Underground at the MCSA copper complex Credit: Ero Copper
Vancouver-based copper and gold producer Ero Copper (TSX: ERO) has tabled an updated resource and reserve statement for its NX Gold mine in Brazil. With this update, the underground operation now has an expected mine life of six years.
In conjunction with the updated reserve numbers, Ero released an updated mine plan for NX Gold, which suggests a six-year life for the operation. In the first four years of this updated plan (starting in 2021), the mine would produce an average of 41,400 gold oz. annually. Based on this new production scenario, all-in sustaining costs at NX Gold are expected to range between US$607 and US$936 per oz. over the next six years.
In the news brief, David Strang, Ero Copper's president and CEO, highlighted how the most recent update underscores successful reserve growth at the site since 2018 and additional production growth and mine life extension potential.
"The positive results and significant extension of mine life at our NX Gold operations as outlined in our 2020 LOM update reflect the culmination of a multi-year commitment to organically grow our NX Gold operations. This effort began in mid-2018 with the first real exploration program conducted at the property since 2012," Strang said in the release. "We believe that with continued exploration success, NX Gold has the ability to not only sustain production at these levels well into the future, but ultimately significantly increase production volumes from the mine, thereby utilizing more of the plant's excess capacity."
Probable reserves total 862,100 tonnes at 8.83 grams gold per tonne, for a total of 244,700 gold ounces. These are contained within indicated resources of 770,200 tonnes grading 10.9 grams gold per tonne, containing 269,900 oz. of gold.
According to the release, the amount of contained gold within the probable reserves increased by 78% when compared with the 2019 mineral reserve statement. Similarly, the contained gold within indicated resources grew by 55%.
Inferred resources now stand at 573,800 tonnes grading 10.55 grams gold, for an additional 194,600 gold ounces.
Research analyst Farooq Hamed of Raymond James wrote that the resource and reserve update adds four years of mine life to this asset. The updated mine plan adds approximately 135,000 oz. of gold starting in 2021 relative to his previous model, with cash costs slightly higher than previously expected.
As a result of the update, the mining analyst maintains an 'outperform' rating on the company, with a $23 share price target, up from $21.5.
With its third-quarter results release, the company revised its 2020 production guidance for NX Gold downwards, to 36,000 to 37,000 gold oz., from 38,000 to 40,000 oz. previously. This revision was due to difficult ground conditions at the upper panel of the San Antonio vein - this structure is the sole reserve contributor.
Ero is installing a paste fill plant at the site, which is expected to be on line in the second half of 2021, to optimize operations and increase pillar recoveries.
The latest reserves are estimated using cut-off grades between 3.14 and 3.22 grams gold; resources are based on a 1.9 gram gold cut-off.
In addition to gold, this year, the company expects to produce 41,000 to 43,000 tonnes of copper. Ero's copper asset is the MCSA mining complex in Brazil's Bahia state.
This article first appeared in the Canadian Mining Journal, part of Glacier Resource Innovation Group.