Amerigo Announces Q1-2014 Financial Results
- Revenues of $32.4 million
- $4.5 million cash flow from operations, $389,000 net loss
- Cauquenes Contract finalized
VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 8, 2014) -
Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company")
reported today results for the three months ended March 31, 2014.
The Company posted revenues of $32.4 million and generated $4.5
million in cash flow from operations before changes in non-cash
working capital.
Amerigo's Chairman and CEO, Dr. Klaus Zeitler, stated, "We have
now opened up a new area in Colihues with increased extraction
levels and I am therefore looking forward to higher production
levels, particularly in the second half of the year. The Company's
annual guidance for 2014 remains at production of 45 million pounds
of copper and 800,000 pounds of molybdenum, with cash costs
projected to be between $2.15 and $2.25 per pound of copper.
"As previously announced, the contract for the acquisition of
the processing rights to the Cauquenes deposit and the extension of
the Company's right to process El Teniente tailings from 2021 to
2037 is now in place, and we continue to expect to receive all
required environmental approvals during the current quarter. The
due diligence being performed by BBVA, the lead bank in the
expansion financing syndicate is virtually complete, and the
results are being provided to other potential syndicate members. As
a result, we expect to break ground on the expansion project during
the second half of 2014."
Comparative Annual
Overview
|
|
Three months ended March 31, |
|
|
|
2014 |
|
2013 |
|
Change |
|
|
|
|
|
|
|
$ |
|
% |
|
|
Copper produced, million pounds |
10.2 |
|
12.8 |
|
(2.63 |
) |
(20 |
%) |
|
Copper sold, million pounds |
10.2 |
|
12.5 |
|
(2.30 |
) |
(18 |
%) |
|
Molybdenum produced, pounds |
125,016 |
|
258,301 |
|
(133,285 |
) |
(52 |
%) |
|
Molybdenum sold, pounds |
110,774 |
|
240,744 |
|
(129,970 |
) |
(54 |
%) |
|
Percentage of copper production from old tailings |
45 |
% |
49 |
% |
|
|
(4 |
%) |
|
Revenue ($ thousands) |
32,370 |
|
43,161 |
|
(10,791 |
) |
(25 |
%) |
|
Cost of sales(1) ($ thousands) |
31,706 |
|
38,037 |
|
(6,331 |
) |
(17 |
%) |
|
El Teniente royalty costs ($ thousands) |
6,421 |
|
10,700 |
|
(4,279 |
) |
(40 |
%) |
|
Gross profit ($ thousands) |
664 |
|
5,124 |
|
(4,460 |
) |
(87 |
%) |
|
Net (loss) profit ($ thousands) |
(389 |
) |
3,238 |
|
(3,627 |
) |
(112 |
%) |
|
Operating cash flow ($ thousands)(2) |
4,503 |
|
7,335 |
|
(2,832 |
) |
(39 |
%) |
|
Cash flow paid for plant expansion ($ thousands) |
(3,402 |
) |
(3,645 |
) |
(243 |
) |
(7 |
%) |
|
Cash and cash equivalents ($ thousands) |
8,142 |
|
13,280 |
|
(5,138 |
) |
(39 |
%) |
|
Bank debt ($ thousands) |
- |
|
999 |
|
(999 |
) |
(100 |
%) |
|
Average realized copper price per pound |
3.36 |
|
3.52 |
|
(0.16 |
) |
(5 |
%) |
|
Cash cost per pound(3) |
2.22 |
|
1.99 |
|
0.23 |
|
12 |
% |
|
Total cost per pound(3) |
3.38 |
|
3.15 |
|
0.23 |
|
7 |
% |
|
(1) |
Includes El Teniente royalty costs |
|
(2) |
Excluding working capital changes |
|
(3) |
Cash
and total costs are non-GAAP measures. Refer to the Company's March
31, 2014 MD&A for a reconciliation measures to GAAP. |
Financial
results
- Revenue was $32.4 million compared to $43.2 million in Q1-2013.
Revenues decreased 25% due to lower copper and molybdenum sales and
lower metal prices.
- Cost of sales was $31.7 million, compared to $38 million in
Q1-2013, a decrease of 17%, driven by lower El Teniente royalty
costs (from lower production and lower average LME prices) and
lower production costs (resulting from lower production
levels).
- Gross profit was $0.7 million, compared to $5.1 million in
Q1-2013.
- Net loss was $0.4 million compared to a net profit of $3.2
million in Q1-2013.
- In Q1-2014, the Company generated cash flow from operations
before changes in non-cash working capital of $4.5 million,
compared to $7.3 million in Q1-2013.
Production
- The Company produced 10.2 million pounds of copper, 20% lower
than the 12.8 million pounds produced in Q1-2013.
- Molybdenum production was 125,016 pounds, 52% lower than the
258,301 pounds produced in Q1-2013.
- Fresh tailings copper production was adversely affected by low
mill tonnage and unplanned downtime at El Teniente, and lower than
expected copper sulphide grade. MVC continued to work in
unfavorable areas of the Colihues deposit as a result of the change
in mine plan made necessary by a pit slide in Colihues during
Q2-2013. Molybdenum production was lower than in prior quarters due
to low throughput and low molybdenum grade in fresh tailings.
Revenue
- Revenue decreased to $32.4 million, compared to $43.2 million
in Q1-2013, due to lower production levels and lower metal prices.
