Amerigo Reports Q4 Rebound in Production and Free Cashflow

Earnings Highlights

  • EBITDA rebounded 250% QoQ on a 50% increase in production
  • Dividend maintained at $0.12/sh on an annual basis (9.4% current yield)
  • 1.7x coverage of the dividend in Q4.
  • Production back to recent highs.
  • Cash costs declined 2% on a dollar basis YoY, though up 10%/lb due to flooding impact on production. If production had been at regular levels, cash costs per lb would have decreased 1.5% YoY

Bottom Line: Amerigo has generated a ~9%/yr dividend return for investors the last two years while also outperforming the COPX copper index by 4% over the same period. With low operational risk but also upside to higher copper prices, Amerigo is a solid risk adjusted option for copper investors that want to be paid while they wait for higher prices.

Amerigo Resources Ltd. (TSX: ARG) (OTCQX: ARREF) announced financial results for the year and three months (“Q4-2023”) ended December 31, 2023. Dollar amounts in this news release are in U.S. dollars unless indicated otherwise. Amerigo’s annual financial results included net income of $3.4 million, earnings per share (“EPS”) of $0.02
and EBITDA of $34.6 million.

In 2023, Amerigo returned $17.2 million to shareholders despite lower copper production levels due to historically significant Chilean weather events and a higher-than-normal capital expenditure (“Capex”) year.

We are pleased  to report our return to normal operations in the fourth quarter, generating a strong operational and financial quarterly close for 2023. With copper prices in the neighbourhood of $3.80 per pound during the fourth quarter, we generated strong quarterly free cash flow to equity of $6.5 million, our ultimate financial performance measure.
We have turned the page on the impact of 2023’s historically significant weather events and a year of scheduled, higher-than-normal capital expenditures. Amerigo is again building cash that will be returned to shareholders, and we anticipate the further tightening of copper supply and demand fundamentals to result in stronger copper prices in 2024. Amerigo’s Board of Directors declared another quarterly dividend of Cdn$0.03 per share, illustrating the continued prioritization of our strong capital return policy and reliability of our quarterly payout. Aurora Davidson, President & CEO, Amerigo Resources Ltd.

Q4-2023 marked the return to normal operations and strong financial results for Amerigo. In the fourth quarter, the Company posted net income of $3.9 million (EPS of $0.02), erasing the cumulative losses posted in the first nine months of 2023. In Q4-2023, EBITDA was $11.2 million, and free cash flow to equity was $6.5 million.

On February 20, 2024, Amerigo’s Board of Directors declared its tenth consecutive quarterly dividend. The dividend will be in the amount of Cdn$0.03 per share, payable on March 20, 2024, to shareholders of record as of March 6, 20244. Amerigo designates the entire amount of this taxable dividend to be an “eligible dividend” for purposes of the Income Tax Act (Canada), as amended from time to time. Based on Amerigo’s
December 29, 2023 share closing price of Cdn$1.39, this represents an annual dividend yield of 8.6%3.

This news release should be read with Amerigo’s audited consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) for the years ended December 31, 2023 and 2022, available on the Company’s website at and

1 This is a non-IFRS measure. See “Non-IFRS Measures” for further information

Highlights and Significant Items

● In 2023, Amerigo’s operations and financial performance were affected by heavy rains and flooding in Chile, negatively impacting copper production. Amerigo’s 2023 copper production of 57.6 million pounds (“M lbs”) was 10% lower than the 2022 production of 64.0 M lbs. The Company’s average copper price in 2023 was also lower at $3.86 per pound (“/lb”) compared to $4.01/lb in 2022.

● Notwithstanding the negative production impact, the Company posted 2023 net income of $3.4 million (2022: $4.4 million) and annual EPS of $0.02 (Cdn$0.03) (2022: $0.03 (Cdn$0.03)).

