ERO.TO · 2021-03-16 12:00:00

Ero Copper reports record fourth quarter and full year 2020 financial results

Financials

TSX: ERO

1 Ero Copper Corp

MARCH 16, 2021

(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 and twelve-months ended December

31, 2020. Management will host a conference call tomorrow, Wednesday, March 1 7, 2021, 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

• Copper production of 10,018 tonnes and 42,814 tonnes during the three and twelve-month

periods ended December 31, 2020, respectively;

• Fourth quarter C1 cash costs(*) of $0.69 per pound of copper produced resulting in full year

C1 cash costs (*) of $0.67 per pound of copper produced – a $0.27 year-on-year

improvement in annual C1 cash costs;

• Generated $67.2 million and $207.1 million in Adjusted EBITDA(*) and $38.6 million and

$162.8 million in cash flow from operations during the three and twelve-month periods

ended December 31, 2020, respectively;

• Adjusted net income attributable to owners of the Company(*) of $37.4 million and $117.3

million ($0.40 and $1.27 per share on a diluted basis) during the three and twelve -month

periods ended December 31, 2020, respectively;

• Record quarterly gold production from the Santo Antonio Vein at the NX Gold Mine of

10,789 ounces of gold at all-in sustaining costs(*) of $608 per ounce of gold produced during

the fourth quarter resulting in full -year production of 36,830 ounces of gold at all-in

sustaining costs(*) of $628 per ounce;

• Total cash and cash equivalents and available undrawn lines of credit at December 31,

2020 of $62.5 million and $11.6 million compared to $21.5 million and $30.0 million,

respectively, at the end of 2019; and,

• Reiterate previously announced full -year production, operating cost and capital guidance

for 2021.

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2 Ero Copper Corp

Additionally, subsequent to the year-end, as part of its ongoing corporate strategy, the Company

amended its Credit Agreement with The Bank of Nova Scotia (“Scotiabank”) and Bank of

Montreal (“BMO”), to amend the existing US$75 million senior secured amortizing non-revolving

credit facility and US$75 million senior secured revolving credit facility (collectively the “ Prior

Facilities”) with a US$150 million senior secured revolving credit facility payable in a bullet at

maturity, approximately four years from closing, on March 31, 2025 (the “Revolving Credit

Facility”). The amendment further reduces the Company’s cost of borrowing depending on the

Company’s consolidated leverage ratio, and eliminates principal payments previously due in 2022,

2023 and 2024 under the Prior Facilities. Additional detail is provided later in this press release.

Commenting on the Company’s 2020 results, David Strang, CEO, stated, “ Our 2020 financial

results reflect the strong operational performance and record- low operating costs we achieved

during the year . Despite headwinds associated with the COVID -19 pandemic, 2020 was an

outstanding year for the Company and w e intend on carrying this operational momentum into

2021, aided thus far by a stronger copper price.

On our growth- initiatives, 2021 is poised to be another exciting year for the Company as we

advance multiple projects including, among others, our regional exploration program at the

MCSA Mining Complex, ongoing s tudies on the potential optimization of our ‘turn- key’ Boa

Esperanҫa Project and the progression of the first regional exploration program ever conducted

at the NX Gold Mine. With the completion of the amendment to our c redit agreement and strong

balance sheet, we intend on using this year to continue to demonstrate the world-class exploration

potential of the Curaçá Valley and our executable low capital-intensity development pipeline.”

*EBITDA, Adjusted EBITDA, Adjusted net income attributable to owners of the Company,

Adjusted net income per share attributable to owners of the Company, C1 Cash Costs per pound

of copper produced and All-in Sustaining Costs (“AISC”) per ounce of gold produced are non-

IFRS measures – see the Notes section of this press release for additional information.

OPERATIONS & EXPLORATION HIGHLIGHTS

 Mining & Milling Operations – strong operating performance across the portfolio

• The MCSA Mining Complex processed 483,447 tonnes of ore grading 2.26% copper

during the fourth quarter producing 10,018 tonnes of copper in concentrate after

metallurgical recoveries of 91.7%.

 Total of 2.3 million tonnes of ore processed grading 2.08% copper

producing a record 42,814 tonnes of copper in concentrate after

metallurgical recoveries that averaged 90.5% during the twelve -month

period ended December 31, 2020.

