Aurora Davidson - CFO and EVP Robert Henderson - CEO and President

Stephen Ottridge - Vancouver Joseph Reagor - Newport Beach John Polcari - New York

Thank you. Welcome to the First Quarter 2018 Investor Conference Call of Amerigo Resources.

I am Aurora Davidson, Executive Vice President and Chief Financial Officer of the company. Before we begin the presentation, let me caution you that our comments and discussions will include forward-looking information within the meaning of applicable securities legislation.

Forward-looking information will include, among other things, forecasts and projections about our copper production for the year, which involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from such forecast and projections. Therefore, although we believe that anticipated future results, performance or achievements expressed or implied by the forward-looking information are based on reasonable assumptions and expectations, you should not place undue reliance on such forward-looking information.

We direct you to our press release issued on May 8 on our other documents that have been filed with the securities authorities in Canada, including our annual information Form under the heading, description Of The Business Risk Factors. This document describes the material factors and assumptions that were applied in drawing the conclusions and making the forecast and projections as reflected in the forward-looking information and the material factors that could cause actual results, performance or achievements to differ materially.

Except as required by law, we undertake no obligation to update or revise any forward-looking information made in this presentation. Rob Henderson, the company's President and Chief Executive Officer, will now provide an operational and corporate update.

Thank you, Aurora, and thank you everyone for joining the call. As you have seen, we had a solid first quarter and I believe we’re well in the way of achieving our objectives for 2018.

For the first quarter of this year, our revenue was $34 million and operating cash flow was $6 million, some 40% higher than a year ago in Q1 2017. This is due to the higher copper price which has increased from $2.65 a pound a year ago to $3.09 which we recorded in the quarter.

As a result, we reported first quarter earnings of $1.2 million and our cash balance increased to $30 million up from $27 million at the end of last year. In the quarter MVC produced 14.2 million pounds of copper at a cash cost of $1.77 a pound.

This quantify of copper includes 8.9 million pounds from the historic Cauquenes deposit, and 5.3 million pounds from El Teniente's fresh tailings. MVC is molybdenum plant produced 0.4 million pounds of moly in the quarter.

MVC's cash costs and total costs are slightly higher than a year ago due to a stronger Chilean peso, increased power transmission cost and higher royalties due to higher copper prices. These costs increases have been partially offset sales by the high moly byproduct credits which were getting due to high molybdenum price.

We continue to expect our full year production of 65 million to 70 million tons of copper at an annual cash cost of $1.45 to $1.60 per pound of copper. Molybdenum production for the year is expected to be 1.8 million pounds.

As I said previously, the first half of the year we will see slightly lower production from Cauquenes as the mine plan extracts lower quality material and cash costs for the first half of 2018 will forecast to be approximately $1.80 a pound which dropped to $1.45 per pound in the second half of the year when additional copper from the expansion project comes online. Construction of the Cauquenes Phase 2 expansion project is proceeding well and we’re on schedule and on budget.

At the end of April the project was 56% complete and MVC have committed $32 million out of the $35 million budget. Mechanical installation of the co-location has commenced and process plant equipment is now been installed on the foundation.

The months of May and June we will see a spike in contract activity at MVC as the electrical and might be installation teams get to work. The concentrated redrive mill would be another five that is going to be shift late from China and is on schedule to arrive at site in August.

However, the new flotation plant is still unscheduled for producing concentrates in early August this year and we continue to expect Q4 the project to be delivering 85 million to 95 million pounds of copper per annum. Our key objectives in 2018 remain first to deliver on guidance, which is £65 million to £70 million at a cash cost to develop of $0.45 to $0.60 per pound.

Second to complete construction of the second phase of the expansion project, and ramp up smoothly to full production in Q4. Once the bank project completion tests or completes, we will then be in a position to distribute cash in the form of dividend.

