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Amerigo Announces Q2-2023 Results & Quarterly Dividend

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Amerigo Announces Q2-2023 Results & Quarterly Dividend

 

 

 

 

 

Net loss of $3.8 million driven by lower copper production and prior quarter price settlement adjustments

 

EBITDA1 of $1.7 million, ending quarter cash & restricted cash of $35.9 million

 

Quarterly dividend of Cdn$0.03 per share declared, representing a 7.79% yield2

 

Amerigo Resources Ltd. (TSX: ARG) (OTCQX: ARREF) announces financial results for the three months ended June 30, 2023. Dollar amounts in this news release are in U.S. dollars unless indicated otherwise.

 

Amerigo’s quarterly financial results were impacted by reduced copper production from Minera Valle Central, the Company’s 100% owned operation near Rancagua, Chile, and $2.7 million in negative price settlement adjustments to prior quarter copper sales. Copper production was impacted by MVC’s scheduled 8-day annual maintenance shutdown and by an additional eight days of lost production in June 2023 due to flooding in Central Chile.

 

Quarterly results included a net loss of $3.8 million, loss per share of $0.02 (Cdn$0.03) and EBITDA1 of $1.7 million. Following year-to-date capital returns to shareholders of $10.0 million, Capex payments of $9.2 million and debt and lease repayments of $5.4 million, cash and restricted cash on June 30, 2023, were $35.9 million, compared to starting 2023 cash and restricted cash of $42.0 million.

 

“Our second quarter production and financial results were impacted by a total operations shutdown at the end of June that will also be felt in the third quarter,” said Aurora Davidson, Amerigo’s President and CEO. “Prior to the flooding event, our copper production outperformed guidance by 4%. Because of that outperformance, although we adjusted our annual copper production guidance by 3% due to the flood, our financial health and outlook remain robust. Amerigo remains committed to its Capital Return Strategy. Despite the disruption, I am pleased to announce that the Company’s eighth consecutive dividend has been declared,” she added.

 

On July 31, 2023, Amerigo’s Board of Directors declared a quarterly dividend of Cdn$0.03 per share, payable on September 20, 2023, to shareholders of record as of August 30, 20233. 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, 2023, share closing price of Cdn$1.54, this represents an annual dividend yield of 7.79%2.

 

This news release should be read with Amerigo’s interim consolidated financial statements and Management’s Discussion and Analysis for Q2-2023, available on the Company’s website at www.amerigoresources.com and www.sedar.com.

 

 

             
    30-Jun-23 31-Dec-22 Q2-2023 Q2-2022  
MVC’s copper price ($/lb)4       3.80 4.10  
Revenue ($ millions)       32.0 33.6  
Net loss ($ millions)       (3.8) (5.1)  
LPS ($)       (0.02) (0.03)  
LPS (Cdn)       (0.03) (0.04)  
EBITDA1 ($ millions)       1.7 6.7  
Operating cash flow before changes in non-cash working capital1 ($ millions)   (2.3) (4.0)  
FCFE1 ($ millions)       (12.8) (10.7)  
Cash ($ millions)   31.7 37.8      
Restricted cash ($ millions)   4.2 4.2      
Borrowings ($ millions)   19.7 23.7      
Share outstanding at end of period (millions)   164.8 166.0      
             

 

