Rio2 Reports Q3 2026 Financial and Operating Results and Webinar

Rio2 posted strong revenue but a net loss, with Fenix Gold ramp-up delayed by severe weather.

What the company is saying

Rio2 Limited presents a detailed operational and financial update for Q3 2026, emphasizing both the resilience of its teams and the challenges faced at Fenix Gold due to two major storm events and ongoing adverse weather. The company highlights consolidated production of 12,307 ounces of gold, 95,257 ounces of silver, and 9,603,325 pounds of copper, with Condestable providing operational stability. Management, led by President and CEO Andrew Cox and Executive Chairman Alex Black, frames the weather disruptions as learning opportunities and maintains confidence in achieving commercial production at Fenix Gold in Q4 2026. The narrative stresses continued progress in integrating Condestable, the transition to a new Lima office, and the advancement of exploration and drilling programs. Financial results are presented with transparency, including a $1.8 million EBITDA loss (driven by a $41.1 million non-cash fair value loss), but also an adjusted EBITDA of $50.0 million and adjusted net income of $22.4 million. The company acknowledges a reduction in cash reserves to $26.8 million, attributing this to capital expenditures and debt repayments.

What the data suggests

The company generated $115.4 million in revenue for Q3 2026, with copper sales of $55.9 million, gold sales of $53.9 million, and silver sales of $5.6 million. Despite strong top-line results, Rio2 reported a net loss of $28.5 million ($0.05 per diluted share), primarily due to a $41.1 million non-cash fair value loss on stream obligation. Adjusted EBITDA was robust at $50.0 million, while income from mine operations reached $43.8 million, and adjusted net income was $22.4 million ($0.04 per diluted share). Cash flow from operating activities was $22.5 million, but cash and cash equivalents declined to $26.8 million from $46.4 million at year-end 2025. Fenix Gold produced 8,500 ounces of gold at a high cash cost of $2,370 per ounce sold, with all-in sustaining costs of $2,615 and all-in costs of $3,089 per ounce. Condestable mined 700,070 tonnes of ore at 0.72% copper, producing 9.6 million pounds of copper at a cash cost of $2.62 per pound and AISC of $3.40. Exploration at Fenix Gold was suspended due to weather, with drilling to resume in January 2027, and an updated resource estimate targeted for December 2027. The Kalzas Tungsten Project has a US$1.5 million budget for a 2,000 metre drill program in 2027. Overall, the data shows operational resilience but exposes cost pressures and weather-related risks.

Analysis

The announcement is a comprehensive quarterly update with a neutral tone, providing detailed realised production, cost, and financial data for both Fenix Gold and Condestable. Most key claims are supported by specific, recent operational and financial metrics, including EBITDA, adjusted EBITDA, net income, and cash flow, which are all disclosed and show year-over-year improvement. Forward-looking statements (such as the ramp-up to commercial production at Fenix Gold in Q4 2026 and planned exploration in 2027) are clearly separated from realised results and are not exaggerated in tone. The only slightly promotional language is the reference to 'steady production and stability' at Condestable, which is not quantified, but this is minor and does not materially inflate the narrative. There is no evidence of excessive hype or overstatement; the gap between narrative and evidence is minimal. Capital intensity is not flagged, as major capex or long-dated, uncertain returns are not the focus of this update.

Risk flags

• ●Severe weather at Fenix Gold disrupted ramp-up progress, resulting in lower production and higher costs; future weather events could similarly impact operations and delay commercial production.
• ●Fenix Gold's cash cost per ounce sold was $2,370, with all-in sustaining costs of $2,615, which are high relative to typical industry benchmarks and could pressure margins if gold prices weaken.
• ●The company ended Q3 2026 with $26.8 million in cash, down from $46.4 million at year-end 2025, reflecting ongoing capital expenditures and debt repayments; continued cash burn could constrain future flexibility.
• ●A $41.1 million non-cash fair value loss on stream obligation materially impacted EBITDA, highlighting exposure to changes in production forecasts and commodity price assumptions.
• ●Key exploration milestones at both Fenix Gold and Kalzas Tungsten are deferred to 2027 or later, introducing long lead times and permitting risks before any new resource value can be realized.

