Bay Street News

Amerigo Announces Q2-2024 Results & Quarterly Dividend

Q2-2024 Net Income of $9.8 million

Quarterly EBITDA1of $22.3 million – Free Cash Flow to Equity1of $6.7 million

12thQuarterly Dividend of Cdn$0.03 per share declared, representing a 10.3% yield3

Previously declared Cdn$0.04 Performance Dividend triggered by Q2-2024 financial strength

VANCOUVER, British Columbia, July 31, 2024 (GLOBE NEWSWIRE) — Amerigo Resources Ltd. (TSX: ARG; OTCQX: ARREF) (“Amerigo” or the “Company”) is pleased to announce financial results for the three months ended June 30, 2024 (“Q2-2024”). Dollar amounts in this news release are in U.S. dollars unless indicated otherwise.

Amerigo’s Q2-2024 financial results included net income of $9.8 million, earnings per share (“EPS”) of $0.06, EBITDA1 of $22.3 million and free cash flow to equity1 of $6.7 million. In Q2-2024, Amerigo returned $3.6 million to shareholders. Subsequent to quarter-end, on July 8, 2024, Amerigo declared its first performance dividend of Cdn$0.04.

“We are pleased to report strong financial performance this quarter. A significant strengthening of copper prices and firm cost management contributed to strong earnings, EBITDA and free cash flow to equity,” said Aurora Davidson, Amerigo’s President and CEO. “With our annual maintenance shutdown now completed and the impact of the previously reported rain-induced production loss absorbed, our 2024 production guidance is intact.”

“Amerigo’s Capital Return Strategy2 has been fully deployed with regular quarterly dividends, share buybacks, and performance dividends. At current copper prices, equivalent to those we received last quarter, we continue to generate significant amounts of capital to return to shareholders.”

“The strength of Amerigo’s business plan is now on full display. Shareholders have received the declaration of our initial performance dividend very well and are benefitting from the prompt transfer of copper price strength to their pockets. Our initial performance dividend will be paid in addition to our twelfth quarterly dividend of Cdn$0.03, announced today. Despite the present short-term price correction, we anticipate continued strength in copper prices and look forward to returning capital as quickly as possible to shareholders,” she added.

On July 29, 2024, Amerigo’s Board of Directors declared its twelfth quarterly dividend. The dividend will be in the amount of Cdn$0.03 per share, payable on September 20, 2024, to shareholders of record as of August 30, 20244. Amerigo designates the entire amount of this taxable dividend to be an “eligible dividend” for purposes of the Income Tax Act (Canada), as amended from time to time. Based on Amerigo’s June 30, 2024, share closing price of Cdn$1.55, the Cdn$0.03 quarterly dividends, and the Performance Dividend of Cdn$0.04 per share declared on July 8, 2024, represents an annual dividend yield of 10.3%3.

This news release should be read with Amerigo’s interim consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) for Q2-2024, available on the Company’s website at www.amerigoresources.com and on the SEDAR+ website at www.sedarplus.ca.

               
        Q2-2024 Q2-2023    
MVC’s copper price ($/lb)4       4.39 3.80      
Revenue ($ millions)       51.6 32.0      
Net income (loss) ($ millions)       9.8 (3.8 )    
EPS (LPS) ($)       0.06 (0.02 )    
EPS (LPS) (Cdn)       0.08 (0.03 )    
EBITDA1 ($ millions)       22.3 1.7      
Operating cash flow before changes in non-cash working capital1 ($ millions)   14.3 (2.3 )    
FCFE1 ($ millions)       6.7 (12.8 )    
    June 30, 2024 Dec. 31, 2023        
Cash ($ millions)   28.7 16.2        
Restricted cash ($ millions)   4.2 6.3        
Borrowings ($ millions)   14.4 20.7        
Shares outstanding at end of period (millions)   166.0 164.8        
               

Highlights and Significant Items

Investor Conference Call on August 1, 2024

Amerigo’s quarterly investor conference call will occur on Thursday, August 1, 2024, at 11:00 a.m. Pacific Daylight Time/2:00 p.m. Eastern Daylight Time.

Participants can join by visiting https://emportal.ink/3VNPCys and entering their name and phone number. The conference system will then call the participants and place them instantly into the call. Alternatively, participants can dial directly to be entered into the call by an Operator. Dial 1-888-664-6392 (Toll-Free North America) and state they wish to participate in the Amerigo Resources Q2-2024 Earnings Call.

About Amerigo and Minera Valle Central (“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; Web: www.amerigoresources.com; ARG:TSX; OTCQX: ARREF.

