Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today
results for the year ended December 31, 2013.
Amerigo's Chairman and CEO, Dr. Klaus Zeitler, stated "We are pleased to
announce that 2013 was a positive year financially for Amerigo, with revenues in
excess of $143 million and operating cash flow of $19 million. The Company ended
the year with more than $13 million in cash and free of long term debt, and is
now well positioned to proceed with the Cauquenes expansion project.
Negotiations for the formal agreements granting the Company the rights to the
Cauquenes tailings deposit and extending its fresh tailings contract from 2021
to 2037 are in their final stages, we anticipate receiving required
environmental approvals by the end of the current quarter and the due diligence
process in respect of the loan for the majority of the capital cost of the
expansion project is well underway. As a result, we continue to expect to break
ground on the Cauquenes expansion during Q2. The Company's guidance for 2014 is
for production of 45 million pounds of copper and 800,000 pounds of molybdenum,
with cash costs projected to be between $2.15 and $2.25 per pound of copper."
Comparative Annual Overview
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Years ended December 31,
2013 2012 Change
$ %
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Copper produced, million pounds 45.7 51.7 (6.0) (12%)
Copper sold, million pounds 45.4 51.6 (6.2) (12%)
Molybdenum produced, pounds 809,057 1,057,717 (248,660) (24%)
Molybdenum sold, pounds 797,444 1,170,703 (373,259) (32%)
Percentage of copper production
from old tailings 40% 47% (7%)
Revenue (thousands) 143,592 181,761 (38,169) (21%)
Cost of sales (1) (thousands) 137,556 182,851 (45,295) (25%)
El Teniente royalty costs
(thousands) 33,815 43,874 (10,059) (23%)
Gross profit (loss) (thousands) 6,036 (1,090) 7,126 654%
Net profit ( loss) (thousands) 993 (8,192) 9,185 112%
Operating cash flow (thousands) 19,136 12,284 6,852 56%
Cash flow paid for plant
expansion (thousands) (2) (13,391) (23,708) 10,317 (44%)
Cash and cash equivalents
(thousands) 13,148 9,250 3,898 42%
Bank debt (thousands) - 1,483 (1,483) (100%)
Average realized copper price
per pound 3.32 3.58 (0.26) (7%)
Cash cost per pound (3) 2.08 2.46 (0.38) (15%)
Total cost per pound (3) 3.22 3.62 (0.40) (11%)
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(1) Includes El Teniente royalty costs
(2) Excluding working capital changes
(3) Cash and total costs are non-GAAP measures, refer to the
Company's MD&A for a reconciliation to cost of sales .
Financial results
-- Revenue was $143.6 million compared to $181.8 million in 2012. Revenues
decreased 21% due to lower copper and molybdenum sales and lower metal
prices.
-- Cost of sales was $137.6 million, compared to $182.9 million in 2012, a
decrease of 25%, driven by lower production and 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 $6 million, compared to gross loss of $1.1 million in
2012.
-- Net profit was $1 million compared to a net loss of $8.2 million in
2012.
Production
-- The Company produced 45.7 million pounds of copper, 12% lower than the
51.7 million pounds produced in 2012.
-- Molybdenum production was 809,057 pounds, 24% lower than the 1,057,717
pounds produced in 2012.
-- Production was adversely affected by a mine slide and pit wall failure
in the Colihues deposit during April 2013 and by low process plant
recoveries from both fresh tailings and Colihues.
Revenue
-- Revenue decreased to $143.6 million from $181.8 million in 2012. The
Company's selling prices fell from $3.58/lb in 2012 to $3.32/lb for
copper and from $12.64/lb to $10.13/lb for molybdenum, and copper and
molybdenum sales volume decreased 12% and 32%, respectively, from 2012
levels.
Costs
-- Cash cost (a non-GAAP measure equal to the aggregate of smelting,
refining and other charges, production costs net of molybdenum-related
net benefits, administration and transportation costs, see the Company's
MD&A) before El Teniente royalty was $2.08/lb, compared to $2.46/lb in
2012. Cash costs decreased mostly as a result of lower power costs.
-- Total cost (a non-GAAP measure equal to the aggregate of cash cost, El
Teniente royalty, depreciation and accretion, see the Company's MD&A)
was $3.22/lb compared to $3.62/lb in 2012, as a result of lower cash
cost and El Teniente royalties.
