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AMEC Report Confirms Expansion Potential At MVC

05.05.2003

AMERIGO RESOURCES LTD. reported today that it has received the final due diligence report from AMEC International (Chile) S.A., a branch of AMEC Mining and Metals, regarding the operations of Minera Valle Central S.A. (MVC). 

In the final report AMEC assessed a number of potential expansion and improvement projects which may be undertaken to increase copper production.

The report considers the expansion and improvement scenarios as compared with a base case utilising the following criteria:

• no modifications to the MVC plant; and
• an increase in fresh tailings supply from El Teniente to 122,000 tonnes per day (tpd) at 0.118% total copper.  The increase in fresh tailings supply is expected to commence in September, 2003 upon commissioning of an expansion at the El Teniente mine, which provides the tailings supply to MVC under a long term contract.

The report calculates that the base case would produce 12,160 tonnes of copper per year (tpa) at an average total cost of US$0.582 per pound of copper. 

The AMEC Report reviews various improvement and expansion projects in two phases.

Phase 1

The first phase is a combination of three plant engineering projects:

1. to pre-classify the entire El Teniente fresh tailings stream into coarse and fine fractions: approximately 20 cyclones would be installed with a capital cost of approximately US$1 million;
2. to increase rougher and first cleaner residence time by installing an additional residence tank at a cost of approximately US$1 million; and
3. to classify rougher tailings and regrind and reprocess the coarse fraction: the additional grinding and flotation capacity would have a capital cost of approximately US$1 million.

The combined effect of the Phase 1 capital improvements is estimated to increase copper production to 15,491 tonnes per annum at an estimated cash operating cost of US$0.534 per pound of copper.

Phase 2

A second phase considered by AMEC is the processing of tailings in the Colihues tailings dam located adjacent to the MVC plant which were deposited by El Teniente operations from 1977 to 1987.  MVC has the right to treat up to 10,000 tpd, and has conducted dredging trials and sample testwork over the last several months. Based on El Teniente records and MVC sampling AMEC assigned a grade of 0.3% copper to this additional tailings feed.  Using these assumptions, an estimated 4,000 tpa of copper could be recovered from the Colihues tailings at a capital cost of US$4.7 million for dredging equipment, pumps, and additional grinding and flotation circuit capacity. AMEC estimates that if both Phase 1 and Phase 2 expansions are completed, MVC could increase production to 19,473 tpa at an estimated cash operating cost of US$0.522 per pound of copper

Conclusions

Amerigo concurs with the results of the AMEC reports. Should Amerigo exercise its option and complete the acquisition of MVC, its intention would be to commence the Phase 1 expansion in the second half of 2003 and commence Phase 2 in 2004.

Amerigo also expects to receive reports on its legal and financial due diligence on MVC in the next few days, and intends to make a release on its conclusions from these later this week.

Amerigo has the option to purchase 100% of the outstanding shares and debt of Minera Valle Central S.A. (MVC). Amerigo Resources Ltd. is a Canadian junior exploration company with properties in Ontario and Quebec.  In addition to the option to acquire MVC, Amerigo is currently exploring for Olympic Dam style copper-gold deposits on four properties in the Sault Ste. Marie area of Ontario.

For further information, please contact:    

Jeffrey Giesbrecht, Secretary                        604.641.2779

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.