• The NX Gold Mine processed 45,574 tonnes grading 7.72 grams per tonne gold during

the fourth quarter producing 10,789 ounces of gold and 6,763 ounces of silver as a by-

product after record metallurgical recoveries of 95.4%.

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3 Ero Copper Corp

 Total of 162,642 tonnes of ore grading 7.72 grams per tonne gold, resulting

in the production of 36,830 ounces of gold a nd 22,694 ounces of silver as

by-product after metallurgical recoveries that averaged 91.3 % during the

twelve-month period ended December 31, 2020.

 Exploration Activities – aggressive exploration program in 2021 starting off strong with

22 drill rigs currently operating at the MCSA Mining Complex and 9 at the NX Gold Mine

• MCSA Mining Complex

 Thirteen drill rigs are currently operating on in- and near-mine targets within

the Pilar and Vermelhos Districts , focused on upgrading the existing mi neral

resources and extending the known limits of mineralization, particularly

beneath the main ore bodies of the Vermelhos Mine and within the Deepening

Extension Zone of the Pilar Mine.

 Five drill rigs are currently focused on regional exploration target s throughout

the Curaçá Valley and an additional four drill rigs are systematically drilling

the Southern Vermelhos Corridor.

• NX Gold Mine

 At the NX Gold Mine, five exploration drill rigs are currently operating on

extensions of the Santo Antonio Vein. Four additional exploration drill rigs are

advancing the first comprehensive regional exploration program in the

property’s history.

 Corporate Highlights – robust balance sheet to execute on organic growth initiatives

• Successfully advanced several key capital programs in 2020 including completion of

the Company’s HIG Mill installation and ore-sorting pilot plant program at MCSA, as

well as drilling and integration of the Deepening Extension Project into MCSA ’s

recently announced life-of-mine plan update for 2020.

• Subsequent to year -end, the Company amended the Prior Facilities with a new

Revolving Credit Facility payable in a bullet at maturity, approximately four years

from closing, on March 31, 2025 – further details are provided later in this press

release.

• The Company continues to have no material disruption to operations, supply chains

or sales channels as a result of the COVID -19 pandemic. Since the onset of COVID-

19 in early 2020, the Company has taken extraordinary measures to mitigate the

possible impac t of COVID -19 on its workforce and operations. The Company

continues to closely monitor the COVID -19 pandemic and is engaged in active

operational and financial contingency planning to prudently manage the potential

impact of the pandemic on its operations.

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4 Ero Copper Corp

OPERATING AND FINANCIAL HIGHLIGHTS

3 months

ended

Dec. 31,

2020

3 months

ended

Sept. 30,

2020

12 months

ended

Dec. 31,

2020

3 months

ended

Dec. 31,

2019

12 months

ended

Dec. 31,

2019

Operating Highlights (MCSA Operations)

Ore Processed (tonnes) 483,447 553,148 2,271,625 589,065 2,424,592

Grade (% Cu) 2.26 2.18 2.08 2.16 1.93

Cu Production (tonnes) 10,018 10,961 42,814 11,526 42,318

Cu Production (000 lbs) 22,086 24,164 94,388 25,411 93,296

Cu Sold in Concentrate (tonnes) 10,265 11,530 42,813 11,595 42,759

Cu Sold in Concentrate (000 lbs) 22,629 25,420 94,387 25,562 94,267

C1 Cash Cost of copper produced (per lb)(1) $0.69 $0.63 $0.67 $0.80 $0.93

Gold (NX Gold Operations)

Au Production (oz) 10,789 9,436 36,830 6,043 30,434

C1 Cash Cost of gold produced (per ounce)(1) $405 $421 $457 $980 $691

AISC of gold produced (per ounce)(1) $608 $579 $628 $1,253 $889

Financial Highlights ($millions, except per share amounts)

Revenues $91.2 $94.3 $324.1 $75.7 $284.8

Gross profit $58.3 $59.6 $188.1 $31.1 $117.1

EBITDA(1) $91.3 $52.1 $116.2 $34.3 $141.4

Adjusted EBITDA(1) $67.2 $62.5 $207.1 $31.2 $134.1

Cash flow from operations $38.6 $44.4 $162.8 $35.9 $127.8

Net income $66.3 $31.4 $52.5 $45.4 $92.5

Net income attributable to owners of the

Company

$65.8 $31.1 $51.6 $45.2 $91.9

Net income per share attributable to owners

of the Company (Basic)