The Company's copper selling price before smelting, refining and
other charges was $3.36/lb compared to $3.52/lb in Q1-2013, and the
Company's molybdenum selling price was $9.93/lb compared to
$11.34/lb in Q1-2013.
Costs
- Cash cost (a non-GAAP measure equal to the aggregate of
smelting, refining and other charges, production costs net of
molybdenum-related net benefits, administration and transportation
costs, before El Teniente royalty was $2.22/lb, compared to
$1.99/lb in Q1-2013. Cash costs increased for the most part as a
result of lower production in Q1-2014.
- Total cost (a non-GAAP measure equal to the aggregate of cash
cost, El Teniente royalty, depreciation and accretion, was $3.38/lb
compared to $3.15/lb in Q1-2013, mainly as a result of lower
production.
- Power costs in Q1-2014 were $5.3 million ($0.0900/kwh) compared
to $6.4 million ($0.0970/kwh) in Q1-2013. Similar power cost levels
are expected to December 31, 2017, the end of the term of MVC's
current power contract.
- Total El Teniente royalties were $6.4 million in Q1-2014,
compared to $10.7 million in Q1-2013, due to lower production and
metal prices.
Cash and Financing
Activities
- Cash balance was $8.1 million at March 31, 2014 compared to
$13.1 million at December 31, 2013.
Investments
- Cash payments for capital expenditures ("Capex") were $3.4
million compared to $3.6 million in Q1-2013. Capex payments have
been funded from operating cash flow and cash on hand.
- Capex incurred in Q1-2014 totaled $2.9 million (Q1-2013: $2
million) and included project investments in connection with
Cauquenes engineering ($0.9 million) and sustaining Capex projects
($2 million).
- The Company's investments in Candente Copper Corp. and Los
Andes Copper Ltd. had an aggregate fair value of $3.1 million at
March 31, 2014 (December 31, 2013: $3.2 million).
Outlook
- MVC's 2014 production guidance continues to be approximately 45
million pounds of copper and 800,000 pounds of molybdenum. In
addition, the tolling contract with Compañia Minera Maricunga
("Maricunga") is expected to contribute a further 2 million pounds
of copper.
- Cash cost is projected to be between $2.15/lb and $2.25/lb in
2014.
- 2014 sustaining Capex at MVC is estimated to be approximately
$3.8 million. Capex for the Cauquenes expansion project is
estimated to be approximately $140 million.
The information in this news release and the Selected Financial
Information contained in the following page should be read in
conjunction with the Unaudited Condensed Consolidated Interim
Financial Statements and MD&A for the three months ended March
31, 2014 and the Audited Consolidated Financial Statements and
MD&A for the year ended December 31, 2013, which will be
available at the Company's website at www.amerigoresources.com and
at www.sedar.com.
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.
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) ("Forward-Looking Information"). Forward-Looking
Information is often, but not always, identified by the use of
words such as "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 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 supply of tailings from El Teniente and extraction of
tailings from the Colihues tailings impoundment, 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 tailings impoundment, 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.
| AMERIGO RESOURCES LTD. |
| SELECTED FINANCIAL INFORMATION |
|
| QUARTERS ENDED MARCH 31, 2014 AND
2013 |
| All
figures expressed in US Dollars and presented under IFRS |
Consolidated Statements of Financial Position
|
|
March 31, |
December 31, |
|
|
2014 |
2013 |
|
|
$ |
$ |
| Cash
and cash equivalents |
8,142 |
13,148 |
|
Property, plant and equipment |
114,035 |
116,601 |
| Other
assets |
57,554 |
56,360 |
|
|
|
| Total
assets |
179,731 |
186,109 |
|
|
|
| Total
liabilities |
58,203 |
64,370 |
|
Shareholders' equity |
121,528 |
121,739 |
|
|
|
| Total
liabilities and shareholders' equity |
179,731 |
186,109 |
Consolidated Statements of Comprehensive (Loss)
|
|
Quarter ended |
|
Quarter ended |
|
|
|
March 31, |
|
March 31, |
|
|
|
2014 |
|
2013 |
|
|
|
$ |
|
$ |
|
|
Revenue |
32,370 |
|
43,161 |
|
| Cost
of sales |
(31,706 |
) |
(38,037 |
) |
| Other
expenses |
(725 |
) |
(703 |
) |
|
Finance expense |
(149 |
) |
(185 |
) |
|
Income tax expense |
(179 |
) |
(998 |
) |
|
Profit for the period |
(389 |
) |
3,238 |
|
| Other
comprehensive income |
(122 |
) |
2,908 |
|
|
Comprehensive income |
(511 |
) |
6,146 |
|
|
|
|
|
|
| EPS-
Basic and Diluted |
- |
|
0.02 |
|
Consolidated Statements of Cash Flows
|
|
Quarter ended |
|
Quarter ended |
|
|
|
March 31, |
|
March 31, |
|
|
|
2014 |
|
2013 |
|
|
|
$ |
|
$ |
|
| Net
cash (used in) provided by operating activities |
(1,702 |
) |
8,203 |
|
| Net
cash provided by investing activities |
(3,402 |
) |
(3,645 |
) |
| Net
cash (used in) financing activities |
98 |
|
(504 |
) |
| Net
cash inflow outflow (inflow) during the period |
(5,006 |
) |
4,054 |
|
Amerigo Resources Ltd.Dr. Klaus ZeitlerChairman & CEO(604)
218-7013 or (604) 697-6201Amerigo Resources Ltd.(604) 681-2802(604)
682-2802www.amerigoresources.com
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