ERO Copper (NYSE: ERO) Update - Oct 27

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

ERO Copper (NYSE: ERO) Update - Oct 27

Post by dan_s »

Ero Copper has a live webinar today at 3PM CT. If you want to attend, send me an email ASAP: dmsteffens@comcast.net

Ero Copper is a recent addition to our Small-Cap Growth Portfolio. I am very bullish on copper.

Ero Copper Corp. (NYSE: ERO, TSX: ERO) is a base metals mining company with organic production growth via its 99.6% interest in Mineração Caraíba S.A. (“MCSA”), a long-established Brazilian copper mining company with over 40 years of operating history in the Curaçá Valley. MCSA’s primary assets are the fully integrated mining and processing operations of the MCSA Mining Complex, located in northeastern Bahia, Brazil. Ero’s strategy is centered upon aggressively increasing the high-grade mineral reserves, extending mine life and maximizing mill throughput, leveraging the excess capacity of the installed infrastructure. In addition, MCSA owns 100% of the “turn key” Boa Esperana development project, an IOCG-type copper deposit located in southern Pará State, Brazil.

MCSA MINING COMPLEX
• Flagship high-grade, low-cost operation generating strong cash flows
• 42-50 kt Cu production at first quartile C1 cash costs of $0.97/lb < This is KEY to my valuation. Copper trading for $4.38/lb this morning.
• Track record of mine life extensions and operational improvements
• Highly prospective land package with 24+ drill rigs operating
• ~1.3 Mtpa of excess mill capacity (~25%)

BOA ESPERANÇA PROJECT
• Low capital-intensity, high-return, construction-ready copper project
• ~35 kt of average annual Cu production in the first 5 years
• Opportunities to further enhance project value by potentially converting material classified as waste into mineralization through exploration of the Gap Zone

NX GOLD MINE
• Amongst Brazil’s highest grade, lowest cost gold mines
• 36-46 koz Au production at $505/oz C1 cash costs and $720/oz AISC costs
• ~130 ktpa of excess mill capacity (~40%)
• Robust exploration program with 9+ drill rigs operating
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: ERO Copper (NYSE: ERO) Update - Oct 27

Post by dan_s »

ERO is trading at $18.75

TipRanks: In the last 3 months, 8 ranked analysts set 12-month price targets for ERO. The average price target among the analysts is $24.82. The price targets range from $18.60 to $28.31.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: ERO Copper (NYSE: ERO) Update - Oct 27

Post by dan_s »

Why I added ERO:

2020 results: $324.1 million of revenues, $0.56 EPS and $2.13 operating CFPS
2021 forecast: $543.2 million of revenues, $2.92 EPS and $3.85 operating CFPS
2022 forecast: $620.0 million of revenues, $3.27 EPS and $4.30 operating CFPS < based on copper price of $4/pound.

ERO is profitable and generating lots of free cash flow from operations; more than enough to fund it organic growth. ERO might take on a bit more debt to fund the development of Boa.

Take a look a the copper price chart here: https://tradingeconomics.com/commodity/copper

ERO is not hedged because they believe copper prices are going a lot higher.
Dan Steffens
Energy Prospectus Group
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