Amerigo Sees Rebounding Production and Declares 9th Consecutive Dividend

Amerigo Resources Ltd. (TSX: ARG; OTCQX: ARREF) announced financial results for the three months ended September 30, 2023 yesterday and the most important takeaway for us is though historic flooding dented results in the quarter, the company is already back to exceeding production targets as of the current quarter.

In a time of unanticipated adversity, the Amerigo operational team showed their true colors.

Due to forward thinking risk management measures such as installing flotation equipment around the pipes that transport the historical tailings slurry to the concentrator, they were able to avoid major damage to the facilities and return to full capacity in a matter of weeks, not months.

Video of Cauquenes Rapid Restart from Early to End of September

Management’s decision to maintain the industry-leading quarterly dividend payout even with production down 30% quarter on quarter shows their confidence that production has rebounded back to normal.

Q3 2023 Operational Summary

Amerigo Remains one of the Lowest Risk Ways to Gain Exposure to Renewable Driven Copper Supply Shortages

Amerigo is in the unique spot of offering copper investors three advantages that can’t be found anywhere else:

  1. The highest dividend yield in the copper industry (10.1% as of Nov 1st)
  2. Low operational risk – The company does not operate a copper mine, it processes leftover tailings, from which they extract the remaining copper.
  3. Upside to higher copper prices due to sales contracts tied to global benchmark prices, well-managed OpEx and low CapEx.

Even with recent macroeconomic uncertainty, Amerigo’s dividend is well supported and essentially pays you to wait until the demand outlook becomes clearer and the real issue of supply constraints resurfaces.

To put Amerigo’s potential earnings power into perspective, at $4.80/lb copper, similar to prices in early 2022, Amerigo would generate US$43 million of free cashflow to equity, against a US$141 million market cap today (30% yield).

Q3 Financial Review

Revenue of $30.3 million in Q3 was only 2% lower quarter on quarter due to higher copper prices ($3.76 vs $3.50) and an increase in molybdenum revenue.

Q3 copper production was 11.1 million pounds compared to 16 million pounds quarter on quarter, impacted by the production interruptions from historic rains in the quarter.

Production returned to full capacity on September 21, and Amerigo is guiding to production exceeding 16.6 million lbs in Q4. This would be in line with peak production capacity.

Q3 2023 Financials

9th Consecutive Quarterly Dividend Paid

Amerigo returned US$3.7 million to shareholders in the quarter through the payment of the C$0.03/sh quarterly dividend.

YTD-2023 capital returns were $13.6 million: $11.0 million paid in quarterly dividends and $2.6 million returned through purchasing 2.3 million common shares for cancellation through a Normal Course Issuer Bid.

Amerigo is generating a 10.1% dividend yield at the current C$0.03/sh payout level.

Cashflow and Balance Sheet

Amerigo generated US$2.6 million of cashflow before non-cash working capital in Q3.

As of September 30th, the company had US$19.4 million of cash, $20.3 million of debt and 164.8 million shares outstanding, down 1% YTD.

Investor Conference Call Scheduled for 2pm EST November 2, 2023

Amerigo’s quarterly investor conference call will occur on Thursday, November 2, 2023, at 11:00 a.m. Pacific Daylight Time/2:00 p.m. Eastern Daylight 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 Q3-2023 Earnings Call.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Capital 10X gets down to the real money business, actionable financial insights for traders and investors. We analyze company earnings, interview management teams and help teach the fundamentals of financial analysis and options trading. Our mission is to hunt for genuine 10 baggers.


Please enter your comment!
Please enter your name here