Ero Copper Corp. (TSX: ERO, NYSE: ERO) (“Ero” or
the “Company”) is pleased to announce its operating and financial
results for the three and six months ended June 30, 2022.
Management will host a conference call tomorrow, Wednesday, August
3, 2022, at 11:30 a.m. Eastern time to discuss the results. Dial-in
details for the call can be found near the end of this press
release.
HIGHLIGHTS
- Record quarterly copper production of 12,734 tonnes at C1 cash
costs(*) of $1.24 per pound of copper produced;
- Record quarterly gold production of 11,122 ounces at C1 cash
costs(*) and All-in Sustaining Costs ("AISC")(*) of $643 and
$1,169, respectively, per ounce of gold produced;
- Adjusted EBITDA(*) of $55.8 million and adjusted net income
attributable to owners of the Company(*) of $24.4 million ($0.27
per share on a diluted basis);
- Financial results during the period were impacted by
operational challenges at the Company's primary domestic customer
that resulted in a higher allocation of sales to the international
market. The timing of sales to, and longer quotational periods
with, international customers, combined with a weakening copper
price just prior to quarter- end, resulted in a reduction to
revenue of approximately $13.0 million (see "Second Quarter Review"
for more information);
- Quarterly cash flows from operations of $22.4 million also
reflect an increase in accounts receivable of $18.9 million due to
the timing of concentrate shipments and longer payment terms with
international customers. Absent this increase in accounts
receivable, cash flows from operations during the quarter would
have been over $40.0 million;
- Available liquidity at quarter-end was $504.9 million,
including cash and cash equivalents of $329.3 million, short-term
investments of $100.6 million, and $75.0 million of undrawn
availability under the Company's senior revolving credit
facility;
- Key organic growth projects advancing on schedule and on
budget:
- At the Tucumã Project (formerly referred to as the Boa
Esperança Project), approximately 22% of planned capital
expenditures were under contract as of August 1, 2022, with another
8% in the final phases of contracting. Capital commitments
contracted and in the final phases of negotiation are within 6% of
Feasibility Study estimates;
- At the Caraíba Operations (formerly referred to as the MCSA
Mining Complex), equipment packages and supply contracts totaling
approximately 25% of planned capital expenditures for the new
external shaft have been finalized as of August 1, 2022 at 10%
below project capital estimates. The shaft sinking contract, the
largest contributor to the project's total capital spend, is in the
final negotiation phase. Upon execution of the sinking contract,
capital secured under contract for the project is expected to be
approximately 70% and align with the total project capital
estimate; and,
- In addition to ongoing construction activities, the Company is
developing a sustainability strategy for the Tucumã Project and
surrounding community. To date, approximately $1.0 million has been
earmarked for projects designed to mitigate the environmental
impact of project development and provide support for the local
community.
- Reaffirming full-year production guidance, lowering
consolidated 2022 capital expenditure guidance, and raising
operating cost guidance for the year:
- Full-year copper production expected to be at the high-end of
the 43,000 to 46,000 tonne guidance range;
- Full-year gold production guidance range of 39,000 to 42,000
ounces reaffirmed;
- Full-year consolidated capital expenditure guidance lowered by
over $20 million, from $330-$375 million to $308-$354 million, as a
result of capital replanning efforts resulting in deferrals at the
Company's Caraíba Operations. The deferral of this capital spend is
not expected to impact timelines for key growth projects;
- Full-year C1 cash cost guidance has been increased for the
Caraíba Operations to $1.20 to $1.35 (previously $1.05 to $1.15)
per pound of copper produced to reflect elevated international
concentrate sales, which are expected to continue through the
remainder of the year, as well as the impact of inflation in the
cost of key consumables and a strong BRL versus the US dollar in H1
2022; and,
- Full-year cost guidance ranges for the Xavantina Operations
(formerly referred to as the NX Gold Mine) have be updated to
reflect the aforementioned impact of inflation and BRL strength in
H1 2022:
- C1 cash cost guidance revised to $600 to $700 (previously $500
to $600) per ounce of gold produced; and,
- AISC guidance revised to $1,000 to $1,100 (previously $925 to
$1,025) per ounce of gold produced.
“Our second quarter delivered record operational
performance across our assets and saw the successful execution of
important milestones critical to our growth strategy,” said David
Strang, Chief Executive Officer. “Underpinning our record quarterly
production results were new monthly records set for production
rates, development rates, asset efficiency and availability, among
others. Following a challenging first quarter operating
environment, I want to congratulate our on-site teams for setting
new high watermarks that showcase the capabilities of our assets
and people.
“Across our key growth projects, construction
and development activities are progressing on schedule and well
within contingency levels at this time. Our team's adherence to the
original capital expenditure estimates for major equipment line
items and work packages that have been secured on these projects to
date is remarkable given the significant inflationary headwinds
that the mining industry has faced since the beginning of 2022.
“Despite our record operating performance and
outstanding project execution during the quarter, our financial
results were impacted by operational challenges at our primary
domestic smelting customer, which resulted in changes to our copper
concentrate sales channels that are expected to continue through
the balance of the year."
“Primarily as a result of higher allocation of
sales to international customers and elevated input costs in the
first half of the year across our business units, we have adjusted
our full- year operating cost guidance ranges. Offsetting these
increases, proactive capital management reviews with our team
during the quarter identified over $20 million of capital deferrals
that will not impact our business strategy yet will support
continued balance sheet strength during this period of elevated
market and copper price volatility.”
*These are non-IFRS measures and do not have a
standardized meaning prescribed by IFRS and might not be comparable
to similar financial measures disclosed by other issuers. Please
refer to the Company’s discussion of Non-IFRS measures in its
Management’s Discussion and Analysis for the three and six months
ended June 30, 2022 and the Reconciliation of Non- GAAP Measures
section at the end of this press release.
