Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company")
reported today results for the quarter ended June 30, 2013.
Amerigo's President and CEO, Dr. Klaus Zeitler, stated "Revenues
were lower due to lower metal prices and reduced production levels
caused by the April slide in a Colihues working area and the
resulting change in mine plan. The Company generated $4.1 million
in cash flow and paid off its remaining bank debt in the quarter.
In addition, as announced in our July 22, 2013 press release, the
Codelco board approved the major terms of an agreement granting
Amerigo the rights to process tailings from the Cauquenes tailings
deposit and extending the fresh tailings contract from 2021 to
2037. On completion of the Cauquenes expansion the Company's annual
copper production is expected to double to 90 million pounds with
cash costs reduced by more than 20% from current levels. Being
debt-free helps clear the way for the debt financing the Company is
seeking for the project."
Rob Henderson, Chief Operating Officer, added, "Despite
continuing challenging mining conditions in Colihues, copper
production levels have risen each month since April through to the
end of July. Our guidance for the year remains unchanged with
copper production to be at the lower end of a range from 45 to 50
million pounds and molybdenum production of approximately 700,000
pounds. The Company has also implemented cost savings measures at
MVC, including a reduction in the number of subcontractors, which
are expected to have a positive impact on the Company's financial
results starting in Q3-2013."
Comparative Quarterly Overview
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Three months ended June 30,
2013 2012 Change
$ %
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Copper produced, million pounds 9.55 11.57 (2.02) (17%)
Copper sold, million pounds 9.44 10.76 (1.32) (12%)
Molybdenum produced, pounds 176,155 228,932 (52,777) (23%)
Molybdenum sold, pounds 177,845 243,263 (65,418) (27%)
Percentage of copper production from
old tailings 37% 42% (5%)
Revenue ($ thousands) 31,446 40,013 (8,567) (21%)
Cost of sales (1) ($ thousands) 31,203 40,092 (8,889) (22%)
El Teniente royalty costs ($ thousands) 7,317 9,589 (2,272) (24%)
Gross profit (loss) ($ thousands) 243 (79) 322
Net (loss) profit ($ thousands) (837) (1,002) 165 (16%)
Operating cash flow ($ thousands) 4,142 3,643 499 14%
Cash flow paid for plant expansion ($
thousands) (3,676) (7,663) 3,987 (52%)
Cash and cash equivalents ($ thousands) 3,881 7,592 (3,711) (49%)
Bank debt ($ thousands) - 3,366 (3,366) (100%)
Average realized copper price per pound 3.40 3.74 (0.34) (9%)
Cash cost per pound (2) 2.24 2.61 (0.37) (14%)
Total cost per pound (3) 3.48 3.77 (0.29) (8%)
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(1) Includes El Teniente royalty costs
(2), (3) Cash cost and total cost per pound are non-GAAP measures. Refer
to the Company`s June 30, 2013 Management's Discussion and Analysis for a
reconciliation of these measures to GAAP.
Financial results
-- Revenue was $31.4 million, compared to $40 million in Q2-2012. Revenues
decreased 21% due to lower copper and molybdenum sales volume and lower
average metal prices.
-- Cost of sales was $31.2 million, compared to $40.1 million in Q2-2012, a
decrease of 22% driven by lower production levels and substantially
reduced power costs mainly as a result of the change in the Company's
power contract from a variable to a lower fixed rate.
-- Gross profit was $243,000, compared to a gross loss of $79,000 in Q2-
2012.
-- Net loss was $837,000, compared to a net loss of $1 million in Q2-2012.
Production
-- The Company produced 9.6 million pounds of copper, 17% lower than the
11.6 million pounds produced in Q2-2012.
-- Molybdenum production was 176,155 pounds, 23% lower than the 228,932
pounds produced in Q2-2012.
