Ero Copper Corp. (TSX: ERO, NYSE: ERO) (“Ero” or
the “Company”) today is pleased to announce its financial results
for the three months ended June 30, 2021. Management will host a
conference call tomorrow, Thursday, August 5, 2021, 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
- Copper production
of 10,898 tonnes at the MCSA Mining Complex at C1 cash costs(*) of
$0.72 per pound of copper produced during the quarter;
- Gold production of
10,377 ounces at the NX Gold Mine at C1 cash costs(*) of $499 per
ounce of gold produced and All-in Sustaining Costs(*) of $660 per
ounce of gold produced;
- Strong quarterly
adjusted EBITDA(*) of $85.5 million and adjusted net income
attributable to owners of the Company(*) of $53.7 million ($0.58
per share on a diluted basis);
- Record quarterly
cash flow from operations of $85.1 million driven by strong
performance across the Company’s operations as well as elevated
copper and gold prices;
- Total cash and cash
equivalents of $137.7 million, an increase of $53.1 million
quarter-over-quarter and $75.1 million since the end of 2020;
- Announced a $110
million streaming agreement with Royal Gold (as defined below) in
relation to gold production from the NX Gold Mine (the “NX Gold
Stream”), unlocking significant shareholder value from the mine and
further enhancing the Company’s balance sheet;
- Net debt position
of $19 million at the end of the quarter (excluding proceeds from
the NX Gold Stream) versus $74 million at the end of Q1 2021;
and,
- Reiterating
full-year production, operating cost and capital expenditure
guidance for 2021.
Commenting on the results, David Strang, CEO,
stated, “We have built strong momentum on all fronts throughout our
organization as we enter the second half of 2021. Our operating
results were highlighted by a continuation of
higher-than-forecasted grades in the Pilar Mine, aided during the
second quarter by an ongoing value engineering program allowing us
to access and mine high-grade stopes previously believed to be
sterilized within the upper levels of the Pilar Mine. These efforts
allowed us to maintain strong copper production while successfully
completing the first of two phases of scheduled mill maintenance at
the MCSA Mining Complex, and as a result, we generated record
quarterly operating cash flows and are well-positioned to achieve
full-year production and cost guidance.
“On the exploration front, we recently released
our most significant results to date, highlighted by several of the
best drill results in the history of our operations including a 67
meter intercept grading over 9% copper from a new open zone of
‘Superpod’ style mineralization at depth in the Pilar Mine and a
nine meter intercept grading over 22 grams per tonne gold at depth
within the NX Gold Mine – the best intercept in the history of the
mine. We expect both areas, which extend known mineralization
beyond the limits of our current mineral resources, along with
ongoing exploration efforts, to contribute to Ero’s growth in the
years to come.
“Our core focus on generating industry-leading
ROIC and unlocking value for shareholders was demonstrated during
the quarter with the announcement of a $110 million streaming
transaction on the NX Gold Mine. The transaction unlocks value from
the NX Gold Mine while forming a strategic partnership highly
aligned with our vision to further develop and grow gold production
from the mine. The NX Gold Stream, combined with our record cash
position and strong cash flow from operations, provides balance
sheet strength and flexibility to continue to execute our organic
growth initiatives, including the development of the Boa Esperança
Project.”
*Earnings before interest, taxes, depreciation
and amortization (“EBITDA”), Adjusted EBITDA, Adjusted net income
attributable to owners of the Company, Adjusted net income per
share attributable to owners of the Company, C1 cash cost per pound
of copper produced, C1 cash cost per ounce of gold produced and
All-in Sustaining Costs (“AISC”) per ounce of gold produced are
non-IFRS measures – see the Notes section of this press release for
additional information. C1 cash cost per pound of copper produced
are net of by-product credits from metal produced at the MCSA
Mining Complex. AISC per ounce of gold produced are net of
by-product credits from metal produced at the NX Gold Mine.