SECOND QUARTER REVIEW
- Mining & Milling Operations
- The Caraíba Operations processed 801,425 tonnes of ore grading
1.74% copper, producing a record 12,734 tonnes of copper in
concentrate during the quarter after metallurgical recoveries of
91.2%.
- The Xavantina Operations processed 57,291 tonnes grading 6.59
grams per tonne, producing a record 11,122 ounces of gold after
metallurgical recoveries of 91.6% and 7,306 ounces of silver as a
by-product.
- Organic Growth Projects
- At the Tucumã Project, the Company continued to advance
critical-path workstreams during the period and subsequent to
quarter-end. Highlights include:
- Approximately 22% of planned capital expenditures under
contract as of August 1, 2022, with another 8% in the final phases
of contracting;
- Capital commitments contracted and in the final phases of
negotiation within 6% of Feasibility Study estimates;
- Significant advances made on all road upgrades, including pit
access and completion of community bypass road infrastructure;
- Completion of approximately 75% of planned pre-production
vegetation suppression required for pre-stripping activities to
commence;
- Purchase of the ball mill for the Project;
- Site earth works initiated subsequent to quarter-end; and,
- Installation of site drainage expected to be completed by end
of October 2022, ahead of the rainy season.
- At the Caraíba Operations, the Company made meaningful progress
on its "Pilar 3.0" initiative, which encompasses various projects
that jointly are designed to create a two-mine system at the Pilar
Mine targeting higher sustained production levels. These projects
include (i) construction of a new external shaft to access the
Deepening Extension Zone, (ii) Project Honeypot, which is expected
to support higher production volumes from the upper levels of the
Pilar Mine, (iii) an expansion of the Caraíba Mill to 4.2 million
tonnes per annum, and (iv) the recently completed Cooling Project.
Select highlights include:
- Equipment packages and supply contracts totaling approximately
25% of planned capital expenditures for the new external shaft
finalized as of August 1, 2022 at 10% below budget;
- Shaft sinking contract, which will bring estimated shaft
capital secured under contract to approximately 70%, in the final
negotiation phase. Upon execution, capital commitments under
contract expected to align with original estimates;
- Engineering and procurement related to shaft sinking were
completed during the quarter with the shaft sinking contract
anticipated to be finalized during the third quarter;
- Completed construction of the concrete batch plant during the
period and commenced commissioning activities subsequent to
quarter-end;
- Engineering and design work related to the expansion of the
Caraíba Mill continued during the second quarter with the ball mill
installation contract finalized subsequent to quarter-end;
- Aggressively advanced drilling efforts within the Project
Honeypot area, the results of which are expected to be included in
the Company's year-end mineral reserve and resource estimates;
and,
- Completed the Cooling Project's second and final phase, with
hand-over to operations occurring in April 2022 at
better-than-design performance.
- Impact of Increased Sales of Copper Concentrate to
International Market
- Historically, the Company has had limited exposure to movements
in copper prices on provisional invoices due to its majority
allocation of concentrate sales to domestic customers with which
the Company has favorable payment terms. However, during the second
quarter, operational challenges at the Company's primary domestic
customer resulted in a higher allocation of sales to the
international market. Longer quotational periods with
international customers, combined with a weakening copper price
just prior to quarter-end, resulted in a reduction to revenue of
approximately $13.0 million during the period.
- Quarterly cash flows from operations of $22.4 million were also
impacted by an increase in accounts receivable of $18.9 million due
to the timing of concentrate shipments and longer payment terms
with international customers.
- These concentrate sales changes, including related impacts on
payment terms, are expected to continue through the end of 2022.
Allocation of concentrate sales between domestic and international
customers is expected to revert to historical levels in 2023
assuming competitive pricing terms.
OPERATING AND FINANCIAL HIGHLIGHTS
|
3 months ended |
|
3 months ended |
|
3 months ended |
|
6 months ended |
|
6 months ended |
|
June 30, 2022 |
|
Mar. 31, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper (Caraíba Operations) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore Processed (tonnes) |
|
801,425 |
|
|
|
596,230 |
|
|
|
553,992 |
|
|
1,397,655 |
|
|
|
1,151,586 |
