ARG.TO · 2018-05-09 12:00:00

Amerigo Announces Q1-2018 Financial Results

Financials

May 9, 2018

N.R. 2018- 05

 Cash of $5.9 million generated from operations

 Net income of $1.2 million

 Phase Two expansion project on budget and schedule

VANCOUVER, BRITISH COLUMBIA – May 9, 2018/Amerigo Resources Ltd. (TSX: ARG)

(“Amerigo” or the “Company”) announced today financial results for the three months ended March

31, 2018. The Company posted revenue of $33.9 million and net income of $1.2 million. Cash of

$5.9 million was generated from operations before working capital changes. At March 31, 2018,

cash balance was $29.9 million. The Cauquenes P hase Two expansion project was 51% complete

at quarter end, on time and budget.

Rob Henderson, Amerigo’s President and CEO, st ated “MVC’s robust production results together

with stronger metal prices have improved our financ ial position and our focus is to safely complete

our expansion to 85 – 90 million pounds of copper per year on budget in Q4-2018.”

Financial Results

 Revenue was $33.9 million (Q1-2017: $29.8 mill ion), including copper revenue of $29.5 million

(Q1-2017: $25.3 million) and molybdenum and other revenue of $4.4 million (Q1-2017: $4.4

million).

 Copper revenue is calculated from MVC’s gr oss value of copper produced of $45.9 million (Q1-

2017: $38.7 million) less notional items including DET royalties of $10.8 million (Q1-2017: $7.7

million), smelting and refining of $5.0 million (Q1-2017: $5.1 million) and transportation of $0.6

million (Q1-2017: $0.5 million).

 In Q1-2018, MVC’s copper price was $3.09 per pound (“/lb”) (Q1-2017: $2.65/lb) and MVC’s

molybdenum price was $12.12/lb (Q1-2017: $8.01/lb).

 Tolling and production costs were $28.7 million (Q1-2017: $27.8 million), driven by higher

power, lime and grinding media costs. Unit tolling and production costs were $1.98/lb (Q1-

2017: $1.83/lb).

 Cash cost (a non-GAAP measure equal to the aggregate of smelting and refining charges,

tolling/production costs net of inventory adjustments and administration costs, net of by-product

credits) before DET notional copper royalties and DET molybdenum royalties increased to

$1.77/lb (Q1-2017: $1.71/lb) due to higher produc tion costs offset by higher molybdenum by-

product credits.

 Total cost (a non-GAAP measure equal to the aggregate of cash cost, DET notional copper

royalties and DET molybdenum royalties of $0. 80/lb and depreciation of $0.25/lb) increased to

$2.83/lb (Q1-2017: $2.52/lb), due to higher DET notional royalties from higher metal prices.

 Gross profit was $5.2 million (Q1-2017: $2.0 million). Net income was $1.2 million (Q1-2017:

net loss of $1.3 million).

 Earnings per share were $0.01 (Q1-2017: loss per share of $0.01).

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 The Company generated operating cash flow before changes in non-cash working capital of

$5.9 million (Q1-2017: $4.3 million).

Production

 Q1-2018 production was 14.2 million pounds of copper, 6% lower than the 15.1 million pounds

produced in Q1-2017, which included 0.9 million pounds of copper produced pursuant to a

tolling contract with Minera Maricunga.

 Q1-2018 copper production includes 8.9 million pounds from Cauquenes (Q1-2017: 9.6 million

pounds) and 5.3 million pounds from fresh tailings (Q1-2017: 4.7 million pounds).

 Molybdenum production was 0.4 million pounds (Q1-2017: 0.3 million pounds).

Cash and Working Capital

 At March 31,2018, cash balance was $29.9 million (December 31, 2017: $27.5 million),

including $22.5 million in operating accounts and $7.3 million in a debt service reserve account.

 At March 31, 2018, the Company had a working capital deficiency of $3.7 million (December

31, 2017: $4.5 million), caused by the Company’s current estimated DET Price Support Facility

repayment scheduled to be completed in September 2018, which may change depending on

MVC’s actual cash flows. The Company does not consider its working capital deficiency

constitutes a liquidity risk, as it is only r equired to repay the DET Price Support Facility by

December 2019 and at a rate of $1.0 million per month, and the Company anticipates

generating sufficient operating cash flow to meet current liabilities as they come due. Working

capital deficiencies are not uncommon in companies with short-term debt.

