Ero Copper Corp. (TSX: ERO, NYSE: ERO)
(“Ero” or the “Company”) is pleased to announce its operating and
financial results for the three and nine months ended September 30,
2024. Management will host a conference call tomorrow, Wednesday,
November 6, 2024, 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
- The Tucumã
Operation achieved a major commissioning milestone in July 2024,
producing its first saleable copper concentrate. As ramp-up efforts
increased mill throughput during the quarter, the operation
delivered 839 tonnes of copper, contributing to consolidated
quarterly copper production of 10,759 tonnes.
- Consolidated
quarterly copper production also included contributions from the
Caraíba Operations of 9,920 tonnes at C1 cash costs(*) of $1.63 per
pound of copper produced.
- Gold production
for the quarter was 13,485 ounces at C1 cash costs(*) and All-in
Sustaining Costs ("AISC")(*) of $539 and $1,034, respectively, per
ounce produced.
- Improved
operating margins were supported by a significant decrease in unit
operating costs at the Caraíba Operations and higher realized gold
prices at the Xavantina Operations, resulting in:
- Net income
attributable to the owners of the Company of $40.9 million, or
$0.39 per share on a diluted basis.
- Adjusted net
income attributable to the owners of the Company(*) of $27.6
million, or $0.27 per share on a diluted basis.
- Adjusted
EBITDA(*) of $62.2 million.
- Available
liquidity at quarter-end was $125.2 million, including $20.2
million in cash and cash equivalents, $80.0 million of undrawn
availability under the Company's senior secured revolving credit
facility, and $25.0 million of undrawn availability under the
copper prepayment facility.
(*) 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 nine months ended September 30, 2024 and the Reconciliation of
Non-IFRS Measures section at the end of this press release.
- During the
quarter, the Company opportunistically entered into zero-cost gold
collar contracts on 2,500 ounces of gold per month from January
2025 to December 2025, representing just over 50% of projected 2025
gold production at the Xavantina Operations. These contracts set a
floor price of $2,200 per ounce, while allowing for upside
participation in gold price increases up to a cap of $3,425 per
ounce, over 20% above the all-time high price reached in October
2024.
- Key 2024
guidance updates include:
- The Company is
updating consolidated copper production guidance to 43,000 to
48,000 tonnes in concentrate, reflecting an extension of Tucumã's
ramp-up schedule due to power disruptions in Q3 and October 2024
and slower-than- expected underground development progress at
Caraíba's Pilar Mine.
- Due to the
anticipated delay in achieving commercial production at the Tucumã
Operation, the Company is narrowing 2024 C1 cash cost guidance to
only include the Caraíba Operations. The Company is reaffirming
full-year C1 cash cost guidance for the Caraíba Operations of $1.80
to $2.00 per pound of copper produced.
- Full-year gold
production guidance is being maintained at the increased range of
60,000 to 65,000. The Company is also reaffirming reduced full-year
gold cost guidance of $450 to $550 per ounce of produced for C1
cash costs, and $900 to $1,000 per ounce for AISC.
- The Company is
maintaining full-year consolidated capital expenditure guidance of
$303 to $348 million.
“The third quarter and year-to-date period
presented both significant achievements to celebrate and new
challenges to navigate,” said David Strang, Chief Executive
Officer. “We have reached the inflection point we have been working
towards since the publication of Tucumã's Optimized Feasibility
Study in September 2021. With construction complete and ramp-up to
commercial production underway, reaching this milestone in just
over three years is a remarkable accomplishment.
"Alongside this achievement, came operational
headwinds, including power-related challenges that have impacted
our ramp-up schedule at Tucumã. At our Caraíba Operations, we made
progress in accelerating underground development rates at the Pilar
Mine, though the performance of a third-party development
contractor has been below expectations. We view these challenges as
transitional, and our team is actively working on returning to
plan.
"Despite these setbacks, our financial results
have been strengthened by improved operating margins driven by
significantly lower unit costs at Caraíba and higher realized gold
prices at Xavantina. We are optimistic about the path ahead, with
2025 on track to be our best year yet, and look forward to
delivering strong value for our stakeholders."
THIRD QUARTER
REVIEW
The Caraíba
Operations
- Quarterly copper
production at the Caraíba Operation increased 11.9% quarter-on-
quarter to 9,920 tonnes of copper in concentrate, with higher mined
and processed copper grades offsetting lower mill throughput.
- Higher copper
grades also contributed to a 24.5% decrease in C1 cash costs, which
averaged $1.63 per pound of copper produced for the quarter. C1
cash costs and margins also benefited from improved concentrate
treatment and refining charges, secured as of May 2024, as well as
a more favorable USD to BRL exchange rate.
- Efforts to
increase underground development rates at the Pilar Mine were
impacted by slower-than-anticipated progress by a third-party
development contractor during the quarter. Consequently, the
Company expects lower mined and processed tonnage at the Caraíba
Operations through year-end.