Grade (% Cu) |
|
1.74 |
|
|
|
1.78 |
|
|
|
2.13 |
|
|
1.76 |
|
|
|
2.22 |
Cu Production (tonnes) |
|
12,734 |
|
|
|
9,784 |
|
|
|
10,898 |
|
|
22,518 |
|
|
|
23,536 |
Cu Production (000 lbs) |
|
28,073 |
|
|
|
21,570 |
|
|
|
24,026 |
|
|
49,643 |
|
|
|
51,889 |
Cu Sold in Concentrate (tonnes) |
|
12,948 |
|
|
|
10,045 |
|
|
|
10,094 |
|
|
22,993 |
|
|
|
22,562 |
Cu Sold in Concentrate (000 lbs) |
|
28,546 |
|
|
|
22,145 |
|
|
|
22,253 |
|
|
50,691 |
|
|
|
22,253 |
C1 cash cost of Cu produced (per lb)(1) |
$ |
1.24 |
|
|
$ |
1.31 |
|
|
$ |
0.72 |
|
$ |
0.63 |
|
|
$ |
0.49 |
Gold (Xavantina Operations) |
|
|
|
|
|
Au Production (oz) |
|
11,122 |
|
|
|
8,796 |
|
|
|
10,377 |
|
|
19,918 |
|
|
|
19,828 |
C1 cash cost of Au Produced (per oz)(1) |
$ |
643 |
|
|
$ |
638 |
|
|
$ |
499 |
|
$ |
641 |
|
|
$ |
494 |
AISC of Au produced (per oz)(1) |
$ |
1,169 |
|
|
$ |
1,092 |
|
|
$ |
660 |
|
$ |
1,135 |
|
|
$ |
652 |
Financial Highlights ($ in millions, except per share amounts) |
Revenues |
$ |
114.9 |
|
|
$ |
108.9 |
|
|
$ |
120.7 |
|
$ |
223.8 |
|
|
$ |
243.2 |
Gross profit |
|
50.7 |
|
|
|
61.0 |
|
|
|
83.7 |
|
|
111.7 |
|
|
|
166.5 |
EBITDA(1) |
|
53.9 |
|
|
|
78.1 |
|
|
|
112.0 |
|
|
132.0 |
|
|
|
167.2 |
Adjusted EBITDA(1) |
|
55.8 |
|
|
|
62.4 |
|
|
|
85.5 |
|
|
118.2 |
|
|
|
172.2 |
Cash flow from operations |
|
22.4 |
|
|
|
44.0 |
|
|
|
85.1 |
|
|
66.4 |
|
|
|
147.2 |
Net income |
|
24.1 |
|
|
|
52.5 |
|
|
|
84.0 |
|
|
76.6 |
|
|
|
116.0 |
Net income attributable to owners
of the Company |
|
23.8 |
|
|
|
52.1 |
|
|
|
83.4 |
|
|
75.9 |
|
|
|
115.2 |
Per share (basic) |
|
0.26 |
|
|
|
0.58 |
|
|
|
0.95 |
|
|
0.84 |
|
|
|
1.31 |
Per share (diluted) |
|
0.26 |
|
|
|
0.57 |
|
|
|
0.89 |
|
|
0.83 |
|
|
|
1.24 |
Adjusted net income attributable
to owners of the Company(1) |
|
24.4 |
|
|
|
33.0 |
|
|
|
53.5 |
|
|
57.3 |
|
|
|
109.8 |
Per share (basic) |
|
0.27 |
|
|
|
0.37 |
|
|
|
0.61 |
|
|
0.63 |
|
|
|
1.25 |
Per share (diluted) |
|
0.27 |
|
|
|
0.36 |
|
|
|
0.57 |
|
|
0.62 |
|
|
|
1.18 |
Cash, cash equivalents, and
short-term investments |
|
429.9 |
|
|
|
365.5 |
|
|
|
137.7 |
|
|
429.9 |
|
|
|
137.7 |
Working capital(1) |
|
417.7 |
|
|
|
443.7 |
|
|
|
118.9 |
|
|
417.7 |
|
|
|
118.9 |
Net (cash) debt(1) |
|
(10.2 |
) |
|
|
(54.4 |
) |
|
|
19.2 |
|
|
(10.2 |
) |
|
|
19.2 |
(1) EBITDA, Adjusted EBITDA, Adjusted net income
(loss) attributable to owners of the Company, Adjusted net income
(loss) per share attributable to owners of the Company, Net (Cash)
Debt, Working Capital, C1 cash cost of copper produced (per lb), C1
cash cost of gold produced (per ounce) and AISC of gold produced
(per ounce) are non-IFRS measures. These measures do not have a
standardized meaning prescribed by IFRS and might not be comparable
to similar financial measures disclosed by other issuers. Please
refer to the Company’s discussion of Non-IFRS measures in its
Management’s Discussion and Analysis for the three and six months
ended June 30, 2022 and the Reconciliation of Non-GAAP Measures
section at the end of this press release.
2022 GUIDANCE(*)
The Company is reaffirming its full-year
production guidance, lowering consolidated 2022 capital expenditure
guidance, and raising operating cost guidance for the year.
At its Caraíba Operations, the Company continues
to guide to the high-end of its reaffirmed 2022 copper production
guidance range of 43,000 to 46,000 tonnes. As previously noted,
copper production is expected to be roughly equally weighted
between the first and second halves of the year with mining of the
initial Project Honeypot stope (RC03) at the Pilar Mine expected to
support a continuation of strong mined and processed copper grades
into Q3 2022. At the Xavantina Operations, higher gold grades are
expected to drive modestly higher gold production during the second
half of the year.
The Company is lowering its consolidated 2022
capital expenditure guidance by over $20 million, from $330-$375
million to $308-$354 million, as a result of capital replanning
efforts and deferrals at the Caraíba Operations. The deferral of
this capital spend is not expected to impact timelines of the
Company's key growth projects.
The Company is raising its full-year operating
cost guidance ranges due to the impact of inflation in the cost of
key consumables and a stronger BRL versus the US dollar during H1
2022 as well as an expected continuation of elevated copper
concentrate sales to international markets in H2 2022. The
Company's revised 2022 copper C1 cash cost guidance range is $1.20
to $1.35 (originally $1.05 to $1.15) per pound of copper produced.
The Company is also increasing its 2022 gold C1 cash costs and AISC
guidance ranges to$600 to $700 (previously $500 to $600) and $1,000
to $1,100 (previously $925 to $1,025), respectively, per ounce of
gold produced for its Xavantina Operations.