Our third objective is to ensure MVC's liquidity and to continue to pay down debt. We plan to draw the remaining $17.5 million from the Phase 2 expansion learn and at the end of the year maintain our totaling borrowings at $67.5 million.

Over the last three years, we have made a substantial investment into MVC during a low and a copper price cycle, and I believe we are very well-positioned to take advantage of future increases in copper price. I'll now hand back to Aurora to discuss the financials.

Thank you, Rob. As Rob mentioned the first quarter of 2018 was a favorable quarter with performance trending slightly better than expected.

Production and cash cost targets were met and annual guidance is being maintained of Cauquenes Phase 2 expansion is progressing on time and on budget. On a positive note, moly prices increased 36% from a price of $9.37 per pound in December to price of $12.73 per pound in March.

As a result moly revenue was $4.5 million in the first quarter was at the same level as the combined moly revenue and molybdenum revenue reported in Q1 of 2017. Results for the quarter included net income of $1.2 million or $0.01 per share and cash flow generated from operations before working capital changes of $5.9 million.

Including changes in working capital, Amerigo generated cash of 9.4 million in the quarter. We have taken $5.8 million debt proceeds for the phase Cauquenes expansion and paid $10.3 million for CapEx including Phase 2 as were stated in CapEx.

We also repaid $3 million on the El Teniente debt. Our ending cash position was strong at almost $30 million compared to $27.5 million at the end of December.

Copper prices were also stable in the first quarter. MVC's copper price was $3.09 per pound and there were positive price settlement adjustments to prior unit sales for almost $1 million.

The company remains fully unhedged. The Chilean peso appreciated 8% compared to Q1 2017 which is our comparative period in the financial statement in MD&A and 5% compared to quarter four of 2017.

This has impacted cost that originate in Chilean pesos such as waiver, subcontractors and maintenance. Despite this pressure MVC continues to focus very strongly on cost controls.

Input cost such as steel online has also become more expensive but not beyond our annual budget and projection. Q1 2018 we saw an increase of 8% in power cost which translates to approximately $600,000 due to higher power of transmission charges in Chile, that stem out of new regulation introduced by the formal Chilean government.

We are in the processes of challenging needs to add changes with relevant authority in Chile. The current quarter is also progressing well consistent with the company's guidance for a conservative good first half of the year and a stronger second half as the Phase 2 expansion comes online.

We expect further remaining capacity of the Cauquenes Phase 2 loan and we will start repaying that loan as currently anticipated in our bank agreements in June 2019. We also continue to making the scheduled El Teniente debt prepayments at $1 million per months and the final payment is scheduled for the month of September.

The Cauquenes Phase 1 loan will continue with semi-annual payments of $5.5 million with interest in June and December and at this rate the company’s bank cash at year end is expected to be shy of $68 million with $7.5 million on bank of financing associated with the moly plant expansion. As we have mentioned before, we will continue to monitor the options available to the company with respect to the best uses expected surplus cash which could include any combination of debt prepayment financing the statement of dividend et cetera.

The bank loans have cash provision for 50% of the cash available for the distribution by the end of peak once the completion task for the Phase 2 expansion is met. The Board is continuing to monitor the company's capital structure and the best utilization of surplus cash.

Rob and I will now take questions from call participants.

For Rob, the concentrate the grind what exactly is it purpose? Well I'm trying to get for the name the concentrate only being produced and you got to regrind that?

So what’s happens we have a rougher floatation circuit and a cleaner floatation circuit. The rougher is essentially the first pass so the concentrate grade coming off the roughers in order of 2% to 3% copper, and the cleaner concentrate circuit we upgrade that to 30% grade which is then salable.

What the regrind mill does is breakdown the most particles which then assists in achieving the final grade. We have an existing regrind mill which is underutilized but the Cauquenes material is inherently very fine.

So by not having to regrind mills, you’re going to lose maybe about 2% to 3% recovery when it’s not there. So we believe that start-up can continue quite smoothly without the regrind mill so we’re going to startup the producer concentrates making a saleable grade albeit at a slightly lower recovery then the ultimate target.

