Shares of Ero Copper (TSX: ERO; NYSE: ERO) rose by 9.4% on Thursday morning on the news of its discovery of a regional nickel sulphide system in the Curaçá Valley of northeastern Brazil.
The discovery, known as the Umburana System, has been traced for 5 km so far and is open in all directions. It is highlighted by several surface expressions of nickel mineralization, the Vancouver-headquartered miner said in a news release.
First pass results from 48 drill holes on two identified zones at the discovery, located about 20 km from Ero’s Caraíba processing facilities in the northeastern state of Bahia, revealed several highlights, with the depth going down to about 300 metres.
Drilling at the VB zone returned 16.5 metres at 1.22% nickel, 0.17% copper and 0.03% cobalt; and 3.8 metres at 3.6% nickel, 0.22% copper and 0.09% cobalt in hole VB-17.
That interval also includes 1.5 metres of massive-sulphide textures grading 6.59% nickel, 0.26% copper and 0.17% cobalt.
In the Lazaro zone, hole LZ-03 cut 24.1 metres at 0.81% nickel, 0.18% copper and 0.04% cobalt, including 13 metres at 1.11% nickel, 0.25% copper and 0.05% cobalt.
Hole LZ-06 returned 22.5 metres at 0.84% nickel, 0.15% copper and 0.05% cobalt, including 8 metres at 1.34% nickel, 0.25% copper and 0.07% cobalt.
Umburana was discovered during the company’s 2021 and 2022 exploration programs using new detailed field mapping and soil geochemistry as well as Ero’s airborne electromagnetic survey, the miner said.
Commenting on the discovery, Ero CEO David Strang said Umburana marks a pivotal moment for the company and region.
“To think that copper in the Curaçá Valley was first documented in the late 1700s and we are just now discovering nickel sulphide mineralization not far from where copper has been mined for over 40 years is truly remarkable,” he said.
“With newly compiled datasets, dedicated resources focused exclusively on understanding and finding nickel and a complete re-look of several historic datasets this past year, our efforts and persistence have paid off. We believe today’s results confirm the Curaçá Valley’s potential to be a globally significant magmatic sulphide district for both copper and nickel.”
In a research note, mining analyst Dalton Baretto of Canaccord Genuity said the discovery was not a surprise given previous early results from the area and formation of a dedicated nickel exploration team earlier this year.
“The discovery comes at a fortuitous time, in our view, when management is in the early stages of contemplating a new mill in the Curaca Valley,” Baretto
“We believe this announcement will result in Ero’s shares starting to reflect more of the exploration potential that has been lost since late 2019. With four rigs still turning on the system, we expect to see more positive results at an update that we understand is planned for early November.”
The discovery adds to Ero’s existing Curaçá Valley operations such as the Pilar and Vermelhos underground mines and the Surubim open pit mine.
Shares of Ero were trading at C$15.53 in Toronto on Thursday at noon. Its shares have traded in a 52-week window of C$10.54 and C$25.83. The company has a market cap of C$1.4 billion.