Amerigo Resources Ltd

Published : August 12th, 2015

Amerigo Announces Q2-2015 Financial Results

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Amerigo Announces Q2-2015 Financial Results

Microsoft Word - NR10 08-12-15 Q2 2015 Financial Results DRAFT v4

August 12, 2015

N.R. 2015- 10

Amerigo Announces Q2-2015 Financial Results

Revenues of $16.4 million1, $2.0 million net loss

$0.6 million in operating cash outflow

Cauquenes expansion on schedule and on budget

VANCOUVER, BRITISH COLUMBIA - August 12, 2015/Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today results for the three months ended June 30, 2015. The Company posted revenues of $16.4 million1 and operating cash outflow before changes in non-cash working capital of $0.6 million.
Rob Henderson, Amerigo's President and COO, stated "MVC's operating results for the quarter were adversely affected by materially lower copper prices, low fresh tailings tonnage and poor quality material from the Colihues deposit. In order to preserve operating cash flow in the final stage of the Cauquenes Phase 1 expansion, operations at Colihues were shut down effective July
20, 2015. Colihues workers have been redeployed to the Cauquenes expansion to assist in repositioning extraction equipment and support the expansion subcontractors".
Amerigo's Chairman and CEO, Dr. Klaus Zeitler, added "During these difficult times we continue to focus on reducing costs in MVC and completing the Cauquenes expansion. Economic performance is expected to improve when MVC begins to mine the higher grade Cauquenes tailings, and I am pleased to report that Phase 1 of the Cauquenes expansion project is now approximately 75% complete and remains on budget and on schedule for completion in Q4 of this year".

1 Effective January 1, 2015, all copper concentrates produced by the Company's wholly-owned subsidiary Minera Valle Central S.A. ("MVC") are delivered to El Teniente under a tolling agreement. Revenue is recognized as a tolling fee and reported as a component of revenue, net of royalties to El Teniente and transportation costs. In prior years the nature of MVC's agreements required that royalties to El Teniente and transportation costs be reported as components of production costs. To facilitate comparative analysis, Q2-2014 revenue and production cost figures are presented in this news release on a pro-forma basis, such that they are adjusted to the results that would have been generated if the tolling agreement with El Teniente had been in place on January 1, 2014. The reconciliation of revenue and production costs, from amounts reported in Amerigo's Q2-2014 public disclosure documents, to the pro-forma presentation is as follows:

Page 2


As re porte d Pro-forma

Re ve nue

Copper net revenue 27,474 27,474

Smelter, refinery and other charges (3,380) (3,380) El Teniente royalties - (6,250) Transportation - (347)

24,094 17,497

Molybdenum and other tolling revenue 3,231 3,231

27,325 20,728

Tolling a nd production costs

Production costs (15,565) (15,565) El Teniente royalties (6,250) - Depreciation and amortization (2,668) (2,668) Transportation costs (347) - Administration (1,297) (1,297)

(26,127) (19,530)

Gross profit 1,198 1,198

Comparative Overview

Q2-2015 Q2-2014


1 Copper production includes production under a tolling agreement with El Teniente

2 Revenue is reported net of smelting, refining and roasting charges, El Teniente royalties and transportation costs.

3 El Teniente royalties are deducted from revenue.

4 Operating cash flow before changes in non-cash working capital.

5 Cash and total costs are non-GAAP measures.

6 Q2-2014 amounts are reported on a pro-forma basis

Financial results

Revenue was $16.4 million compared to $20.7 million in the pro-forma Q2-2014, a 21% decrease due to lower copper tolling fees, resulting mostly from lower copper prices. There were no molybdenum sales in Q2-2015.

Tolling and production costs were $18.1 million, a decrease of 7% from $19.5 million in the pro- forma Q2-2014 results, driven by lower production and cost reduction initiatives at MVC.

Gross loss was $1.7 million (Q2-2014: gross profit of $1.2 million) and net loss was $2.0 million (Q2-2014: $8.3 million). Q2-2014 results include a $5.7 million net loss from change in estimates as a result of MVC and DET entering into the Master Agreement.

Page 3

In Q2-2015 the Group had operating cash outflow before changes in non-cash working capital of $0.6 million, compared to operating cash inflow of $1.5 million in Q2-2014.


Q2-2015 copper production was 9.1 million pounds, 3% lower than 9.3 million pounds in Q2-


There was no molybdenum production in Q2-2015 (Q2-2014: 0.2 million pounds).

Production in Q2-2015 was higher than in Q1-2015 but fresh tailings tonnage remained low and Colihues production was adversely affected by poor quality material. Production from Colihues was suspended on July 20, 2015 due to ongoing low copper prices. As a result, MVC's annual guidance has been revised downwards, as indicated in Outlook below.


