Amerigo Comments on Market Volatility
May 22, 2007
VANCOUVER, BRITISH COLUMBIA ‚Ä" May 22/CNW/Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the ‚ÄúCompany‚ÄĚ) commented today on two matters which the Company believes may have had an effect on the market price for the Company's shares over the past 2 weeks, in addition to normal market factors including changes in the price of copper and molybdenum.
In its May 2, 2007 press release announcing Q1-2007 results, the Company commented that power costs had increased substantially during the first quarter due to higher marginal power surcharges in Chile. Although the National Energy Commission of Chile has forecast that power costs will be volatile for the next few years, the Company's power costs are not expected to remain at this historically high level. Based on recently published projections of the National Energy Commission of Chile and independent energy consultants, power costs are expected to return to historical levels of approximately 5 cents per kilowatt hour, or approximately one-half of the Company's Q1-2007 rates, due to substantial new energy capacity scheduled to come on stream in the next few years. In the meantime it is expected that, subject to demand levels and a series of factors including oil price, natural gas price, and water flow in the country‚Äôs hydro facilities, prices are expected to fluctuate between these levels until the new capacity is commissioned. Energy is priced on a national basis in Chile, and impacts all consumers in a similar way.
There also appears to be concern over the level of the Company's molybdenum production, particularly in Q1-2007. Although the Company cannot accurately predict these production numbers as extraction levels depend on the tailings received by its MVC operations, the Company is pleased to announce that molybdenum production to date in Q2-2007 has already exceeded the full Q1-2007 production.
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
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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 and forward looking information within the meaning of the Securities Acts of Ontario and Alberta. In particular, statements regarding the future additional energy capacity in Chile and the future power costs constitute forward looking information. Such forward-looking information is based on the assumption that the report prepared by the National Energy Commission of Chile is accurate, that the projected additional energy capacity will be added, and that future power costs will return to historical levels. There can be no assurance that such assumptions will be accurate. In addition, such forward-looking information is 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‚Äôs filings with the TSX and on SEDAR. Forward-looking statements are based on the beliefs, estimates and opinions of the Company‚Äôs management on the date the statements are made. The Company undertakes no obligation to update these forward-looking statements if management‚Äôs beliefs, estimates or opinions, or other factors, should change.