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, 2022.
Management will host a conference call tomorrow, Wednesday,
November 2, 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
- Quarterly copper production of 11,189 tonnes at C1 cash
costs(*) of $1.46 per pound of copper produced;
- Quarterly gold production of 10,965 ounces at C1 cash costs(*)
and All-in Sustaining Costs ("AISC")(*) of $537 and $1,135,
respectively, per ounce of gold produced;
- Adjusted EBITDA(*) of $32.1 million and adjusted net income
attributable to owners of the Company(*) of $4.0 million ($0.04 per
share on a diluted basis);
- Strong quarterly cash flows from operations of $43.0
million;
- Financial results during the period were impacted by continued
metal price weakness, including the impact of $10.3 million in
final settlements on provisionally priced copper concentrate sales
from the first half of 2022, combined with increased unit operating
costs at the Caraíba Operations;
- Capital expenditures accelerated during the quarter as
construction activities related to the Company's growth initiatives
continued to progress;
- At the Tucumã Project, critical path work packages required
ahead of the rainy season have been completed. These include site
access and haul road upgrades, major drainage infrastructure, and
advancing pre-stripping activities; and,
- At the Caraíba Operations, the Pilar 3.0 growth initiative
continues to progress with surface infrastructure for the new
external shaft well-advanced, critical equipment orders for the
expansion of the mill contracted, and the integration of Project
Honeypot into the life-of-mine production plan completed. The
updated strategic life-of-mine production plan for the Caraíba
Operations, inclusive of Project Honeypot, is expected to be
released ahead of the Company's Annual Operational, Project and
Exploration Update on November 8, 2022.
- Available liquidity at quarter-end was $434.8 million,
including cash and cash equivalents of $210.2 million, short-term
investments of $149.6 million, and $75.0 million of undrawn
availability under the Company's senior revolving credit
facility;
- 2022 production, operating cost, and capital expenditure
guidance reaffirmed; and,
- The Company will host an Annual Operational, Project and
Exploration Update on November 8, 2022, during which a more
detailed overview will be provided on the Pilar 3.0 growth
initiative, including the integration of Project Honeypot, the
Company's advancement of the Tucumã Project, and results from
exploration programs at each of the Company's operations.
*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, 2022 and the Reconciliation of Non-IFRS
Measures section at the end of this press release.
“Our operations delivered solid third quarter
operating performance against a challenging macroeconomic backdrop
that resulted in compressed operating margins during the period,”
said David Strang, Chief Executive Officer. “While near-term global
economic conditions remain dynamic, we are well-positioned with an
experienced team, high-quality operations and a solid balance sheet
to continue making progress on our strategic growth
initiatives.
"At our Tucumã Project, road upgrades and site
drainage are now complete ahead of the rainy season, and our mining
contractor mobilized to site and commenced pre-stripping activities
and waste rock dump construction during the quarter. All activities
on site are advancing in- line with the Feasibility Study schedule.
At our Caraíba Operations, shaft civil work, raise- boring and
underground development related to our Pilar 3.0 initiative are
progressing well, and an updated life-of-mine production plan
reflecting the integration of Project Honeypot has also been
finalized.
"Despite strong operating performance and
successful project execution during the period, our operating costs
remain higher than we had forecasted at the beginning of the year
due to inflationary pressures and the higher allocation of copper
sales to international customers that negate some of the tax
benefits we receive when we sell to our domestic customer. As we
look ahead to the fourth quarter, we expect to be in line with our
revised full-year operating cost guidance but acknowledge we are
tracking towards the higher end of the range as a result of these
impacts.
"While, like our peers, we continue to navigate
challenging near-term market conditions, we remain focused on
advancing our growth strategy in anticipation of an unprecedented
outlook for copper. The timing of our growth initiatives, now well
underway at Tucumã and Caraíba, continues to align well with an
expected surge in copper demand that is projected to far outpace
supply in the years ahead."
