Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company")
reported today results for the quarter ended March 31, 2013.
Amerigo's President and CEO, Dr. Klaus Zeitler, stated, "We are
pleased to report excellent production and financial results for
the first quarter of 2013. MVC produced 12.8 million pounds of
copper at a cash cost of $1.95/lb Cu. Net earnings for the quarter
at $3.2 million were 39% higher than in Q1-2012 and operating cash
flow was $7.3 million. MVC also continued to make progress in
negotiations with Codelco with respect to the right to process
tailings from the Cauquenes impoundment and an extension to the
fresh tailings contract."
Rob Henderson, Chief Operating Officer, said, "A recent slide in
one of the Colihues working areas has necessitated a change to
MVC's mine plan, and during the second and third quarters Colihues
extraction rates and grades will be lower than originally
anticipated. Copper production is now expected to be at the lower
end of our previously announced guidance of 45 to 50 million pounds
and guidance for molybdenum has been revised downward to 700,000
pounds for 2013. The Company is also conducting a detailed economic
review of molybdenum production under current prices."
Dr. Zeitler added, "The recent volatility in the copper price
together with our revised production guidance has adversely
affected projected financial performance for the remainder of 2013,
and particularly for the next two quarters. In light of these
circumstances the board of directors has decided that it is prudent
to defer a decision on the Company's next dividend payment until
Q3-2013. Amerigo remains committed to its current dividend policy
of paying dividends averaging at least one-third of reported net
earnings calculated over a period of years."
Comparative Quarterly Overview
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Three months ended March 31,
2013 2012 Change
$ %
---------------------------------------------------------------------------
Copper produced, million pounds 12.83 13.88 (1.05) (8%)
Copper sold, million pounds 12.48 14.08 (1.60) (11%)
Molybdenum produced, pounds 258,301 216,292 42,009 19%
Molybdenum sold, pounds 240,744 303,547 (62,803) (21%)
Percentage of copper production from 49% 52% (3%)
old tailings
Revenue ($ thousands) 43,161 50,499 (7,338) (15%)
Cost of sales(1) ($ thousands) 38,037 47,367 (9,330) (20%)
El Teniente royalty costs ($ 10,700 11,684 (984) (8%)
thousands)
Gross profit ($ thousands) 5,124 3,132 1,992 64%
Net profit ($ thousands) 3,238 2,310 928 40%
Operating cash flow ($ thousands) 7,335 7,141 194 2.72%
Cash flow paid for plant expansion (3,645) (8,601) 4,956 (58%)
($ thousands)
Cash and cash equivalents ($ 13,280 19,176 (5,896) (31%)
thousands)
Bank debt ($ thousands) 999 4,394 (3,395) (77%)
Average realized copper price per 3.52 3.55 (0.03) (1%)
pound
Cash cost per pound 1.95 2.35 (0.40) (17%)
Total cost per pound 3.11 3.48 (0.37) (11%)
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(1) Includes El Teniente royalty costs
Financial results
-- Revenue was $43.2 million, compared to $50.5 million in Q1-2012.
Revenues decreased 15% due to lower copper and molybdenum sales volume
and lower average metal prices.
-- Cost of sales was $38 million, compared to $47.4 million in Q1-2012, a
decrease of 20% 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 $5.1 million, compared to $3.1 million in Q1-2012.
-- Net profit was $3.2 million, compared to $2.3 million in Q1-2012.
Production
-- The Company produced 12.8 million pounds of copper, 8% lower than the
13.9 million pounds produced in Q1-2012.
-- Molybdenum production was 258,301 pounds, 19% higher than the 216,292
pounds produced in Q1-2012.
Revenue
-- Revenue decreased to $43.2 million, compared to $50.5 million in Q1-
2012, due to lower production levels and lower metal prices. The
Company's copper selling price before smelting, refining and other
charges was $3.52/lb compared to $3.55/lb in Q1-2012, and the Company's
molybdenum selling price was $11.34/lb compared to $14.10/lb in Q1-2012.