- To support
accelerated development rates, the Company intends to engage an
additional contractor in Q4 2024.
The Tucumã
Operation
- The Tucumã
Operation successfully produced first saleable concentrate in July
2024. Production for the quarter was 839 tonnes of copper in
concentrate, with mill throughput totaling 110,778 tonnes and
metallurgical recoveries averaging 75.7%.
- Mining operations
continued ahead of schedule, contributing to a buildup of ore
stockpiles that are expected to be processed in Q4 2024 and
throughout 2025.
- The ramp-up of
Tucumã's processing plant progressed well through July and the
majority of August; however, as the plant moved toward continuous
operations, the Company detected intermittent voltage oscillations
within the third-party regional power grid. These oscillations
limited the ability to run the mill at full capacity on a
continuous basis.
- Subsequent to
quarter-end, the Tucumã Operation experienced a temporary power
disruption following a severe localized windstorm that impacted the
regional power grid, including the main 230kV transmission line
servicing the southwest region of the Carajás Mineral Province.
Power was restored after approximately 10 days, allowing the
Company to safely resume ramp-up activities on October 16,
2024.(1)
- To address
ongoing intermittent voltage oscillations, the Company implemented
a mill power management solution that enables continuous plant
operations despite minor voltage fluctuations. Since this
implementation, the plant has maintained continuous operations and
is advancing toward full capacity.
(1) For further details on the power disruption and resumption
of ramp-up activities, please refer the Company's press releases
dated October 5, 2024 and October 16, 2024.
The Xavantina
Operations
- Quarterly gold
production at the Xavantina Operations totaled 13,485 ounces with
tonnes processed up 3.3% quarter-on-quarter, partially offsetting a
planned decrease in mined and processed gold grades.
- Unit operating
costs were in line with expectations for the quarter, averaging
$539 per ounce for C1 cash costs and $1,034 per ounce for
AISC.
- The Xavantina
Operations are expected to deliver similar production levels and
unit cost performance in Q4 2024 compared to Q3 2024.
OTHER SUBSEQUENT
EVENTS
The Company continued to advance its growth
pipeline with the announcement of an initial National Instrument
43-101 compliant mineral resource estimate for Furnas Copper-Gold
Project (the "Project") on October 2, 2024. This initial mineral
resource estimate, supported by over 90,000 meters of historic
drilling, highlights the significant potential of this Project.
In October 2024, the Company also commenced the
Phase 1 drill program under the definitive earn-in agreement(1) for
the Project, after receiving drilling permits from the Pará State
environmental agency in September 2024. This minimum 28,000-meter
program, designed to support a preliminary economic assessment on
the Project, is focused on infill drilling and extending high-grade
zones within the broader deposit to depth. For more information on
the Project's initial mineral resource estimate and the Phase 1
drill program, please refer to the Company's press release dated
October 2, 2024.
(1) In July 2024, the Company signed a
definitive earn-in agreement ("Agreement") with Salobo Metais S.A.,
a subsidiary of Vale Base Metals Limited, to earn a 60% interest in
the Project, located in the Carajás Mineral Province in Pará State,
Brazil. The terms of the Agreement align with the previously signed
binding term sheet outlined in the Company's press release dated
October 30, 2023.
OPERATING HIGHLIGHTS |
|
|
2024 - Q3 |
2024 - Q2 |
2023 - Q3 |
2024 - YTD |
2023 - YTD |
Copper (Caraíba Operations) |
|
|
|
|
|
Ore Processed (tonnes) |
|
900,289 |
|
957,692 |
|
806,096 |
|
2,711,352 |
|
2,419,465 |
Grade (% Cu) |
|
1.20 |
|
1.03 |
|
1.46 |
|
1.10 |
|
1.45 |
Cu Production (tonnes) |
|
9,920 |
|
8,867 |
|
10,766 |
|
26,878 |
|
32,097 |
Cu Production (000 lbs) |
|
21,871 |
|
19,548 |
|
23,734 |
|
59,257 |
|
70,761 |
Cu Sold in Concentrate (tonnes) |
|
9,970 |
|
8,706 |
|
10,090 |
|
28,137 |
|
31,166 |
Cu Sold in Concentrate (000 lbs) |
|
21,980 |
|
19,192 |
|
22,244 |
|
62,031 |
|
68,709 |
Cu C1 cash cost(1)(2) |
$ |
1.63 |
$ |
2.16 |
$ |
1.92 |
$ |
2.01 |
$ |
1.83 |
Copper (Tucumã
Operation) |
|
|
|
|
|
|
|
|
|
|
Ore Processed (tonnes) |
|
110,778 |
|
— |
|
— |
|
110,778 |
|
— |
Grade (% Cu) |
|
1.00 |
|
— |
|
— |
|
1.00 |
|
— |
Cu Production (tonnes) |
|
839 |
|
— |
|
— |
|
839 |
|
— |
Cu Production (000 lbs) |
|
1,850 |
|
— |
|
— |
|
1,850 |
|
— |
Cu Sold in Concentrate (tonnes) |
|
357 |
|
— |
|
— |
|
357 |
|
— |
Cu Sold in Concentrate (000 lbs) |
|
787 |
|
— |
|
— |
|
787 |
|
— |
Gold (Xavantina
Operations) |
|
|
|
|
|
Ore Processed (tonnes) |
|
41,761 |
|
40,446 |
|
31,446 |
|
120,041 |
|
101,586 |
Grade (g / tonne) |
|
11.41 |
|
14.00 |
|
18.72 |
|
13.85 |
|
14.43 |
Au Production (oz) |
|
13,485 |
|
16,555 |
|
17,579 |
|
48,274 |
|
42,355 |
Au C1 cash cost(1) |
$ |
539 |
$ |
428 |
$ |
371 |
$ |
447 |
$ |
425 |
Au AISC(1) |
$ |
1,034 |
$ |
842 |
$ |
844 |
$ |
879 |
$ |
943 |
(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, copper C1 cash cost, copper C1 cash cost
including foreign exchange hedges, gold C1 cash cost and gold AISC
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 nine months ended
September 30, 2024 and the Reconciliation of Non-IFRS Measures
section at the end of this press release.(2) Copper C1 cash cost
including foreign exchange hedges was $1.72 in Q3 2024 (Q3 2023 -
$1.77) and $2.04 in YTD 2024 (YTD 2024 - $1.73).
