Rio2 completes acquisition of Condestable mine

Executive Summary

• Rio2 Ltd. has completed the acquisition of a 99.1% interest in the Condestable mine in Peru from Southern Peaks Mining LP, marking a significant step in its strategy to become a diversified Latin American miner.
• The transaction was financed through a bought deal equity financing of approximately $191.1 million, with proceeds released from escrow to fund the cash consideration for the acquisition.
• The acquisition involves significant debt instruments, including a $55 million secured promissory note and a $10 million subordinated mezzanine promissory note, both with six-year terms.

Key Details

• Acquisition Target: 99.1% interest in the Condestable mine, located in Peru.
• Seller: Southern Peaks Mining LP (via subsidiaries including Ariana Management Corp. SAC).
• Transaction Structure: Definitive share purchase agreement dated Dec. 8, 2025, as amended.
• Equity Financing:
  • Closed a bought deal financing of 86,094,750 subscription receipts.
  • Issue price: $2.22 per subscription receipt.
  • Aggregate gross proceeds: $191,130,345.
  • Underwriters: Raymond James Ltd., Stifel Nicolaus Canada Inc., and BMO Capital Markets.
  • Conversion: Subscription receipts converted into common shares concurrently with the acquisition closing.
  • Use of Proceeds: Net proceeds released from escrow were partly used for cash consideration; remainder for working capital and general corporate purposes.
• Debt Instruments (Vendor Debt):
  • Secured promissory note: $55 million (USD).
  • Subordinated mezzanine promissory note: $10 million (USD).
  • Term: Six years for both notes.
• Closing Conditions & Mechanics:
  • Rio2 waived the delivery of a Peruvian tax certificate as a condition to closing.
  • Majority of cash consideration was financed into escrow, to be released to vendors upon receipt of the Peruvian tax certificate.
  • Share consideration to be issued to Southern Peaks following receipt of the Peruvian tax certificate.
  • Transaction remains subject to final approval of the Toronto Stock Exchange.
• Operational Outlook:
  • Integration process expected to take approximately six months.
  • Target annual production: ~27,000 tonnes of copper equivalent.
• Advisers:
  • Rio2 Financial Adviser: Edgehill Advisory Ltd.
  • Rio2 Legal Counsel: McMillan LLP, Dentons (Peru), Appleby (Cayman), DLA Piper (Canada) LLP.
  • Southern Peaks Financial Adviser: BMO Capital Markets.
  • Southern Peaks Legal Counsel: Stikeman Elliott LLP, Echecopar, Maples and Calder.

Notable Quotes

• Alex Black, Executive Chairman: "The acquisition of the Condestable mine is the result of six months of rigorous due diligence and negotiations with Southern Peaks. Rio2 sees the acquisition as a positive step for the company in its quest to become a diversified and highly profitable Latin American miner. Southern Peaks has put the mine on a strong footing during its 12 years of ownership, and Rio2 looks forward to continuing to capitalize on this solid foundation and grow resources/reserves and production over the coming years."
• Andrew Cox, President and CEO: "The operational record of the Condestable mine over the past 12 years has been exemplary. The integration process of Condestable with Rio2 is expected to take approximately six months as we rationalize and optimize the management team. During that time, it will be business as usual as we work to achieve the target annual production currently set at around 27,000 tonnes of copper equivalent."