ERO.TO · 2021-11-10 12:00:00

Ero Copper third quarter production and financial results continue to position the Company for growth

Financials

November 10, 2021

Ero Copper third quarter production and financial results continue to

position the Company for growth

(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 financial results for t he three and nine months ended September

30, 2021. Management will host a conference call tomorrow, Thursday, November 11, 2021 , at 12:30

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

release.

HIGHLIGHTS

• Copper production of 10,057 tonnes at the MCSA Mining Complex at C1 cash costs (*) of $0.94

per pound of copper produced during the quarter;

• Gold production of 9,426 ounces at the NX Gold Mine at C1 cash costs (*) of $538 per ounce of

gold produced and All-in Sustaining Costs ("AISC")(*) of $741 per ounce of gold produced;

• Strong quarterly adjusted EBITDA (*) of $72.9 million and adjusted net income attributable to

owners of the Company(*) of $45.7 million ($0.49 per share on a diluted basis);

• Record quarterly cash flows from operations of $150.7 million driven by strong operating

performance and a $100.0 million upfront payment related to the August 2021 closing of the

$110 million streaming agreement with Royal Gold (as defined below) in relation to gold

production from the NX Gold Mine (the "NX Gold Stream");

• Announced results o f optimized Feasibility Study for the Boa Esperança Project, doubling life-

of-mine copper production compared to the 2017 Study (as defined below);

• Repaid $100.0 million of principal on the $150.0 million senior secured revolving credit facility,

resulting in available liquidity at quarter-end of $219.1 million, including $92.6 million of cash

and cash equivalents, $26.4 million in short-term investments, and $100.0 million of undrawn

availability under the senior secured revolving credit facility; and,

• Tracking towards the high-end of the Company's reaffirmed 2021 production guidance ranges;

lowering full-year AISC guidance for the NX Gold Mine to $650 to $725 per ounce of gold

produced and updating 2021 capital expenditure guidance for the MCSA Mining Complex to

reflect the acceleration of capital expenditures associated with key projects into Q4 2021 as well

as the impact of inflationary pressures on capitalized development.

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1 Ero Copper Corp

Commenting on the results, David Strang, CEO, stated, “The third quarter was instrumental in

positioning our Company to execute on our growth strategy. We delivered on three important milestones

during the quarter including the completion of an optimized Feasibility Study on the Boa Esperança

Project, the closing of the previously announced $110 million NX Gold Stream, and the conclusion of

mill maintenance at the MCSA Mining Complex in preparation for expanded operations. With the

construction of the new external shaft at the Pilar Mine initiated on schedule in September and the

planned commencement of early construction activities at the Boa Esperança Project expected to begin

in Q2 2022 (subject to approval by the Company's Board of Directors), our team is working to double

production while maintaining strong margins over the coming years.

"In preparation of these growth timelines, we have brought forward the second phase of our cooling

project and made down payments for long-lead items related to the new external shaft for the Pilar

Mine. While we, like the rest of the mining industry, are seeing global inflationary pressures impacting

both operating and capital development costs, it remains to be seen whether this cost pressure is

transitory or structural in nature. As a result of the acceleration of growth project capital and

incorporating increases in development costs, we are updating our capital expenditure guidance for the

full-year at the MCSA Mining Complex by approximately $20 million.

"With respect to the Deepening Extension Project, construction of the first phase of the shaft and other

early civil works have commenced. Concurrently, we are finalizing the optimization efforts on the

project including plans to increase the shaft's diameter. As a result of incorporating exceptional year-to-

date drill results from the Deepening Extension and new drilling in the upper levels of the mine, our

team has begun working on a longer-term initiative to potentially increased overall production volumes

from the Pilar Mine.

"We have an exceptional asset portfolio and our team has worked hard to achieve peer-leading cost

performance through optimization and innovation, principles that we are applying to the Deepening

Extension and Boa Esperança Projects. While we expect the macro operating environment to remain

dynamic, we are staking our success on the core values that have consistently delivered shareholder

value: executing upon high-return and low-capital intensity projects.”

*Earnings before interest, taxes, depreciation and amortization (“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 cost per pound of copper produced, C1 cash cost per ounce of gold

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. C1 cash cost per pound of copper

produced are net of by-product credits from metal produced at the MCSA Mining Complex. AISC per

ounce of gold produced are net of by-product credits from metal produced at the NX Gold Mine.

