Amerigo confirms resource at Colihues tailings dam

Vancouver An independent technical report commissioned by Amerigo Resources (ARG-T) has confirmed an inferred mineral resource of 213 million tonnes at a grade of 0.262% copper and 0.01% molybdenum at the Colihues tailings dam near Santiago, Chile.

Amerigo processes tailings from the El Tiente mine, one of the largest copper mines in the world, under a long-term contract with the mine’s owner, state-owned Corporacion Nacional del Cobre de Chile (Codelco). The company can extract up to 45,000 tonnes per day of feed material from the Colihues tailings dam, but at present is only processing less than 4,000 tonnes, or less than 3% of the total tailings processed daily. The bulk of production comes from the processing of fresh tailings from El Tiente.

Amerigo had previously disclosed an inferred resource for the Colihues tailing dam, based on estimates provided by Codelco. These “historic estimates” were not compliant with National Instrument 43-101 reporting standards, and therefore could not be used for a proposed short-form prospectus financing of about $15.6 million. To remedy the situation, Amerigo hired a Qualified Person to prepare a technical report that corroborated its previous disclosure.

The newly filed report concluded that the inferred resource from the Colihues tailings dam is more than sufficient to support the company’s stated objective of extracting 45,000 tonnes per day for at least the next 10 years. Assuming year-round operation, this rate of extraction would require 164.25 million tonnes of tailings from Colihues.

Amerigo reported net earnings of US$18 million last year, up from US$10 million in 2004. Cash costs were US$0.60 per lb. in 2005, after molybdenum credits. The company’s contract with Codelco allows it to continue production until 2021.