- Q4-2016: $7.0 million in operating cash flow, net earnings of $3.0 million
- Annual 2016: $9.6 million in operating cash flow, net loss of $7.5 million
- Record annual copper production
VANCOUVER, British Columbia, Feb. 22, 2017 (GLOBE NEWSWIRE) -- Amerigo Resources Ltd. (TSX:ARG)
(“Amerigo” or the “Company”) reported today financial results for the year ended December 31, 2016. The Company posted
revenue of $91.4 million, operating cash flow before working capital changes of $9.6 million and a net loss of $7.5 million. In
Q4-2016 the Company posted revenue of $29.5 million, operating cash flow before working capital changes of $7.0 million and net
earnings of $3.0 million. Cash balance was $15.9 million at December 31, 2016.
Rob Henderson, Amerigo’s President and CEO, stated, “The increase in copper price and the good production from
the high-grade historic Cauquenes deposit are starting to translate into positive earnings performance. In 2017, we plan to invest
$30.0 million at MVC to substantially increase copper production and reduce cash costs. We remain focused on reducing costs,
improving liquidity and delivering against our targets to build value.”
Annual Financial Results
- Gross tolling revenue was $124.4 million (2015: $73.8 million), mainly due to a 52% increase in copper production. The
Group’s recorded copper tolling price was $2.25/lb (2015: $2.47/lb). Molybdenum production was restarted in H2-2016. Revenue
after notional items was $91.4 million (2015: $52.6 million). In 2015, pre-operating revenue of $5.1 million from Cauquenes was
excluded from revenue.
- Tolling and production costs were $92.0 million (2015: $65.7 million), an increase of 40% driven by a 52% increase in copper
production. Pre-operating costs of $5.9 million from Cauquenes were excluded from 2015 tolling and production costs. Unit tolling
and production costs were $1.64/lb (2015: $1.76/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 decreased to $1.73/lb (2015: $2.18/lb) due to higher production.
- Total cost (a non-GAAP measure equal to the aggregate of cash cost, DET notional copper royalties and DET molybdenum
royalties of $0.38/lb and depreciation of $0.25/lb) decreased to $2.36/lb (2015: $2.85/lb), due to lower cash cost.
- Gross loss was $0.6 million (2015: $13.0 million) and net loss was $7.5 million (2015: $16.9 million).
- In 2016, the Group generated operating cash before changes in non-cash working capital of $9.6 million (2015: used cash flow
in operations before changes in non-cash working capital of $5.0 million).
Production
- 2016 production was 56.8 million pounds of copper, 52% higher than the 37.3 million pounds produced in 2015.
- 2016 copper production includes 32.7 million pounds from Cauquenes, 21.1 million pounds from fresh tailings and 3.0 million
pounds from Maricunga.
- The ramp-up in production from Cauquenes in 2016 progressed in line with expectations. Average tonnes per day of 61,615
exceeded design rates of 60,000 tpd and plant recovery averaged 31.1% in the year. In Q4-2016 MVC achieved the project completion
criteria set by the lenders who financed phase one of the Cauquenes expansion.
- Molybdenum production restarted in August 2016, with an annual production of 0.5 million pounds. The operation of the
molybdenum plant has been outsourced to a subcontractor who refurbished the plant with a $1.0 million Capex investment which is
being paid by MVC over the course of three years.
Cash and Working
Capital
- The Group’s cash balance was $15.9 million at December 31, 2016 (December 31, 2015: $9.0 million), with working capital of
$0.6 million (December 31, 2015: working capital deficiency of $6.0 million).
- The Group’s cash balance at December 31, 2016 includes $9.2 million in operating accounts and $6.7 million in a debt service
reserve account “(DSRA”), required under the terms and provisions of MVC’s finance agreement with the lenders who financed the
first phase of the Cauquenes expansion. Funds in the DSRA must be used to: /i/ pay the principal and interest of the bank loan
and the amounts owing under a related interest rate swap if MVC has insufficient funds to make these payments and /ii/ fund MVC’s
operating expenses. If it becomes necessary to fund MVC’s operations with funds from the DSRA, MVC must replenish into the DSRA
at each month end the funds necessary to maintain a balance equal to one hundred percent of the sum of the principal and interest
pursuant to the bank loan and the interest rate swap that are payable in respect of the following six months.