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2 Ero Copper Corp

OPERATIONS & EXPLORATION HIGHLIGHTS

• Mining & Milling Operations – on track to achieve high-end of full-year production guidance

◦ The MCSA Mining Complex processed 572,666 tonnes of ore grading 1.90% copper,

producing 10,057 tonnes of copper in concentrate during the quarter after metallurgical

recoveries of 92.4%; YTD 2021 copper production totaled 33,593 tonnes based on

approximately 1.7 million tonnes processed at copper grades of 2.11% and metallurgical

recoveries of 92.3%.

◦ The second and final phase of scheduled mill maintenance at the MCSA Mining Complex

was completed at the end of Q3 2021, positioning the Company for higher mill throughput

in Q4 2021.

◦ The NX Gold Mine processed 42,874 tonnes grading 7.37 grams per tonne, producing 9,426

ounces of gold after metallurgical recoveries of 92.7% and 6,575 ounces of silver produced

as by-product; YTD 2021 tonnes processed totaled 124,422 at an average grade of 7.67

grams per tonne, producing 29,254 ounces of gold after metallurgical recoveries of 95.4%

and 19,172 ounces of silver produced as by-product.

◦ Construction of the NX Gold Mine's paste-fill plant concluded in Q3 2021, and

commissioning is currently underway. Integration into the operations is anticipated before

year-end with implementation expected to improve overhand cut and fill mining operations

and enhance pillar recovery throughout the mine.

• Exploration Activities – strong exploration results expected to drive positive year-end mineral

reserve and resource update

◦ Q3 2021 exploration activities continued to generate exceptional results both in-mine and

near-mine at the MCSA Mining Complex and the NX Gold Mine, positioning the Company

for a positive year-end mineral reserve and resource update.

◦ Ongoing exploration efforts are focused on aggressively advancing target zones and new

mineral systems within each of the Company's core exploration programs in an effort to

meaningfully augment near- to long-term production at both the MCSA Mining Complex

and the NX Gold Mine.

◦ Please refer to the Company's press release dated October 14, 2021 for the latest results

from the Company's ongoing exploration programs.

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• Organic Growth Projects

◦ Site clearing, early civil works and initial construction for the new external shaft supporting

the Deepening Extension Project commenced in September 2021. Concurrent engineering

and design efforts are focused on optimizing the 2020 shaft design and evaluating the

potential for increased production volumes from the Pilar Mine longer-term.

◦ On September 28, 2021, the Company announced results for the optimized Feasibility Study

on its Boa Esperança Project. Early construction works are expected to commence in Q2

2022, subject to approval by the Company's Board of Directors. Select highlights include:

– 41.8% after-tax internal rate of return and $380 million after-tax net present value

(8%) based on Consensus Copper Prices(1) and a 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(2) with increased mine life of twelve years;

– Average LOM copper production increased to over 27,000 tonnes per annum, with

the first five years of production averaging approximately 35,000 tonnes per annum;

and

– Low capital-intensity of approximately $8,400 per tonne of average annual copper

production for the first 5 years of the Project, resulting in rapid payback of 1.4 years

at Consensus Copper Prices.

• Corporate Highlights

◦ In August 2021, the Company closed the $110 million NX Gold Stream, unlocking

significant value from the NX Gold Mine and highlighting the exploration potential of the

broader NX Gold land package. Additional detail is provided later in this press release.

◦ The Company used cash on hand, bolstered by $100.0 million in upfront cash consideration

received upon the closing of the NX Gold Stream, to repay $100.0 million of principal on its

$150.0 million senior secured revolving credit facility. At September 30, 2021, the

Company had $50.0 million drawn under its $150.0 million senior secured revolving credit

facility.

(1) Consensus Copper Prices based on the average analyst copper price estimates from 26 financial institutions as of August

31, 2021, or the effective date of the mineral resource and mineral reserve estimates for the Boa Esperança Project as

disclosed in the press release dated September 28, 2021, resulting in $3.80 per pound in 2024, $3.95 per pound in 2025 and

$3.40 per pound in 2026 and thereafter. Using Consensus Copper Prices, the average LOM copper price is $3.51 per

pound. Using a flat $3.50 per pound copper price over the LOM, the Boa Esperança Project generates a 38.0% after-tax

internal rate of return and a $361 million after-tax net present value (8%), assuming a 5.00 BRL:USD exchange rate.

