Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") is pleased to
announce that it has made the regulatory filing of the National Instrument
43-101 ("NI 43-101") technical report (the "Report") prepared for Minera Valle
Central, S.A. ("MVC"), Amerigo's Chilean subsidiary. The Report has been filed
in conjunction with the announcement by Amerigo of the agreement entered into by
MVC with Codelco's El Teniente Division ("DET") for the acquisition of the
processing rights to the Cauquenes tailings deposit and the extension of MVC's
rights to process tailings from the El Teniente mine from 2021 to 2037.
Robert D. Henderson, P. Eng, President and COO of Amerigo is the author of the
Report, is responsible for the technical comments related to the resource
estimate and its parameters and is a "qualified person" for the purposes of NI
43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities
Administrators. Mr. Henderson has verified the data disclosed in this release.
MVC's plant is located approximately 90 kilometres south of Santiago, Chile and
has been in operation since 1992. MVC processes tailings from the current
production of the El Teniente mine ("Fresh Tailings") and tailings from the
historic Colihues tailings deposit. El Teniente is the world's largest
underground copper mine and has been in production since 1904. Construction of a
new mine level, scheduled for completion in 2017, is estimated to extend the
mine's useful life by 50 years.
In 2013, MVC produced 45.7 million pounds of copper and 809,057 pounds of
molybdenum. An expansion project (the "Project") is planned to develop the
historic Cauquenes deposit that is expected to double MVC's copper production to
approximately 90 million pounds per year.
The Colihues and Cauquenes tailings deposits are located in close proximity to
MVC's plant. The MVC plant has a capacity of 175,000 tonnes per day and consists
of grinding and flotation processing facilities. After being reprocessed at MVC,
the tailings are transported by gravity to the Caren tailings impoundment,
located approximately 50 km to the west of the MVC plant.
MVC currently mines the Colihues deposit with hydraulic monitors and plans to
mine the Cauquenes deposit using the same method. The Project will require
construction of additional mining infrastructure, grinding and flotation plants.
In Mr. Henderson's opinion there is sufficient geological and economic evidence
to conclude that MVC's contracts for the processing of Fresh Tailings and
tailings from the Cauquenes and Colihues tailings deposits constitute an
inferred mineral resource. Historical records of El Teniente's mill tailings
represent a detailed account of the tonnage and grade of material stored in the
Cauquenes and Colihues impoundments. A total of 30 holes have been drilled on
the Cauquenes deposit in four separate campaigns. MVC has a long operating
record of economic extraction of copper and molybdenum from Fresh and Colihues
tailings, and MVC's 2014 feasibility study demonstrates that tailings can be
profitably extracted from the Cauquenes deposit.
MVC's total inferred mineral resource estimate for the Fresh, Colihues and
Cauquenes tailings, after application of mining and mill recovery losses, is
1,494 million tonnes at a grade of 0.155% Cu and 0.012% Mo with 1,709 million
pounds of recoverable copper and 43 million pounds of recoverable molybdenum, as
set out in the following tables:
MVC Copper Inferred Mineral Resource Estimate - Dec 31, 2013
----------------------------------------------------------------------------
Tailings Deposit Tonnes (t) Grade (% Cu) Mill Recoverable
Recovery (%) Copper (M lbs)
----------------------------------------------------------------------------
Colihues 68,231,000 0.229 34 117
----------------------------------------------------------------------------
Cauquenes 338,139,000 0.267 48 961
----------------------------------------------------------------------------
Fresh 1,087,444,000 0.115 23 631
----------------------------------------------------------------------------
Total 1,493,814,000 0.155 34 1,709
----------------------------------------------------------------------------
MVC Molybdenum Inferred Mineral Resource Estimate - Dec 31, 2013
----------------------------------------------------------------------------
Tailings Deposit Tonnes (t) Grade (% Mo) Mill Recoverable
Recovery (%) Molybdenum
(M lbs)
----------------------------------------------------------------------------
Colihues 68,231,000 0.010 12 2
----------------------------------------------------------------------------
Cauquenes 338,139,000 0.021 18 29
----------------------------------------------------------------------------
Fresh 1,087,444,000 0.009 6 13
----------------------------------------------------------------------------
Total 1,493,814,000 0.012 11 43
----------------------------------------------------------------------------
The Cauquenes Expansion Project Environmental Impact Assessment study was filed
with the Chilean authorities on January 7, 2013, requesting an increase in the
historic tailings processing rate via an expansion of the MVC plant.
Environmental approval is expected to be received in the first half of 2014. The
January 2014 Cauquenes Expansion Project Feasibility Study development plan
anticipates construction to commence in the second half of 2014. The Study calls
for a Cauquenes processing rate of 60,000 tonnes per day and a phased start up
estimated to commence in Q2-2015, with full production expected to be achieved
in Q2-2016. Processing of the Colihues deposit is planned to be phased out and
restarted in 2034 when the Cauquenes deposit is depleted.
