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News

Amerigo reports record earnings of US$12.4 million in Q2-2006 up 168% from Q2-2005


August 2, 2006

Earnings per share are US$0.13 up from EPS of US$0.06 in Q2-2005

Cash flow from operations of US$10.2M in Q2-2006

Dividend declared of CDN 4.5 cents per share

Increased strategic stake in Chariot Resources

VANCOUVER, BRITISH COLUMBIA ‚Ä" August 2/CNW/Amerigo Resources Ltd. (TSX:ARG) (‚ÄúAmerigo‚ÄĚ or the ‚ÄúCompany‚ÄĚ) reported results for the quarter ended June 30, 2006 today. Significant events are as follows:

  • Net earnings after tax were a record US$12,444,608 in Q2-2006, 168% higher than earnings of US$4,635,764 in Q2-2005, mainly due to higher copper prices.
     
  • Earnings per share were US$0.1322 non-diluted in Q2-2006, compared to earnings per share of US$0.0607 in Q2-2005.
     
  • Cash flow from operations was US$10,208,246 or US$0.1084 per share in Q2-2006, compared to cash flow from operations of US$2,202,756 or US$0.0288 in Q2-2005. Actual cash flow was lower than earnings substantially due to an increase in accounts receivable from metal sales.
     
  • Production was 6.57 million pounds of copper and 203,548 pounds of molybdenum in Q2-2006, a decrease of 7% in copper production due to a temporary plant shutdown from El Teniente. Moly production increased 31% from Q2-2005.
     
  • Gross copper selling price was $4.15/lb after settlement adjustments, compared to an LME average of $3.27/lb during the quarter. Realized copper price was $3.52/lb, also after settlement adjustments.
     
  • Cash costs (the aggregate of smelter, refinery and other charges, production costs net of molybdenum-related net benefits, administration and transportation costs) before El Teniente royalty were US$0.90/lb in Q2-2006, compared to cash costs of US$0.59/lb in Q2-2005. The increase in cash costs was caused by lower copper production, higher smelter and refinery costs due to the effect of copper price participation to the smelter and higher production and maintenance costs overall from a stronger Chilean peso.
     
  • Total costs (the aggregate of cash costs, El Teniente royalty, depreciation and accretion) were US$1.50/lb in Q2-2006 compared to US$0.89/lb in Q2-2005. The increase in total costs was driven by higher cash costs and higher royalty payments to El Teniente, mainly due to higher copper prices.
     
  • Capital plant expenditures for the construction of two thickeners and an industrial water recovery system required to meet upcoming Chilean environmental regulations and for a pipeline system to allow Colihues tailings to be processed at MVC and then recycled back into Colihues, were US$5,818,880 in Q2-2006, funded substantially from operating cash flow.
     
  • Cash balance was US$18,964,216 at June 30, 2006 after US$5.8M of capital expenditures and an increase in Amerigo's strategic investment in Chariot Resources Limited of US$1,018,974, taking Amerigo‚Äôs interest in Chariot to approximately 17% of Chariot‚Äôs issued and outstanding share capital.
     
  • Dividend ‚Ä" In accordance with Amerigo‚Äôs stated policy, on July 31, 2006 the Board of Directors of Amerigo declared a semi-annual dividend of CDN 4.5 cents per share, payable on September 1, 2006 to shareholders of record as of August 18, 2006. A dividend of CDN 4.5 cents per share was paid by Amerigo on April 7, 2006.

The information in this news release and the Selected Financial Information contained in the following page should be read in conjunction with the Consolidated Financial Statements and Management Discussion and Analysis for the quarter ended June 30, 2006, 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. Tel: (604) 681-2802; Fax: (604) 682-2802; Web: www.amerigoresources.com; Listing: ARG:TSX

For further information, please contact:

Michael J. Kuta, General Counsel & Secretary

Amerigo Resources Ltd. (604) 697-6201

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. 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.

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