Outlook
- MVC estimates 2017 production of 60.0 to 65.0 million pounds of copper at an annual cash cost of $1.60 to $1.75/lb.
- MVC expects to produce 1.5 million pounds of molybdenum.
- Amerigo is advancing debt financing discussions to complete the construction of phase two of the Cauquenes expansion project
in the second half of 2018. The project has an estimated cost of $30.0 million and is planned to increase production to 87.0
million pounds of copper per year, at an estimated cash cost of $1.40/lb.
The information in this news release and the Selected Financial Information contained in the following page should be read in
conjunction with the Audited Consolidated Financial Statements and Management’s Discussion and Analysis for the years ended
December 31, 2016 and 2015, which will be available at the Company’s website at www.amerigoresources.com and at www.sedar.com.
About the Company:
Amerigo Resources Ltd. is an innovative copper producer with a long-term relationship with Codelco, the world’s
largest copper producer. Amerigo produces copper concentrate at the MVC operation in Chile by processing fresh and historic
tailings from Codelco’s El Teniente mine, the world's largest underground copper mine. Tel: (604) 681-2802; Fax: (604) 682-2802;
Web: www.amerigoresources.com; Listing: ARG:TSX.
Comparative Annual Overview:
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
Change |
|
|
|
|
|
|
|
|
% |
Copper produced1,2, million pounds |
|
56.8 |
|
|
37.3 |
|
|
19.5 |
|
|
52 |
% |
Copper delivered 1,2, million pounds |
|
56.3 |
|
|
37.2 |
|
|
19.1 |
|
|
51 |
% |
Percentage of production from historic tailings |
|
58 |
% |
|
29 |
% |
|
29 |
% |
|
100 |
% |
Revenue ($ thousands) 3 |
|
91,388 |
|
|
52,623 |
|
|
38,765 |
|
|
74 |
% |
DET notional copper royalties ($ thousands) |
|
20,646 |
|
|
13,674 |
|
|
6,972 |
|
|
51 |
% |
Tolling and production costs ($ thousands) |
|
92,011 |
|
|
65,656 |
|
|
26,355 |
|
|
40 |
% |
Gross loss ($ thousands)5 |
|
(623 |
) |
|
(13,033 |
) |
|
(12,410 |
) |
|
(95 |
%) |
Net loss ($ thousands) |
|
(7,531 |
) |
|
(16,933 |
) |
|
(9,402 |
) |
|
(56 |
%) |
Operating cash flow ($ thousands) 4 |
|
9,555 |
|
|
(4,998 |
) |
|
14,553 |
|
|
291 |
% |
Cash flow paid for plant expansion ($
thousands) |
(8,339 |
) |
|
(52,391 |
) |
|
(44,052 |
) |
|
(84 |
%) |
Cash and cash equivalents ($ thousands) |
|
15,921 |
|
|
9,032 |
|
|
6,889 |
|
|
76 |
% |
Borrowings ($ thousands) |
|
69,847 |
|
|
72,645 |
|
|
(2,798 |
) |
|
(4 |
%) |
Gross copper tolling price
($/lb) |
|
2.25 |
|
|
2.47 |
|
|
(0.22 |
) |
|
(9 |
%) |
1 Copper production is conducted under tolling agreements with DET and
Maricunga. |
2 Includes 4.3 million pounds produced from Cauquenes in 2015. For
accounting purposes revenue of $5.1 million and costs of $5.9 million associated with the Cauquenes production were excluded
from operating results, cash cost and total cost calculations and accounted for as a $0.8 million pre-operating charge to
capital expenditures. |
3 Revenue is reported net of notional items (smelting and refining
charges, DET notional copper royalties and transportation costs). |
4 Operating cash flow before changes in non-cash working capital. |
5 Total borrowings at December 31, 2016 include short and long term
portions of $10.7 and $59.1 million respectively. |
Summary Consolidated Statements of Financial Position |
|
December
31, |
|
2016 |
|
2015 |
|
|
$ |
$ |
Cash and cash equivalents |
15,921 |
|
9,032 |
|
Property plant and equipment |
174,222 |
|
181,494 |
|
Other assets |
31,543 |
|
29,684 |
|
|
|
|
Total assets |
221,686 |
|
220,210 |
|
|
|
|
Total liabilities |
133,809 |
|
125,316 |
|
Shareholders' equity |
87,877 |
|
94,894 |
|
|
|
|
Total liabilities and shareholders'
equity |
221,686 |
|
220,210 |
|
Summary Consolidated Statements of Comprehensive Loss |
|
Year
ended |
|
December
31, |
|
2016 |
|
2015 |
|
|
$ |
$ |
Revenue |
91,388 |
|
52,623 |
|
Tolling and production costs |
(92,011 |
) |
(65,656 |
) |
Other expenses |
(2,626 |
) |
(4,836 |
) |
Finance expense |
(4,955 |
) |
(1,023 |
) |
Income tax recovery |
673 |
|
1,959 |
|
Net loss |
(7,531 |
) |
(16,933 |
) |
Other comprehensive income |
245 |
|
133 |
|
Comprehensive loss |
(7,286 |
) |
(16,800 |
) |
|
|
|
Loss per share - Basic and
Diluted |
(0.04 |
) |
(0.10 |
) |
Summary Consolidated Statements of Cash Flows |
|
Year
ended |
|
December
31, |
|
2016 |
|
2015 |
|
|
$ |
$
|
Net cash provided by (used in) operations |
19,406 |
|
(26,464 |
) |
Net cash used in investing activities |
(8,339 |
) |
(54,082 |
) |
Net cash (used in) provided by financing activities |
(4,659 |
) |
72,904 |
|
Net cash flow |
6,408 |
|
(7,642 |
) |
|
|
|
Cautionary Note Regarding Forward-Looking Information