THIRD QUARTER REVIEW
- Mining & Milling Operations
- The Caraíba Operations processed 720,725 tonnes of ore grading
1.68% copper, producing 11,189 tonnes of copper in concentrate
during the quarter after metallurgical recoveries of 92.2%.
- The Xavantina Operations processed 42,747 tonnes of ore grading
8.55 grams per tonne gold, producing 10,965 ounces of gold after
metallurgical recoveries of 93.3% and 7,487 ounces of silver as a
by-product.
- Organic Growth Projects
- At the Tucumã Project, engineering, contracting efforts and
construction activities continued to progress during the quarter.
- Critical path earthworks, site drainage and road upgrades are
finished. Mine pre-stripping, waste and tailings dump construction,
and plant site earthworks are underway. Total project engineering
and construction are approximately 40% and 8% complete,
respectively, on-track with the Feasibility Study schedule;
- Approximately 30% of planned capital expenditures were under
contract as of quarter-end and within 10% of pre-contingency
Feasibility Study estimates; and,
- Approximately 80% of Feasibility Study capital expenditures
have now been contracted or are in various stages of tendering or
negotiation. Based upon prevailing foreign exchange rates, labour
costs and diesel prices, and subject to final contract
negotiations, these expenditures are currently forecast to be
within 12% of pre-contingency Feasibility Study estimates.
- The Company continued to advance its Pilar 3.0 initiative,
comprised of several projects that together are expected to enable
the creation of a two-mine system at the Pilar Mine. These projects
include (i) Project Honeypot, an engineering initiative focused on
recovering higher-grade material in the upper levels of the Pilar
Mine, (ii) construction of a new external shaft to access the
Deepening Extension Zone, and (iii) an expansion of the Caraíba
Mill to 4.2 million tonnes per annum.
- Incorporation of Project Honeypot into the Caraíba strategic
life-of-mine production plan was completed subsequent to
quarter-end and is expected to be released ahead of the Company's
Annual Operational, Project and Exploration Update on November 8,
2022;
- Construction of the new external shaft is progressing well with
physical completion currently at approximately 10% with
approximately 30% of planned capital expenditures under contract as
of quarter-end; and,
- Caraíba Mill expansion is advancing as planned with the ball
mill installation contract finalized during the quarter.
|
|
|
Figure 1: Tucumã Project site in
April 2022 (left) and August 2022 (right). |
|
|
|
Figure 2: Tucumã Project mine
access road and completed drainage infrastructure (left) and waste
rock dump with installation of HDPE liner underway in October 2022
(right). |
- Exploration Highlights
- In early 2022, the Company formed a dedicated nickel
exploration team to accelerate the identification and testing of
nickel targets throughout the Curaçá Valley. This effort resulted
in the announced discovery of a new nickel sulphide system, known
as the "Umburana System", located approximately 20 kilometers from
the Caraíba processing facilities. The system, which has an initial
strike length of five kilometers, remains open in all directions
and is highlighted by multiple surface expressions of nickel
mineralization. Drilling of additional targets within the system
remains ongoing with four dedicated drill rigs. For additional
information on the Umburana System, including drill results, please
see the Company's press release dated September 29, 2022.
- Exploration at the Tucumã Project during the quarter was
focused on extensional drilling of high-grade mineralization to
depth in the south and southwestern portions of the deposit,
beneath the designed pit shell.
- Exploration activities at the Xavantina Operations during the
quarter continued to focus on testing extensions of the Matinha and
Santo Antônio veins. Step-out drilling continues to confirm thick,
high-grade extensions at depth within the Santo Antônio vein, which
remains open.
- Highlights from these exploration programs will be announced as
part of the Company's Annual Operational, Project and Exploration
Update planned for November 8, 2022.
