(all amounts in US dollars, unless otherwise noted)
VANCOUVER, British Columbia, March 28, 2018 (GLOBE NEWSWIRE) -- Ero Copper Corp. (TSX:ERO) (“Ero” or the “Company”) today announced its financial results for the three and twelve months ended December 31, 2017. Management will host a call tomorrow, Thursday March 29, 2018, at 11:30 a.m. Eastern to discuss the results. Dial in details for the conference call can be found near the end of this news release.
- Fourth quarter copper production of 5,334 tonnes and 2017 full year copper production of 20,133, exceeding production forecast by over 1,100 tonnes of copper;
- Generated $31.4 million and $52.9 million in EBITDA* (Adjusted EBITDA* of $12.0 million and $28.2 million) during the three and twelve month periods ended December 31, 2017, respectively;
- Fourth quarter C1 Cash Costs* of $1.54 per pound of copper and 2017 full year C1 Cash Costs* of $1.45 per pound of copper;
- Net income attributable to owners of the Company of $19.5 million and $22.5 million ($0.24 and $0.34 per share on a diluted basis) during the three and twelve month periods ended December 31, 2017, respectively;
- Ended the fourth quarter with strong cash position of $53.3 million; and,
- Significantly improved net debt position of $85.9 million as at December 31, 2017.
“2017 was an extraordinary year for the Company and our shareholders. From restarting full operations in February, through to our successful initial public offering in October and the additional $25.6 million debt reduction at year-end, we were able to execute many of our primary corporate objectives for the year. At the same time, continued outperformance of our operations, including bringing forward the first production of the high-grade Vermelhos Mine has firmly placed the Company on solid footing thereby allowing us to prioritize efforts on our aggressive exploration programs that underpin our organic growth strategy” commented Noel Dunn, Executive Chairman of Ero.
“At Pilar and Surubim, we have continued to optimize mine sequencing, focusing on lowering dilution and improving the quality of every tonne mined and sent to the mill, as well as advancing development (and exploration) to the known high-grade areas of the Pilar Mine,” added David Strang, President & CEO of Ero. “At Vermelhos, underground mine development has continued to outpace our expectations with 1,717 meters of total development completed during 2017, including 841 meters of primary ramp development. Underground infrastructure has now been completed to the top of the first production level of the main Vermelhos ore body. While we are maintaining our outlook for start-up of Vermelhos late in the fourth quarter of 2018, we are actively looking at opportunities to further advance this timeline. In 2018, we expect production to be biased towards the second half of the year as we begin production from Vermelhos as well as resequencing of Pilar and Surubim.”
On exploration, the results achieved to date both within and adjacent to, the Pilar and Vermelhos mines, including the recently announced new discovery at the Pilar Mine (North Extension), highlight our efforts on near-mine resource and reserve development. The results reinforce our confidence in the longer-term production potential from our existing operations by following extensions that were never previously explored or never followed up.”
“As we look forward to 2018, our exploration efforts will gradually expand to include more aggressive regional step-out exploration in support of our 24,000 line-kilometer airborne geophysical survey designed to target high-grade mineralization throughout the Curaçá Valley.”
*EBITDA, Adjusted EBITDA, and C1 Cash Cost of copper produced (per lb) are non-IFRS measures – see the Notes section of this press release for a discussion on non-IFRS Measures
OPERATIONS, EXPLORATION & CORPORATE HIGHLIGHTS
- Mining & Milling Operations – high-grade production growth
- During the fourth quarter 2017, 444.3 thousand tonnes (“kt”) of ore was mined at a combined grade of 1.36% copper, comprising of 225.0 kt of ore grading 2.03% copper from underground operations and 219.3 kt of ore grading 0.68% from open pit operations;
- During the fourth quarter 2017, 452.4 kt of ore was processed at an average grade of 1.36% copper resulting in 5,334 tonnes of copper production after metallurgical recoveries that averaged 86.9% over the period;
- During the twelve month period ended December 31, 2017, 1.8 million tonnes of ore was processed at an average grade of 1.31% copper, at average metallurgical recoveries of 86.8%, to produce 20,133 tonnes of copper in concentrate;
- 5,448 and 19,719 tonnes of copper in concentrate sold during the three and twelve month periods ended December 31, 2017, respectively;
- Vermelhos Mine Development – continued advancement at above-forecast rates
- During the fourth quarter 2017, total development of 821 meters completed, including 306 meters of primary ramp development, 445 meters of secondary development and 71 meters of auxiliary ramp development to access the UG1 Target; and,
- Total development completed during the twelve month period ended December 31, 2017 of 1,717 meters, including 841 meters of primary ramp development since May 2017 at an average rate of 105 meters per month.
