TORONTO (miningweekly.com) – Canada-based copper miner Amerigo Resources swung to a net loss of $1-million during the second quarter, with a one-time charge and “extremely difficult” mining conditions in Chile impacting on the company’s financial performance.
Amerigo, which produces copper and molybdenum from tailings from the world's largest underground copper mine, Codelco's El Teniente mine, in Chile, on Friday said quarter-on-quarter earnings were slashed by 143%, while year-on-year earnings fell by 153% for the second quarter that ended on June 30, when compared with the year-earlier period.
Revenue during the period was $40-million, compared with $38.29-million in the second quarter 2011 – an increase of 4% as a result of higher copper (15%) and molybdenum (25%) sales.
The cost of sales was $40-million, 16% higher than the year-earlier period, mainly as a result of a higher production volume, high power costs and higher costs for labour and maintenance.
Copper production was 16.6% less at 11.57-million pounds when compared with the first quarter, although on a yearly basis, the company had increased production of the red metal by 22%.
Molybdenum production was 20% higher than in the same comparable period a year earlier, at 228 932 lb.
Power costs in the quarter were persistently high, totalling $12.65-million, compared with $10.68-million a year ago.
Electricity costs continued to be negatively impacted by a drought in Chile that has sapped the country for more than two years. Power costs were partially mitigated by the use of the company’s power generators.
“Extremely difficult mining conditions in Colihues resulted in higher extraction costs and lower metal recoveries, both of which adversely affected financial results for the quarter,” Amerigo CEO Dr Klaus Zeitler said in a statement.
The company maintained its expected copper production for the year at 50-million pounds and its expected molybdenum production at close to one-million pounds.
Negotiations are ongoing for the rights to process old tailings from an additional tailings pond owned by El Teniente, which will enable the company to significantly increase production from current levels.
The majority of the company's capital expenditure (capex) budget was spent in the first half of the year and it was expected that capex for the rest of the year would total about $4.6-million.
Zeitler added that the company’s plant expansion project was substantially completed in the quarter and that the company was now ready to increase production during the second half of the year.
"During the second half of the year we expect mining conditions to improve and believe that power costs will be lower for the rest of the year, and even lower in 2013, which will be positive for Amerigo's bottom line," he said.
The company’s Toronto-listed stock traded 1.64% down on Friday at 60 Canadian cents apiece.