$0.75 $0.36 $0.60 $0.53 $1.08

Net income per share attributable to owners

of the Company (Diluted) $0.71 $0.34 $0.56 $0.49 $1.01

Adjusted net income attributable to owners of

the Company(1)

$37.4 $36.7 $117.3 $40.7 $86.3

Adjusted net income per share attributable to

owners of the Company(1) (Basic) $0.43 $0.42 $1.36 $0.47 $1.01

Adjusted net income per share attributable to

owners of the Company(1) (Diluted) $0.40 $0.40 $1.27 $0.44 $0.94

Cash and Cash Equivalents $62.5 $54.3 $62.5 $21.5 $21.5

Working Capital (Deficit)(1) $35.8 ($9.4) $35.8 ($4.9) ($4.9)

Net Debt(1) $105.6 $118.4 $105.6 $136.4 $136.4

Footnotes

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

to owners of the Company , Net Debt, Working Capital (Deficit), 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 – see the Notes section of this press release

for a discussion on non-IFRS Measures

TSX: ERO

5 Ero Copper Corp

ADJUSTED EBITDA & NET INCOME (LOSS) RECONCILIATION

2020 – Q4

Adjusted EBITDA $ 67,181

Adjustments:

Unrealized foreign exchange gain on USD denominated debt in MCSA 7,713

Unrealized foreign exchange gain on derivative contracts 27,659

Realized foreign exchange loss on derivative contracts (7,816)

Share based compensation and other (2,963)

Incremental costs in response to COVID-19 pandemic (481)

EBITDA $ 91,293

Adjusted net income attributable to owners of the Company $ 37,417

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

Unrealized foreign exchange gain on USD denominated debt in MCSA 7,682

Unrealized foreign exchange gain on derivative contracts 23,077

Unrealized gain on interest rate derivative 640

Share based compensation (2,549)

Incremental costs in response to COVID-19 pandemic (481)

Reported net income attributable to owners of the Company $ 65,786

CREDIT FACILITIES AMENDMENT DETAILS

On March 16, 2021, the Company amended its Credit Agreement with Scotiabank and BMO to

replace the Prior Facilities with a US$150 million senior secured revolving credit facility payable

in a bullet at maturity, approximately four years from closing, on March 31, 2025. Benefits of the

amendment include a reduction of up to 25 basis points in the Company’s cost of borrowing,

depending on the Company’s consolidated leverage ratio.

The Revolving Credit Facility will bear interest on a sliding scale at a rate of LIBOR plus 2. 25%

to 4.25% based on the Company’s consolidated leverage ratio at the time. Commitment fees for

any undrawn portion of the Revolving Credit Facility will also be on a sliding scale between 0.56%

to 1.06%.

The Revolving Credit Facility includes standard and customary terms and conditions with respect

to fees, representations, warranties, and financial covenants that remain unchanged from prior

amendments. Scotiabank is Joint Lead Arranger, Sole Bookrunner and Administrative Agent and

BMO is Joint Lead Arranger and Syndication Agent.

A copy of the amendment to the Credit Agreement will be filed on SEDAR (www.sedar.com).

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6 Ero Copper Corp

2021 PRODUCTION OUTLOOK

Copper production from the MCSA Mining Complex for 2021 is expected to come from ore mined

from the Pilar and Vermelhos underground mines as well as the Surubim open pit mine , which is

expected to restart operations later in 2021. Production from the Pilar Mine is expected to

contribute a total of approximately 1.5 million tonnes grading 1.40% copper, production from the

Vermelhos Mine is expected to contribute a total of approximately 0.8 million tonnes grading

2.40% copper and production from the Surubim Mine is expected to contribute a total of 0.2

million tonnes grading 0.60% copper as it is a partial year of operation . The blended mill head

grade incorporating these sources is expected to be approximately 1.75% copper for the full year.

MCSA Mining Complex

2020

Guidance(1) 2020 Result

2021

Guidance(2)

Tonnes Processed 2,150,000 2,271,625 2,700,000

Copper Grade (% Cu) 2.15% 2.08% 1.75%

Copper Recovery (%) 91.0% 90.5% 93.0%

Cu Production (000 tonnes) 41.0 – 43.0 42.8 42.0 – 45.0

(1) 2020 production guidance for the MCSA Mining Complex as outlined in the Company’s press release dated

January 15, 2020.

