Producing critical materials from waste - Sustainable copper for the green economy - DECEMBER 2023
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DECEMBER 2 0 2 3
Producing critical materials from waste –
Sustainable copper for the green economy
1
Forward Looking Information
ALL REFERENCES TO DOLLARS ARE US DOLLARS, UNLESS OTHERWISE negotiations with government and other third parties, unanticipated metallurgical
INDICATED difficulties, delays associated with permits, approvals and permit appeals, ground
control problems, adverse weather conditions, process upsets and equipment
This presentation contains certain forward-looking information as defined in applicable malfunctions; risks associated with labour disturbances and availability of skilled labour
securities laws (collectively referred to as "forward-looking statements"). These and management; risks related to the potential impact of global or national health
statements relate to future events or the Company’s future performance. All statements concerns, including COVID-19, and the inability of employees to access sufficient
other than statements of historical fact are forward-looking statements. The use of any healthcare; government or regulatory actions or inactions, fluctuations in the market
of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", prices of our principal commodities, which are cyclical and subject to substantial price
"predict", "potential", "should", "believe" and similar expressions is intended to identify fluctuations; risks created through competition for mining projects and properties; risks
forward-looking statements. These forward-looking statements include but are not associated with lack of access to markets; risks associated with availability of and our
limited to, statements concerning: ability to obtain both tailings from Codelco’s Division El Teniente’s current production
• forecasted production and operating costs; and historic tailings from tailings deposits; risks with respect to the ability of the
• our being a profitable long-term copper producer; Company to draw down funds from bank facilities and lines of credit, and the availability
• our strategies and objectives; of and ability of the Company to obtain adequate funding on reasonable terms for
• our estimates of the availability and quantity of tailings, and the quality of our mine expansions and acquisitions; mine plan estimates; risks posed by fluctuations in
plan estimates; exchange rates and interest rates, as well as general economic conditions; risks
• the demand for and supply of copper, molybdenum, and other commodities and associated with environmental compliance and changes in environmental legislation
materials that we produce, sell and use; and regulation; risks associated with our dependence on third parties for the provision
• sensitivity of our financial results and share price to changes in commodity prices; of critical services; risks associated with non-performance by contractual
• the expected amount of MVC’s annual free cash flow that will become available for counterparties; title risks; social and political risks associated with operations in foreign
distribution to Amerigo shareholders; countries; risks of changes in laws affecting our operations or their interpretation,
• the production capacity of our operations, our planned production levels and future including foreign exchange controls; and risks associated with tax reassessments and
production; legal proceedings. Many of these risks and uncertainties apply not only to the Company
• our financial and operating objectives; and and its operations, but also to Codelco and its operations. Codelco’s ongoing mining
• general business and economic conditions. operations provide a significant portion of the materials MVC processes and its
resulting metals production, therefore these risks and uncertainties may also affect their
These forward-looking statements involve known and unknown risks, uncertainties and operations and in turn have a material effect on the Company.
other factors that may cause actual results or events to differ materially from those
anticipated in such statements. Inherent in forward-looking statements are risks and
uncertainties beyond our ability to predict or control, including risks that may affect our
operating or capital plans; risks generally encountered in the permitting and
development of mineral projects such as unusual or unexpected geological formations,
2
Forward Looking Information
ALL REFERENCES TO DOLLARS ARE US DOLLARS, UNLESS OTHERWISE • tax benefits and tax rates;
INDICATED • the outcome of our copper concentrate sales and treatment and refining charge
negotiations;
Actual results and developments are likely to differ, and may differ materially, from • the resolution of environmental and other proceedings or disputes;
those expressed or implied by the forward-looking statements contained in this • the future supply of reasonably priced power;
presentation. Such statements are based on a number of assumptions which may • rainfall in the vicinity of MVC returning to normal levels;
prove to be incorrect, including, but not limited to, assumptions about: • average recoveries for fresh tailings and Cauquenes tailings;
• general business and economic conditions; • our ability to obtain, comply with and renew permits and licenses in a timely
• interest and currency exchange rates; manner; and
• changes in commodity and power prices; • our ongoing relations with our employees and entities with which we do business.