OPERATING AND FINANCIAL
HIGHLIGHTS
|
|
3 months ended Sep. 30, 2022 |
|
|
3 months ended June 30, 2022 |
|
|
|
3 months ended Sep. 30, 2021 |
|
|
|
9 months endedSep. 30, 2022 |
|
|
9 months endedSep. 30, 2021 |
|
Operating Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper (Caraíba Operations) |
|
|
|
|
|
Ore Processed (tonnes) |
|
720,725 |
|
|
801,425 |
|
|
|
572,666 |
|
|
|
2,118,380 |
|
|
1,724,252 |
|
Grade (% Cu) |
|
1.68 |
|
|
1.74 |
|
|
|
1.90 |
|
|
|
1.73 |
|
|
2.11 |
|
Cu Production (tonnes) |
|
11,189 |
|
|
12,734 |
|
|
|
10,057 |
|
|
|
33,707 |
|
|
33,593 |
|
Cu Production (000 lbs) |
|
24,669 |
|
|
28,073 |
|
|
|
22,170 |
|
|
|
74,312 |
|
|
74,059 |
|
Cu Sold in Concentrate (tonnes) |
|
10,522 |
|
|
12,948 |
|
|
|
10,762 |
|
|
|
33,515 |
|
|
33,324 |
|
Cu Sold in Concentrate (000 lbs) |
|
23,197 |
|
|
28,546 |
|
|
|
23,727 |
|
|
|
73,888 |
|
|
73,468 |
|
C1 cash cost of Cu produced (per lb)(1) |
$ |
1.46 |
|
$ |
1.24 |
|
|
$ |
0.94 |
|
|
$ |
1.34 |
|
$ |
0.70 |
|
Gold
(Xavantina Operations) |
|
|
|
|
|
Au Production (oz) |
|
10,965 |
|
|
11,122 |
|
|
|
9,426 |
|
|
|
30,883 |
|
|
29,254 |
|
C1 cash cost of Au Produced (per oz)(1) |
$ |
537 |
|
$ |
643 |
|
|
$ |
538 |
|
|
$ |
604 |
|
$ |
508 |
|
AISC of Au produced (per oz)(1) |
$ |
1,135 |
|
$ |
1,169 |
|
|
$ |
741 |
|
|
$ |
1,135 |
|
$ |
681 |
|
Financial
Highlights ($ in millions, except per share amounts) |
Revenues |
$ |
85.9 |
|
$ |
114.9 |
|
|
$ |
111.8 |
|
|
$ |
309.7 |
|
$ |
355.0 |
|
Gross
profit |
|
22.8 |
|
|
50.7 |
|
|
|
68.0 |
|
|
|
134.5 |
|
|
234.5 |
|
EBITDA(1) |
|
27.9 |
|
|
53.9 |
|
|
|
48.5 |
|
|
|
159.9 |
|
|
215.7 |
|
Adjusted
EBITDA(1) |
|
32.1 |
|
|
55.8 |
|
|
|
72.9 |
|
|
|
150.3 |
|
|
245.1 |
|
Cash flow
from operations |
|
43.0 |
|
|
22.4 |
|
|
|
150.7 |
|
|
|
109.4 |
|
|
297.9 |
|
Net
income |
|
4.0 |
|
|
24.1 |
|
|
|
26.4 |
|
|
|
80.6 |
|
|
142.4 |
|
Net income
attributable to owners of the Company |
|
3.7 |
|
|
23.8 |
|
|
|
26.1 |
|
|
|
79.7 |
|
|
141.2 |
|
Per share (basic) |
|
0.04 |
|
|
0.26 |
|
|
|
0.29 |
|
|
|
0.88 |
|
|
1.60 |
|
Per share (diluted) |
|
0.04 |
|
|
0.26 |
|
|
|
0.28 |
|
|
|
0.87 |
|
|
1.52 |
|
Adjusted net
income attributable to owners of the Company(1) |
|
4.0 |
|
|
24.4 |
|
|
|
41.2 |
|
|
|
61.3 |
|
|
154.4 |
|
Per share (basic) |
|
0.04 |
|
|
0.27 |
|
|
|
0.47 |
|
|
|
0.68 |
|
|
1.75 |
|
Per share (diluted) |
|
0.04 |
|
|
0.27 |
|
|
|
0.44 |
|
|
|
0.67 |
|
|
1.66 |
|
Cash, cash
equivalents, and short-term investments |
|
359.8 |
|
|
429.9 |
|
|
|
119.1 |
|
|
|
359.8 |
|
|
119.1 |
|
Working
capital(1) |
|
343.2 |
|
|
417.7 |
|
|
|
81.4 |
|
|
|
343.2 |
|
|
81.4 |
|
Net (cash)
debt(1) |
|
51.5 |
|
|
(10.2 |
) |
|
|
(63.7 |
) |
|
|
51.5 |
|
|
(63.7 |
) |
(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 nine months
ended September 30, 2022 and the Reconciliation of Non-IFRS
Measures section at the end of this press release.
