Ero Copper (ERO) Q2 2024 earnings summary

Executive summary

• Achieved first saleable copper concentrate at Tucumã at end of June, with ramp-up to commercial production on track for Q3 end and concentrate grades above design targets.

• Strong operational performance at Caraíba and Xavantina, with increased throughput and production; Caraíba processed 957,692 tonnes at 1.03% Cu, producing 8,867 tonnes copper, and Xavantina produced 16,555 oz gold at 14.00 g/t.

• Signed definitive earn-in agreement with Vale Base Metals for the Furnas Copper Project, advancing baseline studies and preparing for a maiden resource estimate later in 2024.

• Safety incident at Caraíba resulted in a fatality and one critical injury; safety remains a top priority.

• Net loss attributable to owners was $53.2M ($0.52/share diluted); adjusted net income was $18.6M ($0.18/share diluted).

Financial highlights

• Q2 revenue was $117.1M, up from $105.8M in Q1 2024; gross profit was $43.3M, and adjusted EBITDA reached $51.5M.

• Adjusted net income was $18.6M ($0.18/share diluted); operating cash flow for Q2 was $14.7M.

• Copper C1 cash costs dropped to $2.16/lb, and gold C1 cash costs and AISC at Xavantina were $428/oz and $842/oz, respectively.

• Liquidity at quarter-end was $169.8M; net debt rose to $482.0M at June 30, 2024.

• Working capital deficit at quarter-end was $57.6M.

Outlook and guidance

• Consolidated copper production expected to increase sequentially in H2 2024, mainly from Tucumã ramp-up; full-year copper production guidance reaffirmed at 59,000–72,000 tonnes.

• Full-year copper C1 cash cost guidance maintained at $1.50–$1.75/lb; gold C1 cash cost guidance reduced to $450–$550/oz, and AISC lowered to $900–$1,000/oz.

• Gold production guidance increased to 60,000–65,000 oz; Caraíba copper production guidance reaffirmed but guided to lower end of range.

• Capital expenditure guidance narrowed to $303–$348M for 2024.