Since listing on the Toronto Stock Exchange in October 2017, shares of Ero Copper (TSX: ERO; US-OTC: ERRPF) have soared from their initial public offering price of $4.75 to $12.30. The company has nearly 85 million shares outstanding for a market cap of just over $1 billion.
Its flagship asset-the Vale do Curaca (MCSA) complex-is situated in northeastern Brazil's Bahia state in the Curaca Valley, about 385 km northwest of the state capital of Salvador, and produces a high-grade clean concentrate grading 35% copper that is shipped and sold locally to the Paranapanema smelter or to international markets via the port of Salvador.
Ero Copper describes the Curaca Valley in its 2017 annual report as "one of the world's last large, underexplored, copper mineral districts owned by a single company." Its operations stretch over 100 km from the Caraiba mill and Pilar underground mine in the south, the Surubim open-pit mine, about 40 km to the north, and Vermelhos, a new high-grade mine it is developing 80 km to the north of the mill.
In early September, the company updated its global reserves and resources for the MCSA complex. MCSA now hosts global proven and probable reserves of 18.44 million tonnes grading 1.86% copper for 342,800 tonnes of contained copper and measured and indicated resources of 42.43 million tonnes grading 1.71% copper for 724,400 tonnes of contained copper.
In late September, the company announced a new discovery east of the Vermelhos mine, where it intersected 77 metres of 2.20% copper from 419.7 metres downhole, including 15 metres of 3.06% copper and 10 metres grading 5.74% copper.
The intercept in drill hole (FVS-261) represents a new zone of mineralization east and about 140 metres below all previously defined resources, reserves and planned infrastructure, for the mine. The zone remains open to depth and along strike.
Drilling will continue to determine the geological relationship between the new discovery, the Vermelhos orebodies, and recently announced Vermelhos West, a newly discovered zone of mineralization about 1 km to the north-northeast and along trend of the Vermelhos mine.
The discoveries at Vermelhos follow news in mid-May that the company discovered a new area at its Pilar mine called the West Limb. West Limb is a mineralized intrusive body of mafic-ultramafic rocks that extends parallel to the existing underground workings of the Pilar mine. For the past 37 years, Pilar has predominantly mined a structure now referred to as the East Limb.
The West Limb was discovered based on more than a year of historic geological and drillhole data compilation, structural modelling of known mineral resources, and new drilling to verify continuity. The company succeeded in delineating a mineralized zone stretching over a north-south strike length of about 1,300 metres and to a depth of about 500 metres. The zone remains open to depth.
Copper mineralization in the West Limb is delineated in a series of mineralized lenses that form a parallel structure on average about 200 metres to the west of the existing Pilar underground mine's infrastructure, including ramp, horizontal development, power, water, ore passes and underground crushing facilities. The primary ramp at Pilar has been completed to about 1,300 metres below surface, following the mineralization of the East Limb.
The goal is to delineate the extent of the new discovery and complete a resource estimate on the West Limb. In addition, drilling will continue down dip of the new mineralization to evaluate whether the West Limb continues to parallel the East Limb at depth.
At its Surubim open-pit mine, meanwhile, the company is evaluating new target areas adjacent to the operation.
This year Ero Copper will complete a 24,000 line-kilometre airborne geophysical survey of the Curaca Valley targeting high-grade mineralization. The survey consists of both electromagnetic and gravity systems.
Last year, the company mined 1.8 million tonnes of mineralized material grading 1.30% copper, made up of 805,000 tonnes grading 2.16% copper from the Pilar underground mine and 995,000 tonnes grading 0.60% copper from its open-pit operations.
In the second quarter of 2018, the company's mines produced 5,684 tonnes of copper at C1 cash costs of US$1.49 per lb. copper produced, and sold 6,569 tonnes of copper in concentrate. It ended the quarter with US$19.3 million in cash.
The MCSA complex was developed by the Brazilian government in the late 1970s.
After finalizing ownership agreements in late 2016, Ero Copper restarted mining and processing operations at MCSA in February 2017.
As part of its deal acquiring MCSA, Ero also acquired the Boa Esperanca copper deposit, 40 km southwest of Tucuma, in Brazil's Para state. Boa Esperanca has measured and indicated resources of 67.17 million tonnes grading 0.73% copper for 490,300 tonnes of contained copper.
According to a 2017 feasibility study, the project has the potential to add about 163,000 tonnes of recovered copper over an initial mine life of nine years.
The study estimated upfront capital costs of about US$160 million, a post-tax net present value of US$195 million, after-tax internal rate of return of 32.7%, and post-tax payback period of 3.6 years.