Ero Copper Announces Results of Optimized Feasibility Study for Boa Esperança Project - Doubles Life-of-Mine Copper Production

Date/time : 2021-09-28 05:00 AM
Symbol :

ERO

Company : Ero Copper Corp.
Price : -
Market cap : -
O/S : -
Exchange :

TSX

Industry :

Copper

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Ero Copper Announces Results of Optimized Feasibility Study for Boa Esperança Project – Doubles Life-of-Mine Copper Production

(all amounts in US dollars, unless otherwise noted)

VANCOUVER, British Columbia, Sept. 28, 2021 (GLOBE NEWSWIRE) -- Ero Copper Corp. (TSX: ERO, NYSE: ERO) (“Ero” or the “Company”) is pleased to announce the results of its optimized Feasibility Study (the "2021 Feasibility Study") on the Boa Esperança Copper Project ("Boa" or the "Project"), located in Pará State, Brazil.

HIGHLIGHTS

  • 41.8% after-tax internal rate of return ("IRR") and $380 million after-tax net present value (8%) based on Consensus Copper Price (as defined below) and 5.00 BRL:USD exchange rate;

  • Doubled life-of-mine ("LOM") copper production to approximately 326,000 tonnes from 163,000 tonnes in the 2017 Study (as defined below) with increased mine life of twelve years;

  • Increased annual average LOM copper production from approximately 18,000 tonnes to over 27,000 tonnes, with the first five years of production averaging approximately 35,000 tonnes per annum;

  • Mine life of twelve years supported by updated proven mineral reserves of 30.7 million tonnes at 0.89% copper and probable mineral reserves of 12.4 million tonnes at 0.67% copper, containing a total of 356.6 thousand tonnes of copper, a 93% increase in contained copper as compared to the 2017 Study (as defined below);

  • Low capital-intensity of approximately $8,400 per tonne of copper produced annually over the first 5 years of the Project resulting in rapid payback of 1.4 years at Consensus Copper Price;

  • Significant exploration upside identified within an under-explored area within the final pit limits, known as the "Gap Zone", expected to enhance the Project by (i) confirming continuity of mineralization between near-surface high-grade zones and high-grade zones near the pit limits at depth; and, (ii) converting material currently classified as waste into mineral resources. Subsequent to August 31, 2021, or the effective date of the mineral resource and mineral reserve estimates in the 2021 Feasibility Study (the “Effective Date”), ten exploration holes were drilled in the Gap Zone, all of which showed mineralization. To date, assay results have been received for three of these holes. Results are highlighted by hole BSPD-166 that intercepted 21.2 meters grading 0.98% copper and 15.3 meters grading 1.25% copper and BSPD-169 that intercepted 64.9 meters grade 0.86% copper including 15.0 meters grading 1.40% copper; and
  • Detailed engineering design efforts are currently underway with early construction works expected to commence during H1 2022, subject to the approval of Ero's Board of Directors.
2021 FEASIBILITY STUDY SUMMARY
General
Type of Operation Open Pit
Mine Life years 12
Mill Throughput Mtpa 4.0
Total Tonnes Processed kt 43,052
Life-of-Mine Strip Ratio waste:ore 3.7
Copper Head Grade % Cu 0.83 %
Metallurgical Recovery % 91.3 %
First Five Years of Production
Average Annual Recovered Copper kt 35
C1 Cash Cost ( 1) $/lb Cu produced $1.12
Total Recovered Copper Production kt 174
Life-of-Mine Production
Average Annual Recovered Copper kt 27
C1 Cash Cost ( 1) $/lb Cu produced $1.36
Total Recovered Copper Production kt 326
Financial Highlights
Copper Price $/lb Consensus Copper Price ( 2)
Foreign Exchange Rate USD:BRL 5.00
Initial Capital $M $294
Sustaining Capital $M $196
After-Tax Net Present Value (8%) $M $380
After-Tax Internal Rate of Return % 41.8 %
After-Tax Payback Period years 1.4

(1) C1 Cash Cost is a non-IFRS Measure. Please refer to the Notes section of this press release for a discussion of non-IFRS Measures.
(2) Consensus Copper Price forecast is based on the average analyst copper price estimates from 26 financial institutions as of the Effective Date, resulting in $3.80 per pound in 2024, $3.95 per pound in 2025 and $3.40 per pound in 2026 and thereafter.

SENSITIVITY OF ECONOMIC RESULTS TO COPPER PRICE (USD/LB)

A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d2dcb7e7-ae75-4bce-acef-25332ea89f31

Commenting on the results, David Strang, CEO, stated, “The Boa Esperança Project is the most recent example of our team's commitment and outstanding track record of creating shareholder value from our existing portfolio, and we could not be more excited about the outcome of these efforts. We started the re-evaluation of Boa from the ground up, beginning with a complete review of the mineral resource calculations that identified significant upside opportunities on which to build a new vision for Boa.

