Amerigo Reports Net Earnings of US$1,625,458 and Cash Flow from Operations of US$3,700,531 in Q2 2004
August 9, 2004
Cash costs down US$0.05 per pound
El Teniente Considering Expansion to 300,000 tpd
New Board Appointments
AMERIGO RESOURCES LTD. (Vancouver, British Columbia) reported results of the period ended June 30, 2004 today. Significant events are as follows:
Net earnings after tax for the three months ended June 30, 2004 were US$1,625,458, lower than the preceding quarter. Earnings were lower due to delays in achieving increased production levels by El Teniente under their plans to expand to 125,000 tpd, and unfavourable settlement adjustments due to lower copper prices at quarter end under new Canadian accounting standards. El Teniente has publicly stated they believe production will have caught up to schedule by year end.
Earnings for the half year to June 30, 2004 were US$5,401,640 or US9c nondiluted. In the same period operating cash flow was US$5,866,778 and total production was 14.51 million pounds.
Cash flow from operations was higher in the three months ended June 30, 2004 at US$3,700,531, up from US$2,166,247 calculated on the same basis in the first quarter. See MD&A for details on calculation.
Cash costs before Codelco royalty were lower at US$0.59 per pound in the 2nd quarter compared to US$0.64 in the 1st quarter, due to higher production and sales of 7.33 million pounds of copper. Total costs after royalty, depreciation and accretion were US$0.78 per pound. Actual production costs are below budget.
Earnings per share were US3c for the three months ended June 30, 2004. Cash flow per share was US6c in the same period.
Cash balances have increased to US$8,044,947 at June 30, 2004.
Molybdenum processing plant underway ‚Ä" MVC has commenced engineering to construct a processing plant to extract molybdenum at projected production rates of 700,000 pounds of molybdenum in concentrates per year and estimated production costs of $2 per pound. Recent molybdenum oxide prices have reached $16 per pound. Commissioning is expected in the first half of 2005.
Initial production expansion is now operational. Phase 1, the installation and commissioning of additional classification and flotation equipment, was completed on time and under budget on April 7, 2004. Optimisation of the new processing circuits continued during the quarter.
Further production increases. Work continues on schedule for the next stage of expansion. In July 2004 MVC purchased 4 used mills with a capacity of 140% of the presently installed mills to accelerate the implementation of the expansion process. Negotiations with El Teniente progress well with respect to an increase of tailings supply from Colihues beyond the present limit of 10,000 tpd. Until these negotiations are finalized, the precise scale of the next expansion is under review to accommodate potential increased Colihues feed material.
During the quarter Mr. Ricardo Alvarez, General Manager of El Teniente, announced that consideration was being given to a further increase in production rate from the recently expanded 125,000 tpd to 300,000 tpd by 2013. This augurs well for significantly increased production from fresh tailings in the future for MVC.
Dr. Robert Gayton and Mr. Ruston Goepel have agreed to join the Amerigo Board with effect from August 15, 2004. Dr. Gayton and Mr. Goepel are very experienced businessmen and are most valuable additions to the Board. Mr. Ian Gallie has tendered his resignation with effect from the same date.
Amerigo Resources Ltd. is a Canadian junior copper producing company forecasting over 14,000 tonnes of copper production in 2004 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:
Jeffrey Giesbrecht, Secretary
Amerigo Resources Ltd.
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 as that term is defined in 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 aterially from estimated results. Such risks and uncertainties are detailed in the Company‚Äôs filings with the TSX and on SEDAR.