Amerigo churns out moly at MVC (April 26, 2005)

Vancouver – Amerigo Resources’ (ARG-T) molybdenum flotation circuit at its Minera Valle Central (MVC) plant is now operational and recovering the metal.

The new circuit extracts molybdenum from the operation’s copper concentrate, which traditionally contains about 0.8% molybdenum. Previously, the company received no credit for moly contained in the concentrate.

Plant construction costs are estimated to come in at under US$3.5 million and it is anticipated the operation will deliver a high rate of return given recent molybdenum prices of over US$33 per pound. An initial shipment of about 25 tonnes of molybdenum concentrate is expected by late-April containing around 25,000 pounds of the metal.

The plant was constructed with excess capacity allowing for increased throughput with future planned increases at MVC.

Molybdenum production in 2005 is anticipated at over 500,000 pounds, increasing to about 1 million pounds for 2006. Production costs are estimated at under US$3 per pound, primarily for the reagents used in the flotation process.

A sales agreement has been entered into with Molybdenos y Metales (MolyMet), one of the worlds largest molybdenum producer, for the concentrate. MolyMet’s conversion facility is located about 75 km north of the MVC operation. The initial 3-year agreement has a US$0.60 per pound base treatment charge plus a participation factor for MolyMet indexed to the metal price.

Codelco receives a flat 10% royalty on molybdenum concentrate sales. An additional royalty is paid to a company associated with Steven Dean and Klaus Zeitler, Amerigo’s chairman and president respectively. The pair initially negotiated the royalty, in lieu of 7.5-million shares, upon assigning the option to acquire MVC to Amerigo in 2003.

MVC has been producing copper concentrate for several years through the reprocessing of tailings from Codelco’s El Teniente mine in central Chile. The operation is forecast to produce 18,000 tonnes of copper (40-million pounds) and 500,000 pounds of molybdenum in 2005.

With 69.5 million shares outstanding, Amerigo posts a market capitalization of about $153 million at its recent trading price of $2.20 per share. The company also has about 20-million warrants listed, exercisable at 70 for a common share, which expire in June 2005.