2021 net income of $39.8 million, earnings per share of $0.22 (Cdn$0.28)

Annual EBITDA¹ of $90.1 million, annual operating cash flow before changes in non-cash working capital¹ of $69.5 million

Dividend of Cdn$0.03 per share payable on March 21, 2022

Amerigo Resources Ltd. (TSX: ARG) (ARREF:OTC) is pleased to announce financial results for the year and three months ended December 31, 2021. Dollar amounts in this news release are in U.S. dollars unless indicated otherwise.

Amerigo’s annual financial results included net income of $39.8 million, earnings per share of $0.22 (Cdn$ 0.28), EBITDA¹ of $90.1 million and operating cash flow before changes in working capital¹ of $69.5 million.

“Amerigo had a robust operational and financial performance in 2021, with record revenue of $199.6 million, EBITDA¹ of $90.1 million and net income of $39.8 million, the highest net income ever recorded by the Company. We closed the year with record cash balances and a strong balance sheet”, said Aurora Davidson, Amerigo’s President and CEO.

“Importantly, we completed a debt refinancing in June 2021 that removed prior restrictions on the use of surplus cash and allowed Amerigo to re-establish dividends and initiate programs to repurchase shares for cancellation. Capital repatriation remains a key corporate goal, and we have provided guidance for another year of robust operational performance at our MVC operation in Chile”, added Ms. Davidson.

Q4-2021 financial results included net income of $8.9 million, EPS of $0.05 (Cdn$0.06), EBITDA¹ of $24.9 million and operating cash flow before changes in working capital¹ of $18.3 million.

On February 22, 2022, Amerigo’s Board of Directors declared a quarterly dividend of Cdn$0.03 per share, payable on March 21, 2022 to shareholders of record as of March 4, 2022. 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 the December 31, 2021 share closing price of Cdn$1.46, this would represent an annual dividend yield of 8.22%.

The Board will continue to declare dividends at a sustainable quarterly rate and, depending on a number of factors including but not limited to the Company’s financial performance, the copper market outlook and the level of activity of the Company’s share buyback programs, will pay an annual dividend at a higher rate such that the Company’s cash levels are maintained in the range of $20.0 to $25.0 million.

This news release should be read in conjunction with Amerigo’s audited consolidated financial statements and Management’s Discussion and Analysis for the years ended December 31, 2021 and 2020, available at the Company’s website at www.amerigoresources.com and at www.sedar.com.

Highlights and Significant Items

• 2021 net income increased to $39.8 million (2020: $6.1 million) due to higher copper production and higher metal prices. Annual EPS was $0.22 (Cdn$0.28) (2020: $0.03; Cdn$:0.05)
• The Company generated $69.5 million in annual operating cash flow before changes in non-cash working capital¹ (2020: $29.1 million). Annual net operating cash flow was $93.1 million (2020: $19.8 million).
• 2021 production was 63.4 million pounds of copper, 13% higher than 2020 production of 56.2 M lbs due to higher tonnage, grade and recoveries from fresh tailings and higher tonnage from Cauquenes.
• 2021 molybdenum production was 1.3 M lbs (2020: 1.4 M lbs) due to lower molybdenum content in fresh tailings.
• At December 31, 2021, MVC had water reserves of 5.8 million cubic meters, which are sufficient to meet the Company’s 2022 production guidance of 61.9 M lbs of copper.
• 2021 cash cost¹ was $1.75 per pound (2020: $1.76/lb).
• In 2021, the Company’s average copper price was $4.25/lb (2020: $2.94/lb) and the Company’s average molybdenum price was $15.01/lb (2020: $8.19/lb).
• Revenue in 2021 was $199.6 million (2020: $126.4 million), including copper tolling revenue of $181.4 million (2020: $116.3 million) and molybdenum revenue of $18.1 million (2020: $9.5 million).
• Copper tolling revenue is calculated from the Company’s gross value of copper produced of $269.4 million (2020: $156.6 million) and fair value adjustments to settlement receivables of $13.1 million (2020: $11.6 million), less notional items including royalties to Codelco’s El Teniente division of $78.4 million (2020: $33.5 million), smelting and refining of $20.6 million (2020: $16.7 million) and transportation of $2.0 million (2020: $1.8 million).

• Amerigo’s financial performance is very sensitive to changes in copper prices. At December 31, 2021, the Company’s provisional copper price was $4.32/lb and final prices for October, November, and December 2021 sales will be the average London Metal Exchange prices for January, February and March 2022 respectively. A 10% increase or decrease from the $4.32/lb provisional price would result in a $7.2 million change in copper revenue in 2022 in respect of 2021 production.
• In response to its improved cash generating capacity and liquidity, in Q4-2021 the Company returned $11.6 million to shareholders. $8.8 million was returned from the purchase of 8.5 million common shares for cancellation (7.1 million shares repurchased through a Substantial Issuer Bid completed on November 12, 2021, and 1.4 million shares repurchased through an ongoing Normal Course Issuer Bid (“NCIB”)). $2.8 million was returned through Amerigo’s Q4-2021 quarterly dividend of Cdn$0.02 per share. In 2022, Amerigo may repurchase for cancellation a further 9.4 million shares under the NCIB. Amerigo is reporting the NCIB monthly activity progress monthly at http://www.amerigoresources.com/investors/share-buybacks/.
• In 2021, MVC made debt repayments of $57.8 million (2020: $9.4 million) and received funds of $33.8 million from a replacement term loan. Borrowings at year end were $30.4 million (December 31, 2020: $53.8 million).
• On December 31, 2021, the Company held cash and cash equivalents of $59.8 million (December 31, 2020: $14.1 million), restricted cash of $4.2 million (2020: $nil) and had working capital of $24.6 million (December 31, 2020: working capital deficiency of $6.1 million).

OTCQX Best 50

Amerigo was included in the 2022 OTCQX Best 50, the OTCQX’s ranking of the top performing OTCQX companies based on total return and growth in average daily dollar volume in 2021.The ranking spans over 500 companies of all sizes, industries, and geographic regions. Amerigo ranked as the 32^nd best performance in the ranking.

About Amerigo and Minera Valle Central

Amerigo Resources Ltd. is an innovative copper producer with a long-term relationship with Corporación Nacional del Cobre de Chile, 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.

¹ Non-IFRS Measures

This news release includes three non-IFRS measures: EBITDA (i), operating cash flow before changes in non-cash working capital (ii) and cash cost (iii).

• EBITDA refers to earnings before interest, taxes, depreciation, and administration and is calculated by adding back depreciation expense to the Company’s gross margin.

• 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)  Cash cost is a performance measure commonly used in the mining industry that is not defined under IFRS. 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 over the number of pounds of copper produced.

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 to plan and assess the overall effectiveness and efficiency of Amerigo’s operations. These performance measures are not standardized financial measures under IFRS 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 measures of performance in accordance with IFRS.