2022 PRODUCTION AND COST
GUIDANCE(*)
The Company's cost guidance for 2022 assumes a
USD:BRL foreign exchange rate of 5.30, a gold price of $1,725 per
ounce and a silver price of $20.00 per ounce for H2 2022.
|
Original |
Revised |
|
|
|
Caraíba Operations |
|
|
Copper Production (tonnes) |
43,000 - 46,000 |
Unchanged |
C1 Cash Cost Guidance (US$/lb)(1) |
$1.05 - $1.15 |
$1.20 - $1.35 |
|
|
|
Xavantina Operations |
|
|
Gold Production (ounces) |
39,000 - 42,000 |
Unchanged |
C1 Cash Cost Guidance (US$/oz)(1) |
$500 - $600 |
$600 - $700 |
All-in Sustaining Cost (AISC) Guidance (US$/oz)(1) |
$925 - $1,025 |
$1,000 - $1,100 |
(1) These are non-IFRS measures and do not have a standardized
meaning prescribed by IFRS and might not be comparable to similar
financial measures disclosed by other issuers.
2022 CAPITAL EXPENDITURE GUIDANCE(*)
The Company's capital expenditure guidance for 2022 assumes a
USD:BRL foreign exchange rate of 5.30 for H2 2022 and has been
presented below in USD millions.
|
Original |
Revised |
|
|
Caraíba Operations |
|
Growth |
$125 - $140 |
$95 - $110 |
Sustaining |
$80 - $90 |
$85 - $95 |
Exploration |
$25 - $30 |
Unchanged |
Total, Caraíba Operations |
$230 - $260 |
$180 - $205 |
|
|
|
Tucumã Project |
|
|
Growth |
$70 - $80 |
Unchanged |
Exploration |
$5 - $6 |
Unchanged |
Total, Tucumã Project |
$75 - $86 |
Unchanged |
|
|
|
Xavantina Operations |
|
|
Growth |
$0 - $1 |
$2 - $4 |
Sustaining |
$16 - $18 |
Unchanged |
Exploration |
$9 - $10 |
$10 - $11 |
Total, Xavantina Operations |
$25 - $29 |
$28 - $33 |
|
|
|
Company Total |
|
|
Growth |
$195 - $221 |
$167 - $194 |
Sustaining |
$96 - $108 |
$101 - $113 |
Exploration |
$39 - $46 |
$40 - $47 |
Total, Company |
$330 - $375 |
$308 - $354 |
(*) Guidance is based on certain estimates and
assumptions, including but not limited to, mineral reserve
estimates, grade and continuity of interpreted geological
formations and metallurgical performance. Please refer to the
Company’s SEDAR and EDGAR filings, including the Company's most
recent Annual Information Form ("AIF"), for complete risk
factors.
CONFERENCE CALL DETAILS
The Company will hold a conference call on
Wednesday, August 3, 2022 at 11:30 am Eastern time (8:30 am Pacific
time) to discuss these results.
Date: |
Wednesday,
August 3, 2022 |
Time: |
11:30 am Eastern time (8:30 am Pacific time) |
Dial in: |
North America: 1-800-319-4610, International:
+1-604-638-5340 |
|
please dial in 5-10 minutes prior and ask to join the call |
|
|
Replay: |
North America: 1-800-319-6413, International:
+1-604-638-9010 |
Replay Passcode: |
9222 |
Reconciliation of Non-IFRS Measures
The Company utilizes certain alternative
performance (non-IFRS) measures to monitor its performance,
including C1 cash cost of copper produced (per lb), C1 cash cost of
gold produced (per ounce), AISC of gold produced (per ounce),
EBITDA, adjusted EBITDA, adjusted net income attributable to owners
of the Company, adjusted net income per share, net (cash) debt,
working capital and available liquidity. These performance measures
have no standardized meaning prescribed within generally accepted
accounting principles under IFRS and, therefore, amounts presented
may not be comparable to similar measures presented by other mining
companies. These non-IFRS measures are intended to provide
supplemental information and should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS.
For additional details please refer to the
Company’s discussion of non-GAAP and other performance measures in
its Management’s Discussion and Analysis for the three and six
months ended June 30, 2022 which is available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
C1 cash cost of copper produced (per
lb.)
