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Amerigo Resources: Don't Bet On The Special Dividend, The Regular One Looks Sustainable

Aug. 01, 2022 10:13 AM ETAmerigo Resources Ltd. (ARG:CA), ARREF4 Comments
Silver Coast Research profile picture
Silver Coast Research


  • Amerigo Resources' stock price dropped sharply in the past few months, along with other copper producers.
  • The lower copper price could hamper the company's ability to pay a special dividend. However, Amerigo can afford the C$0.03 per quarter regular dividend (9% yield at the current price).
  • Long-term, Amerigo will need a copper price of US$4/lb to sustain the current level of distribution. This looks achievable in light of copper's supply-demand fundamentals.
  • Chile's politics is unlikely to have an adverse impact on Amerigo.

Lever du soleil pittoresque au printemps au centre du Chili - montagnes brumeuses, Coltauco, O"Higgins en région, Chili, Amérique du Sud

mbonaparte/iStock via Getty Images

Amerigo Resources (ARG:CA, OTCQX:ARREF), the Canadian company that produces copper from Codelco's tailings in Chile, was not immune to the selloff that engulfed copper stocks in recent months. Even though the lower copper price will mechanically reduce

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Silver Coast Research profile picture
Finance professional from France. My strategy is twofold: - I build capital by identifying small-cap stocks that are likely to appreciate in the near term. - I reinvest the profits from the small-cap stocks into more established dividend payers, in order to build a growing stream of passive income. When looking for undervalued small-cap stocks, my focus is on fundamentals and the presence of hidden assets and near-term catalysts. When looking for dividend stocks, I want decent coverage and capacity to grow the dividend, and I look for special situations where short-term headwinds provide a favorable entry point. I have been contributing to The Natural Resource Hub. However, all of the articles authored by me are entirely the product of my independent research.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ARG:CA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (4)

Darp Research profile picture
SANTIAGO, Chile—Chile’s President Gabriel Boric on Monday was laying the groundwork for a political reset after voters overwhelmingly rejected a proposed constitution that his leftist supporters had endorsed.

In a referendum Sunday, 62% of more than 13 million voters opposed the proposal that would have dramatically reined in Chile’s market-oriented economy, while 38% favored it. Pre-election pollsters such as Cadem had predicted for months that voters would reject the draft, but not by such a wide margin.

Mr. Boric, 36 years old, is now under pressure to shepherd the process of writing another constitution that is more moderate, in response to an earlier mandate by voters to replace the existing charter.

The 388-article proposal defeated Sunday was designed to give the state a greater role in the economy and aimed to replace the country’s existing constitution that was created in 1980 under former dictator Augusto Pinochet. The current constitution has been amended dozens of times since democracy was restored in Chile in 1990.

The Chilean peso strengthened Monday, and the local stock market climbed, as investors embraced the defeat of a proposal perceived as creating more barriers for business. Sergio Godoy, chief economist at Santiago-based brokerage STF Capital, said political negotiations on a new constitutional process have to get under way quickly to sustain these trends, as economic recession looms.
Go and do likewise profile picture
Re, environmental regulations in the proposed constitution, you normally would not expect a constitution to have regulations. But the proposed constitution does give rights to nature. I would expect plenty of lawsuits if the constitution passes.
Go and do likewise profile picture
Good article. Thanks.
Thanks for the update. This is one of my 2 copper plays. I like Amerigo for the income and Capstone for the potential growth
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