Amerigo Resources Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 4, 2023

There are 8 speakers on the call.

Operator

Good afternoon. My name is JP, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amerigo First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the formal remarks, There Will Be A Question and Answer Session.

Operator

Mr. Graham Farrell of Harbour Access Investor Relations, you may begin your conference.

Speaker 1

Thank you, operator. Good afternoon, and welcome everyone to Amerigo's quarterly conference call to discuss the company's financial results for the Q1 of 2023. We are delighted to have you join us today. This call will cover Amerigo's financial and operating results for the Q1 ended March 31, 2023. Following our prepared remarks, we will open the conference call to a question and answer session.

Speaker 1

Call today will be led by Amerigo's Chief Executive Officer, Aurora Davidson, along with the company's Chief Financial Officer, Carmen Amezquita. Before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call may be forward looking statements. Forward looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions.

Speaker 2

Conference Call. These matters involve certain risks

Speaker 1

and uncertainties. The company's actual results may differ significantly from those projected or suggested by any forward looking statements and to a variety of factors, which are discussed in detail in our SEDAR filings. I will now hand the call over to Aurora Davidson. Please go ahead, Aurora.

Speaker 3

Thank you, Graham. Welcome to Amerigo's earnings call for the Q1 of 2023. I will start with our usual reminder that all dollar figures reported in this call are U. S. Dollars, except where we specifically refer to Canadian dollars.

Speaker 3

With me on the call is Carmen Amezquita, Amerigo's Chief Financial Officer. I will only make a few comments on financial matters as Carmen does a great job providing you with the details on Amerigo's quarterly financial results. This quarter's focus of my remarks is our emerging profile as a uniquely profitable copper producer, proving its ability to return tremendous amounts of cash to its shareholders. To be in our position is almost unheard of today, given the severe challenges facing nearly every company producing natural resources. But Amerigo stands out from our peers and investors are noticing us.

Speaker 3

Our success begins with operational excellence, and that's where I will start my comments today. Amerigo had solid operational results in the Q1, which provided an excellent start to the year. MVC, Our plant in Chile recovered £16,500,000 of copper during the quarter, 4.5% above guidance. And molybdenum production was £300,000 5.2 percent above guidance. Over the last three years, our operational results from MVC have become very consistent, which is extremely important.

Speaker 3

Consistent operations result in predictable cash flow, where commodity prices are the only variables. Consistency also leads to trust, and the market now recognizes Amerigo as a trustworthy operator. Our ability to consistently meet or slightly beat our base production targets is a result of the technical excellence of our team in Chile. They are not complacent. They are observant and will opportunistically tweak our concentrator plant to capture additional copper whenever possible.

Speaker 3

The NDC team continues to do an excellent job maximizing production from whatever we work with, whether fresh or Historical Tailings. The production outperformance we witnessed last quarter exemplifies how well our team along with all the members of Amerigo's Board of Directors visited the MVC operation in Chile. We were also guests of Codelco at the El Teniente Mine and the Karen Tailings Deposit.

Speaker 4

For some

Speaker 3

of our newer investors, El Teniente is the largest underground copper mine in the world. This mine provides us with a fresh tailing stream of input material. And El Teniente has a mine plan that is expected to continue for many decades. Karen is the name of the dam where all the tailings from El Pimiente are deposited, including the tailings that come out of the MVC plant. As I probably showed the MVC operation to the Amerigo board members, I reflected on the remarkable transformation of the operation in just over 3 years.

Speaker 3

Our team has made numerous changes that have allowed us to produce more copper, operate more reliably, Recycle More Water and Reduce Risks That Could Impact Operational Continuity. COVID overhang was also present over most of this period. The Embassy plant and operation strength is the cornerstone of Amerigo's capital return strategy. My outlook for Amerigo is very optimistic. It is based on the reliable operational conditions we have achieved, a strong copper demand supply outlook and the long term nature of our MVC's contract to process tailings.

