10:13:50 EST Mon 19 Nov 2018
Enter Symbol
or Name
USA
CA



Login ID:
Password:
Save
Ero Copper Corp
Symbol C : ERO
Shares Issued 84,638,650
Close 2018-11-08 C$ 9.96
Recent Sedar Documents

Ero Copper earns $9.8-million (U.S.) in Q3

2018-11-08 20:44 ET - News Release

Mr. David Strang reports

ERO COPPER REPORTS THIRD QUARTER RESULTS

Ero Copper Corp. has released its financial results for the three and nine months ended Sept. 30, 2018. Management will host a conference call Nov. 9, 2018, 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. (All amounts are in U.S. dollars, unless otherwise noted.)

Highlights:

  • Third quarter copper production of 7,792 tonnes of copper;
  • Third quarter C1 cash costs* of 99 cents per pound of copper produced;
  • Generated $24.8-million in adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization, including further adjustments for non-recurring items and items not indicative to the future operating performance of the company)* during the three-month period ended Sept. 30, 2018;
  • Cash flow from operations of $22.6-million during the three-month period ended Sept. 30, 2018;
  • Adjusted net income* attributable to owners of the company of $8.3-million, or nine cents per share on a diluted basis during the three-month period ended Sept. 30, 2018;
  • Ended the third quarter with total cash position of $22.7-million;
  • Improved full-year production guidance to 28,000 to 29,000 tonnes of copper from 25,500 t to 27,500 t previously and lowered full-year C1 cash cost* guidance to $1.10 (U.S.) to $1.20 (U.S.) per pound of copper produced from $1.30 (U.S.) to $1.40 (U.S.) per pound of copper produced for 2018.

"Our operational results from the third quarter of 2018 reflect the considerable ramp-up in production activities we guided for the second half of the year. Over all, we saw significant quarter-on-quarter increases in production volumes from Pilar underground and Surubim open-pit operations, as well as the first contributions from our newly constructed Vermelhos underground mine, which was completed ahead of schedule. The acceleration of Vermelhos, combined with incremental production from Surubim, has allowed us to meaningfully improve our full-year production and cash cost guidance.

"At Pilar, the benefits of the capital investments we committed to making earlier this year continue to result in increased efficiency and productivity, which contributed to a 20-per-cent quarter-on-quarter improvement in our per-tonne operating cost metric from underground mining. Open-pit production from Surubim continued to perform well and is expected to provide additional incremental production through the balance of the year.

"At Vermelhos, our newest mine, mining and processing of the first ore from the UG1 mining area commenced during the quarter, while development of the first operating stopes within the main orebodies continued to advance ahead of schedule, and we expect to commence mining the main orebodies during the fourth quarter. The mine's construction and execution, approximately four months ahead of schedule and on budget, is a testament to the quality of our development team in Brazil and gives us increased confidence in our ability to turn new discoveries within the Curaca Valley into operating mines quickly and at low cost.

"On exploration, we completed our midyear resource update, and the results -- over a 100-per-cent increase in both mineral resources and mineral reserves -- speak to the company's continued focus on driving shareholder value through exploration results and resource and reserve expansion. With the resource update complete, drill programs have shifted focus toward extensions of previously announced near-mine discoveries, including the West limb of the Pilar mine and the new east zone of the Vermelhos mine, as well as new regional drill programs. In addition, our districtwide airborne geophysical survey, designed to target high-grade mineralization throughout the Curaca Valley, was completed during the quarter. Data interpretation and priority targeting remains ongoing, and initial drill testing is under way," commented David Strang, president and chief executive officer of Ero.

The company's financial statements for the period were impacted by non-cash adjustments related to movements of the Brazilian real against the U.S. dollar during the period, particularly as it relates to the translation of U.S.-dollar debt held by the company's subsidiary, Mineracao Caraiba SA (MCSA) into the Brazilian real, its functional currency. Accordingly, the company believes that adjusted EBITDA and adjusted net gain (loss) are better reflections of the company's underlying performance.

* EBITDA, adjusted net income (loss) and C1 cash cost of copper produced (per pound) are non-international financial reporting standard measures.