• •acts of foreign governments and the outcome of legal proceedings; Future production levels and cost estimates assume there are no adverse mining or
• the supply and demand for, deliveries of, and the level and volatility of prices of other events which significantly affect budgeted production levels.
copper and other commodities and products used in our operations;
• the ongoing supply of material for processing from Codelco’s current mining Although the Company believes that these assumptions were reasonable when made,
operations; because these assumptions are inherently subject to significant uncertainties and
• the grade and projected recoveries of tailings processed by MVC; contingencies which are difficult or impossible to predict and are beyond the Company’s
• the ability of the Company to profitably extract and process material from the control, the Company cannot assure that it will achieve or accomplish the expectations,
Cauquenes tailings deposit; beliefs or projections described in the forward-looking statements.
• the timing of the receipt of and retention of permits and other regulatory and
governmental approvals; We caution you that the foregoing list of important factors and assumptions is not
• our costs of production and our production and productivity levels, as well as those exhaustive. Other events or circumstances could cause our actual results to differ
of our competitors; materially from those estimated or projected and expressed in, or implied by, our
• changes in credit market conditions and conditions in financial markets generally; forward-looking statements. You should also carefully consider the matters discussed
• our ability to procure equipment and operating supplies in sufficient quantities and under Risk Factors in Amerigo’s Annual Information Form. The forward-looking
on a timely basis; statements contained herein speak only as of the date of the presentation and except
• the availability of qualified employees and contractors for our operations; as required by law, we undertake no obligation to update publicly or otherwise revise
• our ability to attract and retain skilled staff; any forward-looking statements or the foregoing list of factors, whether as a result of
• the satisfactory negotiation of collective agreements with unionized employees; new information or future events or otherwise.
• the impact of changes in foreign exchange rates and capital repatriation on our
costs and results;
• costs of closure of various operations;
• market competition;
3Value Proposition
WE R EC OVER C OPPER IN A WE C R EA TE TR U ST-B A SED R ELA TION SH IPS
“C OPPER FA C TOR Y” WITH LON G- TE R M IN V E S TOR S
Simple and sustainable business model; predictable Yield, ESG, Value – Single and Multiple Family Offices,
operations and cash flow Mutual Funds
WE PA Y A C ON SISTEN T YIELD WITH WE H A VE U N IQU E ESG C R ED EN TIA LS
PER FOR M A N C E K IC K ER S
Producing critical materials from waste streams
Current yield: 8.7% on regular dividends
(based on November 30, 2023 share price)
4Corporate Structure
CAPITALIZATION SHAREHOLDERS
Shares outstanding1 164.8 M Retail
Investors
13% Management &
Options1 (average exercise price Cdn$1.26) 10.8 M
Board
21%
Share price1 Cdn$1.38
Market cap1 $168.3 M Aegis
Financial
Corp.
Other Institutional
Yield1 8.7% 13%
Investors
53%
Capital Returned in 2022 $28.0 M
Enterprise Value2 $169.9 M
Management & Board Aegis Financial Corp.
Cash and Restricted Cash2 $19.4 M ANALYST COVERAGE
Other Institutional Investors
Retail Investors
Debt1 $21.0 M Steve Ferazani
1 At November 30, 2023
2 At September 30, 2023 56
How we do it
We receive waste We process the We get market We return profits
streams from one waste streams to prices for the to shareholders.
of Chile’s largest recover copper recovered copper
copper mines and molybdenum and molybdenum
7The Amerigo process
Wastewater treatment process
The Amerigo concentrator plant treats waste
The Amerigo
material from a copper mine to produce copper
and molybdenum.
process Primary classification: Performed on the
incoming waste material to separate the fine
and coarse fractions.
Grinding: Coarse material is subjected to
Amerigo is essentially a Biological oxidation: Wastewater is grinding in conventional ball mills. The fine
wastewater treatment pumped to aeration tanks and mixed fraction is subjected to scavenging skim
flotation in a cascade system.
plant – both are simple and with air and bacteria- loaded sludge to
break down organic matter. Flotation: Ground coarse fraction is sent to a
proven technologies rougher/cleaner flotation circuit to produce a
Sedimentation: The treated effluent combined bulk copper/moly concentrate,
then flows to other sedimentation tanks reground, and cleaned by selective flotation to
to remove excess bacteria. separate moly. Concentrates go through
Chlorine Contact: Effluent from thickening and filtration.
sedimentation tanks is disinfected with
chlorine. Final material goes through water thickeners
before being discharged from the facility.