Contact Information

Aurora Davidson                                             
President and CEO                                       
(604) 697-6207                                             
ad@amerigoresources.com                                

Graham Farrell
Investor Relations
(416) 842-9003
graham.farrell@harbor-access.com 

Summary Consolidated Statements of Financial Position  
  June 30,   December 31,    
  2024    2023     
  $ thousands   $ thousands    
Cash and cash equivalents 28,736   16,248    
Restricted cash 4,198   6,282    
Property plant and equipment 150,161   156,002    
Other assets 22,093   21,027    
Total assets 205,188   199,559    
Total liabilities 93,071   94,706    
Shareholders’ equity 112,117   104,853    
Total liabilities and shareholders’ equity 205,188   199,559    
       
Summary Consolidated Statements of Income and Comprehensive Income  
  Three months ended June 30,  
  2024    2023     
  $ thousands   $ thousands    
Revenue 51,602   32,036    
Tolling and production costs (35,109 ) (35,341 )  
Other (gains) expenses (797 ) 32    
Finance expense (353 ) (359 )  
Income tax expense (5,576 ) (161 )  
Net income (loss) 9,767   (3,793 )  
Other comprehensive income (loss) 42   (915 )  
Comprehensive income (loss) 9,809   (4,708 )  
       
Earnings (loss) per share – basic & diluted 0.06   (0.02 )  
       
Summary Consolidated Statements of Cash Flows  
  Three months ended June 30,  
  2024   2023    
  $ thousands   $ thousands    
Cash flow from (used in) operating activities 14,315   (2,303 )  
Changes in non-cash working capital 9,490   2,807    
Net cash from operating activities 23,805   504    
Net cash used in investing acitivities (3,384 ) (4,791 )  
Net cash used in financing acitivites (6,001 ) (8,041 )  
Net increase (decrease) in cash and cash equivalents 14,420   (12,328 )  
Effect of foreign exchange rates on cash 515   80    
Cash and cash equivalents, beginning of period 13,801   43,923    
Cash and cash equivalents, end of period 28,736   31,675    
       

1   Non-IFRS Measures

This news release includes five non-IFRS measures: (i) EBITDA, (ii) operating cash flow before changes in non-cash working capital, (iii) free cash flow to equity (“FCFE”), (iv) free cash flow (“FCF”) and (v) cash cost.

These non-IFRS performance measures are included in this news release because they provide key performance measures used by management to monitor operating performance, assess corporate performance, and plan and assess the overall effectiveness and efficiency of Amerigo’s operations. These performance measures are not standardized financial measures under International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), and, therefore, amounts presented may not be comparable to similar financial measures disclosed by other companies. These performance measures should not be considered in isolation as a substitute for performance measures in accordance with IFRS Accounting Standards.

(i)    EBITDA refers to earnings before interest, taxes, depreciation, and administration and is calculated by adding depreciation expense to the Company’s gross profit.

     
(Expressed in thousands) Q2-2024 Q2-2023
  $ $
Gross profit (loss) 16,493 (3,305)
Add:    
Depreciation and amortization 5,821 5,028
EBITDA 22,314 1,723
     

(ii)    Operating cash flow before changes in non-cash working capital is calculated by adding back the decrease or subtracting the increase in changes in non-cash working capital to or from cash provided by operating activities.

     
(Expressed in thousands) Q2-2024 Q2-2023
  $ $
Net cash provided by operating activities 23,805 504
Deduct:    
Changes in non-cash working capital (9,490) (2,807)
Operating cash flow before non-cash working capital 14,315 (2,303)
     

(iii)    Free cash flow to equity (“FCFE”) refers to operating cash flow before changes in non-cash working capital, less capital expenditures plus new debt issued less debt and lease repayments. FCFE represents the amount of cash generated by the Company in a reporting period that can be used to pay for the following:

a) potential distributions to the Company’s shareholders and
b) any additional taxes triggered by the repatriation of funds from Chile to Canada to fund these distributions.

Free cash flow (“FCF”) refers to FCFE plus repayments of borrowings and lease repayments.

     
(Expressed in thousands) Q2-2024   Q2-2023  
  $   $  
Operating cash flow before changes in non-cash working capital 14,315   (2,303 )
Deduct:    
  Cash used to purchase plant and equipment (3,384 ) (4,791 )
  Repayment of borrowings, net of new debt issue (4,244 ) (4,059 )
  Lease repayments   (1,674 )
Free cash flow to equity 6,687   (12,827 )
Add:    
Repayment of borrowings, net of new debt issued 4,244   4,059  
  Lease repayments   1,674  
Free cash flow 10,931   (7,094 )
     

(iv)    Cash cost is a performance measure commonly used in the mining industry that is not defined under IFRS. Cash cost is the aggregate of smelting and refining charges, tolling/production costs net of inventory adjustments and administration costs, net of by-product credits. Cash cost per pound produced is based on pounds of copper produced and is calculated by dividing cash cost by the number of pounds of copper produced.