(2) 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, including the Annual Information Form for the year ended December 31, 2020 and

dated March 16, 2021 (the “AIF”), for complete risk factors.

Gold production from NX Gold for 2021 is expected to come from ore mined from the Santo

Antonio Vein. Mining operations during the year are expected to total approximately 167,000

tonnes of ore grading 7.20 grams per tonne gold.

NX Gold Mine 2020 Guidance(1) 2020 Result

2021

Guidance(2)

Tonnes Processed 165,000 162,642 167,000

Gold Grade (gpt) 7.70 7.72 7.20

Gold Recovery (%) 90.0% 91.3% 92.0%

Au Production (000 ounces) 36.0 – 37.0 36.8 34.5 – 37.5

Ag Production (000 ounces) n/a 22.7 n/a

(1) 2020 production guidance for the NX Gold Mine as outlined in the Company’s press release dated November

5, 2020.

(2) 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, including the AIF, for complete risk factors.

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7 Ero Copper Corp

2021 CASH COST GUIDANCE

The Company’s guidance for 2021 assumes a USD:BRL foreign exchange rate of 5.00, gold price

of $1,750 per ounce and silver price of $20.00 per ounce.

2020

Guidance(1) 2020 Result 2021 Guidance

MCSA Mining Complex C1 Cash Cost Guidance

(US$/lb)(2)

$0.70 – $0.85 $0.67 $0.75 – $0.85

NX Gold Mine C1 Cash Cost Guidance (US$/oz)(2) $425 – $525 $457 $500 – $600

NX Gold Mine All -in Sustaining Cost (AISC)

Guidance (US$/oz)(2)

n/a $628 $875 – $975

(1) 2020 cash cost guidance represents revised guidance as outlined in the Company’s press release dated May 7,

2020. Please refer to this press release for additional details.

(2) C1 Cash Costs and AISC are a non-IFRS measures – see the Notes section of this press release for additional

information.

2021 CAPITAL EXPENDITURE GUIDANCE

The Company’s capital expenditure guidance for 2021 assumes a USD:BRL foreign exchange rate

of 5.00 and has been presented below in USD millions.

MCSA Operations 2020

Guidance(1) 2020 Result 2021 Guidance

Pilar Mine and Caraíba Mill Complex

(excluding Deepening Extension Project)

45.0 – 55.0 54.5 45.0 - 50.0

Deepening Extension Project - - 12.5 – 15.0

Vermelhos Mine & District(2) 11.0 – 13.0 14.0 14.0 – 16.0

Surubim Open Pit Mine - - 10.0 – 12.0

Boa Esperanҫa Project 0.2 – 0.2 0.2 1.0 – 1.5

Capital Expenditure Guidance 56.2 – 68.2 68.7 82.5 – 94.5

Curaçá Valley Exploration 25.0 – 30.0 31.9 30.0 – 35.0

NX Gold Mine

2020 Revised

Guidance(1) 2020 Result 2021 Guidance

Capital Expenditure Guidance 9.0 – 11.0 13.0 13.0 – 15.0

Exploration 3.0 – 5.0 4.3 8.0 – 10.0

Total, NX Gold Mine 12.0 – 16.0 17.3 21.0 – 25.0

(1) 2020 capital cost guidance and revised guidance (NX Gold Mine) as outlined in the Company’s press releases

dated May 7, 2020 and November 5, 2020.

(2) Vermelhos District includes open pit mining infrastructure expenditures of approximately US$6.0 million in

2021.

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8 Ero Copper Corp

CONFERENCE CALL DETAILS

The Company will hold a conference call on Wednesday, March 17, 2020 at 11:30 am Eastern

time (8:30 am Pacific time) to discuss these results.

Date: Wednesday, March 17, 2021

Time: 11:30 am Eastern time (8:30 am Pacific time)

Dial in: North America: 1-800-319-4610, International: +1-604-638-5340

please dial in 5-10 minutes prior and ask to join the call

Replay North America: 1-800-319-6413, International: +1-604-638-9010

Replay Passcode: 5910

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), AISC of gold produced (per ounce), EBITDA,

Adjusted EBITDA, Adjusted net income attributable to owners of the Company, Adjusted

net income 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 impr oved 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 sale s 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

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.

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