Ero Copper Corp. (TSX: ERO) (“Ero” or the “Company”) wishes to
provide an update on the current status of its operations in Brazil
and an overview of the response measures undertaken by the Company
and its subsidiaries in response to COVID-19. The Company has not
experienced any disruption to its operations, supply chains or
sales channels as a result of the COVID-19 pandemic. To date, there
are no known cases of COVID-19 at any of the Company’s operations,
neighboring communities, or at its corporate offices in São Paulo
and Vancouver.
Despite the recent decline in copper prices, the
Company remains well positioned and fully funded to continue to
execute its strategy. Highlighting this:
- Operations have operated at planned
production rates and below-budget costs during the first quarter,
aided by the depreciation of the Brazilian Real (“BRL”) during the
period;
- As at December 31, 2019, the
Company had US$22.9 million in cash and approximately US$30 million
in available credit lines. These lines were fully drawn at the end
of the first quarter of 2020, bolstering cash on hand as a
precautionary measure; and,
- The Company is currently
maintaining full-year production, capital and operating cost
guidance for 2020; however, the situation related to the COVID-19
pandemic remains dynamic and the Company will provide further
updates if required.
Additionally, as part of its ongoing corporate
strategy and unrelated to the COVID-19 pandemic, the Company has
amended its existing US$150 million credit Facilities (as further
defined below). Benefits of the amendment include the reduction in
the Company’s overall cost of borrowing and deferral of scheduled
principal payments for two years, now commencing March 2022.
Commenting on the corporate update, David
Strang, President and CEO, stated, “We, as an industry, are
operating in unprecedented and challenging times. While the Company
remains well positioned and fully funded at the prevailing copper
price and foreign exchange rate, we recognize the continued
uncertainty with respect to the COVID-19 pandemic and have several
contingency plans in place to continue to manage our business under
a variety of scenarios.
We have taken extraordinary measures to mitigate
the possible impacts of COVID-19 on our workforce, the Company and
our operations. Some of the measures that have been implemented
since late February include:
- eliminated all non-essential travel
to and from our mining operations;
- weekly engagement with all
suppliers and active stockpiling of key consumables to protect
against any supply chain disruptions;
- reduced human interaction
throughout the organization as much as possible by closing
administrative offices and moving to a work-from-home format,
increasing social distancing by limiting the number of employees
travelling on provided buses between our mining communities and our
mines, limiting the number of employees in the cafeteria at any
given time, cancelling all group meetings, eliminating line-out
meetings and encouraging work-from-home and video/telephone
conferencing where feasible;
- established COVID-19 committees
with senior leadership and local health administrators for the
regions in which we operate;
- ordered 3,000 COVID-19 testing kits
for our operations and will be donating a portion of these test
kits, as well as other personal protective equipment, to our local
municipalities to facilitate rapid testing throughout our
communities if required; and,
- implemented wellness education,
health screenings and self-isolation protocols along with enhanced
sanitization throughout our operations.
Our priority continues to be focused on the
health and well being of our employees, their families living in
Pilar and Nova Xavantina, contractors and local communities. This
is a dynamic situation and we continue to monitor and adapt our
mitigation measures as the situation develops.
The successful amendment of our existing credit
facilities concludes a process that commenced in 2019 as part of
our ongoing corporate strategy. The extension of maturity dates and
decreased borrowing costs of the Company reflect the underlying
strength of our business and provides increased flexibility to
continue to invest in growing our operations, maximizing the
near-term return on invested capital for our shareholders and
stakeholders alike.”
Credit Facilities Amendment
Details
The Company has amended its existing US$80
million senior secured amortizing non-revolving credit facility
(the “Term Facility”) and its US$70 million senior secured
revolving credit facility (the “Revolving Credit Facility”)
(collectively the “Facilities”) previously entered into with The
Bank of Nova Scotia (“Scotiabank”) and Bank of Montreal (“BMO”).
Benefits of the amendment include a 25 to 50 basis point reduction
in the Company’s cost of borrowing, depending on consolidated
leverage ratio, and the deferral of scheduled principal payments
for two years, now commencing March 2022.
The Term Facility (now US$75 million) features a
4-year term with principal payments beginning two years after
closing (March 31, 2022) and with equal quarterly installments
thereafter, while the Revolving Credit Facility (now US$75 million)
is payable in a bullet at maturity, four years from closing (March
31, 2024). The Facilities will bear interest on a sliding scale at
a rate of LIBOR plus 2.50% to 4.25% depending on the Company’s
consolidated leverage ratio at the time. Commitment fees for any
undrawn portion of the Revolving Credit Facility will also be on a
sliding scale between 0.63% to 1.06%.
The Facilities include standard and customary
terms and conditions with respect to fees, representations,
warranties, and financial covenants that remain unchanged from
prior amendments. Scotiabank is Joint Lead Arranger, Sole
Bookrunner and Administrative Agent and BMO is Joint Lead Arranger
and Syndication Agent.
A copy of the Facilities amendment will be filed
on SEDAR (www.sedar.com).
