Author: Atrium Research August 25, 2026
Nicholas Cortellucci, CFA | Equity Research Analyst | [email protected] | 647-391-3314
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What you need to know:
- RIO received approval of its Modified Environmental Impact Study (MEIA) at Condestable on August 21st, concluding a 14-month process.
- The approval permits an increase in throughput to 10Ktpd from the current 8.4Ktpd and extends the environmentally approved mine life by a further decade.
- It also authorizes a dry-stack tailings facility with initial permitted capacity of ~43Mt, designed for staged expansions to 170Mt.
- Engineering studies are underway with a FID targeted in H2/26, while exploration continues to support an expanded operation.
This morning, Rio2 (RIO:TSX, RIOFF:OTC) announced that the Company received approval for its Modification of the Environmental Impact Study (MEIA) at Condestable on August 21st, which is in line with expectations for a Q3 approval. This concludes a 14-month extensive process and enables numerous key operational optimizations including a regulatory path for an expansion to 10Ktpd, dry-stack tailings, and mine life extension. We are maintaining our BUY rating and target price of $5.75/share on Rio2.
Now that Rio2 has integrated Condestable into the portfolio following its acquisition in January, the focus is turning to expansion and optimization to maximize the full potential of the operation. The Company released an updated technical report for Condestable in June (read our note here) outlining a base case mine plan through 2039 at its current ~8.4Ktpd, while highlighting upside from increasing throughput to 10-12Ktpd, which would be supported by further resource expansion. This approval provides the environmental approval necessary to advance the expansion to 10Ktpd. In last week’s conference call, management indicated approval in the third quarter (now received) positions the Company to commence a potential ramp-up in H2/28, which will require modifications to the crushing, milling, and flotation circuit.
In addition, the modification authorizes RIO’s plans for a dry-stack tailings facility, referred to as Tailings Storage Facility (TSF). The facility is initially permitted to a capacity of ~43Mt, and the design allows for staged expansions to 170Mt, supporting a further mine life extension. In tandem with the corresponding commissioning of the tailings filtration plant, the Company remains committed to low-risk tailings management. The third key component of the MEIA is mine life extension, and Condestable is now environmentally approved for a further decade, derisking the operation.
Next steps. With the permit in hand, attention turns to engineering studies for both the processing plant and the mine (currently underway with third-party consultants), along with the final investment decision during the back half of this year. Separately, the ore sorting pilot program targeting low-grade stockpiles and waste dumps is scheduled to commence in Q4/26. In the meantime, commissioning of the tailings filtration plant continues and analysis of the recently completed surface geophysical survey covering the entire Condestable and Raúl package is underway. Exploration carries on from both underground and surface to expand resources and reserves.
In our view, the approval largely de-risks an expansion to 10Ktpd+ at Condestable. We will be watching for a FID before year-end to commence construction, providing upside to our valuation, which currently assumes steady state at ~8.4Ktpd.
Catalysts
- Fenix Ramp Up to 20Kptd – Q3/26
- Fenix Phase Two Expansion Study – Q4/26
- Condestable Ore Sorting & Expansion Plans – 2026
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