New Debt
Facilities and Cost Reductions
All dollar amounts are $US unless otherwise stated
VANCOUVER, BRITISH COLUMBIA � December
29/CNW/Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or
the �Company�) announced today that it has been successful in extending its
existing banking line with a Chilean bank beyond its previous renewal date of
December 15, 2008. The facility has also been increased to 3.5 million pesos
(approximately $5.6 million) and has a next renewal date of June, 2009. The
Company has also established a new line of credit of $5 million with a second
Chilean bank with a renewal date of May 2009.
As outlined in the Company�s Q3 report, the global
financial crisis and resulting precipitous decline in metal prices has
resulted in the Company incurring significant copper and molybdenum negative
price settlement adjustments from October to December 2008. The Company is
finalizing arrangements with its smelter counterparty Enami
which provide for deferral of the negative copper price settlement
adjustments incurred during this period. These amounts will most likely be
repaid over a 12 month period commencing in April 2009. Similar arrangements
are under discussion with Molymet, with whom the
Company has contracts for the roasting and refining of its molybdenum
production.
As a state owned entity, one of Enami's mandates is to support small to medium sized
copper producers in Chile.
The Chilean government has also recently announced that it will provide some
copper price protection through Enami, although the
precise details of this support have yet to be finalized.
In addition to various cost reductions that have
been negotiated with contractors and suppliers, the Company has been
successful in negotiating the partial deferral of energy cost payments
to its energy supplier and of royalty payments to El Teniente.
Subject to energy and oil prices, smelting and
refining terms and the price of molybdenum for 2009, the Company
believes that it can reduce its cash costs before royalties to $1.20 to
$1.25 per pound of copper during the course of 2009.
The combination of the above arrangements provides
capacity for the Company, subject to copper prices, to meet its commitments
on an ongoing basis into 2009. Management is however working on establishing
new long term credit facilities of $10-20 million in the near term which will
provide some additional medium term liquidity during this period of
challenging market and operating conditions.
Amerigo�s board of directors has also officially adopted the
shareholder rights plan (the "Rights Plan") originally announced in
the Company�s December 16, 2008 news release, and the Company has entered
into the Rights Plan with its transfer agent, both effective December 24,
2008.
Amerigo Resources Ltd. is a Canadian junior company
producing copper and molybdenum from its MVC operations near Santiago, Chile.
Tel: (604) 681-2802; Fax: (604) 682-2802; Web: www.amerigoresources.com; Listing: ARG:TSX
For further information, please
contact:
Dr. Klaus Zeitler,
President
(604) 681-2802, (604) 218-7013
Amerigo Resources
Ltd.
The Toronto
Stock Exchange has not reviewed nor accepted responsibility for the adequacy
or accuracy of the contents of this news release, which has been prepared by
management. Statements contained in this news release that are not
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and forward looking
information within the meaning of the Securities Acts of Ontario and
Alberta. In particular, statements regarding energy, oil and metal
prices, cost estimates and deferrals, future banking arrangements and
government and regulatory deferrals and price support programs, are based on
a number of assumptions and constitute forward looking information. There
can be no assurance that such assumptions will be accurate. In
addition, such forward-looking information is subject to risks and
uncertainties which could cause actual results to differ materially from
estimated results. Such risks and uncertainties are detailed in the
Company�s filings with the TSX and on SEDAR. Forward-looking statements
are based on the beliefs, estimates and opinions of the Company�s management
on the date the statements are made. The Company undertakes no
obligation to update these forward-looking statements if management�s
beliefs, estimates or opinions, or other factors, should change.
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