Revenue (reported net of smelting, refining and roasting charges, El Teniente royalties and transportation costs) decreased to $16.4 million from $20.7 million in the pro-forma Q2-2014, due to lower copper prices and no molybdenum sales. The Group's gross copper tolling fee was $2.65/lb (Q2-2014: $2.22/lb).

Total El Teniente royalties (deducted from tolling fees) were $4.7 million in Q2-2015, compared to $6.3 million in Q2-2014, due to lower production and lower metal prices.


Cash cost (a non-GAAP measure equal to the aggregate of smelting, refining and other charges, tolling/production costs net of inventory adjustments, administration and transportation costs, net of by-product credits) before El Teniente royalties decreased to

$2.15/lb (Q2-2014: $2.22/lb), mostly as a result of lower direct production costs due to cost reduction initiatives at MVC.

Total cost (a non-GAAP measure equal to the aggregate of cash cost, El Teniente royalties and depreciation.) decreased to $2.86/lb (Q2-2014: $3.23/lb), due to lower cash cost, lower depreciation costs and lower El Teniente royalties.

Power costs in Q2-2015 were $5.5 million ($0.0908/kwh) compared to $5.4 million

($0.0896/kwh) in Q2-2014.

Cash and Financing Activities

MVC has received cash net of transaction costs of $42.9 million YTD-2015, including drawdowns of $40.3 million from the $64.4 million bank syndicate financing for construction of phase 1 of MVC's Cauquenes expansion.

The Group's cash balance was $12.7 million at June 30, 2015 compared to $18.3 million at

December 31, 2014.

Page 4

Capital Expenditures

Cash payments for capital expenditures ("Capex") were $17.2 million compared to $2.7 million in Q2-2014. Capex payments in Q2-2015 were funded from bank loan proceeds. YTD cash payments for Capex were $25.9 million, compared to $6.1 million in 2014.

Capex incurred in Q2-2015 totaled $14.8 million (Q2-2014: $2.0 million) and included

Cauquenes Capex of $14.3 million (Q2-2014: $0.8 million) and sustaining Capex projects of
$0.5 million (Q2-2014: $1.2 million). YTD-2015 incurred Capex totaled $25.7 million (YTD-
2014: $4.8 million).


MVC has revised its 2015 production guidance to a range of 43.0 to 48.0 million pounds of copper (down from a range of 50.0 to 55.0 million pounds). Copper production is expected to ramp up from 9.1 million pounds in Q2 to approximately 19.0 million pounds in Q4 once Cauquenes is operational, and cash cost is projected to decrease from Q2's $2.15/lb to approximately $1.75/lb in Q4.

The Cauquenes project is scheduled to be completed on time and on budget and to be fully funded from MVC's existing debt facilities, the expansion support agreement with DET and the standby line of credit provided by three Amerigo shareholders even if current low copper prices persist.

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 and six months ended June 30, 2015 and the Audited Consolidated Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2014 which will be available at the Company's website at and at

Amerigo Resources Ltd. produces copper under a long term tolling agreement 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:; Listing: ARG:TSX

For further information, please contact:

Dr. Klaus Zeitler, Chairman & CEO (604) 218-7013

Amerigo Resources Ltd. (604) 697-6201

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 financing and construction of the Company's proposed expansion of its operations in Chile, including the first and subsequent phases of such expansion, 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

Page 5 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, including estimated production increases and cost reductions expected to result from the planned expansion of the Company's Chilean operations. 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, financing and construction of, and estimated production increases and cost reductions expected to result from the planned expansion of, the Company's planned expansion of its Chilean operations, 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.



All figures expressed in thousands of US Dollars and presented under IFRS

Page 6

Consolidated Statements of Financial Position

June 30, December 31,

2015 2014

$ $

Cash and cash equivalents 12,691 18,308

Property, plant and equipment 156,309 133,359

Other assets 33,835 28,488

Total assets 202,835 180,155

Total liabilities 97,239 68,662

Shareholders' equity 105,596 111,493

Total liabilities and shareholders' equity 202,835 180,155

Consolidated Statements of Comprehensive Loss

Quarter ended Quarter ended

June 30, June 30,

2015 2014 pro-forma

$ $

Revenue 16,388 27,325

Tolling and production costs (18,136) (26,127) Other gains (expenses) 166 (9,021) Finance expense (275) (95) Income tax expense (179) (372) Net loss (2,036) (8,290) Other comprehensive (loss) income (20) 325

Comprehensive loss (2,056) (7,965)

Consolidated Statements of Cash Flows

Quarter ended Quarter ended

June 30, June 30,

2015 2014

$ $

Net cash (used in) from operating activities (4,359) 1,609

Net cash used in investing activities (17,655) (2,617) Net cash provided by financing activities 20,760 157

Net cash outflow during the period (1,254) (851)

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Amerigo Resources Ltd

ISIN : CA03074G1090
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Amerigo Res. is a copper and molybdenum producing company based in Canada.