2022
GUIDANCE(*)
The Company is reaffirming its full-year
production guidance as well as its revised 2022 operating cost and
capital expenditure guidance. At the Caraíba Operations, copper
production in Q4 2022 is expected to be similar to Q3 2022
production levels. At the Xavantina Operations, the Company also
expects to achieve similar Q4 2022 gold production levels relative
to Q3 2022, resulting from higher anticipated gold grades and lower
expected tonnes processed.
Due primarily to a higher allocation of
concentrate sales to the international market and the continued
influence of inflation on the cost of key consumables, C1 cash
costs at the Caraíba Operations are trending towards the high-end
of the guidance range of $1.20 to $1.35 per pound of copper
produced. At the Xavantina Operations, costs are trending towards
the low- end of the full-year C1 cash cost guidance range of $600
to $700 per ounce of gold produced and the high-end of the 2022
AISC range of $1,000 to $1,100 per ounce of gold produced.
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 $20.00 per ounce for Q4 2022.
|
2022 Guidance |
Caraíba Operations |
|
Copper Production (tonnes) |
43,000 -
46,000 |
C1 Cash Cost Guidance (US$/lb)(1) |
$1.20 -
$1.35 |
|
|
Xavantina Operations |
|
Gold Production (ounces) |
39,000 -
42,000 |
C1 Cash Cost Guidance (US$/oz)(1) |
$600 -
$700 |
All-in Sustaining Cost (AISC) Guidance (US$/oz)(1) |
$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. See the Reconciliation of Non-IFRS Measures section at the
end of this press release for additional information.
2022 CAPITAL EXPENDITURE
GUIDANCE(*)
The Company's capital expenditure guidance for
2022 assumes a USD:BRL foreign exchange rate of 5.30 for Q4 2022
and has been presented below in USD millions.
|
2022 Guidance |
Caraíba Operations |
|
Growth |
$95 - $110 |
Sustaining |
$85 - $95 |
Exploration |
$25 - $30 |
Total, Caraíba Operations |
$205 - $235 |
|
|
Tucumã Project |
|
Growth |
$70 - $80 |
Exploration |
$5 - $6 |
Total, Tucumã Project |
$75 - $86 |
|
|
Xavantina Operations |
|
Growth |
$2 - $4 |
Sustaining |
$16 - $18 |
Exploration |
$10 - $11 |
Total, Xavantina Operations |
$28
- $33 |
|
|
Company Total |
|
Growth |
$167 - $194 |
Sustaining |
$101 - $113 |
Exploration |
$40 - $47 |
Total, Company |
$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 recent Annual Information Form for the
year ended December 31, 2021 and dated March 11, 2022 (the "AIF"),
for complete risk factors. |
CONFERENCE CALL DETAILS
The Company will hold a conference call on
Wednesday, November 2, 2022 at 11:30 am Eastern time (8:30 am
Pacific time) to discuss these results.