(2) The "2017 Study" is defined as the technical report entitled "Feasibility Study Technical Report for the Boa Esperança

Copper Project, Pará State, Brazil”, dated September 7, 2017 with an effective date of June 1, 2017, prepared by Rubens

Mendonça, MAusIMM of SRK Consultores do Brasil Ltda. (“SRK”) as at the date of the report and Carlos Barbosa, MAIG

and Girogio di Tomi, MAusIMM, both of SRK Brazil, and each a “qualified person” and “independent” of the Company

within the meanings of National Instrument 43-101, Standards of Disclosure for Mineral Projects ("NI 43-101").

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OPERATING AND FINANCIAL HIGHLIGHTS

3 months

ended

Sep. 30, 2021

3 months

ended

June 30, 2021

9 months

ended

Sep. 30, 2021

3 months

ended

Sep. 30, 2020

9 months

ended

Sep. 30, 2020

Operating Highlights

Copper (MCSA Operations)

Ore Processed (tonnes) 572,666 553,992 1,724,252 553,148 1,788,178

Grade (% Cu) 1.90 2.13 2.11 2.18 2.03

Cu Production (tonnes) 10,057 10,898 33,593 10,961 32,796

Cu Production (000 lbs) 22,170 24,026 74,059 24,164 72,302

Cu Sold in Concentrate (tonnes) 10,762 10,093 33,324 11,530 32,549

Cu Sold in Concentrate (000 lbs) 23,727 22,253 73,468 25,420 25,420

C1 cash cost of Cu produced (per lb)(1) $ 0.94 $ 0.72 $ 0.70 $ 0.63 $ 0.66

Gold (NX Gold Operations)

Au Production (oz) 9,426 10,377 29,254 9,436 26,041

C1 cash cost of Au Produced (per oz)(1) $ 538 $ 499 $ 508 $ 421 $ 478

AISC of Au produced (per oz)(1) $ 741 $ 660 $ 681 $ 579 $ 636

Financial Highlights

($ in millions, except per share amounts)

Revenues $ 111.8 $ 120.7 $ 355.0 $ 94.3 $ 232.8

Gross profit 68.0 83.7 234.5 59.6 129.8

EBITDA(1) 48.5 112.0 215.7 52.1 24.9

Adjusted EBITDA(1) 72.9 85.5 245.1 62.5 138.4

Cash flow from operations 150.7 85.1 297.9 44.4 124.2

Net income (loss) 26.4 84.0 142.4 31.4 (13.8)

Net income (loss) attributable to owners of the

Company 26.1 83.4 141.2 31.1 (14.2)

Per share (basic) 0.29 0.95 1.60 0.36 (0.16)

Per share (diluted) 0.28 0.89 1.52 0.34 (0.16)

Adjusted net income attributable to owners of the

Company(1) 45.7 53.7 155.7 36.7 77.8

Per share (basic) 0.52 0.61 1.76 0.42 0.90

Per share (diluted) 0.49 0.58 1.67 0.40 0.85

Cash, cash equivalents, and short-term

investments 119.1 137.7 119.1 54.3 54.3

Working capital (deficit)(1) 81.4 118.9 81.4 (9.4) (9.4)

Net debt(1) (63.7) 19.2 (63.7) 118.4 118.4

(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 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 – see the

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

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ADJUSTED EBITDA & NET INCOME (LOSS) RECONCILIATION

($ in thousands)

3 months ended

Sep. 30, 2021

Adjusted EBITDA $ 72,860

Adjustments:

Unrealized foreign exchange loss on USD denominated balances in MCSA (5,883)

Unrealized foreign exchange loss on derivative contracts (12,350)

Realized foreign exchange loss on derivative contracts (4,381)

Share based compensation and other 931

NX Gold stream transaction fees (1,219)

Incremental costs in response to COVID-19 pandemic (1,485)

EBITDA $ 48,473

Adjusted net income attributable to owners of the Company $ 45,708

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

Unrealized foreign exchange loss on USD denominated debt in MCSA (4,618)

Unrealized foreign exchange loss on derivative contracts, net of tax (10,417)

Unrealized gain on interest rate derivative 147

Share based compensation (2,041)

NX Gold stream transaction fees (1,219)

Incremental costs in response to COVID-19 pandemic (1,479)

Reported net income attributable to owners of the Company $ 26,081

NX GOLD STREAM

During the quarter, the Company closed the NX Gold Stream with RGLD Gold AG, a wholly owned

subsidiary of Royal Gold Inc. (collectively, “Royal Gold”), and received an upfront cash payment of

