Rio2 cuts debt and builds muscle for South American copper-gold push

Rio2 Limited has tightened the screws on its balance sheet and bolstered its bench, slicing US$20 million off the debt for its Peruvian Condestable copper project whilst unveiling a seasoned management line-up. With gold flowing at its Fenix project in Chile and copper exploration humming in Peru, the company is shaping up for a disciplined growth run with a sharper financial edge and deeper operational firepower.

The company voluntarily paid down US$20 (A$29) million of vendor debt tied to its newly acquired Condestable copper mine, simplifying its capital structure and trimming interest exposure. The savvy move has wiped out the entire US$10M mezzanine facility and shaved the senior note down to US$45M.

Under a deal struck in December, Rio2 stitched together a US$180 (A$260) million deal to acquire Condestable from privateer, Southern Peaks Mining, combining US$80M in cash, US$65M in six-year vendor debt and US$35M worth of shares.

A further US$37 million (A$56M) in deferred installations, payable between 2027 and 2030 for cash or shares at Rio2’s election, brings the headline price to US$217 million (A$327M), valuing the total deal at US$241 million (A$363M) after assuming US$24 million (A$36M) in net debt.

Sitting at sea level, 90km south of Lima, Condestable is a 60-plus-year underground mining operation currently producing 27,000 tonnes of copper equivalent per year from an 8,400 tonne per day plant.

The move to pick up an existing copper play and pay down debt as soon as possible is a meaningful shift for a company now also straddling gold production in Chile. 

That financial discipline has been matched by a significant strengthening of the company’s operational brain trust.

Leading the charge is Enrique Ramirez, stepping in as senior vice president of mining and general manager of Condestable. With more than 27 years under his belt across underground operations and senior roles at Pan American Silver, Glencore and Volcan, Ramirez appears to have plenty of technical and importantly regional experience.

Also joining the ranks is Mariano Alarco who looks to have a rare blend of mining and high-level finance expertise following stints at Southern Peaks Mining and Goldman Sachs. 

Carola Gallo also steps in as director of finance, adding further financial depth after years in senior accounting and CFO roles across the Latin American mining sector. 

Rounding out the reshuffle, Edgardo Briones has transitioned into a senior project role, while Christopher Diaz has stepped up to the role of senior vice president of finance. The collective moves aim to reinforce the company’s internal skill set as it juggles multiple producing assets and growth pathways. 

Condestable is now firmly in the fold and the company’s Fenix Gold project is up and running in Chile. Rio2 is evolving into a multi-asset producer with exposure to both precious and base metals.

With debt falling, leadership strengthening and production already underway, the pieces seem to be lining up for a more streamlined and potentially more profitable next chapter for the rapidly growing miner.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au