Cash flow
from operations of US$7.6M in Q3-2008
Record production: 27% increase in copper and 70% increase in
molybdenum from Q3-2007
VANCOUVER, BRITISH COLUMBIA � November
7/Amerigo Resources Ltd. (TSX:ARG) (�Amerigo� or the �Company�) reported today results for the quarter
ended September 30, 2008. Significant events are as follows:
- In Q3-2008 the Company had an operating profit of $1,152,222 and a net loss of $10,407,427, compared to
operating profit of $8,508,794 and net earnings of $6,581,887 in
Q3-2007. In the three months ended September 30, 2008, the Company
recorded an unrealized write-down
of investments to fair value of $12,237,741; the Company
also had negative settlement adjustments to prior quarters� copper sales
of $3,049,900 and
has expensed a signing bonus of $1,753,160 paid to MVC workers on completion of
a four-year collective labour agreement.
- Cash flow from operating activities was $7,638,590
or 8� per share in Q3-2008, compared to $4,797,409 or 5� per share in
Q3-2007.
- The
write-down of investments of $12,237,741 was recorded in earnings in
accordance with accounting standards due to the material decline in fair
value of the Company�s long-term investments in Candente Resource Corp. (�Candente�)
and Los Andes Copper Ltd. (�Los Andes�) at September 30, 2008 and to the
assessment that, under current financial market conditions, a recovery
in the fair value of these investments may not occur in the short-term. The
write-down of investments is a non-cash transaction as the
Company did not sell any of its holdings in Candente or Los Andes.
- Production in Q3-2008 was a record 10.22 million pounds of copper
and 261,234 pounds of
molybdenum, an increase of 27% in copper production and
70% in molybdenum production from Q3-2007, due to higher flow and grades
of fresh tailings, continued processing of old tailings and more
efficient recoveries in the molybdenum plant.
- The
Company�s copper selling price
before smelter, refinery and other charges in Q3-2008 was $2.81/lb. Notwithstanding
record production levels, revenues were affected by declining copper
prices during the quarter and by $3,049,900
of negative settlement adjustments
to prior quarters� sales.
- 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 was $1.60/lb
in Q3-2008, compared to $1.78/lb in Q3-2007. Cash costs declined in
Q3-2008 as a result of higher molybdenum by-product credits, partially
offset by higher unit costs for labour and grinding balls, including
one-time labour costs of $0.17/lb. Excluding one-time labour costs, cash cost in
Q3-2008 was $1.43/lb.
- Total cost (the aggregate of cash
cost, El Teniente royalty, MVC stock-based compensation, depreciation
and accretion) in Q3-2008 was $2.40/lb
compared to $2.49/lb in Q3-2007. The decrease in total cost was driven fundamentally
by lower cash costs, mitigated by higher royalties to El Teniente
($0.65/lb) and higher amortization charges. It is expected that the El
Teniente royalty will be substantially lower in Q4-2008 as it is
calculated on average monthly copper prices.
- Power
costs in Q3-2008 were $8,723,416
($0.17/kwh)
compared to $7,781,476 ($0.21/kwh)
in Q3-2007. Power costs continue on a downward trend
since the peak of $0.33/kwh recorded in Q1-2008. It is expected that
power costs will be lower once the two 10-megawatt generators purchased
by the Company are commissioned.
- Net earnings in the nine months ended September 30, 2008
were $2,194,029,
compared to $22,465,856 in the comparative period.
- Cash flow from operating activities in the nine months ended
September 30, 2008 was $17,972,440, compared to $24,488,459 in the
comparative period.
- In Q3-2008, cash payments for capital expenditures were $5,985,103, funded from
operating cash flow. The Company also made an additional investment in Los
Andes of $1,883,600
and paid a second semi-annual
dividend of $5,784,475
or Cdn 6.5� per
share.
- Cash balance was $4,258,600 at September 30,
2008 after $18,527,776 of cash payments for capital expenditures,
$11,802,999 in dividend payments and corporate investments of $4,013,581
in the nine months ended September 30, 2008.
- Due
to the sharp decline in metal prices subsequent to September 30, 2008,
the Company expects to post negative settlement adjustments, the amount
of which will depend on copper and molybdenum prices over the next three
months.
The information in this news release and the
Selected Financial Information contained in the following page should be read
in conjunction with the Unaudited Consolidated Financial Statements and
Management Discussion and Analysis for quarter ended September 30, 2008,
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
For further information, please contact:
|
Dr. Klaus Zeitler, President
|
(604) 681-2802
|
Amerigo Resources Ltd.