(Expressed in thousands)   Q2-2024     Q2-2023  
    $     $  
Tolling and production costs   35,109     35,341  
Add (deduct):        
  Smelting and refining charges   5,791     5,697  
  Transportation costs   374     417  
  Inventory adjustments   (548 )   (307 )
  By-product credits   (6,399 )   (2,859 )
  Depreciation and amortization   (5,821 )   (5,028 )
  DET royalties – molybdenum   (1,056 )   (1,007 )
Cash cost   27,450     32,254  
Copper tolled (M lbs)   13.98     13.63  
Cash cost ($/lb)   1.96     2.37  
         

2   Capital returned to shareholders
The table below summarizes the capital returned to shareholders since Amerigo’s Capital Return Strategy was implemented in October 2021.

(Expressed in millions)    
       
  Shares repurchased Dividends Paid Total
  $ $ $
2021 8.8 2.8 11.6
2022 12.3 15.8 28.1
2023 2.6 14.6 17.2
2024 7.3 7.3
  23.7 40.5 64.2
 

3   Dividend yield
The disclosed annual yield of 10.3% is based on four quarterly dividends of Cdn$0.03 per share each and the July 8, 2024, Performance Dividend of Cdn$0.04, divided over Amerigo’s June 30, 2024 closing share price of Cdn$1.55.

4   Dividend dates
A dividend of Cdn$0.03 per share will be paid on September 20, 2024, to shareholders of record as of August 30, 2024. Under the “T+1 settlement cycle”, the Company’s shares will commence trading on an ex-dividend basis at the opening of trading on August 30, 2024. Shareholders purchasing Amerigo shares on the ex-dividend date or after will not receive this dividend, as it will be paid to selling shareholders. Shareholders purchasing Amerigo shares before the ex-dividend date will receive the dividend.

5   MVC’s copper price
MVC’s copper price is the average notional copper price for the period before smelting and refining, DET notional copper royalties, transportation costs and excluding settlement adjustments to prior period sales.

MVC’s pricing terms are based on the average LME copper price of the third month following the delivery of copper concentrates produced under the DET tolling agreement (“M+3”). This means that when final copper prices are not yet known, they are provisionally marked to market at the end of each month based on the progression of the LME-published average monthly M and M+3 prices. Provisional prices are adjusted monthly using this consistent methodology until they are settled.

Q1-2024 copper deliveries were marked to market on March 31, 2024, at $3.97/lb and were settled in Q2-2024 as follows:

Q2-2024 copper deliveries were marked to market on June 30, 2024, at $4.41/lb and will be settled at the LME average prices for July, August, and September 2024.

Cautionary Statement Regarding Forward-Looking Information

This news release contains certain forward-looking information and statements defined in applicable securities laws (collectively called “forward-looking 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” and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning:

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. 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 operation, 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 (including, but not limited, to heavy rains), process upsets 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; government or regulatory actions or inactions; 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 (“DET) current production and historic tailings from tailings deposit; the availability of and ability of the Company to obtain adequate funding on reasonable terms for expansions and acquisitions; 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; risks associated with supply chain disruptions; 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. Many of these risks and uncertainties apply to the Company and its operations, as well as DET and its operations. DET’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 the Company’s operations and have a material effect.

Actual results and developments will likely differ materially from those expressed or implied by the forward-looking statements in this news release. Such statements are based on several assumptions which may prove to be incorrect, including, but not limited to, assumptions about:

Future production levels and cost estimates assume no adverse mining or other events significantly affecting budgeted production levels.

Climate change is a global issue that could pose challenges that could affect the Company’s future operations. This could include more frequent and intense droughts followed by intense rainfall. In the last several years, Central Chile has had drought conditions and also rain episodes of significant magnitude. The Company’s operations are sensitive to water availability and the reserves required to process projected historical tailings tonnage.

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.

The preceding list of important factors and assumptions is not exhaustive. Other events or circumstances could cause our results to differ materially from those estimated, projected, and expressed in or implied by our forward-looking statements. You should also consider the matters discussed under Risk Factors in the Company`s Annual Information Form. The forward-looking statements contained herein speak only as of the date of this news release. Except as required by law, we undertake no obligation to revise any forward-looking statements or the preceding list of factors, whether due publicly or otherwise, to new information or future events.


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