8United Utilities PLC Amerigo (8.7% yield)
(4.3% yield)
Veolia (3.9% yield)
Amerigo’s Profitability derived from current demand
for critical materials
Comparatives Profitability enhanced by upcoming
to Wastewater increased demand for critical materials
Treatment Ongoing Capex requirements to Multiple years of operations with low
Companies
maintain operations sustaining Capex
Constraints on returning capital to
shareholders Able to maximize return of capital to
shareholders
Often adversarial relationships in
multiple jurisdictions Cooperative strategic relationship in a
single, preferred jurisdiction
9Our ESG Credentials
(Established and Bona fide)
CIRCULAR ECONOMY
Capturing lost value of critical materials
LOCAL EMPLOYMENT
1,100+ direct jobs in Chile
DIVERSITY
Diverse Board and C-Suite representation
ENERGY
Renewable powered operations
ENVIRONMENT
Reduction of third-party environmental liabilities
H2O EFFICIENCY
Extremely efficient water reutilization
10 We have no environmental liabilities
We do not explore for future reserves
We employ no geologists
We have minimal sustaining Capex
We eliminate the world’s need for a 30,000 TPA
copper mine
11Copper is the “salary
of Chile” – building
block of the economy
and social contract
Operations located Amerigo has a +30-
in Chile, the world’s year strategic
leading copper relationship with
producer Codelco’s El Teniente
mine
Chile
Minimal
Jurisdictional
Codelco is Chile’s
Risk
state-owned copper Amerigo provides
producer - largest additional copper
global copper produce and income to Chile
Fraser Institute Overall Ranking (2020): Chile 7.56; Canada 7.81l United States 7.97 (scores shown are out of 10).
12
1213
Amerigo's Multi-year Capital Allocation Strategy:
A Long Term View
Variances are Expected and Can Be Absorbed Normalized assumptions Variance against LT assumptions
2022 2023 2024 2025
Q1 Q2 Q3 Q4
Major assumptions
MVC production stable > 60 M lbs per year 3 years of outperformance, proven operational excellency
Copper prices stable to up Global electrification supportive of increased demand + declining supply
Chilean peso stable to weak LT Chilean peso has been weakening against USD for 10 years
Sustaining Capex stable LT $8M per year $100M expansion Capex has been spent. Capex is only sustaining/risk mitigation
Declining debt levels Debt declining by $7M/year, debt-free in June 2026, leases have been paid
Working capital line of credit in place $15M LOC in place to weather short-term working capital gaps
Short-term variances
3.4% over 4.5% over Normal
Production guidance guidance
Flooding/historic rains
expected
Copper price $4/lb $3.85/lb to 11/30 despite perceptions
Returning to
Chilean peso : USD Normal Strong CLP Strong CLP
normal
Sustaining Capex Normal Normal
Normal High Capex Year of $16M: New Sump, Transformer
expected expected
14A Simple Capital Return Model With
Proven Success
Quarterly dividends
As we do not require (safe, predictable,
growth capital, we can paid each quarter)
return capital to
shareholders
Performance dividends
(flexible in all aspects) Share buybacks
(Normal Course Issuer
Bids, Substantial Bids)
15Foundations of the Capital Return Model
16Appendices
Water Supply – A Managed and Controlled Risk
Chile faced drought conditions for 10 years until mid-2023
Amerigo took steps to mitigate water supply risk and ensure having water
reserves to operate for at least 18 months without curtailing operations
during the drought
Multiple sources of water: water from fresh tailings, water rights,
recirculated water (water thickeners), rainfall and surplus water stored in
water dam
Water reserves on November 30, 2023: >10.0 MM m3
(Sufficient for > 18 months of operations)
182023: From Drought to Floods
Operational Flexibility is Part of our DNA
We started here:
Original Guidance (January 17) Full-year guidance of 62.3 M lbs
Q1: 16.5 M lbs (Actual)
Q2: 13.6 M lbs (Actual)
+4.5% over guidance
Through End of May +4.0% over guidance End of June -1.5%
below guidance
Flood Full-year guidance of 60.5 M lbs
Revised Guidance (July 25):
event Including Q3: 13.8 M lbs & Q4: 16.6 M lbs
Revised Guidance (Sept. 11): Historic Full-year guidance of 57.8 M lbs
Including Q3: 11.1 M lbs & Q4: 16.6 M lbs
rainfall
19El Teniente Royalties
($/lb)
