Thank you for your patience. Welcome to Ero Copper's First Quarter 2025 Operating and Financial Results Conference Call. All participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be a chance to ask questions. I will now pass the call to Courtney Lynn, Executive Vice President, External Affairs and Strategy. Please proceed.

Thank you, operator. Good morning, and welcome to Ero Copper’s first 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&A for the three months ended March 31, 2025. 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 and Gelson Batista, Executive Vice President and Chief Operating Officer. Before we begin, I'd 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 and 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'll now turn the call over to Makko DeFilippo.

Thank you, Courtney, and thank you everyone for taking the time to join us today. Our first quarter marked a critical period to set up our operations and our company for success. During these first few months of 2025, we have made meaningful progress towards achieving our near term objectives, while laying important groundwork for sustainable growth in copper production, increased operating margins and long term value creation across our portfolio. I am deeply thankful for the ongoing contributions of our global leadership team towards achieving this vision. Our near term strategy for Ero is simple and it remains unchanged. As I have said before, there are four steps to this strategy. Step one, achieve commercial production at Tucuma; two, deleverage our balance sheet; three, aggressively advance long term growth initiatives including our partnership on Furnas and step four, initiate returns to shareholders. Starting with Tucuma and the first step of our strategy, we remain on track to achieve commercial production over the coming weeks. It was a productive start to the year that involved two extended periods of planned downtime in January and February in order to address plant bottlenecks that we identified during the ramp up of the operation in late 2024. The successful execution of this program allowed consistent mill throughput and with the elevated grades that we are seeing early in the mine life, the month of March accounted for more than half of Tucuma’s total plant throughput and copper production during the first quarter. In April, we focused our attention on one of the last remaining items outstanding on our punch list, repairing the damaged third tailings filter, which we completed at the end of the month. We expect throughput volumes to increase steadily over the coming weeks and months as a result of these modifications and repairs. With respect to timing of commercial production, it is worth noting that Tucuma operations contributed a significant portion to our consolidated net income and EBITDA during the first quarter. That said, it is still early in May and we are taking a measured approach here to ensure that the expected throughput improvements following the release of the third filter are maintained prior to making this designation. In summary, we're closing gaps on commercial production at Tucuma. We're setting solid foundations to ensure long term success for the operation and we are reaffirming our guidance ranges for the full year. The growing contribution from Tucuma will position us well to begin delivering on our second near term objective of deleveraging our balance sheet. While we expect this to occur naturally with increasing consolidated EBITDA, assuming metal prices remain constructive, we expect to begin repaying our revolving credit facility during the second half of the year. In parallel, we've continued to aggressively advance our longer term growth initiatives. These efforts are concentrated currently at Furnas where we have eight drill rigs operating on-site. We remain on track to complete the Phase 1 drill program during the third quarter of this year and are pleased with the results we are seeing thus far. In parallel, we are advancing confirmatory technical work in support of a preliminary economic assessment on the project, which we expect to publish in the first half of 2026. Before I turn the call over to Wayne, I would like to share a bit of detail on our operating performance during the first quarter at Caraiba and Xavantina and touch on the investments we are making there to enhance operational flexibility and further support long term growth. At our Caraiba operations, lower planned mined and processed copper grades resulted in a quarter on quarter decline in copper production and elevated unit cost during the first quarter. While total mine and processed tonnage remained relatively flat compared to the fourth quarter, we've begun to see the benefits of our additional investment in development, which resulted in target mining rates being achieved at the Pilar Mine in March. In further support of this effort, we successfully mobilized a second underground development contractor during the quarter and we expect sequential growth in mine and process volumes and as a result copper production through the remainder of the year at Caraiba. At our Xavantina operations, total mine and process volumes increased by more than 27% quarter on quarter. However, lower grades mined and processed resulted in a decrease in total gold production. While a modest decrease in production was anticipated during the first quarter, grades encountered within planned operational areas were slightly below expectations. In addition, the need for additional ground support at access points of several newly developed higher grade areas within San Antonio delayed contributions from this area. Through the remainder of the year, continued investment in low profile mining equipment and support infrastructure is expected to support increased mine and process volumes. We see grades improving as compared to the first quarter, which we expect will support higher production levels and lower unit cost as we move forward. To ensure we have sufficient time for Q&A, I will leave it there and pass the call to Wayne, who will provide more detail on our financial results.