“By re-logging core, focusing our efforts on geologic modelling and optimizing the mine sequence, we were able to identify a superior mine plan capable of supporting a much larger operation by pulling forward high-grade mineralization in the production plan. The result of this work is significantly higher annual copper production averaging approximately 35,000 over the first five years of the mine's life, a very attractive payback of 1.4 years and a 41.8% internal rate of return. Further, we see potential for additional value generation through ongoing exploration within the newly designed final pit shell.

“Our near-term focus will be targeting exploration in an area referred to as the Gap Zone, where we currently have four drill rigs operating. The Gap Zone is a sizeable target area within the current pit shell where there has been limited historic drilling. As a result, material mined from this zone, which is currently included in the later phases of the mine plan, is largely treated as waste. While early in the program, the ten holes we have drilled within the Gap Zone subsequent to the cut-off date of the 2021 Feasibility Study show mineralized zones in the areas where we would expect to see extensions and continuity of mineralization. With continued exploration success, we see potential to meaningfully increase the mine's production profile beyond year five of the current life-of-mine plan.

"Our excitement around our organic growth initiatives, including the delivery of the Boa Esperança Project and production growth at the MCSA Mining Complex, continues to build as we establish a clear path to doubling our copper production profile over the coming years while continuing to generate peer- leading returns on invested capital. With a robust balance sheet and strong cash flow generation, we are well-positioned to execute on our growth strategy and continue delivering shareholder value."

GAP ZONE EXPLORATION SUCCESS

Subsequent to the Effective Date, ten exploration drill holes were drilled within the Gap Zone, all of which show mineralization. To date, assay results have been received for three of these holes. Results are highlighted by hole BSPD-166 that intercepted 21.2 meters grading 0.98% copper and 15.3 meters grading 1.25% copper, including 6.5 meters grading 2.46% copper, hole BSPD-169 that intercepted 64.9 meters grade 0.86% copper, including 15.0 meters grading 1.40% copper and hole BSPD-175 that intercepted 14.1 meters grading 0.73% copper including 5.7 meters grading 1.59% copper. Additional mineralized intercepts from within these holes are pending assay results.

Continued positive exploration results within the Gap Zone are expected to further enhance the Project by (i) confirming continuity of mineralization between near-surface high-grade zones and high-grade zones near the pit limits at depth; and, (ii) converting material currently classified and mined as waste into mineral resources. The Company expects the Gap Zone to contribute to increased copper production beyond year five of the mine plan.

Gap Zone drill results outlined in this press release, including drill collar locations, are shown below in Figure 1 and can be viewed on the Company’s Boa Esperança project tour and interactive three- dimensional ("3D") model, which can be accessed via the Company’s VRIFY Technology Inc. (“VRIFY”) project page ( http://www.vrify.com/companies/ero-copper-corp ) or via VRIFY directly (www.vrify.com).


Hole ID From (m) To (m) Length (m) Cu (%)
GAP Zone - Assay Results
BSPD-166 31.0 44.0 13.0 0.25
and 125.4 141.3 15.9 0.44
and 174.0 179.2 5.2 1.27
and 189.7 200.6 10.9 0.67
and 339.5 360.7 21.2 0.98
including 339.5 343.3 3.9 2.78
and 383.5 398.8 15.3 1.25
including 386.3 392.8 6.5 2.46
and 435.4 445.6 10.3 1.27
including 435.4 439.8 4.4 2.21
and 467.8 476.6 8.8 0.39
BSPD-169 317.2 382.0 64.9 0.86
including 346.5 354.9 8.4 1.46
and including 367.0 382.0 15.0 1.40
BSPD-175 336.8 350.8 14.1 0.73
including 345.1 350.8 5.7 1.59
and 401.0 438.0 37.0 0.20
GAP Zone - Additional Mineralized Intervals for Above Drill Holes (Assay Results Pending)
BSPD-169 112.0 119.0 7.0 assays pending
and 158.5 183.0 24.5 assays pending
and 201.0 263.0 62.0 assays pending
and 484.0 499.0 15.0 assays pending
and 509.0 536.0 27.0 assays pending
BSPD-175 101.0 117.9 16.9 assays pending
and 127.0 138.0 11.0 assays pending
and 185.0 192.5 7.5 assays pending
and 203.8 220.7 16.9 assays pending
and 302.0 320.3 18.3 assays pending

(1) Mineralized intercepts below cut-off grade of 0.20% copper not reported. Drill holes were drilled from surface using diamond core drill rigs. The length of intercept may not represent the true width of mineralization. Values may not add up due to rounding. From, to and mineralized intercepts are rounded to the nearest tenth of a meter. The seven remaining drill holes from the Gap Zone drilling campaign are pending assay results in their entirety.

Gap Zone drill results from BSPD-166, BSPD-169 and BSPD-175, as referenced herein, reflects mineralization not captured in the Company's NI 43-101 (as defined below) compliant mineral resource and mineral reserve models developed for the 2021 Feasibility Study. There has been insufficient work and analysis surrounding Gap Zone drilling to define a mineral resource and it is uncertain if further exploration and analysis will result in such targets being delineated as a mineral resource.

