Ero Copper Q2 2025 slides: Production surges as Tucumã achieves commercial milestone

Introduction & Market Context

Ero Copper Corp (TSX:ERO) presented its Q2 2025 earnings results on August 1, 2025, highlighting significant quarter-over-quarter improvements in production and financial metrics. The company’s stock closed at $13.52 on July 31, representing a 4.16% gain, and has shown a notable recovery from its 52-week low of $9.30, though still well below its 52-week high of $23.40.

The Q2 results mark a substantial improvement from the previous quarter when Ero Copper missed revenue forecasts, suggesting that operational enhancements and the ramp-up of the Tucumã project are beginning to yield positive results.

Quarterly Performance Highlights

Ero Copper reported consolidated copper production of 15,513 tonnes and gold production of 7,743 ounces for Q2 2025. The company achieved adjusted EBITDA of $82.7 million and adjusted net income per share of $0.46, representing a 31% increase from the $0.35 reported in Q1 2025.

As shown in the following comprehensive overview of key metrics:

Cash flow from operations reached $90.3 million, a significant improvement from $65 million in the previous quarter. The company maintained a solid liquidity position of $113.3 million while reducing its net debt leverage ratio to 2.1x from 2.4x at the end of Q1 2025.

Operational Updates

Caraíba Operations

Caraíba’s copper production increased approximately 25% quarter-over-quarter to 9,200 tonnes, while C1 cash costs decreased by 7% to $2.07/lb. This improvement was driven by operational enhancements including shorter haul distances, more effective fleet management, optimized maintenance routines, and improved water management systems that resulted in a 50% reduction in unplanned downtime.

The following chart illustrates Caraíba’s production metrics over the past five quarters:

Management highlighted the successful mobilization of a second underground development contractor and expects sequential increases in mined and processed volumes in the second half of 2025.

Tucumã Operation

A significant milestone was achieved at Tucumã with commercial production declared on July 1, 2025. Copper production increased approximately 25% quarter-over-quarter to 6,400 tonnes, with throughput levels exceeding 75% of design capacity in the second half of June.

The following chart demonstrates Tucumã’s production ramp-up:

The operation shows a steady increase in tonnes processed from 111,000 tonnes in Q3 2024 to 419,000 tonnes in Q2 2025, though grades processed declined from 2.18% in Q1 2025 to 1.74% in Q2 2025.

Xavantina Operations

Gold production at Xavantina increased 17% quarter-over-quarter to 7,700 ounces, though C1 cash costs remained elevated at $1,115/oz and AISC at $2,234/oz. Management noted that operations were temporarily impacted by the transition to mechanized mining.

The following chart shows Xavantina’s performance metrics:

Financial Performance

Ero Copper’s financial metrics showed consistent improvement across all key indicators in Q2 2025. Cash flow from operations has demonstrated particularly strong growth, increasing from $15 million in Q2 2024 to $90 million in Q2 2025.

The following chart illustrates the company’s financial performance trends:

The company maintained a strong balance sheet with total liquidity of $113 million at June 30, 2025, consisting of $45 million in cash and cash equivalents and $68 million available under its senior secured revolving credit facility. The net debt leverage ratio improved to 2.1x from 2.4x in the previous quarter.

The following chart details the company’s balance sheet and liquidity position:

Revised 2025 Guidance

Despite the operational improvements, Ero Copper revised its 2025 guidance for Tucumã and Xavantina operations. Tucumã’s production guidance was lowered to 30.0-37.5 kt Cu from the original 37.5-42.5 kt Cu, while C1 cash cost guidance was increased slightly to $1.10-$1.30/lb from $1.05-$1.25/lb.

Similarly, Xavantina’s gold production guidance was reduced to 40-50 koz Au from the original 50-60 koz Au, with C1 cash cost guidance increased to $850-$1,000/oz from $650-$800/oz.

The following chart presents the updated 2025 guidance:

Caraíba’s guidance remained unchanged at 37.5-42.5 kt Cu production with C1 cash costs of $2.15-$2.35/lb.

Strategic Initiatives & Outlook

Ero Copper outlined four near-term objectives: achieving commercial production at Tucumã (now accomplished), deleveraging the balance sheet, advancing long-term growth initiatives, and initiating returns to shareholders.

The company completed the Furnas Phase 1 Drill Program in July 2025, advancing its long-term growth initiatives. Management emphasized operational improvements at Caraíba, including fleet management optimization and enhanced maintenance routines, which are expected to continue driving performance improvements.

Looking ahead, Ero Copper expects sequential production increases at both Caraíba and Tucumã in the second half of 2025, despite the revised annual guidance. The company’s focus on deleveraging positions it to potentially initiate shareholder returns as previously indicated in its strategic objectives.

While the revised guidance suggests some operational challenges, particularly at Xavantina, the significant quarter-over-quarter improvements in production and financial metrics indicate that the company’s operational strategies are gaining traction as it continues to ramp up production at its key assets.

Full presentation:

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