Amerigo Reports 2020 Annual Production Results and Provides 2021 Guidance
10
January 14, 2021
N.R. 2021-02
Amerigo Reports 2020 Annual Production Results and Provides 2021
Guidance
Vancouver, British Columbia – January 14, 2021/CNW/ - Amerigo Resources Ltd. ("Amerigo" or the "Company")
(TSX: ARG) is pleased to announce 2020 production results from Minera Valle Central ("MVC"), the Company’s
100% owned operation located near Rancagua, Chile.
MVC produced 56.2 million pounds (“M lbs”) of copper at a cash cost of $1.76 per pound (“/lb”) and 1.4 M lbs of
molybdenum. All dollar amounts in this news release refer to U.S. dollars (“USD”).
Annual copper production results were 1% below the latest guidance provided in the Q3-2020 production results.
Annual molybdenum production was 6% higher and annual cash cost was $0.02/lb lower than the Company’s
latest guidance.
2020 Q4-2020 Q3-2020 Q2-2020 Q1-2020
Fresh tailings
Tonnes per day 123,690 136,011 119,285 119,435 120,037
Operating days 353 92 92 91 78
Tonnes processed 43,662,625 12,512,980 10,974,235 10,868,556 9,306,854
Copper grade 0.134% 0.135% 0.136% 0.137% 0.125%
Copper recovery 19.9% 19.3% 20.4% 20.3% 19.9%
Copper produced (M lbs) 25.6 7.17 6.68 6.66 5.13
Cauquenes tailings
Tonnes per day 47,453 54,541 54,292 35,875 43,763
Operating days 326 91 79 89 67
Tonnes processed 15,488,590 4,985,031 4,362,040 3,164,898 2,976,621
Copper grade 0.251% 0.247% 0.245% 0.257% 0.261%
Copper recovery 34.2% 34.2% 34.5% 34.9% 33.4%
Copper produced (M lbs) 29.31 9.28 8.00 6.31 5.72
Fresh tailings + Cauquenes (M lbs) 54.95 16.45 14.68 12.97 10.85
Slag Processing
Tonnes processed 14,960 - - - 14,960
Copper grade 4.6% - - - 4.6%
Copper recovery 80% - - - 80%
Copper produced (M lbs) 1.23 - - - 1.23
Copper produced (M lbs) 56.18 16.45 14.68 12.97 12.08
Copper delivered (M lbs) 56.34 15.90 14.92 13.70 11.82
Cash cost ($/lb) 1.76 1.65 1.80 1.72 1.94
Molybdenum produced (M lbs) 1.41 0.50 0.37 0.35 0.19
Molybdenum sold (M lbs) 1.46 0.50 0.37 0.36 0.23
Q4-2020 Results
In Q4-2020, MVC produced 16.5 M lbs of copper at a cash cost of $1.65/lb and 0.5 M lbs of molybdenum, which
represent production increases of 12% for copper and 35% for molybdenum from Q3-2020.
Copper production was positively impacted by higher tonnage processing from fresh tailings and to a lesser
degree from Cauquenes and from more operating days at Cauquenes but was 3% below the latest quarterly
guidance due to lower-than-expected recoveries.
In Q4-2020, molybdenum production was 19% over guidance and cash cost was within guidance.
Q4-2020 production results are summarized below:
October 2020 November 2020 December 2020 Q4-2020
Fresh tailings
Tonnes per day 135,574 136,535 137,627 136,011
Operating days 31 30 31 92
Tonnes processed 4,170,564 4,096,062 4,246,354 12,512,980
Copper grade 0.134% 0.134% 0.137% 0.135%
Copper recovery 19% 19% 19% 19%
Copper produced (M lbs) 2.39 2.31 2.47 7.17
Cauquenes tailings
Tonnes per day 53,516 55,271 54,919 54,541
Operating days 31 30 30 91
Tonnes processed 1,643,851 1,658,130 1,683,050 4,985,031
Copper grade 0.249% 0.250% 0.243% 0.247%
Copper recovery 35% 34% 34% 34%
Copper produced (M lbs) 3.12 3.09 3.07 9.28
Copper produced (M lbs) 5.51 5.40 5.54 16.45
Cash cost ($/lb ) 1.61 1.69 1.67 1.65
Molybdenum produced (M lbs) 0.16 0.17 0.17 0.50
Water reserves at Colihues at year end 2020 remained high at 8.5 million cubic meters, which are sufficient for
MVC to maintain projected Cauquenes tonnage processing through 2021.
MVC’s operations have continued without any significant disruptions due to Covid-19.
