ARG:CC - Amerigo Announces Q2-2022 Results & Quarterly Dividend

(NewsDirect)

Net loss of $5.1million driven by prior quarter settlement adjustments & annualmaintenance shutdown

EBITDA ¹ of $6.7 million, endingquarter cash & restricted cash of $57.2 million

Quarterly dividend ofCdn$0.03 per share declared, representing 9.68%yield ²

Company reaffirms return of shareholder capitalpolicy

Amerigo Resources Ltd. (TSX: ARG; OTC: ARREF) (“Amerigo” or the “Company”) is pleased to announcefinancial results for the three months ended June 30, 2022(“Q2-2022”). Dollar amounts in this news release are in U.S.dollars unless indicated otherwise.

Amerigo’s quarterly financial results wereimpacted by reduced copper production during the annual scheduledmaintenance shutdown of Minera Valle Central (“MVC”), theCompany’s 100% owned operation located near Rancagua, Chile, and$5.1 million in negative price settlement adjustments to prior quartercopper sales.

Quarterly results included a net loss of $5.1 million, loss pershare (“LPS”) of $0.03 (Cdn$0.04) and EBITDA[1] of $6.7million. Following year-to-date return of capital to shareholders of$20.5 million and debt repayments of $3.5 million, cash and restrictedcash on June 30, 2022 were $57.2 million, compared to starting 2022cash and restricted cash of $64.0 million.

“We are pleased to report a strongoperational quarter where we continued to meet production and costobjectives, which incorporated the annual maintenance shutdown.However, Amerigo’s financial results were negatively affected by asubstantial decline in copper prices which translated to a quarterlyloss of $5.1 million”, said Aurora Davidson, Amerigo’s Presidentand CEO. “Copper price volatility is not new or uncommon, butAmerigo is now well-positioned to weather a period of lower prices.Backed by a strong balance sheet, we remain committed to our policy ofreturning capital to shareholders”, she added.

On August 2, 2022,Amerigo’s Board of Directors declared a quarterly dividend ofCdn$0.03 per share, payable on September 20, 2022, to shareholders ofrecord as of August 31, 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 on the June 30, 2022, share closing price of Cdn$1.24, thiswould represent an annual dividend yield 9.68% ² .

Amerigo’s Board ofDirectors will seek Toronto Stock Exchange (“TSX”) approval tocommence a Normal Course Issuer Bid (“NCIB”) after December 2,2022, once the current 12-month NCIB period expires, as the Companyhas already purchased the maximum number of securities permitted bythe TSX in a 12-month period.

This news release should be read in conjunctionwith Amerigo’s interim consolidated financial statements andManagement’s Discussion and Analysis (“MD&A) for the three andsix months ended June 30, 2022, available at the Company’s websiteat www.amerigoresources.com and at www.sedar.com.

Highlights and Significant Items

• InQ2-2022, market copper prices declined significantly, affectingAmerigo’s financial performance twofold: through lower currentquarterly revenue which is marked-to-market at a lower provisionalprice (Q2-2022: $4.10 per pound (“/lb”) ³ ; Q2-2021:$4.37/lb) ³ and through negative final price settlementadjustments to prior-quarter production (Q2-2022: $5.1 million innegative final price settlement adjustments to Q1-2022 production;Q2-2021: $5.3 million in positive final price settlement adjustmentsto Q1-2021 production).

• Amerigo posteda net loss in Q2-2022 of $5.1 million (Q2-2021: net income of $11.6million). LPS during Q2-2022 was $0.03 (Cdn$0.04) (Q2-2021: earningsper share (“EPS”) of $0.06 (Cdn$0.08)).

• Q2-2022 production was 14.9 million pounds(“M lbs”) of copper, in line with Q2-2021 production of 15.0 M lbsdespite MVC operating for 8 fewer days in Q2-2022 due to its annualmaintenance shutdown. Production in Q2-2022 was positively impacted byhigher tonnage, grade and recoveries from fresh tailings and highergrade and recoveries from Cauquenes.