Its main asset in production is MINERA VALLE CENTRAL in Chile.

Amerigo Res. is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 280.7 millions as of today (US$ 224.4 millions, € 196.6 millions).

Its stock quote reached its lowest recent point on February 21, 2003 at CA$ 0.08, and its highest recent level on April 27, 2007 at CA$ 2.77.

Amerigo Res. has 175 440 000 shares outstanding.

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Financings of Amerigo Resources Ltd
3/26/2015Closes Bank Financing for Cauquenes Expansion
3/19/2015Secures Cauquenes Bank Financing Without Dilution to Shareho...
2/14/2009Closing of Private Placement
2/7/2009Non-brokered Private Placement
8/28/2008Acquisition of Common Shares and Warrants of Los Andes Coppe...
Nominations of Amerigo Resources Ltd
6/5/2012Pleased to Announce New Appointments
Financials of Amerigo Resources Ltd
8/6/2013Announces Q2-2013 Financial Results
5/9/2013Announces Q1-2013 Financial Results
11/8/2012Announces Q3-2012 Financial Results
8/3/2012Announces Q2-2012 Financial Results
5/7/2012Announces Q1-2012 Financial Results
3/5/2012Announces 2011 Financial Results
8/11/2011Announces Q2-2011 Financial Results
6/14/2011Announces Q1-2011 Financial Results
7/28/2008Q2-2008 Financial Results
Project news of Amerigo Resources Ltd
10/15/2013Announces Q3-2013 Production Results
7/12/2013Announces Q2-2013 Copper Production Results
7/12/2013Announces Q2-2013 Copper Production Results
4/15/2013Announces Q1-2013 Copper Production Results
1/16/2013Q4-2012 and Full Year Production Results Exceed Guidance
7/17/2012Announces Q2-2012 Production Results
4/18/2012Announces Record Q1-2012 Copper Production Results
1/27/2012Announces Q4 2011 Production Results and Provides 2012 Produ...
7/21/2011Announces Q2 2011 Production Results
6/7/2011Provides Production Update
5/5/2011Announces Record Q1 2011 Production Results
1/30/2009 Q4 2008 Production Results
7/15/2008Announces Q2 2008 Production Results Copper Production 7.08M...
4/21/2008Announces Q1 2008 Production Results
Corporate news of Amerigo Resources Ltd
5/3/2016Amerigo Announces Results of AGM
4/14/2016Amerigo Announces 2016 First Quarter Production Results
11/4/2015Amerigo Announces Q3-2015 Financial Results
10/20/2015Amerigo Announces Q3-2015 Production Results
9/29/2015Amerigo Announces Management and Board Changes
9/24/2015Amerigo Announces Successful Start-up of Phase 1 of Cauquene...
8/12/2015Amerigo Announces Q2-2015 Financial Results
7/22/2015Amerigo Announces Results of AGM
7/17/2015Amerigo Announces Q2-2015 Production Results
4/17/2015Amerigo Announces Q1-2015 Production Results
4/13/2015Amerigo Announces Appointment of Alberto Salas as President ...
3/19/2015Amerigo Secures Cauquenes Bank Financing Without Dilution to...
2/23/2015Amerigo Announces 2014 Financial Results
2/5/2015Amerigo Announces Q4-2014 and Full Year Production Results
11/6/2014Amerigo Announces Q3-2014 Financial Results
10/16/2014Amerigo Announces Q3-2014 Production Results
8/7/2014Amerigo Announces Q2-2014 Financial Results
7/18/2014Amerigo Announces Q2-2014 Production Results
7/14/2014Amerigo Announces Receipt of Environmental Approval for Cauq...
5/8/2014Amerigo Announces Q1-2014 Financial Results
4/24/2014Amerigo Announces Filing of NI 43-101 Technical Report
4/22/2014Amerigo and Codelco/El Teniente Sign Agreement Extending Tai...
10/30/2013Executes Mandate Agreement With BBVA to Arrange Project Debt...
9/30/2013Announces Management Changes
7/22/2013Announces Cauquenes Approval and Contract Extension to 2037
1/24/2013Announces 2013 Operations and Capital Guidance
10/16/2012Reports Strong Q3-2012 Production Results: Year to Date Copp...
5/26/2011Announces Dates for Release of Q1 2011 Results and Investor ...
3/28/2011Declares Semi-Annual Dividend
3/1/2010Update on Chilean Earthquake
12/29/2008New Debt Facilities and Cost Reductions
12/16/2008Announces Shareholder Rights Plan
11/7/2008Cash flow from operations of US$7.6M in Q3-2008
7/15/2008on Amerigo Q2 Power Costs
7/7/2008Announces Release of Q2 2008 Results
5/7/2008Q1 08 Results
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