NEW YORK Lower copper and molybdenum prices helped push Amerigo Resources Ltd. $8.19 million into the red last year in contrast to net income of $8.7 million in 2011.
"Results were also adversely affected by the one-time payment of $4.6 million in bonuses on the signing of a new four-year union agreement and higher extraction costs and lower metal recoveries in the Colihues tailings pond (in Chile) due to extremely difficult mining conditions during the latter part of the year," Amerigo president and chief executive officer Klaus Zeitler said in a statement.
Amerigos sales increased 9.4 percent to $181.76 million in 2012 from $166.07 million the previous year on higher copper and molybdenum production (amm.com, Jan. 16).
The Vancouver, British Columbia-based companys wholly owned subsidiary in Chile, Minera Valle Central (MVC), treats fresh and old tailings from Codelcos El Teniente copper mine. It has the rights to process El Tenientes tailings from the Caren tailings deposit and the Colihues tailings pond and is in discussions to obtain the rights to process tailings from the Cauquenes deposit, which is adjacent to Colihues.
Zeitler said he remains confident that MVC will reach an agreement on the Cauquenes tailings pond during 2013. "(An agreement) will allow the company to substantially increase copper and molybdenum production," he said.
Zeitler said that although challenging mining conditions in Colihues are expected to continue for the first few months of this year, the company expects to reduce cash costs in 2013 to between $1.95 and $2.15 per pound due mainly to a change in the remaining five years of its power contract from a variable to a lower fixed rate. Power costs in January 2013 were half those in January last year, Zeitler said
Amerigo paid $50.6 million in power costs last year at a rate of $0.1895 per kWh compared with $45.5 million, or $0.1903 per kWh, in 2011.
The company expects 2013 production to total between 45 million and 50 million pounds of copper, down from 51.7 million pounds last year, and 1 million pounds of molybdenum, down from nearly 1.06 million pounds in the same comparison.