Speaker 3

During the Q1, Amerigo posted a healthy net income of $9,100,000 and earnings per share of $0.05 However, I want to make again an important distinction. Amerigo is a cash flow story, not an earnings story. In that sense, our EBITDA was $18,500,000 free cash flow to equity was $8,600,000 and capital return to shareholders was $5,500,000 The company's cash position increased by $6,000,000 during the quarter. Amerigo's capital return policy is well built and balanced. Regular quarterly dividends are the cornerstone of this policy.

Speaker 3

We think consistent dividends provide a big incentive for investors to buy and hold our stock. And we have now declared Amerigo's 7th consecutive quarterly dividend. The regularity and safety of these dividends with a current yield of 7.5%, our power amount to Amerigo. Since October 2021, when the company's capital return policy was launched. Amerigo has also repurchased 19,500,000 of its shares.

Speaker 3

This represents almost 11% of the issued and outstanding shares when the policy was initiated. Under the policy, the company has used $23,000,000 to repurchase shares and paid $22,200,000 in dividends. This represents a 51% to 49% Capital Allocation Ratio. The balance is readily apparent. Quarterly dividends and share repurchases and Markets are only 2 of the tools we will ultimately use to return capital to shareholders.

Speaker 3

We are watching copper prices. And as the progression unfolds towards the levels already seen last year, we will look to use a third pool of our policy, which are performance dividends. Let me now address why we think it is only a question of when higher copper prices will occur, not if they will occur. Last quarter copper prices stabilized and found a floor at around $4 per pound. Yesterday's LME spot price was $3.87 per pound.

Speaker 3

Short term data points such as lower than expected consumption or higher than anticipated Chinese metal inventories May have an impact on today's, tomorrow's, maybe next month's or perhaps even next quarter's copper prices. What is relevant is what happens beyond the immediate term. You will not find a serious market analyst who speaks against the fundamentally strong copper outlook. Without a collapse in global demand, The headwinds facing copper producers are just too significant to allow supply to meet the increasing demand. Higher prices is expected to change the geography of copper demand, making developed regions like North America and Europe become increasing consumers of copper again.

Speaker 3

This is a reversal of decades of declining copper intensity to GDP Metrics for Much of the Developed World. Copper demand forecasts continue to be adjusted upwards, and future copper supply gaps are expected to grow even more significantly given the low pipeline of new projects that are ready to start producing copper. Reducing copper continues to be more challenging as time goes by. On previous calls, I have commented on lower ore grades at existing and new mines, water scarcity and deeper deposits. Beyond these realities, Miners must also deal with long and increasing permitting times, ESG matters and non incentivizing political and Taxation Hurdles.

Speaker 3

It is

Speaker 4

a sure bet that the

Speaker 3

projects that the world needs to bring in new copper supply will likely face delays and those timing glitches could trigger fast and strong upward copper price movements. Remember why we continue to make the distinction that Amerigo is not a miner, but a copper producer. We do not face many of the same obstacles hindering the mining industry, but we will undoubtedly benefit from them as they manifest themselves in higher prices. To conclude my remarks, The global landscape is both pressuring and starting to help miners as a new paradigm for critical metals unveils. It will almost certainly spill over into the copper sector.

Speaker 3

The world is gearing up for a new metals centric stage of industrialization and individual countries are determined to keep their share of this value. Recent examples in the news came from Chile, Mexico, Zimbabwe, Indonesia. None of the new government involvement will be helpful in actually increasing production levels of Needed Materials. On the opposite side, Japan announced they would subsidize the cost of smelting and mine development projects of critical minerals. The European Union also is actively seeking mutually beneficial partnerships with emerging producers as part of its critical raw materials policy.

Speaker 3

And the United States has become a direct investor in rare earth processing facilities and guaranteed loans as part of its push Towards U. S. Electric Vehicle Penetration. Increasingly, copper is being categorized as a critical material, and I will not be surprised when the types of announcements we see for lithium and rare earths are soon made for copper as well. This will be the official acknowledgment of Copper's Coal Roll in the future.

