Ero Copper (NYSE:ERO) executives highlighted record fourth-quarter revenue, improving operational performance across its three producing mines, and early-stage momentum at the company’s Furnas growth project during the company’s fourth-quarter and full-year 2025 earnings call.
Furnas PEA outlines long-life copper-gold-silver project
Chief Executive Officer Makko DeFilippo said the company recently released its maiden preliminary economic analysis (PEA) for the Furnas project, describing it as a “cornerstone asset” in Ero’s long-term growth strategy and emphasizing its capital intensity and economics.
At long-term consensus metal prices, management said the PEA delivers an after-tax net present value (NPV) of approximately $2 billion and an internal rate of return (IRR) of more than 27% on $1.3 billion of initial capital.
Looking ahead, DeFilippo said Ero plans to drill an additional 50,000 meters at Furnas in 2026, targeting extensions of high-grade mineralization around planned underground infrastructure. He also said the company is evaluating opportunities to strengthen project economics, including a magnetite recovery circuit to produce a magnetite concentrate and a gravity pre-concentration stage intended to enhance gold recoveries, which could increase byproduct revenue.
Operational performance improved into year-end
DeFilippo said Ero’s teams delivered sequential quarter improvements through 2025, with the fourth quarter representing the strongest operating period of the year at Caraíba and additional records at Tucumã.
- Caraíba: Fourth-quarter mill throughput reached nearly 1.2 million tons, up 18% from the third quarter and a record for the operation. Copper production increased 15% quarter-over-quarter, and C1 cash costs were $2.27 per pound.
- Tucumã: Copper production rose more than 22% quarter-over-quarter, also a record, as higher process grades helped offset an extended period of unplanned downtime in December. DeFilippo said the downtime stemmed from pulling forward first-quarter maintenance for an early mill liner replacement due to an OEM wear-part quality issue affecting multiple operations in the region. Fourth-quarter C1 cash costs were $1.75 per pound, including about $0.10 per pound tied to expensing the unamortized portion of liners.
- Xavantina: Production increased 53% quarter-over-quarter on higher grades and improved throughput as the mine began to realize benefits from transitioning to mechanized mining. DeFilippo said the company’s gold concentrate program contributed an incremental 15,000 ounces of gold in the fourth quarter, bringing total gold from Xavantina (mine production plus concentrate shipments) to nearly 20,000 ounces for the quarter and more than 50,000 ounces for the full year.
DeFilippo also pointed to consolidated safety performance, calling 2025 one of the company’s best years on record in that respect.
2026 guidance and project priorities
Management said 2026 guidance assumes fourth-quarter operating performance is sustained throughout the year. Ero is guiding consolidated copper production of 67,500 to 77,500 tons in 2026, reflecting year-over-year growth driven mainly by higher sustained plant throughput at Caraíba and Tucumã, partially offset by lower planned grades. DeFilippo said copper output is expected to be weighted to the second half due to mine sequencing and a modest increase in throughput through the year.
At Tucumã, DeFilippo said Ero is “well advanced” on adding additional tailings filtration equipment intended to unlock more throughput capacity, with equipment currently being manufactured and a potential operational benefit expected in the fourth quarter. He emphasized that the potential throughput benefit and associated capital spending are not included in 2026 guidance, citing a desire to focus on steady-state performance and the time between now and the fourth quarter. He added that, in the current metal price environment, the company expects payback on the investment in one to two quarters.
On a Q&A question, DeFilippo confirmed the filtration equipment has been ordered and said the early mill liner replacement pulled into the fourth quarter represented about 10 days of downtime and is “already been completed effectively for the year,” with no similar extended downtime planned in the first quarter beyond routine monthly planned downtime.
At Xavantina, Ero is guiding mine production of 40,000 to 50,000 ounces in 2026. DeFilippo said the first quarter is expected to be the softest due to mine sequencing and a tie-in of a major ventilation upgrade, including completion of a new raise bore to surface. Production is expected to be weighted to the second half. Gold concentrate sales are expected to continue, but management expects them to be “very modest” in the first quarter due to rainy-season constraints on drying stockpiled material.
In response to questions on concentrate shipment cadence, DeFilippo said the rainy season in Mato Grosso typically runs from November through March or April and called 2026 an “exceptionally rainy year” in Brazil. He said sales volumes should ramp “pretty aggressively” through the second and third quarters after a slow first quarter, and that nothing so far suggests the remaining unsampled portion of the stockpile has materially different grades than the sampled material.
Financial results: record revenue and deleveraging
Chief Financial Officer Wayne Drier said fourth-quarter financial results were driven by record copper concentrate sales, a 59% increase in gold doré sales, the commencement of gold concentrate sales, and stronger copper and gold prices. Quarterly revenue rose to a record $320 million, up $143 million from the third quarter.
Consolidated C1 cash costs per pound increased about 1.5% quarter-over-quarter, which Drier said was predominantly due to Tucumã, where higher transportation demurrage and port costs related to COP30 activities in Pará State added about $0.10 per pound to Tucumã’s C1 costs. Drier said Tucumã’s costs were also impacted by the accelerated amortization tied to the mill liner issue discussed by DeFilippo.
Gold C1 cash costs per ounce declined about 29% from the third quarter. Adjusted EBITDA was $186.7 million in the fourth quarter and $409.7 million for the full year. Adjusted net income attributable to owners of the company was $108.4 million for the quarter and $220.4 million for the year, or $1.04 and $2.12 per share, respectively.
Drier said liquidity at quarter-end was $150.4 million, including $105.4 million in cash and cash equivalents and $45 million of undrawn availability under the revolving credit facility. Net debt declined to about $502 million at year-end from $545 million at the end of the third quarter. The net debt leverage ratio improved to 1.2x at the end of the fourth quarter from 1.9x in the third quarter and 2.6x at the end of 2024.
Capital allocation: debt reduction first, then potential shareholder returns
Management said debt reduction and a return to shareholders are intended to be key elements of its midterm capital allocation strategy, supported by expected production growth in 2026 and additional cash flow from Xavantina’s gold concentrate sales. Drier said Ero had $155 million drawn on its revolver at December 31 and intends to pay it down fully in 2026. The company also said it aims to maintain a strong cash position and target a net debt to EBITDA ratio below 1x before commencing a return of capital program.
During Q&A, DeFilippo described the pathway toward capital returns as dependent on (1) getting net leverage below 1x, (2) paying down the revolver, and (3) continued discussions with top shareholders about structure and timing. He also reiterated that Furnas remains “a few years out,” and said Ero has the appetite to advance the project as quickly as possible, while continuing work on a pre-feasibility study and permitting.
As a final update, DeFilippo said the company plans to host a Capital Markets Day in mid-September in São Paulo, with an in-person and virtual option, and that details would be posted to Ero’s website.
About Ero Copper (NYSE:ERO)
Ero Copper Corp (NYSE: ERO) is a Canada-based natural resource company focused on the production of copper concentrate from its Brazilian operations. The company’s flagship asset is the Vale do Curaçá mining complex in the state of Bahia, which includes multiple underground mines and a centralized processing facility. Ero Copper’s primary product is copper concentrate, which is sold to smelters and end users around the world.
The Vale do Curaçá complex comprises the Pilar and Surubim underground mines, supported by a fully integrated processing plant.