The following table provides a reconciliation of C1 cash cost of
copper produced per pound to cost of production, its most directly
comparable IFRS measure.
Reconciliation: |
2022 - Q2 |
|
2022 - Q1 |
|
2021 - Q2 |
|
2022 - YTD |
|
2021 - YTD |
Cost of production |
$ |
38,015 |
|
|
$ |
29,163 |
|
|
$ |
20,464 |
|
|
$ |
67,178 |
|
|
$ |
42,266 |
|
Add (less): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation costs & other |
|
2,579 |
|
|
|
(904 |
) |
|
|
(569 |
) |
|
|
(1,920 |
) |
|
|
(1,382 |
) |
Treatment, refining, and other |
|
3,893 |
|
|
|
577 |
|
|
|
701 |
|
|
|
(1,330 |
) |
|
|
(1,967 |
) |
By-product credits |
|
(6,438 |
) |
|
|
1,869 |
|
|
|
1,516 |
|
|
|
4,448 |
|
|
|
2,491 |
|
Incentive payments |
|
(1,016 |
) |
|
|
(4,812 |
) |
|
|
(5,522 |
) |
|
|
(11,250 |
) |
|
|
(11,722 |
) |
Net change in inventory |
|
(1,907 |
) |
|
|
2,046 |
|
|
|
392 |
|
|
|
5,939 |
|
|
|
1,171 |
|
Foreign exchange translation and other |
|
(178 |
) |
|
|
386 |
|
|
|
352 |
|
|
|
208 |
|
|
|
199 |
|
C1 cash
costs |
$ |
34,948 |
|
|
$ |
28,325 |
|
|
$ |
17,334 |
|
|
$ |
63,273 |
|
|
$ |
31,056 |
|
|
|
|
|
|
|
Mining |
$ |
23,933 |
|
|
$ |
20,126 |
|
|
$ |
13,732 |
|
|
$ |
44,059 |
|
|
$ |
11,869 |
|
Processing |
|
7,988 |
|
|
|
6,447 |
|
|
|
5,132 |
|
|
|
14,435 |
|
|
|
4,010 |
|
Indirect |
|
5,572 |
|
|
|
4,518 |
|
|
|
3,600 |
|
|
|
10,090 |
|
|
|
3,264 |
|
Production costs |
|
37,493 |
|
|
|
31,091 |
|
|
|
22,464 |
|
|
|
68,584 |
|
|
|
19,143 |
|
By-product credits |
|
(6,438 |
) |
|
|
(4,812 |
) |
|
|
(5,522 |
) |
|
|
(11,250 |
) |
|
|
(6,200 |
) |
Treatment, refining and
other |
|
3,893 |
|
|
|
2,046 |
|
|
|
392 |
|
|
|
5,939 |
|
|
|
779 |
|
C1 cash
costs |
$ |
34,948 |
|
|
$ |
28,325 |
|
|
$ |
17,334 |
|
|
$ |
63,273 |
|
|
$ |
13,722 |
|
|
|
|
|
|
|
Payable copper produced (lb,
000) |
|
28,073 |
|
|
|
21,570 |
|
|
|
24,026 |
|
|
|
49,643 |
|
|
|
51,889 |
|
|
|
|
|
|
|
Mining |
$ |
0.85 |
|
|
$ |
0.93 |
|
|
$ |
0.57 |
|
|
$ |
0.89 |
|
|
$ |
0.43 |
|
Processing |
$ |
0.28 |
|
|
$ |
0.30 |
|
|
$ |
0.21 |
|
|
$ |
0.29 |
|
|
$ |
0.14 |
|
Indirect |
$ |
0.20 |
|
|
$ |
0.21 |
|
|
$ |
0.15 |
|
|
$ |
0.20 |
|
|
$ |
0.12 |
|
By-product credits |
$ |
(0.23 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.22 |
) |
Treatment, refining and
other |
$ |
0.14 |
|
|
$ |
0.09 |
|
|
$ |
0.02 |
|
|
$ |
0.12 |
|
|
$ |
0.03 |
|
C1 cash
costs of copper produced (per lb) |
$ |
1.24 |
|
|
$ |
1.31 |
|
|
$ |
0.72 |
|
|
$ |
1.27 |
|
|
$ |
0.49 |
|
C1 cash cost of gold produced and All-in Sustaining Cost
of gold produced (per ounce)
The following table provides a reconciliation of C1 cash cost of
gold produced per ounce and AISC of gold produced per ounce to cost
of production, its most directly comparable IFRS measure.
Reconciliation: |
2022 - Q2 |
|
2022 - Q1 |
|
2021 - Q2 |
|
2022 - YTD |
|
2021 - YTD |
Cost of production |
$ |
7,225 |
|
|
$ |
5,392 |
|
|
$ |
5,080 |
|
|
$ |
12,617 |
|
|
$ |
10,164 |
|
Add (less): |
|
|
|
|
|
Incentive payments |
|
(188 |
) |
|
|
(585 |
) |
|
|
(210 |
) |
|
|
(773 |
) |
|
|
(493 |
) |
Net change in inventory |
|
(73 |
) |
|
|
727 |
|
|
|
292 |
|
|
|
654 |
|
|
|
165 |
|
By-product credits |
|
(145 |
) |
|
|
(124 |
) |
|
|
(157 |
) |
|
|
(269 |
) |
|
|
(305 |
) |
Foreign exchange translation and other |
|
327 |
|
|
|
206 |
|
|
|
176 |
|
|
|
533 |
|
|
|
257 |
|
C1 cash
costs |
$ |
7,146 |
|
|
$ |
5,616 |
|
|
$ |
5,181 |
|
|
$ |
12,762 |
|
|
$ |
9,788 |
|
Site general and
administrative |
|
882 |
|
|
|
559 |
|
|
|
369 |
|
|
|
1,441 |
|
|
|
676 |
|
Accretion of mine closure and
rehabilitation provision |
|
112 |
|
|
|
112 |
|
|
|
(63 |
) |
|
|
224 |
|
|
|
(112 |
) |
Sustaining capital
expenditure |
|
3,690 |
|
|
|
2,296 |
|
|
|
527 |
|
|
|
5,986 |
|
|
|
1,012 |
|
Sustaining leases |
