a challenging undertaking and the management team has done a great job in resolving those challenges and keeping the mine on its path to producing more than 60,000 ounces of gold during 2026. Meanwhile, in Peru, Condestable has performed well and to our expectations during our first two months of ownership as integration of the mine's operating team with Rio2 continues."
Alex Black, Executive Chairman of Rio2, stated: "The entire Rio2 and Fenix Gold team has once again demonstrated its ‘can do' attitude and culture to take on the challenge of starting up a new mine at high altitude in Chile. 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. Condestable has continued to produce to plan in Q1, a credit to the onsite management team, as well as to the Rio2 management team in handling the Condestable integration."
FIRST QUARTER 2026 HIGHLIGHTS
Operational and financial results for the Condestable Mine in this section, and throughout the remainder of this press release, are presented for the period January 30, 2026 (acquisition date) to March 31, 2026.
Advanced Fenix Gold ramp-up with key start-up constraints identified and being addressed, while water transport, blasting fragmentation and leach recovery performance tracked in line with expectations.
Condestable performed well during Rio2's first two months of ownership, providing immediate cash flows from copper, gold and silver production.
Income from mine operations of $24.6 million and adjusted net income1 of $12.1 million, compared to Income from mine operations of $0 and adjusted net loss1 of $1.3 million for the three months ended March 31, 2025.
Maintained a strong liquidity position, ending March 31, 2026 with cash and cash equivalents of $93.1 million, including the voluntary repayment of $20 million of debt, compared to cash and cash equivalents of $46.4 million as at December 31, 2025.
Quarterly consolidated gold production of 7,849 ounces and gold sales of 6,654 ounces at an average realized price1 of $4,745/oz.
Q1 2026 total cash costs of $2,620 per ounce of gold sold1 at the Fenix Gold Mine. Fenix Gold Mine produced 4,648 ounces of gold during the quarter.
Quarterly copper production of 6,403,188 pounds and copper sales of 6,204,313 pounds at an average realized price of $5.69 per pound.
Q1 2026 total cash costs of $2.01 per pound of copper produced1 and AISC1 of $2.84 per pound of copper produced at Condestable. The 6,403,188 pounds of copper produced was entirely at Condestable. Condestable also produced 3,201 ounces of gold and 48,671 ounces of silver.
Cash provided by operating activities in the quarter was $22.8 million, cash used in investing activities of $80.3 million, and net cash provided from financing activities of $103.5 million, compared to cash flow from operating activities in the comparative quarter ended March 31, 2025 was $19.3 million, cash used in investing activities of $16.2 million, and net cash provided from financing activities of $0.04 million. (1) See Non-IFRS Measures section of this press release for definitions and discussion.
OPERATIONS
Fenix Gold Mine
Mine Production - the Fenix Gold Mine continued through its initial production ramp-up during Q1 2026. While planned tonnes and grade were not achieved during the quarter, the key drivers were identified early and corrective actions have been implemented or are underway. Those factors include:
Blasting permit delay, the blasting permit was expected to be issued by mid-November 2025 and was received in late-December 2025, effectively setting the mine plan for 2026 back by 6 weeks.
Opening up Fenix South, initial mining at the peak of Fenix South required careful sequencing between drilling, blasting and mining activities in a constrained area. Operating space has now been created, which is expected to support more efficient mining going forward. Fenix South is a newer area within the Fenix Gold mine plan which began contributing ore to the leach pad during Q1, 2026.
Operator availability - A tight labor market in Chile with high metal prices and increased mining activity, created challenges for our contractor STRACON in retaining personnel, particularly truck drivers willing to work at a high altitude mine such as Fenix Gold. STRACON And Rio2 have been actively addressing the turnover and absenteeism that impacted trucking during Q1. By the end of March, the operator and truck availability were improving, and it is expected that these issues will be satisfactorily resolved in Q2 2026.
Truck fleet transition - the initial mine truck fleet consisted of rented 35-tonne capacity trucks from local providers, originally mobilized during construction of the plant and pad facilities and not optimized for steady-state mine operations. These trucks are being phased out and replaced by a new fleet of 42-tonne capacity trucks that have been purchased by STRACON specifically for mine operations. This fleet of new trucks will start arriving in May 2026 and will be maintained on site by STRACON's maintenance team.