Costs
-- Cash cost (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 $1.95/lb,
compared to $2.35/lb in Q1-2012. Cash costs decreased in Q1-2013 mostly
as a result of a $0.46/lb reduction in power costs.
-- Total cost (the aggregate of cash cost, El Teniente royalty,
depreciation and accretion) was $3.11/lb compared to $3.48/lb in Q1-
2012.
-- Power costs in Q1-2013 were $6.4 million ($0.0970/kwh) compared to $13.3
million ($0.2151/kwh) in Q1-2012. 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 $10.7 million in Q1-2013, compared to
$11.7 million in Q1-2012, due to lower production and metal prices.
Cash and Financing Activities
-- Cash balance was $13.3 million at March 31, 2013 compared to $9.3
million at December 31, 2012.
Investments
-- Cash payments for capital expenditures ("Capex") were $3.6 million
compared to $8.6 million in Q1-2012. Capex payments have been funded
from operating cash flow and cash at hand.
-- Capex incurred in Q1-2013 totaled $2 million (Q1-2012: $7.4 million) and
included project investments in anticipation of the Company obtaining
the rights to process tailings from Cauquenes and sustaining Capex
projects.
-- The Company's investments in Candente Copper Corp. ("Candente Copper)",
Candente Gold Corp. ("Candente Gold"), Cobriza Metals Corp. ("Cobriza")
and Los Andes Copper Ltd. ("Los Andes") had an aggregate fair value of
$4.8 million at March 31, 2013 (December 31, 2012: $4.1 million).
Outlook
-- Management guidance for 2013 copper production remains at the lower end
of the previously announced range of 45 to 50 million pounds. Guidance
for molybdenum production has been revised downwards to approximately
700,000 pounds. The Company is also conducting a detailed economic
review of molybdenum production under current prices, given the minimal
profitability provided by the molybdenum operations.
-- Cash cost continues to be projected to be between $1.95/lb and $2.15/lb
Cu in 2013.
-- Excluding the Cauquenes project, 2013 Capex at MVC is now estimated to
be approximately $7.2 million, an increase of $0.2 million from prior
guidance. Capex for Cauquenes engineering and permitting in 2013 has
been revised from $1.9 million to $2.4 million. Codelco/El Teniente has
agreed to reimburse up to $3.8 million of these costs in the event the
parties are unable to reach an agreement for the processing of Cauquenes
tailings.
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 quarter ended March 31, 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: 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, 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 MARCH 31, 2013 AND 2012
All figures expressed in US Dollars and presented under IFRS
Consolidated Statements of Financial Position
2013 2012
$ $
------------------------
Cash and cash equivalents 13,280 9,250
Property, plant and equipment 157,775 157,073
Other assets 37,233 38,093
------------------------
Total assets 208,288 204,416
------------------------
Total liabilities 69,913 72,218
Shareholders' equity 138,375 132,198
------------------------
Total liabilities and shareholders' equity 208,288 204,416
------------------------
Consolidated Statements of Comprehensive Income
March 31, March 31,
2013 2012
$ $
------------------------
Revenue 43,161 50,499
Cost of sales (38,037) (47,367)
Other expenses (703) (42)
Finance expense (185) (199)
Income tax expense (998) (581)
------------------------
Profit for the period 3,238 2,310
Other comprehensive income 2,908 8,567
------------------------
Comprehensive income 6,146 10,877
------------------------
EPS- Basic and Diluted 0.02 (0.01)
Consolidated Statements of Cash Flows
March 31, March 31,
2013 2012
$ $
------------------------
Net cash provided by operating activities 8,203 7,584
Net cash used in investing activities (3,645) (8,601)
Net cash used in financing activities (504) (353)
------------------------
Net cash inflow (outflow) during the period 4,054 (1,370)
------------------------
Contacts: Amerigo Resources Ltd. Dr. Klaus Zeitler President
& CEO (604) 218-7013 Amerigo Resources Ltd. (604) 697-6201
www.amerigoresources.com
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