 At March 31, 2018, the Company had $30.5 million of undrawn, committed credit facilities,

$17.5 million from the Phase Two expansion loan and $13.0 million from a shareholders’

standby line of credit.

Outlook

 The Company continues to expect full year pro duction of 65.0 to 70.0 million pounds of copper

at a cash cost of $1.45 to $1.60/lb and annual molybdenum production of 1.5 million pounds.

Stronger production and lower cash costs are expected in H2-2018 when better quality material

in Cauquenes is accessed and plant recoveries improve on completion of Phase Two.

 Construction of Phase Two is on track for completion in Q3-2018, with full production in Q4-

2018. MVC expects to complete the project within budget of $35.3 million including

contingencies. Phase Two will improve flotation recovery efficiency, allowing MVC to increase

production to 85.0 to 90.0 million pounds of copper per year.

 In 2018, MVC expects to incur up to $23.5 m illion in Phase Two capital expenditures (“Capex”)

and $5.5 million in sustaining Capex. MVC will also invest an additional $1.5 million in various

Capex projects to improve safety and proce ss efficiencies and is undertaking an expansion of

its molybdenum plant at a Capex of $7.9 million financed by way of a seven-year lease and

operating contract.

 MVC expects to draw the remaining $17.5 m illion from the Phase Two expansion loan and

continue reducing its debt in 2018. Total borrowings at year end are expected to be $67.5

million.

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Amounts in this news release are reported in U.S. dollars except where indicated otherwise.

The information and data contained in this news release should be read in conjunction with the

Company’s Condensed Interim Consolidated Financial Statements (Unaudited) and Management’s

Discussion and Analysis (“MD&A) for the three months ended March 31, 2018 and the Audited

Consolidated Financial Statements and MD&A for the year ended December 31, 2017, available

at the Company’s website at www.amerigoresources.com and at www.sedar.com.

Conference Call Participation

The Company will hold an investor conference call on Thursday May 10, 2018 at 11:00 am Pacific

Standard Time/2:00 pm Eastern Standard Time.

To participate in the call, please dial 1-866-225-0198 (Toll-Free North America) and let the operator

know you wish to participate in the Amerigo Res ources conference call. Media are invited to attend

on a listen-only basis. Following management's discussion of quarterly results, the analyst and

investment community will be invited to ask questions.

About the Company

Amerigo Resources Ltd. is an innovative copper producer with a long-term relationship with

Corporación Nacional del Cobre de Chile (“Codelco”), the world’s largest copper producer.

Amerigo produces copper concentrate at its 100% owned Minera Valle Central (“MVC”) operation

in Chile by processing fresh and historic tailings from Codelco’s El Teniente mine, the world's

largest underground copper mine. Tel: (604) 681-2802; Fax: (604) 682-2802; Web:

www.amerigoresources.com; Listing: ARG:TSX.

For further information, please contact:

Rob Henderson, President and CEO (604) 697-6203

Aurora Davidson, Executive Vice-President and CFO (604) 697-6207

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Comparative Overview

Q1-2018 Q1-2017

Copper produced (million pounds) 1 14.2 15.1 (0.9) (6%)

Copper delivered (million pounds) 1 14.5 15.2 (0.7) (5%)

Percentage of production from historic tailings 63% 63% -

Revenue ($ thousands) 2 33,881 29,744 4,137 14%

DET notional copper royalties ($ thousands) 10,797 7,715 3,082 40%

Tolling and production costs ($ thousands) 28,717 27,761 956 3%

Gross profit ($ thousands) 5,164 1,983 3,181 160%

Net income (loss) ($ thousands) 1,217 (1,310) 2,527 -

Earnings (loss) per share - basic & diluted 0.01 (0.01) 0.02 -

Operating cash flow ($ thousands) 3 5,944 4,255 1,689 40%

Cash flow paid for purchase of plant and equipment ($ thousands) 10,274 451 9,823 2178%

Cash and cash equivalents ($ thousands) 4 29,869 23,097 6,772 29%

Borrowings ($ thousands) 5 66,047 70,942 (4,895) (7%)

MVC's copper price ($/lb)6 3.09 2.65 0.44 17%

Change

1 Copper production conducted under tolling agreements with DET and in Q1-2017, Maricunga.

Revenue reported net of notional items (smelting and refining charges, DET notional copper royalties and transportation costs).

Operating cash flow before chang es in non-cash working capital.

