Amerigo Announces Q2-2010 Financial Results
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 08/12/10 -- Amerigo Resources Ltd. (TSX: ARG) -
-- Cash flow from operations of $4,653,177
-- Net earnings of $2,033,010
-- Production up 34% from Q1-2010
Amerigo Resources Ltd. ('Amerigo' or the 'Company') reported today results for the quarter ended June 30, 2010.
Mr. Steven Dean, Amerigo's Chairman, stated, 'We are pleased to report very positive production results for the quarter, with copper production up 34% from Q1. Net earnings were $2 million, lower than expected due to continuing high power costs, $1.4 million in negative price adjustments, principally related to the fall in copper price at the end of June to $2.96/lb and a non-cash loss on an interest rate swap derivative instrument. Cash flow from operations without the accounting impacts was $4.7 million based on an average copper price of $3.09/lb for the quarter.'
Mr. Dean continued by saying, 'Power costs continued to be high in Q2 due to a particularly cold winter, lack of the normal rainfall to replenish the hydro power network in the south of Chile and various power distribution bottlenecks related to damage incurred in the February earthquake. We maintain a positive production outlook for the second half of 2010 and expect power costs to be contained in the upcoming quarters due to the operation of MVC's own power generators. If current copper prices of $3.20/lb or better continue through the remainder of the year, the Company will benefit from positive price adjustments to 2,400 tonnes of copper booked at low June prices and earnings in Q3 and Q4-2010 are expected to increase.'
Key achievements
In Q2-2010 the Company continued to increase production of copper and molybdenum, particularly from old tailings, and reported positive operating and net financial results despite higher than anticipated power costs resulting from a harsh winter in Chile. The Company:
-- Posted revenue of $32,433,982 and net earnings of $2,033,010 in Q2-2010,
compared to revenue of $18,067,033 and a net loss of $2,325,059 in Q2-
2009.
-- Net earnings in the quarter of $2,033,010 were adversely affected by the
booking of $1,406,156 in negative settlement adjustments due to lower
metal prices in the quarter, an increase of $1,599,370 in power costs
from the preceding quarter and a $288,829 non-cash charge on an interest
rate swap.
-- Generated an operating profit of $3,522,079 in the quarter, compared to
an operating loss of $250,309 in Q2-2009.
-- Generated cash flow from operations of $4,653,177 compared to $1,757,434
in Q2-2009. Including changes in working capital, cash flow provided by
operating activities was $8,367,459 in Q2-2010, compared to $7,420,230
in Q2-2009.
-- Held consolidated cash of $17,211,693 and working capital of $9,411,825
at June 30, 2010.
-- Reached record Q2 copper production of 5,220 tonnes of copper, 20%
higher than the 4,358 tonnes produced in Q2-2009. Copper production from
the processing of old tailings increased from 321 tonnes in Q2-2009 to
2,441 tonnes in Q2-2010.
-- Increased molybdenum production to 155,755 lbs, 56% higher than in Q2-
2009.
-- Made principal repayments of $4,775,560 on loans outstanding to Enami
($1,887,159), Chilean banks ($1,007,066) and to El Teniente for all
remaining deferred royalties ($1,881,335).
Financial results
-- At an average copper sales price of $3.09/lb, the Company achieved
operating profit of $3,522,079 and net earnings of $2,033,010, compared
to an operating loss of $250,309 and a net loss of $2,325,059 in Q2-
2009.
-- Revenue was $32,433,982 compared to $18,067,033 in Q2-2009, due to
higher production and stronger copper and molybdenum prices. Cost of
sales was $28,911,903, compared to $18,317,342 in Q2-2009. Cost of sales
increased due to higher production and royalty costs. Royalty costs are
based on production levels and monthly average copper prices.
Production
-- The Company produced 11.51 million pounds of copper, 20% higher than the
9.61 million pounds produced in Q2-2009.
-- Molybdenum production was 155,755 pounds, 56% higher than the 99,683
pounds produced in Q2-2009, mainly as a result of increased processing
of old tailings.
Revenue
-- Revenue increased to $32,433,982 compared to $18,067,033 in Q2-2009 due
to higher average copper and molybdenum prices and higher production.
The Company's copper selling price before smelter, refinery and other
charges was $3.09/lb compared to $2.06/lb in Q2-2009, and the Company's
molybdenum selling price was $16.29/lb compared to $9.08/lb in Q2-2009.
Copper sales volume increased 20% and molybdenum sales volume was 70%
higher than in Q2-2009.
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 increased to
$1.81/lb from $1.56/lb in Q2-2009 mainly the result of high power costs
due to a harsh winter in Chile.
-- Total cost (the aggregate of cash cost, El Teniente royalty,
depreciation and accretion) was $2.66/lb compared to $2.14/lb in Q2-
2009. The increase in total cost was driven by higher cash costs and
higher El Teniente royalty resulting from stronger copper and molybdenum
prices.
-- Power costs were $9,639,946 ($0.1533/kwh) compared to $6,096,922
($0.1247/kwh) in Q2-2009. The increase in total power costs in Q2-2010
was driven by an increase of 29% in energy consumption from higher
production levels and higher power grid costs due to an unusually cold
winter in Chile. The Company's power costs in H2-2010 are expected to
decrease from Q2-2010 levels due to the operation of the Company's own
power generators.
-- Other operating costs such as steel and reagents increased from Q2-2009
levels due to higher production, high plant maintenance costs and costs
for processing of old tailings which were basically nil in Q2-2009.
Cash and Financing Activities
-- Cash balance was $17,211,693 at June 30, 2010 compared to $7,191,093 at
December 31, 2009.
