Ero Copper finds zone near Vermelhos mine

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 capitalization 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, 385 km northwest of the state capital of Salvador. It 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, under-explored, 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, 40 km north, and Vermelhos, a high-grade mine it is developing 80 km north of the mill.

In 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 contained copper and measured and indicated resources of 42.43 million tonnes grading 1.71% copper for 724,400 tonnes contained copper.

In September, the company announced a discovery east of the Vermelhos mine, where it intersected 77 metres of 2.20% copper from 420 metres downhole, including 15 metres of 3.06% copper and 10 metres of 5.74% copper.

The intercept in hole 261 crossed mineralization that is located to the east and 140 metres below all previously defined resources, reserves and planned mine infrastructure. The zone is open to depth and along strike.

Drilling at the Vale do Curaça (MCSA) complex roughly 385 kilometres northwest of the state capital of Salvador in northeastern Bahia State in Brazil. Credit: Ero Copper.

Drilling will continue to determine the geological relationship between the discovery, the Vermelhos orebodies and the recently announced Vermelhos West, a new mineralization zone 1 km north–northeast, along trend of the Vermelhos mine.

The sites at Vermelhos follow news in May that the company found an area at its Pilar mine called the West Limb. West Limb is a mineralized intrusive body of mafic-ultramafic rocks that parallels the Pilar mine’s underground workings. For the past 37 years, Pilar has mostly mined a structure now referred to as the “East Limb.”

The West Limb was found after more than a year of historic geological and drill-hole data compilation, structural modelling of mineral resources and new drilling to verify continuity. The company delineated a mineralized zone stretching over a north–south strike length of 1,300 metres to 500 metres’ depth. The zone is open to depth.

Copper mineralization in the West Limb is delineated in mineralized lenses that form a parallel structure 200 metres west of the Pilar mine’s underground infrastructure, including a ramp, horizontal development, power, water, ore passes and underground crushing facilities. The primary ramp at Pilar goes 1,300 metres below surface, after mineralization of the East Limb.

The goal is to delineate the discovery and finish a resource estimate on the West Limb. Drilling will continue down dip of the mineralization to evaluate whether the West Limb continues parallel to the East Limb at depth.

At its Surubim open-pit mine, meanwhile, the company is evaluating new target areas next to the operation.

This year Ero Copper will finish a 24,000 line km airborne geophysical survey of the Curaca Valley targeting high-grade mineralization. The survey consists of electromagnetic and gravity work.

Last year, the company mined 1.8 million tonnes 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 5,700 tonnes copper, at C1 cash costs of US$1.49 per lb. copper produced, and sold 6,600 tonnes 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 67.2 million tonnes of 0.73% copper for 490,300 tonnes contained copper.

According to a 2017 feasibility study, the project could add 163,000 tonnes of recovered copper over an initial nine-year mine life.

The study estimated US$160 million in upfront capital costs, a US$195-million, post-tax net present value, a 32.7% after-tax internal rate of return, and a 3.6-year, post-tax payback period.