|
(604) 218-7013
|
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. 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 SEPTEMBER 30, 2008 AND 2007
All figures expressed in US Dollars
Consolidated Balance Sheets
|
|
September
30,
2008
$
|
December
31,
2007
$
|
Cash and cash equivalents
|
4,258,600
|
16,712,630
|
Mineral
property, plant and equipment
|
113,170,366
|
98,136,625
|
Other assets
|
35,389,726
|
49,889,686
|
Total assets
|
152,818,692
|
164,738,941
|
|
|
|
Total liabilities
|
37,720,377
|
34,412,446
|
Shareholders� equity
|
115,098,315
|
130,326,495
|
Total
liabilities and shareholders� equity
|
152,818,692
|
164,738,941
|
Consolidated
Statements of Operations and Comprehensive Income (Loss)
|
|
Quarter
ended
|
Quarter
ended
|
|
September
30,
2008
|
September
30,
2007
|
|
$
|
$
|
Total
revenue, net of smelter and refinery charges
|
29,915,602
|
28,536,864
|
Cost of sales
|
(28,763,380)
|
(20,028,070)
|
Other expenses
|
(862,203)
|
(802,925)
|
Non-operating
income (loss), net
|
(11,308,554)
|
449,098
|
Income tax recovery (expense)
|
802,082
|
(1,431,578)
|
Non-controlling interests
|
(190,974)
|
(141,502)
|
Net earnings (loss)
|
(10,407,427)
|
6,581,887
|
Other comprehensive income
|
-
|
3,393,858
|
Comprehensive income (loss)
|
(10,407,427)
|
9,975,745
|
|
|
|
EPS (LPS) � Basic
|
(0.11)
|
0.07
|
EPS (LPS) � Diluted
|
(0.11)
|
0.07
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
Quarter
ended
|
Quarter
ended
|
|
September
30,
2008
|
September
30,
2007
|
|
$
|
$
|
Net
cash provided by operating activities
|
7,638,590
|
4,797,409
|
Net
cash used in investing activities
|
(7,868,703)
|
(1,184,716)
|
Net
cash used in financing activities
|
(6,704,282)
|
(5,802,371)
|
Net
cash inflow/(outflow) during the quarter
|
(6,934,395)
|
(2,189,678)
|
AMERIGO RESOURCES LTD.
SELECTED TRAILING DATA
All figures expressed in US Dollars
|
Q3-2008
|
Q2-2008
|
Q1-2008
|
Q4-2007
|
Q3-2007
|
|
|
|
|
|
|
Copper production (tonnes)
|
4,634
|
3,212
|
3,538
|
4,318
|
3,653
|
Copper sales (tonnes)
|
4,626
|
3,234
|
3,540
|
4,477
|
3,601
|
Molybdenum production (lbs)
|
261,234
|
147,508
|
148,670
|
157,630
|
153,295
|
Molybdenum sales (lbs)
|
258,499
|
143,048
|
157,739
|
172,374
|
131,575
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper selling price ($/lb) *
|
2.81
|
3.80
|
3.56
|
3.00
|
3.48
|
*Before smelter and refinery costs
and settlement adjustments to prior
quarters� sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 29,915,602
|
$ 31,164,236
|
$ 35,933,465
|
$ 26,974,854
|
$28,536,864
|
Power costs
|
8,723,416
|
9,002,362
|
13,903,331
|
8,288,847
|
7,781,476
|
El Teniente royalty
|
6,631,296
|
5,319,664
|
5,146,561
|
5,836,784
|
4,654,187
|
All other cost of sales
|
13,408,668
|
9,233,253
|
8,035,829
|
9,979,043
|
7,592,407
|
Gross profit
|
1,152,222
|
7,608,957
|
8,847,744
|
2,870,180
|
8,508,794
|
Write-down of investments
|
12,237,741
|
-
|
-
|
-
|
-
|
All other expenses (gains),
including taxes
|
(678,092)
|
1,390,513
|
2,464,732
|
1,053,682
|
1,926,907
|
Net earnings (loss)
|
$(10,407,427)
|
$ 6,218,444
|
$ 6,383,012
|
$ 1,816,498
|
$ 6,581,887
|
|
|
|
|
|
|
Earnings (loss) per share (basic)
|
(0.11)
|
0.07
|
0.07
|
0.03
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income/(loss)
|
$
-
|
$ (875,419)
|
$ (4,505,662)
|
$
37,734
|
$ 3,393,858
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost ($/lb)
|
1.60
|
2.11
|
2.51
|
1.60
|
1.78
|
Total cost ($/lb)
|
2.40
|
3.02
|
3.34
|
2.40
|
2.49
|
|
|
|
|
|
|
Cash flow from operations
|
$ 7,638,590
|
$ 8,136,753
|
$ 2,197,096
|
$ 6,793,697
|
$ 4,797,409
|
|
|
|
|
|
|
Dividend per share declared
|
Cdn$0.065
|
-
|
Cdn$0.065
|
-
|
Cdn$0.065
|
Total dividends paid
|
$ 5,784,475
|
$
-
|
$ 6,018,524
|
-
|
$ 5,802,371
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow for capital expenditures
|
$ 5,985,103
|
$ 5,672,077
|
$ 6,870,595
|
$ 8,905,305
|
$ 1,184,716
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing cash position
|
$ 4,258,600
|
$ 11,192,995
|
$ 10,959,717
|
$ 16,712,630
|
$26,378,172$
|
Working capital
|
(1,088,106)
|
11,852658
|
11,693,685
|
15,512,204
|
27,093,319
|
|