Ero Copper (E0B) Q2 2026 Earnings Report

The call conveyed a broadly positive operational and financial momentum: strong quarter-on-quarter cash flow and EBITDA growth, meaningful deleveraging (net debt leverage down to ~0.8x), increased copper throughput and filtration progress at Tucumã, a sharp QoQ recovery in Xavantina gold production, and material progress on the Furnas drill program. Challenges include a slower Xavantina start pushing gold production toward the low end of guidance, sensitivity of reported unit costs to a stronger BRL and inflation (partially offset by hedges below the line), remaining revolver repayments, and some project timing uncertainty (Caraíba shaft). Overall, the positive operational improvements, cash generation and balance sheet repair outweigh the highlighted risks.

Ero reiterated it is positioned to meet full‑year copper guidance with stronger H2 production and sequentially lower consolidated C1 costs (Q2 copper production 17,315 tonnes at consolidated C1 $2.42/lb); Xavantina is expected to deliver materially higher mining rates, throughput and mine gold production in H2 (≈65% of full‑year mine gold in H2) though mine gold is now expected at the low end of prior guidance, with updated full‑year Xavantina mined gold C1 of $1,100–$1,350/oz and AISC of $2,200–$2,700/oz. Consolidated capex guidance was increased $10M to $285–$330M to include a new power line (potential incremental capex FX/inflation impact ~$20–$25M, largely offset by hedges); the hedge program protects ~70% of consolidated FY BRL exposure at an average floor of BRL 5.54, delivered $13M of realized gains in Q2 ($20M H1) and is expected to add another $20–$25M (full‑year ~$40–$45M) assuming BRL 5.10. Management estimates persistent currency/inflation could add ~ $0.10/lb to consolidated copper C1 and ~ $100/oz to Xavantina mined gold C1. Financially, Q2 cash flow from operations was ≈$138M and adjusted EBITDA $144M (H1 cash flow ≈$231M, H1 adj. EBITDA $269M), net debt was ≈$453M (down ~$38M in Q2 and ≈$100M over 18 months) with net‑debt/adj‑EBITDA ≈0.8x, liquidity ≈$182M (cash ≈$102M + revolver availability ≈$80M), and $60M repaid on the revolver in 2026 with ~$95M remaining.