Rio2 upsizes bought deal financing to $166 million
Rio2 Ltd. [RIO-TSX, RIOFF-OTCQX; BVL-RIO] said it is upsizing a previously announced bought deal financing that is now expected to raise $166 million, up from an earlier $140 million target. Under the terms of the financing, the underwriters have pledged to purchase, on a bought deal basis, 74.8 million subscription receipts priced at $2.22 per receipt.
The company has granted the underwriters an over-allotment option to purchase an additional amount of subscription receipts that is equal to 15% of the number of receipts sold in the offering. That option can be exercised for 30 days following closing, which is expected to occur on December 15, 2025.
On Tuesday, Rio2 shares eased 0.6% or $0.015 to $2.48. The shares trade in a 52-week range of $2.51 and 58 cents.
The announcement comes after Rio2 said it has entered into a definitive agreement with Southern Peaks Mining L.P. to acquire its 99.1% interest in the Condestable mine in Peru. Southern Peaks is a private business that is owned by management and funds advised by Global Natural Resources Investments.
Rio2 was previously focused on taking its Fenix Gold Project in Chile to production in the shortest possible timeframe based on a staged development strategy.
On closing Southern Peaks will receive a 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, payable between 2027 and 2030, for a total consideration of US$217 million, implying an enterprise value of approximately US$241 million.
Condestable is a well-estabished underground copper operation forecasted to produce approximately 27,000 tonnes annually of copper equivalent (CuEq) (or approximately 80,000 ounces on a gold equivalent basis with expansion potential and a reserve life of over 10 years, supported by a robust mineral reserve and resource base.
Pro forma, Rio2 is expected to produce approximately 180,000 ounces of gold equivalent with a pathway to potentially producing approximately 380,000 ounces of gold equivalent per year with the potential Phase 2 expansion at Fenix Gold.
Located approximately 90 kilometres south of Lima, Condestable is a long-life underground copper operation with over 60 years of continuous production history. The mine and its 8,400 tonne per day processing plant produce a clean concentrate with no penalties. It’s coastal location at sea level provides excellent infrastructure access, low logistics risk and strong operational stability. The Fenix Gold Project is one of the largest undeveloped gold oxide, heap leach projects in the Americas, hosting a measured and indicated resource of 4.8 million ounces of gold. The company said the project represents a significant investment in the gold mining business in Chile by a junior mining company of US$235 million of initial and sustaining capital, generating employment for at least 1,200 people during the construction phase and 550 people during the 17-year operations phase. The operation being contemplated is a run of mine heap leach operation.
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