|
894 |
|
|
|
822 |
|
|
|
565 |
|
|
|
1,716 |
|
|
|
1,027 |
|
Royalties and production
taxes |
|
277 |
|
|
|
204 |
|
|
|
271 |
|
|
|
481 |
|
|
|
540 |
|
AISC |
$ |
13,001 |
|
|
$ |
9,609 |
|
|
$ |
6,850 |
|
|
$ |
22,610 |
|
|
$ |
12,931 |
|
|
|
|
|
|
|
|
2022 - Q2 |
|
2022 - Q1 |
|
2021 - Q2 |
|
2022 - YTD |
|
2021 - YTD |
Costs |
|
|
|
|
|
Mining |
$ |
3,929 |
|
|
$ |
3,218 |
|
|
$ |
2,481 |
|
|
$ |
7,147 |
|
|
$ |
4,744 |
|
Processing |
|
2,285 |
|
|
|
1,698 |
|
|
|
1,937 |
|
|
|
3,983 |
|
|
|
3,617 |
|
Indirect |
|
1,077 |
|
|
|
824 |
|
|
|
920 |
|
|
|
1,901 |
|
|
|
1,732 |
|
Production costs |
|
7,291 |
|
|
|
5,740 |
|
|
|
5,338 |
|
|
|
13,031 |
|
|
|
10,093 |
|
By-product credits |
|
(145 |
) |
|
|
(124 |
) |
|
|
(157 |
) |
|
|
(269 |
) |
|
|
(305 |
) |
C1 cash
costs |
$ |
7,146 |
|
|
$ |
5,616 |
|
|
$ |
5,181 |
|
|
$ |
12,762 |
|
|
$ |
9,788 |
|
Site general and
administrative |
|
882 |
|
|
|
559 |
|
|
|
369 |
|
|
|
1,441 |
|
|
|
676 |
|
Accretion of mine closure and
rehabilitation provision |
|
112 |
|
|
|
112 |
|
|
|
(63 |
) |
|
|
224 |
|
|
|
(112 |
) |
Sustaining capital
expenditure |
|
3,690 |
|
|
|
2,296 |
|
|
|
527 |
|
|
|
5,986 |
|
|
|
1,012 |
|
Sustaining leases |
|
894 |
|
|
|
822 |
|
|
|
565 |
|
|
|
1,716 |
|
|
|
1,027 |
|
Royalties and production
taxes |
|
277 |
|
|
|
204 |
|
|
|
271 |
|
|
|
481 |
|
|
|
540 |
|
AISC |
$ |
13,001 |
|
|
$ |
9,609 |
|
|
$ |
6,850 |
|
|
$ |
22,610 |
|
|
$ |
12,931 |
|
|
|
|
|
|
|
Costs per ounce |
|
|
|
|
|
Payable gold produced
(ounces) |
|
11,122 |
|
|
|
8,796 |
|
|
|
10,377 |
|
|
|
19,918 |
|
|
|
19,828 |
|
|
|
|
|
|
|
Mining |
$ |
353 |
|
|
$ |
366 |
|
|
$ |
239 |
|
|
$ |
359 |
|
|
$ |
239 |
|
Processing |
$ |
205 |
|
|
$ |
193 |
|
|
$ |
187 |
|
|
$ |
200 |
|
|
$ |
182 |
|
Indirect |
$ |
97 |
|
|
$ |
94 |
|
|
$ |
89 |
|
|
$ |
95 |
|
|
$ |
87 |
|
By-product credits |
$ |
(12 |
) |
|
$ |
(15 |
) |
|
$ |
(15 |
) |
|
$ |
(13 |
) |
|
$ |
(14 |
) |
C1 cash costs
of gold produced (per ounce) |
$ |
643 |
|
|
$ |
638 |
|
|
$ |
499 |
|
|
$ |
641 |
|
|
$ |
494 |
|
AISC of gold produced (per ounce) |
$ |
1,169 |
|
|
$ |
1,092 |
|
|
$ |
660 |
|
|
$ |
1,135 |
|
|
$ |
652 |
|
Earnings before interest, taxes, depreciation and
amortization (EBITDA) and Adjusted EBITDA
The following table provides a reconciliation of EBITDA and
Adjusted EBITDA to net income, its most directly comparable IFRS
measure.
Reconciliation: |
2022 - Q2 |
|
2022 - Q1 |
|
2021 - Q2 |
|
2022 - YTD |
|
2021 - YTD |
Net Income |
$ |
24,110 |
|
|
$ |
52,486 |
|
|
$ |
83,979 |
|
|
$ |
76,596 |
|
|
$ |
116,036 |
|
Adjustments: |
|
|
|
|
|
Finance expense |
|
8,154 |
|
|
|
5,496 |
|
|
|
2,306 |
|
|
|
13,650 |
|
|
|
6,076 |
|
Income tax expense |
|
5,283 |
|
|
|
8,606 |
|
|
|
15,862 |
|
|
|
13,889 |
|
|
|
23,691 |
|
Amortization and depreciation |
|
16,360 |
|
|
|
11,504 |
|
|
|
9,871 |
|
|
|
27,865 |
|
|
|
21,382 |
|
EBITDA |
$ |
53,907 |
|
|
$ |
78,092 |
|
|
$ |
112,018 |
|
|
$ |
132,000 |
|
|
$ |
167,185 |
|
Foreign exchange loss (gain) |
|
3,303 |
|
|
|
(18,709 |
) |
|
|
(30,718 |
) |
|
|
(15,406 |
) |
|
|
(2,093 |
) |
Share based compensation |
|
(2,333 |
) |
|
|
1,990 |
|
|
|
2,480 |
|
|
|
(343 |
) |
|
|
4,826 |
|
Incremental COVID-19 costs |
|
952 |
|
|
|
1,004 |
|
|
|
1,749 |
|
|
|
1,956 |
|
|
|
2,305 |
|
Adjusted EBITDA |
$ |
55,829 |
|
|
$ |
62,377 |
|
|
$ |
85,529 |
|
|
$ |
118,207 |
|
|
$ |
172,223 |
|
Adjusted net income attributable to owners of the
Company and Adjusted net income per share attributable to owners of
the Company
The following table provides a reconciliation of
Adjusted net income attributable to owners of the Company and
Adjusted EPS to net income attributable to the owners of the
Company, its most directly comparable IFRS measure.