-- Power costs in 2013 were $23.8 million ($0.0939/kwh) compared to $50.7
million ($0.1895/kwh) in 2012, Similar lower power costs are expected at
least to December 31, 2017, the end of the term of MVC's current power
contract
-- Total El Teniente royalties were $33.8 million in 2013, compared to
$43.9 million in 2012, due to lower production and metal prices.
Cash and Financing Activities
-- Cash balance was $13.1 million at December 31, 2013 compared to $9.2
million at December 31, 2012.
Investments
-- Cash payments for capital expenditures ("Capex") were $13.4 million
compared to $23.7 million in 2012. Capex payments have been funded from
operating cash flow and cash at hand.
-- Capex incurred in 2013 totaled $10.4 million (2012: $22.2 million) and
included project investments in connection with Cauquenes engineering
and permitting ($3.6 million) and sustaining Capex projects ($6.8
million).
-- The Company's investments in Candente Copper Corp. and Los Andes Copper
Ltd. had an aggregate fair value of $3.2 million at December 31, 2013
(December 31, 2012: $4.1 million).
Outlook
-- In 2014 MVC is expected to produce approximately 45 million pounds of
copper and 800,000 pounds of molybdenum, not accounting for the
Company's Cauquenes expansion. In addition, the tolling contract with
Minera Maricunga is expected to contribute a further 2 million pounds of
copper. The 2014 production budget anticipates continued low grades in
Colihues as the area to be mined contains recent DET tailings deposited
in 2006.
-- Cash cost is projected to be between $2.15/lb and $2.25/lb in 2014.
-- 2014 Sustaining Capex at MVC is estimated to be approximately $3.8
million. Capex for the Cauquenes expansion project is estimated to be
approximately $140 million (see the
Company's MD&A).
The information in this news release and the Selected Financial Information
contained in the following page should be read in conjunction with the Audited
Consolidated Financial Statements and Management's Discussion and Analysis for
the years ended December 31, 2013 and 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: ARG:TSX
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, 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
YEARS ENDED DECEMBER 31, 2013 AND 2012
All figures expressed in US Dollars and presented under IFRS
Consolidated Statements of Financial Position
December 31, December 31,
2013 2012
$ $
----------------------------
Cash and cash equivalents 13,148 9,250
Property, plant and equipment 116,601 138,337
Other assets 56,360 56,829
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Total assets 186,109 204,416
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Total liabilities 64,370 72,218
Shareholders' equity 121,739 132,198
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Total liabilities and shareholders' equity 186,109 204,416
----------------------------
Consolidated Statements of Comprehensive Income
(Loss)
Year ended Year ended
December 31, December 31,
2013 2012
$ $
----------------------------
Total revenue, net of smelter and refinery
charges 143,592 181,761
Cost of sales (137,556) (182,851)
Other expenses (4,236) (3,751)
Finance expense (626) (1,056)
Income tax expense (181) (2,295)
----------------------------
Profit (loss) for the year 993 (8,192)
Other comprehensive (loss) income (11,504) 7,214
----------------------------
Comprehensive loss (10,511) (978)
----------------------------
EPS (LPS) - Basic and Diluted 0.01 (0.05)
Consolidated Statements of Cash Flows
December 31, December 31,
2013 2012
$ $
----------------------------
Net cash provided by operating activities 19,523 22,726
Net cash used in investing activities (13,391) (23,708)
Net cash (used in) financing activities (1,497) (10,193)
----------------------------
Net cash inflow (outflow) 4,635 (11,175)
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FOR FURTHER INFORMATION PLEASE CONTACT:
Amerigo Resources Ltd.
Dr. Klaus Zeitler
Chairman & CEO
(604) 218-7013 or (604) 697-6201
Amerigo Resources Ltd.
(604) 681-2802
(604) 682-2802 (FAX)
www.amerigoresources.com
Amerigo Resources (TSX:ARG)
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