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News

Amerigo Announces Q1-2009 Financial Results


May 13, 2009

VANCOUVER, BRITISH COLUMBIA â€" May 13/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;
  • 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¢ per share in Q1-2009 compared to cash flows from operating activities of $2,197,096 or 2¢ 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 inChile 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 inChile 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 nearSantiago,Chile.  Tel: (604) 681-2802; Fax: (604) 682-2802; Web: www.amerigoresources.com; Listing: ARG:TSX

For further information, please contact:    

Dr. Klaus Zeitler, President                         
(604) 681-2802

Amerigo Resources Ltd.                             
(604) 218-7013

TheToronto 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.  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,

2009

$

December 31,

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 ofOperations
and Comprehensive Income (Loss)


 

Quarter ended

Quarter ended

 

March 31,

2009

March 31,

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) â€" Basic and Diluted

(0.04)

0.07

     

Consolidated Statements of Cash Flows

 
 

Quarter ended

Quarter ended

 

March 31,

2009

March 31,

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) *

              1.82

              1.31

              2.81

              3.80

              3.56

*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) operations

$   (8,639,787)

$   (7,363,121)

$    7,638,590

$   8,136,753

$   2,197,096

           
           

Cash flow used for capital investments

$   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)

   11,852658

   11,693,685

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