August 3, 2012 / 1:58 PM / in 5 years

Amerigo Resources posts loss on higher extraction costs

Aug 3(Reuters) - Canadian copper and molybdenum producer Amerigo Resources Ltd posted a quarterly loss as extraction costs rose and metal recoveries were lower.

The Chile-focused company, which has been grappling with high power costs due to a drought in the country, however, said power costs are expected to be lower for the rest of the year and fall further in 2013.

Amerigo expects mining conditions to improve in the second half of the year.

Net loss in the second quarter was $1 million, or 1 cent per share, compared with a profit of $1.9 million, or 1 cent per share, a year earlier.

The company said net profit was reduced by about $1 million due to a one-time accounting driven change in labor costs.

Revenue rose 4 percent to $40 million on higher copper and molybdenum sales.

Copper production increased 22 percent to 11.57 million pounds, while molybdenum production rose 20 percent in the quarter.

The company’s primary mine, Minera Valle Central (MVC), is located in Chile. The MVC project produces copper and molybdenum concentrates from the tailings of the world’s largest underground copper mine, El Teniente, operated by Codelco .

Power costs rose 18 percent to $12.6 million in the quarter.

The company said it remains on track to meet or exceed its production forecast of 50 million pounds of copper for the year.

Shares of Amerigo, which has a market value of about C$105 million, were trading flat at 62 Canadian cents on Friday morning on the Toronto Stock Exchange.

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