Operations and exploration highlights:

  • Mining and milling operations -- strongest quarter to date:
    • Strongest production quarter to date with a total of 668,300 t mined grading 1.39 per cent copper during the three-month period ended Sept. 30, 2018, a 35-per-cent increase when compared with second quarter of 2018;
    • During the quarter, 663,400 t of ore were processed at an average grade of 1.38 per cent copper resulting in 7,792 tonnes of copper production after metallurgical recoveries that averaged 84.9 per cent over the period;
    • 6,542 tonnes of copper in concentrate sold during the quarter;
  • Vermelhos mine -- on budget and completed approximately four months ahead of schedule:
    • Mined 63,200 t of ore grading 2.62 per cent copper during the period;
    • Continued to advance overall development, opening up new production areas with 1,135 total metres of development completed during the period;
    • Production from the main Vermelhos orebodies expected during the fourth quarter;
  • Exploration activities -- exploration activities highlighted by Vermelhos discovery and regional program focus:
    • Vermelhos district:
      • A new discovery announced during the period, located east and approximately 140 metres below all previously identified mineral resources and planned infrastructure of the mine was highlighted by drill hole FVS-261 that intersected 76.7 metres grading 2.20 per cent copper, including 15.0 metres grading 3.06 per cent copper and 10.0 metres grading 5.74 per cent copper; the intercept is significant as it is interpreted to represent a new subvertical zone of mineralization extending from surface to approximately 400 metres below surface and to date has been intersected over a horizontal distance of approximately 350 metres (see the company's press release dated Sept. 25, 2018, for additional information on the new Vermelhos discovery); currently five exploration drill rigs are operating at Vermelhos;
    • Pilar district:
      • Exploration activities continue to focus on extensions to the Deepening, as well as extensions and infill of the recently announced West limb discovery (see the company's press release dated May 17, 2018, for additional information on the West limb discovery); all Pilar exploration targets are within or adjacent to existing Pilar underground mine infrastructure; currently, eight underground and two surface drill rigs are operating at Pilar;
    • Surubim district:
      • Drilling activities continue to focus on evaluating new target areas adjacent to the Surubim open-pit mine; currently two exploration drill rigs are operating within the district;
    • Regional programs:
      • The company's airborne geophysical survey, composed of both electromagnetic and gravity components, was completed the period. Data interpretation and prioritization of drill targets remain continuing, and initial drill testing is under way; there is one exploration drill rig targeting regional exploration targets.

                                       OPERATING AND FINANCIAL HIGHLIGHTS

                                   Three months ended       Nine months ended   Three months ended    Nine months ended
                          Sept. 30, 2018   June 30, 2018       Sept. 30, 2018       Sept. 30, 2017    Sept. 30, 2017 (1)
Operating highlights 
(MCSA operations) 
Ore processed (tonnes)           663,359         500,952            1,480,437              540,882            1,318,838
Grade (% Cu)                        1.38            1.35                 1.45                 1.23                 1.29
Cu production (tonnes) (2)         7,792           5,684               18,321                5,793               14,799
Cu production (000 lb) (2)        17,178          12,532               40,392               12,771               32,625
Cu sold in concentrate (tonnes)    6,542           6,569               17,207                5,642               14,271
Cu sold in concentrate (000 lb)   14,423          14,482               37,935               12,438               31,462
C1 cash cost of copper produced 
(per lb) (3) (4)                    0.99            1.49                 1.31                 1.37                 1.42
                      
Financial highlights 
($ millions, except per-share 
amounts)  
Revenues                          $ 37.0          $ 47.3              $ 112.4               $ 33.0               $ 77.6
Gross profit (loss)               $ 15.6          $ 11.6              $  32.2               $  5.5               $  7.6
EBITDA (3)                        $ 22.4          $ (2.6)             $  26.9               $ 17.6               $ 23.3
Adjusted EBITDA (3)               $ 24.8          $ 23.6              $  54.7               $ 10.7               $ 18.5
Cash flow from (used in) 
operations                        $ 22.6          $ 22.7              $  46.3               $  6.8               $  5.6
Net income (loss) 
attributable to owners 
of the company                    $  9.8          $(16.9)             $ (11.2)              $ 18.3               $  2.9
Net income (loss) per share 
attributable to owners 
of the company -- 
basic                             $ 0.12          $(0.20)             $ (0.13)              $ 0.32               $ 0.06
Net income (loss) per share 
attributable to owners 
of the company --
diluted                           $ 0.11          $(0.20)             $ (0.13)              $ 0.29               $ 0.05
Adjusted net income (loss) 
attributable to 
owners of the company (3)         $  8.3          $  2.6              $   6.1               $ 11.4               $ (2.0)
Adjusted net earnings (loss) 
per share attributable to 
owners of the company (3) -- 
basic                             $ 0.10          $ 0.03              $  0.07               $ 0.20               $(0.04)
Adjusted net earnings (loss) 
per share attributable to 
owners of the company (3) -- 
diluted                           $ 0.09          $ 0.03              $  0.07               $ 0.18               $(0.04)

