world's largest underground copper mine,
Chile's El Teniente mine - a Long Term Low Cost Copper & Molybdenum Producer
Message: Announces 2008 Financial Results
| March 25, 2009 |
| Amerigo Announces 2008 Financial Results |
| VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 25, 2009) - Amerigo Resources Ltd. (TSX:ARG) ("Amerigo" or the "Company") reported today results for the year ended December 31, 2008. Significant events are as follows: - In 2008 the Company had an operating loss of $1,347,711 and a net loss of $18,986,845, compared to operating profit of $29,884,273 and net earnings of $24,282,354 in 2007. In 2008, the Company recorded an $18,855,343 unrealized write-down of investments in Candente Resource Corp. ("Candente") and Los Andes Copper Ltd. ("Los Andes") to fair value. The Company was severely affected by a sharp decline in copper and molybdenum prices due to the current worldwide economic crisis. In Q4-2008 alone the Company recorded $12,463,135 in negative pricing adjustments to prior quarters' sales of copper and molybdenum. - Cash flow from operating activities was $10,609,319 or 11 cents per share in 2008, compared to $31,282,155 or 33 cents per share in 2007. - Production in 2008 was a record 34.63 million pounds of copper and 769,142 pounds of molybdenum, compared to 33.21 million pounds of copper and 639,020 pounds of molybdenum produced in 2007. Production increased 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 was $2.77/lb in 2008 and $1.31/lb in Q4-2008. Notwithstanding record production levels, revenues were affected by the sharp decline in copper and molybdenum prices during the year, particularly in Q4-2008. - Throughout 2008 the Company was continued to be affected by high operating power costs in Chile. Power costs were $37,945,807 ($0.21/kwh) compared to $27,501,016 ($0.17/kwh) in 2007. In Q1-2009 power costs have trended lower to average approximately $0.13 - $0.14/kwh; industry experts in Chile expect this trend to continue. - Operating costs such as power, steel and reagents are expected to decrease from their high 2008 levels; however, the reductions are lagged and were not evident in the operating costs for Q4-2008. Subject to energy, oil and molybdenum prices in 2009, the Company believes that cash costs will be reduced to $1.20 to $1.25/lb during the course of 2009. - The Company has effectively completed a project that will allow it to substantially become energy self sufficient as of Q2-2009. - The write-down of investments of $18,855,343 was recorded in earnings due to the material decline in fair value of the Company's long-term investments in Candente and Los Andes at December 31, 2008 and management's 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. - 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 $2.01/lb in 2008, compared to $1.50/lb in 2007. Cash costs increased in 2008 as a result of lower molybdenum by-product credits and higher operating costs overall, particularly power. - Total cost (the aggregate of cash cost, El Teniente royalty, MVC stock-based compensation, depreciation and accretion) in 2008 was $2.75/lb compared to $2.20/lb in 2007. The increase in total cost was driven by higher cash costs. - Payments for capital expenditures were $23,133,008 in 2008. The most significant project in the year was the energy self-generation project. Capital expenditures will be substantially lower in 2009. - In 2008, the Company made additional investments in Candente and Los Andes of $4,013,581, paid dividends of $11,802,999 and purchased $1,589,328 of the Company's shares for cancellation. Given current liquidity considerations the Company will be suspending dividends and other discretionary expenditures for the foreseeable future. - Cash balance was $3,187,084 at December 31, 2008, at which date the Company had a working capital deficiency of $14,116,136. Subsequent to year end, the Company completed a private placement financing for proceeds of Cdn$10,500,000, secured additional bank financing in Chile of approximately $1,100,000 and restructured pricing adjustments due to the smelter into a 2 year loan with payments extending from April 2009 to March 2011. 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 Discussion and Analysis for the year ended December 31, 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. |
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