Ero Copper Corp. (ERO) Q3 2026 Earnings Call Transcript

Operator: Thank you for standing by. This is the conference operator. Welcome to the Arrow Copper Third Quarter 26 Operating and Financial Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Farooq, VP, Investor Relations. Please go ahead.

Farooq Hamed: Thank you, operator. Good morning, and welcome to Arrow Copper's third quarter earnings call. Our operating and financial results were released yesterday afternoon and are available on our website. Along with our financial statements and MD and A for the 3 and 9 months ended 09/30/2026. A corresponding earnings presentation can be downloaded directly from the webcast and is also available in the Presentations section of our website. Joining me on the call today are Makko DeFilippo, President and Chief Executive Officer Wayne Drier, Executive Vice President and Chief Financial Officer Gelson da Silva Batista, Executive Vice President and Chief Operating Officer and Courtney R. Lynn, Executive Vice President, External Affairs and Strategy. Before we begin, I would like to remind everyone that today's discussion will include forward looking statements which involve risks and uncertainties that may cause actual results to differ materially. For a detailed discussion of these risks, their potential impact on our business, please refer to our most recent annual information form available on our website as well as on SEDAR and EDGAR. Unless otherwise noted, all figures discussed today are in U. S. Dollars. With that, I will now turn the call over to Makko DeFilippo.

Makko DeFilippo: Thank you, Farooq, and good morning, everyone. As always, we will keep today's prepared remarks short to allow sufficient time for Q&A. Before turning to the quarter, I do want to take a step back for a moment. Despite recent market volatility and lingering questions about the pace of AI in infrastructure spending, the underlying value of high quality copper production strong free cash flow generation a tangible organic growth pipeline, has never been more clear. This brings me to what I hope will be the 4 key takeaways from today's call. First, our operational performance is translating directly into cash generation and balance sheet strength. This year, we have applied $0.97 of every available dollar towards debt reduction. Our commitment to balance sheet has resulted in a net debt reduction of approximately $100 million in Q3 alone. For Arrow, this means greater flexibility to continue advancing our organic growth projects including Furnas. Second, our cash operating margins remain strong. Cost savings from our 1 Arrow initiative and a successful foreign exchange hedge strategy while working in tandem, as intended to offset the impact of inflationary pressures we are seeing at Arrow and throughout the mining sector. Third, our copper business continues to perform well, and we remain well positioned to achieve our full year copper production guidance. Fourth, the gold concentrate program we launched at Xavantina in late 25 has provided us with real operational and commercial flexibility this year. We now have assays for the in process material we expect to sell over the next 8 weeks And based on those results, we expect a combined 75 thousand to 80 thousand ounces of gold from Xavantina this year, a record for the company by any measure. With those takeaways in mind, let me now turn to the quarter. As you have seen, we delivered record financial performance this quarter, and year to date establishing new high watermarks across all key financial metrics. Our results reflect progress. In particular, I would point to the sequential quarterly increases in plant throughput at our copper operations Both Caraíba and Tucumã are set to achieve record annual throughput volumes this year. Operating momentum across our business paired with metal price tailwinds contributed to record cash flow from operations approximately $191 million and adjusted EBITDA of over $200 million both up nearly 40% quarter on quarter. An impressive 260% since our third quarter of last year. On a year to date basis, we generated over $420 million in cash flow from operations and $470 million in adjusted EBITDA. Up approximately 60%, 110%, respectively, compared to this time last year. Against this backdrop of improving operational performance, should be no surprise that this was our seventh consecutive quarter of accelerated de levering. When I look back and compare our vastly improved net debt leverage ratio of 0.5x in Q3 to our peak of 2.6x at the start of 2025 cannot help but be proud of our leadership team's commitment and focus to this objective. Turning to our operations themselves, our copper business produced 18.3 thousand tonnes of copper during the third quarter at a consolidated C1 cash cost of just over $2.50 per pound. Throughput volumes at Cariba and Tucumar remain strong during Q3, increasing quarter on quarter by 8%, 14%, respectively. We continue to expect Q4 to be the strongest operating quarter of the year, and are on track to achieve full year copper production guidance. On the cost side of the equation, since the onset of the BRL comp we have pointed to a potential $0.10/lb impact on a reported cash costs as a result of the inflationary pressures we are seeing and the flow through of a stronger BRL on our functional currency. We have now reflected that in our consolidated C1 cash cost guidance for the year. Offsetting this from a cash margin perspective, through the first 9 months of the year, we have generated realized gains of $30 million our foreign exchange hedge book. This protection is in place to protect our business against exactly the type of environment we have operated in during the first 9 months of this year. Wayne will speak to how we as management view this margin protection in the context of our adjusted C1 cash costs in more detail. At Xavantina, mine performance was just short of 8 thousand oz, and objectively below our expectations in Q3, total gold produced and recovered grew by 23% quarter on quarter to a record of approximately 25 thousand ounces. Increasing production from historic concentrates was a key operational focus for us this year given the slow start to mining operations in the first half and at sub-$750 per ounce of all in sustaining costs, is perhaps no surprise we prioritize the sale of this material. The investments we made during the first half of the year enhance our drying capacity of historic concentrates are clearly paying off as we enter the second half of the year. As A Result, We Expect Total Gold From Xavantina of between 75 thousand to 80 thousand ounces this year. Transitioning into our growth pipeline at the Furnas project, we completed the 45 thousand-meter Phase III drill program in August completing the entirety of the exploration component of the earning agreement with Vale Base Metals, more than 2 years ahead of schedule. Drilling results have consistently demonstrated high grade continuity within the deposit extensions at depth and along strike. We expect to provide the full results of the Phase 3 program prior to year end. Parallel, we are moving forward across all technical work streams to support the projects pre feasibility study, and we expect to publish this in 2027. The work we have done and are continuing to do strengthen our operating performance and improve operating margins for our 1 Arrow program are translating into strong free cash flow generation and record financial performance. With that, I will turn the call over to Wayne.