2021 Guidance
In 2021, Amerigo expects to produce 61.0 M lbs of copper and 1.5 M lbs of molybdenum at a cash cost of
$1.79/lb. The following quarterly production breakdown is currently expected based on MVC’s mine plan,
including grade and projected recoveries in each quarter:
Q1-2021 Q2-2021 Q3-2021 Q4-2021 2021
Copper production (M lbs) 15.6 15.6 14.7 15.1 61.0
Molybdenum production (M lbs 0.4 0.4 0.3 0.4 1.5
Cash cost ($/lb) 1.83 1.74 1.77 1.81 1.79
Production in H1 is expected to be stronger than in H2 given that MVC and El Teniente’s annual plant shutdown
will take place in September and October instead of in Q1, as has been the case historically. MVC anticipates
losing 8 production days due to the annual plant maintenance shutdown.
MVC has identified additional plant optimization initiative s together with its technical consultant 911Metallurgy
Corp., most of which are expected to be completed by the end of Q2-2021, with some of the work continuing
into Q3-2021. The Company’s 2021 production targets do not include any impact from the optimization work
underway.
The Company’s 2021 cash cost forecast in this news release assumes a market copper price of $3.50/lb (2020:
$2.80/lb), a molybdenum market price of $9.30/lb (2020: $8.8/lb) and an exchange rate of the CLP to the USD
of $715 (2020: $792).
The projected 2021 cash cost is currently expected to be slightly higher than in 2020 due to a stronger projected
CLP. A 10% change in molybdenum price could have a $0.02/lb impact on cash cost, and a 10% change on the
CLP to USD foreign exchange rate could have an impact of $0.06/lb on cash cost.
At these assumed variables, the DET royalty would be $0.90/lb in 2021. The DET royalty is calculated on a
sliding scale based on copper prices.
Projected 2021 EBITDA considering these combined variables is expected to be $50 million.
Annual sustaining capital expenditures (“Capex”) in 2021 are expected to be $5.3 million and capitalizable
maintenance and strategic spares are expected to be $2.4 million. The most significant 2021 sustaining Capex
project will be to further optimize the MVC water thickeners with a target increase in water recovery from 1,560
liters per second to 2,100 liters per second, at a cost of $3.6 million, followed by $0.7 million on miscellaneous
plant improvements, $0.5 million on environmental sa fety and compliance projects and $0.5 million on
information technology improvements at MVC.
With respect to MVC’s financial obligations, the Company currently expects the following to occur in 2021:
a) MVC is expected to repay a $7.2 million loan due to El Teniente, which loan originated in 2020 in connection
with price settlement adjustments. The loan will be repai d monthly in equal instalments of $0.6 million plus
interest.
b) MVC also expects to make two semi-annual bank loan payments of $4.7 million each plus interest in March
and September. After these payments are made, MVC’s bank debt would be $37.5 million, currently due by
September 2023. Under the terms of the loan agreement, MVC can make additional loan prepayments.
c) Finally, MVC will make payments of approximately $1.3 million in connection with its molybdenum plant
lease.
“We would like to thank our Amerigo and MVC employees and partners along with our shareholders for a
successful 2020 which I believe is demonstrated in our production results. Despite the COVID-19 pandemic we
were able to increase production consistently quarter to quarter. We look forward to 2021 and remain optimistic
towards the sector and our industry”, stated Aurora Davidson, President and CEO of Amerigo.
Release of 2020 results on February 18, 2021
The Company will release its 2020 financial results at market open on Thursday, February 18, 2021.
Investor conference call on February 19, 2021
Amerigo’s quarterly investor conference call will take place on Friday, February 19, 2021 at 11:00 am Pacific
Standard Time/2:00 pm Eastern Standard Time.
To join the call, please dial 1-800-806-5484 (Toll-Free North America) and enter passcode 1259759# to
participate in the Amerigo Resources conference call.
The analyst and investment community are welcome to ask questions to management. Media can attend on a
listen-only basis.
