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Ero Copper announces greater than 100% increase in mineral reserves and provides pathway for mill expansion of the Vale do Curaçá Property

Resource Estimates Mine Development & Operations

OCTOBER 10, 2019 NR:19-14

Ero Copper announces greater than 100% increase in mineral reserves and provides pathway for mill expansion of the Vale do Curaçá Property

Vancouver, British Columbia – Ero Copper Corp. (the “Company”) (TSX: ERO) is pleased to announce the release of its 2019 updated National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) compliant mineral reserve and resource estimate along with updated life of mine (“LOM”) production, capital and operating cost projections for a flexible and phased plan to return the Caraíba Mill to its original design capacity of 5.5 million tonnes per annum on its 99.6% owned Vale do Curaçá Property (herein referred to as the “Curaçá Valley”) located in Bahia State, Brazil. Highlights of the 2019 mineral reserve and resource estimate include:

  • A 106% increase in Proven and Probable mineral reserves to approximately 38 million tonnes (containing 436,000 tonnes of copper) compared to the Proven and Probable mineral reserves set out in the 2018 Technical Report (as defined below), using the same copper price assumption of US$2.75 per pound;
  • A 69% increase in Measured and Indicated mineral resources to approximately 72 million tonnes (containing approximately 894,000 tonnes of copper), inclusive of mineral reserves, as compared to the Measured and Indicated mineral resources set out in the 2018 Technical Report at the same geological cut-off grades;
  • Updated LOM production plan increasing copper production by approximately 140,000 tonnes of copper as compared to the LOM production plan set out in the 2018 Technical Report;
  • Pathway provided for a low-cost and phased mill expansion to return the mill to its original design capacity of 5.5 million tonnes per annum with a preliminary capital expenditure estimate of US$63 million.

Commenting on the update, David Strang, President and CEO stated, “We are very pleased with the 2019 updated mineral resource and reserve estimate. Since acquiring the operations in the Curaçá Valley in 2016, we have continued to significantly grow mineral resources and reserves annually. Including mine depletion, we have added over 500,000 tonnes of contained copper to our measured and indicated resource base since 2017. In addition, our updated LOM plan continues to increase the copper production profile over the prior year. In 2018, we set out a plan to produce approximately 40,000 tonnes of copper annually for the following six years and in 2019, that plan has increased to approximately 50,000 tonnes of copper.

As we look to the future, and to support our continued growth, our exploration focus is moving towards delineating new, higher grade mineral resources and reserves away from our existing operations and portfolio of inherited projects. In order to support this strategy, we will be taking a phased approach to investing capital in the Caraíba Mill to systematically return it to its original design capacity of 5.5 million tonnes per annum, per prevailing copper prices and continued exploration success. At the same time, we are evaluating the opportunity afforded by ore sorting, which has the potential to increase mill head grades at reduced mill throughput given the heterogenous nature of our deposits.

This is a very exciting, but busy, time for Ero Copper as our focus changes from mainly in- and near-mine growth towards growth from discovery of new mineral resources in the Curaçá Valley, such as Siriema, and with the additional value enhancing opportunities such as the phased expansion of the mill and ore sorting. In summary, we have increased the number of options available to continue to execute on our core objective of generating strong absolute returns on invested capital for our shareholders in an uncertain macroeconomic environment.”

The 2019 updated mineral reserve and resource estimate is shown in the tables below:

Tonnage Grade Cu Contained Classification

(000 tonnes)(Cu %)(000 tonnes)
Total Proven & Probable, Underground21,1271.59335
Total Measured & Indicated, Underground44,7151.66743
Inferred, Underground22,0790.99219
Total Proven & Probable, Open Pit16,8430.60101
Total Measured & Indicated, Open Pit26,9070.56151
Inferred, Open Pit4,1250.5623
Reserves, Underground
Proven12,0011.77212
Probable9,1261.35123
M&I Resources (including Reserves), Underground
Measured25,4761.94494
Indicated19,2391.29249
Reserves, Open Pit
Proven6,4080.6542
Probable10,4340.5759
M&I Resources (including Reserves), Open Pit
Measured9,5220.6461
Indicated17,3840.5291

Mineral Reserve & Resource Notes:

1. Mineral reserve effective date of September 18, 2019.

2. Mineral resource effective date varies by deposit, with an effective date of July 9, 2019, except for Vermelhos N8/N9 (July 31, 2019) and Baraúna and Siriema (September 15, 2019).

