Welcome!

News Feed Item

Amerigo Announces Q2-2014 Financial Results

- Revenues of $27.3 million

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/07/14 -- Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today results for the three months ended June 30, 2014 ("Q2-2014"). The Company posted revenues of $27.3 million, generated $1.5 million in cash flow from operations before changes in non-cash working capital and posted a loss of $8.3 million, which included a $6.2 million negative impact on earnings from changes in estimates(1) resulting from the recent extension of the Company's tailings processing contract from 2021 to 2037.

Rob Henderson, Amerigo's President and COO, commented "We experienced low copper and molybdenum production in the quarter due to low sulphide grades in both fresh and old tailings, together with wet conditions in the Colihues deposit which limited access to higher grade tailings located in deeper zones. Although we believe grades and production rates will improve during the second half of the year, we have revised our production guidance for 2014 to 40 million pounds of copper and 500,000 pounds of molybdenum. We generated $1.5 million in cash flow from operations in Q2-2014, and have implemented further cost reduction initiatives as of July 1st. As a result, 2014 cash cost guidance is being maintained at $2.15 to $2.25/lb Cu."

Amerigo's Chairman and CEO, Dr. Klaus Zeitler, added "We are extremely pleased to have now accomplished two of the three major milestones necessary for the Cauquenes expansion. The signing of the master agreement granting the Company the rights to the Cauquenes deposit and extending tailings processing rights to 2037, together with receipt of the environmental approvals from COREMA, Chile's Regional Environmental Commission, put the Company on track to begin construction of the expansion during the last quarter of this year. The final major milestone, completion of the expansion financing, is in its final stages with bank due diligence complete and negotiations currently taking place for the finalization of the terms of the loan agreement. Once completed, the expansion is projected to have a very significant and positive effect on the Company's financial results, with annual production projected to more than double to close to 90 million pounds of copper and cash costs expected to fall well below $2.00/lb."

(1) Changes in Estimates of $6.2 million include a gain of $2.4 million included as a component of cost of sales, a loss of $8.1 million included as a component of other expenses and a $0.5 million tax expense. Changes in Estimates are further explained in Note 4 of the Company's Q2-2014 financial statements and on page 12 of the Q2-2014 MD&A.

Comparative Financial Overview


----------------------------------------------------------------------------
                                           Three months ended June 30,      
                                           2014     2013            Change  
                                                                $        %  
----------------------------------------------------------------------------
Copper produced, million pounds            9.34     9.55    (0.21)      (2%)
Copper sold, million pounds                9.32     9.44    (0.12)      (1%)
Molybdenum produced, pounds             152,340  176,155  (23,815)     (14%)
Molybdenum sold, pounds                 153,970  177,845  (23,875)     (13%)
Percentage of copper production from                                        
 old tailings                                38%      37%       -        1% 
Revenue ($ thousands)                    27,325   31,446   (4,121)     (13%)
Cost of sales(1) ($ thousands)           26,127   31,203   (5,076)     (16%)
El Teniente royalty costs ($ thousands)   6,250    7,317   (1,067)     (15%)
Gross profit ($ thousands)                1,198      243      955      393% 
Net loss(2) ($ thousands)                (8,290)    (837)  (7,453)     890% 
Operating cash flow ($ thousands)(3)      1,473    4,142   (2,669)     (64%)
Cash flow paid for plant expansion ($                                       
 thousands)                              (2,723)  (3,676)     953      (26%)
Cash and cash equivalents ($ thousands)   7,265    3,881    3,384       87% 
Bank debt ($ thousands)                       -        -        -        -  
Average realized copper price per pound    3.16     3.40    (0.24)      (7%)
Cash cost per pound                        2.22     2.24    (0.02)      (1%)
Total cost per pound                       3.23     3.48    (0.25)      (7%)
----------------------------------------------------------------------------
(1)  Includes El Teniente royalty costs                                     
(2)  Includes $6.2 million in Changes in Estimates.                         
(3)  Excluding working capital changes                                      

Financial results


--  Revenue was $27.3 million, compared to $31.4 million in Q2-2013.
    Revenues decreased 13% due to lower copper and molybdenum sales volume
    and lower average copper prices. 

