ERO.TO · 2018-03-28 12:00:00

Ero Copper Reports Fourth Quarter and 2017 Year End Results

Financials

TSX: ERO

Ero Copper Corp

MARCH 28, 2018 NR:18-3

(all amounts in US dollars, unless otherwise noted)

Vancouver, British Columbia – 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.

HIGHLIGHTS

• 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 $1 2.0

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 C 1 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 extraordi nary year for the Company and our shareholders . From restarting full

operations in February, through to our successful initial public offering in Octobe r 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.

TSX: ERO

Ero Copper Corp

“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 exis ting 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;

TSX: ERO

Ero Copper Corp

• During the twelve month period ended December 31, 2017, 1.8 million tonnes of ore

was processed at a n 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.

 Corporate Highlights – Reduction in consolidated tot al 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

TSX: ERO

Ero Copper Corp

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.

TSX: ERO

Ero Copper Corp

OPERATING AND FINANCIAL HIGHLIGHTS

3 months

ended

3 months

ended

Year

ended

Period

ended

December 31,

2017

December

31, 2016[1]

December 31,

2017

December

31, 2016[1]

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

Recovery (%) 86.9 n/a 86.8 n/a

Concentrate Sales (tonnes) 15,577 n/a 56,341 n/a

Cu Sold in Concentrate

(tonnes) 5,448 n/a 19,719 n/a

Cu Sold in Concentrate (lbs) 12,010,770 n/a 43,472,902 n/a

C1 Cash cost of copper

produced (per lb)[2]

1.54

n/a

1.45

n/a

Financial Highlights ($millions, except per share amounts)

Revenues $37.8 n/a $115.4 n/a

Gross profit (loss) $5.8 n/a $12.9 n/a

EBITDA $31.4 ($2.2) $52.9 ($2.2)

Adjusted EBITDA $12.0 ($5.4) $28.2 ($5.4)

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)[2] $42.6 ($129.3) $42.6 ($129.3)

Net Debt[2] ($85.9) $(143.8) ($85.9) ($143.8)

TSX: ERO

Ero Copper Corp

Footnotes

[1] ERO was incorporated on May 16, 2016. MCSA was acquired December 12, 2016. Operations did not commence until the first

quarter of 2017

[2] 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

OUTLOOK

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:

2018[1]

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] $1.30 – $1.40

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.

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 cos ts and certain tax benefits that are passed through to

customers on invoicing. These adjustments were not included in prior C1 Cash Cost disclosure.

Capital Expenditures:

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.

TSX: ERO

Ero Copper Corp

($US millions) 2018

Pilar Mine 39.0

Vermelhos 36.0

Exploration & Drilling[1] 20.0

Boa Esperanҫa 1.0

Capital Expenditure Guidance 96.0

Footnotes:

[1] Exploration & drilling 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),

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 ope rating

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)

TSX: ERO

Ero Copper Corp

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 Compa ny

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

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

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.

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