Date: |
Wednesday,
November 2, 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: |
9507 |
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 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-IFRS and other performance measures in
its Management’s Discussion and Analysis for the three and nine
months ended September 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 - Q3 |
2022 - Q2 |
2021 - Q3 |
2022 - YTD |
2021 - YTD |
Cost of production |
|
$ |
39,047 |
|
$ |
38,015 |
|
$ |
24,693 |
|
$ |
106,225 |
|
$ |
66,959 |
|
Add
(less): |
|
|
|
|
|
|
Transportation costs & other |
|
|
2,209 |
|
|
2,579 |
|
|
1,842 |
|
|
6,657 |
|
|
4,333 |
|
Treatment, refining, and other |
|
|
4,198 |
|
|
3,893 |
|
|
277 |
|
|
10,137 |
|
|
1,448 |
|
By-product credits |
|
|
(4,929 |
) |
|
(6,438 |
) |
|
(5,011 |
) |
|
(16,179 |
) |
|
(16,733 |
) |
Incentive payments |
|
|
(902 |
) |
|
(1,016 |
) |
|
(663 |
) |
|
(2,822 |
) |
|
(2,045 |
) |
Net change in inventory |
|
|
(3,849 |
) |
|
(1,907 |
) |
|
(384 |
) |
|
(5,179 |
) |
|
(2,351 |
) |
Foreign exchange translation and other |
|
|
212 |
|
|
(178 |
) |
|
(3 |
) |
|
420 |
|
|
196 |
|
C1
cash costs |
|
$ |
35,986 |
|
$ |
34,948 |
|
$ |
20,751 |
|
$ |
99,259 |
|
$ |
51,807 |
|
|
|
|
|
|
|
|
Mining |
|
$ |
23,594 |
|
$ |
23,933 |
|
$ |
15,706 |
|
$ |
67,653 |
|
$ |
41,307 |
|
Processing |
|
|
7,687 |
|
|
7,988 |
|
|
5,282 |
|
|
22,122 |
|
|
15,220 |
|
Indirect |
|
|
5,436 |
|
|
5,572 |
|
|
4,497 |
|
|
15,526 |
|
|
10,565 |
|
Production
costs |
|
|
36,717 |
|
|
37,493 |
|
|
25,485 |
|
|
105,301 |
|
|
67,092 |
|
By-product
credits |
|
|
(4,929 |
) |
|
(6,438 |
) |
|
(5,011 |
) |
|
(16,179 |
) |
|
(16,733 |
) |
Treatment,
refining and other |
|
|
4,198 |
|
|
3,893 |
|
|
277 |
|
|
10,137 |
|
|
1,448 |
|
C1
cash costs |
|
$ |
35,986 |
|
$ |
34,948 |
|
$ |
20,751 |
|
$ |
99,259 |
|
$ |
51,807 |
|
|
|
|
|
|
|
|
Payable
copper produced (lb, 000) |
|
|
24,669 |
|
|
28,073 |
|
|
22,170 |
|
|
74,312 |
|
|
74,059 |
|
|
|
|
|
|
|
|
Mining |
|
$ |
0.96 |
|
$ |
0.85 |
|
$ |
0.71 |
|
$ |
0.91 |
|
$ |
0.56 |
|
Processing |
|
$ |
0.31 |
|
$ |
0.28 |
|
$ |
0.24 |
|
$ |
0.30 |
|
$ |
0.21 |
|
Indirect |
|
$ |
0.22 |
|
$ |
0.20 |
|
$ |
0.20 |
|
$ |
0.21 |
|
$ |
0.14 |
|
By-product
credits |
|
$ |
(0.20 |
) |
$ |
(0.23 |
) |
$ |
(0.23 |
) |
$ |
(0.22 |
) |
$ |
(0.23 |
) |
Treatment,
refining and other |
|
$ |
0.17 |
|
$ |
0.14 |
|
$ |
0.02 |
|
$ |
0.14 |
|
$ |
0.02 |
|
C1
cash costs of copper produced (per lb) |
|
$ |
1.46 |
|
$ |
1.24 |
|
$ |
0.94 |
|
$ |
1.34 |
|
$ |
0.70 |
|
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 - Q3 |
2022 - Q2 |
2021 - Q3 |
2022 - YTD |
2021 - YTD |
Cost of production |
$ |
7,317 |
|
$ |
7,225 |
|
$ |
4,936 |
|
$ |
19,934 |
|
$ |