Bottom line

Rio2 delivered strong revenue and adjusted EBITDA in Q3 2026, but a large non-cash loss and high costs at Fenix Gold led to a net loss and declining cash reserves. The company remains confident in achieving commercial production at Fenix Gold in Q4 2026, but weather disruptions and elevated operating costs present ongoing risks. Condestable provided stable copper production at reasonable costs, partially offsetting Fenix Gold's challenges. Near-term value hinges on the successful ramp-up at Fenix Gold, while longer-term upside depends on execution of deferred exploration and resource updates. Investors should watch for confirmation of commercial production at Fenix Gold and evidence of cost control in subsequent quarters. The most important takeaway is that operational resilience is evident, but cost and weather risks remain material to the investment case.

Announcement summary

(TSX:RIO, OTCQX:RIOFF, BVL:RIO) Rio2 Limited reported financial and operational results for the three months ended September 30, 2026, covering the Fenix Gold Mine and the Condestable Copper Mine. Consolidated production for the quarter was 12,307 ounces of gold, 95,257 ounces of silver, and 9,603,325 pounds of copper. Andrew Cox, President and Chief Executive Officer, noted that Fenix Gold operations were significantly disrupted by two major storm events in July and August, with continued snowfall and high winds into September, impacting ramp-up progress. Despite these challenges, the company continues to expect Fenix Gold to ramp up to 20,000 tonnes per day and achieve commercial production in Q4 2026. Condestable delivered steady production and stability, with the transition to a new Lima office expected early in Q4. Alex Black, Executive Chairman, highlighted the resilience of the Fenix Gold operations team and ongoing efforts to optimize site activities. For the three months ended September 30, 2026, Rio2 reported an EBITDA loss of $1.8 million and adjusted EBITDA of $50.0 million. EBITDA included a non-cash fair value loss of $41.1 million on stream obligation, reflecting updated Condestable production forecasts and higher forecast gold and silver prices. Income from mine operations was $43.8 million, and adjusted net income was $22.4 million, compared to income from mine operations of $0 and adjusted net loss of $2.8 million for the same period in 2025. The company ended the quarter with cash and cash equivalents of $26.8 million, down from $46.4 million at December 31, 2025. Cash provided by operating activities was $22.5 million, cash used in investing activities was $21.3 million, and net cash used in financing activities was $23.5 million. Consolidated revenue for the quarter was $115,385,000, with copper sales of $55,921,000, gold sales of $53,931,000, and silver sales of $5,623,000. Net loss for the quarter was $28,452,000, or $0.05 per diluted share, while adjusted net income was $22,415,000, or $0.04 per diluted share. Fenix Gold produced 8,500 ounces of gold in Q3 2026, with total cash costs of $2,370 per ounce of gold sold, all-in sustaining cost of $2,615 per ounce, and all-in cost of $3,089 per ounce. Fenix Gold mined 1,934,293 tonnes, stacked 1,001,420 tonnes on the pad, and had a head grade of 0.510 g/t Au. Exploration drilling at Fenix Gold was suspended in Q3 due to weather and safety, with plans to resume in January 2027; 43 drill holes totaling 14,669 metres were completed in 2026. An updated Mineral Resource Estimate for Fenix Gold is anticipated in December 2027. Condestable mined 700,070 tonnes of ore at average grades of 0.72% copper, 0.23 g/t gold, and 5.27 g/t silver, and processed 686,413 tonnes during Q3. Condestable produced 9,603,325 pounds of copper, 3,807 ounces of gold, and 93,854 ounces of silver, with cash cost per copper pound produced of $2.62, AISC of $3.40, and all-in cost of $3.78. Exploration at Condestable included 1,421 metres of surface drilling and 12,538 metres of production drilling in Q3. Phase 2 of the drilling program will include 62 drill platforms and 72 drill holes totaling 17,120 metres, with permitting expected to take six months. A drone-based magnetic geophysical survey covered 57,740 hectares, including 40,694 hectares of mining concessions. At the Kalzas Tungsten Project, Rio2 advanced technical studies and permitting, with a planned 2,000 metre diamond drilling program in 2027 and a budget of approximately US$1.5 million. The company will host a webinar on November 12, 2026, at 11:00 a.m. ET to discuss results and outlook.

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