Revenue
-- Revenue decreased to $31.4 million, compared to $40 million in Q2-2012,
due to lower production levels and lower metal prices. The Company's
copper selling price before smelting, refining and other charges was
$3.40/lb compared to $3.74/lb in Q2-2012, and the Company's molybdenum
selling price was $11.00/lb compared to $14.02/lb in Q2-2012.
Costs
-- Cash cost (the aggregate of smelting, refining and other charges,
production costs net of inventory adjustments and molybdenum-related net
benefits, administration and transportation costs) before El Teniente
royalty was $2.24/lb, compared to $2.61/lb in Q2-2012. Cash costs
decreased in Q2-2013 mostly as a result of a $0.56/lb reduction in power
costs.
-- Total cost (the aggregate of cash cost, El Teniente royalty,
depreciation and accretion) was $3.48/lb compared to $3.77/lb in Q2-
2012.
-- Power costs in Q2-2013 were $5.1 million ($0.0858/kwh) compared to $12.7
million ($0.1947/kwh) in Q2-2012. Similar lower power cost levels are
expected to December 31, 2017, the end of the term of MVC's current
power contract.
-- Total El Teniente royalties were $7.3 million in Q2-2013, compared to
$9.6 million in Q2-2012, due to lower production and metal prices.
Cash and Financing Activities
-- Cash balance was $3.9 million at June 30, 2013 compared to $9.3 million
at December 31, 2012.
Investments
-- Cash payments for capital expenditures ("Capex") were $3.7 million,
compared to $7.7 million in Q2-2012, and were funded from operating cash
flow and cash at hand. YTD cash payments for Capex were $7.3 million,
compared to $16.3 million in 2012.
-- Capex incurred in Q2-2013 totaled $3 million (Q2-2012: $8.4 million) and
included project investments in connection with the Cauquenes expansion
and sustaining Capex projects. YTD-2013 incurred Capex totaled $5
million (YTD-2012: $15.8 million).
-- The Company's investments in Candente Copper Corp. and Los Andes Copper
Ltd. had an aggregate fair value of $2.9 million at June 30, 2013
(December 31, 2012: $4.1 million).
Outlook
-- Management guidance for 2013 production remains at the lower end of the
range of 45 to 50 million pounds of copper and 700,000 pounds of
molybdenum. As a result of a slide in a Colihues working area and
consequent change in mine plan, Colihues extraction rates and grades
have been negatively affected but are expected to improve in the second
half of the year.
-- Projected cash cost for 2013 continues to be between $1.95/lb and
$2.15/lb Cu.
-- Excluding the Cauquenes project, 2013 estimated Capex at MVC continues
to be approximately $7.2 million, with $2.4 million for Cauquenes
engineering and permitting.
The information in this news release and the Selected Financial
Information contained in the following page should be read in
conjunction with the Unaudited Condensed Consolidated Interim
Financial Statements and Management's Discussion and Analysis for
the three and six months ended June 30, 2013 and the Audited
Consolidated Financial Statements and Management's Discussion and
Analysis for the year ended December 31, 2012, which will be
available at the Company's website at www.amerigoresources.com and
at www.sedar.com.
Amerigo Resources Ltd. produces copper and molybdenum under a
long term partnership with the world's largest copper producer,
Codelco, by means of processing fresh and old tailings from the
world's largest underground copper mine, El Teniente near Santiago,
Chile. Tel: (604) 681-2802; Fax: (604) 682-2802; Web:
www.amerigoresources.com; Listing: TSX:ARG.