Thank you, Makko. Our financial results reflect the growing contribution from the Tucuma operation and stronger metal prices, which together drove quarter on quarter adjusted EBITDA of $65.4 million and adjusted net income attributable to owners of the company of $35.8 million or $0.35 per share. We ended the quarter with a solid liquidity position of $116 million supported by several actions to further strengthen our balance sheet and support long term growth. In January, we amended our credit facility to reflect our expanded operating footprint, increasing total commitments from $150 million to $200 million. In March, we drew the remaining $25 million available under our copper prepayment facility to support working capital needs related to the ramp up at Tucuma. To help protect cash flows amid continued macroeconomic uncertainty and copper price volatility, we opportunistically entered into zero cost copper collars covering 3,000 tons of copper per month from April through September of this year. These contracts provide downside protection at a floor price of $4 per pound with an average ceiling price of $4.68 per pound. Just prior to quarter end, we also extended our stream agreement with Royal Gold in exchange for $50 million in upfront proceeds, bringing total proceeds under the Xavantina stream to $160 million. With key capital investments underway at Xavantina, this transaction offered a dedicated non-dilutive source of funding to support investments focused on asset integrity and margin expansion. Turning to our foreign exchange hedge program, our total notional position at quarter end was $332.5 million consisting of zero cost collars with a weighted average floor and ceiling of BRL5.52 and BRL6.49 dollars per U.S. dollar respectively. These extend through to June 2026. While we recorded a realized loss of $2.2 million related to collars that matured in December 2024, the real to U.S. dollar exchange rate remained largely within our collar range during the first quarter.

Thank you, Wayne. Before we move into the Q&A session, I want to take a moment to reiterate our commitment to delivering on our four pillar strategy over the near term. Achieving commercial production at Tucuma remains our top priority. With that, I'll now turn the call back to the operator to open the line for questions.

Thank you. The first question comes from Dalton Baretto with Canaccord. Please go ahead.

Thanks. Good morning, guys. Hey, Makko, thanks for the operating color through March there. I'm wondering if you can give us an update on all three assets and how they're doing in April. Thank you.

Thanks, Dalton. I appreciate the question. Let's just kind of run through the list here. In April, starting at Xavantina, we're seeing grades improving. We're seeing productivity increase from the mine as we expected to come out of Q1 here. So positive indications on that side of things. In Caraiba, obviously, we're now starting to see the benefits of the third-party contractor at Caraiba and specifically the Pilar mine. So, being able to maintain target mining rates at Pilar is obviously a very important milestone for us to be able to improve the consistency and operating performance there. So pretty encouraged about what we're seeing on both of our operating assets given the transformational program that we started at the tail end of last year and committed and continued here through the first quarter. And then at Tucuma, I think as we outlined on the call here, we completed the third filter press repairs at the very end of the month. So, I'd say from April's perspective, it was aligned with our expectations in terms of being able to execute in that program. Until the third filter process is fully operational, we expect throughput volumes to be somewhat muted and that was reflected in our guidance range for the full year and our expectations for the first half. So, stay tuned on that side. As I said, pretty pleased with the performance overall across all three of our operations. And stay tuned.

Great. Thanks for that, Makko. And then if I can just maybe ask a question of Wayne there, maybe a bit more about how to scheme item. I think there was a $43 million advance to customers on your cash flow statement. Just wondering if you can wrap some context around that. Thanks.

Yeah, sure, Dalton. I mean, if you actually have a look at the accounts receivable for the quarter that was exceptionally elevated as well. What that was, was that we switched some sales from one trading house to another late in the quarter. So, what you really see is an elevated accounts payable, but also an elevated accounts receivable. So, it's really just some accounting treatment right at the end of the quarter.

Got it. Thanks very much Wayne. That's all for me.

The next question comes from a representative with Goldman Sachs. Please proceed.

Good morning, everyone. Thank you for the opportunity. So I have a question on Tucuma. First, you guys mentioned that going forward, we would expect lower grades and improving throughput. So just want to understand the reason why we expect grades to be marginally lower. So is this a result of fine-tuning in the ball mills? Can you please elaborate on that? So that's the first question. Second one goes on Xavantina. Also, I want to understand why we should expect grades improving in the coming quarters. Is this just a consequence of a soft comparison base or indeed there is a structural improvement in grades and would that come back to last year's levels? And this happened one on Xavantina and also connecting to liquidity management. I see that you guys incremented the Xavantina streaming agreement by some 70,000 ounces with implied better prices indeed. But considering the current outlook for gold prices and the positive outlook on Tucuma as well, I wonder if this growth streaming strategy will continue to be part of the company's liquidity management going forward? Thank you.