Gelson da Silva Batista: Thank you, Makko, and good morning, everyone. As Makko outlined, we had a strong metal production in Q3 and our expected improved performance across all 3 operations in Q4. I will provide some additional detail on the underlying operation drivers and our expectations for the remaining of the year. At Caraíba, copper production totaled 9.39 thousand tonnes. During the quarter, at C1 cash costs of $2.89/lb produced Production increased by 12% over the previous quarter driven by higher plant throughput. Grades and recoveries. Costs in the quarter were impacted by accelerated waste stripping costs at Surubim open pit and elevated road fleet maintenance costs. Both of these cost centers were heavily influenced by the elevated diesel price environment in Q3. Looking ahead, we expect stronger production at Caraíba in Q4 driven by higher mined and processed grades. Coming from deeper high grade benches at Surubim combined with contributions from the Pilar underground mine. Positioning us well to achieve full year production guidance. Q1 cash costs are expected to decline in Q4 with increased production volumes. At Tucumã, copper production totaled 8.96 thousand tonnes at C1 cash costs of $2.12/lb produced. Production and costs were similar to the prior quarter, as a planned decrease in process grades was offset by 14% increase in plant throughput. Recoveries were impacted in Q3 due to operating operational adjustments that were required coming out of a mill liner replacement and maintenance shutdown. This was a temporary impact which Marcos spoke to our spoke to on our Q2 conference call. Looking to Q4, we expect production to benefit from higher throughput rates and increased metallurgical recoveries. C1 cash costs are expected to decline sequentially supporting our Montaigne full year production and cost guidance for Tucuman. The 3 new filters we are installing were delivered to site in late Q3 and will remain on schedule to finalize their installation and commissioning. Prior to year end. At Xavantina, Mine gold production totaled 7.84 thousand oz at C1 cash costs of $1.89 thousand/oz produced in Q3. Mine and process grades increased as expected. However, as Makko noted, operational delays in assets in key high grade stopes resulted in lower grades processed during the war time. Looking ahead, we expect MIND and processed tonnage and grades to improve in the fourth quarter. This outlook is supported by all time record development led achieved over the past few months. Gold recovered from the historic stockpiles increased by 47% from the previous quarter to 17.4 thousand oz at C1 cash costs of $621/oz. As the operations benefited from the mobile field depress and inducer dry air commission. At the end of Q2. Looking to quarter 4, further increase in throughput volumes along with an improved grade profile we expect will translate directly into lower C1 cash costs. We expect historic concentrate volumes to remain robust based on the volume shipped and in process so far through October. As Marco mentioned. I will now turn the call over to Wayne walk through our financial results.

