Ero Copper Corp. Q3 FY2025 Earnings Call

Thank you for standing by. This is the conference operator. Welcome to the Ero Copper Third Quarter 2025 Operating and Financial Results Conference Call. The conference is being recorded. I would now like to turn the conference over to Farooq Hamed, VP, Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Ero 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&A for the 3 and 9 months ended September 30, 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; Gelson Batista, Executive Vice President and Chief Operating Officer; and Courtney Lynn, Executive Vice President, External Affairs and Strategy. 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, Farooq, and thank you all for taking the time to join us this morning. Speaking for everyone on this side of today's conference call, it is an exciting time over here at Ero. During our last quarterly update and in conversations with many stakeholders since then, we have been speaking to the fundamental transformation that has been underway at Ero this year. This work has continued to drive sequential improvements in quarterly performance and unlock new value drivers across our portfolio. These efforts are clearly evident in our Q3 results and in our Xavantina release yesterday. I will speak to both on today's call while ensuring we have sufficient time for questions. Yesterday, before market opened, we announced the result of a dedicated behind-the-scenes effort we initiated late last year to create value from within our portfolio, specifically at the Xavantina operations. This work entailed sampling, metallurgical testing, characterization, and commercialization of stockpiled gold concentrates that have been produced in small but high-grade quantities since processing operations began over a decade ago. These efforts have culminated in the announcement of a maiden inferred resource of 24,000 tonnes grading approximately 37 grams per tonne, containing 29,000 ounces of gold. The estimate was based on detailed sampling of approximately 20% of the concentrate stockpile volume. Late last month, just shy of 1 year since we laid out the initial work plan for this initiative with our teams, we commenced shipping gold concentrate, resulting in our first invoice this week, which Wayne will speak to in more detail. Looking ahead, we expect to sell between 10,000 and 15,000 tonnes of concentrate during Q4 2025 at an operating cost of approximately $300 to $500 per ounce of gold. At approximately 90% to 95% payability after deductions and treatment charges, this means in practical terms that we expect to significantly accelerate the deleveraging of our business, one of our core objectives for 2025. Sampling campaigns are ongoing to better quantify the remaining gold concentrate in stockpile, and we expect to sell the full volume over the next 12 to 18 months, resulting in what we expect to be a significant boost to gold sales and financial performance. Before I jump back into the quarter itself, I'll just address what is likely the first question many of you have. How did October go? And how does that compare to underlying operational guidance ranges? While 1 month doesn't make a quarter, and we have a considerable amount of daylight between now and December 31, I am pleased to report that every single operation in our portfolio achieved not just 2025 calendar year monthly records for productivity and production, but they achieved all-time historic monthly records in October, beating some set many years ago. Starting at Caraíba, we built on the momentum of a solid Q3 and during the month of October, achieved all-time record mine tonnages from each of the Pilar, Vermelhos, and Surubim mines. New high watermarks across all of our mines at Caraíba supported all-time record monthly mill throughput of just over 400,000 tonnes, implying an annualized run rate well beyond our installed capacity. We achieved this result on the back of a successful debottlenecking exercise that was initiated early this year and completed during the third quarter at effectively zero cost. Q4 at Caraíba is off to a good start with over 3,500 tonnes of copper produced in October, on par with our best month so far this year. At Tucumã, sequential improvement in throughput volumes and grades following another sequential quarter of nearly 20% growth in copper production drove a new monthly record in October of approximately 3,300 tonnes of copper produced. Last but not least, at Xavantina, we produced just shy of 7,000 ounces of gold in October, excluding any benefits from our new concentrate sales operation. This is a particularly noteworthy result when you consider that our average quarterly production during the first half of the year was also 7,000 ounces. This result reflects the considerable effort we have put into successfully mechanizing Xavantina to make it safe and more productive. I'm very proud of what Rodrigo Fidelis and his team and the whole broader team at Xavantina have been doing to achieve these results. More broadly speaking, we have spent a lot of time this year changing the way we do things, challenging the status quo, incentivizing improvement and optimization across our organization and focusing on health and safety in order to drive productivity and operational excellence. The build we saw from a challenging first half of the year across the group, the green shoots in July and August, momentum from August into September and breaking all-time records in September and October has been energizing, and we expect many more production records to be broken over the coming months and years. I'm deeply proud of the work we are doing to achieve these results, proud of our global leadership team for their commitment and thankful to our operational leadership for achieving these results while consistently improving our consolidated safety performance. That was a long detour to our third quarter results, but hopefully that clears up the question queue. Getting back to the quarter itself, Q3 was another record for Ero on consolidated copper production due to increased contributions from Tucumã, up nearly 20% for the second