Figure 1 shows high-grade and low-grade mineralization, as well as the Gap Zone exploration target area within the final pit design of the Project. Figure 2 highlights recent Gap Zone drilling results.

The center of the final pit design is located at UTM Easting 450722.00 and UTM Northing 9241657.00. Boa Esperança mineralization based on data compilation work which includes review of geological controls, structural analysis and copper mineralization identified during the Company’s technical programs. The interpretation and boundary limits do not imply continuity of mineralization or actual thickness of mineralization. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

Figure 1: Boa Esperança VRIFY 3D Model, Plan View looking North (Ero Copper, 2021) is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/c6dfee9a-605f-44d8-b1a1-5513b780e764


The center of the final pit design is located at UTM Easting 450722.00 and UTM Northing 9241657.00. The GAP Zone volume is shown to demonstrate a future area of exploration within the Boa Esperança final pit design. The shape is based on data compilation work which includes review of geological controls and structural analysis during the Company’s technical programs. The interpretation and boundary limits do not imply continuity of mineralization or actual thickness of mineralization.

Figure 2: Boa Esperança VRIFY 3D Model, Gap Zone Results, view looking North (Ero Copper, 2021) is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/bc04e274-5ba7-4bbf-a7f3-b29950a9b500


MINERAL RESERVES & RESOURCES, 2021
Tonnes
(000s)
Grade
(Cu %)
Contained Cu
(kt)
Mineral Reserves
Proven Reserves 30,674 0.89 273.2
Probable Reserves 12,378 0.67 83.3
Proven & Probable Reserves 43,052 0.83 356.6
Mineral Resources (Pit Constrained, inclusive of Reserves)
Measured Resources (High-Grade) 7,117 2.16 153.6
Indicated Resources (High-Grade) 1,661 2.27 37.6
Measured & Indicated Resources (High-Grade) 8,778 2.18 191.3
Measured Resources (Low-Grade) 25,476 0.60 152.0
Indicated Resources (Low-Grade) 13,434 0.51 68.4
Measured & Indicated Resources (Low-Grade) 38,909 0.57 220.4
Total Measured & Indicated Resources 47,687 0.86 411.7
Inferred Resources
Inferred Resources (Pit Constrained High-Grade) 40 2.69 1.1
Inferred Resources (Pit Constrained Low-Grade) 514 0.49 2.5
Inferred Resources (Pit Constrained) 555 0.65 3.6
Inferred Resources (Unconstrained High-Grade Outside Pit Limits) 1,354 2.24 30.4
Inferred Resources (Unconstrained Low-Grade Outside Pit Limits) 9,681 0.60 58.2
Inferred Resources (Unconstrained Mineralization Outside Pit) 11,035 0.80 88.6
Total Inferred Resources 11,590 0.80 92.2

(1) Mineral reserves and mineral resources have an effective date of August 31, 2021.
(2) Stated mineral resources are inclusive of mineral reserves. All figures have been rounded to the relative accuracy of the estimates. Summed amounts may not add due to rounding. High-grade and low-grade mineral resources defined as greater than or equal to 1.00% copper and less than 1.00% copper, respectively.
(3) A 3D geologic model was developed for the Boa Esperança Project. Geologically constrained copper grade shells were developed using a copper cut-off grade of 0.20% and 0.51% for pit constrained and unconstrained mineral resources, respectively, to generate a 3D mineralization model of the Boa Esperança Project. Within grade shells, mineral resources were estimated using ordinary kriging within a 2.0 meter by 2.0 meter by 4.0 meter block size. Open pit constrained, unconstrained and marginal cut-off grades are based upon a copper price of US$6,400 per tonne with cost parameters appropriate to the deposit. The mineral resource estimates were prepared 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”), and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines, adopted by CIM Council on November 29, 2019 (the ‘CIM Guidelines”), using geostatistical and/or classical methods, plus economic and mining parameters appropriate to the deposit.
(4) Mineral reserve estimates were prepared in accordance with the CIM Standards and the CIM Guidelines, using geostatistical and/or classical methods, plus economic and mining parameters appropriate for the deposit. Mineral reserves are based on a long-term copper price of US$6,613 per tonne; concentrate grade of 27% copper; average metallurgical recoveries of 91.3%; copper concentrate logistics costs of US$108.20 per wet metric tonne ("wmt"); transport losses of 0.2%; copper concentrate treatment charges of US$59.50 per dry metric tonne ("dmt"), refining charges of U$0.0595 per pound of copper; copper payability of 96.3%; average mining cost of US$2.47 per tonne mined; processing cost of US$7.74 per tonne processed and G&A costs of US$3.83 per tonne processed; average pit slope angles that range from 30º for saprolite to 50º for fresh rock and a 2% CFEM government royalty.

Mineral resources which are not mineral reserves do not have demonstrated economic viability. Please refer to the Technical and Scientific section of this press release for additional information.

MINERAL RESERVE COMPARISON TO 2017 STUDY

2021 Feasibility Study ( 1,2,3) 2017 Study (4) Change
Tonnes Grade Contained Cu Tonnes Grade Contained Cu Contained Cu
(000s) (Cu %)