Wayne Drier: Thank you, Gelson, and good morning all. Our third quarter financial results reflected a 10%, 47% quarter on quarter increase in copper and gold sales volumes respectively. Coupled with strong metal prices. These factors together drove quarterly revenue to $348 million up 22% from the second quarter. As Makko noted, we achieved record quarterly cash flow from operations which increased to $191 million while adjusted EBITDA increased to a record of $201 million both measures up 39% sequentially. The strong financial performance allowed us to accelerate debt reduction with repayments of $70 million in the quarter against our revolving credit facility, bringing total repayments in 2026 to $105 million. As a result, net debt declined by $99 million during Q3 to approximately $353 million, while the last 12-month adjusted EBITDA increased to $657 million. Together, these factors reduced our net leverage our net debt leverage ratio to approximately 0.5x. Our liquidity position also improved during the period, increasing $82 million to $264 million including $114 million in cash and cash equivalents $150 million of availability under our revolver. Turning to foreign exchange. A stronger real continued to adversely impact our reported operating costs and capital expenditures during the quarter. However, on a cash basis, our hedge program worked as intended. Generating $10 million of realized gains in the quarter and bringing the total foreign exchange gains through the first 3 quarters to $30 million While these gains mitigate the cash impact of the stronger real, they are not included in our reported C1 cash costs. To better capture how we think about our cash margins at Ero, if we were to apply the year to date $30 million of realized gains to the operations on a pro rata basis, This would translate to a $0.15/lb reduction in consolidated copper C1 cash costs and a $50/oz reduction to Xavantina's C1 cash costs over the full year. This is illustrated on Slide 17 of the webcast presentation. With that, I will pass the call back to Makko for some closing remarks.

Makko DeFilippo: Thank you, Wayne. Before we open the line for questions, let me bring everyone back to the full points I opened with. First, we are turning operating performance into cash generation. We have put $0.97 of every dollar available towards debt reduction this year, including approximately $100 million of net debt reduction in Q3 alone. Second, our copper business is performing well and we remain on track to meet our full year production guidance. Third, the gold concentrate program at Xavantina has us on track approximately 75 thousand to 80 thousand ounces of gold this year, a record for the company. Fourth, our 1 Arrow program and our BRL hedge strategy are working in tandem and as intended maintain strong cash operating margins despite the inflationary pressures we are seeing across the sector. Finally, looking a little bit further ahead to Furnas milestones, we remain on track to deliver the pre feasibility study in 2027. Thank you for joining us this morning. Operator, we are ready for questions.

Operator: Thank you. We will now begin the question and answer session. First question comes from Fahad Tariq with Jefferies. Please go ahead.

Fahad Tariq: Hi, thanks for taking my questions. With the leverage ratio and net debt to EBITDA now at 0.5x, can you talk a little bit about shareholder return program? When we should be expecting some sort of announcement? And just how the management team is thinking about shareholder returns? Thanks.

Makko DeFilippo: Yes. Thanks for the question. Look, think I covered it fairly extensively on our Capital Markets Day in September in Sao Paulo. We are well on that journey We are below the leverage ratio where we wanted to be We are on track to repay the revolver. And certainly with the current price environment, the expectation is that we will be repaid during Q4. We had a very active discussion with our board. And around what that shareholder return framework will look like. And I think you just have to see when we are ready to put that out to the market.

Fahad Tariq: Okay. And then just on the Brazilian real, I mean, it is weakened pretty substantially over the past couple of weeks since the election. What how should we be thinking about the effect of that in the fourth quarter as it pertains to the hedges and the floor price in the second half? Along with the operating cost impact.

Makko DeFilippo: Like, does it net out? Yeah. I will take that question as well. Obviously, we have already in place our hedge book for 2026, and so we are fairly well covered. For Q4. That obviously does not cover the entire amount of OpEx and CapEx. So certainly, some of these tailwinds we have seen following the election will help but I think if we look through to 2027, we are very. You know, we actively manage our book in a in a in a proactive manner. We have taken advantage of some of this weakening to put in place some hedges for 2027. So we are starting to build up 10/27 slot.

