ERO.TO · 2023-03-07 12:00:00

Ero Copper Reports Fourth Quarter and Full Year 2022 Operating and Financial Results

Financials

March 7, 2023

(all amounts in US dollars, unless otherwise noted)

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

“Company”) is pleased to announce its operating and financial results for t he three and

twelve months e nded December 31, 2022 . Management will host a conference call

tomorrow, Wednesday, March 8, 2023, at 11:30 a.m. Eastern time to discuss the results. Dial-

in details for the call can be found near the end of this press release.

HIGHLIGHTS

• Record full-year copper production of 46,371 tonnes, including 12,664 tonnes

produced in the fourth quarter, surpassed the Company's 2022 production guidance

range of 43,000 to 46,000 tonnes

• Copper C1 cash costs (*) for the fourth quarter and full-year were $1.41 and $1.36,

respectively, per pound of copper produced

• Gold production also marked a record 42,669 ounces in 2022, including 11,786 ounces

produced in the fourth quarter, and exceeded the full-year guidance range of 39,000 to

42,000 ounces

• Gold C1 cash costs (*) for the fourth quarter and full-year were $445 and $560,

respectively, per ounce of gold produced. All-in Sustaining Costs ("AISC") (*) for the

same periods were $1,096 and $1,124, respectively, per ounce of gold produced

• Fourth quarter and full-year cash flows from operations were $34.0 million and

$143.4 million, respectively

• Fourth quarter and full-year adjusted EBITDA(*) were $58.2 million and $208.6 million,

respectively

• Fourth quarter and full-year adjusted net income attributable to owners of the

Company(*) were $22.2 million ($0.24 per share on a diluted basis) and $83.5 million

($0.91 per share on a diluted basis), respectively

• Capital expenditures were nearly $90 million in the fourth quarter as construction

activity related to the Company's strategic growth initiatives ramped up. Full-year

capital expenditures, including deposits on contracts, were just under $300 million,

below 2022 capital expenditure guidance of $308 million to $354 million, primarily

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due to the success of Project Honeypot and subsequent deferral of the delivery date

for the new external shaft of Pilar Mine

• Available liquidity at year-end was $392.4 million, including cash and cash equivalents

of $177.7 million , short-term investments of $139.7 million, and $75.0 million of

undrawn availability under the Company's senior secured revolving credit facility.

Subsequent to year-end, the Company extended the maturity and increased the size of

its senior secured revolving credit facility to $150.0 million, resulting in pro forma year-

end liquidity of $467.4 million

• 2023 production, operating cost, and capital expenditure guidance reaffirmed

*These are non-IFRS measures and do not have a standardized meaning prescribed by IFRS

and might not be comparable to similar financial measures disclosed by other issuers. Please

refer to the Company’s discussion of Non-IFRS measures in its Management’s Discussion and

Analysis for the year ended December 31, 2022 and the Reconciliation of Non-IFRS Measures

section at the end of this press release.

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“Our 2022 financial results showcase record production levels amidst a backdrop of

inflationary pressures experienced across the global mining industry over the past year ,” said

David Strang, Chief Executive Officer. “Despite encountering some unique obstacles related

to our domestic smelter that necessitated a higher allocation of copper concentrate sales to

the export market, resulting in reduced tax benefits during the year, we resumed domestic

sales on a limited basis subsequent to year-end. With the added benefit of higher metal

prices, we are witnessing stronger-than-expected operating margins as we enter 2023 and

are well-positioned to execute on our growth strategy.

"At our Tucumã Project, road upgrade and drainage infrastructure completed at the end of the

third quarter allowed us to build momentum during the rainy season with minimal down-

time. As of year-end, we reached just over 20% physical completion and are ahead of

schedule on pre-stripping activities. As a result of these efforts, we were able to commence

concrete pours for the plant foundation subsequent to year-end.

"At the Pilar Mine, we revised our timeline for the new external shaft following the success of

Project Honeypot and updates to Caraíba's Strategic Life-of-Mine Plan. The Project Honeypot

stopes added to our production plan have allowed us to maintain high margins while

smoothing our capital profile during construction of the shaft, for which the delivery date has

been deferred by approximately nine months.

