Amerigo’s copper yield down, moly up

Vancouver – Niche producer Amerigo Resources (ARG-T) is facing a drop in copper output from its Minera Valle Central (MVC) operation, just south of Santiago, Chile, however molybdenum recoveries are expected to rise.

At the company’s recent AGM, president Klaus Zeitler indicated 2005 copper production from MVC will likely fall about 15-20% short of the projected 18,000 tonnes. Zeitler laid the blame on “underperformance of extraction equipment at the Colihues tailings dam.”

Colihues tailings extraction has relied on system of pumps onboard dredging barges used on the flooded impoundment, including excavator-cutting assemblies to aid in the break-up of the sub-aqueous tailings. Amerigo plans to implement a new strategy, utilizing hydraulic monitors, commencing in early-2006.

Colihues is a 368-hectare flooded impoundment used by Chilean copper-giant Codelco for a decade, from 1977-87, as a repository for its El Teniente tailings. It contains over 200 million tonnes of tailings with an average grade of about 0.27% total copper; more than double that of the current fresh tailings averaging about 0.11% copper.

Offsetting the copper shortfall is MVC’s molybdenum production. Recoveries from the molybdenum flotation circuit, constructed earlier this year, have exceeded expectations. Zeitler expects this year’s molybdenum output to surpass the originally estimated 500,000 pounds by 20%. Given the metal’s buoyant price level of US$35 per pound, Amerigo is unlikely see any significant financial impact due to its drop in copper yield.

Amerigo recently entered into a tolling arrangement with Codelco’s Chuquicamata division, whereby MVC will process 4,000 tonnes of molybdenum-copper bulk concentrate, producing saleable copper and molybdenum concentrates. The company anticipates the capital costs for the new molybdenum flotation circuit at MVC will be repaid from less than three months of operating profits.

Amerigo produces copper-molybdenum by reprocessing current and past tailings from Codelco’s El Teniente mine. Production for 2005 is forecast at 15,000 tonnes of copper and 600,000 pounds of molybdenum.