Rio2 pays down Condestable debt by $20-million (U.S.)

Executive Summary

• Rio2 Ltd. made a voluntary payment of $20 million (U.S.) plus accrued interest to reduce vendor debt associated with the Condestable copper mine acquisition, extinguishing the $10 million mezzanine note and reducing the senior note balance to $45 million.
• The company announced significant senior management appointments and transitions, including the addition of Enrique Ramirez, Mariano Alarco, and Carola Gallo, and the promotion of Edgardo Briones and Christopher Diaz, following the completion of the Condestable transaction and the start of gold production at Fenix Gold.
• Rio2 granted equity incentive awards, including 1,017,500 restricted share units and 1,462,500 stock options exercisable at $3 per share, to executive officers, management, and directors.

Key Details

• Debt Repayment:
  • Voluntary payment of $20 million (U.S.) plus accrued interest made on March 27, 2026.
  • Payment was applied to vendor debt from the acquisition of Condestable copper mine from Southern Peaks Mining LP (SPM).
  • Mezzanine Note: The $10 million secured mezzanine promissory note was fully extinguished.
  • Senior Note: The $55 million secured promissory note was reduced to $45 million.
  • Future Payments: Quarterly principal repayments of $2.5 million (senior) and $550,000 (mezzanine) were scheduled to begin after a six-quarter grace period.
  • Interest Rates: Senior note interest was 11.75% (Prime + 4.0% post-grace); Mezzanine note interest was 15.75% (Prime + 11.0% post-grace).
• Management Appointments:
  • Enrique Ramirez: Incoming Senior Vice-President, Mining, and General Manager of Condestable. Former EVP and COO at SPM; 27+ years experience in underground mining.
  • Mariano Alarco: Incoming Senior Director, Operational Excellence. Former Executive VP of Business Development at SPM; former Executive Director at Goldman Sachs.
  • Carola Gallo: Incoming Director, Finance. Former CFO at SPM; former Head of Financial Planning and Control at Maple Energy PLC.
  • Edgardo Briones: Transitioning to Senior Director, Projects. Civil engineer with 25+ years experience in mining construction management.
  • Christopher Diaz: Transitioning to Senior Vice-President of Finance. Former Director of Finance; extensive experience in M&A financial integrations and public company reporting.
  • Adolfo Vera: Founder and former President of SPM departed Rio2 but will continue as an adviser to the executive management team.
• Equity Incentives:
  • Restricted Share Units (RSUs): 1,017,500 RSUs granted to executive officers, management, and directors pursuant to the share incentive plan.
  • Stock Options: 1,462,500 stock options granted to certain executive officers, management, and directors.
  • Option Terms: Exercisable at $3 per share (10% premium over the March 31, 2026 closing price of $2.72); expire five years from the grant date.

Notable Quotes

• "We look forward to the inclusion of Enrique, Mariano and Carola to our senior management team in Lima as we advance our mining activities in Peru and Chile. I would also like to sincerely thank Adolfo for his many years of exceptional service at SPM. From founding SPM and the acquisition of Condestable, Adolfo oversaw the development of the company into a medium-size copper producer in Peru. Condestable has become the mining operation it is today largely owing to Adolfo's enthusiasm, drive and leadership, and we thank him for his invaluable contribution." — Andrew Cox, President and CEO of Rio2