ARG:CC - Amerigo Announces Q1-2022 Results and Quarterly Dividend

(NewsDirect)

N.R.2022-5

Q1-2022 net income of $15.5 million, earningsper share of $0.09 (Cdn$0.11)

EBITDA ¹ of $26.4million, free cash flow to equity ¹ of $17.9million

Dividend of Cdn$0.03 per share payable on June 20,2022

Amerigo Resources Ltd. (TSX: ARG; ARREF: OTC) (“Amerigo” or the “Company”) is pleased to announcefinancial results for the three months ended March 31, 2022(“Q1-2022”). Dollar amounts in this news release are in U.S.dollars unless indicated otherwise.

Amerigo’s quarterly financial resultsincluded net income of $15.5 million, earnings per share (“EPS”)of $0.09 (Cdn$0.11), EBITDA[1] of $26.4 million and freecash flow to equity (“FCFE”) ¹ of $17.9 million.

“Weare pleased to report a robust start to the year for Amerigo. We metour copper production and cash cost targets, and our average quarterlycopper price increased to $4.64 per pound”, said Aurora Davidson,Amerigo’s President and CEO. “Amerigo’s Board of Directors hasdeclared a quarterly dividend of Cdn$0.03 per share. The Company’sdividend policy combines the strength of sustainable and reliablequarterly dividends, with the flexibility of top-up dividends that canbe declared anytime to distribute additional surplus cash toshareholders. We remain comfortable with a targeted minimum corporatecash balance of $20.0 to $25.0 million and our normal course issuerbid remains in place”, added Ms. Davidson.

On May 2, 2022,Amerigo’s Board of Directors declared a quarterly dividend ofCdn$0.03 per share, payable on June 20, 2022, to shareholders ofrecord as of May 30, 2022. Amerigo designates the entire amount ofthis taxable dividend to be an “eligible dividend” for purposes ofthe Income Tax Act (Canada), as amended from time to time. Based onthe March 31, 2022 share closing price of Cdn$1.84, this wouldrepresent an annual dividend yield 6.52%.

This news release should be read inconjunction with Amerigo’s interim consolidated financial statementsand Management’s Discussion and Analysis (“MD&A) for Q1-2022,available at the Company’s website at www.amerigoresources.com and at www.sedar.com.

Highlights and SignificantItems

• Net income during Q1-2022 was $15.5 million(Q1-2021: $10.9 million), due to higher copper production and highermetal prices. Q1-2022 EPS was $0.09 (Cdn$0.11) (Q1-2021: $0.06;(Cdn$0.08)).

