Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today
results for the quarter ended September 30, 2013.
Amerigo's Chairman and CEO, Dr. Klaus Zeitler, stated "Despite ongoing
production challenges resulting from the Colihues pit slide in Q2 and lower
copper prices in the quarter, the Company's financial position continued to
improve with $4.9 million in cash flow and an increase in the Company's cash
balance to $5.4 million at quarter end. We expect improved results in Q4, and
our outlook for full year 2013 production is 45 million pounds of copper. We are
also pleased to report that due diligence is proceeding with BBVA relating to
the financing for the Cauquenes expansion project, and that we are continuing to
work on the finalization of the Cauquenes formal agreement."
Rob Henderson, President and COO, added, "The cost control measures initiated
this year are having a positive impact on operating results, with Q3 cash costs
at $1.93/lb which are 25% lower than the 2012 Q3 cash costs. Total capex for
2013, including the Cauquenes expansion, is anticipated to be $11 million which
is less than half of the capex incurred in 2012."
Comparative Quarterly Overview
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Three months ended September 30,
2013 2012 Change
$ %
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Copper produced, million pounds 11.04 12.70 (1.66) (13%)
Copper sold, million pounds 10.86 13.02 (2.16) (17%)
Molybdenum produced, pounds 193,138 321,788 (128,650) (40%)
Molybdenum sold, pounds 206,645 337,818 (131,173) (39%)
Percentage of copper production
from old tailings 37% 47% (10%)
Revenue ($ thousands) 31,950 44,231 (12,281) (28%)
Cost of sales (1) ($ thousands) 30,202 46,285 (16,083) (35%)
El Teniente royalty costs ($
thousands) 7,257 10,179 (2,922) (29%)
Gross profit (loss) ($
thousands) 1,748 (2,054) 3,802
Net profit (loss) ($ thousands) 1,039 (4,189) 5,228 (125%)
Operating cash flow ($
thousands) 4,872 2,707 2,165 80%
Cash flow paid for plant
expansion ($ thousands) (2,533) (4,606) 2,073 (45%)
Cash and cash equivalents ($
thousands) 5,368 35,649 (30,281) (85%)
Bank debt ($ thousands) - 2,501 (2,501) (100%)
Average realized copper price
per pound 3.19 3.52 (0.33) (9%)
Cash cost per pound (2) 1.93 2.57 (0.64) (25%)
Total cost per pound (3) 2.96 3.69 (0.73) (20%)
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(1) Includes El Teniente royalty costs
(2, 3) Cash cost and total cost per pound are non-GAAP measures . Please refer
to the September 30, 2013 Company's MD&A for a reconciliation of these measures
to GAAP
Financial results
-- Revenue was $32 million, compared to $44.2 million in Q3-2012. Revenues
decreased 28% due to lower copper and molybdenum sales volume and lower
average metal prices.
-- Cost of sales was $30.2 million, compared to $46.3 million in Q3-2012, a
decrease of 35% 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 $1.7 million, compared to a gross loss of $2 million in
Q3-2012.
-- Net profit was $1 million, compared to a net loss of $4.2 million in Q3-
2012.
Production
-- The Company produced 11.04 million pounds of copper, 13% lower than the
12.70 million pounds produced in Q3-2012. Production was affected by
challenging mining conditions in Colihues which resulted in lower
recovery rates.
-- Molybdenum production was 193,138 pounds, 40% lower than the 321,788
pounds produced in Q3-2012, as a result of the Colihues mine sequence
delivering lower molybdenum grades to the MVC plant.
Revenue
-- Revenue decreased to $32 million from $44.2 million in Q3-2012, due to
lower production levels and lower metal prices. The Company's copper
selling price before smelting, refining and other charges was $3.19/lb
compared to $3.52/lb in Q3-2012, and the Company's molybdenum selling
price was $9.41/lb compared to $11.64/lb in Q3-2012.
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 $1.93/lb, compared to $2.57/lb in Q3- 2012. Cash costs
decreased in Q3-2013 mostly as a result of a $0.44/lb reduction in power
costs.
-- Total cost (the aggregate of cash cost, El Teniente royalty,
depreciation and accretion) was $2.96/lb compared to $3.69/lb in Q3-
2012.
-- Power costs in Q3-2013 were $5.1 million ($0.0802/kwh) compared to $11.5
million ($0.1790/kwh) in Q3-2012. 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 Q3-2013, compared to
$10.2 million in Q3- 2012, due to lower production and metal prices.
Cash and Financing Activities
-- Cash balance was $5.4 million at September 30, 2013 compared to $3.9
million at June 30, 2013 and $9.3 million at December 31, 2012.
Investments
-- Cash payments for capital expenditures ("Capex") were $2.5million,
compared to $4.6 million in Q3-2012, and were funded from operating cash
flow and cash at hand. YTD cash payments for Capex were $9.9 million,
compared to $20.9 million in 2012.
-- Capex incurred in Q3-2013 totaled $2.2 million (Q3-2012: $3.4 million)
and included project investments in connection with Cauquenes
engineering and permitting and sustaining Capex projects. YTD-2013
incurred Capex totaled $7.2 million (YTD-2012: $19.2 million).
-- The Company's investments in Candente Copper Corp. and Los Andes Copper
Ltd. had an aggregate fair value of $3.1 million at September 30, 2013
(December 31, 2012: $4.1 million).
Outlook
-- Management guidance for 2013 production is 45 million pounds of copper
and 800,000 pounds of molybdenum.
-- Projected cash cost for 2013 is 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. The 2013 Cauquenes engineering and
permitting costs have been revised from $2.4 million to $3.8 million.
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 nine months ended September 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 SEPTEMBER, 2013 AND 2012
All figures expressed in US Dollars and presented under IFRS
Consolidated Statements of Financial Position
September 30, December 31,
2013 2012
$ $
------------------------------
Cash and cash equivalents 5,368 9,250
Property, plant and equipment 123,877 138,337
Other assets 53,784 56,829
------------------------------
------------------------------
Total assets 183,029 204,416
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------------------------------
Total liabilities 54,358 72,218
Shareholders' equity 128,671 132,198
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Total liabilities and shareholders' equity 183,029 204,416
------------------------------
------------------------------
Consolidated Statements of Comprehensive Income
Quarter ended Quarter ended
September 30, September 30,
2013 2012
$ $
------------------------------
Revenue 31,950 44,231
Cost of sales (30,202) (46,285)
Other (expenses) gains (233) 530
Finance expense (166) (250)
Income tax expense (310) (2,415)
------------------------------
Loss for the period 1,039 (4,189)
Other comprehensive income 683 7,377
------------------------------
Comprehensive income 1,722 3,188
------------------------------
------------------------------
EPS (LPS) - Basic and Diluted 0.01 (0.02)
Consolidated Statements of Cash Flows
Quarter ended Quarter ended
September 30, September 30,
2013 2012
$ $
------------------------------
Net cash provided by operating activities 4,164 33,350
Net cash used in investing activities (2,533) (4,606)
Net cash used in financing activities - (1,150)
------------------------------
Net cash outflow during the period 1,631 27,594
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FOR FURTHER INFORMATION PLEASE CONTACT:
Amerigo Resources Ltd.
Dr. Klaus Zeitler
Chairman & CEO
(604) 218-7013 or (604) 697-6201
www.amerigoresources.com
Amerigo Resources (TSX:ARG)
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