
Amerigo Resources Ltd. (TSX: ARG; OTCQX: ARREF) announced production results for the quarter ended March 31, 2023 (“Q1-2023”) from Minera Valle Central (“MVC”), the Company’s 100% owned operation located near Rancagua, Chile. Dollar amounts in this news release are in U.S. dollars (“USD”) unless indicated otherwise.
Highlights
- Cash costs fell 9% and were maintained at year ago levels, a strong outcome in the face of rising mining inflation.
- Copper production of 16.5 million pounds exceeded guidance by 4.5%
- Returned $5.5 million to shareholders (10% payout yield) among the highest in the copper industry.
higher molybdenum prices reduced cash cost by 11%, or $0.23 per pound, compared to our annual cash cost guidance
said Aurora Davidson, Amerigo’s President and CEO.
stated Ms.Davidson.
In Q1-2023, MVC produced 16.5 million pounds (“M lbs”) of copper, with 61% of production coming from fresh tailings. Copper production was 4.5% over guidance due to higher grades from fresh tailings and higher grades and recoveries from historical tailings (“Cauquenes tailings”). Amerigo’s 2023 annual copper production guidance is 62.3 M lbs. Quarterly molybdenum production was 0.3 M lbs, 5.2% over guidance. Amerigo’s 2023 annual molybdenum production guidance is 1.0 M lbs.
The annual plant maintenance shutdown at MVC and El Teniente is expected to last nine days and occur in May. Amerigo’s 2023 guidance has factored in lower production from the shutdown. Amerigo’s cash cost in Q1-2023 was $1.91 per pound (“/lb”), 11% lower than Amerigo’s annual guided cash cost of $2.14/lb. The positive cash cost performance quarter was mainly driven by higher-than-guided molybdenum by-product credits from stronger molybdenum production and market prices.
Amerigo’s quarterly copper price in Q1-2023 was $4.02/lb, compared to $3.80/lb in Q4-2022, and their molybdenum price was $31.73/lb, up from $21.00/lb in Q4-2022.
On March 31, 2023, cash was $43.9 million (an increase of $6.1 million from December 2022), and restricted cash was $6.4 million (an increase of $2.2 million from December, 2022). Outstanding bank debt was $24.5 million, the lowest debt held since Q1-2015.
On March 31, 2023, MVC’s water reserves were 4.7 million cubic meters, 0.7 million lower than at year-end 2022. As MVC prepares to enter the start of Chile’s wet season, water reserves remain sufficient to maintain projected Cauquenes processing rates for at least eighteen months.
Capital Return Strategy
In Q1-2023, Amerigo returned $3.6 million to shareholders through the regular quarterly dividend of Cdn$0.03 per share, and $1.9 million was returned through the purchase of 1.6 million common shares for cancellation through Amerigo’s ongoing Normal Course Issuer Bid (“NCIB”). A further 9.5 million shares can be repurchased for cancellation under the NCIB before December 1, 2023.
Since the implementation of Amerigo’s Capital Return Strategy initiated in September 2021, they’ve paid a cumulative dividend of Cdn$0.17 per share ($22.2 million) and used $23.0 million to purchase and cancel 19.5 million of its common shares, a 10.7% reduction in the number of common shares outstanding since the strategy’s inception.
In addition to quarterly dividends of Cdn$0.03 per share and the opportunistic repurchase of common shares for cancellation under the NCIB, Amerigo is confident that higher copper prices will permit the deployment of performance dividends in 2023.
Release of Q1-2023 financial results on May 3, 2023
Amerigo will release Q1-2023 financial results at the market open on Wednesday, May 3, 2023.
Investor conference call on May 4, 2023
Amerigo’s quarterly investor conference call will occur on Thursday, May 4, 2023, at 11:00 am Pacific Daylight Time/2:00 pm Eastern Daylight Time. Participants can join by visiting https://emportal.ink/3IS4o0U 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 enter confirmation number 13362748.
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