Perfect. Thank you. A lot to unpack there, but I took notes if I missed anything. I apologize. Let's run through those. So starting first, with Tucuma, the increasing throughput and declining grade, I want to stress as a bit of context that that was always part of the strategy. The Tucuma deposit has a very, very high grade upper benches of the mine and is Phase zero, Phase 1 is very high grade. And as we move through that near surface high-grade mineralization, we do expect grade to decline. And that's been an artifact of the project since inception. It's the reason that we have such a high return on that project and the operation and we're seeing that. I think as we alluded to over the last couple of quarters, what we saw in our infill drilling was in fact a bit higher grade in some of these areas than we expected. And so we're really encouraged with the signs that we're seeing on the grades. And obviously, we expect as we move through that high grade to for grades to decline. I would note just from an outlook perspective that to the extent that throughputs remain lower than the original design, obviously that extends that high grade further out in time, but the contained metal volume is the same. So that's starting with Tucuma, that's the artifact of geology and the mine plan. Xavantina, I think it's really important to look at the context here. We went through two years of significant positive grade reconciliation to the tune of more than 15%. And so, when I look at the first quarter in that context, yes, some of the operational areas that we had were a bit lower grade. We also planned for lower grade throughout the year relative to prior periods. And we see the grades here in April and May returning to sort of normalized levels against our full year. So, I think it was really a moment in time. We also had, as I outlined in the call, a couple of levels that required some additional ground support in the access that delayed the mining of these levels, which we're seeing higher grades and we expect higher grades to continue. So again, but I think that historical context is important there. In terms of liquidity management, obviously very pleased with where the gold price is. I think commodity prices in general are having a strong tailwind here and we're quite pleased with that. The stream itself as part of our ongoing strategy. From my perspective, we have a big capital outlay at Xavantina this year. We're putting in quite a bit of low profile equipment. We're, as Wayne mentioned, have a big asset integrity program. And so, what we sought to do with the stream was I'd say less of a liquidity management tool, but rather as a partnership to further develop that asset. And we have a great partner in Royal Gold. They've been supported of this project for the last several years. They continue to invest alongside us in this asset. They believe in our exploration programs. They support us and the work that we do around the community. So I think from my perspective, it was an opportunity to tap into that partnership to further advance Xavantina at a time when we don't get rewarded for that capital investment that we're making.

All right. Very clear, Makko. Thank you.

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

Good morning. Regarding the Tucuma ramp, now that the maintenance work and the replacement of the third filter press have been completed, is there anything left that needs to be replaced or repaired? Also, are there any significant maintenance tasks scheduled in the coming months that we should be aware of?

Thank you, Orest. I believe we are quite satisfied with our current progress regarding the main building blocks. We will continue to make adjustments and consider any further changes needed as we increase production. In regard to the key issues we pinpointed last year that were causing significant constraints and bottlenecks, we have largely addressed those. Therefore, we do not expect any significant downtime. However, we do have planned maintenance for the mill and the filter process, which will lead to some periodic downtime, but it will not be as extensive as what we experienced in January and February of this year.

Can you provide an update on the power situation at Tucuma? Are you still experiencing temporary shutdowns of the mill due to fluctuations in the power grid, or has that issue been resolved? Is the permanent solution now implemented?

Yeah, thanks, Orest. We do still see oscillations on the power line for sure. We haven't seen the levels of disruption since we implemented the solution that we put in place late last year. And so we've been pretty happy with the performance of that system. We're still evaluating the longer-term solution to normalized power as we discussed last quarter. During the first quarter, I would say the one area that we focused on was expanding the data collection time period and also the reach in terms of distance from our operation, we want to make sure that what we put in place covers the asset not only for this year but for the life of the mine. And so that data collection process is over. We're continuing to work here in the second quarter on design and implementation of what that looks like exactly. But again, with the performance that we've seen and the consistency of operations, we don't see that as a big bottleneck going forward. Obviously, we still want to address that issue for the long term. But in the near to medium term, we don't see that as a big gating item.

Can you provide some numbers regarding the current situation? Specifically, how often is power tripping occurring each month? I'm trying to understand how much this is affecting the ramp-up process.

Yeah. Orest, as I said, we don't see that as being a gating item for us right now.