consecutive quarter. As we look to Q4 and as evidenced by my commentary on October, we continue to build on our strengths here and are expecting Q4 to be the strongest production quarter of the year across all three of our operations. At Caraíba, plant throughput levels reached a quarterly volume record, supported by sequentially higher mining rates across all three mines in the complex, momentum we have carried so far into Q4. Grade declined as expected in the quarter as we switched our center of mass to the upper levels of the Pilar mine and received more ore from the Surubim pit, a strategy shift that was discussed at length last quarter. We expect to continue to benefit from higher throughput levels going forward, the result of a multi-quarter debottlenecking effort in order to drive higher copper production. We expect strong production in Q4 to allow us to achieve the low end of our annual production guidance, and we expect cash costs to decline from Q3 levels during Q4, supporting our full-year C1 cash costs in the lower half of our range. At Tucumã, production in the third quarter increased 19%, driven by the continued ramp-up of throughput at the mill, up approximately 37% quarter-on-quarter, partially offset by lower planned grades. As we look to Q4, we expect continued progress in increasing throughput levels, along with higher grades in the mine to drive the strongest production of the year. We're off to a good start in October and expect strong production in Q4 to allow us to achieve the low end of our annual production guidance. We have adjusted our full-year C1 cash cost guidance at Tucumã to reflect higher-than-expected maintenance and freight costs incurred during Q3, which will be partially offset by the expected improvements in underlying costs in Q4. At Xavantina, production increased by approximately 17% quarter-on-quarter as the mine began to benefit from our investments in mechanization during the first half of the year. We mined over 50,000 tonnes of ore in Q3, a level we haven't achieved since 2022. Looking ahead into Q4, as I touched on in my October commentary, we expect higher mine tonnage, higher tonnes processed, and higher grade stopes to significantly drive higher gold production in Q4, which will allow us to achieve the lower end of gold production guidance and meet full-year cost guidance ranges at Xavantina. At Furnas, a central part of our growth strategy, physical work streams on site progressed well through the end of October. We have now completed approximately 50,000 meters of drilling, completing the drilling obligations set out in the agreement for both the Phase 1 and Phase 2 programs. The Phase 1 program completed early this year was drilled in support of an updated mineral resource estimate and preliminary economic analysis. Technical work streams to support the preliminary economic analysis remain ongoing, and we are on track to complete this study during the first half of next year. The drilling completed under Phase 2 of the agreement will be used in time to support the development of a pre-feasibility study. We currently do not anticipate slowing the drill program at Furnas based on the success of these programs and early insights into potential project economics. We set out this year to turn around and stabilize our operations, achieve commercial production at Tucumã, delever our balance sheet, aggressively advance long-term growth initiatives at Furnas, and in due course, initiate returns to shareholders. Transformative work is nonlinear, but seeing the momentum we have carried and the results flow through to an incredible September and October makes me confident we are on the right path. Every area of our business is doing its part to achieve these goals and create additional value for all of our stakeholders out of what we believe is a truly remarkable asset portfolio. I am thankful as ever for the continued support and belief in our vision for Ero. 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 third-quarter financial results reflected a 24% increase in copper concentrate sales at Tucumã, which, together with stronger copper and gold prices during the period, drove revenue to $177 million or $14 million higher when compared to the second quarter. At the same time, operating costs increased due to expected lower mined and processed grades at Caraíba and a change in the accounting treatment at Tucumã following the declaration of commercial production on July 1, 2025. As a reminder, ramp-up costs are no longer capitalized and depletion, depreciation, and amortization began to be recognized at the operation. As a result, adjusted EBITDA totaled $77.1 million in the third quarter and adjusted net income attributable to owners of the company was $27.9 million or $0.27 per share. Our liquidity position at quarter end stood at $111 million, including $66.3 million in cash and cash equivalents and $45 million of undrawn availability under our revolving credit facility. We continue to deleverage our balance sheet, paying down $9 million on our copper prepayment facility during the quarter. Combined with higher 12-month trailing EBITDA, this resulted in further improvement in our net debt leverage ratio, which decreased to 1.9x at the end of Q3 from 2.1x in Q2 and 2.5x at the end of 2024. With performance expected to be strongest across all three of our operations in the fourth quarter and additional cash flow from Xavantina's gold concentrate sales, we expect to materially accelerate deleveraging in the coming months. Since the beginning of Q4, we've already shipped 3,000 tonnes of gold concentrate at an invoiced value of approximately $10 million, providing early momentum towards that goal. As for our foreign exchange hedge program, our total notional position at quarter end was $290 million, consisting of zero-cost collars with a weighted average floor and ceiling of BRL 5.59 and BRL 6.59 per dollar, respectively. These extend through December 2026. The real trended stronger and below our collar range during the quarter, resulting in a realized gain of $2 million on these hedges. I'll now pass the call back to Makko for some closing remarks.