"Given the scarcity of new copper development projects and extraordinary demand

anticipated from global decarbonization efforts, the timing of our near-term growth plans is

highly favorable. With these unprecedented market conditions as well as nearly $470 million

in balance sheet liquidity as of February 2023, we remain focused on delivering peer-leading

growth."

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FOURTH QUARTER & FULL-YEAR REVIEW

• Mining & Milling Operations

◦ The Caraíba Operations achieved record full-year production of 46,371 tonnes of

copper in concentrate, following strong year-end operating performance driven by

the addition of high-grade Project Honeypot stopes to the fourth quarter

production plan

– Higher mined and process copper grades during the fourth quarter resulted

in copper production of 12,664 tonnes in concentrate, representing an

increase of approximately 13% compared to the third quarter

– Full-year copper production exceeded 2022 copper production guidance

range of 43,000 to 46,000 tonnes and reflect a year-on-year increase to

mill throughput of nearly 500,000 tonnes of ore

◦ The Xavantina Operations delivered record quarterly and full-year gold production

of 11,786 and 42,669 ounces, respectively

– Fourth quarter gold production benefited from higher processed gold

grades of 10.17 grams per tonne ("gpt"), representing an increase in grade

of nearly 20% compared to the prior quarter

– Full-year gold production, which surpassed 2022 gold production guidance

range of 39,000 to 42,000 ounces, increased approximately 13% year-on-

year due to higher mill throughput as well as higher mined and processed

gold grades

• Organic Growth Projects

◦ The Company continued to progress the construction of the Tucumã Project, which

is advancing on schedule with over 20% physical completion achieved as of year-

end

– Mine pre-stripping accelerated during Q4 2022 with approximately 1.6

million tonnes of pre-stripping completed as of year-end, or approximately

12% of total. Waste dump construction is progressing on schedule with

completion expected in Q3 2023

– Completion of the on-site concrete batch plant and mobilization of the civil

works contractor occurred subsequent to year-end with first foundations

poured in February 2023

– Approximately 55% of planned capital expenditures were under contract as

of year-end, up from approximately 30% at the end of Q3 2022. An

additional 25% of Feasibility Study capital expenditures remain in various

stages of tendering or negotiation. Consistent with Q3 2022 project capital

forecasts, total planned capital expenditures remain within 12% of pre-

contingency Feasibility Study as of year-end

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– In partnership with The National Service for Industrial Training, a Brazilian

non-profit organization focused on improving the competitiveness of Brazil's

manufacturing sector through technical and vocational education, the

Company commenced comprehensive training programs within the city of

Tucumã and surrounding communities to further develop skills within the

local community that are expected to support the development and

operation of the Tucumã Project

◦ During the quarter, the Company's Pilar 3.0 initiative was significantly bolstered by

the success of Project Honeypot as reflected in the Caraíba Operations' 2022

Strategic Life-of-Mine ("LOM") Plan (please refer to press release dated November

7, 2022). Project Honeypot, an engineering initiative focused on recovering higher-

grade material in the upper levels of the Pilar Mine, is one of three projects that

together are expected to enable the creation of a two-mine system at the Pilar

Mine. The other two components of Pilar 3.0 include (i) construction of a new

external shaft to access the Deepening Extension Zone and (ii) an expansion of the

Caraíba mill to 4.2 million tonnes per annum

– The addition of Project Honeypot into the LOM Plan drove a significant

increase to the Caraíba Operations' estimated mineral resources, mineral

reserves and mine life, allowing the Company to defer the delivery date of

the new external shaft by approximately nine months without impacting

expected copper production

– Construction of the new external shaft continued to advance well against

the revised timeline with physical completion at approximately 20% as of

year-end and approximately 35% of planned capital expenditures under

contract or in the final stages of negotiation. Based upon current capital

expenditure forecasts which reflect additional supplier and contractor

quotes, construction of the new external shaft remains on budget

– The Caraíba mill expansion remains on schedule with completion expected

in Q4 2023

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Figure 1: Tucumã Project pre-stripping progress (February 2023).

Figure 2: Aerial view of future Tucumã Project processing areas, including (A) primary crushing, (B) secondary

and tertiary crushing, and (C) plant and administrative buildings.