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

Thank you, and good morning, everyone. I appreciate you taking my questions. My first question is about Tucuma. I understand that you plan to begin commercial production in the first half of 2025. Since we are already in May and next month is the start of the second half, could you provide any updates for this month leading up to the end of the first half? Additionally, I noticed that while costs were higher, volumes were low, but overall costs were below the C1 guidance. As performance improves and grades pick up, can we expect C1 to be around the lower end of your guidance for this year? Thank you.

Yeah, good questions. Turning to commercial production, as I said, we're being thoughtful about how we view that delineation, that designation we just came through the final repairs that filter press, so we want to see that operating for a bit of time here. So when we say we're on track for the first half of the year, I'm going to stick with that and rather give the first half of the year. I feel comfortable with that. But in terms of differentiating between May and June, we'll skip that detail for now. In terms of costs at Caraiba, yes, look, it's a great point, one that where we've made a huge effort across our organization on margin expansion. Obviously, we benefited a little bit here in the first quarter from the foreign exchange, and we continue to see that supporting U.S. dollar operating margins through right now. We'll see what happens through the balance of the year, but we've historically planned our operations at relatively conservative FX rates. And obviously, as Wayne mentioned, we have the floors in place at 5.50. So we're very happy with where we see operating margins and some of the effort that we've been making that we've been put in place on procurement and operating efficiencies, making an impact, and we expect that to continue going forward.

The next question comes from Craig Hutchison with TD Cowen. Please go ahead.

Hi, thanks for taking my question. I wanted to circle back to Tucuma. You mentioned that the final repair process was completed at the end of April. Does that mean it's a month behind schedule, as I believe the original guidance was for the end of Q1?

Yeah, thanks, Craig. We always planned for that to be done towards the end of Q1. I think it slipped by a couple of weeks there, but we had planned in our outlook for the year for, as I said early on, a wide range of possibilities in terms of getting people and equipment to site. So we don't view that couple of weeks slip in the schedule as being significant for our outlook on the full year at Tucuma.

Okay, great. Can you define how you define commercial production? What are those metrics again?

I believe we've been clear about what those metrics are. As I mentioned in the last quarterly conference call, we are reviewing them in light of our observations on filter press performance related to concentrate. In Q1, March proved to be a very strong month, contributing over half of the consolidated copper production from Tucuma for the quarter. One key point we've discussed is that when examining the processed grades at Tucuma, particularly for the higher grades, which are about over 2% copper, this exceeds the average life of mine grade by more than double. We are still in discussions as a team, and it's important to highlight that recovery in concentrate grades continues to meet or exceed our expectations. We focus on two main metrics: throughput rates and the consistency of performance in recovery and concentrate grades. We feel we are very close to achieving our goals in both areas.

Okay, great. And then just one last question. Just the mining rates at Tucuma came off quite a lot this quarter. Is that just a function of you have plenty of inventories at this point and those structures were just put idle or were they redirected to the tailings management facility?

Absolutely. Thanks, Craig. Absolutely, you hit it on the head. We've been progressing well ahead of the mine plan for the last couple of years here, basically since we started pre-strip. We have a huge amount of inventory on stockpiles. We moved our mining fleet didn't stop operations. They did moderate a little bit in the first quarter, but they moved to waste stripping. And it's part of the reason that we saw an elevated stripping ratio in the first quarter, and we've resumed your mining activities in the second quarter.

The next question comes from an analyst with CIBC. Please go ahead.

Good morning. And thank you for taking my question. I'm asking on behalf of my analyst Anita Soni. I'm just looking to understand the commentary around mobilization of the contractors at Caraiba in March. Does that mean we should be expecting mining costs to increase for the remainder of the year? Or will they remain relatively in line with the mining costs we saw in Q1? Thank you.

Thanks for your question. It's important to highlight that most of our development work with third-party contractors is capitalized, and this is fully incorporated into our guidance. There may be a very small portion allocated to operating costs, but generally, our development contractors focus on capitalizing development. Therefore, we don’t anticipate any impact on our operating costs.

We have a follow-up question from Dalton Baretto with Canaccord Genuity. Please go ahead.

Yeah, thanks for taking my follow up. I thought I'd switch gears a little bit. I like we haven't talked about exploration in some time now. Makko, can you give us an update on sort of how you're allocating the dollars you're spending today and what you're seeing? Thanks.