Sliding scale tied to copper prices Cu price Royalty
$ 3.00 $ 0.71
Cu price Royalty Royalty
($/lb) factor ($/lb) $ 3.20 $ 0.79
Fresh tailings $ 1.95 13.5% $ 0.26
$ 3.40 $ 0.88
$ 4.80 28.4% $ 1.36
$ 3.50 $ 0.92
Cauquenes $ 1.95 16% $ 0.31
$ 3.60 $ 0.97
$ 5.50 39% $ 2.15
$ 3.80 $ 1.06
Outside of these price ranges, parties $ 4.00 $ 1.16
would meet to reset royalty factors $ 4.20 $ 1.27
$ 4.40 $ 1.37
The table shows the El Teniente copper $ 4.60 $ 1.48
royalties in 2023 at various copper $ 4.80 $ 1.59
prices
20Moly by-product credit
($/lb)
MVC produces molybdenum as a by- Moly price
Credit to Cash
Cost
product (2023 guidance: 1.0 M lbs)
$ 14.00 $ (0.19)
When talking about cash cost (a non- $ 16.00 $ (0.21)
GAAP measure) moly is considered a $ 18.00 $ (0.24)
“credit” to cash cost $ 20.00 $ (0.27)
$ 22.00 $ (0.29)
At the right moly market price, the
contribution of the moly by-product $ 24.00 $ (0.32)
credit to cash cost can be significant $ 26.00 $ (0.35)
$ 28.00 $ (0.37)
The table shows the moly-by product
$ 30.00 $ (0.40)
credit to cash cost in 2023 at various
$ 32.00 $ (0.43)
moly prices
$ 34.00 $ (0.45)
21Management
Aurora Davidson Dr. Klaus Zeitler Carmen Amezquita Christian Cáceres
President, CEO & Director Executive Chairman & Director Chief Financial Officer General Manager, MVC
Ms. Davidson has been with Amerigo Dr. Zeitler founded Amerigo in 2003. He Ms. Amezquita is a Chartered Mr. Cáceres is a Metallurgical
since 2003. She is a Chartered has more than 50 years of experience in Professional Accountant having Engineer with an MBA, and is a
Professional Accountant (CPA, CGA) the mining industry and has financed, received her Chartered Accountant Registered Member of the Chilean
with over 30 years of international built and managed base metal and gold designation in 2010. Prior to joining Mining Commission. He has over 30
experience in financial and general mines throughout the world with a total Amerigo, Ms. Amezquita worked as years of experience in metallurgical
business management. She has investment value of more than $4 billion. the Chief Financial Officer and processes, tailings processing, water
assisted numerous private and public He was founder and first CEO of Inmet Controller of public companies in the recovery, engineering projects,
companies in the mining, engineering Mining Corporation and a director of mining industry. She holds a Bachelor operation management and
and high-technology sectors as Chief Teck Corp. and Cominco Limited for of Arts degree from UBC and has a sustainability, leading MVC as
Financial Officer, Vice President, many years. Diploma in Accounting from the UBC General Manager since 2015.
Finance and Corporate Controller. Sauder School of Business
22Directors
Dr. Klaus Zeitler Robert Gayton George Ireland Alberto Salas
Executive Chairman & Director Lead Independent Director Director Director
Dr. Zeitler founded Amerigo in 2003. He Dr. Gayton, FCDA (FCA) is a Chartered George Ireland has almost 40 years of Alberto Salas is a mining entrepreneur,
has more than 50 years of experience in Professional Accountant (CPA, CA) with experience in the mining and metals former President of Chile’s National
the mining industry and has financed, a Ph.D. in Business from the University industry in positions ranging from field Mining Society, former Chairman of
built and managed base metal and gold of California, Berkeley. geologist and operations to banking. Chile’s SQM and Chairman of the
mines throughout the world. National Institute of Professional
Training (INACAP), Chile’s largest
higher education and training institute.
Michael Luzich Aurora Davidson
Margot Naudie
Director President, CEO & Director
Director
Mr. Luzich is the founder of Luzich Margot Naudie is a seasoned 25-year Ms. Davidson has been with
Partners LLC, a multi-strategy capital markets professional with global Amerigo since 2003. She is a
investment firm formed in 2013 and a investment expertise as a Senior Portfolio Chartered Professional
significant shareholder in the Company. Manager for long-only and long/short Accountant (CPA, CGA) with over
North American and global natural 30 years of international
resource portfolios. experience in financial and
general business management.
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