ERO — Ero Copper Corp.

Ero Copper Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Achieved a record $320 million in Q4, up $143 million from Q3, driven by record copper concentrate and a 59% increase in gold dore sales.
• Adjusted EBITDA: Grew to $186.7 million in Q4 and $409.7 million for the full year.
• Net Income: Adjusted net income attributable to owners was $108.4 million for Q4 and $220.4 million for the year, translating to $1.04 and $2.12 per share, respectively.
• C1 Cash Costs: Consolidated C1 copper cash costs were $2.27 per pound in Q4, reflecting a slight increase due to higher costs at Tucuma.
• Liquidity: Ended Q4 with $150.4 million in liquidity, including $105.4 million in cash and equivalents.
• Net Debt: Decreased to approximately $502 million, improving the net debt leverage ratio to 1.2x from 1.9x in Q3.

2. Strategic Updates and Business Highlights

• Furnas Project: Released a preliminary economic analysis (PEA) indicating strong potential with an expected production of over 1.2 million tonnes of copper, 2 million ounces of gold, and 9 million ounces of silver over a 24-year mine life. The project has an after-tax NPV of approximately $2 billion and an IRR of over 27%.
• Operational Performance: Q4 saw record mill throughput at Caraiba and Tucuma, with significant production increases. Xavantina's production rose 53% quarter-on-quarter due to mechanization efforts.
• Exploration Plans: Ero plans to drill an additional 50,000 meters in 2026, focusing on high-grade mineralization and potential enhancements to gold recoveries.

3. Forward Guidance and Outlook

• 2026 Production Guidance: Consolidated copper production is expected to be between 67,500 to 77,500 tonnes, with production weighted towards the second half of the year. Xavantina is projected to produce 40,000 to 50,000 ounces of gold.
• Capital Allocation: Focus on debt reduction and potential returns to shareholders once the net debt-to-EBITDA ratio falls below 1x. Plans to pay down the revolver fully in 2026.

4. Bad News, Challenges, or Points of Concern

• Cost Increases: C1 cash costs are expected to rise due to lower grades and additional maintenance at Tucuma, as well as higher transportation and port costs related to COP30 activities.
• Weather Impact: Heavy rains during the rainy season are anticipated to affect concentrate shipments, particularly from Xavantina, leading to modest sales in Q1.
• Market Conditions: The Brazilian Real (BRL) has posed a headwind, affecting costs and profitability.

5. Notable Q&A Insights

• Gold Concentrate Shipments: Management indicated that Q1 shipments would be modest due to the rainy season, with expectations for ramp-up in Q2 and Q3.
• Tucuma Maintenance: Maintenance related to mill liners was pulled into Q4, with no extended downtime planned for Q1.
• Furnas Drilling: The PEA included 28,000 meters of drilling, with plans for further drilling to convert inferred resources into measured and indicated categories.
• Mechanization Benefits: Investments in mechanization at Xavantina are expected to reduce workforce exposure and improve production capacity over time.

Overall, Ero Copper demonstrated strong financial performance in Q4 2025, with significant operational improvements and strategic initiatives aimed at long-term growth, despite facing challenges related to costs and weather conditions.