Highlights and Significant Items

  • Amerigo’s Q2-2023 financial performance was impacted by MVC’s planned 8-day annual plant maintenance shutdown but unexpectedly affected by a complete shutdown commencing on June 23, 2023, caused by extraordinary flooding that disconnected MVC from Chile’s central power grid and resulted in 1.3 million pounds of lost copper production in the quarter, bringing production 9% lower than in the three months ended June 30, 2022. On July 21, 2023, MVC was reconnected to the power grid, enabling MVC to resume normal operations on July 22, 2023.
  • The 8% decline in copper deliveries and a lower average copper price of $3.80 per pound, compared to an average copper price of $4.10/lb during Q2-2022, resulted in lower gross copper revenue of $10.9 million in the quarter.
  • Net loss during Q2-2023 was $3.8 million, compared to a net loss of $5.1 million in Q2-2022, due to stronger foreign exchange gains and lower income tax expense.
  • LPS during Q2-2023 was $0.02 (Cdn$0.03) (Q2-2022: $0.03 (Cdn$0.04)).
  • Q2-2023 copper production was 13.6 million pounds (“M lbs”) (Q2-2022: 14.9 M lbs), including 8.8 M lbs from fresh tailings (Q2-2022: 9.1 M lbs) and 4.8 M lbs from Cauquenes historical tailings (Q2-2022: 5.8 M lbs).
  • Molybdenum production during Q2-2023 was 0.3 million pounds (Q2-2022: 0.2 million pounds). MVC’s molybdenum price increased to $20.76/lb (Q2-2022: $17.58/lb), resulting in a Q2-2023 molybdenum revenue of $2.9 million (Q2-2022: $2.2 million).
  • Copper tolling revenue is calculated from the gross value of copper produced in Q2-2023 of $52.8 million (Q2-2022: $63.7 million) and negative fair value adjustments to settlement receivables of $3.5 million (Q2-2022: $7.8 million), less notional items including DET royalties of $14.0 million (Q2-2022: $18.3 million), smelting and refining of $5.7 million (Q2-2022: $5.8 million) and transportation of $0.4 million (Q2-2022: $0.4 million).
  • The Company used operating cash flow before changes in non-cash working capital1 of $2.3 million in Q2-2023 (Q2-2022: $4.0 million). Quarterly net operating cash flow was $0.5 million (Q2-2022: $0.5 million). There was negative free cash flow to equity1 of $12.8 million in Q2-2023 compared to $10.7 million in Q2-2022.
  • Q2-2023 cash cost1 was $2.37/lb (Q2-2022: $2.01/lb), impacted by lower production, which resulted in increases of $0.29/lb in other direct costs, $0.08/lb in power costs, $0.03/lb in smelting and refining charges, and $0.03/lb in administration costs. The increases were mitigated by stronger molybdenum by-product credits of $0.06/lb from stronger molybdenum production and prices.
  • Amerigo’s financial performance is sensitive to changes in copper prices. MVC’s Q2-2023 provisional copper price was $3.80/lb. The final prices for April, May and June 2023 sales will be the average London Metal Exchange (“LME”) prices for July, August and September 2023, respectively. A 10% increase or decrease from the $3.80/lb provisional price would result in a $5.2 million change in revenue in Q3-2023 regarding Q2-2023 production.
  • In Q2-2023, Amerigo returned $4.5 million to shareholders (Q2-2022: $13.0 million), including $3.7 million through Amerigo’s regular quarterly dividend of Cdn$0.03 per share (Q2-2022: $4.1 million), and $0.8 million used to repurchase for cancellation 0.7 million common shares (Q2-2022: $8.9 million used to repurchase 6.8 million common shares).
  • In Q2-2023, the Company made scheduled debt payments of $3.5 million (Q2-2022: $3.5 million), lease repayments of $1.7 million (Q2-2022: $0.2 million) and paid $4.8 million for plant and equipment (Q2-2022: $3.0 million).
  • On June 30, 2023, the Company held cash and cash equivalents of $31.7 million (December 31, 2022: $37.8 million), a restricted cash balance of $4.2 million (December 31, 2022: $4.2 million) and had a working capital deficiency of $4.9 million (December 31, 2022: working capital of $10.0 million).

 

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.

 

 

Summary Consolidated Statements of Financial Position
  June 30,   December 31,  
  2023   2022  
  $ thousands   $ thousands  
Cash and cash equivalents 31,675   37,821  
Restricted cash 4,201   4,215  
Property plant and equipment 160,467   158,591  
Other assets 21,759   30,552  
Total assets 218,102   231,179  
Total liabilities 104,472   112,476  
Shareholders’ equity 113,630   118,703  
Total liabilities and shareholders’ equity 218,102   231,179  
       
Summary Consolidated Statements of Loss and Comprehensive Loss
  Three months ended June 30,  
  2023   2022  
  $ thousands   $ thousands  
Revenue 32,036   33,584  
Tolling and production costs (35,341)   (31,968)  
Other gains (expenses) 32   (3,089)  
Finance expense (359)   (267)  
Income tax expense (161)   (3,331)  
Net loss (3,793)   (5,071)  
Other comprehensive (loss) income (915)   728  
Comprehensive loss (4,708)   (4,343)  
       
Loss per share – basic & diluted (0.02)   (0.03)  
       
Summary Consolidated Statements of Cash Flows
  Three months ended June 30,  
  2023   2022  
  $ thousands   $ thousands  
Cash flow used in operating activities (2,303)   (3,952)  
Changes in non-cash working capital 2,807   4,460  
Net cash from operating activities 504   508  
Net cash used in investing activities (4,791)   (3,010)  
Net cash used in financing activities (8,041)   (14,394)  
Net decrease in cash and cash equivalents (12,328)   (16,896)  
Effect of foreign exchange rates on cash 80   (1,179)  
Cash and cash equivalents, beginning of period 43,923   71,095  
Cash and cash equivalents, end of period 31,675   53,020  
       

 

Posted August 2, 2023

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