Rio2 Ltd. (RIO:TSX.V; RIOFF:OTCQX; RIO:BVL) acquired a 15% interest in Royal Road Minerals Ltd. (RYR:TSX.V; RRDMF:OTCQB; RLU:FSE) for CA$4.58 million (CA$4.58M), reported Cantor Fitzgerald Analyst Matthew O'Keefe in a Sept. 29 research note.
"[Rio2] stock continues to offer good value as a near-term, low-cost gold producer trading at 0.6x net asset value versus producing peers at 1x," O'Keefe wrote.
21% Upside Potential
Cantor Fitzgerald reiterated its CA$2.07 per share target price on the Canadian developer and near-term producer, trading at the time of O'Keefe's report at about CA$2.50 per share, the analyst noted. The difference between these two prices implies a potential return for investors of 21%.
Rio2 Ltd. remains a Buy.
The company has 427.6 million shares outstanding, a market cap of CA$885.1M and a 52-week range of US$0.58–2.04 per share.
Upside, Diversification Options
Rio2 purchased 39,855,000 ordinary shares, or 15%, of Royal Road Minerals at CA$0.115 per share via a block trade.
"RIO2 Ltd. sees Royal Road as a top explorer with a portfolio that is geologically attractive and provides options for future diversification and growth," O'Keefe wrote.
Headquartered in Jersey, Royal Road has three highly prospective, early-stage exploration projects, one each in Morocco, Saudi Arabia and Colombia.
Lalla Aziza in Morocco is a high-grade copper project with gold potential. Jabal Sahabiyah in Saudi Arabia, boasts several drill-ready zinc-gold and gold vein targets. Güintar and Margaritas, in Colombia, are two adjacent copper-gold-silver porphyry projects.
"The Rio2 team has had great success with this latter type of deposit through the La Arena project in Peru, that made Rio Alto (Rio2's predecessor) such a success," noted O'Keefe.
Production to Start in January
Rio2's top priority is bringing is flagship Fenix gold project in northern Chile's Atacama region into production. Construction at Fenix was 41% completed at the end of Q2/25 and on track for first gold production in January 2026. Rio2 will bring the heap-leach project online with minimal capex to produce about 80,000 ounces (80 Koz) of gold annually. Plus the potential exists to double or triple production in the future.
"We see the investment in Royal Road as a further signal that construction at Fenix is proceeding on track and that Rio2 remains well funded," O'Keefe wrote.
Currently, the mining company is working on a prefeasibility study (PFS) of increasing throughput at Fenix to 80,000 tons per day, which would boost annual gold production to about 300 Koz from 80 Koz. The PFS is due out in Q1/26.
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