● The Company’s revenue in 2023 was $157.5 million (2022: $168.1 million). Revenue was comprised of lower gross value of copper tolled on behalf of DET of $220.7 million (2022: $255.4 million) from lower copper production and copper prices, less notional items including DET royalties of $58.8 million (2022:$70.5 million), smelting and refining of $23.3 million (2022: $24.0 million) and transportation of $1.6
million (2022: $1.7 million), and positive fair value adjustments to settlement receivables of $1.1 million (2022: negative adjustments of $6.2 million). Revenue also included increased molybdenum revenue of $19.4 million (2022: $15.1 million) due to stronger molybdenum production and prices in 2023.

● 2023 copper production was 57.6 million pounds (“M lbs”) (2022: 64.0 M lbs), including 35.8 M lbs from fresh tailings (2022: 37.7 M lbs) and 21.8 M lbs from the Cauquenes historical tailings (2022: 26.3 M lbs).

● 2023 molybdenum production was 1.2 M lbs (2022: 1.0 M lbs).

● In 2023, the Company generated annual operating cash flow before changes in non-cash working capital of $22.3 million (2022: $34.9 million). Annual net operating cash flow in 2023 was $20.3 million (2022: $23.6 million). Free cash flow to equity in 2023 was $nil (2022: $17.1 million).

● 2023 cash cost was $2.17/lb (2022: $1.98/lb). The main driver of the increase in cash cost was lower copper production, which increased other direct costs ($0.17/lb) and power costs ($0.07/lb). Higher industry-wide smelting and refining charges in 2023 impacted these costs by $0.04/lb. Strong molybdenum production and prices in 2023 offset these increases with stronger by-product credits of

1 This is a non-IFRS measure. See “Non-IFRS Measures” for further information.

● The Company’s financial performance is sensitive to changes in copper prices. MVC’s year-end provisional copper price was $3.83/lb, and final prices for October, November, and December 2023 sales will be the average London Metal Exchange (“LME”) prices for January, February, and March 2024, respectively. A 10% change from the $3.83/lb provisional price used on December 31, 2023, would result in a $6.2 million change in revenue in Q1-2024 regarding Q4-2023 production.

● In 2023, Amerigo returned $17.2 million to shareholders; $14.6 million was paid through Amerigo’s quarterly dividend of Cdn$0.03 per share, and $2.6 million was returned through the purchase of 2.3 million common shares for cancellation through a Normal Course Issuer Bid. The Normal Course Issuer Bid was renewed on December 2, 2023, and allows Amerigo to purchase for cancellation up to 10.9 million common shares through December 1, 2024.

● In 2023, net debt repayments were $5.3 million (2022: $7.0 million), and MVC drew $2.0 million from it working capital line of credit (2022: $nil). The Company’s outstanding bank debt on December 31, 2023, was $20.7 million (December 31, 2022: $23.7 million). In 2023, the Company repaid all outstanding leases with payments of $1.9 million (2022: $1.0 million).

● 2023 was an unusually intensive Capex year for the Company, with Capex payments of $16.9 million (2022: $9.8 million). Capex included building a new Cauquenes sump with an expected life of 3.5 years, investing in risk-mitigation projects and carrying out other sustaining Capex projects.

● On December 31, 2023, the Company held cash and cash equivalents of $16.2 million (December 31,2022: $37.8 million), a restricted cash balance of $6.3 million (December 31, 2022: $4.2 million) and had a working capital deficiency of $12.3 million (December 31, 2022: working capital of $10.0 million).

Investor Conference Call on February 22, 2024

Amerigo’s quarterly investor conference call will occur on Thursday, February 22, 2024, at 11:00 a.m. Pacific Standard Time/2:00 p.m. Eastern Standard Time. Participants can join by visiting and entering their name and phone number.

The conference system will then call the participants and place them instantly into the call. Alternatively, participants can dial directly to be entered into the call by an Operator. Dial 1-888-664-6392 (Toll-Free North America) and state they wish to participate in the Amerigo Resources Q4-2023 Earnings Call.

About Amerigo and Minera Valle Central (“MVC”)

Amerigo Resources Ltd. is an innovative copper producer with a long-term relationship with Corporación Nacional del Cobre de Chile (“Codelco”), the world’s largest copper producer.
Amerigo produces copper concentrate, and molybdenum concentrate as a by-product at the MVC operation in Chile by processing fresh and historic tailings from Codelco’s El Teniente mine, the world’s largest underground copper mine. Tel: (604) 681-2802; Web:; ARG:TSX; OTCQX:ARREF.

