Ero Copper(US:ERO)2022-05-14 20:49Financial Data and Key Metrics Changes - The first quarter revenues were $108.9 million, a decrease of $26 million or approximately 19% compared to the fourth quarter of 2021, primarily due to lower copper production and concentrate sales at MCSA [23] - The company reported record quarter-end available liquidity of $540.5 million, including approximately $365 million in cash and cash equivalents, $100 million in short-term investments, and $75 million in undrawn availability under the senior secured credit facility [22] - Operating cash flows were approximately $44 million in the first quarter, supported by record high copper and gold prices despite the challenges faced [24] Business Line Data and Key Metrics Changes - Copper production at the MCSA Mining Complex was approximately 9,700 tonnes, while gold production at the NX Gold Mine was 8,800 ounces during the first quarter [11] - The company expects to achieve a high-end production range of 43,000 to 46,000 tonnes of copper for the full year, with production roughly equally weighted between the first and second halves of the year [13] - Gold production guidance for 2022 remains at 39,000 to 42,000 ounces, with higher production anticipated in the latter part of the year due to planned mine sequencing [14] Market Data and Key Metrics Changes - The Brazilian real strengthened from approximately 5.65 to 4.75 per U.S. dollar by the end of the first quarter, impacting unit operating costs [25] - The company faced inflationary pressures affecting all industries, which influenced cash costs at both MCSA and NX Gold [15] Company Strategy and Development Direction - The company plans to increase annual copper production to approximately 100,000 tonnes and gold production to approximately 60,000 ounces over the next few years [5] - The Boa Esperança project construction was formally approved, with site clearing having commenced recently [7][18] - A company-wide rebranding initiative was launched to align cultural and identity aspects throughout the company [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, highlighting the ongoing demand for copper driven by global decarbonization initiatives [9] - The company is focused on advancing its growth strategy and expects several strong quarters ahead [27] Other Important Information - The company successfully issued $400 million in senior unsecured notes with an eight-year maturity and a 6.5% coupon [6] - The first quarter C1 cash costs at MCSA were $1.31 per pound of copper produced, while NX Gold Mine's C1 cash costs and all-in sustaining costs were $638 and $1,092 per ounce, respectively [15] Q&A Session Summary Question: Progress on Honeypot initiative - Management indicated that the Honeypot initiative has uncovered significant opportunities, but a clearer direction will be available in the next six months, with a new technical report expected by the end of the year [29][30] Question: Tendering status for Boa project - The majority of the budget for the Boa project has gone out to tender, with 60% to 70% of the project either agreed or out to tender [32][33] Question: Inclusion of Pilar 3.0 in the tender - Management confirmed that the Pilar 3.0 expansion is included in the tendering process, with contracts for major lead items already signed [34][35]