ARG: Slight Miss on Q1 Production; Copper Price Supports FCF
What you need to know:• Quarterly copper production was 13.2Mlbs, below our estimate of 14.9Mlbs due to the scheduled annual plant maintenance.
• Cash costs came in at $2.22/lb, above our estimate of $1.88/lb.
• Copper prices rose substantially in Q1, followed by a sharp drop in recent days due to U.S. tariffs, despite this, copper remains high at >$4.00/lb.
• We recently published a note on our site visit to Amerigo’s MVC processing plant in Chile. Click here to read the full note.
This morning, Amerigo Resources (ARG:TSX) published Q1 production results from its MVC processing facility in Chile. Results missed our estimates due to the scheduled annual maintenance shutdown; however, operationally, the Company performed well and has stated it is on track to meet annual guidance. ARG also remains on track to be debt-free by the end of 2025. We are maintaining our BUY rating and C$2.50/share target price on Amerigo Resources.
Production Highlights
• Q1 copper production came in at 13.2Mlbs below our estimates of 14.9Mlbs. This was due to the scheduled annual maintenance shutdown, which affected operations more than we anticipated.
• 136.9Ktpd of fresh tailings were processed during the quarter, with another 39.7Ktpd of historic tailings. The grade from the fresh tails fell slightly from 0.182% in Q4/24 to 0.165% in Q1. The historic tailings grade dropped slightly from 0.241% in Q4/24 to 0.238% in Q1. As a consequence, copper recoveries fell ~4% for both the fresh and historic tails during the quarter.
• Normalized cash cost of $2.22/lb above our estimate of $1.88/lb, again, this can be attributed to the shutdown, and ARG noted it remains on track to meet annual guidance of $1.93/lb in 2025.
• Moly production for the quarter came in at 0.24Mlbs, slightly below our estimate of 0.3Mlbs, declining due to the maintenance shutdown.
• Additionally, ARG announced $4.6M of capital returned to shareholders, reporting $3.5M paid as dividends and $1.1M as share buybacks in Q1/25.
• The Company reported a cash position of $30.8M (including $3.1M of restricted cash) and debt of $11.5M.
• Q1 capex was $6.8M or 52% of its annual capex budget, however, management stated that it remains on track with guidance.
Amerigo Resources is engaged in the production of copper and molybdenum concentrates with operations in Chile. Through its subsidiary, Minera Valle Central S.A., Co. has a contract with Chile's state-owned copper producer National Copper Corporation to process the tailings from El Teniente underground copper mine.
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