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Amerigo Reports 2021 Production Results and Provides 2022 Guidance

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Amerigo Reports 2021 Production Results and Provides 2022 Guidance

 

 

 

 

 

2021 results beat production and cost guidance

 

Copper production of 63.4 million pounds, 4% over guidance

 

Cash cost1 of $1.75/lb, 2% below guidance

 

Amerigo Resources Ltd. (TSX: ARG) (ARREF: OTC) is pleased to announce production results for the year ended December 31, 2021 from Minera Valle Central, the Company’s 100% owned operation located near Rancagua, Chile. Dollar amounts in this news release are in U.S. dollars unless indicated otherwise.

 

“We are pleased to report annual copper production of 63.4 million pounds. MVC’s strong operational performance, together with an annual robust average LME copper price of $4.22/lb resulted in a transformative year for Amerigo under which the Company put in place quarterly dividends and share repurchase initiatives”, said Aurora Davidson, Amerigo’s President and CEO. “We would like to thank the Company’s employees for their continued commitment to meeting corporate goals. We look forward to another year of strong performance and robust markets under which the Company will continue returning capital to shareholders”, stated Ms. Davidson.

 

In 2021, MVC produced 63.4 million pounds of copper at a cash cost1 of $1.75 per pound and 1.3 M lbs of molybdenum.

 

Annual copper production was 4% over guidance, due to higher fresh tailings tonnage and grade. During the year, MVC successfully completed a series of plant modifications to take advantage of the higher throughput of fresh tailings coming from El Teniente. Production from fresh tailings increased from 45% of copper production in Q1-2021 to 55% of copper production in Q4-2021. To the extent that a higher percentage of production comes from fresh tailings, historical tailings are depleted at a lower rate.

 

Amerigo’s 2021 cash cost1 of $1.75/lb was 2% lower than the Company’s cash cost1 guidance of $1.79/lb mostly due to higher than projected production.

 

Annual molybdenum production was 11% below guidance, driven by the lower molybdenum content found in fresh tailings.

 

Water reserves at Colihues at year end 2021 were 5.8 million cubic meters, which are sufficient for MVC to maintain the Cauquenes tonnage processing projected in Amerigo’s 2022 production guidance.

 

MVC’s operations have continued without any significant disruptions due to Covid-19.

 

In Q4-2021, the Company returned $11.8 million to shareholders. $9.0 million was returned from the purchase of 8.7 million common shares for cancellation (7.1 million shares repurchased through a Substantial Issuer Bid completed on November 12, 2021, and 1.6 million shares repurchased through an ongoing Normal Course Issuer Bid). $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 9.2 million shares under the Normal Course Issuer Bid.

 

On December 31, 2021, the Company’s cash and restricted cash balance was $63.8 million (a decrease of $7.6 million from September 30, 2021) and outstanding bank debt was $31.5 million (a decrease of $3.5 million from September 30, 2021).

 

 

  2021 Q4-2021 Q3-2021 Q2-2021 Q1-2021
Fresh tailings          
  Tonnes per day 135,531 147,047 137,650 129,153 128,238
  Operating days 354 91 84 89 90
  Tonnes processed 48,018,661 13,381,267 11,562,611 11,533,405 11,541,378
  Copper grade 0.147% 0.149% 0.152% 0.144% 0.143%
  Copper recovery 20.7% 20.9% 22.3% 20.2% 19.3%
  Copper produced (M lbs) 32.28 9.26 8.62 7.37 7.03
Cauquenes tailings          
  Tonnes per day 52,209 46,869 52,981 54,026 55,457
  Operating days 346 91 81 87 87
  Tonnes processed 18,073,067 4,293,218 4,267,203 4,701,475 4,811,171
  Copper grade 0.238% 0.242% 0.238% 0.230% 0.242%
  Copper recovery 32.8% 33.6% 33.0% 31.9% 33.1%
  Copper produced (M lbs) 31.09 7.64 7.37 7.61 8.47
Copper produced (M lbs)          63.38           16.90          15.99         14.99             15.50
Copper delivered (M lbs)          63.86           16.72          16.90         15.13             15.11
Cash cost1 ($/lb) 1.75 1.68 1.61 1.81 1.88
Molybdenum produced (M lbs) 1.34 0.30 0.32 0.33 0.40
Molybdenum sold (M lbs) 1.32 0.30 0.34 0.33 0.36

 

 

2022 Guidance

 

Based on MVC’s mine plan for 2022, Amerigo’s annual production guidance is 61.9 M lbs of copper and 1.2 M lbs of molybdenum.

 

The Company’s 2022 cash cost1 is expected to be $1.90/lb, driven by higher market-driven treatment and refinery charges ($0.06/lb). Amerigo also anticipates an increase in steel prices which would impact grinding costs ($0.04/lb), projected lower moly by-product credits ($0.02/lb) and a projected escalation of all other costs combined ($0.02/lb).

 

The Company’s 2022 guidance in this news release assumes an average market copper price of $3.90/lb, an average molybdenum market price of $17/lb and an exchange rate of the CLP to the USD of $800. A 10% change in molybdenum price could have a $0.03/lb impact on cash cost1, and a 10% change on the CLP to USD foreign exchange rate could have an impact of $0.07/lb on cash cost1.

 

At these assumed variables, the royalty to Codelco’s El Teniente Division would be $1.09/lb in 2022. The DET royalty is calculated on a sliding scale based on copper prices. A 10% increase in copper price could have a $0.21/lb impact on the DET royalty.

 

Projected 2022 EBITDA1 considering these combined variables is expected to be $50 million (including 2021 settlement adjustments). A 10% increase in copper price could have an impact on EBITDA1 of $17 million.

 

The annual plant maintenance shutdown at MVC and El Teniente is currently expected to last 8 days and take place in Q2-2022. The dates of the plant shutdowns could potentially be moved forward. Amerigo’s 2022 annual production guidance factors in lower production from the annual maintenance shutdown, whichever quarter it occurs.

 

In 2022, MVC will undertake 29 sustaining capital expenditure projects at a target cost of $6.0 million, including water supply and storage improvements, reallocation of an additional mill to grind fresh tailings, improvements to the moly plant and electrical lines, implementation of an ERP system and others.

MVC will also undertake 2 additional Capex projects at a target cost of $4.7 million to reinforce the slurry and water lines between Cauquenes and the MVC concentrator plant and to upgrade the aerial tailings channel within the MVC facilities in response to higher throughput from fresh tailings. Capitalizable maintenance and strategic spares are expected to be $2.8 million.

 

With respect to financial obligations, MVC will make two semi-annual bank debt repayments of $3.5 million plus interest (in June and December 2022) and will make payments of approximately $1.3 million in connection with its molybdenum plant lease.

 

Release of 2021 results on February 24, 2022

Amerigo will release 2021 financial results at market open on Thursday, February 24, 2022.

 

About Amerigo and MVC

 

Amerigo 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.

 

Posted January 13, 2022

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