ERO — Ero Copper Corp.

Ero Copper Q2 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Adjusted EBITDA: $82.7 million
• Adjusted Net Income: $48.1 million, or $0.46 per share
• Liquidity Position: $113 million, including $68.3 million in cash and $45 million undrawn from the revolving credit facility
• Net Debt-to-EBITDA Ratio: Improved from 2.4x to 2.1x after paying down $10 million of the revolver and $9 million of the copper prepayment facility.

2. Strategic Updates and Business Highlights:

• Operational Excellence Framework: Implemented to enhance production efficiency and reduce downtime, with significant improvements noted at Caraíba and Xavantina.
• Tucumã: Achieved commercial production, with production rates improving significantly in June and July.
• Caraíba: Experienced a 25% increase in copper production compared to Q1, with a 50% reduction in unplanned downtime and improved fleet management.
• Xavantina: Transitioning to mechanized mining, resulting in a 17% increase in gold production versus Q1.
• Furnas Project: Phase 1 drill program completed, with Phase 2 ongoing, showing promising results.

3. Forward Guidance and Outlook:

• Production Expectations: Anticipate third quarter performance to exceed second quarter, with fourth quarter expected to be better than third.
• Copper Production Guidance: Adjusted to reflect a full-year production trend towards the lower end of guidance, with expectations of achieving around 80% of design capacity at Tucumã by year-end.
• C1 Cash Costs: Expected to remain in the lower half of the guidance range despite anticipated lower grades in the second half of the year.

4. Bad News, Challenges, or Points of Concern:

• Production Bottlenecks: Initial challenges at Tucumã were addressed, but consistency in achieving design capacity remains a focus.
• Grade Decline at Caraíba: Anticipated lower grades in the second half of the year due to the increasing contribution from the Surubim pit, which has lower average grades.
• Operational Risks: Ongoing need for preventative maintenance and addressing bottlenecks in the processing plant, particularly in crushing, conveying, and filter press systems.

5. Notable Q&A Insights:

• Tucumã Production Rates: Management emphasized the shift from addressing bottlenecks to achieving consistent operational performance, with expectations to maintain higher production rates.
• Cash Cost Management: While improvements are being made, there is upward pressure on costs due to lower grades expected in the second half.
• Mechanization at Xavantina: Initial results from mechanized mining have shown less dilution than manual methods, with expectations for improved production volumes.
• Future Cash Returns: Discussions are ongoing regarding the timeline for initiating shareholder returns, contingent on continued balance sheet improvement and deleveraging.

This summary encapsulates Ero Copper's operational and financial performance for Q2 2025, highlighting both the progress made and the challenges faced as the company navigates its growth strategy.