Speaker 3

And increasing copper prices will be the signal that precedes this acknowledgment. The rules of the Monopoly game, Mining Edition 2023 are being rewritten. In the middle of all of this is increasing impact of ESG, which governments, environmentalists and investors drive. ESG is an easily visible market distinction for Amerigo, and we're working to promote it. As promised in our last call, Amerigo has launched a new website where we devote space to highlight our 4 year ESG data record, Energy Footprint, Water Utilization, Safety, Diversity and Other Metrics.

Speaker 3

We are in the enviable position to showcase strong ESG credentials that have already been attained, and these credentials convincingly verify our operational sustainability. For all these reasons, I hope you'll agree that Amerigo is genuinely in a unique position with a tremendous value proposition for new and existing shareholders. I will now ask Carmen Amezquita, Amerigo's CFO, to discuss the company's financial results. Karen, please go ahead.

Speaker 4

Thank you, Aurora. We are pleased to present the Q1 2023 quarterly financial report from Amerigo and its MVC operation in Chile. In the Q1 of 2023, Amerigo had a net income of 9,100,000 earnings per share of CAD 0.05 or CAD 0.07 dollars EBITDA of CAD 18,500,000 and operating cash flow before changes in non cash working capital of 13,200,000 On March 31, 2023, the company had a cash and restricted cash balance of $50,300,000 and working capital of $12,600,000 compared to cash and restricted cash balance of $42,000,000 and working capital of $10,000,000 at December 31, 2022. Amerigo's financial performance is sensitive to copper prices. The company's average copper price during Q1 2023 was $4.02 per pound compared to $4.64 per pound in Q1 2022.

Speaker 4

Our earnings are also affected by the changes in copper price from one period to the next. This is so because of our M plus 3 price convention for copper sales. Where the final settlement price is the average London Metal Exchange price for the 3rd month following production of copper concentrate. MVC's Q1 2023 provisional copper price was $4.01 per pound. The final prices for January, February March sales will be the average London Metal Exchange prices for April, May June, respectively.

Speaker 4

A 10% increase or decrease from the $4.01 per pound provisional price used on March 31, 2023, would result in a $6,600,000 change in revenue in Q2 2023 regarding our production from Q1. We now know the April price, which was $4 per pound. Revenue in Q1 2023 was $52,600,000 compared to $53,800,000 in the comparative quarter. This included copper tolling revenue of $44,600,000 and molybdenum revenue of 8,000,000 Within the copper revenue, the gross copper sales were $66,800,000 and there were positive settlement adjustments of 3,400,000 Then, deducted from revenue, we had $18,400,000 in royalties to DET, smelting and refinery costs of $6,700,000 and Transportation Costs of $500,000 Total tolling and production costs, including depreciation, were 39,200,000 This compares to tolling and production costs of $32,300,000 in Q1 2022. Recently increased tolling and production costs included higher power costs, higher direct labor costs and an increase in other direct tolling costs, mostly due to inflationary pressures and a stronger Chilean peso.

Speaker 4

Under other expenses, general and administrative expenses were $1,300,000 compared to $1,600,000 in Q1 twenty twenty 2, resulting mostly from a decrease in salaries, management and professional fees of 300,000 Other gains were $1,500,000 in Q1 2023 compared to 0.7000000 In Q1 2023, the $1,500,000 related almost entirely to a foreign exchange gain, Within Q1 2022, dollars 1,200,000 related to a foreign exchange gain, and this has been offset by $600,000 in write downs of obsolete equipment and supplies. The derivative $3,000,000 expense compared to a $500,000 recovery in Q1 2022. This was due to the change in the fair value of the liability as a result of the change in discount rates used on the calculation of the present value. In Q1 2022, the discount rates increased, thereby decreasing the liability and the salary, Finance expense in Q1 2023 was $800,000 compared to a recovery of $100,000 in Q1 2022, given changes in the mark to market position of interest rate swaps. In Q1 2023, The company recognized an income tax expense of $3,500,000 with a current tax expense of $5,600,000 offset by a deferred income tax recovery of $2,100,000 In respect of cash flow in Q1 2023, Cash flow generated from operating activities before working capital changes was $13,200,000 with cash generated of $18,200,000 after working capital changes.