- Exploration Activities – advancing several new discoveries towards production
- Pilar District
- Exploration activities predominately focused on the new discovery within the North Extension and the high-grade infill drilling program within the “Deepening Zone”, both located within, or adjacent to existing Pilar underground mine infrastructure. Several significant intercepts highlighting these discoveries were previously reported including 43.1 meters grading 1.70% (including 19.0 meters grading 2.49% copper) at the North Extension.
- Vermelhos District
- Exploration activities remain focused on infill drilling required for stope definition and detailed mine planning, with several significant intercepts including 15.8 meters grading 8.84% copper, confirming the high-grade nature of the Vermelhos mine. As the infill drill program nears completion, drilling will refocus towards exploration of new targets and down dip extensions of the main Vermelhos ore bodies to the north.
- Pilar District
- Corporate Highlights – Reduction in consolidated total debt and improved net debt position
- During the fourth quarter, the Company purchased at a discount senior secured notes of the Company’s subsidiary, Mineração Caraíba S.A. (“MCSA”), with the face amount of US$75.6 million. The Company financed the purchase through a US$50 million senior secured non-revolving credit facility with The Bank of Nova Scotia and recognized a US$25.6 million reduction in total consolidated debt. Please refer to the Company’s press release dated December 21, 2017 for additional information.
- A significantly improved net debt position of $85.9 million as result of the debt repurchase and proceeds from the initial public offering.
OPERATING AND FINANCIAL HIGHLIGHTS
|3 months |
|December 31, |
|December 31, |
|Operating Highlights (MCSA Operations)|
|Ore Processed (tonnes)||452,371||n/a||1,771,209||n/a|
|Grade (% Cu)||1.36||n/a||1.31||n/a|
|Cu Production (tonnes)||5,334||n/a||20,133||n/a|
|Cu Production (lbs)||11,759,857||n/a||44,384,986||n/a|
|Concentrate Grade (% Cu)||35.2||n/a||35.2||n/a|
|Concentrate Sales (tonnes)||15,577||n/a||56,341||n/a|
|Cu Sold in Concentrate|
|Cu Sold in Concentrate (lbs)||12,010,770||n/a||43,472,902||n/a|
|C1 Cash cost of copper produced (per lb)|| |
|Financial Highlights ($millions, except per share amounts)|
|Gross profit (loss)||$5.8||n/a||$12.9 ||n/a|
|Cash flow from (used in) operations||$11.2||($8.6)||$21.2||($8.7)|
|Net income (loss) attributable to owners of the Company||$19.5||($2.7)||$22.5 ||($3.0)|
|Net income (loss) per share attributable to owners of the Company|
|- Basic||$0.28||$(0.19)||$0.40 ||$(0.44)|
|- Diluted||$0.24||$(0.19)||$0.34 ||$(0.44)|
|Cash and Cash Equivalents||$51.1||$18.3||$51.1 ||$18.3|
|Working Capital (Deficit)||$42.6||($129.3)||$42.6||($129.3)|
 ERO was incorporated on May 16, 2016. MCSA was acquired December 12, 2016. Operations did not commence until the first quarter of 2017
 EBITDA, Adjusted EBITDA, Net Debt, Working capital and C1 Cash Cost of copper produced (per lb) are non-IFRS measures – see the Notes section of this press release for a discussion on non-IFRS Measures
The Company’s production, cash cost and capital expenditure guidance for 2018 is outlined below and detailed in the Company’s press release dated January 9, 2018.