FINANCIAL HIGHLIGHTS($ in
millions, except per share amounts)
|
2024 - Q3 |
2024 - Q2 |
2023 - Q3 |
2024 - YTD |
2023 - YTD |
Revenues |
$ |
124.8 |
|
$ |
117.1 |
|
$ |
105.2 |
$ |
347.7 |
|
$ |
311.1 |
Gross profit |
|
53.7 |
|
|
43.3 |
|
|
35.5 |
|
128.2 |
|
|
115.0 |
EBITDA(1) |
|
74.5 |
|
|
(36.2 |
) |
|
28.3 |
|
56.1 |
|
|
135.0 |
Adjusted EBITDA(1) |
|
62.2 |
|
|
51.5 |
|
|
42.9 |
|
157.0 |
|
|
133.2 |
Cash flow from operations |
|
52.7 |
|
|
14.7 |
|
|
41.9 |
|
84.6 |
|
|
113.7 |
Net income (loss) |
|
41.4 |
|
|
(53.4 |
) |
|
2.8 |
|
(18.9 |
) |
|
57.3 |
Net income (loss) attributable to owners of the |
|
40.9 |
|
|
(53.2 |
) |
|
2.5 |
|
(19.5 |
) |
|
56.3 |
Per share (basic) |
|
0.40 |
|
|
(0.52 |
) |
|
0.03 |
|
(0.19 |
) |
|
0.61 |
Per share (diluted) |
|
0.39 |
|
|
(0.52 |
) |
|
0.03 |
|
(0.19 |
) |
|
0.60 |
Adjusted net income attributable to owners of the Company(1) |
|
27.6 |
|
|
18.6 |
|
|
17.3 |
|
63.0 |
|
|
62.0 |
Per share (basic) |
|
0.27 |
|
|
0.18 |
|
|
0.19 |
|
0.61 |
|
|
0.67 |
Per share (diluted) |
|
0.27 |
|
|
0.18 |
|
|
0.18 |
|
0.61 |
|
|
0.66 |
Cash, cash equivalents, and short-term |
|
20.2 |
|
|
44.8 |
|
|
87.6 |
|
20.2 |
|
|
87.6 |
Working (deficit) capital(1) |
|
(60.9 |
) |
|
(57.6 |
) |
|
32.8 |
|
(60.9 |
) |
|
32.8 |
Net debt(1) |
|
518.7 |
|
|
482.0 |
|
|
331.8 |
|
518.7 |
|
|
331.8 |
(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, copper C1 cash cost, copper C1 cash cost
including foreign exchange hedges, gold C1 cash cost and gold AISC
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 nine months ended
September 30, 2024 and the Reconciliation of Non-IFRS Measures
section at the end of this press release.
2024
GUIDANCE(*)
The Company is updating production guidance for
both the Caraíba and Tucumã Operations, resulting in a consolidated
copper production guidance for the year of 43,000 to 48,000 tonnes
in concentrate.
Due to the anticipated delay in achieving
commercial production at the Tucumã Operation, the Company is
narrowing 2024 C1 cash cost guidance to only include the Caraíba
Operations. The Company is reaffirming full-year C1 cash cost
guidance for the Caraíba Operations of $1.80 to $2.00 per
pound of copper produced. Positive factors, including improved
concentrate treatment and refining charges secured as of May 2024,
a higher gold byproduct credit, and a more favorable USD to BRL
exchange rate, are expected to more than offset the impact of lower
projected copper production.