Speaker 4

Cash flow used in investing activities was $4,400,000 which related entirely to the purchase of plant and equipment. Cash flow used in financing activities was $7,700,000 with $3,600,000 of dividends paid, dollars 1,900,000 in the repurchase of shares, $2,100,000 in increases to restricted cash and $200,000 of lease payments, offset by $100,000 received and the exercise of options. Overall, there was a net increase in cash and cash equivalents of 6,100,000 and Q1 2023 and an ending cash balance of $43,900,000 The company also held $6,400,000 in to Cash. America's cash cost in Q1 was $1.91 per pound, 11% lower than Amerigo's guided annual cash costs. This over performance was caused by our substantial molybdenum byproduct credits in Q1.

Speaker 4

In our guidance, we assumed a molybdenum price of $16 per pound. Amerigo's average molybdenum price in Q1 2023 was almost double that at nearly $32 per pound. We have informed the market that we expected that for every 10% change in molybdenum price, it would impact $0.02 per pound on cash costs. The contribution to lower cash costs from strong molybdenum prices in Q1 was better than expected due to the higher molybdenum production achieved. Our price increased to $31.73 per pound, resulting in a Q1 2023 molybdenum revenue of $8,000,000 compared to a Q1 2022 molybdenum revenue of $3,400,000 The increase in molybdenum prices was due to supply issues and Favorable Demand Drivers in sectors such as Energy and Aerospace.

Speaker 4

However, prices began to drop from the highs of Q1 and are now around $21 per pound. Higher short term supply has dampened prices, and this is primarily subject to volatility in copper production. In our case, our melodulin production is priced predominantly at M+4. We have benefited from higher prices in Q1 and will see negative adjustments in Q2 if current price conditions remain. In Q1, we experienced approximately $0.04 per pound higher than anticipated power costs, resulting from higher than expected pass through charges from the Chilean grid.

Speaker 4

We expect these higher charges will continue throughout 2023. MVC also faced an increase in cash costs of approximately $0.05 per pound associated with the stronger Chilean peso against the U. S. Dollar in Q1, which was 12% stronger in Q1 than our guidance. Our guidance had assumed that for each 10% change in the foreign exchange rate of the Chilean peso to the U.

Speaker 4

S. Dollar, The impact on cash costs would be $0.08 per pound. We will report the Q2 2023 financial results early in August 2023 and want to thank you for your continued interest in the company. We will now take questions from call participants.

Operator

Telephone. You will hear a one tone prompt acknowledging your request. Please ensure you lift the handset if you are using a speakerphone. Your first question comes from the line of Steve Farazani from Sidoti. Your line is now open.

Speaker 5

Good afternoon, Aurora. I appreciate all the detail on the call. I wanted to ask you about what you're seeing in terms of inflationary pressures. Are Are you starting to see any easing? I'm just trying to figure if there'd be any offset from the lower moly price and how you're thinking about cash costs for the back half of the year.

Speaker 3

Steve, thanks for the question. In terms of local Chilean inflationary pressures, they're starting to come down. We're not seeing the same monthly increases that we saw in 2022. The rest of our supply critical Supply inputs such as steel. We negotiated our Steel Supply Costs, the price of the grinding balls for the full year, the same as Lyme.

Speaker 3

So they're not subject to inflationary adjustments. One item that is changing our reagents, but we're seeing as well the flexibility in that sense. And some of the reagents are actually coming down from the higher input costs that we saw in 2022. In general terms, we haven't revised our cash cost guidance for the rest of the year because we're not seeing the necessity to do that. We run our scenarios at the end of March.

Speaker 3

We're receiving the information for April, and everything looks under control with no requirement to adjust. Some of the variables have changed, but the overall end result is remaining in line with what we had expected and within the guided parameter variables that we had announced in January.

Speaker 5

Perfect. That's helpful. Scheduled the annual maintenance shutdown, timing of that and the plan, I guess, it Those in line with how you're sort of de risking your production, can I assume some of the investments you're making during this year's annual maintenance shutdown?