Production & Cash Costs:
|Tonnes Processed Sulphides||2,000,000|
|Copper Grade (% Cu)||1.50%|
|Copper Recovery (%)||86.0%|
|Cu Production Guidance (tonnes)||25,500 – 27,500|
|C1 Cash Cost Guidance (US$/lb)||$1.30 – $1.40|
 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.
 C1 Cash Costs of copper produced (per lb.) is a non-IFRS measures – see the Notes section of this press release for a discussion of non-IFRS measures.
Production for the year is heavily weighted towards the second half of the year in part due to the commissioning of the Vermelhos Mine, currently anticipated during the fourth quarter, as well as Pilar and Surubim mine resequencing. Cash cost guidance for 2018 assumes a USD:BRL foreign exchange rate of 3.20, gold price of US$1,250 per ounce and silver price of US$17.50 per ounce. C1 Cash Cost guidance for 2018 has been updated to include treatment and refining charges (“TC/RCs”), offsite transportation costs and certain tax benefits that are passed through to customers on invoicing. These adjustments were not included in prior C1 Cash Cost disclosure.
The Company’s capital expenditure guidance for 2018 reflect the acceleration of the Vermelhos mine and a significant expansion of the Company’s 2017 exploration programs. Additional investments in the Pilar underground mine and supporting infrastructure are being made during 2018 in preparation for a longer mine life than previously envisioned.
|Exploration & Drilling||20.0|
|Capital Expenditure Guidance||96.0|
 Exploration & drilling capital expenditure guidance is dependent, in part, on future exploration success and subject to further review and revision
Non IFRS measures
Financial results of the Company are prepared in accordance with IFRS. The Company utilizes certain non-IFRS measures, including C1 cash cost of copper produced (per lb), EBITDA, net debt and working capital, which are not measures recognized under IFRS. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
C1 Cash Cost of copper produced (per lb.)
C1 cash cost of copper produced (per lb) is the sum of production costs, net of capital expenditure development costs and by-product credits, divided by the copper pounds produced. C1 cash costs reported by the Company exclude treatment, refining charges and offsite costs. By-product credits are calculated based on actual precious metal sales (net of treatment costs) during the period divided by the total pounds of copper produced during the period. C1 cash cost of copper produced per pound is a non-IFRS measure used by the Company to manage and evaluate operating performance of the Company’s operating mining unit, and is widely reported in the mining industry as benchmarks for performance, but does not have a standardized meaning and is disclosed in addition to IFRS measures.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
EBITDA represents earnings before interest expense, income taxes, depreciation, and amortization. Adjusted EBITDA includes further adjustments for non-recurring items and items not indicative to the future operating performance of the Company. The Company believes EBIDTA and adjusted EBIDTA are appropriate supplemental measures of debt service capacity and performance of its operations.
Adjusted EBIDTA was calculated by removing the following income statement items:
- Gain on debt settlement
- Foreign exchange gain (loss)
Working capital is determined based on current assets and current liabilities as reported in the Company’s consolidated financial statements. The Company uses working capital as a measure of the Company’s short-term financial health and operating efficiency. The following table provides a calculation of working capital based on amounts presented in the Company’s consolidated financial statements as at December 31, 2017 and 2016.
Net debt is determined based on cash and cash equivalents, restricted cash and loans and borrowings as reported in the Company’s consolidated financial statements. The Company uses net debt as a measure of the Company’s ability to pay down it’s debt.
CONFERENCE CALL DETAILS
The Company will hold a conference call on Thursday, March 29, 2018 at 11:30am Eastern time (8:30am Pacific time) to discuss these results.
|Date:||Thursday, March 29, 2018|
|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|
This release should be read in conjunction with the complete audited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the twelve month period ended December 31, 2017 available on the Company’s website www.erocopper.com
ABOUT ERO COPPER CORP
Ero Copper Corp, headquartered in Vancouver, B.C., is focused on copper production growth from the Vale do Curaçá Property, located in Bahia, Brazil. The Company’s primary asset is a 99.6% interest in the Brazilian copper mining company, MCSA, 100% owner of the Vale do Curaçá Property with over 37 years of operating history in the region. The Company currently mines copper ore from the Pilar underground and the Surubim open pit mines and is currently developing the new high-grade Vermelhos copper mine. In addition to the Vale do Curaçá Property, MCSA owns 100% of the Boa Esperanҫa development project, an IOCG-type copper project located in Pará, Brazil. Additional information on the Company and its operations, including Technical Reports on both the Vale do Curaçá and Boa Esperanҫa properties, can be found on the Company’s website (www.erocopper.com) and on SEDAR (www.sedar.com).