ABOUT ERO COPPER CORP
Ero, headquartered in Vancouver, B.C., is
focused on copper production growth from the Vale do Curaçá
Property, located in Bahia, Brazil. The Company’s primary asset is
a 99.6% interest in the Brazilian copper mining company, Mineração
Caraíba S.A. (“MCSA”), 100% owner of the Vale do Curaçá Property
with over 40 years of operating history in the region. The
Company currently mines copper ore from the Pilar and Vermelhos
underground mines. In addition to the Vale do Curaçá Property, MCSA
owns 100% of the Boa Esperanҫa development project, an IOCG-type
copper project located in Pará, Brazil and the Company, directly
and indirectly, owns 97.6% of the NX Gold Mine, an operating gold
and silver mine located in Mato Grosso, Brazil. Additional
information on the Company and its operations, including technical
reports on the Vale do Curaçá, Boa Esperanҫa and NX Gold
properties, can be found on the Company’s website
(www.erocopper.com) and on SEDAR (www.sedar.com).
ERO COPPER CORP.
Signed: “David Strang” |
For further information contact: |
|
|
David Strang, President &
CEO |
Makko DeFilippo, Vice President, Corporate Development |
|
(604) 429-9244 |
|
info@erocopper.com |
CAUTION REGARDING FORWARD LOOKING INFORMATION
AND STATEMENTS This Press Release contains “forward-looking
information” within the meaning of applicable Canadian securities
laws. Forward-looking information includes statements that use
forward-looking terminology such as “may”, “could”, “would”,
“will”, “should”, “intend”, “target”, “plan”, “expect”, “budget”,
“estimate”, “forecast”, “schedule”, “anticipate”, “believe”,
“continue”, “potential”, “view” or the negative or grammatical
variation thereof or other variations thereof or comparable
terminology. Such forward-looking information includes, without
limitation, the interest rate of the Facilities, future cost of
borrowing, any implied improvement in the Company’s operational and
financial flexibility, any projected improvement to the Company’s
balance sheet or working capital position, the Company’s continued
ability to service its ongoing debt service obligations, the
Company’s future capital resources and expenditures and the
potential impact of new accounting standards and amendments on the
Company’s financial statements related to the Facilities,
statements with respect to the Company's operational performance,
benefit from changes in the US dollar BRL exchange rate, the
Company's future production outlook, capital resources required to
successfully complete the Company’s plans for 2020 and the
effectiveness of any measure put in place by the Company to
mitigate the impact of COVID-19 on the Company or its
operations.
Forward-looking information is not a guarantee
of future performance and is based upon a number of estimates and
assumptions of management in light of management’s experience and
perception of trends, current conditions and expected developments,
as well as other factors that management believes to be relevant
and reasonable in the circumstances, as of the date of this Press
Release including, without limitation, assumptions about:
favourable equity and debt capital markets; the ability to raise
any necessary additional capital on reasonable terms to advance the
production, development and exploration of the Company’s properties
and assets; future prices of copper and other metal prices; the
timing and results of exploration and drilling programs; the
accuracy of any mineral reserve and mineral resource estimates; the
geology of the Vale do Curaçá Property, NX Gold Mine and the Boa
Esperanҫa Property being as described in the technical reports for
these properties; production costs; the accuracy of budgeted
exploration and development costs and expenditures; the price of
other commodities such as fuel; future currency exchange rates and
interest rates; operating conditions being favourable such that the
Company is able to operate in a safe, efficient and effective
manner; political and regulatory stability; the receipt of
governmental, regulatory and third party approvals, licenses and
permits on favourable terms; obtaining required renewals for
existing approvals, licenses and permits on favourable terms;
requirements under applicable laws; sustained labour stability;
stability in financial and capital goods markets; availability of
equipment; positive relations with local groups and the Company’s
ability to meet its obligations under its agreements with such
groups; and satisfying the terms and conditions of the Company’s
current loan arrangements. While the Company considers these
assumptions to be reasonable, the assumptions are inherently
subject to significant business, social, economic, political,
regulatory, competitive and other risks and uncertainties,
contingencies and other factors that could cause actual actions,
events, conditions, results, performance or achievements to be
materially different from those projected in the forward-looking
information. Many assumptions are based on factors and events that
are not within the control of the Company and there is no assurance
they will prove to be correct.
Furthermore, such forward-looking information
involves a variety of known and unknown risks, uncertainties and
other factors which may cause the actual plans, intentions,
activities, results, performance or achievements of the Company to
be materially different from any future plans, intentions,
activities, results, performance or achievements expressed or
implied by such forward-looking information. Such risks include,
without limitation the risk factors listed under the heading “Risk
Factors” in the Annual Information Form of the Company for the year
ended December 31, 2019, dated March 12, 2020.
Although the Company has attempted to identify
important factors that could cause actual actions, events,
conditions, results, performance or achievements to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events, conditions,
results, performance or achievements to differ from those
anticipated, estimated or intended.
The Company cautions that the foregoing lists of
important assumptions and factors are not exhaustive. Other events
or circumstances could cause actual results to differ materially
from those estimated or projected and expressed in, or implied by,
the forward-looking information contained herein. There can be no
assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly,
readers should not place undue reliance on forward-looking
information.
Forward-looking information contained herein is
made as of the date of this press release and the Company disclaims
any obligation to update or revise any forward-looking information,
whether as a result of new information, future events or results or
otherwise, except as and to the extent required by applicable
securities laws.
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