Average annual production over the initial ten year period (2016-2025) is
estimated to be 88 million pounds of copper per year at a cash cost of
production of approximately $1.51/lb Cu, excluding royalties. Royalty payments
are estimated to be $0.69/lb Cu at the base case metal prices used in the
economic analysis. The initial capital cost of the Project has been estimated at
$140 million, including contingency and excluding escalation. At an 8% discount
rate, the unlevered after tax net present value for the Project is estimated to
be approximately US$279 million at an assumed long term copper price of $2.95/lb
Cu, rising to US$441 million at a price of $3.50/lb Cu. Over the life of the
contract, assuming a copper price of $3.50/lb, total EBITDA for MVC is estimated
to be $3.1 billion, of which $1.6 billion is payable to DET as royalties.
Using these parameters, the preliminary financial analysis of the Project
indicates that MVC has a positive net cash flow and an acceptable internal rate
of return and supports progression to construction and development of the
Cauquenes deposit.
The results of the preliminary economic assessment represent forward-looking
information that is subject to a number of known and unknown risks,
uncertainties and other factors that may cause actual results to differ
materially from those anticipated in such information. This information speaks
only as of the date of this Technical Report, and is based on a number of
assumptions which are believed to be true but which may prove to be incorrect in
future. The preliminary economic assessment is preliminary in nature and it
includes inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves. There is no certainty that
the preliminary economic assessment will be realized
In Mr. Henderson's opinion the data supporting the inferred mineral resource
estimates were appropriately collected, evaluated and estimated, and the Project
objective of identifying tailings mineralization that could potentially support
future processing operations has been achieved. Mr. Henderson's recommendation
is to proceed with construction of the Project.
Amerigo Resources Ltd. produces copper and molybdenum under a long term
partnership with the world's largest copper producer, Codelco, by means of
processing fresh and old tailings from the world's largest underground copper
mine, El Teniente near Santiago, Chile. Tel: (604) 681-2802; Fax: (604)
682-2802; Web: www.amerigoresources.com; Listing: ARG:TSX
Certain of the information and statements contained herein that are not
historical facts, constitute "forward-looking information" within the meaning of
the Securities Act (British Columbia), Securities Act (Ontario) and the
Securities Act (Alberta)applicable Canadian securities legislation
("Forward-Looking Information"). Forward-Looking Information is often, but not
always, identified by the use of words such as "expects", "seek", "anticipate",
"believe", "plan", "estimate", "expect" and "intend"; statements that an event
or result is "due" on or "may", "will", "should", "could", or might" occur or be
achieved; and, other similar expressions. More specifically, Forward-Looking
Information contained herein includes, without limitation, information
concerning the agreement for the purchase by MVC of the processing rights for
the Cauquenes tailings deposit, extending the contract for the processing of
Fresh Tailings to 2037 (the "Master Agreement"), completion of construction of
the planned expansion of MVC's operations required for the processing of old
tailings from the historic Cauquenes tailings deposit (the "Cauquenes
Expansion"), future tailings production volumes and the Company's copper and
molybdenum production, all of which involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such Forward-Looking Information including, without limitation, material factors
and assumptions relating to, and risks and uncertainties associated with, the
performance of the Master Agreement, the receipt of adequate debt financing
required for the Cauquenes Expansion, the receipt of environmental approval to
the Cauquenes expansion, the continued supply of tailings from El Teniente and
successful extraction of tailings from the Cauquenes and Colihues tailings
deposits, the achievement and maintenance of planned production rates, the
evolving legal and political policies of Chile, the volatility in the Chilean
economy, military unrest or terrorist actions, metal price fluctuations,
governmental relations, the availability of financing for activities when
required and on acceptable terms,
the estimation of mineral resources and reserves, current and future
environmental and regulatory requirements, the availability and timely receipt
of permits, approvals and licenses, industrial or environmental accidents,
equipment breakdowns, availability of and competition for future mineral
acquisition opportunities, availability and cost of insurance, labour disputes,
land claims, the inherent uncertainty of production and cost estimates, currency
fluctuations, expectations and beliefs of management and other risks and
uncertainties, including those described under Risk Factors in the Company's
Annual Information Form and in Management's Discussion and Analysis in the
Company's financial statements. Such Forward-Looking Information is based upon
the Company's assumptions regarding global and Chilean economic, political and
market conditions and the price of metals, including copper and molybdenum, and
future tailings production volumes and the Company's copper and molybdenum
production. Among the factors that have a direct bearing on the Company's future
results of operations and financial conditions are changes in project parameters
as plans continue to be refined, interruptions in the supply of fresh tailings
from El Teniente, further delays in the extraction of tailings from the Colihues
and Cauquenes tailings deposits, a change in government policies, competition,
currency fluctuations and restrictions and technological changes, among other
things. Should one or more of any of the aforementioned risks and uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from any conclusions, forecasts or projections described in
the Forward-Looking Information. Accordingly, readers are advised not to place
undue reliance on Forward-Looking Information. Except as required under
applicable securities legislation, the Company undertakes no obligation to
publicly update or revise Forward-Looking Information, whether as a result of
new information, future events or otherwise. In addition, readers are cautioned
that the preliminary economic assessment in the NI 43-101 report is preliminary
in nature and includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves. There is no
certainty that the preliminary economic assessment will be realized.
FOR FURTHER INFORMATION PLEASE CONTACT:
Amerigo Resources Ltd.
Dr. Klaus Zeitler
Chairman & CEO
(604) 218-7013
Amerigo Resources Ltd.
(604) 697-6201
www.amerigoresources.com
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