Wayne Drier: Yes, maybe just to answer that question, As we think about Q4, I think it is important to note that the way that our hedge strategy works is, you know, we protect the floor in this case, for Q4 of 5.54 So that is our protection level. We participate in the exposure of the BRL all the way up to our ceiling, which is 6.42. And that showed on Slide 8 of the webcast presentation. So when you think about where we were the first 9 months of the year versus where we are today, Should we see continued weakness in the BRL? We will participate in that up to our cap of 6.42.

Operator: The next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi, good morning. Brett to see the cash flow generation. I had a couple of questions on Xavantina. First of all, I mean, the grade was quite low in Q3. I am wondering if you have now seen the turn in Q4 in terms of a grade that is say, closer to reserve grade?

Makko DeFilippo: Yeah. Look, I will jump in, Orest, and then Gelson can comment on this. We expect Q4 to be the strongest quarter of the year. I think some of the key high-grade stopes, as Gelson pointed to in the conference call, that we had planned coming in late Q3 were shifted a bit. So those are coming in Q4. I mean, I think, Orest, it is important to keep in mind that when we think about reserve grade, you know, that is an average over life of mine. We obviously. Every month, every quarter, we mine stopes that are well above that range. In some instances as we saw the last couple of years and then some that are lower. it is obviously a blended grade and we think about reserves, but what I can tell you is that you know, looking at results here, we do see grades climbing as expected. it is well supported by our infill drill program and channel sampling that we have for Q4. So we are feeling pretty good about the steps that we are into now and get to them in Q4.

Gelson da Silva Batista: Gelson, if you have got anything? Other-- No. Thanks, Orest, for the call. I think Makko mentioned well there. Well, the stopes that we got in and into the squad and then back on track. I have no further. Yeah.

Makko DeFilippo: Orest, you know, we Gelson mentioned this too. At Xavantina, our real priority for us Coming out of the first half, obviously, we are behind where we hope to be in terms of development in mine performance. I think the good leading indicator for us Gelson mentioned there, we achieved record development in the last 3 months, all time historic record development levels. So, you know, we are certainly not out the woods yet. I think it is too early to declare victory, but based on, you know, achieving the achieving the development that we. You know, ahead of being ahead of development being in some high-grade stopes and seeing that flow through, I think is a strong indicator. For where we think Q4 is heading.

Orest Wowkodaw: Thank you for that. And just as a follow-up, you are guiding to, I believe 15 thousand oz of gold from the concentrate sales in Q4. Why are you thinking it is going to be lower than Q3 Is that are you expecting sort of a pickup in the rainy season late in the year? Or I am just wondering if that is a conservative estimate or is there something constraining volume here in Q4?

Makko DeFilippo: Yes. Look, obviously, we have made big investments in the drying infrastructure, and we saw that flow through in Q3. That did coincide with a seasonal dry period, which obviously helps that dryer perform well. I would say the reality, Orest, is that our approach in the concentrates has been consistent. We can Only provide forward looking information for the information that we have available on hand and what we have today in dried inventory or drying inventory is that 9 thousand oz? Obviously, we expect to add more to that, but the 15 thousand is what we have assayed and available today. And I would say that includes also over 6 thousand ounces were invoiced in October. Right. So I think that is an important thing to keep in mind as I think about Q4.

Orest Wowkodaw: Okay, thank you for that. And just finally, if I could just switch gears for a second. Can you give us an update on the shaft sinking project at Caraíba? In terms of current expectation for completion and how much CapEx is remaining on the project?

Makko DeFilippo: Yeah, sure. I will jump in here and Gelson can pick up. If I miss anything there. So as of right now, we are about 1.25 thousand meters complete. That means that we have got about 300 meters to go if you follow. We are that progress has been as we talked about on our Capital Markets Day. We still expect to complete that shaft in Q1 as we outlined in September. At our Capital Markets Day, that is an important metric for us. As I said, you know, when we think about the timing and completion of shaft, go back to some of the commentary from Q2, I want to remind everyone that the last shaft that was built in Kilar was in 1.99 thousand 40 years ago. So we are we are certainly not trying to solve for a specific month next year. This investment will support the operation for hopefully decades to come. On the CapEx side, yeah, look, we have were it is a $370 million investment at the end of Q3. So about $300 million. So $70 million to go. We expect to spend a good chunk of that here in Q4 with some balance in through next year.

