Amerigo Resources Reports Jump in Q2 Free Cashflow, Close to Debt Free

By
Duane Hope
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Q2 Highlights

  • Net Income of $9.8 million, vs a loss of $3.8 million in Q2 2023.
  • Quarterly EBITDA of $22.3 million – Free Cash Flow to Equity of $6.7 million.
  • 12% FCF yield last 12 months.
  • Debt/EBITDA down to 0.3x, debt will be substantially paid off by year end.
  • 12th Quarterly Dividend, 10.3% current yield
  • Previously declared Cdn$0.04 Performance Dividend triggered by Q2-2024 financial strength

Amerigo Resources Ltd. (TSX: ARG; OTCQX: ARREF) announced financial results for the three months ended June 30, 2024 (“Q2-2024”). Dollar amounts in this news release are in U.S. dollars unless indicated otherwise.

Amerigo’s Q2-2024 financial results included net income of $9.8 million, earnings per share (“EPS”) of $0.06, EBITDA1 of $22.3 million and free cash flow to equity1 of $6.7 million. In Q2-2024, Amerigo returned $3.6 million to shareholders. Subsequent to quarter-end, on July 8, 2024, Amerigo declared its first performance dividend of Cdn$0.04.

We are pleased to report strong financial performance this quarter. A significant strengthening of copper prices and firm cost management contributed to strong earnings, EBITDA and free cash flow to equity. With our annual maintenance shutdown now completed and the impact of the previously reported rain-induced production loss absorbed, our 2024 production guidance is intact.
Amerigo’s Capital Return Strategy has been fully deployed with regular quarterly dividends, share buybacks, and performance dividends. At current copper prices, equivalent to those we received last quarter, we continue to generate significant amounts of capital to return to shareholders.
The strength of Amerigo’s business plan is now on full display. Shareholders have received the declaration of our initial performance dividend very well and are benefitting from the prompt transfer of copper price strength to their pockets. Our initial performance dividend will be paid in addition to our twelfth quarterly dividend of Cdn$0.03, announced today. Despite the present short-term price correction, we anticipate continued strength in copper prices and look forward to returning capital as quickly as possible to shareholders.Aurora Davidson, President & CEO, Amerigo Resources Ltd.

On July 29, 2024, Amerigo’s Board of Directors declared its twelfth quarterly dividend. The dividend will be in the amount of Cdn$0.03 per share, payable on September 20, 2024, to shareholders of record as of August 30, 2024. 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 June 30, 2024, share closing price of Cdn$1.55, the Cdn$0.03 quarterly dividends, and the Performance Dividend of Cdn$0.04 per share declared on July 8, 2024, represents an annual dividend yield of 10.3%3.

This news release should be read with Amerigo’s interim consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) for Q2-2024, available on the Company’s website at www.amerigoresources.com and on the SEDAR+ website at www.sedarplus.ca.

Q2 2024 Summary Table

Q2 Financial Highlights

  • Q2-2024 showed a strong financial performance under an increased MVC average copper price of $4.39 per pound (“/lb”) (Q2-2023: $3.80/lb), which combined with a copper production of 14.0 million pounds (“M lbs”) (Q2-2023: 13.6 M lbs) and lower tolling and production costs of $35.1 million (Q2-2023: $35.3 million), translated into net income of $9.8 million (Q2-2023: net loss of $3.8 million).
  • EPS in Q2-2024 was $0.06 (Cdn$0.08), compared to a loss per share (“LPS”) of $0.02 (Cdn$0.03) in Q2-2023.
  • The Company generated operating cash flow before changes in non-cash working capital1 of $14.3 million in Q2-2024 (Q2-2023: operating cash used of $2.3 million). Quarterly net operating cash flow was $23.8 million (Q2-2023: $0.5 million). Free cash flow to equity1 was $6.7 million in Q2-2024 (Q2-2023: negative free cash flow to equity1 of $12.8 million).
  • Q2-2024 cash cost1 was $1.96/lb (Q2-2023: $2.37/lb). The $0.41/lb reduction in cash cost was caused predominantly by a $0.25/lb increase in molybdenum by-product credits, a $0.07/lb decrease in other direct costs and $0.05/lb lower power costs.
  • The Company’s liquidity was substantially strengthened during the quarter. On June 30, 2024, the Company’s cash and cash equivalents increased to $28.7 million (December 31, 2023: $16.2 million), the Company’s working capital deficiency (current assets less current liabilities) was reduced to $1.5 million (December 31, 2023: working capital deficiency of $12.3 million) and borrowings were reduced to $14.4 million (December 31, 2023: $20.7 million). The Company also held a restricted cash balance of $4.2 million (December 31, 2023: $6.3 million).
  • In Q2-2024, Amerigo returned $3.6 million to shareholders through Amerigo’s regular quarterly dividend of Cdn$0.03 per share (Q2-2023: $3.7 million). In Q2-2023, $0.8 million was used to repurchase 0.7 million common shares through a Normal Course Issuer Bid.
  • The Company’s financial performance is sensitive to changes in copper prices. MVC’s Q2-2024 provisional copper price was $4.41/lb. The final prices for April, May and June 2024 sales will be the average London Metal Exchange (“LME”) prices for July, August and September 2024, respectively. A 10% increase or decrease from the $4.41/lb provisional price used on June 30, 2024, would result in a $6.3 million change in revenue in Q3-2024 regarding Q2-2024 production.

Investor Conference Call on August 1, 2024

Amerigo’s quarterly investor conference call will occur on Thursday, August 1, 2024, at 11:00 a.m. Pacific Daylight Time/2:00 p.m. Eastern Daylight Time.

Participants can join by visiting https://emportal.ink/3VNPCys 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 Q2-2024 Earnings Call.

Amerigo Resources is a market awareness client of Capital 10X. For more information, including potential conflicts of interest please see our Content Disclaimer.

Duane Hope
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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