At the Xavantina Operations, the Company is
reaffirming increased full-year gold production guidance of 60,000
to 65,000 ounces, with similar production levels and unit cost
performance expected in Q4 2024 compared to Q3 2024. Consequently,
the Company is reaffirming its reduced gold cost guidance ranges,
including C1 cash cost guidance of $450 to $550 per ounce, and
AISC guidance of $900 to $1,000 per ounce.
The Company is also maintaining consolidated
2024 capital expenditure guidance of $303 to $348 million.
The Company's cost guidance for 2024 assumes a
foreign exchange rate of 5.00 BRL per USD, a gold price of $1,900
per ounce and a silver price of $23.00 per ounce for Q4 2024.
|
Original Guidance |
Updated Guidance |
Consolidated Copper Production
(tonnes) |
|
|
Caraíba Operations |
42,000 - 47,000 |
35,000 - 37,000 |
Tucumã Operation |
17,000 - 25,000 |
8,000 - 11,000 |
Total |
59,000 - 72,000 |
43,000 - 48,000 |
Caraíba Operations
C1 Cash
Cost(1)
Guidance |
$1.80 - $2.00 |
Unchanged |
The Xavantina Operations |
|
|
Au Production (ounces) |
55,000 - 60,000 |
60,000 - 65,000 |
Gold C1 Cash Cost(1) Guidance |
$550 - $650 |
$450 - $550 |
Gold AISC(1) Guidance |
$1,050 - $1,150 |
$900 - $1,000 |
* 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 most recent Annual Information Form and Management of
Risks and Uncertainties in the MD&A for complete risk
factors.
(1) Please refer to the section titled
"Alternative Performance (Non-IFRS) Measures" within the
MD&A.
CONFERENCE CALL DETAILS
The Company will hold a conference call on Wednesday, November
6, 2024 at 11:30 am Eastern time (8:30 am Pacific time) to discuss
these results.
Date: |
Wednesday, November 6, 2024 |
Time: |
11:30 am Eastern time (8:30 am Pacific time) |
Dial in: |
Canada/USA Toll Free: 1-844-763-8274,International:
+1-647-484-8814Please dial in 5-10 minutes prior to the start of
the call or pre-register using this link to bypass the live
operator queue |
Webcast: |
To
access the webcast, click here |
Replay: |
Canada/USA: 1-855-669-9658, International: +1-412-317-0088 For
country-specific dial-in numbers, click here |
Replay Passcode: |
1437453 |
|
|
Reconciliation of Non-IFRS
Measures
Financial results of the Company are presented
in accordance with IFRS. The Company utilizes certain alternative
performance (non-IFRS) measures to monitor its performance,
including copper C1 cash cost, copper C1 cash cost including
foreign exchange hedges, gold C1 cash cost, gold AISC, 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-IFRS and other performance measures in
its Management’s Discussion and Analysis for the three and nine
months ended September 30, 2024 which is available on SEDAR+ at
www.sedarplus.ca, and on EDGAR at www.sec.gov.
Copper C1 cash cost and copper C1 cash cost
including foreign exchange hedges
The following table provides a reconciliation of copper C1 cash
cost to cost of production, its most directly comparable IFRS
measure.
Reconciliation: |
2024 - Q3 |
2024 - Q2 |
2023 - Q3 |
2024 - YTD |
2023 - YTD |
Cost of production |
$ |
40,149 |
|
$ |
41,945 |
|
$ |
39,345 |
|
$ |
124,321 |
|
$ |
113,397 |
|
Add (less): |
|
|
|
|
|
Transportation costs & other |
|
1,283 |
|
|
1,283 |
|
|
1,614 |
|
|
3,818 |
|
|
4,686 |
|
Treatment, refining, and other |
|
3,170 |
|
|
4,058 |
|
|
6,574 |
|
|
12,398 |
|
|
20,991 |
|
By-product credits |
|
(6,584 |
) |
|
(3,431 |
) |
|
(3,022 |
) |
|
(12,455 |
) |
|
(9,536 |
) |
Incentive payments |