3. Presented mineral resources inclusive of mineral reserves. All figures have been rounded to the relative accuracy of the estimates. Summed amounts may not add due to rounding.

4. Mineral resources have been modeled within a 0.20% copper grade shell using a 0.68% copper cut-off grade for underground deposits and a 0.18% copper cut-off grade for open pit deposits. Mineral resources have been estimated using ordinary kriging inside 5m by 5m by 5m block sizes. The mineral resource estimates were prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards for Mineral Resources and Mineral Reserves, adopted by the CIM Council on May 10, 2014 (the “CIM Standards”), and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines, adopted by CIM Council on November 23, 2003 (the “CIM Guidelines”), using geostatistical and/or classical methods, plus economic and mining parameters appropriate to the deposit.

Please see “Technical and Scientific Information” below for additional information on the stated mineral resources.

5. Mineral reserve estimates were prepared in accordance with the CIM Standards and the CIM Guidelines, using geostatistical and/or classical methods, plus economic and mining parameters appropriate for the deposit. Mineral reserves are based on a long-term copper price of US$2.75 per pound (“lb”), and a USD:BRL foreign exchange rate of 3.70. Mineral reserves are the economic portion of the Measured and Indicated mineral resources. Mining dilution and recovery factors vary for specific mineral reserve sources and are influenced by factors such as deposit type, deposit shape, stope orientation and selected mining method. Inferred resource blocks, where unavoidably mined, were assigned zero grade. Dilution occurring from Measured & Indicated resource blocks was assigned grade based upon the current mineral resource grade of the blocks included in the dilution envelope. Please see “Technical and Scientific Information” for additional information on the stated mineral reserves.

Mineral resources which are not mineral reserves do not have demonstrated economic viability.

UPDATED PRODUCTION PLAN

The Company’s updated production plan, prepared in conjunction with the mineral resource and mineral reserve update, provides a road map for a low-cost, flexible and phased approach to return the Caraíba Mill to its original design capacity of 5.5 million tonnes per annum, with a timeline and three-year capital outlay that can be paired alongside continued exploration success and prevailing copper prices. This plan will allow the Company to capitalize on future discoveries within the Curaçá Valley as they are drilled and developed.

The table below outlines the updated production plan for the Curaçá Valley. The plan is centered upon increasing plant capacity and throughput to 5.5 million tonnes of capacity with a three-year phased capital plan, resulting in production of approximately 48,000 tonnes of copper in concentrate per annum, on average, over the next 6 years based on current reserves.

Ore Mined Underground - 2,138 2,234 2,599 2,765 3,097 2,641 1,725 2,172 2,034 (000 tonnes)

Grade (% Cu) - 2.15 1.96 1.67 1.55 1.35 1.29 1.38 1.29 1.22

Ore Mined Open

  • 566 1,785 1,887 1,917 2,261 2,339 1,950 1,950 1,160

Pit (000 tonnes)

Grade (% Cu) - 0.45 0.53 0.58 0.65 0.57 0.65 0.54 0.54 0.59

Ore Processed 2,250 2,638 3,806 4,173 4,788 5,352 5,457 3,686 4,118 3,252 (000 tonnes)

Grade (% Cu) 1.95% 1.84% 1.37% 1.26% 1.16% 1.01% 0.96% 0.94% 0.94% 0.99% Recovery (%) 90.0% 92.1% 91.4% 91.1% 90.9% 90.0% 89.5% 90.0% 90.5% 91.1%

Copper in Concentrate 38.0-40.0 44.7 47.5 48.0 50.4 48.8 47.0 31.0 34.9 29.2 (000 tonnes)

Please refer to the Company’s press release dated August 8, 2019 for complete 2019 revised guidance information. Processed tonnes may not sum mined totals due to intermediate mine stockpiles.

UPDATED OPERATING & CAPITAL COSTS

The updated production plan has resulted in changes to the forecast operating and capital cost estimates. The tables below show the operating and capital costs for the updated production schedule.

