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ARG: Positioned to Benefit from Higher Copper Prices

What you need to know:
• Q2 copper production was 15.5Mlbs, vs. our 16.0Mlbs due slightly weaker grade from the fresh tailings, yet ARG maintained guidance.
• Cash costs for the quarter came in at $1.82/lb, below our estimate of $1.93/lb, led by continued operational excellence.
• ARG has returned $12.1M of capital to shareholders through H1/25, including $7.6M in Q2.
• We are increasing our target price to C$3.00/share based 6.5x 2025E OCF (previously 5.0x).

This morning, Amerigo Resources (ARG:TSX, ARREF:OTC) published its Q2 production results that were mixed relative to our estimates. The quarter was driven by slightly lower copper grades offset by 99% plant availability (ARG completed its annual maintenance in Q1) and lower cash costs. ARG demonstrated continued capital return efforts in Q2, distributing $7.6M to shareholders through its dividends and buyback program. ARG announced that it will release its Q2 financials on July 30th, 2025, and host an investor conference call on July 31st, we expect strong results led by the increased copper price. We are maintaining our BUY rating and increasing our target price to C$3.00/share on ARG.

Q2 Production Highlights
• Copper produced came in at 15.5Mlbs (+11% YoY) compared to our estimate of 16.0Mlbs. This was driven by inclement weather issues and slightly lower copper grade than expected for the fresh tailings portion.
• 129.4Ktpd of fresh tailings were processed during the quarter, with 45.6Ktpd in historic tailings. The grade from the fresh tails fell slightly to 0.161% in Q2 vs. historical levels of >0.18%. The historic tailings grade remained the flat at 0.238%. Copper recoveries were solid, coming in at 21.7% from the fresh tailings and 31.3% from the historical tailings.
• Cash costs came in at $1.82/lb, below our estimate of $1.93/lb, which can be attributed to MVC’s plant availability of 99%. ARG noted that its annual guidance of $1.93/lb remains on track.
• Moly production for the quarter came in at 0.39Mlbs, topping our estimate of 0.30Mlbs and increasing significantly from the 0.30Mlbs produced in Q2/24.
• ARG announced $7.6M of capital returned to shareholders, reporting $3.5M paid as dividends and $4.0M as share buybacks in Q2/25.
• The Company reported a cash position of $23.3M (plus $0.9M of restricted cash) and debt of $7.5M, declining $4.0M since December 2024.