OPERATIONS & EXPLORATION HIGHLIGHTS
- Mining
& Milling Operations – record operating cash flows
driven by operational excellence
- The MCSA Mining
Complex processed 553,992 tonnes of ore grading 2.13% copper,
producing 10,898 tonnes of copper in concentrate during the quarter
after metallurgical recoveries of 92.5%; H1 2021 copper production
totaled 23,536 tonnes based on approximately 1.2 million tonnes
processed at copper grades of 2.22% and metallurgical recoveries of
92.2%.
- Lower
quarter-on-quarter tonnes processed due to scheduled mill
maintenance at the MCSA Mining Complex was offset by
higher-than-planned grades related to favorable grade
reconciliations and value engineering opportunities, which allowed
for the integration of high-grade stopes within the upper levels of
the Pilar Mine into the mining sequence.
- The NX Gold Mine
processed 43,936 tonnes grading 7.45 grams per tonne, producing
10,377 ounces of gold after metallurgical recoveries of 98.6%(*)
and 6,803 ounces of silver produced as by-product; H1 2021 tonnes
processed totaled 81,548 at an average grade of 7.82 grams per
tonne, producing 19,828 ounces of gold after metallurgical
recoveries of 96.7% and 12,597 ounces of silver produced a
by-product.(*) Metallurgical recovery rates were elevated during H1
2021 due to contributions from gold recovered through the Company’s
“Zero Loss” campaign, which included the reprocessing of mill and
foundry scrap, and therefore, may not be representative of
metallurgical recoveries from mined ore during the period.
- Exploration
Activities – new open zone of high-grade “Superpod” style
mineralization identified with best hole drilled in the history of
the MCSA Mining Complex
- MCSA In-Mine and
Near-Mine Exploration Programs
- Deepening Extension
drilling, within the Pilar Mine, has delineated a new open zone of
“Superpod” style mineralization extending over 350 meters in strike
length below the current mineral resource shell with best hole
drilled in the history of the mine of 67.0 meters grading 9.21%
copper, including 21.0 meters grading 14.14% copper.
- NX Gold Mine
Exploration Program
- Best intercepts in
the history of the mine, including 9.0 meters grading 22.66 grams
per tonne, continue to demonstrate extensions of the Santo Antonio
Vein beyond the current mineral resource shell. In addition, new
high-grade extensions of the Matinha Vein have been identified at
depth.
- Two new mineralized
gold systems, known as the Sovaco de Cobra (“Cobra”) and the Mata
Verde Systems, located 1.2 kilometers and 25 kilometers,
respectively, from the NX Gold Mine, were also discovered during
the quarter.
- MCSA Past Producing
Open Pit Mine Re-Evaluation
- New drilling
continues to confirm two high-grade zones of mineralization within
the Surubim District beneath each Lagoa da Mina, part of the past
producing Angicos Mine, and the Surubim Mine.
- Regional
Exploration Program
- Regional
exploration within the Curaçá Valley continues to be a top priority
with an aggressive drill program underway for H2 2021.
- Six geochemistry
teams, four ground gravity teams and three ground induced
polarization teams continue to refine drill locations within
previously announced target systems.
- Organic
Growth Projects – executing on high-return, low capital
intensity organic growth strategy
- Mobilization for
early works is underway in preparation for construction of the new
external shaft supporting the Deepening Extension Project, which
upon completion, is expected to support higher production rates
from the Pilar Mine at an elevated grade profile. As a result of
newly identified “Superpod” style mineralization at depth, the
Company has initiated a design review of the new shaft to maximize
the value of the mineral resource.
- The Company
continues to progress the Boa Esperança Project optimized
Feasibility Study and expects to provide an update on these ongoing
studies during Q3 2021.
- Corporate
Highlights – strengthened balance sheet to execute organic
growth plans
- The Company
announced a $110 million NX Gold Stream, unlocking significant
value from the NX Gold Mine by validating the exploration potential
of the broader NX Gold land package. Additional detail is provided
later in this press release.
- During the quarter,
the Company released its 2020 Sustainability Report, detailing the
Company’s commitment to responsible mining as well as its
environmental, social, corporate governance and health and safety
goals and performance.