2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e (Guidance)

C1 Cash Cost $1.00 - $1.10 $0.98 $1.14 $1.25 $1.17 $1.39 $1.38 $1.40 $1.28 $1.38 (US$ per lb)

C1 Cash Cost Notes:

1. Assumes USD:BRL FX rate of 3.80.

2. Assumes gold price of US$1,400 per ounce and silver price of US$17.00 per ounce.

3. C1 Cash Cost of copper produced is a non-IFRS measure, as more particularly discussed under the “Technical and Scientific Information” section of this press release.

4. Please refer to the Company’s press release dated August 8, 2019 for complete guidance information.

Capital Expenditures[1] $100.0 $78.5 $67.6 $68.8 $56.5 $43.1 $32.2 $17.9 $3.6 $1.5 (US$M)

Mill Expansion

  • $16.7 $25.7 $20.7 $1.6 $1.1 $1.5 $1.4 $1.1 $1.1

Capex[2] (US$M)

Capital Expenditure Notes:

1. Excluding mill expansion capital

2. Preliminary mill expansion capital plan shown estimated based on +/- 30% accuracy, pending completion of detailed engineering and integration costing.

3. Assumes USD:BRL FX rate of 3.80.

4. Please refer to the Company’s press release dated August 8, 2019 for complete guidance information.

5. Capital expenditures shown do not include discretionary greenfield or brownfield exploration in years 2020 to 2028.

MINERAL RESOURCE GROWTH

The following section discusses the updated mineral reserve and resource estimates as they relate to each of the three mineral districts of the Curaçá Valley. Detailed information with respect to tonnes, grade and contained copper for the mineral reserve and resource estimates for each mineral district can be found at the end of this press release. Relative comparisons of 2019 to 2018 refer to the 2019 updated mineral resource and reserve estimate discussed herein and the 2018 Technical Report, respectively. A more fulsome discussion of the installed infrastructure within each of the mineral districts of the Curaçá Valley can be found in the 2018 Technical Report.

Vermelhos District

The Vermelhos District encompasses the Vermelhos underground mine, the N8/N9 open pit deposit and the recently announced Siriema discovery, which is currently envisioned as an open pit mine. The Company commenced construction of the Vermelhos mine during the second quarter of 2017, and declared commercial production during the third quarter of 2018, approximately 16 months after construction began and approximately 4 months ahead of schedule. Ore mined from the Vermelhos District is hauled to the Caraíba Mill, located approximately 80 kilometers south of Vermelhos, via the Curaça Valley haul road.

Contained copper within the Measured and Indicated mineral resource increased by 23% in the Vermelhos District. This increase, on a contained copper basis, was primarily attributable to significant increases at the N8/N9 open pit deposit and Siriema, which more than off-set depletion at the Vermelhos Mine, for a total net increase of approximately 46,000 tonnes of contained copper (Vermelhos District total of approximately 250,000 tonnes in 2019 vs. 204,000 tonnes in 2018). Approximately 37,000 tonnes and 16,000 tonnes, respectively are attributable to N8/N9 and Siriema. At the Vermelhos underground mine, approximately 630,000 tonnes of ore was mined grading 3.00% copper prior to the July 9, 2019 effective date of the 2019 updated mineral resource and reserve estimate. Despite this depletion of approximately 19,000 tonnes of contained copper, the updated Measured and Indicated mineral resource of the mine only resulted in a net decline of 6,000 tonnes of contained copper due to off-setting increases, primarily from the Vermelhos East Zone extension to depth.

During the fourth quarter, near-mine exploration drilling will continue to focus on the recently announced Siriema discovery, where drilling continues to highlight a shallow-plunging eastdipping zone of high-grade massive sulphide breccia mineralization. This zone was highlighted recently by drill hole FSI-42 that intersected 31.8 meters grading 2.22% copper including 5.0 meters grading 5.56% copper. In addition, follow-up drilling from underground drill-stations will target a newly identified zone of high-grade mineralization approximately 70 meters below the main Vermelhos orebodies, as highlighted by hole FVS-465 that intersected 13.4 meters grading 5.86% copper including 8.4 meters grading 7.04% copper (please refer to the Company’s press releases dated June 20, 2019 and September 12, 2019 for complete Vermelhos mine and Siriema drill results).