Includes at March 31, 2018, $22.5 million held in operating cash accounts and a $7.3 million debt service reserve account.

Includes at March 31, 2018, short and long-term portions of $18.1 and $47.9 million respectively.

Copper price before smelting and refining, DET notional copper royalties, transporta tion costs and settlement adjustments to

prior period sales.

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March 31, December 31,

2018 2017

Cash and cash equiv alents 29,869 27,524

Property plant and equipment 183,993 176,011

Other assets 23,234 27,014

Total assets 237,096 230,549

Total liabilities 137,081 132,373

Shareholders' equity 100,015 98,176

Total liabilities and shareholders' equity 237,096 230,549

Q1-2018 Q1-2017

Revenue 33,881 29,744

Tolling and production costs (28,717) (27,761)

Other expenses (1,706) (2,013)

Finance expense (985) (1,353)

Income tax (expense) recov ery (1,256) 73

Net income (loss) 1,217 (1,310)

Other comprehensive (loss) income (335) 238

Comprehensive income (loss) 882 (1,072)

Earnings (loss) per share - basic and diluted 0.01 (0.01)

Q1-2018 Q1-2017

Cash flows from operating activities 5,944 4,255

Changes in non-cash working capital 3,493 3,183

Net cash from operating activities 9,437 7,438

Net cash used in investing acitivities (10,274) (451)

Net cash from financing acitivites 2,882 57

Net increase in cash 2,045 7,044

Effect of foreign exchange rates on cash 300 132

Cash and cash equivalents - beginning of period 27,524 15,921

Cash and cash equivalents - end of period 29,869 23,097

Summary Consolidated Statements of Financial Position

Summary Consolidated Statements of Comprehensive Loss

Summary Consolidated Statements of Cash Flows

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Cautionary Note Regarding Forward-Looking Information

This news release contains certain forwar d-looking information and statements as defi ned in applicable securities laws (collect ively

referred to as "forward-looking statements"). These statements rela te to future events or the Company’s future performance. All

statements other than statements of historical fact are forward- looking statements. The use of any of the words "anticipate", " plan",

"continue", "estimate", "expect", "may", "will", "project", "p redict", "potential", "should", "believe" and similar expressions is intended to

identify forward-looking statements. Although the Company believe s that these assumptions were reasonable when made, because

these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to pr edict and

are beyond the Company’s control, the Company cannot assure that it will achieve or accomplish the expectations, beliefs or

projections described in the forward-look ing statements. These forward-looking st atements involve known and unknown risks,

uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such sta tements.

These forward-looking statements include but are not limited to, statements concerning:

• a forecasted increase in production and a reduction in operating costs;

• our strategies and objectives;

• the expected improvement of flotation recove ry efficiency from the Phase Two expansion;

• our estimates of the availability and quantity of tailings, and the quality of our mine plan estimates;

• prices and price volatility for copper and other co mmodities and of materials we use in our operations;

• the demand for and supply of copper and other commodi ties and materials that we produce, sell and use;

• sensitivity of our financial results and s hare price to changes in commodity prices;

• our financial resources and our expected ability to meet our obligations for the next 12 months;

• interest and other expenses;

• domestic and foreign laws affecting our operations;

• our tax position and the tax rates applicable to us;

• the timing and costs of construction and tolling/production of, and the issuance and maintenance of the necessary permits

and other authorizations required for, our expansion projects, including the exp ansion for the Cauquenes deposit and the

timing of ramp-up to full production from Cauquenes;

• our ability to procure or have access to fi nancing and to comply with our loan covenants;

• the production capacity of our operations, our planned production levels and future production;

• potential impact of production and transportation disruptions;

• hazards inherent in the mining industry c ausing personal injury or loss of life, severe damage to or destruction of property and

equipment, pollution or environmental damage, claims by third parties and suspension of operations

• our planned capital expenditures (includi ng our plan to upgrade our existing plant and operations) including the timing and

cost of completion of our capital projects;

• estimates of asset retirement obligations and other costs related to environmental protection;

• our future capital and production costs, including the co sts and potential impact of complying with existing and proposed

environmental laws and regulations in the operation and closure of our operations;

• repudiation, nullification, modification or renegotiation of contracts;

• our financial and operating objectives;

• our environmental, health and safety initiatives;

• the outcome of legal proceedings and other disputes in which we may be involved;

• the outcome of negotiations concerning meta l sales, treatment charges and royalties;

• disruptions to the Company's information technology systems, including those related to cybersecurity;

• our dividend policy; and

• general business and economic conditions.