This news release contains certain forward-looking information and statements as defined in applicable
securities laws (collectively referred to as "forward-looking statements"). These statements relate to future events or our 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" and
similar expressions is intended to identify forward-looking statements. Although 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 statements. These 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 forward-looking statements. These statements speak only as of the date of this news release. These forward-looking
statements include but are not limited to, statements concerning:
- forecast 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;
- the extension of El Teniente’s useful life and the extent of its remaining ore reserves;
- prices and price volatility for 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;
- 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, 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 (including funding of the remaining phases of the Cauquenes project) 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 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 upgrade our existing plant and operations after phase one of
Cauquenes is complete) and estimates of asset retirement, royalty, severance and other obligations;
- 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 notional royalties/royalties;
- our capital expenditures, including the timing and cost of completion of capital projects;
- disruptions to the information technology systems of the Company and its subsidiaries (collectively, the “Group”), including
those related to cyber-security;
- 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 and 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 upsets and equipment malfunctions; risks associated with labour disturbances 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 associated with the availability and pricing of materials used in our operations; risks
created through competition for mining projects and properties; risks associated with lack of access to markets; risks associated
with availability of tailings and mine plan estimates; risks posed by fluctuations in exchange rates and interest rates, 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 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 operations or their interpretation, including foreign exchange controls; and
risks associated with tax reassessments and legal proceedings. All of these risks and uncertainties apply not only the Group
and its operations, but also to Codelco and its operations. Codelco’s ongoing mining operations provide a significant portion
of the materials the Group processes and its resulting production and therefore these risks and uncertainties may also affect their
operations and in turn have a material effect on the Group.
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;
- levels of and 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 volatility of prices of copper and other commodities and of the
products used in our operations;
- the ongoing supply of material for processing from Codelco’s current mining operations;
- MVC’s ability to profitably extract and process material from the Colihues and Cauquenes tailings deposits;
- the timing of the receipt and ongoing retention of permits and other regulatory and governmental approvals;
- the availability of and ability of the Company to obtain adequate financing for expansions and acquisitions, including the
Cauquenes expansion;
- our tolling/production costs and our production and productivity levels, as well as those of our competitors;
- changes in credit market conditions and conditions in financial markets generally;
- the availability of funding on reasonable terms, including financing for the Group’s expansions and acquisitions;
- 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 mine plan estimates (including, 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, treatment and refining charge negotiations;
- the resolution of environmental and other proceedings or disputes;
- the future supply of reasonably priced power;
- our ability to obtain, comply with and renew permits in a timely manner;
- our ability to meet production and cost budgets and plans; 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.
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. You should also carefully consider the matters discussed under "Risk Factors" in our Annual
Information Form. 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.
For further information, please contact: Rob Henderson, President and CEO (604) 697-6203 Aurora Davidson, Executive Vice-President and CFO (604) 218-7013