Ero Copper Corp (ERO)ERO

Ero Copper Corp: A Comprehensive Overview

Company Profile:

Detailed History and Background:

Ero Copper Corp. (NYSE: ERO) is a Canadian copper mining company founded in 2014. It operates the fully-permitted Boa Safra copper mine located in the Carajás mineral district, Brazil. Prior to 2021, Ero operated the Pilar copper mine in Bahia, Brazil, which was sold to Nexa Resources in June of that year.

Core Business Areas:

Ero Copper Corp. is primarily focused on copper exploration, development, and mining. The company operates one mine and controls a portfolio of copper projects and opportunities in Brazil and the United States.

Leadership and Corporate Structure:

• CEO: Luis Arenas
• CFO: Luiz Felipe Rocha
• COO: Daniel Mariani
• Executive Vice President, Exploration: Wilson Brumer
• Executive Vice President, Corporate Affairs: Fernanda Dantas
• Executive Vice President, Sustainability: Leonardo Coelho

Ero Copper Corp. is headquartered in Toronto, Canada, and operates a branch office in Belo Horizonte, Brazil.

Top Products and Market Share:

Top Products:

Ero Copper Corp.'s primary product is copper concentrate, which is sold to smelters and refineries worldwide.

Global Market Share:

The global copper market is estimated to be approximately 25 million tonnes per annum. Ero Copper Corp. is a relatively small producer, with a market share of less than 1%.

US Market Share:

The US copper market is estimated to be approximately 4 million tonnes per annum. Ero Copper Corp. does not currently sell copper concentrate in the US market.

Product Performance and Comparison:

Ero Copper Corp.'s Boa Safra mine is a high-quality copper mine with an average grade of 1.04% copper. The mine has a low strip ratio and a long mine life. However, it faces competition from other copper producers in Brazil and globally.

Total Addressable Market:

The total addressable market for Ero Copper Corp. is the global copper market, which is estimated to be approximately 25 million tonnes per annum. This market is expected to grow at a rate of around 2% per year over the next five years.

Financial Performance:

Recent Financial Statements:

• Revenue: Ero Copper Corp. reported revenue of US$342.8 million in 2022.
• Net Income: The company reported net income of US$40.7 million in 2022.
• Profit Margins: Ero Copper Corp.'s profit margin was 11.9% in 2022.
• Earnings per Share (EPS): Ero Copper Corp.'s EPS was US$0.07 in 2022.

Year-over-Year Comparison:

• Revenue: Revenue increased by 27% year-over-year in 2022.
• Net Income: Net income increased by 49% year-over-year in 2022.
• Profit Margins: Profit margins increased from 8.0% in 2021 to 11.9% in 2022.
• EPS: EPS increased from US$0.03 in 2021 to US$0.07 in 2022.

Cash Flow and Balance Sheet:

Ero Copper Corp. generated US$148.8 million in operating cash flow in 2022. The company had a cash balance of US$236.7 million as of December 31, 2022.

Dividends and Shareholder Returns:

Dividend History:

Ero Copper Corp. does not currently pay a dividend.

Shareholder Returns:

• One-year total shareholder return: 48%
• Five-year total shareholder return: 241%
• Ten-year total shareholder return: Not applicable (company founded in 2014)

Growth Trajectory:

Historical Growth Analysis:

Ero Copper Corp.'s revenue has grown at a compound annual growth rate (CAGR) of 30% over the past five years. The company's net income has grown at a CAGR of 45% over the same period.

Future Growth Projections:

Ero Copper Corp. expects to produce between 70,000 and 80,000 tonnes of copper in 2023. The company is also exploring opportunities to expand its operations through acquisitions and organic growth.

Recent Initiatives:

Ero Copper Corp. is currently developing the VMS District project in southern Bahia, Brazil. The company is also exploring opportunities to develop the Xavantina project in Matto Grosso, Brazil.

Market Dynamics:

Current Trends:

The copper market is currently characterized by strong demand from the electric vehicle and renewable energy industries. Copper prices are expected to remain elevated in the near term.

Demand-Supply Scenario:

The global copper market is currently in a supply deficit. This is expected to continue over the next few years, as demand is expected to outpace supply.

Technological Advancements:

Technological advancements in the copper mining industry are focused on improving efficiency and reducing costs. This includes the use of automation, artificial intelligence, and other digital technologies.

Ero's Position:

Ero Copper Corp. is well-positioned to benefit from the strong copper market. The company's high-quality Boa Safra mine is expected to generate strong cash flow, which can be used to fund growth initiatives.

Competitors:

• Vale (VALE)
• BHP Group (BHP)
• Rio Tinto (RIO)
• Freeport-McMoRan (FCX)
• Southern Copper Corp. (SCCO)

Market Share Percentages:

• Vale: 12%
• BHP Group: 8%
• Rio Tinto: 7%
• Freeport-McMoRan: 4%
• Southern Copper Corp.: 4%
• Ero Copper Corp.: <1%

Competitive Advantages:

Ero Copper Corp.'s competitive advantages include:

• High-quality copper mine
• Low operating costs
• Strong financial position

Competitive Disadvantages:

Ero Copper Corp.'s competitive disadvantages include:

• Small market share
• Limited geographic diversification

Potential Challenges and Opportunities:

Key Challenges:

• Copper price volatility
• Supply chain disruptions
• Competition from larger miners

Key Opportunities:

• Growing copper demand
• Potential for acquisitions
• Development of new projects

Recent Acquisitions:

• 2022: Acquisition of the Pau Branco copper project in Tocantins, Brazil.

The Pau Branco project is a high-grade copper project with a resource of 304 million tonnes grading 0.6% copper. The acquisition is expected to extend Ero Copper's mine life and provide additional growth opportunities.

AI-Based Fundamental Rating:

Ero Copper Corp.'s stock has an AI-based fundamental rating of 8 out of 10. This rating is based on the company's strong financial position, positive growth prospects, and the continued strength of the copper market.