Rubens Mendonça, MAusIMM, Chartered Professional – Mining, has reviewed and approved the scientific and technical information contained in this news release. Mr. Mendonça is a Qualified Person and is independent of Ero Copper Corp. as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”).
|ERO COPPER CORP.|
|Signed: “David Strang”||For further information contact:|
|David Strang, President & CEO||Makko DeFilippo, Vice President, Corporate Development|
CAUTION REGARDING FORWARD LOOKING INFORMATION AND STATEMENTS This Press Release contains “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking information includes statements that use forward-looking terminology such as “may”, “could”, “would”, “will”, “should”, “intend”, “target”, “plan”, “expect”, “budget”, “estimate”, “forecast”, “schedule”, “anticipate”, “believe”, “continue”, “potential”, “view” or the negative or grammatical variation thereof or other variations thereof or comparable terminology. Such forward-looking information includes, without limitation, statements with respect to the Company’s expected operations at the Pilar Mine, timing of production at the Vermelhos Mine, drilling plans, plans for the Company’s exploration program, the Company’s ability to service its ongoing obligations, the Company’s future capital resources and expenditures and the impact of new accounting standards and amendments on the Company’s financial statements.
Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this Press Release including, without limitation, assumptions about: favourable equity and debt capital markets; the ability to raise any necessary additional capital on reasonable terms to advance the production, development and exploration of the Company’s properties and assets; future prices of copper and other metal prices; the timing and results of exploration and drilling programs; the accuracy of any mineral reserve and mineral resource estimates; the geology of the Vale do Curaçá Property and the Boa Esperanҫa Property being as described in the technical reports for these properties; production costs; the accuracy of budgeted exploration and development costs and expenditures; the price of other commodities such as fuel; future currency exchange rates and interest rates; operating conditions being favourable such that the Company is able to operate in a safe, efficient and effective manner; 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. While the Company considers these assumptions to be reasonable, the assumptions are inherently 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 information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.
Furthermore, such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking information. Such risks include, without limitation the risk factors listed under the heading “Risk Factors” in the Annual Information Circular of the Company for the year ended December 31, 2017, dated March 28, 2018.
Although the Company has attempted to identify important factors that could cause actual actions, events, conditions, results, performance or achievements to differ materially from those described in forward-looking information, there may be other factors that cause actions, events, conditions, results, performance or achievements to differ from those anticipated, estimated or intended.
The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information contained herein. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.
Forward-looking information contained herein is made as of the date of this Press Release and the Company disclaims any obligation to update or revise any forward-looking information, whether as a result of new information, future events or results or otherwise, except as and to the extent required by applicable securities laws.
GENERAL Information of a scientific or technical nature in respect of the Vale do Curaçá Property included in this news release is based upon the Vale do Curaçá Technical Report, dated September 7, 2017 with an effective date of June 1, 2017, prepared by Rubens Mendonça, MAusIMM, of SRK Brazil as at the date of the report (now with Planaminas), and Porfirio Cabaleiro Rodrigues, MAIG, Mário Conrado Reinhardt, MAIG, Fábio Valério Xavier, MAIG and Bernardo H.C. Viana, MAIG, all of GE21, who are independent qualified persons under NI 43-101.
Please see the Vale do Curaçá Technical Report filed on the Company’s profile at www.sedar.com, for details regarding the data verification undertaken with respect to the scientific and technical information included in this news release regarding the Vale do Curaçá Property for additional details regarding the related exploration information, including interpretations, the QA/QC employed, sample, analytical and testing results and for additional details regarding the Mineral Resource and Mineral Reserve estimates discussed herein.
Source: Ero Copper Corp.