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• Subsequent Events

◦ In January 2023, the Company entered into a zero-cost collar program on 3,000

tonnes of copper per month for February through December of 2023. The collars

establish a floor price at $3.50 per pound of copper on total hedged volumes of

33,000 tonnes of copper, representing approximately 75% of full-year production

volumes. The program protects a meaningful portion of the Company's revenue at

the Company's 2023 budget copper price which was used for capital, cash flow

and liquidity planning purposes, while providing upside to increases in the copper

price up to a cap of $4.76 per pound - within 5% of the all-time high copper price.

The hedge contracts are financially settled on a monthly basis.

◦ Subsequent to year-end, the Company also closed its amended senior secured

revolving credit facility (the "Amended Senior Credit Facility"), increasing its

capacity from $75.0 million to $150.0 million and extending the maturity from

March 2025 to December 2026. The Company also achieved improved terms on

the Amended Credit Facility, including a 25 basis point reduction to the applicable

margin on drawn funds and reduced standby fees on undrawn commitments.

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OPERATING AND FINANCIAL HIGHLIGHTS

3 months

ended

Dec. 31, 2022

3 months

ended

Sep. 30, 2022

3 months

ended

Dec. 31, 2021

12 months

ended

Dec. 31, 2022

12 months

ended

Dec. 31, 2021

Operating Highlights

Copper (Caraíba Operations)

Ore Processed (tonnes) 745,850 720,725 646,319 2,864,230 2,370,571

Grade (% Cu) 1.84 1.68 2.01 1.76 2.08

Cu Production (tonnes) 12,664 11,189 11,918 46,371 45,511

Cu Production (000 lbs) 27,918 24,669 26,275 102,230 100,333

Cu Sold in Concentrate (tonnes) 13,301 10,522 12,393 46,816 45,717

Cu Sold in Concentrate (000 lbs) 29,323 23,197 27,321 103,211 100,788

C1 cash cost of Cu produced (per lb)(1) $ 1.41 $ 1.46 $ 0.96 $ 1.36 $ 0.77

Gold (Xavantina Operations)

Au Production (oz) 11,786 10,965 8,544 42,669 37,798

C1 cash cost of Au Produced (per oz)(1) $ 445 $ 537 $ 582 $ 560 $ 525

AISC of Au produced (per oz)(1) $ 1,096 $ 1,135 $ 910 $ 1,124 $ 732

Financial Highlights ($ in millions, except per share amounts)

Revenues $ 116.7 $ 85.9 $ 134.9 $ 426.4 $ 489.9

Gross profit 52.7 22.8 84.4 187.2 318.9

EBITDA(1) 58.7 27.9 80.7 218.6 296.4

Adjusted EBITDA(1) 58.2 32.1 86.8 208.6 331.9

Cash flow from operations 34.0 43.0 66.7 143.4 364.6

Net income 22.5 4.0 60.2 103.1 202.6

Net income attributable to owners of the Company 22.2 3.7 59.8 101.8 201.1

Per share (basic) 0.24 0.04 0.67 1.12 2.27

Per share (diluted) 0.24 0.04 0.65 1.10 2.21

Adjusted net income attributable to owners of the

Company(1) 22.2 4.0 59.7 83.5 215.4

Per share (basic) 0.24 0.04 0.67 0.92 2.43

Per share (diluted) 0.24 0.04 0.65 0.91 2.37

Cash, cash equivalents, and short-term investments 317.4 359.8 130.1 317.4 130.1

Working capital(1) 263.3 343.2 86.0 263.3 86.0

Net (cash) debt(1) 100.7 51.5 (70.9) 100.7 (70.9)

(1) EBITDA, Adjusted EBITDA, Adjusted net income (loss) attributable to owners of the Company, Adjusted net

income (loss) per share attributable to owners of the Company, Net (Cash) Debt, Working Capital, C1 cash

cost of copper produced (per lb), C1 cash cost of gold produced (per ounce) and AISC of gold produced (per

ounce) are non-IFRS measures. These measures do not have a standardized meaning prescribed by IFRS and

might not be comparable to similar financial measures disclosed by other issuers. Please refer to the

Company’s discussion of Non-IFRS measures in its Management’s Discussion and Analysis for the year ended

December 31, 2022 and the Reconciliation of Non-IFRS Measures section at the end of this press release.

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