Thank you, Wayne. Before we move into the Q&A session, I want to take a moment here to reiterate our commitment to delivering on our strategy at Ero, the one that we set out in January of this year. Thank you for your continued support in our company. We look forward to speaking with you in the new year. With that, I'll now turn the call back to the operator to open the line for questions.

The first question comes from Fahad Tariq with Jefferies.

On Xavantina, regarding the gold concentrate, it may be too early to determine, but how should we consider the remaining 80% that has not been sampled? Would it be reasonable to assume that the concentrates are homogenous and that it could amount to approximately 144,000 ounces of contained gold?

Yes. Thank you for the question. I think everyone on this call is capable of dividing the 29,000 ounces by 0.2. We're very excited about the opportunity and what it means for our company, but I think it's too early to say exactly what that remaining volume will be. We fundamentally just need to do the work. As we outlined in our prepared remarks and in the news release yesterday, we do expect to sell the full volume over the next 12 to 18 months, which should be a very significant boost to our financial performance. But in terms of outlining specific densities and grades for the volumes that have yet to be sampled, very difficult to do.

Okay. And then maybe just switching gears to Brazil costs in general. One of your mining peers, more on the gold side, has mentioned significant labor contractor inflation in Brazil specifically. I'm just curious if you've seen anything emerging on that.

Yes, that's a great question. Let's take a moment to reflect on the past eight years because context is important. From 2017 until last year, inflation in Brazil was outpaced by the depreciation of the currency. It's accurate to say that inflation remains high in Brazil when viewed in U.S. dollar terms. We observe this in our labor agreements and contractor pricing. Over the past two years, we haven't gained as much from a depreciating BRL as we did from 2017 to 2022. As Wayne mentioned, one of our strategies to address this is implementing cost collars on foreign exchange, which we have established for a part of our expenditures next year with a higher floor or a weaker level than this year to help counter some of the inflation we are experiencing. It's crucial to consider what's happening with the currency and our efforts to mitigate inflation when discussing costs in Brazil. We have several initiatives from our full potential exercise, a collaborative effort between operations and procurement aimed at consistently seeking efficiencies as our business has expanded over the last two years with the integration of Tucumã and the mechanization of Xavantina. We have observed some cost reductions that, while not significant, are sufficient to offset the inflation we are facing. We’ll continue this work as it is essential for protecting our operating margins in the long term.

