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 sales 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 ($1.04 per share) and $220.4 million for the year ($2.12 per share).
• C1 Cash Costs: Consolidated C1 cash costs for copper were approximately $2.27 per pound in Q4, with gold C1 cash costs declining by 29% from Q3.
• Liquidity: Ended the quarter with $150.4 million in liquidity, including $105.4 million in cash.
• Net Debt: Decreased to approximately $502 million, improving the net debt-to-EBITDA ratio to 1.2x from 1.9x in Q3.

2. Strategic Updates and Business Highlights

• Furnas Project: Released a maiden preliminary economic analysis (PEA) indicating a potential production of over 1.2 million tonnes of copper, 2 million ounces of gold, and 9 million ounces of silver over 24 years. The project has an after-tax NPV of approximately $2 billion and an IRR of over 27%.
• Operational Performance: Q4 marked the strongest operating quarter for Caraiba and Tucuma, with significant increases in mill throughput and copper production. Xavantina saw a 53% increase in production quarter-on-quarter.
• Exploration Plans: In 2026, Ero plans to complete an additional 50,000 meters of exploration drilling to enhance the Furnas project and improve economics through potential byproduct revenue initiatives.

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 due to mine sequencing.
• Xavantina Gold Production: Guidance for gold production at Xavantina is set at 40,000 to 50,000 ounces, with expectations for modest sales in Q1 due to the rainy season.
• Capital Allocation Strategy: Plans to focus on debt reduction and potential returns to shareholders once the net debt-to-EBITDA ratio falls below 1x.

4. Bad News, Challenges, or Points of Concern

• Operational Challenges: Unplanned downtime at Tucuma due to maintenance issues impacted Q4 results. The company faced increased transportation and port costs related to COP30 activities.
• Cost Pressures: C1 cash costs are expected to rise due to lower grades and additional maintenance costs at Tucuma, alongside a strong Brazilian Real (BRL) affecting overall costs.
• Rainy Season Impact: The rainy season is expected to limit operational efficiency and concentrate shipments, particularly affecting Q1 production and sales.

5. Notable Q&A Insights

• Gold Concentrate Sales: The company anticipates ramping up gold concentrate sales post-rainy season, with Q1 expected to be the softest quarter.
• Tucuma Maintenance: Maintenance for mill liner replacement was pulled into Q4, with no extended downtime planned for Q1.
• Furnas Drilling: The PEA included 28,000 meters of drilling from a total of 50,000 meters completed last year, with plans to convert inferred mineralization into measured and indicated resources.
• Capital Return Plans: Discussions are ongoing regarding potential capital returns to shareholders, contingent on achieving a net debt-to-EBITDA ratio below 1x and paying down the revolver.

Overall, Ero Copper demonstrated strong financial performance in Q4 2025, with significant operational improvements and strategic initiatives in place, although it faces challenges related to cost pressures and operational disruptions due to seasonal weather impacts.