OPERATING AND FINANCIAL HIGHLIGHTS
|
|
3 months endedJune 30, 2021 |
|
3 months endedMarch 31, 2021 |
|
6 months endedJune 30, 2021 |
|
3 months endedJune 30, 2020 |
|
6 months endedJune 30, 2020 |
|
Operating Highlights |
|
Copper (MCSA Operations) |
|
|
|
|
|
|
|
|
|
|
|
Ore Processed (tonnes) |
|
|
553,992 |
|
|
597,594 |
|
|
1,151,586 |
|
|
627,071 |
|
|
|
1,235,030 |
|
|
Grade (% Cu) |
|
|
2.13 |
|
|
2.30 |
|
|
2.22 |
|
|
1.98 |
|
|
|
1.97 |
|
|
Cu Production (tonnes) |
|
|
10,898 |
|
|
12,638 |
|
|
23,536 |
|
|
11,178 |
|
|
|
21,835 |
|
|
Cu Production (000 lbs) |
|
|
24,026 |
|
|
27,863 |
|
|
51,889 |
|
|
24,643 |
|
|
|
48,138 |
|
|
Cu Sold in Concentrate (tonnes) |
|
|
10,094 |
|
|
12,469 |
|
|
22,562 |
|
|
10,586 |
|
|
|
21,018 |
|
|
Cu Sold in Concentrate (000 lbs) |
|
|
22,253 |
|
|
27,488 |
|
|
49,741 |
|
|
23,339 |
|
|
|
46,338 |
|
|
C1 cash cost of copper produced (per lb)(1) |
|
$ |
0.72 |
|
$ |
0.49 |
|
$ |
0.60 |
|
$ |
0.65 |
|
|
$ |
0.68 |
|
|
Gold (NX Gold Operations) |
|
|
|
|
|
|
|
|
|
|
|
Au Production (oz) |
|
|
10,377 |
|
|
9,451 |
|
|
19,828 |
|
|
8,739 |
|
|
|
16,605 |
|
|
C1 cash cost of gold produced (per ounce)(1) |
|
$ |
499 |
|
$ |
487 |
|
$ |
494 |
|
$ |
437 |
|
|
$ |
511 |
|
|
AISC of gold produced (per ounce)(1) |
|
$ |
660 |
|
$ |
643 |
|
$ |
652 |
|
$ |
593 |
|
|
$ |
668 |
|
|
Financial Highlights ($millions, except per share
amounts) |
|
Revenues |
|
$ |
120.7 |
|
$ |
122.5 |
|
$ |
243.2 |
|
$ |
70.8 |
|
|
$ |
138.5 |
|
|
Gross
Profit |
|
$ |
83.7 |
|
$ |
82.8 |
|
$ |
166.5 |
|
$ |
39.5 |
|
|
$ |
70.2 |
|
|
EBITDA(1) |
|
$ |
112.0 |
|
$ |
55.2 |
|
$ |
167.2 |
|
$ |
23.4 |
|
|
$ |
(27.2 |
) |
|
Adjusted EBITDA(1) |
|
$ |
85.5 |
|
$ |
86.7 |
|
$ |
172.2 |
|
$ |
42.4 |
|
|
$ |
75.9 |
|
|
Cash
Flow from Operations |
|
$ |
85.1 |
|
$ |
62.1 |
|
$ |
147.2 |
|
$ |
42.5 |
|
|
$ |
79.8 |
|
|
Net
Income (loss) |
|
$ |
84.0 |
|
$ |
32.1 |
|
$ |
116.0 |
|
$ |
7.7 |
|
|
$ |
(45.3 |
) |
|
Net
income (loss) attributable to owners of the Company |
|
$ |
83.4 |
|
$ |
31.7 |
|
$ |
115.2 |
|
$ |
7.5 |
|
|
$ |
(45.2 |
) |
|
Per share (basic) |
|
$ |
0.95 |
|
$ |
0.36 |
|
$ |
1.31 |
|
$ |
0.09 |
|
|
$ |
(0.53 |
) |
|
Per share (diluted) |
|
$ |
0.89 |
|
$ |
0.34 |
|
$ |
1.24 |
|
$ |
0.08 |
|
|
$ |
(0.53 |
) |
|
Adjusted net income attributable to owners of the Company(1) |
|
$ |
53.7 |
|
$ |
56.3 |
|
$ |
110.0 |
|
$ |
20.3 |
|
|
$ |
41.1 |
|
|
Per share (basic) |
|
$ |
0.61 |
|
$ |
0.64 |
|
$ |
1.25 |
|
$ |
0.24 |
|
|
$ |
0.48 |
|
|
Per share (diluted) |
|
$ |
0.58 |
|
$ |
0.61 |
|
$ |
1.18 |
|
$ |
0.22 |
|
|
$ |
0.45 |
|
|
Cash
and Cash Equivalents |
|
$ |
137.7 |
|
$ |
84.6 |
|
$ |
137.7 |
|
$ |
51.6 |
|
|
$ |
51.6 |
|
|
Working Capital (Deficit)(1) |
|
$ |
118.9 |
|
$ |
63.5 |
|
$ |
118.9 |
|
$ |
(25.7 |
) |
|
$ |
(25.7 |
) |
|
Net
Debt(1) |
|
$ |
19.2 |
|
$ |
74.5 |
|
$ |
19.2 |
|
$ |
130.9 |
|
|
$ |
130.9 |
