GuruFocus -
- Net Profit: $9.8 million in Q2 2024.
- EBITDA: $22.3 million in Q2 2024.
- Operating Cash Flow: $14.3 million before changes in working capital in Q2 2024.
- Free Cash Flow to Equity: $6.7 million in Q2 2024.
- Cash on Balance Sheet: $28.7 million at the end of Q2 2024.
- Debt: Reduced to $15.5 million in Q2 2024.
- Working Capital Deficiency: Reduced to $1.5 million from $12.3 million at year-end 2023.
- Copper Revenue: $63 million in Q2 2024, up from $52.8 million in Q2 2023.
- Final Revenue: $51.6 million in Q2 2024, up from $32 million in Q2 2023.
- Cash Cost: $1.96 per pound in Q2 2024, down from $2.37 per pound in Q2 2023.
- Total Cost: $3.78 per pound in Q2 2024, down from $3.84 per pound in Q2 2023.
- All-in Sustaining Cost: $4.20 per pound in Q2 2024, down from $4.44 per pound in Q2 2023.
- Performance Dividend: CAD0.04 per share, to be paid on August 6, 2024.
- Average Copper Price: $4.39 per pound in Q2 2024, compared to $3.95 per pound in Q1 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Amerigo Resources Ltd (ARREF) reported a strong financial performance in Q2 2024, with a net profit of $9.8 million and EBITDA of $22.3 million.
- The company benefited from rising copper prices, which averaged $4.39 per pound, contributing to higher revenues.
- Amerigo Resources Ltd (ARREF) declared its first performance dividend of CAD0.04 per share, demonstrating its ability to quickly share profits with shareholders.
- The company successfully reduced its debt to $15.5 million and improved its cash position to $28.7 million.
- Amerigo Resources Ltd (ARREF) maintained its annual production guidance of 62.4 million pounds of copper despite weather-related production challenges.
- The company faced a production reduction of 1 million pounds due to severe rains, impacting its output.
- There is uncertainty regarding future copper prices, which could affect revenue projections.
- Amerigo Resources Ltd (ARREF) has a working capital deficiency of $1.5 million, although it has been reduced from previous levels.
- The company is exposed to price volatility, with provisional copper sales subject to future price adjustments.
- Amerigo Resources Ltd (ARREF) has not been active in share buybacks this year, which may affect shareholder value perception.
A: Aurora Davidson, President and CEO, explained that beyond the significant byproduct credit impact from higher molybdenum prices, the weaker Chilean Peso and effective cost management of non-contractual items like maintenance and production costs at MVC contributed to the lower cash costs.
Q: What is the expected full-year CapEx for Amerigo, considering recent approvals for water removal pumps?
A: Aurora Davidson stated that the full-year CapEx is expected to be around $12 million to $13 million, including the $1.4 million for additional pumps. This is significantly lower than last year's high CapEx due to major projects like the sump construction and transformer installation.
Q: How does the Board consider returning capital to shareholders amid fluctuating copper prices?
A: Aurora Davidson noted that the capital return policy involves maintaining a cash reserve of $25 million and observing spot prices. The Board considers quarterly dividends as the fundamental tool, with additional cash potentially distributed through performance dividends or share buybacks, depending on copper price trends.
Q: What is the outlook for molybdenum prices, and how does it impact Amerigo?
A: Aurora Davidson mentioned that molybdenum prices were strong in the second quarter, which positively impacted the bottom line. However, molybdenum prices can be unpredictable, and while current prices are beneficial, they are not the primary focus of Amerigo's operations.
Q: With debt gradually reducing to zero, is there a possibility of increasing the regular dividend?
A: Aurora Davidson indicated that while it hasn't been discussed yet, the possibility of increasing the regular dividend will be considered as debt obligations are eliminated, potentially enhancing the ability for discretionary performance payments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.