15,100 |
|
Add
(less): |
|
|
|
|
|
Incentive payments |
|
(177 |
) |
|
(188 |
) |
|
(145 |
) |
|
(950 |
) |
|
(638 |
) |
Net change in inventory |
|
(1,031 |
) |
|
(73 |
) |
|
(176 |
) |
|
(377 |
) |
|
(11 |
) |
By-product credits |
|
(145 |
) |
|
(145 |
) |
|
(153 |
) |
|
(414 |
) |
|
(458 |
) |
Foreign exchange translation and other |
|
(80 |
) |
|
327 |
|
|
608 |
|
|
453 |
|
|
865 |
|
C1
cash costs |
$ |
5,884 |
|
$ |
7,146 |
|
$ |
5,070 |
|
$ |
18,646 |
|
$ |
14,858 |
|
Site general
and administrative |
|
1,011 |
|
|
882 |
|
|
601 |
|
|
2,452 |
|
|
1,277 |
|
Accretion of
mine closure and rehabilitation provision |
|
106 |
|
|
112 |
|
|
285 |
|
|
330 |
|
|
173 |
|
Sustaining
capital expenditure |
|
4,105 |
|
|
3,690 |
|
|
552 |
|
|
10,091 |
|
|
1,564 |
|
Sustaining
leases |
|
1,036 |
|
|
894 |
|
|
216 |
|
|
2,752 |
|
|
1,243 |
|
Royalties
and production taxes |
|
298 |
|
|
277 |
|
|
261 |
|
|
779 |
|
|
801 |
|
AISC |
$ |
12,440 |
|
$ |
13,001 |
|
$ |
6,985 |
|
$ |
35,050 |
|
$ |
19,916 |
|
|
|
|
|
|
|
|
2022 - Q3 |
2022 - Q2 |
2021 - Q3 |
2022 - YTD |
2021 - YTD |
Costs |
|
|
|
|
|
Mining |
$ |
3,071 |
|
$ |
3,929 |
|
$ |
2,247 |
|
$ |
10,218 |
|
$ |
6,991 |
|
Processing |
|
1,867 |
|
|
2,285 |
|
|
2,005 |
|
|
5,850 |
|
|
5,622 |
|
Indirect |
|
1,091 |
|
|
1,077 |
|
|
971 |
|
|
2,992 |
|
|
2,703 |
|
Production
costs |
|
6,029 |
|
|
7,291 |
|
|
5,223 |
|
|
19,060 |
|
|
15,316 |
|
By-product
credits |
|
(145 |
) |
|
(145 |
) |
|
(153 |
) |
|
(414 |
) |
|
(458 |
) |
C1
cash costs |
$ |
5,884 |
|
$ |
7,146 |
|
$ |
5,070 |
|
$ |
18,646 |
|
$ |
14,858 |
|
Site general
and administrative |
|
1,011 |
|
|
882 |
|
|
601 |
|
|
2,452 |
|
|
1,277 |
|
Accretion of
mine closure and rehabilitation provision |
|
106 |
|
|
112 |
|
|
285 |
|
|
330 |
|
|
173 |
|
Sustaining
capital expenditure |
|
4,105 |
|
|
3,690 |
|
|
552 |
|
|
10,091 |
|
|
1,564 |
|
Sustaining
leases |
|
1,036 |
|
|
894 |
|
|
216 |
|
|
2,752 |
|
|
1,243 |
|
Royalties
and production taxes |
|
298 |
|
|
277 |
|
|
261 |
|
|
779 |
|
|
801 |
|
AISC |
$ |
12,440 |
|
$ |
13,001 |
|
$ |
6,985 |
|
$ |
35,050 |
|
$ |
19,916 |
|
|
|
|
|
|
|
Costs per ounce |
|
|
|
|
|
Payable gold
produced (ounces) |
|
10,965 |
|
|
11,122 |
|
|
9,426 |
|
|
30,883 |
|
|
29,254 |
|
|
|
|
|
|
|
Mining |
$ |
280 |
|
$ |
353 |
|
$ |
238 |
|
$ |
331 |
|
$ |
239 |
|
Processing |
$ |
170 |
|
$ |
205 |
|
$ |
213 |
|
$ |
189 |
|
$ |
192 |
|
Indirect |
$ |
99 |
|
$ |
97 |
|
$ |
103 |
|
$ |
97 |
|
$ |
92 |
|
By-product
credits |
$ |
(12 |
) |
$ |
(12 |
) |
$ |
(16 |
) |
$ |
(13 |
) |
$ |
(15 |
) |
C1
cash costs of gold produced (per ounce) |
$ |
537 |
|
$ |
643 |
|
$ |
538 |
|
$ |
604 |
|
$ |
508 |
|
AISC
of gold produced (per ounce) |
$ |
1,135 |
|
$ |
1,169 |
|
$ |