Reconciliation: |
2022 - Q2 |
|
2022 - Q1 |
|
2021 - Q2 |
|
2022 - YTD |
|
2021 - YTD |
Net income
as reported attributable to the owners of the |
Company |
$ |
23,820 |
|
|
$ |
52,107 |
|
|
$ |
83,419 |
|
|
$ |
75,927 |
|
|
$ |
115,168 |
|
Adjustments: |
|
|
|
|
|
Share based compensation |
|
(2,333 |
) |
|
|
1,990 |
|
|
|
2,480 |
|
|
|
(343 |
) |
|
|
4,826 |
|
Unrealized foreign exchange loss (gain) on USD |
|
|
|
|
|
denominated balances in MCSA |
|
1,038 |
|
|
|
(1,337 |
) |
|
|
(8,712 |
) |
|
|
(299 |
) |
|
|
(912 |
) |
Unrealized foreign exchange loss (gain) on foreign exchange
derivative contracts |
|
1,405 |
|
|
|
(24,615 |
) |
|
|
(29,799 |
) |
|
|
(23,210 |
) |
|
|
(12,928 |
) |
Incremental COVID-19 costs |
|
946 |
|
|
|
998 |
|
|
|
1,735 |
|
|
|
1,944 |
|
|
|
2,291 |
|
Unrealized (gain) loss on interest rate derivative |
|
|
|
|
|
contracts |
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
(409 |
) |
Tax effect on the above adjustments |
|
(519 |
) |
|
|
3,808 |
|
|
|
4,344 |
|
|
|
3,289 |
|
|
|
1,771 |
|
Adjusted net income
attributable to owners of the Company |
$ |
24,357 |
|
|
$ |
32,951 |
|
|
$ |
53,473 |
|
|
$ |
57,308 |
|
|
$ |
109,807 |
|
|
|
|
|
|
|
Weighted average number of common shares |
|
|
|
|
|
Basic |
|
90,539,647 |
|
|
|
90,238,008 |
|
|
|
88,251,995 |
|
|
|
90,389,661 |
|
|
|
88,158,672 |
|
Diluted |
|
91,850,321 |
|
|
|
92,050,104 |
|
|
|
93,314,274 |
|
|
|
91,887,665 |
|
|
|
93,106,210 |
|
|
|
|
|
|
|
Adjusted EPS |
|
|
|
|
|
Basic |
$ |
0.27 |
|
|
$ |
0.37 |
|
|
$ |
0.61 |
|
|
$ |
0.63 |
|
|
$ |
1.25 |
|
Diluted |
$ |
0.27 |
|
|
$ |
0.36 |
|
|
$ |
0.57 |
|
|
$ |
0.62 |
|
|
$ |
1.18 |
|
Net (Cash) Debt
The following table provides a calculation of
net (cash) debt based on amounts presented in the Company’s
condensed consolidated interim financial statements as at the
periods presented.
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
June 30, 2021 |
Current
portion of loans and borrowings |
$ |
16,219 |
|
|
$ |
8,740 |
|
|
$ |
4,344 |
|
|
$ |
4,461 |
|
Long-term portion of loans and
borrowings |
|
403,492 |
|
|
|
402,345 |
|
|
|
54,906 |
|
|
|
152,404 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
(329,292 |
) |
|
|
(365,465 |
) |
|
|
(130,129 |
) |
|
|
(137,655 |
) |
Short-term investments |
|
(100,589 |
) |
|
|
(100,018 |
) |
|
|
— |
|
|
|
(26,408 |
) |
Net (cash)
debt |
$ |
(10,170 |
) |
|
$ |
(54,398 |
) |
|
$ |
(70,879 |
) |
|
$ |
(7,198 |
) |
Working capital and Available
liquidity
The following table provides a calculation for
these based on amounts presented in the Company’s condensed
consolidated interim financial statements as at the periods
presented.
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
June 30, 2021 |
Current assets |
$ |
523,201 |
|
|
$ |
546,439 |
|
|
$ |
208,686 |
|
|
$ |
202,342 |
|
Less: Current liabilities |
|
(105,527 |
) |
|
|
(102,743 |
) |
|
|
(122,660 |
) |
|
|
(83,453 |
) |
Working
capital |
$ |
417,674 |
|
|
$ |
443,696 |
|
|
$ |
86,026 |
|
|
$ |
118,889 |
|
|
|
|
|
|
Cash and cash equivalents |
|
329,292 |
|
|
|
365,465 |
|
|
|
130,129 |
|
|
|
137,655 |
|
Short-term investments |
|
100,589 |
|
|
|
100,018 |
|
|
|
26,408 |
|
|
|
— |
|
Available undrawn
revolving credit |
facilities |
|
75,000 |
|
|
|
75,000 |
|
|
|
100,000 |
|
|
|
— |
|
Available
liquidity |
$ |
504,881 |
|
|
$ |
540,483 |
|
|
$ |
256,537 |
|
|
$ |
137,655 |
|
ABOUT ERO COPPER CORP
Ero is a high-margin, high-growth, clean copper
producer with operations in Brazil and corporate headquarters in
Vancouver, B.C. 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 Company's Caraíba Operations (formerly
known as the MCSA Mining Complex), which are located in the Curaçá
Valley, Bahia State, Brazil and include the Pilar and Vermelhos
underground mines and the Surubim open pit mine, and the Tucumã
Project (formerly known as Boa Esperança), an IOCG-type copper
project located in Pará, Brazil. The Company also owns 97.6% of NX
Gold S.A. ("NX Gold") which owns the Xavantina Operations (formerly
known as the NX Gold Mine), comprised of an operating gold and
silver mine located in Mato Grosso, Brazil. Additional information
on the Company and its operations, including technical reports on
the Caraíba Operations, Xavantina Operations and Tucumã Project,
can be found on the Company's website (www.erocopper.com), on SEDAR
(www.sedar.com), and on EDGAR (www.sec.gov). The Company’s shares
are publicly traded on the Toronto Stock Exchange and the New York
Stock Exchange under the symbol “ERO”.
ERO COPPER
CORP.
/s/ David Strang |
For further information contact: |
David Strang, CEO |
Courtney
Lynn, VP, Corporate Development & Investor Relations |
|
(604)
335-7504 |
|
info@erocopper.com |
CAUTION REGARDING FORWARD LOOKING INFORMATION
AND STATEMENTS
This press release contains “forward-looking
statements” within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and “forward-looking
information” within the meaning of applicable Canadian securities
legislation (collectively, “forward-looking statements”).
