VANCOUVER Amerigo Resources really got going in 2003 when Steven Dean and Klaus Zeitler, formerly senior executives with Teck Cominco, emerged from retirement to take control and focus on exploration in Central and Eastern Canada.
Then came a perfect acquisition opportunity and what is now being referred to as "a golden goose of an asset": a copper production facility located near Santiago, Chile, called Minera Valle Central. MVC currently produces roughly 13,000 tonnes of copper per year, while treating 90,000 - 100,000 tonnes per day of fresh tailings from the El Teniente Copper Mine.
Exploration in the Great White North is still a stated objective for the company; but riding the copper wave in South America is why the company is attracting fanfare and an enthusiastic following, will some allusion to Northern Orion and it's Alumbrera cash cow.
"It would appear that Amerigo has broadened its activities from the exploration of copper to the production of it," opined an understated analyst from Vancouver-based brokerage Golden Capital at the time of the purchase. Dean, the former Teck Cominco president and current chairman of Amerigo, was more blunt. "It gives investors excellent positive leverage to copper," he declared.
Investors like the company's new direction. Since 2003, shares have jumped from around C$.20 range to their current value of about C$2; peaking at C$2.40 earlier this year.
The upsides for the company - zero debt, 60 years' worth of future copper in El Teniente, impressive growth on the copper production front, a respectable analyst following - is countered by emerging bearish sentiments related to the short-term demand for copper.
A slew of mining stocks, including Antofagasta, Xstrata, Corus, Anglo American and BHP Billiton faced the fickleness of investors earlier this week as metal prices tanked. BHP Billiton didn't help matters when it warned that copper supplies are set to outstrip demand during the latter-half of 2005 thanks to rising industry output.
Amerigo investors, like their brethren across the metals spectrum, are keeping the faith, buoyed on by long-term demand for copper and base metals in general from the expanding economies of China and India. Their sentiments were recently reaffirmed by Cl'ement Gignac, strategist and chief economist for National Bank Financial, who recently mused that the big picture looks good for copper miners, based on evidence of copper and nickel inventories at close to
eight- or nine-year lows and above-average world economic growth this year and next.
The smaller picture also looks good. Amerigo recently garnered the status as fastest-growing publicly traded company in British Columbia in early October. Earlier this year, the company also enjoyed another milestone: It graduated from the TSX Venture exchange to the blue chip-geared Toronto Stock Exchange. The move underscored the company's changing stature from Vancouver junior to a more widely followed Canadian copper play.
The company's story is not exactly a secret on the North American investment landscape. It has been active at mining-friendly investment shows and has attracted a following from some newsletter writers, including Doug Casey. The combination has produced considerable Amerigo-related chatter on investment messageboards and on Howe Street.
While economists sort out the bigger picture that dictates coming fortunes, or lack thereof, for copper issues, Amerigo seems content to focus on what is within its control. Ramping up profits and production, while sticking to a simple plan, is so far proving to be a winning combination.