• In Q1-2022, the Company’s average copper price was $4.64per pound (“/lb”) (Q1-2021: $4.08/lb) and the Company’s averagemolybdenum price was $18.33/lb (Q1-2021: $10.88/lb).
• Q1-2022production was 16.5 million pounds (“M lbs”) of copper 6% higherthan Q1-2021 production of 15.5 M lbs due to higher tonnage, grade andrecoveries from fresh tailings and higher grade and recoveries fromCauquenes.
• Molybdenum production during Q1-2022 was 0.2 M lbs(Q1-2021: 0.4 M lbs) due to lower molybdenum content in freshtailings.
• Revenue during Q1-2022 was $53.8 million (Q1-2021:$48.9 million), including copper tolling revenue of $50.4 million(Q1-2021: $45.4 million) and molybdenum revenue of $3.4 million(Q1-2021: $3.5 million).
• Copper tolling revenue is calculatedfrom the Company’s gross value of copper produced during Q1-2022 of$73.8 million (Q1-2021: $58.1 million) and fair value adjustments tosettlement receivables of $5.6 million (Q1-2021: $8.5 million), lessnotional items including DET royalties of $22.3 million (Q1-2021:$16.0 million), smelting and refining of $6.2 million (Q1-2021: $4.7million) and transportation of $0.5 million (Q1-2021: $0.5 million).The Q1-2022 settlement adjustments included $3.8 million in settlementadjustments in respect of Q4-2021 production, which are finaladjustments (Q1-2021: $5.0 million of final adjustments).
• TheCompany generated operating cash flow before changes in non-cashworking capital ¹ of $20.6 million in Q1-2022 (Q1-2021:$20.0 million). Quarterly net operating cash flow was $21.4 million(Q1-2021: $28.1 million). Free cash flow to equity ¹ was$17.9 million (Q1-2021: $12.6 million).
• Q1-2022 cashcost ¹ was $1.90/lb (Q1-2021: $1.88/lb).
• Amerigo’sfinancial performance is very sensitive to changes in copper prices.At March 31, 2022, the Company’s provisional copper price was$4.64/lb, and final prices for January, February, and March 2022 saleswill be the average London Metal Exchange prices for April, May, andJune 2022, respectively. A 10% increase or decrease from the $4.64/lbprovisional price would result in a $7.6 million change in revenue inQ2-2022 in respect of Q1-2022 production.
• In Q1-2022, Amerigoreturned $7.6 million to shareholders: $4.2 million were paid on March21, 2022, through Amerigo’s increased quarterly dividend of Cdn$0.03per share, and $3.4 million were returned through the purchase of 2.4million common shares for cancellation through Amerigo’s ongoingNormal Course Issuer Bid (“NCIB”). Amerigo may repurchase forcancellation a further 6.9 million shares under the NCIB. Amerigo isreporting the NCIB monthly activity progress at http://www.amerigoresources.com/investors/share-buybacks/ .
• InQ1-2022, the Company made scheduled debt payments of (Q1-2021:$6.5 million) and paid $2.4 million for plant and equipment (Q1-2021:$0.6 million).
• At March 31, 2022, the Company held cash andcash equivalents of $71.1 million (December 31, 2021: $59.8 million),restricted cash of $6.4 million (December 31, 2021: $4.2 million) andhad working capital of $34.5 million (December 31, 2021: $24.6million).

Investor Conference Call on May 5, 2022

Amerigo’s quarterlyinvestor conference call will take place on Thursday, May 5, 2022 at11:00 am Pacific Standard Time/2:00 pm Eastern Standard Time. To jointhe call, please dial 1-888-664-6392 (Toll-Free North America)and enter confirmation number 54894230 .

Upcoming InvestorConferences Participation

Amerigo will be participating in the SidotiMicro Cap Virtual Conference (May 11 and 12, 2022), the InflectionPartners 2022 Virtual Conference (May 12, 2022) and the International Deal Gateway Mining & Resource Showcase (May26, 2022).

CEOAurora Davidson will present the Amerigo investment thesis and will beavailable for one-on-one meetings throughout each event.

About Amerigo andMinera Valle Central (“MVC”)

Amerigo Resources Ltd. is an innovative copperproducer with a long-term relationship with Corporación Nacional delCobre de Chile (“Codelco”), the world’s largest copper producer.Amerigo produces copper concentrate and molybdenum concentrate as aby-product at the MVC operation in Chile by processing fresh andhistoric tailings from Codelco’s El Teniente mine, the world'slargest underground copper mine. Tel: (604) 681-2802; Web: www.amerigoresources.com ;Listing: ARG:TSX.

¹ Non-IFRSMeasures

Thisnews release includes five non-IFRS measures: EBITDA (i), operatingcash flow before changes in non-cash working capital (ii), free cashflow to equity & free cash flow (iii) and cash cost (iv).

These non-IFRSperformance measures are included in this news release because theyprovide key performance measures used by management to monitoroperating performance, assess corporate performance, and to plan andassess the overall effectiveness and efficiency of Amerigo’soperations. These performance measures are not standardized financialmeasures under IFRS and, therefore, amounts presented may not becomparable to similar financial measures disclosed by other companies.These performance measures should not be considered in isolation as asubstitute for measures of performance in accordance with IFRS.

(i) EBITDA refers toearnings before interest, taxes, depreciation, and administration andis calculated by adding back depreciation expense to the Company’sgross margin.

(ii) Operating cashflow before changes in non-cash working capital is calculated byadding back the decrease or subtracting the increase in changes innon-cash working capital to or from cash provided by operatingactivities.

