Amerigo Reports Record Q3-2018 Production Results
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October 15, 2018
N.R. 2018-9
Amerigo Reports Record Q3-2018 Production Results
Vancouver, British Columbia – October 15, 2018/CNW/ - Amerigo Resources Ltd. ("Amerigo" or the "Company")
(TSX: ARG) announced today production results for Q3-2018 from Minera Valle Central ("MVC"), the
Company’s 100% owned operation located near Rancagua, Chile.
MVC set new production records in Q3-2018
In Q3-2018 Amerigo produced 17.6 million pounds of copper at a cash cost of $1.38 per pound. Molybdenum
production was 0.6 million pounds.
Rob Henderson, Amerigo's President and CEO, stated “The team at MVC has done well to safely deliver the
Phase Two expansion project on schedule and copper recovery is increasing. In Q3-2018, MVC achieved
record copper and molybdenum production and more importantly, c ash cost is now at the lowest level since
2006.”
Q3-2018 Q2-2018 Q1-2018 Q4-2017 Q3-2017
Fresh tailings
Tonnes processed 11,125,346 11,114,743 10,521,210 11,290,794 11,152,93
0
Copper grade 0.121% 0.118% 0.119% 0.123% 0.117%
Copper recovery 19.1% 19.1% 19.3% 19.7% 19.8%
Copper produced (millions of pounds) 5.652 5.526 5.309 6.030 5.700
Cauquenes tailings
Tonnes processed 5, 651,098 5,642,687 5,328,898 5,650,522 5,7 16,546
Copper grade 0.259% 0.238% 0.246% 0.247% 0.240%
Copper recovery 36.8% 30.7% 30.8% 31.2% 32.4%
Copper produced (millions of pounds) 11.903 9.132 8.901 9.596 9.786
Total copper produced (millions of pounds) 17.555 14.658 14.210 15.625 15.487
Total copper delivered (millions of pounds) 17.595 14.219 14.52 0 15.970 15.251
Cash cost ($/pound copper) 1.38 1.71 1.77 1.66 1.69
MVC’s Phase Two expansion project was essentially complete in Q3-2018 and production ramp up is
ongoing
At September 30, 2018, the Phase Two expansion project was 97% complete. The new rougher flotation cells
started to produce concentrates on August 20 and the new cleaner flotation circuit came on-line on October 12.
The 60-day production test required under the Cauquenes expansi on finance loan is scheduled to commence
on October 17, 2018. The project’s $1.5 million concentrate regrind mill has been removed from the Phase Two
completion timeline and is expected to be installed in Q1-2019. The completion of the project in Q4-2018 will
substantially strengthen Amerigo’s cash generation capacity.
The Phase Two capital expenditure (“Capex”) is estimated at $37.4 million, compared to budget of $35.3 million,
primarily due to a 9.3% appreciation of the Chilean peso during the construction period compared to budget.
2018 copper production and cash guidance are maintained
The Company continues to expect 2018 production of 65 to 70 million pounds of copper at a cash cost of $1.45
to $1.60/lb and has increased molybdenum production guidance to 1.8 million pounds.
In 2018, MVC expects to incur $26 million in Phase Two Capex, $5.5 million in sustaining Capex, an additional
$1.5 million in Capex projects to improve safety and process ef ficiencies and a $8.4 million expansion of its
molybdenum plant, financed by way of a seven-year lease and operating contract.
The Phase Two project has improved flotation recovery efficienc y, allowing MVC to increase production to an
estimated 85 to 90 million pounds of copper per year.
Release of Q3-2018 financial results on November 5, 2018
The Company will release Q3-2018 financial results at market open on Monday November 5, 2018.
Investor conference call on November 6, 2018
Amerigo’s quarterly investor conference call will take place on Tuesday November 6, 2018 at 11:00 am Pacific
Standard Time/2:00 pm Eastern Standard Time.
To joint the call, please dial 1-800-377-0758 (Toll-Free North America) and let the operator know you wish to
participate in the Amerigo Resources conference call.
The analyst and investment community are welcome to ask questio ns 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 partnership with Corporación
Nacional del Cobre de Chile (“Codelco”), the world’s largest copper producer.
