Ero Copper (ERO.TO) on Monday said it has extended a 2021 agreement with Royal Gold for future gold production from the Xavantina operations in Mato Grosso, Brazil.

For upfront proceeds of US$50 million, Ero Copper will deliver an additional 40,200 ounces of gold to Royal Gold, which will make cash payments equal to 40% of the prevailing spot gold price. The delivery of additional ounces under the new agreement is expected to start in 2028, the statement said.

"The performance and growth prospects for the Xavantina Operations, combined with recent increases in mineral reserves and resources, creates an opportunity to capitalize on what continues to be a significant dislocation of value for the Xavantina Operations with a strong strategic partner in Royal Gold," said Makko DeFilippo, chief executive officer.

The additional proceeds will support growth and investment programs at the Xavantina Operations, which were included in the company's 2025 capital expenditure guidance, DeFilippo added.

Ero Copper was last seen down US$0.13, to US$12.11, in New York trading.