ERO — Ero Copper Corp.

Ero Copper Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $177 million, a $14 million increase from Q2, driven by a 24% increase in copper concentrate sales at Tucumã and higher copper and gold prices.
• Adjusted EBITDA: $77.1 million.
• Net Income: $27.9 million, or $0.27 per share.
• Liquidity Position: $111 million, including $66.3 million in cash and equivalents.
• Net Debt Leverage Ratio: Improved to 1.9x from 2.1x in Q2 and 2.5x at the end of 2024.
• Operating Costs: Increased due to lower mined and processed grades at Caraíba and changes in accounting treatment at Tucumã.

2. Strategic Updates and Business Highlights:

• Xavantina Operations: Announced a maiden inferred resource of 24,000 tonnes grading approximately 37 grams per tonne, containing 29,000 ounces of gold. The company commenced shipping gold concentrate, expecting to sell 10,000 to 15,000 tonnes in Q4 2025.
• Production Records: Achieved all-time record monthly production across all operations in October, including 3,500 tonnes of copper at Caraíba and nearly 7,000 ounces of gold at Xavantina.
• Mechanization Success: Significant improvements in productivity and safety at Xavantina due to mechanization efforts.
• Furnas Project: Continued progress with drilling and technical work for a preliminary economic analysis, on track for completion in H1 2026.

3. Forward Guidance and Outlook:

• Q4 Expectations: Anticipating the strongest production quarter of the year across all operations. Expected to achieve the low end of annual production guidance.
• Cash Costs: Expected to decline from Q3 levels, supporting full-year C1 cash costs in the lower half of the guidance range.
• Tucumã Capacity: Improvements expected to continue, with a goal to reach nameplate capacity in the second half of 2026.

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

• Cost Pressures: Increased operating costs due to inflation in Brazil affecting labor and contractor pricing. Adjusted full-year C1 cash cost guidance at Tucumã due to higher maintenance and freight costs.
• Resource Sampling: Remaining 80% of gold concentrate stockpile yet to be sampled, creating uncertainty in future resource estimates.
• Operational Risks: Potential challenges in achieving throughput targets at Tucumã and the need for additional filtration capacity to alleviate bottlenecks.

5. Notable Q&A Insights:

• Gold Concentrate Sales: The remaining stockpile will be sold as quickly as possible, but specific estimates on the volume and timing of future sales remain uncertain.
• Inflation Impact: Management acknowledged ongoing inflationary pressures in Brazil but emphasized efforts to mitigate these through hedging strategies.
• Future Production Rates: The mechanization at Xavantina has allowed for increased mining rates and lower costs, with expectations for continued high grades in Q4.
• Long-term Vision: Beyond achieving Tucumã's nameplate capacity, the company is focused on growth initiatives at Caraíba and Xavantina, with plans for further exploration and resource development.

Overall, Ero Copper reported strong financial results and operational improvements, with a positive outlook for Q4 and beyond, despite facing challenges related to costs and resource estimation.