Amerigo resumes production after flooding in Chile

Amerigo Resources Ltd. [ARG-TSX, ARREF-OTCQX] said Tuesday its Minera Valle Central (MVC) operation in Chile has resumed normal operations after severe flooding knocked out the power system. It said the MVC plant was reconnected to Chile’s central power grid on July 21, 2023, a move that enabled MVC to resume normal operations processing fresh and historic tailings on July 22, 2023.

Amerigo shares advanced on the news, rising 2.6% or $0.04 to $1.56 on volume of 293,120. The shares are currently trading in a 52-week range of $1.85 and 85 cents.

Amerigo is a company that produces copper and molybdenum concentrate as a by-product at the MVC operation by processing fresh and historic tailings from Codelco’s El Teniente mine, the world’s largest underground copper mine.

MVC lost its connection to the central power grid on June 23, 2023, when three high-voltage power towers owned by MVC collapsed following severe flooding from heavy rains in central Chile. This situation caused a total power outage at MVC.

As reported in the company’s news release on July 12, 2023, Amerigo reduced its annual production guidance by 3.0% to 60.5 million pounds of copper due to lost production from the flooding. The company said the revised copper production guidance remains in place, while the company’s original guidance of 1.0 million pounds of molybdenum remains unchanged.

Amerigo said MVC quickly secured secondary power supply, which allowed the plant to process fresh tailings from El Teniente while repairs were completed. While the extensive repairs required to reconnect to the power grid properly were underway, including installing seven new high-voltage towers, MVC was able to produce 90,000 pounds of copper per day between July 6, 2023, and July 21, 2023.

In the second quarter of 2023, MVC produced 13.6 million pounds of copper, with 65% of production coming from fresh tailings. Copper production to the end of May, 2023 was trending 4.0% over guidance. As a result of the lost production due to the climatic event, cumulative production to June 30, 2023 of 30.15 million pounds was 1.5% below guidance.

In the second quarter of 2023 molybdenum production was 0.3 million pounds. Year to date molybdenum production of 0.6 million pounds was 10.3% over guidance.

“We are pleased to resume normal operations at MVC. I am very proud of the swift response from all members of our team in Chile, which allowed us to reconnect to the power grid as quickly as possible and minimize lost production,’’ said Amerigo President and CEO Aurora Davidson.

“We took this opportunity to make changes to our infrastructure in a way that should provide additional protection to our operation from another event of this type,” she said. Davidson said the disruption from the climatic event will impact the company’s second and third quarter results but will have no lasting impact on Amerigo’s long-term business.