--  Cost of sales was $26.1 million compared to $31.2 million in Q2-2013, a
    decrease of 16% driven by lower production levels and a $2.4 million
    gain from Changes in Estimates. 

--  Gross profit was $1.2 million, compared to $243,000 in Q2-2013. 

--  Net loss was $8.3 million, compared to $837,000 in Q2-2013 and included
    Changes in Estimates of $6.2 million.  

--  In Q2-2014, the Company generated cash flow from operations before
    changes in non-cash working capital of $1.5 million, compared to $4.1
    million in Q2-2013. 

Production


--  The Company produced 9.3 million pounds of copper, 2% lower than the 9.6
    million pounds produced in Q2-2013. 

--  Molybdenum production was 152,340 pounds, 14% lower than the 176,155
    pounds produced in Q2-2013. 

--  Copper production in Q2-2014 was below target due to low grades for both
    fresh and old tailings. Sulphide content in the fresh tailings was also
    low and negatively impacted recovery. Low grades have persisted in
    Colihues for longer than originally anticipated, as wet conditions in
    the extraction zone have limited access to better grades located in
    deeper layers. 

Revenue


--  Revenue decreased to $27.3 million, compared to $31.4 million in Q2-
    2013, due to lower production levels and lower copper prices. The
    Company's copper selling price before smelting, refining and other
    charges was $3.16/lb compared to $3.40/lb in Q2-2013, and the Company's
    molybdenum selling price was $13.33/lb compared to $11.00/lb in Q2-2013.

Costs


--  Cash cost (a non-GAAP measure equal to the aggregate of smelting,
    refining and other charges, production costs net of inventory
    adjustments and molybdenum and tolling-related net benefits,
    administration and transportation costs), before El Teniente royalty was
    $2.22/lb, compared to $2.24/lb in Q2-2013.  

--  Total cost (a non-GAAP measure equal to the aggregate of cash cost, El
    Teniente royalty, depreciation and accretion) was $3.23/lb compared to
    $3.48/lb in Q2-2013, mainly as a result of lower depreciation charges. 

--  Power costs in Q2-2014 were $5.4 million ($0.0896/kwh) compared to $5.1
    million ($0.0858/kwh) in Q2-2013. 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 $6.3 million in Q2-2014, compared to
    $7.3 million in Q2-2013, due to lower production and metal prices. 

Cash and Financing Activities


--  Cash balance was $7.3 million at June 30, 2014 compared to $13.1 million
    at December 31, 2013. 

Investments


--  Cash payments for capital expenditures ("Capex") were $2.7 million,
    compared to $3.7 million in Q2-2013, and were funded from operating cash
    flow and cash on hand. YTD cash payments for Capex were $6.1 million,
    compared to $7.3 million in 2013. 

--  Capex incurred in Q2-2014 totaled $2 million (Q2-2013: $3 million) and
    included project investments in connection with Cauquenes engineering
    and permitting and sustaining Capex projects. YTD-2014 incurred Capex
    totaled $4.8 million (YTD-2013: $5 million). 

--  The Company's investments in Candente Copper Corp. and Los Andes Copper
    Ltd. had an aggregate fair value of $3.5 million at June 30, 2014
    (December 31, 2013: $3.2 million). 

Outlook


--  Production YTD-2014 has been lower than anticipated, mostly due to low
    grades. Although the grades of tailings are expected to improve in the
    second half of the year, MVC's 2014 production guidance has been revised
    from 45 to 40 million pounds of copper and from 800,000 to 500,000
    pounds of molybdenum. 