|
(1,138 |
) |
|
(1,174 |
) |
|
(1,609 |
) |
|
(3,511 |
) |
|
(3,975 |
) |
Net change in inventory |
|
(1,220 |
) |
|
(468 |
) |
|
2,835 |
|
|
(5,581 |
) |
|
2,973 |
|
Foreign exchange translation and other |
|
3 |
|
|
21 |
|
|
(171 |
) |
|
17 |
|
|
(169 |
) |
C1 cash costs |
|
35,663 |
|
|
42,234 |
|
|
45,566 |
|
|
119,007 |
|
|
128,367 |
|
(Gain) loss on foreign exchange hedges |
|
1,965 |
|
|
46 |
|
|
(3,458 |
) |
|
1,735 |
|
|
(7,232 |
) |
C1 cash costs
including foreign
exchange hedges |
$ |
37,628 |
|
$ |
42,280 |
|
$ |
42,108 |
|
$ |
120,742 |
|
$ |
121,135 |
|
Mining |
$ |
26,529 |
|
$ |
27,881 |
|
$ |
27,258 |
|
$ |
79,666 |
|
$ |
76,262 |
|
Processing |
|
7,069 |
|
|
7,927 |
|
|
8,362 |
|
|
22,173 |
|
|
22,559 |
|
Indirect |
|
5,479 |
|
|
5,799 |
|
|
6,394 |
|
|
17,225 |
|
|
18,091 |
|
Production costs |
|
39,077 |
|
|
41,607 |
|
|
42,014 |
|
|
119,064 |
|
|
116,912 |
|
By-product credits |
|
(6,584 |
) |
|
(3,431 |
) |
|
(3,022 |
) |
|
(12,455 |
) |
|
(9,536 |
) |
Treatment, refining and other |
|
3,170 |
|
|
4,058 |
|
|
6,574 |
|
|
12,398 |
|
|
20,991 |
|
C1 cash costs |
|
35,663 |
|
|
42,234 |
|
|
45,566 |
|
|
119,007 |
|
|
128,367 |
|
(Gain) loss on foreign exchange hedges |
|
1,965 |
|
|
46 |
|
|
(3,458 |
) |
|
1,735 |
|
|
(7,232 |
) |
C1 cash costs
including foreign
exchange hedges |
$ |
37,628 |
|
$ |
42,280 |
|
$ |
42,108 |
|
$ |
120,742 |
|
$ |
121,135 |
|
Costs per
pound |
|
|
|
|
|
Total copper produced (lbs, 000) |
|
21,871 |
|
|
19,548 |
|
|
23,734 |
|
|
59,257 |
|
|
70,761 |
|
Mining |
$ |
1.22 |
|
$ |
1.42 |
|
$ |
1.15 |
|
$ |
1.34 |
|
$ |
1.08 |
|
Processing |
$ |
0.32 |
|
$ |
0.41 |
|
$ |
0.35 |
|
$ |
0.38 |
|
$ |
0.32 |
|
Indirect |
$ |
0.25 |
|
$ |
0.30 |
|
$ |
0.27 |
|
$ |
0.29 |
|
$ |
0.26 |
|
By-product credits |
$ |
(0.30 |
) |
$ |
(0.18 |
) |
$ |
(0.13 |
) |
$ |
(0.21 |
) |
$ |
(0.13 |
) |
Treatment, refining and other |
$ |
0.14 |
|
$ |
0.21 |
|
$ |
0.28 |
|
$ |
0.21 |
|
$ |
0.30 |
|
Copper C1 cash
costs |
$ |
1.63 |
|
$ |
2.16 |
|
$ |
1.92 |
|
$ |
2.01 |
|
$ |
1.83 |
|
(Gain) loss on foreign exchange hedges |
$ |
0.09 |
|
$ |
— |
|
$ |
(0.15 |
) |
$ |
0.03 |
|
$ |
(0.10 |
) |
Copper C1 cash
costs including
foreign exchange
hedges |
$ |
1.72 |
|
$ |
2.16 |
|
$ |
1.77 |
|
$ |
2.04 |
|
$ |
1.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold C1 cash cost and gold
AISC
The following table provides a reconciliation of gold C1 cash
cost and gold AISC to cost of production, its most directly
comparable IFRS measure.
Reconciliation: |
|
2024 - Q3 |
|
2024 - Q2 |
|
2023 - Q3 |
2024 - YTD |
|
2023 - YTD |
Cost of production |
|
$ |
6,220 |
|
|
$ |
7,580 |
|
|
$ |
6,323 |
|
$ |
21,055 |
|
|
$ |
18,087 |
|
Add (less): |
|
|
|
|
|
|
|
|
|
Incentive payments |
|
|
(378 |
) |
|
|
(226 |
) |
|
|
(320 |
) |
|
(1,047 |
) |
|
|
(1,038 |
) |
Net change in inventory |
|
|
1,378 |
|
|
|
(322 |
) |
|
|
213 |
|
|
1,320 |
|
|
|
797 |
|
By-product credits |
|
|
(232 |
) |
|
|
(259 |
) |
|
|
(240 |
) |
|
(680 |
) |
|
|
(579 |
) |
Smelting and refining |
|
|
79 |
|
|
|
97 |
|
|
|
101 |
|
|
266 |
|
|
|
240 |
|
Foreign exchange translation and other |
|
|
203 |
|
|
|
215 |
|
|
|
453 |
|
|
650 |
|
|
|
510 |
|
C1 cash costs |
|
$ |
7,270 |
|
|
$ |
7,085 |
|
|
$ |
6,530 |
|
$ |
21,564 |
|
|
$ |
18,017 |
|
Site general and administrative |
|
|
1,321 |
|
|
|
1,350 |
|
|
|
1,304 |
|
|
4,024 |
|
|
|
3,874 |
|
Accretion of mine closure and rehabilitation provision |
|
|
82 |
|
|
|
88 |
|
|
|
112 |
|
|
262 |
