Atrium Research analyst maintained a Buy rating on Rio2 today and set a price target of C$4.00.
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Atrium Research has given its Buy rating due to a combination of factors surrounding Rio2’s strategic acquisition of a significant interest in the Condestable underground copper mine in Peru. This acquisition is expected to substantially enhance Rio2’s production capacity, with the mine forecasted to produce approximately 27Ktpa CuEq or 80Koz AuEq and having a reserve mine life exceeding ten years. The deal’s structure, which includes a mix of cash, shares, and vendor-supported debt, minimizes upfront dilution and positions Rio2 favorably for future growth.
Atrium Research also highlights the financial attractiveness of the acquisition, noting that at consensus metal prices, the operation is projected to generate an average annual EBITDA of about $110M, valuing the acquisition at approximately 2x EBITDA. This valuation is considered highly favorable, prompting Atrium Research to maintain its Buy rating and increase the target price for Rio2’s stock to C$4.00 per share. Additionally, the anticipated commencement of production at Rio2’s Fenix Gold project further supports the positive outlook for the company.