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

So my first one is on the value creation strategy in Xavantina. I just want to understand why have you guys announced it now and not before? Just given when you look at the cash OpEx of these concentrates, they look super accretive even under lower gold prices. Of course, it is even more now that prices are close to $4,000. So maybe just if you could expand on why doing it now and not before, it was a matter of time and having the capability to take a look at that. And also, if you guys see potential for doing that to your other operations, especially Caraíba, which has been running for some time and maybe has something in terms of concentrate stockpile or maybe the waste on the dams. And then finally, on Tucumã, just a quick question. How are you guys seeing the operating rates throughout 2026 between quarters? When are you expecting now to reach nameplate capacity in throughput?

Thank you for your questions. I'll address them one at a time. The value creation potential at Xavantina is important to highlight. This isn't a new initiative that started when gold prices reached $4,000 an ounce; we’ve been aware of it for several years. In my previous role, I was involved in efforts to recover value from this material, which yielded mixed results. Our focus was primarily on building Tucumã over the past few years, so this initiative was put on hold. However, with our leadership changes this year, both on-site and in our technical team, we identified several key initiatives late last year to pursue, and this was one of them. The work required to unlock value went beyond just selling concentrate. It involved extensive sampling, material characterization, and metallurgical testing, along with significant support from our commercial team to reach our recent progress. The value creation initiative looked promising when we began at a gold price of $3,000 an ounce, and it looks terrific now at $4,000 an ounce, but the timing of the gold price increase was coincidental. We began working on this seriously late last year, which should clarify your first question. Regarding other value creation opportunities within our portfolio, we have several possibilities. One I'll mention shortly pertains to Tucumã. As for Caraíba, we need more information before determining if there’s residual value there. We have been focusing on health and safety, operational excellence, and thorough planning across all our assets. We are enthusiastic about some of the value initiatives at Caraíba, but it's too early to assess whether they will resemble Tucumã's opportunities. While I don’t foresee a similar level of potential, we are actively pursuing other high-value chances throughout our operations. Concerning Tucumã in 2026, we are witnessing an ongoing increase in our production rates and throughput levels. We're pleased with the advancements made in September and October, but there's still considerable work ahead as we approach the end of the year. The improvements since the beginning of the year have been substantial. However, we anticipate that we may reach the maximum throughput capacity due to our filtration system. To address this bottleneck, we are currently exploring options to add more filtration capacity. I do not expect to reach design capacity until the latter half of next year, but we will provide more information in January when we share our guidance for the year. We're engaged in numerous initiatives; for instance, we received a mobile filter press on site last week, which we are eager to put into operation to help overcome the remaining challenges. Importantly, these initiatives do not require large investments, and it's worth noting that across the rest of the asset, our crushing, grinding, and flotation circuits are performing exceptionally well. Together with Gelson and the entire team, we are looking beyond 4 million tonnes a year and exploring how to maximize our existing assets through debottlenecking. This is crucial for enhancing the long-term production profile at Tucumã as we advance in the mine’s life. If we can boost throughput with relatively modest investments, it will significantly stabilize production volumes in the long run. Stay tuned for further updates. I hope this addresses your question about Tucumã.

The next question comes from Emerson Vieira with Goldman Sachs.

I have two sets of questions. First, regarding the gold concentrate sales, could you provide the expected timeline for sampling the remaining 80% of the total stockpile volume? Secondly, on the gold side, I want to clarify if the concentrate sales are also subject to the same conditions as those established with Royal Gold. Specifically, should we expect that 25% of the 24,000 ounces will be delivered at 40% of spot prices? Moving on to Tucumã, could you update us on the progress made and the next steps for improving the tailings filtration circuit? Additionally, based on the guidance and recoveries and grades from Q3 as a reference, Tucumã's throughput should nearly double in Q4 to meet the 30,000 tonnes guidance. However, I understand that grades are expected to improve and that throughput has been increasing throughout the quarter. Can you provide the throughput figure for September or any recent updates on throughput figures? That's it.