|
|
|
328 |
|
Sustaining capital expenditure |
|
|
2,784 |
|
|
|
2,653 |
|
|
|
4,258 |
|
|
8,691 |
|
|
|
10,801 |
|
Sustaining lease payments |
|
|
1,801 |
|
|
|
1,908 |
|
|
|
1,832 |
|
|
5,831 |
|
|
|
5,232 |
|
Royalties and production taxes |
|
|
686 |
|
|
|
862 |
|
|
|
808 |
|
|
2,058 |
|
|
|
1,702 |
|
AISC |
|
$ |
13,944 |
|
|
$ |
13,946 |
|
|
$ |
14,844 |
|
$ |
42,430 |
|
|
$ |
39,954 |
|
Costs |
|
Mining |
$ |
3,852 |
|
$ |
3,705 |
|
$ |
3,140 |
|
$ |
11,377 |
|
$ |
8,724 |
|
Processing |
|
2,419 |
|
|
2,277 |
|
|
2,165 |
|
|
6,955 |
|
|
6,118 |
|
Indirect |
|
1,152 |
|
|
1,265 |
|
|
1,364 |
|
|
3,646 |
|
|
3,514 |
|
Production costs |
|
7,423 |
|
|
7,247 |
|
|
6,669 |
|
|
21,978 |
|
|
18,356 |
|
Smelting and refining costs |
|
79 |
|
|
97 |
|
|
101 |
|
|
266 |
|
|
240 |
|
By-product credits |
|
(232 |
) |
|
(259 |
) |
|
(240 |
) |
|
(680 |
) |
|
(579 |
) |
C1 cash costs |
$ |
7,270 |
|
$ |
7,085 |
|
$ |
6,530 |
|
$ |
21,564 |
|
$ |
18,017 |
|
Site general and administrative |
|
1,321 |
|
|
1,350 |
|
|
1,304 |
|
|
4,024 |
|
|
3,874 |
|
Accretion of mine closure and rehabilitation provision |
|
82 |
|
|
88 |
|
|
112 |
|
|
262 |
|
|
328 |
|
Sustaining capital expenditure |
|
2,784 |
|
|
2,653 |
|
|
4,258 |
|
|
8,691 |
|
|
10,801 |
|
Sustaining leases |
|
1,801 |
|
|
1,908 |
|
|
1,832 |
|
|
5,831 |
|
|
5,232 |
|
Royalties and production taxes |
|
686 |
|
|
862 |
|
|
808 |
|
|
2,058 |
|
|
1,702 |
|
AISC |
$ |
13,944 |
|
$ |
13,946 |
|
$ |
14,844 |
|
$ |
42,430 |
|
$ |
39,954 |
|
Costs per
ounce |
|
|
|
|
|
Total gold produced (ounces) |
|
13,485 |
|
|
16,555 |
|
|
17,579 |
|
|
48,274 |
|
|
42,355 |
|
Mining |
$ |
286 |
|
$ |
224 |
|
$ |
179 |
|
$ |
236 |
|
$ |
206 |
|
Processing |
$ |
179 |
|
$ |
138 |
|
$ |
123 |
|
$ |
144 |
|
$ |
144 |
|
Indirect |
$ |
85 |
|
$ |
76 |
|
$ |
78 |
|
$ |
76 |
|
$ |
83 |
|
Smelting and refining |
$ |
6 |
|
$ |
6 |
|
$ |
6 |
|
$ |
6 |
|
$ |
6 |
|
By-product credits |
$ |
(17 |
) |
$ |
(16 |
) |
$ |
(15 |
) |
$ |
(15 |
) |
$ |
(14 |
) |
Gold C1 cash
cost |
$ |
539 |
|
$ |
428 |
|
$ |
371 |
|
$ |
447 |
|
$ |
425 |
|
Gold AISC |
$ |
1,034 |
|
$ |
842 |
|
$ |
844 |
|
$ |
879 |
|
$ |
943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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: |
2024 - Q3 |
2024 - Q2 |
2023 - Q3 |
2024 - YTD |
2023 - YTD |
Net Income
(Loss) |
$ |
41,367 |
|
$ |
(53,399 |
) |
$ |
2,811 |
|
$ |
(18,862 |
) |
$ |
57,252 |
|
Adjustments: |
|
|
|
|
|
Finance expense |
|
4,039 |
|
|
4,565 |
|
|
8,017 |
|
|
13,238 |
|
|
20,538 |
|
Finance income |
|
(781 |
) |
|
(1,361 |
) |
|
(2,976 |
) |
|
(3,610 |
) |
|
(10,476 |
) |
Income tax expense (recovery) |
|
8,331 |
|
|
(8,267 |
) |
|
(807 |
) |
|
(1,789 |
) |
|
9,632 |
|
Amortization and depreciation |
|
21,555 |
|
|
22,294 |
|
|
21,299 |
|
|
67,145 |
|
|
58,044 |
|
EBITDA |
$ |
74,511 |
|
$ |
(36,168 |
) |
$ |
28,344 |
|
$ |
56,122 |
|
$ |
134,990 |
|
Foreign exchange (gain) loss |
|
(17,246 |
) |
|
70,454 |
|
|
13,937 |
|
|
72,204 |
|
|
(9,741 |
) |
Share based compensation |
|
4,859 |
|
|
6,075 |
|
|
(1,185 |
) |
|
17,479 |
|
|
8,741 |
|
Write-down of exploration and evaluation asset |
|
467 |
|
|
10,745 |
|
|
— |
|
|
11,212 |
|
|
— |
|
Unrealized (gain) loss on commodity derivatives |
|
(360 |
) |
|
436 |
|
|
1,814 |
|
|
12 |
|
|
(840 |
) |
Adjusted EBITDA |
$ |
62,231 |
|
$ |
51,542 |
|
$ |
42,910 |
|
$ |
157,029 |
|
$ |
133,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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: |
