Vancouver, British Columbia--(Newsfile Corp. - March 30, 2017) - Amerigo Resources Ltd. (TSX: ARG) ("Amerigo" or the "Company") is pleased to announce that it has filed a technical report (the "Report") prepared for Minera Valle Central, S.A. ("MVC"), Amerigo's Chilean subsidiary in conjunction with Amerigo's intention to commence the Cauquenes Phase Two Expansion project ("Phase Two"). Phase Two is planned to improve flotation recovery efficiency and expand the existing facilities to an output of 85 to 90 million pounds of copper per year. Phase Two is expected to be completed in the second half of 2018 at an estimated cost of US$30 million.
Robert D. Henderson, P. Eng, President and CEO of Amerigo, is the author of the Report and is responsible for the technical comments related to the resource estimate and its parameters. Mr. Henderson is a "qualified person" for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators and has verified the data disclosed in this release. He has also prepared the information that forms the basis for the disclosure in this release, and he has approved the disclosure in this release.
In 2016, MVC produced a record of 56.8 million pounds of copper. MVC's plant is located approximately 90 kilometres south of Santiago, Chile and has been in operation since 1992. MVC processes tailings from the current production of the El Teniente mine ("Fresh Tailings") and tailings from the historic Cauquenes tailings deposit. El Teniente is the world's largest underground copper mine and has been in production since 1904.
In Mr. Henderson's opinion, there is sufficient geological and economic evidence to conclude that MVC's contracts for the processing of Fresh Tailings, and tailings from the Cauquenes and Colihues tailings impoundments (collectively, the "Fresh, Cauquenes and Colihues Tailings"), constitute an inferred mineral resource. Historical records of El Teniente's mill tailings represent a detailed account of the tonnage and grade of material stored in the Cauquenes and Colihues impoundments. A total of 30 holes have been drilled on the Cauquenes deposit in four separate campaigns. MVC has a long operating record of economic extraction of copper and molybdenum from El Teniente's tailings and MVC's December 2016 development plan presents an economic assessment of producing 1,461 million pounds of copper and 38 million pounds of molybdenum over the period 2017 to 2037.
MVC's total inferred mineral resource estimate for the Fresh, Cauquenes and Colihues Tailings and after application of mining and mill recovery losses, is 1,179 million tonnes at a grade of 0.159% Cu and 0.010% Mo with 1,461 million pounds of recoverable copper and 38 million pounds of recoverable molybdenum, as set out in the following tables:
Table 1-1 MVC Copper Inferred Mineral Resource Estimate - Dec 31, 2016
| Tailings Deposit |
Tonnes (t) | Grade (% Cu) | Mill Recovery (%) | Recoverable Copper (M lbs) |
| Colihues | 77,280,000 | 0.229 | 37 | 145 |
| Cauquenes | 305,000,000 | 0.267 | 47 | 847 |
| Fresh | 796,267,115 | 0.111 | 24 | 469 |
| Total | 1,178,547,115 | 0.159 | 35 | 1,461 |
Table 1-2 MVC Molybdenum Inferred Mineral Resource Estimate - Dec 31, 2016
|
Tailings |
Tonnes (t) |
Grade (% Mo) |
Mill Recovery (%) |
Recoverable |
|
Colihues |
77,280,000 |
0.010 |
21 |
4 |
|
Cauquenes |
305,000,000 |
0.021 |
20 |
28 |
|
Fresh |
796,267,115 |
0.005 |
7 |
6 |
|
Total |
1,178,547,115 |
0.010 |
15 |
38 |
The Environmental Impact Assessment study for the Cauquenes Expansion project (the "Cauquenes Project") was filed with the Chilean authorities in 2013, requesting an increase in historic tailings processing rate via an expansion to the MVC plant. Environmental approval was received in 2014. MVC has the necessary sectorial permits to commence construction of Phase Two. Phase One of the Cauquenes Project was completed in 2015 and has enabled MVC to extract Cauquenes tailings and process them at MVC's existing plant. Phase Two is planned to improve flotation recovery efficiency.
Annual production over the initial ten-year period (2019-2028) is estimated to be 85 to 90 million pounds of copper per year at a cash cost of production of approximately $1.51/lb Cu, excluding royalties. Royalties are estimated to be $0.88/lb Cu at the base case metal prices used in the Report's economic analysis. At a 7% discount rate, the unlevered after tax net present value for MVC's operations is estimated to be approximately US$480 million at an assumed long term copper price of $3.30/lb. Over the life of the contract, total EBITDA for MVC is estimated to be $2.5 billion, of which $1.2 billion are the estimated El Teniente royalties.
Using these parameters, the preliminary financial analysis summary presented in Table 1-3 of the Report indicates that MVC has a positive net cash flow and supports the further development of the Cauquenes deposit.
The results of the preliminary economic assessment represent forward-looking information that is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such information. This information speaks only as of the date of this Technical Report, and is based on a number of assumptions which are believed to be true but which may prove to be incorrect in future. The preliminary economic assessment is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
In Mr. Henderson's opinion, the data supporting the inferred mineral resource estimates were appropriately collected, evaluated and estimated, and the objective of identifying tailings mineralization that could potentially support future processing operations has been achieved. Mr. Henderson's recommendation is to proceed with construction of Phase Two.
About the Company:
Amerigo Resources Ltd. is an innovative copper producer with a long-term partnership with Codelco, the world's largest copper producer. Amerigo produces copper concentrate at the MVC operation in Chile by processing fresh and historic tailings from Codelco's El Teniente mine, the world's largest underground copper mine. Tel: (604) 681-2802; Fax: (604) 682-2802; Web: www.amerigoresources.com; Listing: ARG:TSX.