• Molybdenum production in Q2-2022 was 0.2 million pounds(Q2-2021: 0.3 million pounds) due to lower molybdenum content in freshtailings.

• Revenue during Q2-2022was $33.6 million (Q2-2021: $50.5 million), including copper tollingrevenue of $31.4 million (Q2-2021: $45.7 million) and molybdenumrevenue of $2.2 million (Q2-2021: $4.8 million).

• Copper tolling revenue is calculated fromMVC’s gross value of copper produced during Q2-2022 of $63.7 million(Q2-2021: $66.6 million) and negative fair value adjustments tosettlement receivables of $7.9 million (Q2-2021: positive adjustmentsof $4.8 million), less notional items including DET royalties of $18.3million (Q2-2021: $20.2 million), smelting and refining of $5.8million (Q2-2021: $4.9 million) and transportation of $0.4 million(Q2-2021: $0.5 million). The Q2-2022 fair value adjustments included$5.1 million in negative price settlement adjustments in respect ofQ1-2022 production, which are final adjustments (Q2-2021: $5.3 millionof positive final price settlement adjustments in respect of Q1-2021production).

• The Companyused operating cash flow before changes in non-cash workingcapital ¹ of $4.0 million in Q2-2022 (Q2-2021: cashgenerated of $17.1 million). Quarterly net operating cash flow was$2.7 million (Q2-2021: $21.9 million). There was negative free cashflow ¹ to equity of $10.7 million in Q2-2022 (Q2-2021:positive cash flow of $5.7 million).

• Q2-2022 cash cost ¹ was $2.01/lb (Q2-2021:$1.81/lb), driven by a decrease of $0.17/lb in molybdenum by-productcredits from lower molybdenum production and an increase of $0.06/lbin smelter/refinery charges. All other cost combined decreased by$0.03/lb.

• Amerigo’s financialperformance is very sensitive to changes in copper prices. At June 30,2022, the Company’s provisional copper price was$4.10/lb ³ , and final prices for April, May and June 2022sales will be the average London Metal Exchange (“LME”) prices forJuly, August and September 2022, respectively. A 10% increase ordecrease from the $4.10/lb ³ provisional price used on June30, 2022 would result in a $6.1 million change in revenue in Q3-2022in respect of Q2-2022 production.

• InQ2-2022, Amerigo returned $13.0 million to shareholders: $4.1 millionwas paid on June 20, 2022 through Amerigo’s regular quarterlydividend of Cdn$0.03 per share, and $8.9 million was returned throughthe purchase of 6.9 million common shares for cancellation throughAmerigo’s recently completed Normal Course Issuer Bid. Year-to-date,Amerigo returned $20.5 million to shareholders.

• In Q2-2022, the Company made scheduled debtpayments of $3.5 million (Q2-2021: net debt payments of $10.3 million)and paid $3.0 million for plant and equipment (Q2-2021: $0.8 million).

• On June 30, 2022, the Company held cashand cash equivalents of $53.0 million (December 31, 2021: $59.8million), restricted cash of $4.2 million (December 31, 2021: $4.2million) and had working capital of $10.9 million (December 31, 2021:$24.6 million).

Investor Conference Call on August 4, 2022

Amerigo’s quarterlyinvestor conference call will take place on Thursday, August 4, 2022at 11:00 am Pacific Daylight Time/2:00 pm Eastern Daylight Time. Tojoin the call, please dial 1-888-664-6392 (Toll-Free NorthAmerica) and enter confirmation number 81494727.

Upcoming Investor Conferences Participation

Amerigo will beparticipating in the Sidoti Small Cap Virtual Conference onSeptember 21 and 22, 2022 and the 121 Global Online Tech Metals conference on October 25 and 26, 2022. CEO Aurora Davidson will bepresenting at both conferences and will be available for one-on-onemeetings throughout each event.