And then when we bring the regrind mill on, we then can hit our target recovery. So that will a little bit of slower start up but we certainly don’t see any materially impact in our completion test or our production guidance.

The other question - the sustaining CapEx was 4.1 million in Q1, what are the forecast for the balance of the year?

We're still on target for 5.5 and sustaining so what happened in Q1 we installed the two new Samsung Cauquenes and those take us down to the 37 meter level. So they're done and that will be lion share of that cost.

The remaining stuff for rest of the year is essentially just maintenance and smaller projects that the big sums are now in place and starting to deliver.

And another one for you, does Codelco effectively take control of the concentrate you produced that the plant gave is that how it effectively works?

At the yard, we produced the concentrate Codelco is in charge of transportation. So as soon as they start loading their trucks they take the concentrate its their responsibility so it’s even before could start.

Any chance of other tolling contracts that you had like you had with Maricunga?

Not that we’re aware of, I mean some may pop up but we haven't been actively looking for tolling type contracts. We are doing studies on other tailings materials but nothing to report back yet.

And one other one, your percentage recovery was up in Q1 of the tailings and was that by using some of the new floatation that's being added already in Q1?

No, I think it's just a function of top grade. Q1 recovery last year was pretty poor because we had problems with one of the mills.

So our recovery in Q1 last year was kind of abnormally low. In fact the recovery we're seeing right now is slightly below average, so we expect recovery to continue to improve as the grade improves in Cauquenes.

One final one for you. How much of this phase to expansion that you're doing now is currently being used in processing?

None. Some part was running but the news has not been used yet.

So first congrats on another strong quarter. It's good to see the positive cash flow.

You guys moving forward with all the installations of Phase 2, just big picture, have you guys become any more active on the M&A front. Are you still feeling like you guys need to get through all this freestyle looking at other things, any color you can give there?

Obviously our focus right now is to complete the Phase 2 expansion so that's where the team is dedicating the majority of their time and we are looking at other tailings projects in the preliminary phase of doing an initial test work and preliminary studies. We haven't come to any firm conclusions yet to identify any other hot tailings projects but we do continue to look for other tailings opportunities which we can deliver value like we have done in from El Teniente's but nothing to report back yet.

And then you know looking at kind of trailing 12 months valuation basis, I mean I realize you guys small cap and most of your peers are not but you guys trade a significantly lower valuation. Do you think that the Phase 2 in all work that's come with that, all the focus by the company is kind of left room for more marketing on management's part, maybe a lack of understanding out there in the market of kind of where you guys are at today and where you're going?

I believe you're correct. We're you know we're on the cusp I believe of becoming a more material company I think possibly a bit of a curiosity with the intermediate to small production levels certainly at £85 million to £90 million will be a lot more comparable to our peers and our all in cash costs will be very competitive to a bunch of other market participants.

So, I certainly think in Q4 this year will be a time to raise the flag and promote to the industry what it is that we're doing. So right now it kind of promises of what's going to happen but in Q4, I think we can go out and demonstrate a much stronger cash flows thanks to the expansions, yes, Q4 be time for more intensive our activity.

Rob just a few quick questions. The breakeven cost drops considerably upon contract expansion completion.

Is that and if anything happens after you are fully ramped up or does it gradually take place over the next six months. In other words, with the third quarter you see some reduced costs and then further cost reductions in the fourth quarter and then much lower costs at the end of the year or is it just something that happens when you actually split the switch so to speak?

There will be a ramp up of course from where we are currently at. And until we hit that steady state, production of £5 million up to £90 million.

The period August, September, October I think is going to be a bit of a transition to the lower cost scenario ending at 45. We have molybdenum plants also coming online.

We're expanding the molybdenum plant so that expansion is going to be also coming online at the same period in August/September timeframe. So right now moly is giving us a very good boost in our cash costs with the increased moly production in that timeframe will increase copper production we’re going to see costs trending down over that three month time period.