Operator: The next question comes from Guilherme Rosito with Bank of America. Please go ahead.

Guilherme Rosito: All right. Thank you for taking my questions. Good morning, everyone. So I have 2 on my side. Wayne if you could begin with an update on Tucumã, how are the filters coming along? And what are you expecting for Wayne if you can give us some color for 2027 versus what you guys are probably producing 2026 or how 4Q is coming along? And then my second is also on Xavantina. I know you guys comment on that a bit, but if we look at the previous 3-year production outlook that implied 50 thousand to 60 thousand ounces in Xavantina and with the performance we had year to date especially in terms of grades. It seems a bit more challenging than it would have seemed in the early in the year, right? So my question is if how are you guys thinking about the 3 year production outlook? Is there any chance you guys seeing it could be revised lower? To hear your thoughts on that. Thank you.

Gelson da Silva Batista: Thank you. Thank you for your question, Guilherme. it is Gelson here. In Tucumã, we have got all the filters on-site. They arrived in last quarter late last quarter. Everything is on track. For completion by the year end. And, we expect, as we mentioned before, to come out of 2026 at 4 million per annum as we planned before. So the filters are on track. And team is working there to make sure that we can complete them on time.

Makko DeFilippo: Yeah. And I think just maybe touching on that point, Guilherme, Gelson and I speak about this a lot. And if you look at their performance, we are foregoing out the additional filtration capacity, huge progress being made there reaching that above 800 thousand tonnes a quarter. So we are, you know, we are all on our way. And as Gelson said, expect to exit the year there at that 4 million tonne a year rate, which is which is where we expect to be for 2027. Certainly to the question on Xavantina. I would maybe point you in a slightly different direction there. I think if you look at our even our adjusted guidance, obviously, which came down versus our expectations in the early part of the year, that really reflects a delay in ventilation cooling development. If you look at the Q4 in isolation, I think that is a better representation of where what that asset is capable of doing. With obviously the transition that happened this year. So looking at Q4, and multiplying by 4, I think it is probably a better representation than looking at the full year 2026 especially the first 9 months. And getting to that range. So I would say that you know, when we think about Xavantina, I think Q4 is more representative of what we think we can do both in terms of throughput volumes, mine performance, throughput volumes and also processed grade.

Guilherme Rosito: All right. Thank you.

Operator: The next question comes from Matthew Murphy with Bradesco BBI. Please go ahead.

Matteis: Yes. Thank you. Good morning, everyone. Thanks for taking my questions. 2 questions on my side. First, at Caraíba, you mentioned that we should see production improving in the last quarter driven by higher grades. I am just wondering how should we expect these grades to extend into 2027? And could you help us understand what will be a reasonable production mix between Pilar, Vermelhos and Surubim next year? And then my second question on Furnas. I mean, you have completed the Phase 3 drilling program during the quarter. Which is, you know, roughly 2 years ahead of the original schedule. Does that give you room to bring forward an eventual FID? And what are the key milestones you still need to work through? And then maybe just 1 more on the PFS. Which you expect to complete in 2027. Can you give us a sense of whether that is more likely to be early or late in the year? Those are my 2 questions. Thank you.