One second, I'm just writing down your last question to make sure I address them all. Thank you for your question, Emerson. To start with your first question about gold concentrate sales, the timing for the remaining volumes on sampling. The reality is that we completed a significant amount of work on the volume available for sampling. We need to sell that volume before we can continue with the sampling process, which is exactly what we're doing, as Wayne pointed out. Our goal is to achieve this as quickly as possible. Currently, we have a planned resource and reserve schedule. We believe that our sales of concentrate volumes will exceed the rate of our resource update timing. This means that we will provide clarity on a quarterly basis for the concentrate volumes we've sold next year. We will discuss this further next year in our guidance with more details regarding the quarterly sales cadence. As Wayne mentioned, the first sale took place this week. We’d like to have a few more weeks and months of sales before we discuss next year’s cadence. So please stay tuned on that front. Our focus is on shipping and selling as much as possible and as quickly as we can while ensuring safety. Therefore, we will continue to provide quarterly updates moving forward and offer additional forward-looking information in our guidance for next year in January. For your second question, yes, concentrate sales are subject to the stream. This is a standard term across all streaming agreements, so there’s nothing unusual there. The gold derived from concentrate sales will indeed be governed by the streaming agreement. We have a strong relationship with Royal Gold, who has been a fantastic partner in the growth and vision of Xavantina from their initial investment. We're pleased that these deliveries will help expedite the effective pay down to Stage 3, which is a 6% stream tail. For more details, please refer to the streaming agreements filed on SEDAR. Now regarding the Tucumã filtration capacity, what is planned, what has been accomplished, and what is ongoing about throughput levels. As I noted earlier, we see a continued improvement rate. It is gradually slowing down as we approach terminal velocity on the rate of change, which likely indicates a need for further filtration capacity. A few months ago, we mobilized a mobile filter press on site, and it is now ramping up and operating, which should help alleviate some additional capacity issues. Gelson and the team are conducting further engineering work and exploring alternative sources for incremental tailings capacity to enhance throughput volumes. Looking ahead, building on a solid October, we observe that grades and recoveries are performing well and expect this trend to continue into Q4, helping us reach the low end of our guidance range of 30,000 tonnes of copper for the year. Concerning throughput levels, we continue to see improvement. We noted progress in September and October, and we anticipate good performance in November and December as well. In the last conference call, I discussed an exit velocity around 80% of our design throughput. We might fall just short of that, but we are managing to maintain high-grade feed from the mine, supporting our production levels in Q4. Gelson, would you like to add anything regarding the specific work for the filtration capacity?

Well, thanks, Makko. Thanks for the question as well. I mean you've mentioned before about sequential improvement in Tucumã. I think this is the progress for the entire year. There are various things on debottlenecking. We engage experts. They've been helping us for some time now and also optimization in the plant, but it varies from mostly on the filtration plant, but small things in the mill as well and the grinding system and also the thickener. So this is ongoing, and we'll see the results in 2026.

The next question comes from Craig Hutchison with TD Cowen.

Just on Xavantina, it sounds like it's a good start to Q4. But can you give us some guidelines in terms of what the mining rates are maybe on a quarterly basis? And as you kind of move into next year, what is your capability now that you have the mechanized equipment? And maybe just as a follow-up question, what should we think about in terms of the grades as we kind of move into next year given the updated reserves you guys have, which I think is just under 7 grams a tonne.