Investments
-- Payments for capital expenditures were $2,987,409 compared to $3,244,767
in Q2-2009. Capital expenditures incurred in Q2-2010 totalled $3,673,542
(Q2-2009: $1,729,595).
-- The Company's investments in Candente Copper Corp., Candente Gold Corp.
and Los Andes Copper Ltd. had aggregate fair values of $5,982,485 at
June 30, 2010 (December 31, 2009: $6,754,790). The $772,305 before-tax
fair value decrease in these investments on a YTD basis (YTD-2009:
increase of $3,938,599) does not affect net earnings but is included as
other comprehensive loss on a net of tax basis of $563,305 (YTD-2009:
other comprehensive income of $3,938,599).
Outlook
-- Copper production in Q3-2010 is expected to be in the 12 million pounds
range. The Company has initiated a technical study to improve the
recovery of molybdenum and expects molybdenum production to increase as
of Q4-2010.
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 and six months ended June 30, 2010 and the Audited Consolidated Financial Statements and Management Discussion and Analysis for the year ended December 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 near Santiago, Chile. Tel: (604) 681-2802; Fax: (604) 682-2802; Web: www.amerigoresources.com; Listing: ARG:TSX
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 JUNE 30, 2010 AND 2009
All figures expressed in US Dollars
Consolidated Balance Sheets
June 30, December 31,
2010 2009
$ $
------------------------------
Cash and cash equivalents 17,211,693 7,191,093
Mineral property, plant and equipment 124,105,753 121,783,483
Other assets 32,694,802 37,220,851
------------------------------
Total assets 174,012,248 166,195,427
------------------------------
------------------------------
Total liabilities 49,775,088 58,999,428
Shareholders' equity 124,237,160 107,195,999
------------------------------
Total liabilities and shareholders' equity 174,012,248 166,195,427
------------------------------
------------------------------
Consolidated Statements of Operations and Comprehensive Income (Loss)
Quarter ended Quarter ended
June 30, 2010 June 30, 2009
$ $
-----------------------------
Total revenue, net of smelter and refinery
charges 32,433,982 18,067,033
Cost of sales (28,911,903) (18,317,342)
Other expenses (1,375,706) (945,676)
Non-operating gains( losses), net 545,379 (759,056)
Income tax expense (474,315) (219,389)
Non-controlling interests (184,427) (150,629)
-----------------------------
Net earnings (loss) 2,033,010 (2,325,059)
Other comprehensive (loss) income (1,565,517) 2,066,456
-----------------------------
Comprehensive income (loss) 467,493 (258,603)
-----------------------------
EPS (LPS) - Basic and Diluted 0.01 (0.02)
Consolidated Statements of Cash Flows
Quarter ended Quarter ended
June 30, 2010 June 30, 2009
$ $
------------------------------
Net cash provided by operating activities 8,367,459 7,420,230
Net cash used in investing activities (2,987,409) (3,244,767)
Net cash used in financing activities (2,894,225) (1,333,961)
------------------------------
Net cash inflow during the period 2,485,824 2,841,502
------------------------------
------------------------------
AMERIGO RESOURCES LTD.
SELECTED TRAILING DATA
All figures expressed in US Dollars
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Q2-2010 Q1-2010 Q4-2009 Q3-2009 Q2-2009
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Copper
production
(tonnes) 5,220 3,896 5,498 4,589 4,358
Copper
sales
(tonnes) 5,149 3,855 5,713 4,622 4,304
Molybdenum
production
(lbs) 155,755 143,371 246,636 151,310 99,683
Molybdenum
sales
(lbs) 156,514 137,094 252,761 147,894 92,065
Company's
recorded
copper
price
($/lb) (i) 3.09 3.20 2.79 2.43 2.06
(i)Before
smelter
and
refinery
costs and
settlement
adjustment
s to prior
quarters'
sales
Revenue $ 32,433,982 $ 29,656,765 $ 33,852,105 $ 24,532,499 $ 18,067,033
Power costs 9,639,946 8,040,576 5,985,090 5,411,515 6,096,922
El Teniente
royalty 7,722,758 6,321,273 6,875,447 4,686,346 3,634,597
All other
cost of
sales 11,549,199 11,271,459 12,697,674 10,983,234 8,585,823
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Operating
profit
(loss) 3,522,079 4,023,457 8,293,894 3,451,404 (250,309)
All other
expenses,
including
taxes 1,489,069 447,293 4,382,128 213,288 2,074,750
----------------------------------------------------------------
Net
earnings
(loss) $ 2,033,010 $ 3,576,164 $ 3,911,766 $ 3,238,116 $ (2,325,059)
----------------------------------------------------------------
----------------------------------------------------------------
Earnings
(loss) per
share
(basic) 0.01 0.02 0.03 0.02 (0.02)
Cash cost
($/lb) 1.81 1.92 1.58 1.49 1.56
Total cost
($/lb) 2.66 2.86 2.21 2.14 2.14
Cash flow
provided
by (used
in) oper-
ations $ 8,367,459 $ 925,926 $ 7,415,773 $ (558,286)$ 7,420,230
Cash flow
used in
plant
expansion $ 2,987,409 $ 2,953,714 $ 3,307,744 $ 2,039,630 $ 3,244,767
Cash flow
provided
by (used
in)
financing $ (2,894,225)$ 9,562,564 $ 201,232 $ (824,404)$ (1,333,961)
Closing
cash
position $ 17,211,693 $ 14,725,869 $ 7,191,093 $ 2,881,832 $ 6,304,152
Working
capital 9,511,805 10,246,413 (6,353,737) (7,468,463) (10,318,380)
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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.
Contacts:
Amerigo Resources Ltd.
Dr. Klaus Zeitler
President
(604) 218-7013
Amerigo Resources Ltd.
(604) 697-6201
www.amerigoresources.com