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Amerigo Reports Strong Q3-2021 Financial Results

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Amerigo Reports Strong Q3-2021 Financial Results

 

 

 

 

 

Dividend of Cdn$0.02 per share payable on December 20, 2021

 

 

Q3-2021 net income of $8.4 million, earnings per share of $0.05 (Cdn$0.06)

 

EBITDAof $18.5 million, quarterly operating cash flow before changes in non-cash working capital1 of $14.1 million.

 

Amerigo Resources Ltd. (TSX: ARG) (OTC:ARREF) is pleased to announce financial results for the quarter ended September 30, 2021. Dollar amounts in this news release are in U.S. dollars unless indicated otherwise.

 

Amerigo posted net income of $8.4 million, earnings per share of $0.05 (Cdn$0.06), EBITDAof $18.5 million and quarterly operating cash flow before changes in non-cash working capital1 of $14.1 million.

 

“Amerigo had strong operations, with solid financial results and accomplished planned annual maintenance during the shortened quarter. During the quarter, we also announced a substantial issuer bid to provide the mechanism to orderly retire up to Cdn$25 million in the share capital of the Company and Amerigo has reinstated dividends, which will now be paid on a quarterly basis”, said Aurora Davidson, Amerigo’s President and CEO. “We anticipate providing 2022 guidance to the market in conjunction with the release of the Q4-2021 production results at early in January 2022.”

 

The information and data contained in this news release should be read in conjunction with Amerigo’s interim consolidated financial statements and Management’s Discussion and Analysis (“MD&A) for the three and nine months ended September 30, 2021, available at the Company’s website at www.amerigoresources.com and at www.sedar.com.

 

 

 
  30-Sep-21 31-Dec-20 Q3-2021 Q3-2020
Revenue ($ millions)     48.1 37.6
Net income ($ millions)     8.4 5.4
EPS (LPS) ($)     0.05 0.03
EPS (LPS) (Cdn$)     0.06 0.04
EBITDA1 ($ millions)     18.5 13.3
Operating cash flow before changes in non-cash working capital1 ($ millions)   14.1 10.7
Cash ($ millions) 64.9 14.1    
Restricted cash ($ millions) 6.4    
Bank debt ($ millions) 34.2 46.5    
 

 

Highlights and Significant Items

 

  • Q3-2021 net income increased to $8.4 million (Q3-2020: $5.4 million) due to higher production and higher metal prices.
  • Q3-2021 EPS was $0.05 (Cdn$0.06) (Q3-2020: $0.03 (Cdn$0.04)).
  • The Company generated operating cash flow before changes in non-cash working capital1 of $14.1 million in Q3-2021 (Q3-2020: $10.7 million). Quarterly net operating cash flow was $25.4 million (Q3-2020: $15.4 million).
  • Q3-2021 production was 16.0 million pounds of copper (Q3-2020: 14.7 million pounds) including 7.4 million pounds from Cauquenes (Q3-2020: 8.0 million pounds) and 8.6 million pounds from fresh tailings (Q3-2020: 6.7 million pounds).
  • Molybdenum production in Q3-2021 was 0.3 million pounds (Q3-2020: 0.4 million pounds).
  • Q3-2021 cash cost1 decreased 10% to $1.62 per pound (“/lb”) (Q3-2020: $1.80/lb).
  • In Q3-2021, the Company’s average quarterly copper price was $4.23/lb, 39% higher than the Q3-2020 average quarterly copper price of $3.04/lb. The Company’s average quarterly molybdenum price was $18.19/lb, 147% higher than the Q3-2020 average quarterly price of $7.37/lb.
  • Revenue during Q3-2021 was $48.1 million (Q3-2020: $37.6 million), including copper tolling revenue of $42.5 million (Q3-2020: $35.5 million) and molybdenum revenue of $5.6 million (Q3-2020: $2.1 million).
  • Copper tolling revenue is calculated from the Company’s gross value of copper produced during Q3-2021 of $72.0 million (Q3-2020: $44.3 million) and negative fair value adjustments to settlement receivables of $2.9 million (Q3-2020: positive fair value adjustments of $5.9 million), less notional items including royalties to Codelco’s El Teniente division of $20.6 million (Q3-2020: $9.8 million), smelting and refining of $5.5 million (Q3-2020: $4.4 million) and transportation of $0.5 million (Q3-2020: $0.5 million). The Q3-2021 settlement adjustments included $2.4 million in negative settlement adjustments in respect of Q2-2021 production, which are final adjustments.
  • Amerigo’s financial performance is very sensitive to changes in copper prices. The Company’s Q3-2021 provisional copper price was $4.23/lb, and final prices for July, August, and September sales will be the average London Metal Exchange prices for October, November, and December, respectively. A 10% increase or decrease from the $4.23/lb provisional price used on September 30, 2021 would result in a $7.2 million change in revenue in Q4-2021 in respect of Q3-2021 production.
  • On September 28, 2021, Amerigo commenced a substantial issuer bid to purchase for cancellation from Amerigo shareholders who choose to participate up to Cdn$25 million in value of its common shares. The issuer bid expires on November 12, 2021.
  • On September 30, 2021, the Company held cash and cash equivalents of $64.9 million (December 31, 2020: $14.1 million), restricted cash of $6.4 million (December 31, 2020: $nil) and had working capital of $21.6 million (December 31, 2020: working capital deficiency of $6.1 million).
  • Amerigo’s Board of Directors (the “Board”) has reached a decision to declare and pay steady dividends on a quarterly basis. Dividends will be declared at the discretion of the Board and will depend on the Company’s financial results, other factors of relevance determined by the Board and the maintenance of appropriate levels of working capital.
  • On November 1, 2021, the Board declared a quarterly dividend of Cdn$0.02 per share, payable on December 20, 2021 to shareholders of record as of November 30, 2021. 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 September 30, 2021 share closing price of Cdn$1.26, this would represent an annual dividend yield of 6.35%.

 

Summary Consolidated Statements of Financial Position
  September 30, December 31,
  2021 2020
  $ thousands $ thousands
Cash and cash equivalents 64,945 14,085
Restricted cash 6,441
Property plant and equipment 182,030 184,805
Other assets 17,247 38,685
     
Total assets 270,663 237,575
     
Total liabilities 129,479 126,893
Shareholders’ equity 141,184 110,682
Total liabilities and shareholders’ equity 270,663 237,575
     
Summary Consolidated Statements of Income and Comprehensive Income
  Q3-2021 Q3-2020
  $ thousands $ thousands
Revenue 48,132 37,555
Tolling and production costs (33,940) (28,572)
Other expenses (1,546) (922)
Finance expense (1,102) (784)
Income tax expense (3,124) (1,889)
Net income 8,420 5,388
Other comprehensive income 55 444
Comprehensive income 8,475 5,832
     
Earnings per share – basic & diluted 0.05 0.03
     
Summary Consolidated Statements of Cash Flows
  Q3-2021 Q3-2020
  $ thousands $ thousands
Cash flows from operating acitivities 14,067 10,738
Changes in non-cash working capital 11,315 4,646
Net cash from operating activities 25,382 15,384
Net cash used in investing acitivities (6,022) (540)
Net cash used in financing acitivites (2,156) (5,030)
Net increase in cash 17,204 9,814
Effect of foreign exchange rates on cash (1,168) 168
Cash and cash equivalents, beginning of period 48,909 489
Cash and cash equivalents, end of period 64,945 10,471
     

 

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 (“Codelco”), 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 November 3, 2021

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