Amerigo Resources Ltd.
TSX : ARG

Amerigo Resources Ltd.

May 13, 2009 08:30 ET

Amerigo Announces Q1-2009 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 13, 2009) - Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today results for the quarter ended March 31, 2009. Significant events are as follows:

Key achievements

In Q1-2009 the Company successfully faced very challenging working capital demands following the precipitous fall of copper and molybdenum prices in Q4-2008. Management was able to achieve the following:

- Structured terms for the repayment of substantial negative copper and molybdenum pricing adjustments that occurred in Q4-2008;

- Secured additional bank financing and negotiated payment deferrals with key partners and suppliers, including El Teniente;

- Completed an equity financing in very difficult financial markets;

- Implemented changes to the mining plan for old tailings, which will increase production as of Q2-2009;

- Introduced a series of cost containment strategies.

Despite the short-term challenges faced in the quarter, the long-term prospects of the Company remain favourable.

Financial results

- In Q1-2009 the Company had an operating loss of $2,601,186 and a net loss of $4,779,074, compared to operating profit of $8,847,744 and net earnings of $6,383,012 in Q1-2008. Significant factors affecting financial performance in Q1-2009 included a 64% decrease in revenue due to lower copper and molybdenum prices, partially offset by a 42% reduction in cost of sales compared to Q1-2008.

- Cash flows used in operating activities totalled $8,639,787 or 8 cents per share in Q1-2009 compared to cash flows from operating activities of $2,197,096 or 2 cents per share in Q1-2008 largely due to the increase in accounts receivable from December 31, 2008 when trade receivables were lower because of negative pricing adjustments.

Production

- Production in Q1-2009 was 7.12 million pounds of copper and 97,184 pounds of molybdenum, compared to 7.80 million pounds of copper and 148,670 pounds of molybdenum produced in Q1-2008. The Company suspended mining of old tailings for much of the quarter in order to reposition equipment to access higher grade material, which resulted in a reduction in both the amount of feed material processed and copper produced in Q1-2009. Molybdenum production was also adversely affected due to lower grades in fresh tailings and the absence of higher grade material from old tailings.

Revenue

- Revenue decreased to $13,021,611 compared to $35,933,465 in Q1-2008 due to sharply decreased metal prices and lower production during the quarter. The Company's copper selling price before smelter, refinery and other charges was $1.82/lb in Q1-2009 compared to $3.56/lb in Q1-2008 and the Company's molybdenum selling price was $8.63/lb in Q1-2009 compared to $32.41/lb in Q1-2008.

Costs

- Cash cost (the aggregate of smelter, refinery and other charges, production costs net of molybdenum-related net benefits, administration and transportation costs) before El Teniente royalty was $1.94/lb in Q1-2009, compared to $2.51/lb in Q1-2008. Cash costs decreased in Q1-2009 as a result of lower overall production costs, principally power costs.

- Total cost (the aggregate of cash cost, El Teniente royalty, depreciation and accretion) in Q1-2009 was $2.42/lb compared to $3.34/lb in Q1-2008. The decrease in total cost was driven by lower cash cost and lower El Teniente royalty due to lower copper and molybdenum prices between the comparative periods.

- Power costs in Q1-2009 were $5,842,586 ($0.1468/kwh) compared to $13,903,331 ($0.3268/kwh) in Q1-2008. Electricity costs in Chile are expected to trend lower in Q2-2009.

- Operating costs such as power, steel and reagents have decreased from their high 2008 levels, but the effect was not fully evident in Q1-2009. Unit costs were affected by lower production in the quarter. If production increases as expected, unit costs will continue to trend downwards in 2009.

Cash and Financing Activities

- During Q1-2009 the Company completed a private placement, resulting in gross proceeds of $8,480,068 (Cdn$10,500,000). The Company also secured additional bank debt in Chile of $1,072,607 during the quarter.

- Cash balance was $3,462,650 at March 31, 2009 compared to cash of $3,187,084 at December 31, 2008.

- Subsequent to March 31, 2009, a Chilean bank loan with a review date of May 2009 was extended to a review date of July 2009, at which time further steps towards rolling the facility to a long-term loan will be reviewed.

- The Company expects to receive tax refunds from the Chilean Internal Revenue Service of approximately $7,000,000 in the course of the year, of which approximately $3,500,000 are expected in Q2-2009.

Investments

- Payments for capital expenditures were $2,965,313 in Q1-2009 compared to $6,870,595 in Q1-2008. Capital expenditures incurred in the quarter were $2,653,414 (Q1-2008: $6,532,247) of which $1,808,250 were for MVC's energy self-generation project.

- The Company's investments in Candente Resource Corp. ("Candente") and Los Andes Copper Ltd. ("Los Andes") had a fair value of $3,196,125 and $449,233 respectively at March 31, 2009. Fair value increases of these investments in Q1-2009 totalled $1,872,143 and were included as other comprehensive income, and therefore not included in the net loss for the quarter.

Mr. Steven Dean, Amerigo's Chairman, stated, "We have successfully weathered the difficult markets of late 2008 and early 2009 and look forward to much better results ahead, which will restore the Company's financial health and allow us to focus on several opportunities for future growth to our copper production."

The information in this news release and the Selected Financial Information contained in the following page should be read in conjunction with the Unaudited Consolidated Financial Statements and Management Discussion and Analysis for quarter ended March 31, 2009, which will be available at the Company's website at www.amerigoresources.com and at www.sedar.com.

