Amerigo Board Approves Molybdenum Plant Construction Additional Grinding Capacity
June 17, 2004
AMERIGO RESOURCES LTD. (Vancouver, British Columbia) reported that the Board of Directors has approved construction of a processing plant to extract molybdenum from copper concentrate produced at its Minera Valle Central S.A. (MVC) plant located near Santiago, Chile.
MVC recovers copper from the fresh tailings discarded by El Teniente, producing an average of 140 tons per day of concentrate. These concentrates contain an average of 29.8% copper and 0.894 % molybdenum (Mo), based on the last 52 months of operation.
Amerigo has received a report by consulting firm Castro Ingenieria Ltda., which states that Mo recovery from the copper concentrates is feasible, using conventional processes. At the present concentrations of Mo in MVC copper concentrates and recoveries estimated in the report, the expected yearly production of Mo would be 700,000 lb, in the form of a molybdenite concentrate MoS2 at an operating cost of approximately US$2 per pound Mo. The company has initiated discussions with a number of parties regarding the sale and/or further processing of the molybdenite concentrate to maximize revenue.
MVC estimates a capital expenditure of approximately US$2.1 million, and a construction time of six months, after completion of detailed engineering. The capital cost is particularly low as it takes advantage of some existing plant and infrastructure recently decommissioned from the MVC plant copper circuit as a consequence of the recent expansions and is available for conversion to the molybdenum plant. The current price of molybdenum oxide is approximately US$16 per pound, however economic analysis used the 5-year average to 2004 of approximately US$4.20 per pound with very robust results.
Amerigo is also reviewing the feasibility of additional grinding of the coarse fraction of both the fresh tailings from El Teniente and the in-situ tailings in Colihues. A study of the additional copper recoveries that would result from the additional grinding capacity has been initiated, and it is anticipated that a decision to proceed with construction will be made later this year. In anticipation of a positive report, the company has approved the expenditure of up to US$2.5 million to secure appropriate used equipment to reduce any lead time to commissioning.
Amerigo currently has approximately US$8 million in cash and liquid investments and is therefore able to fund both capital expenditure projects from internal sources.
Amerigo Resources Ltd. is a Canadian junior copper producing company forecasting 16,000 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
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 materially from estimated results. Such risks and uncertainties are detailed in the Company’s filings with the TSX and on SEDAR.