|
|
Footnotes
(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 Debt, Working Capital (Deficit), 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 – see the Notes section of this press release for
a discussion on non-IFRS Measures.
ADJUSTED EBITDA & NET INCOME (LOSS)
RECONCILIATION
($ in
thousands) |
|
3 months endedJune 30, 2021 |
|
|
|
|
|
Adjusted EBITDA |
|
$ |
85,529 |
|
|
Adjustments: |
|
|
|
Unrealized foreign exchange gain on USD denominated debt in
MCSA |
|
|
9,993 |
|
|
Unrealized foreign exchange gain on derivative contracts |
|
|
29,934 |
|
|
Realized foreign exchange loss on derivative contracts |
|
|
(5,997 |
) |
|
Share based compensation and other |
|
|
(5,692 |
) |
|
Incremental costs in response to COVID-19 pandemic |
|
|
(1,749 |
) |
|
EBITDA |
|
$ |
112,018 |
|
|
|
|
|
|
Adjusted net income attributable to owners of the
Company |
|
$ |
53,672 |
|
|
Adjustments for non-cash items (attributable to owners of the
Company): |
|
|
|
Unrealized foreign exchange gain on USD denominated balances in
MCSA |
|
|
8,712 |
|
|
Unrealized foreign exchange gain on derivative contracts, net of
tax |
|
|
25,256 |
|
|
Unrealized loss on interest rate derivative |
|
|
(6 |
) |
|
Share based compensation |
|
|
(2,480 |
) |
|
Incremental costs in response to COVID-19 pandemic |
|
|
(1,735 |
) |
|
Reported net income attributable to owners of the
Company |
|
$ |
83,419 |
|
|
NX GOLD STREAM
During the quarter, the Company entered into a
definitive Precious Metals Purchase Agreement with RGLD Gold AG, a
wholly owned subsidiary of Royal Gold Inc. (collectively, “Royal
Gold”), in relation to gold production from the NX Gold Mine.
The Company will receive upfront cash
consideration of $100 million for the purchase of 25% of gold
produced until 93,000 ounces of gold have been delivered,
decreasing to 10% of gold produced over the remaining life of mine.
Royal Gold will make ongoing payments equal to 20% of the
prevailing spot gold price for each ounce of gold delivered until
49,000 ounces of gold have been received, after which it will pay
40% of the prevailing spot gold price for each ounce of gold
delivered. Additional payment obligations of Royal Gold
include:
- Up to US$5 million
payable, available through the end of 2024, based upon the number
of ounces of gold added to the Measured and Indicated mineral
resource categories as compared to the mineral resources as of the
effective date of the NX Gold Stream at a rate of US$20 per
ounce;
- Up to US$5 million
payable, available from 2022 through the end of 2024, based upon
completion of planned meters of drilling within the exploration
concessions of the NX Gold Mine at a rate of US$100 per meter;
and,
- US$5 per ounce of
gold delivered under the NX Gold Stream payable to the Company as
contribution towards ongoing ESG initiatives within the area of
influence of the mine.