Regional greenfield drilling within the Vermelhos District is currently targeting several highpriority exploration targets identified during the Company’s comprehensive targeting work. These targets extend over approximately 10 kilometers of anomalous soil geochemistry and induced polarization (“IP”) anomalies along the Paredao Antiform as shown in Figure 1. A long-section and cross-section of the Vermelhos mine, including Siriema and N8/N9 mineral resources are shown in Figure 2.

Pilar District

The Pilar District encompasses the Pilar underground mine (which includes the zones of: Baraúna, the Deepening, East Limb, MSB South, the West Limb, P1P2 W, R22 and P1P2 West) as well as the open pit deposits of R75, and Suçuarana. With the exception of a brief period in 2016, mining within the Pilar District has been continuous since 1979. The Pilar District includes the Caraíba Mill, which currently receives and processes ore mined by the Company from deposits throughout the Curaçá Valley including those within the Vermelhos and Surubim Districts.

Contained copper within the Measured and Indicated mineral resource category increased by 19% in the Pilar District. This increase in contained copper was primarily attributable to a significant 74,000 tonne increase in the Pilar underground mine (total of approximately 546,000 tonnes contained copper in 2019 vs. 472,000 tonnes in 2018), as well as 16,000 tonnes of contained copper combined between the R75 and Suçuarana open pit deposits.

During the fourth quarter, infill and extensional drilling in the Pilar underground mine will continue to focus on high-grade zones that the Company has yet to fully delineate. These include recent drill results from the Deepening zone, located down-plunge to the north and along strike to the south of known mineralization. Recent drill results in the Deepening are highlighted by drill hole FC47142 that intersected 34.7 meters grading 2.29% copper including 18.6 meters grading 3.15% copper and hole FC47139 that intersected 23.3 meters including 3.68% copper.

In addition to the Deepening zone, drilling during the fourth quarter at Pilar will seek to further delineate the area surrounding recent results in the South Extension zone located at higher levels of the mine south of the planned mining blocks of MSB South. Drilling in the South Extension from a new exploration drift located on level -300 is highlighted by hole FC34100 that intersected 25.5 meters grading 1.47% copper including 2.0 meters grading 5.85% copper (please refer to the Company’s press release dated September 12, 2019 for complete Deepening and South Extension results). A long-section and cross-section of the Pilar underground mine are shown in Figure 3.

Surubim District

The Surubim District encompasses the Surubim underground mine, a neighboring deposit to the south known as C12, currently envisioned as an open pit mine, and several historic previously known resources that have been validated for the purposes of the 2019 updated mineral resource reserve estimate. These historic projects include: Cercado Velho, Lagoa da Mina and Terra do Sal, which are located in the vicinity of the Surubim mine. The open pit portion of the Surubim mine was mined by the Company from the first quarter of 2018 to the first quarter of 2019.

Contained copper within the Measured and Indicated mineral resource estimate increased by 69% in the Surubim District (approximately 82,000 tonnes in 2019 vs. 49,000 tonnes in 2018). This increase in contained copper is attributable to the historic validated deposits which collectively added approximately 16,000 tonnes of contained copper in 2019 with Cercado Velo, Lagoa da Mina Terra do Sal each contributing approximately 3,100 tonnes, 10,600 tonnes and 1,800 tonnes of contained copper, respectively. In addition, the contribution from the C12 deposit is approximately 32,000 tonnes. Offsetting these gains, approximately 12,000 tonnes of contained copper was mined from the Surubim open pit mine prior to the July 9, 2019 effective date of the 2019 updated mineral resource and reserve estimate, resulting in a net gain of approximately 34,000 tonnes of contained copper.

Near-mine and regional greenfield exploration drilling is primarily focused on the Pilar and Vermelhos Districts for the balance of 2019. A long-section of the Surubim mine is shown in Figure 4.

