ERO.TO · 2019-05-07 12:00:00

Ero Copper Reports First Quarter Results

Financials

TSX

: ERO

Ero Copper Corp

MAY 7, 2019 NR:19-6

Ero Copper Reports First Quarter Results

(all amounts in US dollars, unless otherwise noted)

Vancouver, British Columbia – Ero Copper Corp. (TSX : ERO) (“Ero” or the “Company” )

today is pleased to announce its financial results for the three months ended March 31, 2019.

Management will host a conference call tomorrow , Wednesday, May 8 , 2019, at 11:30 a.m.

Eastern to discuss the results. Dial in details for the call can be found near the end of this press

release.

HIGHLIGHTS

• First quarter copper production of 10,645 tonnes of copper;

• First quarter C1 Cash Costs* of $0.91 per pound of copper produced;

• First quarter gold and silver production at the NX Gold Mine of 10,119 ounces of gold and

6,359 ounces of silver at C1 Cash Costs* of $486 per ounce of gold produced;

• Generated $39.3 million in Adjusted EBITDA* and $25.1 million in cash flow from

operations during the three month period ended March 31, 2019;

• Adjusted net income attributable to owners of the Company * of $15.7 million ($0.17 per

share on a diluted basis) during the three month period ended March 31, 2019;

• Ended the first quarter with cash position of $22.1 million; and,

• Reiterated full year production, capital and operating cost guidance for 2019.

“Our operational results from the first quarter of 2019 are in line with our expectations and

demonstrate strong overall performance during the period. The results are highlighted by a

significant quarter-on-quarter increase in grades mined and processed as we started to mine the

main orebodies of the Vermelhos Mine during the period. The increase in mill head-grade, paired

with several recently completed low- cost and high- value milling and flotation improvement

initiatives resulted in increased metallurgical recoveries which contributed to the 8% improvement

in C1 Cash Costs per pound of copper produced when compared to the fourth quarter of 2018 and

reflects the continued great work by our team at Mineração Caraíba.

Ero Copper Corp

TSX: ERO

At Vermelhos, production from the first operating stopes of the main orebodies commenced during

the period, resulting in a 34% quarter -on-quarter improvement in grades mined. With two

quarters of production at Vermelhos now complete, we are extremely pleased with the operational

performance of the mine . At Pilar, a decline in grades was anticipated due to planned stope

sequencing, and we expect grades to improve through the balance of the year. During the period,

we also repositioned our open pit mining fleet and commenced operations at R22W, which we

expect will continue to ramp up production through the second quarter.

Now that production from Pilar and Vermelhos is on stable footing, we have continued to increase

our exploration efforts throughout the Curaçá Valley where we now have 24 drill rigs operating.

While the majority of the ongoing exploration programs are focused in and around our existing

mines in preparation of our updated National Instrument 43-101 compliant technical report ,

expected to be completed towards the end of the third quarter or early fourth quarter , we have

now commenced drilling targets within the Vermelhos and Pilar Districts identified during the

Company’s regional airborne survey and subsequent data compilation and prioritization work.

At our high-grade NX Gold Mine, production of 10,119 ounces of gold and 6,359 ounces of silver

during the period was in line with 2018 production levels. Mill improvements completed during

the period combined with an increase in mill head-grades contributed to a 10% overall

improvement in C1 Cash Costs to $486 per ounce of gold produced – a fantastic achievement for

our NX Gold team,” commented David Strang, President & CEO of Ero.