Lower tonnes moved reduced ore availability and affected head grade to the plant, resulting in lower grade ore being sent to the pad. Management took the decision not to high-grade mining until planned production rates can be achieved. Mining of higher-grade material (greater than 0.4g/t) is expected to resume during H2 2026, at which time lower grade material will be sent to stockpile. To further increase mine production flexibility, management has also decided to bring forward the commencement of mining at Fenix Central which will now start in Q2, 2026.
The processing plant experienced initial start-up issues with the elution solution pump failing three times causing delays in the desorption process. A replacement pump arrived in March, and this issue has now been resolved.
Water transport ramp-up has been very successful with trucking consistently delivering over 1,000 m3 per day, and up to 1,500 m3 on occasions. The mine has not been water constrained and at the end of March the mine water storage was overstocked for a total on-site water inventory of 45,000 m3.
Blasting fragmentation of mineralized material has also performed to expectation with a P80 of 4 inches being achieved for the quarter.
Analysis of the leaching of material on the pad versus the gold being absorbed in carbon in the processing plant indicates that the projected gold recovery of 75% at 90 days leaching is being achieved.
Based on current ramp-up progress, Rio2 anticipates achieving commercial production at Fenix Gold in Q4 2026.
Gold production guidance for 2026 is 60,000, 65,000 gold ounces, with efforts being made to bring forward the mining production rate to 20,000 tonnes per day in Q2 2026 and for the remainder of the year, to recover the reduced tonnes and ounces production experienced during Q1 2026.
Key performance data for the Fenix Gold Mine for Q1 2026 is summarized as follows:
Q1 2026
Q1 2025(2)
Total tonnes mined
tonne
901,264
tonne
N/A
Ore mined
tonne
807,590
tonne
N/A
Ore stacked in pad
tonne
657,112
tonne
N/A
Head Grade (g/t Au)
g/t
0.452
g/t
N/A
Contained ounces in pad
oz
9,554
oz
N/A
Gold ounces produced
oz
4,648
oz
N/A
Gold ounces sold
oz
3,934
oz
N/A
Cash cost per gold ounce sold (1)
$/oz
2,620
$/oz
N/A
All-in Sustaining cost per gold ounce sold (1)
$/oz
3,131
$/oz
N/A
All-in Cost per gold ounce sold (1)
$/oz
3,151
$/oz
N/A
Silver ounces produced
$/oz
527
$/oz
N/A
Silver ounces sold
$/oz
514
$/oz
N/A
Average realized price per gold ounce (1)
$/oz
4,750
$/oz
N/A
Average realized price per silver ounce (1)
$/oz
83.77
$/oz
N/A
(1) See Non-IFRS Measures section of this press release for definitions and discussion.(2) This information was not available ("N/A") for Q1 2025 or not applicable as the Company's only asset was the Fenix Gold Mine and it did not have production or sales during Q1 2025.
Human Resources – A total of 1,401 personnel (including contractors) are currently employed at Fenix Gold in mine operations, construction and exploration. 94% of the workforce is comprised of Chileans, with 42% from the Atacama Region, and 12% are female.
Health & Safety – A total of 650,424 person-hours has been worked at the mine in Q1 2026, with one LTI from a twisted ankle which occurred in March 2026 for an LTIFR rate of 0.6.
Exploration, For the first time since 2014, exploration drilling has commenced at Fenix Gold. In total, 9,250 m of reverse circulation drilling and 13,940 m of diamond drilling will be carried out, for a total of 23,190 m. The budget for this drilling program is $9.5 million. The objectives of the 2026 drilling program are to upgrade the classification of mineral resources from inferred to indicated and/or measured, and to increase mineral resources below the reserve pit and to 100 m below the current resource pit. Drill rigs were mobilized during March for drilling in Q2.
Fuel Hedging, As a consequence of the Iran War, diesel prices in Chile during Q1 2026 have increased by up to 60%. As the transition from construction to full operations at Fenix Gold progresses, diesel consumption for the mining fleet and infrastructure will remain an important operating expense. In early March 2026, Rio2 secured a portfolio of 9 commodity call options (hedges) used to lock in prices to protect against the risk of rising fuel costs at the mine. These hedge contracts span a nine-month period from April through December 2026, covering a total volume of 1,575,000 gallons. The protected monthly volume scales up over time, starting at 150,000 gallons in the spring, increasing to 175,000 in the summer, and peaking at 200,000 gallons per month through the end of the year. The upfront premium paid to secure these nine positions was $622,000.
