My latest blog post on Amerigo below. I view the pessimism (undoubtedly by long-suffering longs who are in at higher prices) as a bullish indicator.
by James Kwantes
Amerigo Resources continues to be the copper producer that is being priced by the market like a junior miner.
The company yesterday announced 2012 production numbers that set records for both copper and molybdenum. Copper production was 51.7 million pounds – 11% higher than the 2010 record of 46.6M lbs, with moly coming in at 1.057 million pounds – 35% higher than 2011′s 785,000 lbs.
Through wholly owned subsidiary Minera Valle Central, Amerigo processes tailings from Codelco’s El Teniente mine, the largest underground copper mine in the world. I wrote the company up here on Nov. 7.
The stock is at 65 cents this morning, giving Amerigo a market cap of about $110 million. Shares are up 14% YTD but only 14 cents above their 52-week low (of 51 cents).
Amerigo’s 10-year chart is instructive. The company was motoring along nicely, even paying 13 cents in annual dividends in 2007 and 2008, when the financial crisis hit. The copper price went off a cliff and so did Amerigo stock, with the dividend a casualty. A 4-cent annual dividend, paid semi-annually, was reinstated in 2011.
The copper price has recovered nicely, production of copper and moly is strong and the company is negotiating with Codelco for the right to process tailings from another (higher-grade) tailings pond. MVC just signed a 4-year labour deal with its employees that included $4.5-million worth of signing bonuses that were accounted for in Q3, and as of Jan. 1, the company has lower power costs as a result of a new fixed-price electricity contract.
In short, the groundwork has been laid for a very good 2013, yet shares seem to reflect troubles in the rear-view mirror (including labour disruptions and power hiccups) more than catalysts going forward.
Amerigo announces 2013 production guidance on Jan. 24 and releases 2012 Q4 and full-year financials at market open Feb. 27.