Proceeds from the transaction, which is expected
to close during the third quarter of 2021, will significantly
enhance Ero’s balance sheet strength and flexibility, offering
further support to execute upon the Company’s growth strategy
including advancing the Boa Esperança Project.
Please refer to the Company’s press release
dated June 30, 2021 for additional information on the NX Gold
Stream. Closing of the transaction is subject to the completion of
certain corporate matters and customary conditions.
2021 PRODUCTION OUTLOOK
The Company is reaffirming its 2021 production
guidance ranges for both the MCSA Mining Complex and the NX Gold
Mine and is well-positioned to achieve the high end of both ranges.
Similar to Q2 2021, mill throughput volumes and copper production
in Q3 2021 are expected to be impacted by the second phase of
planned mill maintenance at the MCSA Mining Complex, scheduled to
begin in August 2021 and be completed before the end of the third
quarter. Copper grades are expected to revert to plan in H2
2021.
Gold production from the NX Gold Mine for 2021
is expected to come from ore mined from the Santo Antonio Vein.
Lower gold grades are anticipated in H2 2021 due to scheduled mine
sequencing, and recovery rates, which were elevated during H1 2021
due to gold contributions from mill and foundry scrap recycling
efforts, are expected to normalize in Q3 2021.
|
2021
Guidance(1) |
MCSA Mining Complex |
|
Tonnes Processed |
2,700,000 |
|
Copper Grade (% Cu) |
1.75 |
% |
Copper Recovery (%) |
93.0 |
% |
Cu Production Guidance (000 tonnes) |
42.0 – 45.0 |
|
|
|
NX Gold Mine |
|
Tonnes Processed |
167,000 |
|
Gold Grade (gpt) |
7.20 |
|
Gold Recovery (%) |
92.0 |
% |
Au Production Guidance (000 ounces) |
34.5 – 37.5 |
|
(1) 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 filings, including the Annual Information Form for
the year ended December 31, 2020 and dated March 16, 2021 (the
“AIF”), for complete risk factors.
2021 COST GUIDANCE
The Company is tracking towards the low end of
its reaffirmed 2021 cost guidance ranges, which assume a USD:BRL
foreign exchange rate of 5.00, a gold price of $1,750 per ounce and
a silver price of $20.00 per ounce.
|
2021 Guidance |
MCSA Mining Complex C1 Cash Cost Guidance (US$/lb)(1) |
$0.75 – $0.85 |
NX Gold Mine C1 Cash Cost Guidance (US$/oz)(1) |
$500 – $600 |
NX Gold Mine All-in Sustaining Cost (AISC) Guidance
(US$/oz)(1) |
$875 – $975 |
(1) C1 cash costs and AISC are a non-IFRS
measures – see the Notes section of this press release for
additional information.
2021 CAPITAL EXPENDITURE GUIDANCE
The Company is reaffirming its 2021 capital
expenditure guidance, which assumes a USD:BRL foreign exchange rate
of 5.00 and has been presented below in USD millions.
MCSA Operations |
|
2021 Guidance |
Pilar Mine and Caraíba Mill Complex (excluding Deepening Extension
Project) |
|
$45.0 – $50.0 |
Deepening Extension Project |
|
$12.5 – $15.0 |
Vermelhos Mine & District(1) |
|
$14.0 – $16.0 |
Surubim Open Pit Mine |
|
$10.0 – $12.0 |
Boa Esperança Project |
|
$1.0 – $1.5 |
Capital Expenditure Guidance |
|
$82.5 – $94.5 |
Curaçá Valley Exploration |
|
$30.0 – $35.0 |
|
|
|
NX Gold Mine |
|
2021 Guidance |
Capital Expenditure Guidance |
|
$13.0 – $15.0 |
Exploration |
|
$8.0 – $10.0 |
Total, NX Gold Mine |
|
$21.0 – $25.0 |
(1) Vermelhos District includes open pit mining
infrastructure expenditures of approximately US$6.0 million in
2021.