Speaker 3

We'll start the annual Mason shutdown next week on the 9th May. It's going to last 9 days. We do it aligned with the shutdown at El Teniente. Originally, we had planned it based on the information that we had for April. It has been moved forward a month.

Speaker 3

We're ready for it, and we're also advancing well in the construction of the new Cauquenes sump, which is one of the critical CapEx projects that we have. So everything on the maintenance, Engineering CapEx side of things is progressing according to plan.

Speaker 5

Perfect. And then Couldn't get one more in. Just ask about your thoughts here on the share buyback and the potential for the performance dividend, if you can just sort of update your parameters on both of those potential returning cash to shareholders.

Speaker 3

Our policy hasn't changed. We have the 3 vehicles, and I always insist on them, and I actually have to apologize because it may sound repetitive. But for us, it's very important to express why each one of those tools exist and what are the strengths of each one of them. We have continued buying shares, as you saw, in the Q1. And Yes.

Speaker 3

We used all of our normal course issuer bid in 2022 as well. So that will continue To the extent that the macro signals are favorable to that and that The share price considerations still make sense for us and continue to be opportunistic. If copper prices had been stronger and even tensed and stronger in Q1 and has continued so forth. As of the date of this call, I'm pretty sure that performance dividend would have already been declared. We continue to watch the copper price behavior.

Speaker 3

We did the same last year, and it has served as well. As you know, One of the aspects that we have to be mindful of is the fact that we're selling our copper exposed by the 3 months of copper price corrections. And those can be significant when copper prices have Correction. Just to give you a reminder here, Steve, in Q3 of 2022. We had almost $9,000,000 in negative settlement adjustments.

Speaker 3

Q2 of last year, almost $8,000,000 And we were ready for it. We weren't caught off guard. We had the balance sheet strength to face that without any hiccup, not a hair of stress was raised here. So we want to continue with that because the Paramount's philosophy is to protect that sustainable quarterly dividend. And it has worked well and it will continue to work well and timing glitches occur.

Speaker 3

But as I stated in the call, the fundamentals for copper price, which is the driving force behind the share buybacks and the performance dividends Very positive past the immediate scenario ahead of us.

Speaker 5

Excellent. Thanks for all the detail.

Speaker 3

For sure.

Operator

Your next question comes from the line of Terry Fisher from CIBC. Your line is now open.

Speaker 6

Yes, good morning. I guess, it's still good morning for you or I'm not sure. I have three quick questions. But just before that, your introductory remarks, I agree with all of them. But When I was a young analyst, my research director told me when I would go on and on recommending a stock that he said that's fine, but can you put it into a number?

Speaker 6

So I wanted to give you a number that I saw recently from someone named Simon Michaud at Finland's Geographical Society, who said that for 1 generation of renewable technologies, industry would need to produce 4,500,000,000 tonnes of copper, which is 6 times the volume of copper that's been mined throughout history. Just an interesting number. Anyway, the questions. Number 1, I see the electricity costs were up, but I was under the impression that Your electricity cost was locked in under a long term agreement. And I guess I just didn't understand that agreement very well, but Maybe you can elaborate on that a bit.

Speaker 6

The second question is, I read somewhere that Codelco is having some production problems as many in Peru and Chile, but in particular, it'll be El Teniente. So I don't know what that was about. And then the final question, I'll just table it now, is on the share buybacks, if I use your numbers, which are in U. S. Dollars and I convert the one €900,000 to Canadian and divided by the number of shares, all of which are round numbers.

Speaker 6

I come out with a purchase cost for the Q1 of around about $1.60 a share. I don't know how Close that is. What I'm trying to get at is where the Board feels it's the right time to be in there and active on the share buyback. And I look at your Q1 results in the Q1 of last year, If I take this year, it's a 27% return on your equity of $0.74 a share. Last year, it was 49% return on equity.

