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Amerigo Reports Record Revenue, Net Income and Cash Balances in 2021

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Amerigo Reports Record Revenue, Net Income and Cash Balances in 2021

 

 

 

 

 

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

 

Annual EBITDAof $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), EBITDAof $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.

 

 

    Annual Annual        
    2021 2020 Q4-2021 Q4-2020    
Revenue ($ millions)   199.6 126.4 52.0 47.2    
Net income ($ millions)   39.8 6.1 8.9 8.3    
EPS ($)   0.22 0.03 0.05 0.05    
EPS (Cdn)   0.28 0.05 0.06 0.06    
EBITDA1 ($ millions)   90.1 33.1 24.9 20.1    
Operating cash flow before changes in working capital1 ($ millions)   69.5 29.1 18.3 19.8    
Cash ($ millions)   59.8 14.1        
Restricted cash ($ millions)   4.2        
Borrowings ($ millions)   30.4 53.8        
               

 

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).

 

Summary Consolidated Statements of Financial Position  
  December 31,   December 31,    
  2021   2020    
  $ thousands   $ thousands    
Cash and cash equivalents 59,792   14,085    
Restricted cash 4,221      
Property plant and equipment 178,083   184,805    
Other assets 27,249   38,685    
Total assets 269,345   237,575    
Total liabilities 130,552   126,893    
Shareholders’ equity 138,793   110,682    
Total liabilities and shareholders’ equity 269,345   237,575    
       
Summary Consolidated Statements of Income and Comprehensive Income  
  Year ended December 31,  
  2021   2020    
  $ thousands   $ thousands    
Revenue 199,551   126,427    
Tolling and production costs (127,463 ) (111,041 )  
Other expenses (7,820 ) (3,606 )  
Finance expense (3,769 ) (5,240 )  
Income tax expense (20,680 ) (476 )  
Net income 39,819   6,064    
Other comprehensive (loss) income (604 ) 1,756    
Comprehensive income 39,215   7,820    
       
Earnings per share – basic & diluted 0.22   0.03    
       
Summary Consolidated Statements of Cash Flows  
  Year ended December 31,  
  2021   2020    
  $ thousands   $ thousands    
Cash flows from operating activities 69,453   29,148    
Changes in non-cash working capital 23,672   (9,371 )  
Net cash from operating activities 93,125   19,777    
Net cash used in investing activities (8,104 ) (2,720 )  
Net cash used in financing activities (36,821 ) (10,658 )  
Net increase in cash 48,200   6,399    
Effect of foreign exchange rates on cash (2,493 ) 522    
Cash and cash equivalents, beginning of year 14,085   7,164    
Cash and cash equivalents, end of year 59,792   14,085    
       

 

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 32nd 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.

 

(Expressed in thousands) 2021 2020 Q4-2021 Q4-2020
  $ $ $ $
Gross profit 72,088 15,386 19,891 15,729
Add:        
   Depreciation and amortization 18,014 17,694 4,992 4,350
EBITDA 90,102 33,080 24,883 20,079

 

  • 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.

 

(Expressed in thousands) 2021 2020 Q4-2021 Q4-2020
  $ $ $ $
Net cash provided by operating activities 93,125 19,777 17,705 4,639
Add (deduct):        
  Changes in non-cash working capital (23,672) 9,371 574 15,118
Operating cash flow before non-cash working capital 69,453 29,148 18,279 19,757

 

(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.

                 
(Expressed in thousands)   2021     2020     Q4-2021     Q4-2020  
    $     $     $     $  
Tolling and production costs   127,463     111,041     32,118     31,459  
Add (deduct):                
  DET notional royalties – copper   78,374     33,536     21,606     12,355  
  Smelting and refining   20,631     16,665     5,426     4,905  
  Transportation costs   2,021     1,751     458     511  
  Inventory adjustments   (223 )   (3,381 )   570     (1,254 )
  By-product credits   (18,107 )   (10,168 )   (4,228 )   (3,598 )
Total cost   210,159     149,444     55,950     44,378  
Deduct:                
  DET notional royalties – copper   (78,374 )   (33,536 )   (21,606 )   (12,355 )
  DET royalties – molybdenum   (3,159 )   (1,345 )   (896 )   (506 )
    (81,533 )   (34,881 )   (22,502 )   (12,861 )
  Depreciation and amortization   (18,014 )   (17,694 )   (4,992 )   (4,350 )
Cash cost   110,612     96,869     28,456     27,167  
Pounds of copper tolled from   63.4M     54.9M     16.9M     16.4M  
fresh and old tailings                
Cash cost ($/lb)   1.75     1.76     1.68     1.65  
                 

 

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.

 

 

Posted February 24, 2022

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