Ero Copper reveals 24-year life, $2B NPV for Furnas project

[Ben Graham]

Ero Copper (TSX, NYSE: ERO) has reached a key milestone in the development of the Furnas project in Para, Brazil, which is being advanced in partnership with Vale Base Metals, following the release of the project’s first-ever preliminary economic assessment (PEA).

The report highlighted a large-scale operation with four distinct mining areas that would produce approximately 1.2 million tonnes of copper, 2 million million oz. of gold and 9 million oz. of silver over a 24-year life. Over the first 15 years, its average annual copper-equivalent production could reach 108,000 tonnes.

For comparison, Ero produced 64,307 tonnes of copper last year, a new record, as well as 37,291 oz of gold across its three sites in Brazil.

Using long-term copper, gold and silver prices of $4.60/lb., $3,300/oz. and $40/oz. respectively, the PEA gave the Furnas project an after-tax net present value (at 8% discount) of $2 billion and a 27% internal rate of return. Its initial capital cost is estimated at $1.3 billion, for a low capital intensity of approximately $16,000/t copper equivalent.

Shares of Ero Copper jumped as much as 9% to nearly C$47 apiece in Toronto, giving the company a market capitalization of C$4.83 billion ($3.52 billion). The stock’s 52-week high was C$53.69.

Multiple drilling campaigns

The PEA results, says Ero Copper chief executive officer Makko DeFilippo, showed “what an exceptional asset” the Furnas project is, adding that the report is the “culmination of multiple exploration drilling campaigns and a strong foundation of engineering and technical studies” for over a decade.

The project was previously worked on by Vale (NYSE: VALE) and Anglo American (LSE: AAL), which together completed 90,000 meters of drilling. The property covers 2,400 hectares within the Carajás mineral province and sits approximately 50 kilometers southeast of Vale Base Metals’ Salobo copper operations.

Ero partnered with Vale in late 2023 and now holds the right earn into 60% of the Furnas project after the parties reached an agreement in July 2024. As sole funder of exploration, Ero has so far completed 45,000 meters of drilling in two phases.

Based on the Phase 1 drilling (28,000 meters) alone, the company produced a current resource estimate of 275.6 million tonnes indicated grading 0.83% copper equivalent and 195.9 million tonnes inferred grading 0.76% copper equivalent.