Ero Copper Corp. (TSX: ERO, NYSE: ERO) announced on Monday it has entered into a binding term sheet with Salobo Metais S.A, part of the Vale Base Metals business (VBM) to advance the Furnas copper project located in the Carajás Mineral Province in Pará State, Brazil.
The term contemplates Ero Copper earning a 60% interest in the project upon completion of exploration, engineering and development milestones over a period of five years from the execution of a definitive earn-in agreement.
Ero will solely fund a phased exploration and engineering work program during the earn-in period and grant VBM up to an 11% free carry on future project construction capital expenditures.
Once the company enter into the definitely earn-in agreement it will do exploration and engineering work to ultimately produce a definitive feasibility study at the end of a 5-year earn-in period.
At that point, if Ero and Vale decide to move forward with construction of the project, Ero has agreed to cover a small portion of Vale’s pro rata contributions for the first $2 billion of capital expenditures.
Furnas is an iron oxide copper gold ore deposits (IOCG) project located about 50 kilometres southeast of VBM’s Salobo operations and about 190 kilometres northeast of Ero’s Tucumã project.
Covering an area of about 2,400 hectares, the project sits within 15 kilometres of extensive regional infrastructure, including paved roads, an industrial-scale cement plant, a power substation and Vale’s railroad loadout facility.
“As construction of our Tucumã project approaches completion in the coming year, we look forward to Furnas further contributing to the growth of copper production within the broader Carajás region and solidifying Brazil’s position as a leader in low carbon-intensity production of critical minerals,” Ero Copper’s CEO David Strang said in a news release.
Shares of Ero Copper rose 2.19% by 11:31 a.m. EDT on Tuesday. The miner has a market capitalization of C$1.74 billion ($1.25bn).
Correction: In contrast to what was previously reported, Ero Copper will not be investing $2 billion over the next 5 years in the Furnas project.