2024 - Q3 |
2024 - Q2 |
2023 - Q3 |
2024 - YTD |
2023 - YTD |
Net income
(loss) as reported
attributable to
the |
owners of the
Company |
$ |
40,857 |
|
$ |
(53,247 |
) |
$ |
2,525 |
|
$ |
(19,531 |
) |
$ |
56,255 |
|
Adjustments: |
|
|
|
|
|
Share based compensation |
|
4,859 |
|
|
6,075 |
|
|
(1,185 |
) |
|
17,479 |
|
|
8,741 |
|
Unrealized foreign exchange (gain) loss on USD |
|
|
|
|
|
denominated balances in MCSA |
|
(11,860 |
) |
|
48,517 |
|
|
9,481 |
|
|
47,914 |
|
|
(4,988 |
) |
Unrealized foreign exchange (gain) loss on foreign exchange
derivative contracts |
|
(9,807 |
) |
|
16,006 |
|
|
7,530 |
|
|
15,503 |
|
|
2,300 |
|
Write-down of exploration and evaluation asset |
|
465 |
|
|
10,745 |
|
|
— |
|
|
11,210 |
|
|
— |
|
Unrealized (gain) loss on commodity derivatives |
|
(367 |
) |
|
434 |
|
|
1,808 |
|
|
3 |
|
|
(836 |
) |
Tax effect on the above adjustments |
|
3,431 |
|
|
(9,904 |
) |
|
(2,873 |
) |
|
(9,601 |
) |
|
540 |
|
Adjusted net income attributable to owners of the Company |
$ |
27,578 |
|
$ |
18,626 |
|
$ |
17,286 |
|
$ |
62,977 |
|
$ |
62,012 |
|
Weighted average
number of common
shares |
|
|
|
|
|
Basic |
|
103,239,881 |
|
|
103,082,363 |
|
|
93,311,434 |
|
|
103,026,138 |
|
|
92,767,525 |
|
Diluted |
|
103,973,827 |
|
|
103,961,615 |
|
|
94,009,268 |
|
|
103,742,304 |
|
|
93,643,940 |
|
Adjusted EPS |
|
|
|
|
|
Basic |
$ |
0.27 |
|
$ |
0.18 |
|
$ |
0.19 |
|
$ |
0.61 |
|
$ |
0.67 |
|
Diluted |
$ |
0.27 |
|
$ |
0.18 |
|
$ |
0.18 |
|
$ |
0.61 |
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt
(Cash)
The following table provides a calculation of
net debt (cash) based on amounts presented in the Company’s
condensed consolidated interim financial statements as at the
periods presented.
|
September |
|
June 30, |
|
December 31, |
|
September |
|
30, 2024 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
30, 2023 |
|
Current portion of loans and borrowings |
$ |
39,383 |
|
|
$ |
39,889 |
|
|
$ |
20,381 |
|
|
$ |
11,764 |
|
Long-term portion of loans and borrowings |
|
499,527 |
|
|
|
486,919 |
|
|
|
405,852 |
|
|
|
407,656 |
|
Less: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
(20,229 |
) |
|
|
(44,773 |
) |
|
|
(111,738 |
) |
|
|
(44,757 |
) |
Short-term investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(42,843 |
) |
Net debt (cash) |
$ |
518,681 |
|
|
$ |
482,035 |
|
|
$ |
314,495 |
|
|
$ |
331,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
September |
|
June 30, |
|
December 31, |
|
September |
|
30, 2024 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
30, 2023 |
|
Current assets |
$ |
126,808 |
|
|
$ |
124,554 |
|
|
$ |
199,487 |
|
|
$ |
174,113 |
|
Less: Current liabilities |
|
(187,708 |
) |
|
|
(182,143 |
) |
|
|
(173,800 |
) |
|
|
(141,284 |
) |
Working (deficit) capital |
$ |
(60,900 |
) |
|
$ |
(57,589 |
) |
|
$ |
25,687 |
|
|
$ |
32,829 |
|
Cash and cash equivalents |
|
20,229 |
|
|
|
44,773 |
|
|
|
111,738 |
|
|
|
44,757 |
|
Short-term investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
42,843 |
|
Available undrawn revolving credit facilities |
|
80,000 |
|
|
|
100,000 |
|
|
|
150,000 |
|
|
|
150,000 |
|
Available undrawn prepayment facilities(1) |
$ |
25,000 |
|
|
$ |
25,000 |
|
|
$ |
— |
|
|
$ |
— |
|
Available liquidity |
$ |
125,229 |
|
|
$ |
169,773 |
|
|
$ |
261,738 |
|
|
$ |
237,600 |
|
(1) In May 2024, the Company entered into a
$50.0 million non-priced copper prepayment facility arrangement.