$100 million for the purchase of 25% of gold produced until 93,000 ounces of gold have been delivered,

decreasing to 10% of gold produced over the remaining life of mine. Royal Gold will make ongoing

payments equal to 20% of the prevailing spot gold price for each ounce of gold delivered until 49,000

ounces of gold have been received, after which it will pay 40% of the prevailing spot gold price for each

ounce of gold delivered. Additional payment obligations of Royal Gold include:

• Up to US$5 million payable, available through the end of 2024, based upon the number of

ounces of gold added to the Measured and Indicated mineral resource categories as compared to

the mineral resources as of the effective date of the NX Gold Stream at a rate of US$20 per

ounce;

• Up to US$5 million payable, available from 2022 through the end of 2024, based upon

completion of planned meters of drilling within the exploration concessions of the NX Gold

Mine at a rate of US$100 per meter; and,

• US$5 per ounce of gold delivered under the NX Gold Stream payable to the Company as

contribution towards ongoing ESG initiatives within the area of influence of the mine.

Please refer to the Company’s press releases dated June 30, 2021 and August 6, 2021 for additional

information on the NX Gold Stream.

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2021 PRODUCTION OUTLOOK(*)

The Company is well-positioned to achieve the high-end of its reaffirmed 2021 production guidance

ranges of:

• 42,000 to 45,000 tonnes of copper in concentrate at the MCSA Mining Complex

• 34,500 to 37,500 ounces of gold at the NX Gold Mine

During Q3 2021, the Company completed the second and final phase of preventative mill maintenance

at the MCSA Mining Complex in preparation for expanded operations and higher mill throughput

volumes, including from Surubim open pit mine where pre-stripping activity continued during the

quarter. Initial production from the Surubim open pit, including the processing of ore stockpiled during

pre-stripping, is expected to drive higher mill throughput volumes and lower average processed copper

grades during Q4 2021.

The Company expects to achieve the high-end of its full-year production guidance at the NX Gold Mine

despite lower planned grades in Q4 2021 due to mine sequencing within the Santo Antonio Vein.

2021 COST GUIDANCE(*)

The Company is on track to achieve its reaffirmed 2021 C1 cash cost guidance ranges, which assume a

USD:BRL foreign exchange rate of 5.00, a gold price of $ 1,750 per ounce and a silver price of $ 20.00

per ounce. The Company has lowered its 2021 AISC guidance range for the NX Gold Mine to reflect

lower sustaining capital expenditures year-to-date.

2021 Guidance

MCSA Mining Complex C1 Cash Cost Guidance (US$/lb)(1) $0.75 - $0.85

NX Gold Mine C1 Cash Cost Guidance (US$/oz)(1) $500 - $600

NX Gold Mine All-in Sustaining Cost (AISC) Guidance (US$/oz)(1) $650 - $725

(1) C1 Cash Costs and AISC are a non-IFRS measure - see the Notes section of this press release for additional information.

2021 CAPITAL EXPENDITURE GUIDANCE(*)

The Company is reaffirming its full-year capital expenditure guidance for the NX Gold Mine and

updating its 2021 capital expenditure guidance for MCSA Mining Complex to reflect the acceleration

of: (i) the Phase 2 cooling project at the MCSA Mining Complex, (ii) long-lead item purchases related to

the new external shaft of the Pilar Mine and (iii) early civil and road construction activities at the Boa

Esperança project into Q4 2021. Capitalized development costs at the MCSA Mining Complex have also

been updated to reflect inflationary pressures impacting consumables used in development activities.

The capital expenditure guidance assumes a USD:BRL foreign exchange rate of 5.00 and has been

presented below in USD millions.

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7 Ero Copper Corp

MCSA Operations 2021 Guidance

Pilar Mine and Caraíba Mill Complex (excluding Deepening Extension Project) $55.0 - $60.0

Deepening Extension Project 26.0 - 28.5

Vermelhos Mine & District 8.0 - 10.0

Surubim Open Pit Mine 6.0 - 8.0

Boa Esperanҫa Project 7.0 - 9.0

Capital Expenditure Guidance $102.0 - $115.5

Curaçá Valley Exploration $30.0 - $35.0

NX Gold Mine 2021 Guidance

Capital Expenditure Guidance $13.0 - $15.0

Exploration 8.0- 10.0

Total, NX Gold Mine $21.0 - $25.0

(*) 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.

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8 Ero Copper Corp

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