The first quarter of 2026 marked a turning point for Rio2. The company recorded initial production at the Fenix Gold mine and brought the Condestable copper operation into the consolidated results following the acquisition date of January 30, 2026. Consolidated output for the period totaled 7,849 ounces of gold, 49,198 ounces of silver and 6,403,188 pounds of copper. These volumes were accompanied by a stronger balance sheet position, with cash and cash equivalents of $93.1 million at quarter end and an early voluntary debt repayment of $20 million.
Financially, the quarter delivered a meaningful swing: income from mine operations of $24.6 million and adjusted net income of $12.1 million, versus the prior-year quarter where the company reported operating income of zero and an adjusted net loss of $1.3 million. Operating cash flow provided $22.8 million, while investing activities used $80.3 million and financing activities supplied net proceeds of $103.5 million. These figures reflect the dual impact of start-up capital and the immediate cash contribution from Condestable following integration.
Operational performance and ramp-up at Fenix Gold
The Fenix Gold operation progressed through an initial ramp-up phase where key constraints were identified and corrective actions implemented. Production from the mine was 4,648 ounces of gold in Q1, with 657,112 tonnes stacked on the leach pad and a head grade of 0.452 g/t Au. Management reported that planned tonnage and grade were behind targets early in the quarter due to sequencing and permitting delays, but technical indicators such as leach recovery (projected 75% at 90 days) and blasting fragmentation (P80 of 4 inches) aligned with expectations.
Start-up constraints and fixes
Several specific issues slowed ramp-up: a delayed blasting permit received in late-December 2026, constrained access at Fenix South that required phased excavation, and labor shortages affecting truck availability. The contractor fleet is transitioning from rented 35-tonne trucks to purchased 42-tonne trucks arriving in May 2026 to improve haulage efficiency. The processing plant experienced repeated failures of an elution solution pump; a replacement arrived in March and resolved the desorption delays. Water logistics performed well, with trucking delivering over 1,000 m3 per day and peak deliveries near 1,500 m3, leaving an on-site inventory of about 45,000 m3.
Condestable integration and consolidated mining results
Following the January 30, 2026 acquisition, Condestable contributed immediately to consolidated output and cash flow. For the February–March operating window under Rio2 ownership, Condestable processed more than 470,000 tonnes at an average copper grade of 0.70%, producing the quarter’s entire copper volume of 6,403,188 pounds. Condestable also produced 3,201 ounces of gold and 48,671 ounces of silver. Unit costs were favourable at roughly $38.90 per tonne, and copper unit cash cost and AISC averaged $2.01 per pound and $2.84 per pound, respectively.
Production, pricing and cash metrics
Rio2 reported consolidated gold sales of 6,654 ounces at an average realized price near $4,745 per ounce, while copper sales totaled 6,204,313 pounds at an average realized price of $5.69 per pound. The company disclosed Q1 total cash costs at Fenix of $2,620 per ounce of gold sold. Cash flow dynamics reflected both start-up capital and acquisition activity: operating cash flow provided $22.8 million, investing used $80.3 million, and financing provided net proceeds of $103.5 million.
Capital program, exploration and outlook
Rio2 set out remaining 2026 capital commitments of approximately $33.87 million, covering construction, ADR plant work, leach pad expansion and a truck workshop among other items. Exploration at Fenix resumed for the first time since 2014 with a planned 23,190 metres of drilling and a budget of $9.5 million to upgrade and expand resources. The company is also advancing water-supply options and expects proposals from two desalination providers by June, a key input to a prefeasibility study targeting a potential 80,000 tonnes per day expansion with study timing set for Q3 2026.
Management maintains guidance of 60,000–65,000 ounces of gold for 2026, with a goal to reach a mining feed rate of 20,000 tonnes per day beginning in Q2 2026 to recover lost tonnes during the early ramp. Workforce and safety metrics showed 1,401 employees and contractors at Fenix (94% Chilean) and a total of 650,424 person-hours worked in Q1 with one lost-time injury (LTIFR of 0.6). To manage operating cost risk, Rio2 purchased nine diesel call options covering 1,575,000 gallons from April through December 2026 for an upfront premium of $622,000; mark-to-market valuations rose from $770,000 on March 31, 2026 to $1,037,000 on April 30, 2026, reflecting realized and unrealized gains.
