Amerigo Resources Ltd. (TSX: ARG) has solid financial results for the three months ended March 31, 2022.
Amerigo’s quarterly financial results included net income of US$15.5 million, earnings per share (EPS) of US$0.09, EBITDA of US$26.4 million and free cash flow to equity (FCFE) of US$17.9 million.
“We are pleased to report a robust start to the year for Amerigo. We met our copper production and cash cost targets, and our average quarterly copper price increased to $4.64 per pound,”said Aurora Davidson, Amerigo’s President and CEO.
“Amerigo’s Board of Directors has declared a quarterly dividend of Cdn$0.03 per share. The company’s dividend policy combines the strength of sustainable and reliable quarterly dividends, with the flexibility of top-up dividends that can be declared anytime to distribute additional surplus cash to shareholders. We remain comfortable with a targeted minimum corporate cash balance of $20.0 to $25.0 million and our normal course issuer bid remains in place”, added Ms. Davidson.
On May 2, 2022, Amerigo’s Board of Directors declared a quarterly dividend of Cdn$0.03 per share, payable on June 20, 2022, to shareholders of record as of May 30, 2022. 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 the March 31, 2022 share closing price of Cdn$1.84, this would represent an annual dividend yield 6.52%.
Highlights and Significant Items
- Net income during Q1-2022 was $15.5 million (Q1-2021: $10.9 million), due to higher copper production and higher metal 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 $4.64 per pound (“/lb”) (Q1-2021: $4.08/lb) and the company’s average molybdenum price was $18.33/lb (Q1-2021: $10.88/lb).
- Q1-2022 production was 16.5 million pounds (“M lbs”) of copper 6% higher than Q1-2021 production of 15.5 M lbs due to higher tonnage, grade and recoveries from fresh tailings and higher grade and recoveries from Cauquenes.
- Molybdenum production during Q1-2022 was 0.2 M lbs (Q1-2021: 0.4 M lbs) due to lower molybdenum content in fresh tailings.
- 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 calculated from the company’s gross value of copper produced during Q1-2022 of $73.8 million (Q1-2021: $58.1 million) and fair value adjustments to settlement receivables of $5.6 million (Q1-2021: $8.5 million), less notional items including DET royalties of $22.3 million (Q1-2021: $16.0 million), smelting and refining of $6.2 million (Q1-2021: $4.7 million) and transportation of $0.5 million (Q1-2021: $0.5 million). The Q1-2022 settlement adjustments included $3.8 million in settlement adjustments in respect of Q4-2021 production, which are final adjustments (Q1-2021: $5.0 million of final adjustments).
- The company generated operating cash flow before changes in non-cash working capital1 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 equity1 was $17.9 million (Q1-2021: $12.6 million).
- Q1-2022 cash cost1 was $1.90/lb (Q1-2021: $1.88/lb).
- Amerigo’s financial 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 sales will be the average London Metal Exchange prices for April, May, and June 2022, respectively. A 10% increase or decrease from the $4.64/lb provisional price would result in a $7.6 million change in revenue in Q2-2022 in respect of Q1-2022 production.
- In Q1-2022, Amerigo returned $7.6 million to shareholders: $4.2 million were paid on March 21, 2022, through Amerigo’s increased quarterly dividend of Cdn$0.03 per share, and $3.4 million were returned through the purchase of 2.4 million common shares for cancellation through Amerigo’s ongoing Normal Course Issuer Bid (NCIB). Amerigo may repurchase for cancellation a further 6.9 million shares under the NCIB. Amerigo is reporting the NCIB monthly activity progress at
- In Q1-2022, the company made scheduled debt payments of $nil (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 and cash equivalents of $71.1 million (December 31, 2021: $59.8 million), restricted cash of $6.4 million (December 31, 2021: $4.2 million) and had working capital of $34.5 million (December 31, 2021: $24.6 million).
For further information please visit http://www.amerigoresources.com/