Forward-looking statements include 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. Forward-looking statements may include, but are not
limited to, statements with respect to mineral reserve and mineral
resource estimates; targeting additional mineral resources and
expansion of deposits; capital and operating cost estimates and
economic analyses (including cash flow projections), including
those from the Caraíba Operations Technical Report, the Xavantina
Operations Technical Report and the Tucumã Project Technical
Report; the Company’s expectations, strategies and plans for the
Caraíba Operations, the Xavantina Operations and the Tucumã
Project, including the Company’s planned organic growth,
exploration, development, construction and production activities;
the results of future exploration and drilling; estimated
completion dates for certain milestones; successfully adding or
upgrading mineral resources and successfully developing new
deposits; the costs and timing of future exploration, development
and construction including but not limited to the Deepening
Extension Project at the Caraíba Operations and the Tucumã Project;
the timing and amount of future production at the Caraíba
Operations, the Xavantina Operations and the Tucumã Project; the
impacts of COVID-19 on the Company’s business and operations;
expectations regarding the Company's ability to manage risks
related to future copper price fluctuations and volatility; future
financial or operating performance and condition of the Company and
its business, operations and properties, including expectations
regarding liquidity, capital structure, balance sheet strength and
competitive position; expectations about sustainability efforts and
strategies including the cost and ability to offset the
environmental impact of operating and/or construction activities;
expectations regarding future currency exchange rates; and any
other statement that may predict, forecast, indicate or imply
future plans, intentions, levels of activity, results, performance
or achievements.
Forward-looking statements are subject to a
variety of known and unknown risks, uncertainties and other factors
that could cause actual results, actions, events, conditions,
performance or achievements to materially differ from those
expressed or implied by the forward-looking statements, including,
without limitation, risks discussed in this press release and in
the AIF under the heading “Risk Factors”. The risks discussed in
this press release and in the AIF are not exhaustive of the factors
that may affect any of the Company’s forward-looking statements.
Although the Company has attempted to identify important factors
that could cause actual results, actions, events, conditions,
performance or achievements to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results, actions, events, conditions, performance or
achievements to differ from those anticipated, estimated or
intended.
Forward-looking statements are not a guarantee
of future performance. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Forward-looking statements involves
statements about the future and are inherently uncertain, and the
Company’s actual results, achievements or other future events or
conditions may differ materially from those reflected in the
forward-looking statements due to a variety of risks, uncertainties
and other factors, including, without limitation, those referred to
herein and in the AIF under the heading “Risk Factors”.
The Company’s forward-looking statements are
based on the assumptions, beliefs, expectations and opinions of
management on the date the statements are made, many of which may
be difficult to predict and beyond the Company’s control. In
connection with the forward-looking statements contained in this
press release and in the AIF, the Company has made certain
assumptions about, among other things: continued effectiveness of
the measures taken by the Company to mitigate the possible impact
of COVID-19 on its workforce and operations; 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, gold 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
Caraíba Operations, the Xavantina Operations and the Tucumã Project
being as described in the respective technical report for each
property; production costs; the accuracy of budgeted exploration,
development and construction 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; work force continuing to remain healthy in the face of
prevailing epidemics, pandemics or other health risks (including
COVID-19), 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. Although the Company believes that the
assumptions inherent in forward-looking statements are reasonable
as of the date of this press release, these assumptions are 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 statements. The Company
cautions that the foregoing list of assumptions is 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 statements contained in this press
release.
Forward-looking statements contained herein are
made as of the date of this press release and the Company disclaims
any obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or results or
otherwise, except as and to the extent required by applicable
securities laws.
CAUTIONARY NOTES REGARDING MINERAL RESOURCE AND
MINERAL RESERVE ESTIMATES
In accordance with applicable Canadian
securities regulatory requirements, all mineral reserve and mineral
resource estimates of the Company disclosed or incorporated by
reference in this press release have been prepared in accordance
with NI 43-101 and are classified in accordance with the Canadian
Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition
Standards for Mineral Resources and Mineral Reserves, adopted by
the CIM Council on May 10, 2014 (the “CIM Standards”). NI 43-101 is
a rule developed by the Canadian Securities Administrators that
establishes standards for all public disclosure an issuer makes of
scientific and technical information concerning mineral projects.
NI 43-101 differs significantly from the disclosure requirements of
the Securities and Exchange Commission (the “SEC”) generally
applicable to U.S. companies. For example, the terms “mineral
reserve”, “proven mineral reserve”, “probable mineral reserve”,
“mineral resource”, “measured mineral resource”, “indicated mineral
resource” and “inferred mineral resource” are defined in NI 43-101.
These definitions differ from the definitions in the disclosure
requirements promulgated by the SEC. Accordingly, information
contained in this press release may not be comparable to similar
information made public by U.S. companies reporting pursuant to SEC
disclosure requirements.
Mineral resources which are not mineral reserves
do not have demonstrated economic viability. Pursuant to the CIM
Standards, mineral resources have a higher degree of uncertainty
than mineral reserves as to their existence as well as their
economic and legal feasibility. Inferred mineral resources, when
compared with measured or indicated mineral resources, have the
least certainty as to their existence, and it cannot be assumed
that all or any part of an inferred mineral resource will be
upgraded to an indicated or measured mineral resource as a result
of continued exploration. Pursuant to NI 43-101, inferred mineral
resources may not form the basis of any economic analysis.
Accordingly, readers are cautioned not to assume that all or any
part of a mineral resource exists, will ever be converted into a
mineral reserve, or is or will ever be economically or legally
mineable or recovered.
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