*EBITDA, Adjusted EBITDA, Adjusted net income (loss), C1 Cash Cost of copper produced (per

lb) and C1 Cash Costs of gold produced (per ounce) are non-IFRS measures – see the Notes section

of this press release for a discussion on non-IFRS Measures

OPERATIONS & EXPLORATION HIGHLIGHTS

 M

ining & Milling Operations – strong start to 2019

• 530,133 tonnes of ore grading 2.19 % copper processed during the first quarter

producing 10,645 tonnes of copper in concentrate after average metallurgical

recoveries of 91.8%;

• Commenced mining of the Vermelhos main orebodies, with 139,143 tonnes mined

grading 3.71% copper mined during the period contributing to a significant increase

in total grades mined and processed;

TSX: ERO

Ero Copper Corp

• The Company’s 97.6% owned NX Gold Mine processed 38,717 tonnes of ore grading

8.76 grams per tonne gold, resulting in the production of 10,119 ounces of gold and

6,359 ounces of silver as by -product after metallurgical recoveries that averaged

92.8% during the first quarter of 2019.

 Exploration Activities – advancing new discoveries

• Vermelhos District

 Exploration in the Vermelhos District, where 11 drill rigs are currently

operating, is focused on in and near-mine expansion as well as drilling a north-

northeast mineralized trend encompassing the Vermelhos Mine, East Zone, N8

Deposit and several high-priority regional targets located south and to the north

of the Vermelhos Mine – a combined strike length of approximately 5.5

kilometers.

• Pilar District

 Exploration activity within the Pilar District, where 13 drill rigs are currently

operating, continues to focus on previously announced discoveries of the West

Limb and Deepening Extension zones. Recent drilling has identified a high-

grade zone of mineralization within the southern portion of the West Limb and

newly iden tified and now digitized data continues to augment exploration

activities at Pilar . In addition, the Company continues to drill test several

regional targets within the Pilar Distric t south of the Pilar Mine identified

during the Company’s data compilation and targeting work.

• NX Gold Mine

 At the NX Gold Mine, where 6 drill rigs are currently operating, exploration

efforts are focused on a recently announced new zone of mineralization. This

new zone of mineralization is located between and on- trend of the Bras and

Buracão veins. To-date, mineralization has been delineated over approximately

400 meters in strike -length and approximately 200 meters down- dip and

remains open to depth.

• Regional Programs

 With the Company’s regional data compilation and targeting work now

substantively completed, the Company has prioritized and is currently drilling

regional exploration targets proximate to the existing operations. An order for

a mobile truck-mounted reverse-circulation drill rig has been placed with our

TSX: ERO

Ero Copper Corp

primary drill contractor that will used to expedite testing of regional targets

distal to the Pilar and Vermelhos mines.

TSX: ERO

Ero Copper Corp

OPERATING AND FINANCIAL HIGHLIGHTS

3 months ended

Mar. 31, 2019

3 months ended

Dec. 31, 2018

3 months ended

Mar. 31, 2018

Operating Highlights (MCSA Operations)

Ore Processed (tonnes) 530,133 777,480 316,126

Grade (% Cu) 2.19 1.77 1.76

Cu Production (tonnes) 10,645 12,104 4,845

Cu Production (000 lbs) 23,468 26,685 10,682

Cu Sold in Concentrate (tonnes) 10,033 12,900 4,096

Cu Sold in Concentrate (000 lbs) 22,118 28,440 9,030

C1 Cash cost of copper produced (per lb)(1) 0.91 0.99 1.63

Gold (NX Gold Operations)

Au Production (ounces) 10,119 10,008 9,418

C1 Cash cost of gold produced (per ounce) (1) 486 540 555

Financial Highlights ($millions, except per share amounts)

Revenues $72.0 $85.1 $39.7

Gross profit (loss) $32.6 $39.0 $8.5

EBITDA(1) $37.2 $40.2 $13.6

Adjusted EBITDA(1) $39.3 $39.0 $13.6

Cash flow from (used in) operations $25.1 $24.0 $2.9

Net income (loss) attributable to owners of the Company

$15.3 $11.2 ($1.4)

Net income (loss) per share attributable to owners of the

Company – Basic

$0.18 $0.13 ($0.02)

Net income (loss) per share attributable to owners of the

Company – Diluted $0.17 $0.13 ($0.02)

Adjusted net income (loss) attributable to owners of the

Company(1) $15.7 $7.9 ($1.9)

Adjusted net earnings (loss) per share attributable to

owners of the Company(1) – Basic $0.19 $0.09 ($0.02)