Makko DeFilippo: Yeah. Perfect. Lots to unpack there. So if I miss something, I apologize. Just ask it again. But starting with the first question, on Caraíba, Yeah. Look, We have been, I think, consistent you know, with the main contributor to higher grades this year from Caraíba is a mix of these lower levels, these lower benches in Surubim. We have been mining at Surubim for the last couple of years, really, and when you look at the investment the last couple years, the strength of that investment is really supported by these lower benches, right? They are about 1% copper versus where we were a few years ago. it is a very high grade open pit operation, at least the lower levels of Surubim. We do expect to see some of that into Q4 with a bit of a delay there. In Q3, we expect some of that material to roll forward into Q1 of next year. But we provided in our capital market today, we gave more clarity about the relative mix and how we see Serbian transitioning into N8 for next year and over the next couple of years. So would point you to the Capital Markets Day for that allocation on the grade on the mix of relative sources, but we do see this transition in 2027 from Surubim into N8 and, again, you know, a little bit of a great profile difference there, particularly because the lower benches that we are mining now are quite high grade from an open pit perspective at Caraíba. Furnas, just to touch on a couple of questions you asked there. So 1, 2 years ahead of schedule. And I think there is there is very important milestones The 1 that we that we are, you know, able to control directly is the effort put on drilling. We think that with the quality of project that Furnas is, getting well ahead on drilling is 1 of the best places to put growth capital towards. So we have obviously done that. Right? 2 years ahead of schedule as you pointed to. In terms of pulling forward FID, we still have a couple of levels of engineering to go. Including the PFS here next year, and then obviously a feasibility study I would say let's get through the pre feasibility study and the work that we are doing now, and then have a discussion sometime next year about that. The reality, though, is, as I have said many times, we still have to go through the permitting process. We are obviously familiar with what that entails. Having done that for Tucumã, quite recently. So that is another key parallel work stream that is happening in conjunction with all the drilling and all the engineering work. So we have a couple of key milestones on permitting that we are advancing this year. Those are those are going well as we have talked about in our Capital Markets Day. As well. And in terms of timing of the pre feasibility study, I would say, look, yeah, we are going as fast as we can. If you follow the milestone agreement, we have until September to finalize that. Obviously, we are we continue to work as fast as possible to get that done. But I would say September at the latest, given the timeline as outlined in the earnings agreement.

Matthew Murphy: that is very good color. Thank you. Thanks, Makko.

Operator: The next question comes from Ricardo Monagalia with Banco Safra. please go ahead.

Ricardo: Hello, guys. Good morning. Thank you for taking my questions. I have 2. First, on Tucumã, just a quick follow-up. Throughput rows and that is great. But recoveries fell a bit short of our estimates. So could you give us some color on what drove it? And maybe how confident are you on reaching that high 80s or low 90s level?

Makko DeFilippo: Yes, perfect. So thanks for the question. We have spoken about this on our Q2 conference call, right? We did see coming out of right at the end of Q2 we had a mill reline and a major maintenance period that was successfully completed. We did, however, see an impact on recovery coming out of that. There was operational adjustments that needed to be made largely around liberation side that impacted the recoveries for Q3. That was early in the quarter. Throughout the quarter, we did see an increase in recovery. And obviously, that supports kind of where we think we are going to be through the balance of that year as Justin mentioned improving recoveries. Into the, you know, into the highest range. I would say that you know, keep in mind that recoveries are a function of grade. So there is a grade recovery curve at Tucumã as with all copper flotation operations. And so, we expect strong recoveries in Q4 over time is obviously a relationship to grade and we have got a number of initiatives to help improve recovery as we go forward. But again, I would say that the read through on Q3 is really a 1 off improvement coming or 1 off impact coming out of that maintenance period. Until the operational adjustments that we had to make to improve the circuit. Again, with higher throughput volumes during the period as well.

Ricardo: Thank you, Michael. Very clear. My second question on corporate G and A. G and A in the operations were fairly in line with what we expected, but corporate G and A bit higher. And growing, like, 30% year-over-year. So just wanted to understand, what could we consider as a 1 off and maybe what run rate do you think we should model for the upcoming quarters and maybe 2027?

Wayne Drier: Yeah, good question. The change in from Q2 to Q3 was about $4 million is actually entirely related to SAP implementation project, which is underway. So right now, we are basically instituting SAP HANA, which is a cloud based ERP system through the enterprise. Unfortunately, the new. The rules. The IFRS rules under cloud based system do not allow us to capitalize that much like legacy ERP systems. And so those costs are being expensed through the implementation And so I think you can expect to see that amount for the next 2 quarters 2 to 3 quarters. We expect implementation to be done by Q2. But the run rate, certainly, if you look at Q1, Q2, that is our typical run rate. The change is simply related to the SAP implementation. Right. Thanks, Wayne. And congrats on the results.

Operator: The next question comes from Stefan Ioannou with ATB Cormark. Please go ahead.