About Amerigo and Minera 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 ;ARG:TSX; OTC: ARREF.

1 Non-IFRS Measures

This news releaseincludes five non-IFRS measures: (i) EBITDA, (ii) operating cash flowbefore changes in non-cash working capital, (iii) free cash flow toequity (“FCFE”), (iv) free cash flow (“FCF”) and (v) cashcost.

Thesenon-IFRS performance measures are included in this news releasebecause they provide key performance measures used by management tomonitor operating performance, assess corporate performance, and toplan and assess the overall effectiveness and efficiency ofAmerigo’s operations. These performance measures are notstandardized financial measures under IFRS and, therefore, amountspresented may not be comparable to similar financial measuresdisclosed by other companies. These performance measures should not beconsidered in isolation as a substitute for measures of performance inaccordance with IFRS.

(i) EBITDArefers to earnings before interest, taxes, depreciation, andadministration and is calculated by adding back depreciation expenseto the Company’s gross margin.

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

(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 in a reporting period that can be used to payfor:

a) potential distributions to the Company’s shareholders, and

b) any additional taxes triggered by the repatriation of fundsfrom Chile to Canada to fund these distributions.

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

(iv) Cash cost is a performance measurecommonly 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 andadministration costs, net of by-product credits. Cash cost per poundproduced is based on pounds of copper produced and is calculated bydividing cash cost over the number of pounds of copperproduced.

2 Dividend yield

The disclosed annual yield of 9.68% is based onfour quarterly dividends of Cdn$0.03 per share each, divided overAmerigo’s June 30, 2022 share price of Cdn$1.24.

3 MVC’s copperprice

MVC’scopper 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 priorperiod sales.

MVC’s pricing terms are based on the average LME copper pricefor the third month following delivery of copper concentrates producedunder the tolling agreement with DET (“M+3”). This means that whenfinal copper prices are not yet known, they are provisionallymarked-to-market at the end of each month based on the progression ofthe LME published average monthly M and M+3 prices. Provisional pricesare adjusted monthly using this consistent methodology, until they aresettled.

Q1-2022copper deliveries were marked-to-market at March 31, 2022 at $4.64/lband were settled in Q2-2022 as follows:

• January 2022 sales settled at the April2022 LME average price of $4.62/lb
• February 2022 sales settledat the May 2022 LME average price of $4.25/lb
• March 2022 salessettled at the June 2022 LME average price of $4.10/lb

Q2-2022 copperdeliveries were marked-to-market at June 30, 2022 at $4.10/lb and willbe settled at the LME average prices for July, August and September2022.

Cautionary Statement on Forward-Looking Information

This newsrelease contains certain forward-looking information and statements asdefined in applicable 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 productionand operating costs;
• our strategies andobjectives;
• our estimates of the availability and quantity oftailings, and the quality of our mine plan estimates;
• pricesand price volatility for copper, molybdenum, and other commodities andof materials we use in our operations;
• the demand for andsupply of copper, molybdenum, and other commodities and materials thatwe produce, sell and use;
• sensitivity of our financial resultsand share price to changes in commodity prices;
• our financialresources and financial condition and our expected ability to meet ourobligations for the next 12 months;
• interest and otherexpenses;
• domestic and foreign laws affecting ouroperations;
• our tax position and the tax rates applicable tous;
• our ability to comply with our loan covenants;
• theproduction capacity of our operations, our planned production levelsand future production;
• hazards inherent in the mining industrycausing personal injury or loss of life, severe damage to ordestruction of property and equipment, pollution or environmentaldamage, claims by third parties and suspension ofoperations
• estimates of asset retirement obligations and othercosts related to environmental protection;
• 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 ouroperations;
• repudiation, nullification, modification orrenegotiation of contracts;
• our financial and operatingobjectives;
• our environmental, health and safetyinitiatives;
• the outcome of legal proceedings and otherdisputes in which we may be involved;
• the outcome ofnegotiations concerning metal sales, treatment charges androyalties;
• disruptions to the Company's informationtechnology systems, including those related tocybersecurity;
• our dividend policy; and
• generalbusiness and economic conditions.