Adjusted net earnings (loss) per share attributable to

owners of the Company(1) – Diluted $0.17 $0.09 ($0.02)

Cash and Cash Equivalents $19.5 $18.9 $27.1

Working Capital (Deficit)(1) ($0.7) ($9.3) ($22.2)

Net Debt(1) ($133.1) ($130.3) ($110.7)

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Ero Copper Corp

Footnotes

[1] EBITDA, Adjusted EBITDA, Adjusted net income (loss) attributable to owners of the Company, Adjusted earnings (loss) per share,

Net Debt, Working Capital, C1 Cash Cost of copper produced (per lb) and C1 Cash Cost of gold produced (per ounce) are non-IFRS

measures – see the Notes section of this press release for a discussion on non-IFRS Measures

ADJUSTED EBITDA & NET INCOME (LOSS) RECONCILIATION

2019 – Q1

Adjusted EBITDA $ 39,294

Adjustments:

Unrealized foreign exchange loss on USD denominated debt in MCSA (136)

Unrealized foreign exchange loss on derivative contracts (265)

Realized foreign exchange gain on derivative contracts 723

Share based compensation and other (2,453)

EBITDA $ 37,163

Adjusted net income (loss) $ 15,722

Adjustments for non-cash items (attributable to owners of the Company):

Unrealized foreign exchange loss on USD denominated debt in MCSA (135)

Unrealized foreign exchange loss on derivative contracts (264)

Reported net income attributable to owners of the Company $ 15,323

OUTLOOK

The Company’s production, cash cost and capital expenditure guidance for 2019 remains

unchanged. Additional information is outlined below and further detailed in the Company’s press

release dated January 15, 2019.

Production & Cash Costs:

2019[1]

Tonnes Processed Sulphides 2,050,000

Copper Grade (% Cu) 2.00%

Copper Recovery (%) 88.0%

Cu Production Guidance (tonnes) 36.0 – 38.0

C1 Cash Cost Guidance (US$/lb)[2] $1.00 – $1.10

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.

[2] 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.

TSX: ERO

Ero Copper Corp

Capital Expenditures:

The Company’s capital expenditure guidance for 2019 assumes a USD:BRL foreign exchange rate

of 3.70 and has been presented below in USD millions.

2019

Pilar Mine 42.0

Vermelhos 18.0

Boa Esperanҫa 2.0

Capital Expenditure Guidance 62.0

Exploration[1] 20.0

Footnotes:

[1] Exploration capital expenditure guidance is dependent, in part, on future exploration success and subject to further review and

revision

NOTES

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),

C1 cash costs of gold produced (per ounce), EBITDA, Adjusted EBITDA, Adjusted net

income (loss), Adjusted earnings (loss) per share, 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 include treatment, refining charges ,

offsite costs, and certain tax credits relating to sales invoiced to the Company’s Brazilian

customer on sales. 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

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Ero Copper Corp

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.

C1 Cash Cost of gold produced (per ounce)

C1 Cash cost of gold produced (per ounce) is the sum of production costs, net of capital

expenditure development costs and silver by -product credits, divided by the gold ounces

produced. By-product credits are calculated based on actual precious metal sales during

the period divided by the total ounces of gold produced during the period. C1 cash cost of

gold 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) and Adjusted

EBITDA

EBITDA represents earni ngs 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 EBITDA and adjusted EBIT DA are appropriate supplemental measures of debt

service capacity and performance of its operations.

Adjusted EBITDA is calculated by removing the following income statement items:

- Gain on debt settlement

- Foreign exchange gain (loss)

- Share based compensation

Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share

The Company uses the financial measure “Adjusted net income (loss)” and “Adjusted

earnings (loss) per share” to supplement information in its consolidated financial

statements. The Company believes that, in addition to conventional measures prepared in

accordance with IFRS, the Company and certain investors and analysts use this information

to evaluate the Company’s performance. The Company excludes non- cash and unusual

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