Speaker 6

So the equity is dramatically understated on the balance sheet. And if I'm a director, I'd be looking at spending money to buy back shares only if that's at a better rate of return on equity that would be my target. If I use 15% at the lower rate of earnings, That's about $1.87 a share. And at the higher $0.09 a quarter, It would be more like $2.40 a share. So can you give me any kind of sense of direction of What would be an upper limit where the share buyback would stop operating because you think you could make better use of the cash in another way?

Speaker 3

Well, you get one of your 3 questions. No, I'm just kidding. I'll answer this to you, then I'll start with the power. Our power contract is 2,037, and it has locked in the power rate that we pay. This is the last year, 2023, when we actually had a base tariff decrease.

Speaker 3

And it's just subject to U. S. CPI adjustments from 1 year to the next. On top of that Base Tariff. We have to pay what are called pass through charges, and those are charges charged to every consumer in Chile.

Speaker 3

Of course, major industrial consumers like ourselves pay the lion's share of the pass through charges from the grid. In our MD and A, we have provided some additional information on where our power variances to budget or to guidance have been this year. And it is basically coming from higher pass through charges coming to all the major industrial Consumers in Chile. Why is this happening, Terry? Because as Chile continues to move to renewable energy supplies, they have to build up Redundancy.

Speaker 3

A significant amount of the renewal supply is coming from wind. Wind is not a super reliable source, so there has to be layers of redundancy built in because It's just absolutely required to ensure that there is reliable power supply. And That cost is being paid by the major consumers. We have looked at the trend for the pass through charger for the rest of the year. There was a hike in January.

Speaker 3

They have remained quantized stable for the rest of February March, and they changed on a monthly basis. So We know that we're going to be having that continued incremental power cost. It's out of our control. It represents Normally, prior years, about 12% of our power costs came from cash recharges. It's now coming up to about 15% or so, but it's not something that is making us change our cash cost guidance.

Speaker 3

So I hope that's clarified on the power cost side of things. Your second question was about El Teniente. Yes, they have released sorry, about Codelco in general, not about El Teniente, and that's an important distinction. They have reported their first quarter results this week, and they have provided details to the Chilean press around that. They have been facing problems in 2 other divisions, mostly Chukti and Ministerales.

Speaker 3

They didn't speak about problems at El Teniente. We're not seeing any significant deviations in El Teniente from the plans that have been shared with MVC for 2023. So that's on that front. The rest of the third question that you had was whether we have reached a stage where share buybacks don't make sense to the company. We haven't, but we analyze that on a consistent basis on every Board meeting, and we had ample discussions about that At the last meeting.

Speaker 3

The value, the intrinsic value of the Amerigo share depends on what your outlook If you want to use a long term copper price of 3.50 You probably wouldn't be buying back shares. Do we think that, that is the long term value of copper? No, we don't. But we monitor that on a Consistent Basis. The two conditions that we have to meet in order to make share buybacks are essentially the protection of the regular dividend based on forecast projections on the rest of the operational, financial and investing commitments that we have On the short term, I would say short term in our case means 18 months at any given point in time and the outlook on copper.

Speaker 3

So It is monitored, and we haven't seen any indications yet to say we're going to put a stop on the share buybacks. But it has to be monitored consistently. It's not just done on an automatic basis.

Speaker 6

If I could ask just one follow-up on that. The 11% number you mentioned that you achieved so far in buying back or reducing shares, Is that net of auction grants? Or is that a gross figure?

Speaker 3

That is the figure based on the number of shares out spending on the day we initiated the capital return policy, which was around £180,000,000

Speaker 6

Okay. That's great, Laura. Thanks very much. I'll look

Operator

at the MD and A

Speaker 6

on the electrical thing. I should have done that before.

Speaker 3

Okay. Not a problem.

Operator

Your next question comes from the line of John Polcari from Mutual of America Capital Management. Your line is now open.

Speaker 2

Thank you. Thank you for taking the call. Several quick questions. I know melanoma is Simply a byproduct. And I wonder if you could comment on the grade of the oxide.