Yes. Thank you, Craig. When it comes to Xavantina, there are a few things to note there. Maybe step back just a minute before I talk about specific rates. One of our objectives for the strategy at Xavantina this year was obviously to unlock value from gold concentrate sales. So check that mark, check that off the list. The second was to really extend the known limits of mineralization in the mine. And I think that was reflected really well in our resource update, specifically with the significant increase in measured indicated resources and inferred resources. Our target was to uncover 1 million ounces. That was our objective. And when you look at what we put out yesterday, I think it's fair to say that we achieved that objective of 1 million ounces. Some of the last drill holes in the underground mine. We're looking at a recent intercept this morning that came out a few weeks ago, 15 meters at 11 to 12 grams per tonne. So we're seeing a significant increase in the potential for Xavantina, and that makes us very excited. Coming back to the strategy for the year, mechanize the mine, make it safer, and extend the limits of mineralization. Obviously, over the next few years, we've started this work now. We need to do additional infill drilling to confirm those resources, which are not yet mineral reserves. But we've been really happy with the effort on mechanization and what that means for Xavantina. We talked a little bit about mining rates in Q3. Obviously, you can see that from an ore process perspective, big increase, right? So going up to 50,000 tonnes mined and processed during Q3. That implies a rate just over 15,000 tonnes. We've been able to at least match that in October, with much higher grades, just a function of where we are in the ore body coming in at about 17 grams per tonne in October. So very high grade. When we think about the variability in that deposit, it still exists. The mechanization has allowed us to increase the mining rate substantially and do it at a lower cost while making it more productive and safer at the same time.

The next question comes from Anita Soni with CIBC World Markets.

I have a couple of follow-up questions regarding Xavantina. Specifically, I would like to know the breakdown of the new reserve estimate in terms of the percentage attributed to sublevel stoping versus the typical room and pillar method.

Yes. Thank you. There is very little remaining room and pillar mining. It's going to be immaterial in the context of our total reserves. We're 100% focused on sublevel stoping. There's a little bit of residual room and pillar, but the overall majority is going to be sublevel stoping.

Okay. When we examine the cutoff analysis on resources, which is generally less conservative than reserves, I believe you used a consolidated mining and processing number of USD 107. What should we consider regarding mining costs, and while processing costs will likely remain the same, what savings might we see compared to the current mining costs you are delivering?

Yes. Thanks. Good question. We look at this in detail. I'd say that we're early days on mechanization. Back to, the original plan was to complete the mechanization of the mine by June of next year. It was such a resounding success that we accelerated that timeline. Our last Jack Lake mining crew left site in September, and so we're 100% mechanized. I think to give a specific cost reduction number is probably a bit immature given that we're still optimizing. But what we've seen so far, again, I wouldn't peg this for the long term, but something in the order of 30% to 35% reduction in mining costs is what we've seen so far in terms of BRL per tonne. Obviously, it's going to impact by FX and a few other variables there, but so far, about a 30% reduction in mining unit cost.

Okay. And so can you just tell me what the processing costs are right now?

I don't have that right in front of me. We can certainly follow up on the call after the call.

Okay. And then just one last question about the Matinha vein. As I review how the resource transitioned to reserve, it's greater than the 23% dilution that seems to have been used in the estimate. Can someone clarify what occurred with that specific vein? The other vein, the San Antonio vein, appears to align with the 23% dilution you mentioned. However, this one decreased from 11 grams per tonne in resources to 6.65, which is nearly a 40% reduction. Is there anything specific I should consider regarding this?

Yes. Obviously, the right, the 23% is average across. I think when you get to specifics, and we can address this offline, too. I think it's probably a better form. But when you look at the planned stopes that we have with sublevel stoping, they're obviously larger than room and pillar. And so that tends to increase planned dilution when you look at any kind of variability in the ore body in terms of its orientation, dip, any contours, you tend to pull in more planned dilution when you're using larger stopes. And so again, that 23% is the average across the ore body. So we can talk more specifically about the Matinha vein and some of the impacts there in the update offline. But hopefully, that gives you kind of a rough sense of what we're looking at.

