Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today
results for the three months ended March 31, 2014. The Company posted revenues
of $32.4 million and generated $4.5 million in cash flow from operations before
changes in non-cash working capital.
Amerigo's Chairman and CEO, Dr. Klaus Zeitler, stated, "We have now opened up a
new area in Colihues with increased extraction levels and I am therefore looking
forward to higher production levels, particularly in the second half of the
year. The Company's annual guidance for 2014 remains at 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.
"As previously announced, the contract for the acquisition of the processing
rights to the Cauquenes deposit and the extension of the Company's right to
process El Teniente tailings from 2021 to 2037 is now in place, and we continue
to expect to receive all required environmental approvals during the current
quarter. The due diligence being performed by BBVA, the lead bank in the
expansion financing syndicate is virtually complete, and the results are being
provided to other potential syndicate members. As a result, we expect to break
ground on the expansion project during the second half of 2014."
Comparative Annual Overview
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Three months ended March 31,
2014 2013 Change
$ %
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Copper produced, million pounds 10.2 12.8 (2.63) (20%)
Copper sold, million pounds 10.2 12.5 (2.30) (18%)
Molybdenum produced, pounds 125,016 258,301 (133,285) (52%)
Molybdenum sold, pounds 110,774 240,744 (129,970) (54%)
Percentage of copper production from
old tailings 45% 49% (4%)
Revenue ($ thousands) 32,370 43,161 (10,791) (25%)
Cost of sales(1) ($ thousands) 31,706 38,037 (6,331) (17%)
El Teniente royalty costs ($ thousands) 6,421 10,700 (4,279) (40%)
Gross profit ($ thousands) 664 5,124 (4,460) (87%)
Net (loss) profit ($ thousands) (389) 3,238 (3,627) (112%)
Operating cash flow ($ thousands)(2) 4,503 7,335 (2,832) (39%)
Cash flow paid for plant expansion ($
thousands) (3,402) (3,645) (243) (7%)
Cash and cash equivalents ($ thousands) 8,142 13,280 (5,138) (39%)
Bank debt ($ thousands) - 999 (999) (100%)
Average realized copper price per pound 3.36 3.52 (0.16) (5%)
Cash cost per pound(3) 2.22 1.99 0.23 12%
Total cost per pound(3) 3.38 3.15 0.23 7%
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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
March 31, 2014 MD&A for a reconciliation measures to GAAP.
Financial results
-- Revenue was $32.4 million compared to $43.2 million in Q1-2013. Revenues
decreased 25% due to lower copper and molybdenum sales and lower metal
prices.
-- Cost of sales was $31.7 million, compared to $38 million in Q1-2013, a
decrease of 17%, driven by lower El Teniente royalty costs (from lower
production and lower average LME prices) and lower production costs
(resulting from lower production levels).
-- Gross profit was $0.7 million, compared to $5.1 million in Q1-2013.
-- Net loss was $0.4 million compared to a net profit of $3.2 million in
Q1-2013.
-- In Q1-2014, the Company generated cash flow from operations before
changes in non-cash working capital of $4.5 million, compared to $7.3
million in Q1-2013.
Production
-- The Company produced 10.2 million pounds of copper, 20% lower than the
12.8 million pounds produced in Q1-2013.
-- Molybdenum production was 125,016 pounds, 52% lower than the 258,301
pounds produced in Q1-2013.
-- Fresh tailings copper production was adversely affected by low mill
tonnage and unplanned downtime at El Teniente, and lower than expected
copper sulphide grade. MVC continued to work in unfavorable areas of the
Colihues deposit as a result of the change in mine plan made necessary
by a pit slide in Colihues during Q2-2013. Molybdenum production was
lower than in prior quarters due to low throughput and low molybdenum
grade in fresh tailings.
Revenue
-- Revenue decreased to $32.4 million, compared to $43.2 million in Q1-
2013, due to lower production levels and lower metal prices. The
Company's copper selling price before smelting, refining and other
charges was $3.36/lb compared to $3.52/lb in Q1-2013, and the Company's
molybdenum selling price was $9.93/lb compared to $11.34/lb in Q1-2013.
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, before El
Teniente royalty was $2.22/lb, compared to $1.99/lb in Q1-2013. Cash
costs increased for the most part as a result of lower production in Q1-
2014.
-- Total cost (a non-GAAP measure equal to the aggregate of cash cost, El
Teniente royalty, depreciation and accretion, was $3.38/lb compared to
$3.15/lb in Q1-2013, mainly as a result of lower production.
-- Power costs in Q1-2014 were $5.3 million ($0.0900/kwh) compared to $6.4
million ($0.0970/kwh) in Q1-2013. Similar 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 $6.4 million in Q1-2014, compared to
$10.7 million in Q1-2013, due to lower production and metal prices.
Cash and Financing Activities
-- Cash balance was $8.1 million at March 31, 2014 compared to $13.1
million at December 31, 2013.
Investments
-- Cash payments for capital expenditures ("Capex") were $3.4 million
compared to $3.6 million in Q1-2013. Capex payments have been funded
from operating cash flow and cash on hand.
-- Capex incurred in Q1-2014 totaled $2.9 million (Q1-2013: $2 million) and
included project investments in connection with Cauquenes engineering
($0.9 million) and sustaining Capex projects ($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 March 31, 2014
(December 31, 2013: $3.2 million).
Outlook
-- MVC's 2014 production guidance continues to be approximately 45 million
pounds of copper and 800,000 pounds of molybdenum. In addition, the
tolling contract with Compania Minera Maricunga ("Maricunga") is
expected to contribute a further 2 million pounds of copper.
-- 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.
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 MD&A for the three
months ended March 31, 2014 and the Audited Consolidated Financial Statements
and MD&A for the year ended December 31, 2013, 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.
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
QUARTERS ENDED MARCH 31, 2014 AND 2013
All figures expressed in US Dollars and presented under IFRS
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Consolidated Statements of Financial Position
March 31, December 31,
2014 2013
$ $
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Cash and cash equivalents 8,142 13,148
Property, plant and equipment 114,035 116,601
Other assets 57,554 56,360
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Total assets 179,731 186,109
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Total liabilities 58,203 64,370
Shareholders' equity 121,528 121,739
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Total liabilities and shareholders' equity 179,731 186,109
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Consolidated Statements of Comprehensive (Loss)
Quarter ended Quarter ended
March 31, March 31,
2014 2013
$ $
------------------------------
Revenue 32,370 43,161
Cost of sales (31,706) (38,037)
Other expenses (725) (703)
Finance expense (149) (185)
Income tax expense (179) (998)
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Profit for the period (389) 3,238
Other comprehensive income (122) 2,908
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Comprehensive income (511) 6,146
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EPS- Basic and Diluted - 0.02
Consolidated Statements of Cash Flows
Quarter ended Quarter ended
March 31, March 31,
2014 2013
$ $
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Net cash (used in) provided by operating
activities (1,702) 8,203
Net cash provided by investing activities (3,402) (3,645)
Net cash (used in) financing activities 98 (504)
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Net cash inflow outflow (inflow) during the
period (5,006) 4,054
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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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