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

a) potentialdistributions to the Company’s shareholders, and

b) any additionaltaxes triggered by the repatriation of funds from Chile to Canada tofund these distributions.

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

(iv) Cash cost is aperformance measure commonly used in the mining industry that is notdefined under IFRS. Cash cost is the aggregate of smelting andrefining charges, tolling/production costs net of inventoryadjustments and administration costs, net of by-product credits. Cashcost per pound produced is based on pounds of copper produced and iscalculated by dividing cash cost over the number of pounds of copperproduced.

Cautionary Statement on Forward-Looking Information

This news release containscertain forward-looking information and statements as defined inapplicable securities laws (collectively referred to as"forward-looking statements"). These statements relate tofuture events or the Company’s future performance. All statementsother than statements of historical fact are forward-lookingstatements. 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 identifyforward-looking statements. These forward-looking statements includebut are not limited to, statements concerning:

• forecasted production and operatingcosts;

• our strategies andobjectives;

• our estimates of theavailability and quantity of tailings, and the quality of our mineplan estimates;

• our estimates inrespect of annual 2021 sustaining capital expenditures;

• the sufficiency of water reserves ofColihues to maintain projected Cauquenes tonnage processing in 2021and future years;

• prices andprice volatility for copper, molybdenum, and other commodities and ofmaterials we use in our operations;

• the demand for and supply of copper, molybdenum, and othercommodities and materials that we produce, sell and use;

• sensitivity of our financial resultsand share price to changes in commodity prices;

• our financial resources and ourexpected ability to meet our obligations for the next 12 months;

• the expected amount of MVC’s annualfree cash flow that will become available for distribution to Amerigoshareholders each year during the term of the Term Loan;

• our assessment of the probabilities ofDET exercising its early exit options under the DET Agreement asremote;

• interest and otherexpenses;

• domestic and foreignlaws affecting our operations;

•our tax position and the tax rates applicable to us;

• our ability to comply with our loancovenants;

• the productioncapacity of our operations, our planned production levels and futureproduction;

• hazards inherent inthe mining industry causing personal injury or loss of life, severedamage to or destruction of property and equipment, pollution orenvironmental damage, claims by third parties and suspension ofoperations

• estimates of assetretirement obligations and other costs related to environmentalprotection;

• our future capitaland production costs, including the costs and potential impact ofcomplying with existing and proposed environmental laws andregulations in the operation and closure of our operations;

• repudiation, nullification,modification or renegotiation of contracts;

• our financial and operatingobjectives;

• our environmental,health and safety initiatives;

•the outcome of legal proceedings and other disputes in which we may beinvolved;

• the outcome ofnegotiations concerning metal sales, treatment charges androyalties;

• disruptions to theCompany's information technology systems, including those relatedto cybersecurity;

• our dividendpolicy; and

• general business andeconomic conditions.

Theseforward-looking statements involve known and unknown risks,uncertainties and other factors that may cause actual results orevents to differ materially from those anticipated in such statements.Inherent in forward-looking statements are risks and uncertaintiesbeyond our ability to predict or control, including risks that mayaffect our operating or capital plans; risks generally encountered inthe permitting and development of mineral projects such as unusual orunexpected geological formations, negotiations with government andother third parties, unanticipated metallurgical difficulties, delaysassociated with permits, approvals and permit appeals, ground controlproblems, adverse weather conditions, process upsets and equipmentmalfunctions; risks associated with labour disturbances andavailability of skilled labour and management; risks related to thepotential impact of global or national health concerns, includingCOVID-19, and the inability of employees to access sufficienthealthcare; government or regulatory actions or inactions,fluctuations in the market prices of our principal commodities, whichare cyclical and subject to substantial price fluctuations; riskscreated through competition for mining projects and properties; risksassociated with lack of access to markets; risks associated withavailability of and our ability to obtain both tailings fromCodelco’s Division El Teniente’s current production and historictailings from tailings deposits; risks with respect to the ability ofthe Company to draw down funds from bank facilities and lines ofcredit, and the availability of and ability of the Company to obtainadequate funding on reasonable terms for expansions and acquisitions;mine plan estimates; risks posed by fluctuations in exchange rates andinterest rates, as well as general economic conditions; risksassociated with environmental compliance and changes in environmentallegislation and regulation; risks associated with our dependence onthird parties for the provision of critical services; risks associatedwith non-performance by contractual counterparties; title risks;social and political risks associated with operations in foreigncountries; risks of changes in laws affecting our operations or theirinterpretation, including foreign exchange controls; and risksassociated with tax reassessments and legal proceedings.Notwithstanding the efforts of the Company and MVC, there can be noguarantee that Amerigo’s or MVC’s staff will not contract COVID-19or that Amerigo’s and MVC’s measures to protect staff fromCOVID-19 will be effective. Many of these risks and uncertaintiesapply not only to the Company and its operations, but also to Codelcoand its operations. Codelco’s ongoing mining operations provide asignificant portion of the materials MVC processes and its resultingmetals production, therefore these risks and uncertainties may alsoaffect their operations and in turn have a material effect on theCompany.

