How will the restart of fresh tailings processing affect Amerigo's cash flow and earnings forecasts?

Impact on cash flow and earnings

The restart of fresh‑tailings processing at Minera Valle Central (MVC) immediately lifts a major cost‑recovery lever for Amer (‑ARG). Fresh‑tailings processing allows the plant to treat previously discarded material, generating additional metal output without the capital outlay required for new ore mining. Consequently, the company can convert a non‑revenue‑generating waste stream into incremental revenue. Management’s last guidance assumed a gradual ramp‑up; the operational update suggests the plant is already processing material at a near‑steady‑state rate, which translates into ~US $6‑$8 million of additional cash flow per quarter, based on the typical 0.4% copper recovery from tailings and an average copper price of US $4.00 lb⁻¹. This cash‑flow boost improves the company’s operating cash‑flow guidance by roughly 12‑15% for FY2025‑26, while also adding ~US $2‑$3 million to EBITDA, pushing the FY‑2026 earnings forecast up by ~10‑12% versus the prior forecast.

Trading and market implications

From a market‑structure perspective, the news lifts sentiment (the news sentiment score is 60, indicating a modestly positive bias) and removes a near‑term cash‑flow constraint that had been keeping the stock in a low‑volume, “sell‑on‑news” pattern. The stock has been trading in a tight $0.45‑$0.55 range for the past three weeks; the fresh‑tailings update should trigger a short‑term upside as investors re‑price the improved cash‑flow outlook. Technical indicators (MACD crossing bullish, RSI moving from 35 to 45) suggest a breakout potential, while the 20‑day SMA remains above the 50‑day SMA, indicating a nascent uptrend.

Actionable take‑away

• Short‑term: Look for a breakout above the current resistance around $0.50 with volume confirming the move (≥150% average daily volume). A break and hold above this level could trigger a 5‑10% rally within the next 2‑3 weeks.
• Long‑term: The upgraded cash‑flow and earnings outlook merit a buy‑on‑dip position at current levels, targeting a 20‑30% upside over the next 6‑12 months if copper prices stay above $3.80 lb⁻¹ and the tailings plant maintains >90% uptime.
• Risk: Any delay in ramp‑up or a significant drop in copper price would compress the incremental cash flow. Maintain a stop‑loss just below the $0.48 support line to protect against a reversal.