Amerigo Resources Ltd. is a Canadian junior company producing copper and molybdenum from its MVC operations near Santiago, Chile.

Statements contained in this news release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company's filings with the TSX and on SEDAR. Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change.



AMERIGO RESOURCES LTD.
SELECTED FINANCIAL INFORMATION

QUARTERS ENDED MARCH 31, 2009 and 2008
All figures expressed in US Dollars

Consolidated Balance Sheets

March 31, December 31,
2009 2008
$ $
---------------------------
Cash and cash equivalents 3,462,650 3,187,084
Mineral property, plant and equipment 117,609,461 116,243,844
Other assets 35,901,226 24,836,949
---------------------------

Total assets 156,973,337 144,258,877
---------------------------
---------------------------

Total liabilities 57,350,354 50,223,162
Shareholders' equity 99,622,983 94,035,715
---------------------------

Total liabilities and shareholders'
equity 156,973,337 144,258,877
---------------------------
---------------------------


Consolidated Statements of Operations and Comprehensive Income (Loss)

Quarter ended Quarter ended
March 31, March 31,
2009 2008
$ $
---------------------------
Total revenue, net of smelter and
refinery charges 13,021,611 35,933,465
Cost of sales (15,622,797) (27,085,721)
Other (expenses) (1,234,692) (1,056,773)
Non-operating income (loss), net (1,143,602) 271,405
Income tax recovery (expense) 312,687 (1,541,792)
Non-controlling interests (115,047) (137,572)
---------------------------
Net earnings (loss) (4,779,074) 6,383,012
Other comprehensive income (loss) 1,872,143 (4,505,662)
---------------------------
Comprehensive income (loss) (2,906,931) 1,877,350
---------------------------

EPS (LPS) - Basic and Diluted (0.04) 0.07


Consolidated Statements of Cash Flows

Quarter ended Quarter ended
March 31, March 31,
2009 2008
$ $
---------------------------
Net cash provided by operating
activities (8,639,787) 2,197,096
Net cash used in investing activities (2,965,313) (7,023,775)
Net cash provided by (used in)
financing activities 11,880,666 (926,234)
---------------------------
Net cash inflow (outflow) during the
period 275,566 (5,752,913)
---------------------------
---------------------------


AMERIGO RESOURCES LTD.
SELECTED TRAILING DATA

All figures expressed in US Dollars

---------------------------------------------------------------------------
Q1-2009 Q4-2008 Q3-2008 Q2-2008 Q1-2008
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Copper
production
(tonnes) 3,228 4,323 4,634 3,212 3,538
---------------------------------------------------------------------------
Copper sales
(tonnes) 3,228 4,336 4,626 3,234 3,540
---------------------------------------------------------------------------
Molybdenum
production
(lbs) 97,184 211,729 261,234 147,508 148,670
---------------------------------------------------------------------------
Molybdenum
sales (lbs) 101,661 219,215 258,499 143,048 157,739
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
Company's
recorded
copper
price
($/lb)(i) 1.82 1.31 2.81 3.80 3.56
---------------------------------------------------------------------------
(i) Before
smelter and
refinery costs
and settlement
adjustments to
prior quarters'
sales
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
Revenue $13,021,611 $ 614,179 $ 29,915,602 $31,164,236 $35,933,465
---------------------------------------------------------------------------
Power
costs 5,842,586 6,316,698 8,723,416 9,002,362 13,903,331
---------------------------------------------------------------------------
El Teniente
royalty 1,387,644 2,615,100 6,631,296 5,319,664 5,146,561
---------------------------------------------------------------------------
All other
cost of
sales 8,392,567 10,639,015 13,408,668 9,233,253 8,035,829
---------------------------------------------------------------------------
Operating
profit
(loss) (2,601,186) (18,956,634) 1,152,222 7,608,957 8,847,744
---------------------------------------------------------------------------
Write-down
of
investments - 6,617,602 12,237,741 - -
---------------------------------------------------------------------------
All other
expenses
(gains),
including
taxes 2,177,888 (4,393,362) (678,092) 1,390,513 2,464,732
---------------------------------------------------------------------------
Net
earnings
(loss) $(4,779,074) $(21,180,874) $(10,407,427) $ 6,218,444 $ 6,383,012
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Earnings
(loss)
per share
(basic) (0.04) (0.23) (0.11) 0.07 0.07
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
Cash cost
($/lb) 1.94 1.99 1.60 2.11 2.51
---------------------------------------------------------------------------
Total cost
($/lb) 2.42 2.43 2.40 3.02 3.34
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Cash flow
from
(used
in)
oper-
ations $(8,639,787) $ (7,363,121) $ 7,638,590 $ 8,136,753 $ 2,197,096
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
Cash flow
used for
capital
invest-
ments $ 2,965,313 $ 4,605,232 $ 5,985,103 $ 5,672,077 $ 6,870,595
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
Closing
cash
position $ 3,462,650 $ 3,187,084 $ 4,258,600 $11,192,995 $10,959,717
---------------------------------------------------------------------------
Working
capital (8,264,628) (14,116,136) (1,088,106) 11,852,658 11,693,685
---------------------------------------------------------------------------


The Toronto Stock Exchange has not reviewed nor accepted responsibility for the adequacy or accuracy of the contents of this news release, which has been prepared by management.

Contact Information

  • Amerigo Resources Ltd.
    Dr. Klaus Zeitler
    President
    (604) 681-2802 or (604) 218-7013
    (604) 682-2802 (FAX)
    www.amerigoresources.com