In a significant development for its growth strategy, Rio2 Limited has finalized the acquisition of a 99.1% interest in the Condestable mine located in Peru. This acquisition follows extensive negotiations and due diligence over the past six months, reinforcing Rio2’s objective to diversify and strengthen its operations within the Latin American mining sector.
The Condestable mine, acquired from Southern Peaks Mining L.P., has been under the management of Southern Peaks for twelve years, during which it established a solid operational framework.
Alex Black, Executive Chairman of Rio2, expressed optimism about this acquisition, stating it represents a crucial advancement for the company, focused on leveraging existing infrastructure and expanding resources for future production.
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Details of the acquisition
The transaction was finalized under a definitive share purchase agreement (SPA) dated December 8. This agreement involved Rio2, Southern Peaks, its subsidiary Rio2 Cobre S.A.C., and Mr. Adolfo Vera. Through this transaction, Rio2 acquired all outstanding shares of key subsidiaries linked to Southern Peaks, particularly Ariana Management Corporation S.A.C., which holds the majority stake in the Condestable mine.
Operational integration and future production goals
According to Andrew Cox, President and CEO of Rio2, the operational performance of the Condestable mine has been commendable throughout its history. The integration of Condestable into Rio2’s operations is expected to take approximately six months as the company optimizes its management structure. During this transitional phase, operations will continue as planned, with a target production goal of about 27,000 tonnes of copper equivalent annually.
Management at Rio2 aims to capitalize on the existing operational strengths of the Condestable mine while actively seeking ways to increase reserves and production levels in the coming years.
Financial aspects of the acquisition
Financial support for this acquisition was provided through a bought deal financing, wherein Rio2 successfully raised approximately C$191 million via the issuance of subscription receipts. Each receipt, priced at C$2.22, was converted into one common share of Rio2 upon the closing of the acquisition. This financing was underwritten by notable financial institutions, including Raymond James Ltd. and BMO Capital Markets, among others.
Regulatory approvals and conditions
As the transaction progressed, several conditions were addressed. Rio2 agreed to amend the SPA by waiving the requirement for a Peruvian tax certificate at closing. A significant portion of the cash payment was held in escrow, to be released upon receipt of the necessary tax documentation. This careful approach ensures compliance with local regulations while facilitating a smooth ownership transition.
It is important to highlight that the acquisition is still awaiting final approval from the Toronto Stock Exchange, a standard procedure that emphasizes the importance of regulatory oversight in the mining sector.
Looking ahead
As Rio2 Limited embarks on this new chapter with the Condestable mine, it remains committed to maintaining the highest environmental standards while promoting economic growth. The company aims to align its operational practices with social responsibility and environmental stewardship, advocating for responsible mining practices.
With a dedicated team and a clear vision, Rio2 is positioned to enhance its portfolio, aiming not only for profitability but also for sustainable mining practices that respect the communities and environments in which it operates.
The Condestable mine, acquired from Southern Peaks Mining L.P., has been under the management of Southern Peaks for twelve years, during which it established a solid operational framework. Alex Black, Executive Chairman of Rio2, expressed optimism about this acquisition, stating it represents a crucial advancement for the company, focused on leveraging existing infrastructure and expanding resources for future production.0