Stefan Ioannou: I am not sure if I maybe missed it earlier, but just maybe when we were down on-site, I guess, a month or so ago, at Xavantina, just wondering if the outlook for the concentrate that will be still coming out of the ground, say through the middle of next year? Or is there any additional color on sort of the outlook over the coming quarters for what the gold in concentrate production might look like?

Makko DeFilippo: And we do not have a. We do not have an outlook beyond Q4. it is a good question. I think the reality there is as outlined, we comfortable with the 8 weeks that we have. All the material's been assayed and is in an inventory or, you know, drying process. now. To go beyond that, obviously, difficult you know, difficult to provide any information on given the lack of samples there as we have discussed you know, a few times here. I do think that there is volume remaining. We are obviously prioritizing the extraction sale of that material, particularly in this gold price environment. Again, as I mentioned, you know, $750 all-in sustaining cost Probably no surprise while we are doing that. But I think, you know, stay tuned. We will consider reconcile some of the what is what is remaining on the balance there. But I think, you know, looking at the next that material continuing for the next couple of quarters into 2027 is not unreasonable. Know, unreasonable timeline. Obviously, cannot speak to the grades. Yeah. That are in there because we do not know. But I think it is reasonable to assume that we will we will have additional material remaining from which to sell over the next couple of quarters.

Stefan Ioannou: Okay. I mean, I guess the simplest-- simplistically is it really just a function of the fact that it is obviously underwater, so it is hard to really guesstimate or estimate how many times you actually still have. Right? Yeah. In order to get a representative sample, we would have to pump all that material out Yeah. And dry it. And if we are going to do that, then we might as well sell it So yeah. So the reality is that we just will not be able to sample that material. Until it is in the drying process as we saw in Q4. Okay. Perfect. Thanks very much, guys.

Operator: The next question comes from Rodrigo Fidelis with BTG. Please go ahead.

Rodrigo: Hello. Good morning, guys. Good morning, all. 2 questions on my side. The first 1, could you give us some updates? how are the updated Technical reports for the 3 current mines evolving right now? So since the last 1, Ero has made meaningful development in operations, brought forward initiatives, We have new metal prices since then. So what do you expect from these studies? If there is a planned timeline, when you plan to release them? If you could give us an outlook and what you expect would be very helpful.

Makko DeFilippo: Yeah. Good question. Again, had this question, particularly on Tucumã Last quarter. We do expect to put out an updated technical report for Tucumã out this year. that is in the late stages here. So stay tuned. That will be before year end. We will continue with our normal reporting process for Caraíba and Xavantina. So you know, on this call, we will not give a steer as to what we are seeing there. Obviously, metal prices being where they are at it is given us a good opportunity to kind of reevaluate those plans and make some optimizations. But I would say the focus for us is still on margin. So yeah, stay tuned. We will have that discussion later this year.

Rodrigo: Okay, perfect. Thanks for the update. My second question for Makko and the team. Just how do you see the equity story until 2020 before Furnas, right? So we have been seeing many brownfield initiatives, Ero's generating cash, deleveraging in a fast pace, So just in a broader picture, in terms of operations, projects, shareholders return, how do you see the company until 2029?

Makko DeFilippo: Yes, it is a good question. Thanks for that. I think as I have said many times, the investment case for high quality assets in copper ones that are generating significant amount of cash flow in this environment. Certainly, I think deserves attention. Obviously leveraging our assets and the strength of our balance sheet into what we think is truly an incredible growth project in Furnas and setting up a business for us to execute on that. it is something that we spend a lot of time thinking about. As well as advancing some of the exploration programs in our portfolio. I think what differentiates Ero in this environment from perhaps I do not want to say the rest of the sector. I think that is too broad of a brush, but certainly some of our peers we are at the tail end of what has been a multiyear, a very intensive capital intensive phase. We are seeing the rest of We have a few years until we embark on our next growth asset. We think that sets up our business very well to invest not only in the future growth that we have in Furnas, but a couple of organic growth drivers we have around our operations as we spoke to in detail in our Capital Markets Day. But it is an exciting time, obviously, to see the effort that we have put into the operations into value drivers like the concentrate sales program. And obviously, the 1 arrow initiative that we have been driving compared to our risk mitigation strategy in the currency I think, is all setting us up well. To position the company to execute on our organic growth pipeline, Furnas, add additional value through some of our exploration programs. And brownfield development projects that we spoke about on Capital Markets Day. And yeah, I have a strong balance sheet on top of that. So our priorities in the short term, I think, Wayne alluded to, when I think short term you know, next quarter, obviously, we want to pay down the balance of our revolver. That is a top priority for us as a team. it is something that we committed to all of our shareholders back in 2025. And I think collectively very pleased to see that on the near term horizon. that is very clear. Thanks for the update.