Actual results anddevelopments are likely to differ, and may differ materially, fromthose expressed or implied by the forward-looking statements containedin this news release. Such statements are based on a number ofassumptions which may prove to be incorrect, including, but notlimited to, assumptions about:

•general business and economic conditions;

• interest and currency exchange rates;

• changes in commodity and powerprices;

• acts of foreigngovernments and the outcome of legal proceedings;

• the supply and demand for, deliveriesof, and the level and volatility of prices of copper and othercommodities and products used in our operations;

• the ongoing supply of material forprocessing from Codelco’s current mining operations;

• the grade and projected recoveries oftailings processed by MVC;

• theability of the Company to profitably extract and process material fromthe Cauquenes tailings deposit;

•the timing of the receipt of and retention of permits and otherregulatory and governmental approvals;

• our costs of production and our production and productivitylevels, as well as those of our competitors;

• changes in credit market conditionsand conditions in financial markets generally;

• our ability to procure equipment andoperating supplies in sufficient quantities and on a timelybasis;

• the availability ofqualified employees and contractors for our operations;

• our ability to attract and retainskilled staff;

• the satisfactorynegotiation of collective agreements with unionized employees;

• the impact of changes in foreignexchange rates and capital repatriation on our costs andresults;

• costs of closure ofvarious operations;

• marketcompetition;

• tax benefits andtax rates;

• the outcome of ourcopper concentrate sales and treatment and refining chargenegotiations;

• the resolution ofenvironmental and other proceedings or disputes;

• the future supply of reasonably pricedpower;

• rainfall in the vicinityof MVC returning to normal levels;

• average recoveries for fresh tailings and Cauquenestailings;

• our ability to obtain,comply with and renew permits and licenses in a timely manner;and

• our ongoing relations withour employees and entities with which we do business.

Future production levels and costestimates assume there are no adverse mining or other events whichsignificantly affect budgeted production levels.

Although the Company believes that theseassumptions were reasonable when made, because these assumptions areinherently subject to significant uncertainties and contingencieswhich are difficult or impossible to predict and are beyond theCompany’s control, the Company cannot assure that it will achieve oraccomplish the expectations, beliefs or projections described in theforward-looking statements.

Wecaution you that the foregoing list of important factors andassumptions is not exhaustive. Other events or circumstances couldcause our actual results to differ materially from those estimated orprojected and expressed in, or implied by, our forward-lookingstatements. You should also carefully consider the matters discussedunder Risk Factors in Amerigo’s Annual Information Form. Theforward-looking statements contained herein speak only as of the dateof the news release and except as required by law, we undertake noobligation to update publicly or otherwise revise any forward-lookingstatements or the foregoing list of factors, whether as a result ofnew information or future events or otherwise.

ContactDetails

Aurora Davidson, President and CEO

+1604-697-6207

ad@amerigoresources.com

GrahamFarrell

+1 416-842-9003

graham.farrell@harbor-access.com

CompanyWebsite

http://www.amerigoresources.com/

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