Amerigo produces copper concentrate at the MVC operation in Chi le 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) 697-6 207
Cautionary Note Regarding Forward-Looking Information
This news release contains certa in forward-looking information and statements as defined in applicable securities laws (collec tively referred to as
"forward-looking statements"). These statements relate to futur e events or the Company’s future performance. All statements ot her than statements of
historical fact are forward-look ing statements. The use of any of the words "anticipate", "plan", "continue", "estimate", "exp ect", "may", "will", "project",
"predict", "potential", "should", "believe" and similar express ions is intended to identify forward-looking statements. Althou gh the Company believes that
these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which
are difficult or impossible to predict 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-looking stateme nts. These forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results or events to differ materially from those anticipated in such statements. These forward-looking statements
include but are not limited to, statements concerning:
• a forecasted increase in production and a reduction in operat ing costs;
• our strategies and objectives;
• our estimates of the availability and quantity of tailings, a nd the quality of our mine plan estimates;
• prices and price volatility fo r copper and other commodities and of materials we use in our operations;
• 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;
• 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 o f, and the issuance and maintenance of the necessary permits and other authorizations
required for, our expansion projects, including the expansion for the Cauquenes deposit and the timing of ramp-up to full production from Cauquenes;
• our ability to procure or have access to financing and to com ply with our loan covenants;
• the production capacity of our operations, our planned produc tion levels and future production;
• potential impact of production and transportation disruptions;
• 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
• our planned capital expenditures (including our plan to upgra de 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 costs and potential impact of complying with existing and proposed en vironmental 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 proceedi ngs 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 in formation technology systems, including those related to cybersecurity;
• our dividend policy; and
• general business and economic conditions.
Inherent in forward-looking statements are risks and uncertainties beyond our ability to predict or control, including risks that may affect our operating or
capital plans; risks generally encountered in the permitting an d development of mineral projects such as unusual or unexpected geological formations,
negotiations with government and other third parties, unanticipated metallurgical difficulties, delays associated with permits, approvals and permit appeals,
ground control problems, adverse weather conditions, process up sets and equipment malfunctions; risks associated with labour d isturbances and
availability 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 production 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 ob tain adequate funding on reasonable terms for expansions and ac quisitions, including all
phases of the Cauquenes expansion; mine plan estimates; risks posed by fluctuations in exchange rates and interest rates, as well as general economic
conditions; risks associated wi th environmental compliance and changes in environmental legislat ion and regulation; risks asso ciated with our
dependence on third parties for the provision of critical servi ces; risks associated with non-performance by contractual count erparties; 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 proceedin gs. Many of these risks and uncertainties apply not only to the Company and its
operations, but also to Codelco and its operations. Codelco’s o ngoing mining operations provide a significant portion of the m aterials 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 rates;
• changes in commodity and power prices;
• acts of foreign governments and the outcome of legal proceedi ngs;
• the supply and demand for, deliveries of, and the level and v olatility 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 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 oth er regulatory and governmental approvals;
• the availability of and ability of the Company to obtain adeq uate 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 facil ities and lines of credit;
• our costs of production and our production and productivity levels, as well as those of our competitors;
• changes in credit market conditi ons and conditions in financial markets generally;
• our ability to procure equipment and operating supplies in su fficient quantities and on a timely basis;
• the availability of qualified employees and contractors for o ur operations;
• our ability to attract and retain skilled staff;
• the satisfactory negotiation of collective agreements with un ionized employees;
• the impact of changes in foreign exchange rates and capital repatriation on our costs and results;
• engineering and construction time tables and capital costs for our expansion projects;
• costs of closure of various operations;
• market competition;
• the accuracy of our preliminary economic assessment (includin g 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 disp utes;
• the future supply of reasonably priced power;
• our ability to obtain, comply with and renew permits and lice nses in a timely manner; and
• our ongoing relations with our employees and entities with wh ich 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. Other events or circumstances c ould cause our actual
results to differ materially from those estimated or projected and expressed in, or implied by, our forward-looking statements. Except as required by law,
we undertake no obligation 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.