These forward-looking statements involve known and unknownrisks, uncertainties and other factors that may cause actual resultsor events to differ materially from those anticipated in suchstatements. Inherent in forward-looking statements are risks anduncertainties beyond our ability to predict or control, includingrisks that may affect our operating or capital plans; risks generallyencountered in the permitting and development of mineral projects suchas unusual or unexpected geological formations, negotiations withgovernment and other third parties, unanticipated metallurgicaldifficulties, delays associated with permits, approvals and permitappeals, ground control problems, adverse weather conditions, processupsets and equipment malfunctions; risks associated with labourdisturbances and availability of skilled labour and management; risksrelated to the potential impact of global or national health concerns,including COVID-19, and the inability of employees to accesssufficient healthcare; 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; risks associatedwith supply chain disruptions; title risks; social and political risksassociated with operations in foreign countries; risks of changes inlaws affecting our operations or their interpretation, includingforeign exchange controls; and risks associated with tax reassessmentsand legal proceedings. Notwithstanding the efforts of the Company andMVC, there can be no guarantee that Amerigo’s or MVC’s staff willnot contract COVID-19 or that Amerigo’s and MVC’s measures toprotect staff from COVID-19 will be effective. Many of these risks anduncertainties apply not only to the Company and its operations, butalso to Codelco and its operations. Codelco’s ongoing miningoperations provide a significant portion of the materials MVCprocesses and its resulting metals production, therefore these risksand uncertainties may also affect their operations and in turn have amaterial effect on the Company.

Actual results and developments are likely todiffer, and may differ materially, from those expressed or implied bythe forward-looking statements contained in this news release. Suchstatements are based on a number of assumptions which may prove to beincorrect, including, but not limited to, assumptions about:

• general business andeconomic conditions;
• interest and currency exchangerates;
• changes in commodity and power prices;
• acts offoreign governments and the outcome of legal proceedings;
• thesupply and demand for, deliveries of, and the level and volatility ofprices of copper and other commodities and products used in ouroperations;
• the ongoing supply of material for processing fromCodelco’s current mining operations;
• the grade and projectedrecoveries of tailings processed by MVC;
• the ability of theCompany to profitably extract and process material from the Cauquenestailings deposit;
• the timing of the receipt of and retentionof permits and other regulatory and governmentalapprovals;
• our costs of production and our production andproductivity levels, as well as those of ourcompetitors;
• changes in credit market conditions andconditions in financial markets generally;
• our ability toprocure equipment and operating supplies in sufficient quantities andon a timely basis;
• the availability of qualified employees andcontractors for our operations;
• our ability to attract andretain skilled staff;
• the satisfactory negotiation ofcollective agreements with unionized employees;
• the impact ofchanges in foreign exchange rates and capital repatriation on ourcosts and results;
• costs of closure of variousoperations;
• market competition;
• tax benefits and taxrates;
• the outcome of our copper concentrate sales andtreatment and refining charge negotiations;
• the resolution ofenvironmental and other proceedings or disputes;
• the futuresupply of reasonably priced power;
• rainfall in the vicinity ofMVC returning to normal levels;
• average recoveries for freshtailings and Cauquenes tailings;
• our ability to obtain, complywith and renew permits and licenses in a timely manner;and
• our ongoing relations with our employees and entities withwhich we do business.

Future production levels and cost estimates assume there are noadverse mining or other events which significantly affect budgetedproduction levels.

Although the Company believes that these assumptions werereasonable when made, because these assumptions are inherently subjectto significant uncertainties and contingencies which are difficult orimpossible to predict and are beyond the Company’s control, theCompany cannot assure that it will achieve or accomplish theexpectations, beliefs or projections described in the forward-lookingstatements.

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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