CONFERENCE CALL DETAILS
The Company will hold a conference call on
Thursday, August 5, 2021 at 11:30 am Eastern time (8:30 am Pacific
time) to discuss these results.
Date: |
Thursday, August 5, 2021 |
Time: |
11:30 am Eastern time (8:30 am Pacific time) |
Dial in: |
North America: 1-800-319-4610, International: +1-604-638-5340please
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: |
7238 |
NOTES
Non-IFRS measures
Financial results of the Company are prepared in
accordance with IFRS. The Company utilizes certain non-IFRS
measures, including C1 cash cost of copper produced (per lb), C1
cash costs 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 debt
and working capital, which are not measures recognized under IFRS.
The Company believes that these measures, together with measures
determined in accordance with IFRS, provide investors with an
improved ability to evaluate the underlying performance of the
Company. Non-IFRS measures do not have any standardized meaning
prescribed under IFRS, and therefore they may not be comparable to
similar measures employed by other companies. The data is intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
C1 cash cost of copper produced (per
lb.)
C1 cash cost of copper produced (per lb) is the
sum of production costs, net of capital expenditure development
costs and by-product credits, divided by the copper pounds
produced. C1 cash costs reported by the Company include treatment,
refining charges, offsite costs, and certain tax credits relating
to sales invoiced to the Company’s Brazilian customer on sales.
By-product credits are calculated based on actual precious metal
sales (net of treatment costs) during the period divided by the
total pounds of copper produced during the period. C1 cash cost of
copper produced per pound is a non-IFRS measure used by the Company
to manage and evaluate operating performance of the Company’s
operating mining unit, and is widely reported in the mining
industry as benchmarks for performance, but does not have a
standardized meaning and is disclosed in addition to IFRS
measures.
C1 cash cost of gold produced (per
ounce)
C1 cash cost of gold produced (per ounce) is the
sum of production costs, net of capital expenditure development
costs and silver by-product credits, divided by the gold ounces
produced. By-product credits are calculated based on actual
precious metal sales during the period divided by the total ounces
of gold produced during the period. C1 cash cost of gold produced
per ounce is a non-IFRS measure used by the Company to manage and
evaluate operating performance of the Company’s operating mining
unit and is widely reported in the mining industry as benchmarks
for performance but does not have a standardized meaning and is
disclosed in addition to IFRS measures.
All-in Sustaining Cost of gold produced (per
ounce)
All-in sustaining cost of gold produced (per
ounce) is the sum of production costs, site general and
administrative costs, accretion of mine closure and rehabilitation
provision, sustaining capital expenditures, sustaining leases, and
royalties and production taxes, net of silver by-product credits,
divided by the gold ounces produced. By-product credits are
calculated based on actual precious metal sales during the period
divided by the total ounces of gold produced during the period.
All-in sustaining cost of gold produced per ounce is a non-IFRS
measure used by the Company to manage and evaluate operating
performance of the Company’s operating mining unit and is widely
reported in the mining industry as benchmarks for performance but
does not have a standardized meaning and is disclosed in addition
to IFRS measures.
Earnings before interest, taxes,
depreciation and amortization (EBITDA) and Adjusted
EBITDA
EBITDA represents earnings before interest
expense, income taxes, depreciation, and amortization. Adjusted
EBITDA includes further adjustments for non-recurring items and
items not indicative to the future operating performance of the
Company. The Company believes EBITDA and adjusted EBITDA are
appropriate supplemental measures of debt service capacity and
performance of its operations.
Adjusted EBITDA is calculated by removing the
following income statement items:
- Foreign exchange loss (gain)
- Share based compensation
- Incremental costs in response to COVID-19 pandemic
Adjusted net income attributable to
owners of the Company and Adjusted net income per share
attributable to owners of the Company
The Company uses the financial measure “Adjusted
net income attributable to owners of the Company” and “Adjusted net
income per share attributable to owners of the Company” to
supplement information in its consolidated financial statements.
The Company believes that, in addition to conventional measures
prepared in accordance with IFRS, the Company and certain investors
and analysts use this information to evaluate the Company’s
performance. The Company excludes non-cash and unusual items from
net earnings to provide a measure which allows the Company and
investors to evaluate the operating results of the underlying core
operations.