And what we have is - to the end the production as a completion test to the banks so we have to maintain two months at a certain production rates and then we have to certify that all the equipment is in place and constructed as intended, and then we essentially are out of the touches of the banks as it were and free to distribute 50% of our cash in a manner we seem as appropriate. So we see that happening towards the end of the year and Q1 2019 when we are - complete with the project.

Well I understand the ramp up at year end or from August on to a year end but from say, May now through August, is there any series of events that gradually further reduces costs or at the moment do the costs remain fairly steady?

I think what we're seeing as I guided in the previous call, the first half of the year we're seeing cash flow - we plan to have cash costs in order of 80, we’re coming in a bit under that but certainly Q2 see big changes to that. There's no drivers that would indicate one way or another that's going to change fundamentally from that.

And really there's a big change is the increased production coming in Q3 and Q4. So it's really in the first half of the year is still relatively soft in terms of costs and becoming a much more focused in Q3 and Q4.

Rob or maybe I should ask Aurora half of that is restricted on the discretionary cash flow not the half that would be opened to the Board or management's discretion but to have such restricted is that exclusively dedicated to debt repayment?

It is.

And can you tell me what was the delay from China again I just missed that in terms of delivery?

We've got a small regrinding mill in which we used to polish up the concentrates. The 5 shops in China have been maxed out and they missed some key foundry dates.

So they've advised us that the ball mill is going to need about two months later than we expected. So fabrication is still proceeding but they missed some key windows in a couple of months ago and the consequence ball mill is only going to be arriving at sites in August now.

Ball mill installation will happen concurrently with the ramp up in the concentrate production from the new growth plant.

Are you obviously happy with the quality of what you're getting from China in terms of delivery?

We’ve got some Chinese motors, we are getting Chinese grinding steel right now. Quality is very good.

Rob could you just over the tax regime again just quickly you were explaining that a recent change?

You're talking about tax, there aren’t any changes in taxes there was comprehensive tax reform into this gradually over the last three years. We're at - this is the last year in which static rates have gone up to 27% and there we are at now with no changes we’re seeing for the year.

That's another 2% or 3% increase right over a rolling increase somewhat.

1.5% to 0.5% increase compared to last year.

And it would top out of 27%.

It is top out now like 27.

Q4 starting at the beginning of this year?

Yes.

And lastly just what would you think that level would be upon the books - let's say the pro forma estimate of project completion time at the end of the year or early '19?

Well we have the benefit of accelerating deprecation and regimes in Chile, so we are - with the expansion for the Phase 1 and Phase 2 and the benefit of being able to deduct that in an accelerated basis, you'll not see a full 27% taxable rate. Our current rates are going to be lower for the remaining - for the next four or five years until we utilize that will benefit and accelerate depreciation

No, I meant the actual dollar amount of debt, sorry.

68 million at year end.

And that would include all CapEx related to Phase 2?

That is correct. With the exception of the moly plant, we will consider that vendor financing that would be at year-end $10.5 million.

And Rob one final question. Are there any significant differences between processing tailings of copper versus say a gold mine?

It's a pretty wide open question but not fundamentally. I think the secret recipe is moving large amounts of material very efficiently.

Obviously there are tricks in the process plant and the gold process plant pretty different to copper process plant but fundamentally it's really material very in which I believe we can do pretty well. So, I'm certainly open to looking at any type of tailings that don't have copper.

That's really where I was going. So for the wide open nature of the question but that was - you’ve answered in a sense that you wouldn't have a restriction in looking at tailings from other metals or even pressure ounces.

MVC has got 25 years of experience of learning how to extract those materials efficiently. And I think we can apply that expertise to do most tailings materials.

Thank you very much. We appreciate your attendance to our first quarter conference call and we look forward to speaking with you again in three months time to report the second quarter results.

We can terminate the call now operator.