REGIONAL EXPLORATION PROGRAM UPDATE

With the completion of the 2019 updated mineral resource and reserve estimate, the Company has shifted its exploration focus from in- and near-mine exploration (including infill, upgrade, validation and extensional programs) to regional greenfield exploration. The Company has, and will continue to increase the ratio of regional greenfield exploration to in- and near-mine exploration. In 2018, only 4% of all drilling completed during the year was allocated to regional greenfield exploration. Through the end of the third-quarter, 2019 this ratio increased to approximately 17%, and during the fourth quarter of 2019 approximately 50% of total meters drilled are expected to be allocated to regional greenfield exploration. Subject to continued exploration success, the Company expects to allocate approximately 60% of its 2020 exploration program effort to regional greenfield targets throughout the Curaçá Valley.

TECHNICAL AND SCIENTIFIC INFORMATION

Mineral Resources

Block model tonnage and grade estimates for the Curaçá Valley were classified according to the CIM Standards and the CIM Guidelines by Sr. Porfirio Cabaleiro Rodriguez of GE21 Consultoria Mineral Ltda. (“GE21”) who is an independent qualified person as such term is defined under NI 43-101.

Cut-off grades of 0.68% copper were used for underground (“UG”) mineral resources and 0.18% for open pit (“OP”) mineral resources based on copper prices of $3.00 per lb., net smelter return (“NSR”) of 87.5%, metallurgical recoveries of 87.5%, processing costs of US$5.70 per tonne (run of mine, including transport) and mining costs of US$3.30 and US$28.60 per tonne for open pit and underground deposits, respectively. Mineral resources were estimated using ordinary kriging within 5m by 5m by 5m block sizes. Mineral resources associated with underground deposits were constrained using a minimum stope dimension of 5m by 2.5m by 5m. Mineral resources associated with open-pit operations were limited using a Whittle 3D pit (LG 3D). Mineral resources are shown inclusive of mineral reserves.

Mineral Resource effective date of July 9, 2019 for all deposits with the exception of the N8/N9 deposits of the Vermelhos District, which have an effective date of July 31, 2019, and Baraúna (Pilar District) and Siriema (Vermelhos District) both of which have an effective date of September 15, 2019.

Mineral Reserves

The mineral reserves for the Pilar, Vermelhos, and Surubim Districts are derived from the Measured and Indicated mineral resources as defined within the resource block models following the application of economic and other modifying factors further described below. Inferred mineral resources, where unavoidably mined within a defined mining shape have been assigned zero grade. Dilution occurring from Measured & Indicated resource blocks was assigned grade based upon the current mineral resource grade of the blocks included in the dilution envelope. Mineral reserves were classified according to the CIM Standards and the CIM Guidelines by Rubens Jose De Mendonça of Planminas – Projectos e Consultoria em Mineração Ltd., an independent qualified person as such term is defined under NI 43-101.

Mineral reserve cost assumptions are based on actual operating cost data during the 18-month period from January 1, 2018 to June 30, 2019. The USD:BRL rate of 3.70 was selected based on the average rate during this same period.

A summary of the mineral reserve estimate parameters is provided below:

Mining Costs (US$/tonne ore mined)

Pilar UG mine $27.31 Vermelhos UG mine $33.21 Surubim / C12 UG mine $18.66 Suçuarana OP mine $3.06 C12 OP mine $3.06 Vermelhos N8/N9 OP mine $2.51 Siriema OP mine $2.51

Transportation Costs (US$/tonne to mill)

Vermelhos mine $11.56 Surubim mine $5.98 Suçuarana mine $3.54

Processing Costs (US$/tonne milled) $7.90

Metallurgical Recovery (average) 90.70%

LME Copper Price (US$/lb)$2.75
Net Smelter Return94.53%
Foreign Exchange Rate (USD:BRL)3.70

Reserve Parameters Note

All road-maintenance costs associated with the Curaçá Valley haul road have been allocated to Vermelhos. Calculated difference between Suçuarana OP mine / C12 OP mine and Vermelhos N8/N9 / Siriema open pit mining costs are a result of additional incurred costs related to contract mining envisioned for Suçuarana and C12. Metallurgical recoveries vary by area. Average estimated metallurgical recoveries of 91.0% used for Pilar underground mine, 92.0% for Vermelhos underground mine, 89.0% for the Surubim / C12 underground mines, and 89.0% for each of the open pit deposits of C12, Suçuarana, N8/N9 and Siriema.