Yes. And then just a last question. Are you going to file a 43-101 on this one? Or did you do it already? I'm sorry, I'm on the road right now.

Yes, no worries. We will provide that within 45 days of the news release that went out yesterday. So expect it before year-end.

The next question comes from Roald Ross with Clarksons Securities.

Congrats also on the record production. I wanted to ask about the costs this quarter and maybe some commentary if there are any cost pressures in the business right now. So on Caraíba, it appears to be an 8% increase in mining costs and 28% increase in processing costs, while at Xavantina, there seems to be a jump in sustaining CapEx, so is there a trend of increasing costs or any color to add to that increase?

No, none other than what we outlined in the call. Obviously, we did increase production volumes a lot at Caraíba, which had an impact. But if you normalize that for volume, I think you see that it's pretty comparable quarter-on-quarter. Obviously, we had a higher grade in Q2. So Q3 was a bump up. We expect that to come down in Q4, as I outlined on the call at Caraíba. Xavantina, I think there's some timing differences there on capital. So I wouldn't read too much into that in terms of increasing costs. I think I commented on one of the earlier questions about inflation in Brazil. That's a reality of all operations, I think not just in Brazil, but globally, quite frankly, and we're working hard to make sure that we offset those inflationary pressures with hedges on the BRL so we can protect our operating margins going into next year.

Okay. Great. Second and final question also. It appears that the company is in a phase now where everything is sort of centered on getting Tucumã at the nameplate capacity. But after achieving that later next year, how would you describe the vision of the company and sort of the next phase of the company? I expect that the furnace growth leg is a bit further into the future. How would you describe sort of that next phase for Ero?

No, that's exactly right. I mean I know we don't get asked a lot about it. But when you look across our portfolio, we still have a number of value-generative projects that are ongoing or in process. Gelson and I were on site at Caraíba over the weekend and reviewing the progress on our shaft project to access a higher-grade zone in the Pilar mine, which we think will transform productivity and obviously, margins for that asset when that comes online in 2027. That's a big investment that we've committed to. We've been working that over a number of years. The shaft right now is about 870 meters below surface. And right now, it takes about five minutes to get down to that level in the kibble compared to almost an hour driving down the ramp. So that will make a significant improvement in our company later on in 2027. Xavantina to that part of the portfolio is obviously a big value creation exercise. I'm incredibly proud of what we've been able to do there, not just in terms of unlocking value from gold concentrates, but also the mechanization of the mine. If you look at the planning, effort, and execution of those investments and that project, it's been a big success this year. Again, very proud of the work that we're doing there. We see with keeping that 1 million ounce target in mind, we see opportunities there to eventually increase production. Obviously, that needs additional studies. There’s ventilation, drilling, development involved in that and some infrastructure. So we're working on studies to help support that for the future. But clearly, with 1 million-ounce potential and growing. Again, I mentioned some of those deeper drill holes and the very strong mineralization we continue to see in San Antonio. We for sure see opportunities to expand that operation. That's something that we're working on for the next year. And then you hit on the head for us. It looks like a very compelling opportunity. Obviously, we're working hard right now on the preliminary economic analysis and the drilling, which remains on track for the first half of next year. If I take a big step back, I've had the distinct privilege of being the first employee at Ero Copper nine years ago and to watch what's happened this year and see our teams firing on all cylinders here at the end of Q3 and early into Q4. It's been an incredible year of transformation and pretty exciting to see the results that we've been able to produce. As I said, nothing is a guarantee or a layout for sure. We have a lot of daylight between now and December 31. But when I look at beyond December 31 in this year, I'm incredibly excited about the legwork that we've done and where we're heading.

Since there are no more questions, 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.

Yes. Thank you, everyone. Thank you for participating. For those of you that are traveling back from various site visits, safe travels. I look forward to following up over the coming days and weeks and giving an update on our outlook for 2026 early in the new year. Thank you very much.

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