--  Cash cost continues to be 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 excluding escalation, contingencies and
    finance costs, of which $8.7 million has been incurred to June 30, 2014.

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, 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. Listing: (TSX:ARG)

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 JUNE 30, 2014 AND 2013                   
        All figures expressed in US Dollars and presented under IFRS        
----------------------------------------------------------------------------

Consolidated Statements of Financial Position


                                                      June 30,  December 31,
                                                          2014          2013
                                                             $             $
                                                ----------------------------
Cash and cash equivalents                                7,265        13,148
Property, plant and equipment                          128,109       116,601
Other assets                                            32,106        56,360
                                                ----------------------------
                                                                            
Total assets                                           167,480       186,109
                                                ----------------------------
                                                ----------------------------
                                                                            
Total liabilities                                       53,373        64,370
Shareholders' equity                                   114,107       121,739
                                                ----------------------------
                                                                            
Total liabilities and shareholders' equity             167,480       186,109
                                                ----------------------------

Consolidated Statements of Comprehensive Loss


                                              Quarter ended   Quarter ended 
                                                   June 30,        June 30, 
                                                       2014            2013 
                                                          $               $ 
                                            --------------------------------
Revenue                                              27,325          31,446 
Cost of sales                                       (26,127)        (31,203)
Other expenses                                         (955)         (1,176)
Change in estimates                                  (8,066)              - 
Finance expense                                         (95)           (114)
Income tax expense                                     (372)            210 
                                            --------------------------------
Loss for the period                                  (8,290)           (837)
Other comprehensive income (loss)                       325         (10,610)
                                            --------------------------------
Comprehensive loss                                   (7,965)        (11,447)
                                            --------------------------------
                                            --------------------------------

Consolidated Statements of Cash Flows


                                              Quarter ended   Quarter ended 
                                                   June 30,        June 30, 
                                                       2014            2013 
                                                          $               $ 
                                            --------------------------------
Net cash provided by (used in) operating                                    
 activities                                           1,609          (4,764)
Net cash used in investing activities                (2,617)         (3,676)
Net cash provided by (used in) financing                                    
 activities                                             157            (993)
                                            --------------------------------
Net cash inflow outflow during the period              (851)         (9,433)
                                            --------------------------------
                                            --------------------------------

Contacts:
Amerigo Resources Ltd.
Dr. Klaus Zeitler
Chairman & CEO
(604) 218-7013

Amerigo Resources Ltd.
(604) 697-6201 or (604) 681-2802
(604) 682-2802 (FAX)
www.amerigoresources.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Akana has announced the availability of version 8 of its API Management solution. The Akana Platform provides an end-to-end API Management solution for designing, implementing, securing, managing, monitoring, and publishing APIs. It is available as a SaaS platform, on-premises, and as a hybrid deployment. Version 8 introduces a lot of new functionality, all aimed at offering customers the richest API Management capabilities in a way that is easier than ever for API and app developers to use.
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
To leverage Continuous Delivery, enterprises must consider impacts that span functional silos, as well as applications that touch older, slower moving components. Managing the many dependencies can cause slowdowns. See how to achieve continuous delivery in the enterprise.
Actian Corporation has announced the latest version of the Actian Vector in Hadoop (VectorH) database, generally available at the end of July. VectorH is based on the same query engine that powers Actian Vector, which recently doubled the TPC-H benchmark record for non-clustered systems at the 3000GB scale factor (see tpc.org/3323). The ability to easily ingest information from different data sources and rapidly develop queries to make better business decisions is becoming increasingly importan...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Kubernetes, Docker and containers are changing the world, and how companies are deploying their software and running their infrastructure. With the shift in how applications are built and deployed, new challenges must be solved. In his session at @DevOpsSummit at19th Cloud Expo, Sebastian Scheele, co-founder of Loodse, will discuss the implications of containerized applications/infrastructures and their impact on the enterprise. In a real world example based on Kubernetes, he will show how to ...