Inherent in forward-looking statements ar e risks and uncertainties beyond our ability to predict or control, including risks th at may

affect our operating or capital plans; risks generally encountered in the permitting and de velopment of mineral projects such a s

unusual or unexpected geological form ations, negotiations with government and ot her third parties, unanticipated metallurgical

difficulties, delays associated with permits, approvals and per mit appeals, ground control problem s, adverse weather conditions ,

process upsets and equipment malfunctions; risks associated with labour disturbances and avail ability of skilled labour and

management; fluctuations in the market prices of our principal commodities, which are cyclical and subject to substantial price

fluctuations; risks created through competition for mining projects and properties; risks associated with lack of access to markets; risks

associated with availability of and our ability to obtain both tailings from Codelco’s Division El Teniente’s current productio n and

historic tailings from tailings deposit; risks with respect to completion of all phases of the Cauquenes expansion, the ability of the

Company to draw down funds from bank facilities and lines of credit, the availability of and ability of the Company to obtain a dequate

funding on reasonable terms for expansions and acquisitions, including all phases of the Cauquenes expansion; mine plan estimates;

risks posed by fluctuations in exchange rates and interest rate s, as well as general economic conditions; risks associated with

environmental compliance and changes in envir onmental legislation and regulation; risks associated with our dependence on third

parties for the provision of critical services; risks associated with non-performance by contractual counterparties; title risks; social and

political risks associated with operations in foreign countries; risks of changes in laws affecting our o perations or their interpretation,

including foreign exchange controls ; and risks associated with tax reassessments and legal proceedings. Many of these risks and

uncertainties apply not only to the Company and its operations, but also to Codelco and its oper ations. Codelco’s ongoing mining

operations provide a significant portion of the materials the Company processes and its resulting metals production, therefore these

risks and uncertainties may also affect their operations and in turn have a material effect on the Company.

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Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward -looking

statements contained in this news release. Such statements are based on a number of assumptions which may prove to be incorrect ,

including, but not limited to, assumptions about:

• general business and economic conditions;

• interest rates;

• changes in commodity and power prices;

• acts of foreign governments and the outcome of legal proceedings;

• the supply and demand for, deliveries of, and the level and vola tility of prices of copper and other commodities and products

used in our operations;

• the ongoing supply of material for processi ng from Codelco’s current mining operations;

• the ability of the Company to profitably extract and process material from the Cauquenes tailings deposit;

• the timing of the receipt of and retention of per mits and other regulatory and governmental approvals;

• the availability of and ability of the Company to obtain adequat e funding on reasonable terms for expansions and acquisitions,

Including all phases of the Cauquenes expansion;

• the ability of the Company to draw down funds from bank facilities and lines of credit;

• our costs of production and our production and productivi ty levels, as well as those of our competitors;

• changes in credit market conditions and conditions in financial markets generally;

• our ability to procure equipment and operating supp lies in sufficient quantities and on a timely basis;

• the availability of qualified employees and contractors for our operations;

• our ability to attract and retain skilled staff;

• the satisfactory negotiation of colle ctive agreements with unionized employees;

• the impact of changes in foreign exchange rates an d capital repatriation on our costs and results;

• engineering and construction ti metables and capital costs for our expansion projects;

• costs of closure of various operations;

• market competition;

• the accuracy of our preliminary economic assessment (incl uding with respect to size, grade and recoverability) and the

geological, operational and price assumptions on which these are based;

• tax benefits and tax rates;

• the outcome of our copper concentrate sales and treatment and refining charge negotiations;

• the resolution of environmental an d other proceedings or disputes;

• the future supply of reasonably priced power;

• our ability to obtain, comply with and renew permits and licenses in a timely manner; and

• our ongoing relations with our employees and entities with which we do business.

Future production levels and cost estimates assume there are no adverse mining or other events which significantly affect budgeted

production levels.

We caution you that the foregoing list of important factors and assumptions is not exhaustive. Ot her events or circumstances co uld

cause our actual results to differ materia lly from those estimated or projected and expressed in, or implied by, our forward-lo oking

statements. Except as required by law, we undertake no obligat ion to update publicly or otherwise revise any forward-looking

statements or the foregoing list of factors, whether as a result of new information or future events or otherwise.

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