Certain of the information and statements contained herein that
are not historical facts, constitute "forward-looking information"
within the meaning of the Securities Act (British Columbia),
Securities Act (Ontario) and the Securities Act (Alberta)
("Forward-Looking Information"). Forward-Looking Information is
often, but not always, identified by the use of words such as
"seek", "anticipate", "believe", "plan", "estimate", "expect" and
"intend"; statements that an event or result is "due" on or "may",
"will", "should", "could", or might" occur or be achieved; and,
other similar expressions. More specifically, Forward-Looking
Information contained herein includes, without limitation,
information concerning future tailings production volumes and the
Company's copper and molybdenum production, all of which involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by
such Forward-Looking Information; including, without limitation,
material factors and assumptions relating to, and risks and
uncertainties associated with, the supply of tailings from El
Teniente and extraction of tailings from the Colihues tailings
impoundment, the achievement and maintenance of planned production
rates, the evolving legal and political policies of Chile, the
volatility in the Chilean economy, military unrest or terrorist
actions, metal price fluctuations, favourable governmental
relations, the availability of financing for activities when
required and on acceptable terms, the estimation of mineral
resources and reserves, current and future environmental and
regulatory requirements, the availability and timely receipt of
permits, approvals and licenses, industrial or environmental
accidents, equipment breakdowns, availability of and competition
for future mineral acquisition opportunities, availability and cost
of insurance, labour disputes, land claims, the inherent
uncertainty of production and cost estimates, currency
fluctuations, expectations and beliefs of management and other
risks and uncertainties, including those described under Risk
Factors in the Company's Annual Information Form and in
Management's Discussion and Analysis in the Company's financial
statements.
Such Forward-Looking Information is based upon the Company's
assumptions regarding global and Chilean economic, political and
market conditions and the price of metals, including copper and
molybdenum, and future tailings production volumes and the
Company's copper and molybdenum production. Among the factors that
have a direct bearing on the Company's future results of operations
and financial conditions are changes in project parameters as plans
continue to be refined, interruptions in the supply of fresh
tailings from El Teniente, further delays in the extraction of
tailings from the Colihues tailings impoundment, a change in
government policies, competition, currency fluctuations and
restrictions and technological changes, among other things. Should
one or more of any of the aforementioned risks and uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from any conclusions, forecasts
or projections described in the Forward-Looking Information.
Accordingly, readers are advised not to place undue reliance on
Forward-Looking Information. Except as required under applicable
securities legislation, the Company undertakes no obligation to
publicly update or revise Forward-Looking Information, whether as a
result of new information, future events or otherwise.
AMERIGO RESOURCES LTD.
SELECTED FINANCIAL INFORMATION
QUARTERS ENDED JUNE, 2013 AND 2012
All figures expressed in US Dollars and presented under IFRS
Consolidated Statements of Financial Position
June 30, December 31,
2013 2012
$ $
------------------------------
Cash and cash equivalents 3,881 9,250
Property, plant and equipment 126,054 138,337
Other assets 55,553 56,829
------------------------------
Total assets 185,488 204,416
------------------------------
------------------------------
Total liabilities 58,539 72,218
Shareholders' equity 126,949 132,198
------------------------------
Total liabilities and shareholders' equity 185,488 204,416
------------------------------
------------------------------
Consolidated Statements of Comprehensive Loss
Quarter ended Quarter ended
June 30, June 30,
2013 2012
$ $
--------------------------------
Revenue 31,446 40,013
Cost of sales (31,203) (40,092)
Other expenses (1,176) (1,194)
Finance expense (114) (177)
Income tax recoveries 210 448
--------------------------------
Loss for the period (837) (1,002)
Other comprehensive loss (10,610) (6,056)
--------------------------------
Comprehensive loss (11,447) (7,058)
--------------------------------
--------------------------------
LPS- Basic and Diluted (0.01) (0.01)
Consolidated Statements of Cash Flows
Quarter ended Quarter ended
June 30, June 30,
2013 2012
$ $
--------------------------------
Net cash (used in) provided by operating
activities (4,764) 270
Net cash used in investing activities (3,676) (7,663)
Net cash used in financing activities (993) (4,227)
--------------------------------
Net cash outflow during the period (9,433) (11,620)
--------------------------------
Contacts: Amerigo Resources Ltd. Dr. Klaus Zeitler President
& CEO (604) 218-7013 (604) 697-6201
www.amerigoresources.com
Amerigo Resources (TSX:ARG)
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Amerigo Resources (TSX:ARG)
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