741 |
|
$ |
1,135 |
|
$ |
681 |
|
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 - Q3 |
2022 - Q2 |
2021 - Q3 |
2022 - YTD |
2021 - YTD |
Net Income |
$ |
3,999 |
$ |
24,110 |
|
$ |
26,384 |
$ |
80,595 |
|
$ |
142,420 |
Adjustments: |
|
|
|
|
|
Finance expense |
|
7,283 |
|
8,154 |
|
|
3,787 |
|
20,933 |
|
|
9,863 |
Income tax expense |
|
1,887 |
|
5,283 |
|
|
6,069 |
|
15,776 |
|
|
29,760 |
Amortization and depreciation |
|
14,743 |
|
16,360 |
|
|
12,233 |
|
42,608 |
|
|
33,615 |
EBITDA |
$ |
27,912 |
$ |
53,907 |
|
$ |
48,473 |
$ |
159,912 |
|
$ |
215,658 |
Foreign exchange loss (gain) |
|
65 |
|
3,303 |
|
|
19,642 |
|
(15,341 |
) |
|
17,549 |
Share based compensation |
|
4,151 |
|
(2,333 |
) |
|
2,041 |
|
3,808 |
|
|
6,867 |
Incremental COVID-19 costs |
|
— |
|
952 |
|
|
1,485 |
|
1,956 |
|
|
3,790 |
NX Gold stream transaction fees |
|
— |
|
— |
|
|
1,219 |
|
— |
|
|
1,219 |
Adjusted EBITDA |
$ |
32,128 |
$ |
55,829 |
|
$ |
72,860 |
$ |
150,335 |
|
$ |
245,083 |
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 - Q3 |
|
|
|
2022 - Q2 |
|
|
|
2021 - Q3 |
|
|
|
2022 - YTD |
|
|
|
2021 - YTD |
|
Net income as reported attributable to the owners of
the Company |
$ |
3,745 |
|
|
$ |
23,820 |
|
|
$ |
26,081 |
|
|
$ |
79,672 |
|
|
$ |
141,249 |
|
Adjustments: |
|
|
|
|
|
Share based compensation |
|
4,151 |
|
|
|
(2,333 |
) |
|
|
2,041 |
|
|
|
3,808 |
|
|
|
6,867 |
|
Unrealized foreign exchange loss on USD denominated balances in
MCSA |
|
2,106 |
|
|
|
1,038 |
|
|
|
4,618 |
|
|
|
1,807 |
|
|
|
3,706 |
|
Unrealized foreign exchange (gain) loss on foreign exchange
derivative contracts |
|
(6,733 |
) |
|
|
1,405 |
|
|
|
10,417 |
|
|
|
(29,943 |
) |
|
|
(637 |
) |
Incremental COVID-19 costs |
|
— |
|
|
|
946 |
|
|
|
1,479 |
|
|
|
1,944 |
|
|
|
3,770 |
|
NX Gold stream transaction fees |
|
— |
|
|
|
— |
|
|
|
1,219 |
|
|
|
— |
|
|
|
1,219 |
|
Unrealized gain on interest rate derivative contracts |
|
— |
|
|
|
— |
|
|
|
(147 |
) |
|
|
— |
|
|
|
(556 |
) |
Tax effect on the above adjustments |
|
706 |
|
|
|
(519 |
) |
|
|
(4,511 |
) |
|
|
3,995 |
|
|
|
(1,222 |
) |
Adjusted net income attributable to owners of the
Company |
$ |
3,975 |
|
|
$ |
24,357 |
|
|
$ |
41,197 |
|
|
$ |
61,283 |
|
|
$ |
154,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
90,845,229 |
|
|
|
90,539,647 |
|
|
|
88,449,567 |
|
|
|
90,543,185 |
|
|
|
88,256,703 |
|
Diluted |
|
91,797,437 |
|
|
|
91,850,321 |
|
|
|
93,255,615 |
|
|
|
91,950,181 |
|
|
|
93,217,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.04 |
|
|
$ |
0.27 |
|
|
$ |
0.47 |
|
|
$ |
0.68 |
|
|
$ |
1.75 |
|
Diluted |
$ |
0.04 |
|
|
$ |
0.27 |
|
|
$ |
0.44 |
|
|
$ |
0.67 |
|
|
$ |
1.66 |
|
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.
