Author: Atrium Research November10, 2026
Ben Pirie | Equity Research Analyst | [email protected] | 647-688-9661
Nicholas Cortellucci, CFA | Equity Research Analyst | [email protected] | 647-391-3314
PLEASE REVIEW THE DISCLOSURES AT THE BOTTOM OF THE PAGE
What you need to know:
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RIO reported its Q3/26 production and financial results outlining consolidated production of 12.3Koz Au, 95.3Koz Ag, and 9.6Mlb Cu.
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RIO disclosed extreme weather impacts on Fenix’s ramp up at the end of September, so there are no surprises in this morning’s results.
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Condestable continued to deliver consistent production, and adjusted financials came in slightly ahead of our expectations.
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RIO will host a webinar on November 12ᵗʰ at 11AM ET to discuss this morning’s results and outlook.
This morning, Rio2 (RIO:TSX, RIOFF:OTC) reported its Q3/26 production and financial results with consolidated production of 12.3Koz Au, 95.3Koz Ag, and 9.6Mlb Cu. RIO had already reported significant weather-related challenges in the quarter at Fenix, and results are largely as expected. The operation remains on track for commercial production this quarter. Through the ramp-up, Condestable is proving to be a steady contributor to RIO’s production profile, delivering another quarter of consistent production. Overall, financials were slightly ahead of our expectations after adjusting out a sizable fair value loss. We are maintaining our BUY rating and target price of C$5.75/share on Rio2.
Storms set back Fenix ramp-up. As previously disclosed in RIO’s September operations update (read here), extreme weather driven by a super El Niño significantly impacted the quarter, and production was expected to be roughly flat QoQ. Q3 gold production of 8.5Koz was broadly in line with our expectation of 8.8Koz, declining modestly from 9.1Koz in Q2 (-6%). The revised monthly projections released in September implied ~17Koz in Q4 for ~40Koz in 2026, and RIO has reiterated expectations for Fenix to ramp up to 20Ktpd and achieve commercial production in Q4. Q3 cash costs declined QoQ from $2,701/oz to $2,370/oz, compared to our forecast of $2,155/oz. Similarly, AISC declined from $2,872/oz in Q2 to $2,615/oz.
Steady performance at Condestable. The operation mined ~700Kt of ore at average grades of 0.72% Cu, 0.23 g/t Au, and 5.27 g/t Ag. ~686Kt processed was modestly below our 720Kt forecast (-5%), and copper recoveries of 88.8% remained marginally below expectations due to mining oxide ore at shallow depths, resulting in copper production of 9.6Mlb vs. our 10.5Mlb forecast (-8%); albeit, increasing QoQ from 9.3Mlb (+3%). Mining is migrating to deeper levels as the expanded haulage fleet is deployed. We were forecasting lower QoQ gold grades of 0.15 g/t, which remained roughly flat from 0.24 g/t in Q2, and was further bolstered by gold recoveries of 77.0% ahead of budget, resulting in gold production of 3.8Koz vs. our 2.8Koz estimate (+36%). Silver production contributed 93.9Koz vs. our 80.3Koz forecast (+17%). Q3’s cash costs and AISC of $2.62/lb and $3.40/lb modestly increased from $2.34/lb and $3.10/lb in Q2.
Financial Highlights
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Q3 revenue of $115.4M increased +10% QoQ from $105.3M in Q2 and came in ahead of our $93.5M forecast by +23%.
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Income from mining operations was $43.8M vs. $39.2M in Q2 (+12% QoQ) and our estimate of $37.5M.
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Q3 EBITDA of ($1.8M) vs. $76.2M in Q2 and our forecast of $39.5M reflects a $41.1M fair value loss on stream obligations. This resulted from updating Condestable’s forecast for the planned expansion to 10Ktpd and extended mine life to 2041. Adjusted EBITDA of $50.0M beat our expectations.
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Q3’s net income of ($28.2M) reflects the fair value loss. Adjusted net income of $22.4M beat our $17.5M forecast and $17.1M in Q2.
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