As of March 31, 2026 valuation date, their combined market value was $770,000, including an unrealized gain of $148,000. As of April 30, 2026 valuation date, their combined market value has risen to $1,037,000 for a total gain of $415,000 which included a realized gain of $131,000 in April 2026 plus an unrealized mark-to-market gain of $284,000 on the remaining open contracts.
Mine Expansion Study, Work on desalinated water alternatives continues with two potential providers selected to provide initial estimates for capital and operating costs, and timelines for connecting Fenix Gold project to desalinated water from Copiapó. Results from both providers are now expected to be delivered by June. The selection of one of these providers to supply desalinated water to Fenix Gold will then enable the prefeasibility study for the expansion case to increase the production rate to 80,000 tonnes per day to be completed. Timing for the release of that study is now expected to be Q3 2026. In anticipation of this study, the Fenix Gold permitting team have started work on the baseline study for the expanded mine site EIA, which includes expansion to the existing pits at Fenix north, central and south to form one combined pit, the expansion of the adsorption, desorption and recovery plant ("ADR plant"), piped water supply, the expanded leach pad footprint, the expanded waste dump footprint, additional water ponds, grid power connection, a truck shop for a large equipment fleet, and other support infrastructure.
Construction Activities, In 2025, Rio2 expended the critical capital necessary to bring Fenix Gold into gold production to begin generating cash flow. For 2026, the plan is to complete the deferred capital expenditures required for the mine to enter 2027 at a consistent production rate of 20,000 tonnes per day of ore to pad. During Q1 2026, deferred capital expenditures included completing items around the ADR plant and restarting leach pad construction for pad expansion.
The remaining capital planned to be expended in 2026 which will be funded out of cash reserves and cashflow is summarized as follows:
TOTAL
USD
Construction
32,499,385
Access roads
240,927
ADR Plant
4,354,926
Leach Pad Construction
11,330,033
Lime Plant
1,178,177
Power Generation
2,071,877
Electric Power distribution
1,287,022
Communications infrastructure
137,252
Reagents first fill
342,172
Onsite laboratory
1,710,000
Truck Work Shop
9,847,000
Sustaining Construction
1,369,732
Preliminary Works
-
Camp Infrastructure
20,000
Leach Pad expansion
1,349,732
Total USD
33,869,117
Condestable Mine
Mine Production - Condestable delivered solid operating performance in February and March, processing over 470,000 tonnes of ore at an average copper grade of 0.70%, 0.24 g/t gold and 4.10 g/t silver. Although copper grades were partly below planned grades, this was compensated by higher gold production through higher grades and recoveries. Unit production costs were better than expected at $38.90/t due to a higher mix of ore being extracted from upper levels of the mine and exchange rates being more favorable than initially estimated. This was achieved despite some difficulties in managing the ore and waste haulage fleet due to a lack of truck operators and larger capacity haulage equipment challenges.
Overall processing plant performance was strong. Copper recoveries were marginally below expectations due to higher oxide material in certain near surface sections of the mine, while gold and silver recoveries were materially better than budgeted. Condestable produced 6,403,188 pounds of copper, 3,201 ounces of gold and 48,671 ounces silver during February and March, contained in concentrate.
Production guidance for 2026 (February to December) is 21,500, 23,500 tonnes of payable copper equivalent.
Key performance data for the Condestable Mine for Q1 2026 is summarized as follows:
Q1 2026
Q1 2025(2)
Exploration drilling
m
541
m
N/A
Production drilling
m
6,690
m
N/A
Deepening works
M
656
m
N/A
Ore mined
tonne
486,188
tonne
N/A
Ore treated
tonne
474,341
tonne
N/A
Cu headgrade
%
0.70
%
N/A
Au headgrade
g/t
0.24
g/t
N/A
Ag headgrade
g/t
4.10
g/t
N/A
Cu recovery rate
%
89.55
%
N/A
Au recovery rate
%
81.94
%
N/A
Ag recovery rate
%
83.20
%
N/A
Copper produced
lb
6,403,188
lb
N/A
Gold produced
oz
3,201
oz
N/A
Silver produced
oz
48,671
oz
N/A
Copper sold
lb
6,204,313
lb
N/A
Gold sold
oz
2,720
oz
N/A
Silver sold
oz
46,588
oz
N/A