Through the end of 2024, the Company has the option to increase the
size of the facility from $50.0 million to $75.0 million.
ABOUT ERO COPPER
CORP
Ero Copper is a high-margin, high-growth 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
Operation (formerly known as Boa Esperança), an open pit copper
mine 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 Operation,
can be found on SEDAR+ (www.sedarplus.ca/landingpage/) 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”.
FOR MORE INFORMATION, PLEASE
CONTACT
Courtney Lynn, SVP, Corporate Development, Investor Relations
& Sustainability (604) 335-7504info@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 the Company's expected
production, operating costs and capital expenditures at the Caraíba
Operations, the Tucumã Operation and the Xavantina Operations;
estimated timing for certain milestones, including resolution of
power-related challenges and ramp-up of production levels at the
Tucumã Operation; the Company's ability to engage an additional
underground development contractor and accelerate development rates
at the Pilar Mine; expectations related to foreign exchange rates
as well as copper concentrate treatment and refining charges; 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 Company’s Annual Information Form for the year ended December
31, 2023 (“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 involve
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: 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
Operation 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, 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. 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
Unless otherwise indicated, all reserve and
resource estimates included in this press release and the documents
incorporated by reference herein have been prepared in accordance
with National Instrument 43-101, Standards of Disclosure for
Mineral Projects (“NI 43-101") and the Canadian Institute of
Mining, Metallurgy and Petroleum (the “CIM”) — CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended (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.
Canadian standards, including NI 43-101, differ significantly from
the requirements of the United States Securities and Exchange
Commission (the “SEC”), and reserve and resource information
included herein may not be comparable to similar information
disclosed by U.S. companies. In particular, and without limiting
the generality of the foregoing, this press release and the
documents incorporated by reference herein use the terms “measured
resources,” “indicated resources” and “inferred resources” as
defined in accordance with NI 43-101 and the CIM Standards.
Further to recent amendments, mineral property
disclosure requirements in the United States (the “U.S. Rules”) are
governed by subpart 1300 of Regulation S-K of the U.S. Securities
Act of 1933, as amended (the “U.S. Securities Act”) which differ
from the CIM Standards. As a foreign private issuer that is
eligible to file reports with the SEC pursuant to the
multi-jurisdictional disclosure system (the “MJDS”), Ero is not
required to provide disclosure on its mineral properties under the
U.S. Rules and will continue to provide disclosure under NI 43-101
and the CIM Standards. If Ero ceases to be a foreign private issuer
or loses its eligibility to file its annual report on Form 40-F
pursuant to the MJDS, then Ero will be subject to the U.S. Rules,
which differ from the requirements of NI 43-101 and the CIM
Standards.
Pursuant to the new U.S. Rules, the SEC
recognizes estimates of “measured mineral resources”, “indicated
mineral resources” and “inferred mineral resources”. In addition,
the definitions of “proven mineral reserves” and “probable mineral
reserves” under the U.S. Rules are now “substantially similar” to
the corresponding standards under NI 43-101. Mineralization
described using these terms has a greater amount of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, U.S. investors are
cautioned not to assume that any measured mineral resources,
indicated mineral resources, or inferred mineral resources that Ero
reports are or will be economically or legally mineable. Further,
“inferred mineral resources” have a greater amount of uncertainty
as to their existence and as to whether they can be mined legally
or economically. Under Canadian securities laws, estimates of
“inferred mineral resources” may not form the basis of feasibility
or pre-feasibility studies, except in rare cases. While the above
terms under the U.S. Rules are “substantially similar” to the
standards under NI 43-101 and CIM Standards, there are differences
in the definitions under the U.S. Rules and CIM Standards.
Accordingly, there is no assurance any mineral reserves or mineral
resources that Ero may report as “proven mineral reserves”,
“probable mineral reserves”, “measured mineral resources”,
“indicated mineral resources” and “inferred mineral resources”
under NI 43-101 would be the same had Ero prepared the reserve or
resource estimates under the standards adopted under the U.S.
Rules.
Ero Copper (TSX:ERO)
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