|
|
September 30, 2022 |
|
June 30, 2022 |
December 31, 2021 |
September 30, 2021 |
Current portion of loans and
borrowings
|
$ |
9,049 |
|
$ |
16,219 |
|
$ |
4,344 |
|
$ |
3,713 |
|
Long-term
portion of loans and borrowings |
|
402,275 |
|
|
403,492 |
|
|
54,906 |
|
|
51,667 |
|
Less: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
(210,244 |
) |
|
(329,292 |
) |
|
(130,129 |
) |
|
(92,646 |
) |
Short-term investments |
|
(149,554 |
) |
|
(100,589 |
) |
|
— |
|
|
(26,408 |
) |
Net
(cash) debt |
$ |
51,526 |
|
$ |
(10,170 |
) |
$ |
(70,879 |
) |
$ |
(63,674 |
) |
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 30, 2022 |
June 30, 2022 |
December 31, 2021 |
September 30, 2021 |
Current assets |
$ |
444,188 |
|
$ |
523,201 |
|
$ |
208,686 |
|
$ |
187,042 |
|
Less:
Current liabilities |
|
(100,943 |
) |
|
(105,527 |
) |
|
(122,660 |
) |
|
(105,683 |
) |
Working capital |
$ |
343,245 |
|
$ |
417,674 |
|
$ |
86,026 |
|
$ |
81,359 |
|
|
|
|
|
|
Cash and
cash equivalents |
|
210,244 |
|
|
329,292 |
|
|
130,129 |
|
|
92,646 |
|
Short-term
investments |
|
149,554 |
|
|
100,589 |
|
|
— |
|
|
26,408 |
|
Available undrawn
revolving credit |
facilities |
|
75,000 |
|
|
75,000 |
|
|
100,000 |
|
|
100,000 |
|
Available liquidity |
$ |
434,798 |
|
$ |
504,881 |
|
$ |
230,129 |
|
$ |
219,054 |
|
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 the Company’s production,
operating cost and capital expenditure guidance, 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 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 and Caraíba Mill
expansion 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; the Company's
expectations regarding planned capital expenditures for the Tucumã
Project, the Deepening Extension Project and/or the Caraíba Mill
expansion project falling within contingency levels; expectations
regarding consumption, demand and future price of copper, gold and
other metals; future financial or operating performance and
condition of the Company and its business, operations and
properties, including expectations regarding liquidity, capital
structure, competitive position and payment of dividends;
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 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: 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. 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 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.
Photos accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/49cf8b30-31ae-4312-9d80-fe0d7d41943ehttps://www.globenewswire.com/NewsRoom/AttachmentNg/b628b1df-6c74-46a2-a670-4e856d6426b9https://www.globenewswire.com/NewsRoom/AttachmentNg/909dd624-76bb-4ecb-a125-0723977eda3chttps://www.globenewswire.com/NewsRoom/AttachmentNg/d0861485-542e-4b74-95dc-beab52e8b0b0
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