Other modifying factors considered in the determination of the mineral reserve estimate include:

  • Maximum bench height of 10m for open pit mines. Maximum underground stope dimensions based on geotechnical assessments from previous studies and past operating experience within each mining area, combined with evaluation of induced stresses and the Rock Mass Rating (“RMR”).
  • The Vertical Retreat Mining (“VRM”) method with cemented paste fill was selected for the Pilar UG Mine, where the method is currently in use. For the Vermelhos UG Mine, Sublevel Open Stoping method (“SOS”) is the mining method currently in use on consideration of the dip, plunge and thickness of the ore-bodies, the rock quality designation (“RQD”) and overall competence of the host rock. Variations of this method are in use within the central high-grade area for the maximum possible recovery via cemented rockfill matrix filling (“CRF”).
  • Within designed stopes, all contained material was assumed to be mined with no selectivity. Inferred mineral resources, where unavoidably included within a defined mining shape have been included in the mineral reserves estimate at zero grade. Mining dilution resulting from Measured and Indicated blocks was assigned the grade of those blocks captured in the dilution envelope using the current mineral resource estimate.
  • Dilution and mining recovery values vary by deposit as set forth below:
    • Pilar UG mine operational dilution of 12%, mining recovery of 96%.
    • Vermelhos UG mine operational dilution of 10%, mining recovery of 100%.
    • Vermelhos N8/N9 overall dilution of 10%, mining recovery of 100%.
    • Siriema overall dilution of 10%, mining recovery of 100%.
    • Suçuarana OP operational dilution of 10%, mining recovery of 100%
    • Surubim/C12 UG operational dilution of 10%, mining recovery of 100%.

Ore-Sorting & Modeled Impacts to Mill Feed

As part of its ongoing optimization efforts, and in recognition of the heterogeneous nature of the mineralization of the Curaçá Valley, the Company undertook testwork in early 2019 to evaluate the potential of Rados XRF ore-sorting to upgrade copper content of mined ores. In order to evaluate this potential, three bulk samples weighing approximately 300kg each, 900kg in total, were collected from several locations within the Surubim mine. The sampling program sought to create representative high-grade, medium-grade and waste bulk composite sample from exposed ore in a recently mined open pit to form approximately one tonne of material grading approximately one percent copper. These samples were crushed, screened and delivered to Metanza Mineral Processors (Pty) Ltd. outside of Johannesburg South Africa in six drums. Particle sizes of the bulk samples ranged between 30mm and 75mm.

These samples were passed through a Rados XRF machine in normal operation mode to analyze the particles as they fell past the Rados XRF sensor, which was set to record the relative values of copper, iron, nickel and calcium. Relative values were normalized to develop optimal sorting conditions based on the normalized values of copper, nickel and iron. A 24 product factoral approach was then used to evaluate the cumulative performance throughout the selectivity range for each composite sample. Each of the sort products were pulverized and sent to ALS laboratories in Johannesburg to determine copper, nickel, iron and calcium contents using four-acid digestion and inductively coupled plasma atomic emission spectroscopy (“ICP-AES”). ALS laboratories is independent of the Company.

The results of this test program demonstrated that Rados XRF ore-sorting could be used to upgrade the copper content of these samples with minimal copper loss. The combined result showed that a sample weighing approximately 900kg and grading 1.00% copper could be sorted to approximately one-half of its original mass, while only losing 5% of the contained copper. The results of the testwork program are shown below for the Rados XRF selectivity setting that maximized copper recovery.

Sample head- Sort Concentrate Sort Concentrate Reject Grade Copper Sample ID

grade (Cu %)Mass (%)Grade (Cu %)(Cu %)Recovery (%)
High-grade1.69%66.8%2.41%0.24%95.3%
Medium-grade1.38%79.0%1.68%0.26%96.2%
Waste0.04%3.20%0.62%0.02%49.6%
Total Bulk1.00%47.9%1.98%0.10%95.0%

Total Bulk sample mass of 912.9kg comprised of 292.3kg of high-grade, 292.9kg of medium-grade and 327.7kg of waste sample. Cumulative performance up to the selectivity range for maximum copper recoveries shown.