Ero Copper gives green light to Brazil mine
Ero Copper Corp. [ERO-TSX, NYSE] said Tuesday its board of directors has approved construction of the Boa Esperanca project in Brazil.
Ero is a Brazil-focused base metals mining company. Its key asset is a 99.6% stake in Mineracao Caraiba S.A. (MCSA), a long-established Brazilian copper mining company with 40 years of operating experience in the Curaca Valley of Bahia, Brazil. MCSA’s primary assets are the fully integrated mining and processing operations of the MCSA Mining Complex in northeastern.
The MCSA Mining Complex produced 42,814 tonnes of copper in concentrate in 2020.
In addition, MCSA owns 100% of the “turnkey” Boa Esperanca, development project, an IOCG-type copper deposit located in Para State.
Construction is expected to commence in the second quarter of this year and the company anticipates achieving first production during the third quarter of 2024. Ero CEO David Strang said the project will play an integral role in the company’s plans to become a 100,000 tonne-per-year copper producer.
Results of an optimized feasibility study announced in September, 2021, indicate up front capital costs of US$294 million. The study envisions life of mine average annual copper production of 27,000 tonnes at a cash cost of US$1.36 per pound.
Significant exploration upside identified within an under-explored area within the final pit limits, known as the “Gap Zone,” is expected to enhance the project by confirming continuity of mineralization between near-surface high-grade zones and high-grade zones near the pit limits at depth. Material currently classified as waste is expected to be upgraded to the mineral resource category.
“One of the most compelling aspects about this project is its expected ability to double Eros’s annual copper production at a low upfront capital investment of approximately US$300 million,” said Strang.
In preparation for construction, the company said it has made significant progress on key workstreams. They feature ongoing drilling, including further exploration of the Gap Zone, and detailed engineering and construction designs.
The company recently completed a US$400 million senior unsecured note offering, a move that provides ample liquidity to execute its growth projects, which are expected to double copper production and achieve higher sustained gold production levels while maintaining first quartile operating costs and industry-leading returns on capital investment.
Ero shares were unchanged at $17.26 and currently trade in a 52-week range of $29.76 and $15.01.
The company also holds a 97.6% of the NX Gold Mine, an operating gold and silver mine in Mato Grosso, Brazil. Ero recently announced details of a US$110 million streaming agreement with unit of Royal Gold Inc. [RGLD-NASDAQ], involving gold production from the NX Gold Mine.
Key components of the deal included an upfront cash consideration of US$100 million for the purchase of 25% of the gold produced until 93,000 ounces has been delivered, decreasing to 10% of gold produced over the remaining life of the mine.