During the period, the following non-cash or
unusual adjustments to calculated adjusted net income (loss):
- Share based compensation
- Unrealized foreign exchange loss (gain) on USD denominated
balances in MCSA
- Unrealized loss (gain) on foreign exchange derivative
contracts, net of tax
- Incremental costs in response to COVID-19 pandemic
- Unrealized loss (gain) on interest rate derivative
contracts
Net Debt
Net debt is determined based on cash and cash
equivalents, restricted cash and loans and borrowings as reported
in the Company’s consolidated financial statements. The Company
uses net debt as a measure of the Company’s ability to pay down its
debt.
Working capital
Working capital is determined based on current
assets and current liabilities as reported in the Company’s
consolidated financial statements. The Company uses working capital
as a measure of the Company’s short-term financial health and
operating efficiency.
ABOUT ERO COPPER CORP
Ero Copper Corp, headquartered in Vancouver,
B.C., is focused on copper production growth from the MCSA Mining
Complex located in Bahia State, Brazil, with over 40 years of
operating history in the region. The Company's primary asset is a
99.6% interest in the Brazilian copper mining company, MCSA, 100%
owner of the MCSA Mining Complex, which is comprised of operations
located in the Curaçá Valley, Bahia State, Brazil, wherein the
Company currently mines copper ore from the Pilar and Vermelhos
underground mines, and the Boa Esperança development project, an
IOCG-type copper project located in Pará, Brazil. The Company also
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 MCSA
Mining Complex, Boa Esperança and NX Gold properties, can be found
on the Company's website (www.erocopper.com), on SEDAR
(www.sedar.com), and on EDGAR (www.sec.gov).
ERO COPPER CORP. |
|
Signed: “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. Such forward-looking statements include, without
limitation, statements with respect to mineral reserve and mineral
resource estimates as well as LOM plans; targeting additional
mineral resources and expansion of deposits; the Company’s
expectations, strategies and plans for the MCSA Mining Complex, the
NX Gold Property and the Boa Esperança Property, including, but not
limited to, the Company’s planned exploration, development and
production activities; the significance and timing of any
particular exploration program or result and the Company’s
expectations for current and future exploration plans including,
but not limited to, planned areas of additional exploration, the
significance of any drill results or new discoveries and targets
including, but not limited to, extensions of defined mineralized
zones, possibilities for mine life extensions or continuity of
high-grade mineralization, the recoverable value of any metals
other than copper, further extensions and expansion of
mineralization near the Company’s existing operations and
throughout the Curaçá Valley or the NX Gold Mine, statements with
respect to the importance of any new discoveries including newly
identified mineral systems, the significance of re-evaluation of
the Company’s past producing open pit mines, the timing and
advancement of ongoing projects including the Deepening Extension
Project and the re-start of the Surubim open pit mine; estimated
completion dates for certain milestones; successfully adding or
upgrading mineral resources and successfully developing new
deposits; the costs and timing of future exploration and
development including but not limited to the Deepening Extension
Project at the MCSA Mining Complex; the significance of any
potential optimization initiatives in connection with the Boa
Esperança Property; the impact of the COVID-19 pandemic on the
Company’s planned drill programs; the timing and amount of future
production at the MCSA Mining Complex and the NX Gold Property; the
timing and successful close of the NX Gold Stream; the Company's
ability to service its ongoing obligations, the Company's future
production outlook, cash costs, capital resources, expenditures,
and current global macroeconomic uncertainty stemming from the
COVID-19 pandemic and its impact on the Company’s business,
financial condition, results of operations, cash flows and
prospects.
Forward-looking statements are not a guarantee
of future performance and are 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: 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 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 MCSA Mining Complex, NX Gold Property and the Boa
Esperança 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; work force conditions 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 and critical supplies, spare parts and consumables;
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,
global health, 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. 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 statements
involve 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 statements. Such risks include,
without limitation the risk factors listed under the heading “Risk
Factors” in the AIF.
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 statements,
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 statements contained herein. 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. Accordingly,
readers should not place undue reliance on forward-looking
statements.
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 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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