Footnotes:
(1) Ero was incorporated on May 16, 2016. MCSA was acquired Dec. 12, 2016. Operations did not commence 
until the first quarter of 2017.
(2) Includes 1,250 tonnes of copper from the gallery development and trial mining of the newly 
constructed Vermelhos underground mine.
(3) EBITDA, adjusted EBITDA, adjusted net income (loss), adjusted net earnings (loss) per share and C1 
cash cost of copper produced (per pound) are non-international financial reporting standard measures.
(4) Starting in 2018, the company included the costs of treatment, refining, and sales costs and 
credits related to the sale of copper concentrate in its C1 cash cost calculation.

Revised 2018 guidance

The company is updating its production and cash cost guidance for the full-year 2018 as outlined herein. The revised guidance reflects the accelerated completion of the Vermelhos mine and the resulting contributions of UG1 and first production from the main Vermelhos orebodies during the fourth quarter of 2018, as well as additional incremental production from the Surubim open-pit mine through the end of the year.

               2018 PRODUCTION AND CASH COST GUIDANCE (1) 
                          
                                           Previous guidance        Revised guidance

Tonnes processed sulphides                         2,000,000               2,200,000
Copper grade (% Cu)                                     1.50%                   1.50%
Copper recovery (%)                                     86.0%                   86.0%
Cu production guidance (000 tonnes)                25.5-27.5               28.0-29.0
C1 cash cost guidance (U.S.$/lb) (2)             $1.30-$1.40             $1.10-$1.20

Footnotes:
(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 for complete risk factors, including, without 
limitation, the annual information circular of the company for the year ended 
Dec. 31, 2017, dated March 28, 2018.
(2) C1 cash costs of copper produced (per pound) are a non-international
financial reporting standard measures.

As is evidenced in the company's third quarter performance and in the company's revised guidance, production continues to be weighted toward the second half of the year due to the commissioning of the Vermelhos mine, as well as mine sequencing at Pilar and Surubim. Updated cash cost guidance for 2018 considers actual performance, expenditures and the prevailing U.S.-dollar/Brazilian-real foreign exchange rate, gold price of $1,250 (U.S.) per ounce, and silver price of $17.50 (U.S.) per ounce. C1 cash cost guidance has been updated to include treatment and refining charges (TC/RCs), off-site transportation costs and certain tax benefits that are passed through to customers on invoicing. These adjustments have been included in C1 cash cost disclosure since the first quarter of 2018. Capital expenditure guidance for the year remains unchanged.

Conference call details

The company will hold a conference call on Nov. 9, 2018, at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time) to discuss these results.

Date:  Nov. 9, 2018

Time:  11:30 a.m. Eastern Time (8:30 a.m. Pacific Time)

Dial-in:  North America: 1-800-319-4610 or international: 1-604-638-5340; please dial in five to 10 minutes prior and ask to join the call

Replay North America:  1-800-319-6413 or international: 1-604-638-9010

Replay passcode:  2673

This press release should be read in conjunction with the complete unaudited condensed consolidated interim financial statements for the three- and nine-month periods ended Sept. 30, 2018, and 2017, and management's discussion and analysis for the three- and nine-month periods ended Sept. 30, 2018, available on the company's website.

About Ero Copper Corp.

Ero Copper, headquartered in Vancouver, B.C., is focused on copper production growth from the Vale do Curaca property, located in Bahia, Brazil. The company's primary asset is a 99.6-per-cent interest in the Brazilian copper mining company, MCSA, 100-per-cent owner of the Vale do Curaca property with over 39 years of operating history in the region. The company currently mines copper ore from the Pilar underground mine, the Surubim open-pit mine and its newly constructed Vermelhos underground mine. In addition to the Vale do Curaca property, MCSA owns 100 per cent of the Boa Esperanca development project, an IOCG-(iron oxide copper gold)-type copper project located in Para, Brazil.

Rubens Mendonca, MAusIMM, chartered professional, mining, has reviewed and approved the scientific and technical information contained in this press release. Mr. Mendonca is a qualified person and is independent of Ero Copper as defined by National Instrument 43-101 (Standards of Disclosure for mineral Projects).

We seek Safe Harbor.

© 2018 Canjex Publishing Ltd. All rights reserved.