About Amerigo and MVC
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 and molybdenum concentrate as a by-product at the 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:
Aurora Davidson Graham Farrell
President and CEO Investor Relations
(604) 697-6207 (416) 842-9003
[email protected] [email protected]
Cautionary Note Regarding Forward-Looking Information
This news release contains certain forward-looking informati on and statements as defined in applicable securities laws
(collectively referred to as "forward-looki ng statements"). These statements relate 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", "predict", "potential", "should", "believe" a nd similar
expressions is intended to identify forward-looking statemen ts. These forward-looking statements include but are not limited to ,
statements concerning:
• forecasted production and operating costs;
• our strategies and objectives;
• our estimates of the availability and quantity of tailings, and the quality of our mine plan estimates;
• our estimates in respect of annual 2021 sustaining capital expenditures;
• the sufficiency of water reserves at Colihues to maintain projected Cauquenes tonnage processing through 2021;
• the timing of completion of MVC’s plant optimization initiatives;
• prices and price volatility for copper, molybdenum and other commodities and of materials we use in our operations;
• our estimate as to the amount of the DET royalty in 2021;
• the demand for and supply of copper and other commodities and materials that we produce, sell and use;
• sensitivity of our financial results and share price to changes in commodity prices;
• our financial resources and our expected ability to meet our obligations for the next 12 months;
• our expectation that MVC will, during 2021, repay its loan due to El Teniente and our expectation of how much MVC is to pay
towards its bank loan and its molybdenum plant lease during 2021;
• interest and other expenses;
• domestic and foreign laws affecting our operations;
• our tax position and the tax rates applicable to us;
• our ability 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, including, but not limited to, our estimate of the loss of production
days due to the annual MVC plant shutdown scheduled for September and October, 2021;
• hazards inherent in the mining industry causing 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
• estimates of asset retirement obligations and other costs related to environmental protection;
• our future capital and production costs, including the costs 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 metal 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.
These forward-looking statements involve known and unknown risks, uncertainties and other factors that are beyond our ability
to predict or control, includ ing risks that may affect our operating or capi tal plans; risks generally encountered in the permi tting
and development of mineral projects such as unusual or unexpected geological fo rmations, negotiations with government and
other third parties, unanticipated metallurgi cal difficulties, delays associated with permits, approvals and permit appeals, ground
control problems, adverse weather conditions, process upset s and equipment malfunctions ; risks associated with labour
disturbances and availability of skilled labour and management; risks related to the potential impact of global or national health
concerns, including COVID-19, and the inabili ty of employees to access sufficient hea lthcare; government or regulatory actions
or inactions; fluctuations in the market prices of our principal commodities, which are cyclical and subject to substantial pri ce
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 production
and historic tailings from tailings deposit; mine plan estimates; risks posed by fluctuations in exchange rates and interest ra tes,
as well as general economic conditions; risks associated with environmental compliance and changes in environmental legislation
and regulation; risks associated with our dependence on third part ies 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 operations or their interpretation, including foreign exchange controls; and risks associated
with tax reassessments and legal proceedings. Notwithstanding the efforts of the Company and MVC, there can be no guarantee
that the Company’s or MVC’s staff will not contract COVID-19 or that the Company’s and MVC’s measures to protect staff from
COVID-19 will be effective. Many of these risks and uncertainties apply not only to the Company and its operations, but also to
Codelco and its operations. 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.
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 and currency exchange 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 volati lity of prices of copper and other commodities and products
used in our operations;
• the ongoing supply of material for processing from Codelco’s current mining operations;
• the grade and projected recoveries of tailings processed by MVC;
• 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 permits and other regulatory and governmental approvals;
• our costs of production and our production and productivity 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 supplies 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 collective agreements with unionized employees;
• the impact of changes in foreign exchange rates and capital repatriation on our costs and results;
• engineering and construction timetables and capital costs for our expansion projects;
• costs of closure of various operations;
• market competition;
• the accuracy of our preliminary economic assessment (includi ng 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 and other proceedings or disputes;
• the future supply of reasonably priced power;
• rainfall in the vicinity of MVC returning to normal levels;
• average recoveries for fresh tailings and Cauquenes tailings;
• 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.
Although the Company believes that t hese assumptions were reasonable when made, because these assumptions are
inherently subject to significant uncertainties and contingencie s which are difficult or impossible to predict and are beyond t he
Company’s control, the Company cannot a ssure that it will achieve or accomplish the expectations, beliefs or projections
described in the forward-looking statements.
We caution you that the foregoing list of important factors and assumptions is not exhaustive. Other events or circumstances
could cause our actual results to differ materially from those estimated or projected and expressed in, or implied by, our forward-
looking statements.
This news release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the
Company’s prospective results of operations, including, without limitation, an estimate of EBITDA. Readers are cautioned that
the assumptions used in the preparation of such information, although considered r easonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance
or achievement could differ materially from those expressed in, or implied by, the FOFI. The Company has included the FOFI
to provide readers with a general overview of management’s ex pectations regarding the anticip ated result of operations, and
such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this press rele ase and, except as required by law, we
undertake no obligation to update publicly or otherwise revise any forward-looking statements, FOFI or the foregoing list of factors,
whether as a result of new information or future events or otherwise.