Thank you, Dalton. Exploration remains one of Ero's core values since the beginning. Currently, our major focus is on Furnas, where we have eight drill rigs operational. We are very encouraged by the results we are seeing there and hope to provide an update in the next couple of months. At Caraiba, we are still working around our existing operations, with infilling and deepening as key objectives this year to outline the initial panels of the mine plan in the higher grade zones. We continue advancing land consolidation and early exploration work throughout the cost levi, targeting both copper and nickel. Additionally, at Xavantina, with support from Royal Gold, we have expanded our exploration program to extend mine life and explore the broader region. Exploration is definitely still a priority for us, while our top focus remains on Tucuma. We expect to share more updates, especially regarding Furnas, later in the year.

That's great. Thanks, Makko. And then maybe if I could just stay on Tucuma and just thinking out a little bit longer term. What's your latest thinking now in terms of some of the stuff we've talked about in the past in terms of backfilling the grade drop?

Yeah. Great question. We have a program at Tucuma that we've talked about before where we see high grades in the lower part of the pit bottom. So I would say don’t too early to talk in too much detail about that. We see a couple of different pathways to being able to maintain elevated production profiles for longer than were previously outlined, but we're still working through those scenarios and opportunities. So I think it's too early really to dive into too much detail on that.

Got it. Is there still a regional M&A program in place?

Look, we are very active in the Carajas, pretty happy with our land package right now at Tucuma. We have a couple of programs throughout the Carajas that are looking at different opportunities. But again, our core focus as a team and certainly on the exploration side, is Furnas. But yeah, we continue to look at things in a broader region to support the Tucuma operation. As you know, it's the only sulfide mill operating on the western side of the Carajas. So we still see a unique strategic advantage there that we expect will pay off in the long term. But again, focuses on getting that mine up to commercial production levels.

Great. That’s all. Thanks.

The next question comes from Roald Ross with Clarkson Securities. Please go ahead.

Hi, guys. Thank you for taking my question. I wanted to ask about the new shaft at Pilar. So number one, what's sort of the primary milestones to achieve now going forward? And number two, of the annual CapEx on Caraiba, how much is allocated to the shaft?

Yeah, good questions. The shaft is going well. It's a quarterly planned. I mean, really, we're not talking about that being operational until 2027. So finishing the shaft sinking towards the end of 2026. So there's still a lot of ways to go on that project, but things are progressing well. The main milestones for us are really day by day here. I mean we've completed the surface infrastructure. We're advancing shaft sinking. It's a day by day blast in line and then do that the following day as well. So not too much to say on milestones other than we're advancing that project day by day here. In terms of cost allocation for 2025, we expect the entire deepening project, including ore handling system and the development associated with some of the deeper work in the mine, to be about $80 million to $90 million this year, and that's fully reflected in our guidance range.

Okay, great. And lastly, just on Xavantina. With sort of lower production this quarter, but you reaffirmed the volumes for the full year. Are you expecting a sequential progress throughout the year or straight back to a higher level next quarter? Or how do you view the progression for 2025?

Yeah. It's more of a steady progression. And the reason for that is that we continue to have equipment arrive on site or low-profile equipment that we purchased last year is arriving on site sequentially throughout the year, and our increase in production volumes matches those delivery timelines.

We have a follow-up question from Goldman Sachs. Please go ahead.

Hey, guys. Thanks again. Just a follow-up on Tucuma. You mentioned that you guys are reviewing the metrics used in order to declare commercial production. So I just want to understand a little bit better, what types of variables are you guys starting to change here? Is it the 80% production in terms of nameplate capacity or the amount of time needed running at that level? So this is my question. Thank you.

Thank you for the question. To clarify on commercial production, we are still having discussions about it. I would say that with the current grades being double the life of mine average, it would be quite challenging to sustain 100% of mill throughput. We are balancing this issue as a team in making that determination. However, if you take a step back and consider the impact of Tucuma on our consolidated net income and EBITDA for the quarter, particularly with just one month of production, it's evident that we expect Tucuma to significantly contribute to our overall results. That expectation likely plays a major role as well. Wayne, do you have anything to add?

No. The concept of commercial production, in purely accounting terms, refers to when management considers the asset fully ready for operation. This is a subjective measure, and there is no definitive standard, especially with our auditors. As Makko mentioned, as the asset ramps up and we continue to experience significant free cash flow generation, the chances of not declaring commercial production from an accounting standpoint decrease. Ultimately, as Makko indicated, we are evaluating this situation. We believe we are getting closer to that point, and hopefully, it will happen in the near future.

Okay, thank you.

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.

I appreciate everyone taking the time today. It was a lively Q&A, and I certainly appreciate that as does the rest of the team. So I appreciate your time. Obviously, myself and our leadership team always available for any follow-up questions. Thank you very much. We'll chat next quarter.

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