Speaker 2

I understand that variance grades determine the price received in the marketplace, and I wondered what the level of The quality of the grade was that the company is achieving as a byproduct. In other words, 50%. I understand that the oxide can be anywhere from, say, 50% all the

Operator

way up to 80% or

Speaker 2

90% Purity. And I wondered what we are would we deliver the mineral? If you could comment on the quality of it, the level of material that we're actually producing.

Speaker 3

John, we don't comment on our technical sort of final grade characteristics of the moly. Let me just mention that obviously with our client, which is Molymed, we have to meet certain thresholds, and they're all met. We don't have any penalties based on Impurities or Similar Issues With Molly. Just another point of discussion here. Obviously, the material from Cauquenes has a higher molybdenum content than the fresh material.

Speaker 3

That's just another point of reference. And then the other variable for us is the moly grade that we get from the fresh tailings. Last year, we were getting lower than expected molybdenum content in Fresh Tailings. We are getting higher than expected molybdenum content in the Fresh this year. Thus, our production has trended over what we had anticipated in our budget.

Speaker 3

We treat moly as a byproduct. We will not treat our facility in order to produce more moly sort of That's a very simplistic way of answering it. But suffice it to say, all of our commercial requirements for delivery of moly concentrates are being met, and that's the information that we guide on.

Speaker 2

Thank you. So while the volume might go up, it might be tweaked somewhat higher, I'd say the grade is fairly consistent, I guess.

Speaker 3

No, the Gray Ferries. The Gray Ferries.

Speaker 2

Okay. Thank you. The borrowings went up slightly $600,000 from year end to March 31.

Speaker 4

It's a crude interest.

Speaker 3

That is a crude interest.

Speaker 1

For your interest, okay.

Speaker 2

And in the Q1, the company repurchased 1 point 6,000,000 common shares. Shares outstanding declined 500,000. So the difference of $1,100,000 is, I assume, stock grants, options. Is that correct?

Speaker 3

It's not option grants. It's Options Exercise. We have most of our options exercised in the Q1 of each year when the options are about to expire. We get options, management directors and our key employees at NVC get options with a 5 year term, and most of those are usually granted in each February. So that's when you will see most of the activity happening.

Speaker 3

Just another point of comment there, John. Most of the options exercised by Senior Management and Directors are being kept by senior management and directors. You see very little selling event or none at all from senior officers and directors.

Speaker 2

And lastly, is there any change that you would be aware of in terms of the long term weather and precipitation outlook. I know you only comment on the next the forward 18 months for adequacy of water supply. But is there any change in the Global Term Outlook to address the ongoing drought that's been in place for quite a long time?

Speaker 3

No drought conditions continue to be expected in the foreseeable future in Chile. I will invite you to take a look at our Web and see some of the metrics on water utilization. We have become more efficient in capturing industrial water from our own facility compared to where we were 3 years ago, and that has reduced our dependency on rainfall as an important driver. Obviously, rain is important, but it's not as critical as it was for us a few years ago.

Speaker 2

Very good. Thank you and thank you for your time.

Speaker 3

Thank you, John.

Operator

Your next question comes from the line of David Brown, Private Investor. Your line is now open.

Speaker 7

Hello. Thanks for this call. I noticed on your website, you've got 2 Black Oak period where you cannot buy stock. Is it possible for you to set up an automatic stock buyback system where you can still buy stock in a certain range or under certain conditions during these blackout periods?

Speaker 3

No, that's not allowed.

Speaker 7

Okay. That's my question. Thanks very much.

Operator

There are no further questions at this time. Aurora Davidson, please continue.

Speaker 3

Thank you for joining us at the call today. I appreciate your questions and your interest in Amerigo. The recording of the call and a script of the call will be available in the next few days, and they will remain accessible through the Amerigo website. We don't put a termination date on our remarks. You can always go back and check them out.

Speaker 3

We will address you again in August to discuss the 2nd quarter's financial results. As usual, if you have any other further questions about Amerigo, Carmen, Graham or myself are available anytime. Thank you very much.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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Earnings Conference Call
Amerigo Resources Q1 2023
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