Operator: The next question comes from Anita Soni with CIBC World Markets. Please go ahead.

Anita Soni: Hi, good morning. I am just I apologize if this has been asked, but I just wanted to circle back to Xavantina. You mentioned that if we looked at Q4 as a run rate, that would be more indicative of what it could do in 2027. Did you give the parameters around what you are seeing for Q4? I might have missed that.

Makko DeFilippo: You know, we-- but I think we just did. On grade. Yeah. Yeah. Sorry. Go ahead. If you just look at the, if you just look at sort of the midpoint of our guidance, I was obviously, it still implies a pretty big step up in operational performance there. I think the question is, how do you see yourself to the 50 thousand-ounce rate you know, plus range. Obviously, I think looking at the full year of 2026, and multiplying that you know, looking at the first 9 months and saying, well, you know, that is representative of what the asset could do. I do not think it is fair. Point to what we expect to do in Q4. I mean from an operational perspective, we talked about this in our Capital Markets Day, and if you look at where we expect to be, we are sort of triangulating into the 20 thousand- to 25 thousand- ton a month range. From the mine and plant. Think, you know, we saw very close to those levels in Q3. I think the normalized value is about 19 thousand/month. So we did see the mine come back as Gelson alluded to. Impact there was not great as we beat delays in access to some of the really you know, key high-grade stopes that we expect at the end of quarter and those are obviously transitioning to into Q4 here. So we did not provide specific parameters. It was more of an implied mathematical extrapolation based on the input of our guidance. And where we are going for the first 9 months.

Anita Soni: Sure. And then at Caraíba, I just wanted to ask, in terms of the tonnage. So it looks like you have kind of ramped up to that, I think, with the capital markets they said, kind of a 4.5 to 4.7 million ton per annum sustained throughput and you are pretty close to that this quarter, if I am doing the math right. So do you expect that could be sustained in 2027 at this stage? Or is there something that I might be missing in terms of additional tie ins or other work that needs to be done in 2027 to sustain that rate?

Makko DeFilippo: No. We think that is sustainable. Obviously, you know, from time to time, we obviously do have planned shutdowns that will impact that. On a quarterly basis. But nothing. No major tie ins. I think the debottlenecking work that the team did, it was led by Gelson here. I think it showed up this year sequential throughput improvement. And we think that pace is representative of what we can do. I said, notwithstanding the normal downtime for maintenance in the year, but pretty solid performance from that operation, given where we were just a few years ago. Okay, thank you. That is it for my questions.

Operator: We have a follow-up question from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi. Thanks for the follow-up. Just a question clarification question, Makko. You mentioned there is a tech report update coming for Tucumã before year end. Is that going to be only updated like reserves resources or should we or can we anticipate also like a life of mine production plan, updated in that as well?

Makko DeFilippo: Yes. Yes. Thanks, Orest. We do expect an updated resource and reserve estimate coming from that operation prior to year-end. We there will not be details about the phasing of that operation. Is maybe as far as I am prepared to go on. that is our 921. So it is not a huge surprise, I think, on this call. But we will provide some information about the phases, particularly around how the reserve's constructed. That work is happening as we speak, and we are well positioned to put that out before year end. Okay. Thanks.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Makko DeFilippo for any closing remarks. Please go ahead.

Makko DeFilippo: Yes. Thank you, operator, and thank you, everyone, for joining us. I know it is a very busy time. So as always, we appreciate the lively Q&A. Discussion. it is 1 of the highlights of the quarter for me and appreciate the dialogue. As always, our team is available for follow-up discussions and questions. Please do reach out to Courtney, Farooq or anyone on our team. For those of you that we are going to see in Toronto, Boston and Montreal in the coming days, we look forward to seeing you in person. Thank you very much. Talk soon.

Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.