1 Non-IFRS Measures
This news release includes five non-IFRS measures: (i) EBITDA, (ii) operating cash flow before changes in non-cash working
capital, (iii) free cash flow to equity (“FCFE”), (iv) free cash flow (“FCF”) and (v) cash cost.

These non-IFRS performance measures are included in this news release because they provide key performance measures
used by management to monitor operating performance, assess corporate performance, and plan and assess the overall
effectiveness and efficiency of Amerigo’s operations. These performance measures are not standardized financial measures
under IFRS Accounting Standards and, therefore, amounts presented may not be comparable to similar financial measures
disclosed by other companies. These performance measures should not be considered in isolation as a substitute for
performance measures in accordance with IFRS Accounting Standards.

(i) EBITDA refers to earnings before interest, taxes, depreciation, and administration and is calculated by adding
depreciation expense to the Company’s gross profit.

(ii) Operating cash flow before changes in non-cash working capital is calculated by adding back the decrease or subtracting
the increase in changes in non-cash working capital to or from cash provided by operating activities.

(iii) Free cash flow to equity (“FCFE”) refers to operating cash flow before changes in non-cash working capital, less capital
expenditures plus new debt issued less debt and lease repayments. FCFE represents the amount of cash generated by
the Company in a reporting period that can be used to pay for the following:
a) potential distributions to the Company’s shareholders and
b) any additional taxes triggered by the repatriation of funds from Chile to Canada to fund these distributions.
Free cash flow (“FCF”) refers to FCFE plus repayments of borrowings and lease repayments.

(iv) Cash cost is a performance measure commonly used in the mining industry that is not defined under IFRS Accounting
Standards. Cash cost is the aggregate of smelting and refining charges, tolling/production costs net of inventory
adjustments and administration costs, net of by-product credits. Cash cost per pound produced is based on pounds of
copper produced and is calculated by dividing cash cost by the number of pounds of copper produced.

2 Capital returned to shareholders
The table below summarizes the capital returned to shareholders since Amerigo’s Capital Return Strategy was implemented
in October 2021.

3 Dividend yield
The disclosed annual yield of 8.6% is based on four quarterly dividends of Cdn$0.03 per share each, divided over Amerigo’s
December 29, 2023, closing share price of Cdn$1.39.

4 Dividend dates
A dividend of Cdn$0.03 per share will be paid on March 20, 2024, to shareholders of record as of March 6, 2024. Accordingly,
the ex-dividend date will be March 5, 2024. Shareholders purchasing Amerigo shares on the ex-dividend date or after will not
receive this dividend, as it will be paid to selling shareholders. Shareholders purchasing Amerigo shares before the ex-dividend
date will receive the dividend.

5 MVC’s copper price
MVC’s copper price is the average notional copper price for the period before smelting and refining, DET notional copper
royalties, transportation costs and excluding settlement adjustments to prior period sales.
MVC’s pricing terms are based on the average LME copper price of the third month following the delivery of copper
concentrates produced under the DET tolling agreement (“M+3”). This means that when final copper prices are not yet known,
they are provisionally marked to market at the end of each month based on the progression of the LME-published average
monthly M and M+3 prices. Provisional prices are adjusted monthly using this consistent methodology until they are settled.

Q3-2023 copper deliveries were marked-to-market on September 30, 2023 at $3.75/lb and were settled in Q4-2023 as
• July 2023 sales settled at the October 2023 LME average price of $3.60/lb
• August 2023 sales settled at the November 2023 LME average price of $3.71/lb
• September 2023 sales settled at the December 2023 LME average price of $3.81/lb
Q4-2023 copper deliveries were marked to market on December 31, 2023 at $3.83/lb and will be settled at the LME average
prices for January ($3.78/lb), February and March 2024.

Duane Hope is a Partner at Capital 10X, he brings over 15 years of communications and research experience to the firm. His research and writing have appeared in publications for North American, European and Asian audiences.


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