Third Quarter 2026 Operating and Financial Results Conference Call - ERO COPPER CORP

Financial Performance:

• Q3 2026 revenue reached $348 million, a 22% increase quarter-over-quarter, driven by a 10% rise in copper sales and a 47% surge in gold sales alongside strong metal prices.
• Cash flow from operations hit a record $191 million (up 39% QoQ, 260% YoY), while adjusted EBITDA reached $201 million (up 39% QoQ, 260% YoY).
• Year-to-date cash flow from operations totaled over $420 million, and adjusted EBITDA exceeded $470 million, representing 60% and 110% growth respectively compared to the prior year.
• Net debt decreased by approximately $99 million in Q3 (totaling $353 million) due to $70 million in revolver repayments, bringing the net debt to adjusted EBITDA leverage ratio down to 0.5x.
• Consolidated C1 cash costs for copper were $2.50/lb; foreign exchange hedging generated $30 million in realized gains YTD, effectively reducing copper C1 costs by $0.15/lb and Javanchina C1 costs by $50/oz.
• Liquidity improved by $82 million to $264 million, comprising $114 million in cash and $150 million in revolver availability.

Guidance and Future Outlook:

• Full-year copper production guidance is on track, with Q4 expected to be the strongest operating quarter of the year.
• Gold production from the Javanchina Gold Concentrate Program is projected at 75,000–80,000 ounces for the full year, with Q4 gold recovered from concentrates estimated at 15,000 ounces based on current assay data.
• The Furnas project Phase 3 drilling is complete two years ahead of schedule, with a Pre-Feasibility Study (PFS) expected in 2027 and the possibility of accelerating the Final Investment Decision (FID) pending PFS results and permitting progress.
• Management expects to fully repay the revolving credit facility by the end of Q4 2026.
• Tucumã is projected to exit 2026 at a 4 million tonnes per annum (mtpa) rate, sustained into 2027 following filter commissioning.
• Updated technical reports for Tucumã, including resource/reserve estimates, are expected to be released before year-end.

Business Segments and Product Lines:

• Copper Operations: Produced 18,300 tons in Q3.
  • Cariba: Produced 9,387 tons at $2.89/lb C1 costs; production up 12% QoQ driven by higher throughput and grades.
  • Tucumã: Produced 8,958 tons at $2.12/lb C1 costs; production stable with 14% throughput increase offsetting grade declines; recovery impacted by mill liner maintenance but improving.
  • Three new filters delivered to Tucumã in Q3, with installation scheduled for completion prior to year-end.
  • Pilar Shaft: Kariba's shaft sinking is 1,250m complete (300m remaining), with full completion expected in Q1 2027; $70m of the $370m budget remains, with significant spend in Q4.
• Gold Operations (Javanchina): Produced 7,844 oz from mining and 17,414 oz from concentrates in Q3.
  • Gold concentrate program delivered 47% more recovery from stockpiles QoQ, benefiting from newly commissioned mobile filter presses and inducer dryers.
  • All-in sustaining costs for concentrates are under $750/oz.

Market and Competitive Landscape:

• Management highlights the "tangible organic growth pipeline" and high-quality copper production value despite market volatility regarding AI infrastructure spending.
• Strong operational momentum and metal price tailwinds are driving sector-leading cash flow generation.
• The "One Arrow" cost savings initiative and FX hedging strategy are effectively offsetting inflationary pressures and a stronger Brazilian Real (BRL) functional currency.
• The company is leveraging its strong balance sheet and low leverage (0.5x) to maintain flexibility for growth projects compared to peers still in intensive capital phases.

Risks and Challenges:

• Inflation & FX: A stronger BRL and inflationary pressures (including elevated diesel prices) added $0.10/lb to reported C1 costs; while hedging mitigated this, unhedged portions of OPEX/CAPEX remain exposed.
• Operational Delays: Javanchina faced delays in accessing high-grade stopes in Q3, leading to lower grades processed than expected, though development levels are now at record highs.
• Cost Volatility: Cariba costs were impacted by accelerated waste stripping and maintenance costs due to fuel prices.
• SAP Implementation: Corporate G&A increased by ~30% YoY due to expensed SAP HANA cloud ERP implementation costs, expected to normalize by Q2 2027.

Management Commentary and Tone:

• Management conveyed high confidence in operational execution, emphasizing the transformation of operating performance into cash generation and balance sheet strength.
• The tone was proud regarding the 97% allocation of available cash to debt reduction and the achievement of record financial metrics across all segments.
• There was a strong focus on discipline, highlighting the successful execution of the "One Arrow" cost initiative and the strategic timing of the gold concentrate program.
• Leadership expressed certainty that Q4 will be the peak operating quarter for the year.

Analyst Questions and Answers:

• Shareholder Returns: Confirmed active board discussions on a return framework; repayment of the revolver in Q4 is the immediate priority before announcing specific return mechanisms.
• Javanchina Grades/Volume: Q4 is expected to be the strongest quarter due to the inclusion of high-grade stopes; concentrate guidance for Q4 is 15,000 oz based on assayed inventory, with potential for additional sales in 2027 once more material is dewatered.
• Tucumã Future Production: Filters are on schedule for year-end; the 4 mtpa run rate is expected to be sustained into 2027.
• Furnas Project: Phase 3 drilling is complete; FID timing will be revisited next year post-PFS; PFS target is September 2027 at the latest.
• Cariba Mix: Higher grades in Cariba will transition from the Serbim open pit to the Nos underground mine in 2027, with mix details available at the Capital Markets Day.
• Recoveries: Q3 recovery dip at Tucumã was a one-off due to post-maintenance operational adjustments; expected to return to the high 80s/low 90s in Q4.
• Technical Reports: Updated resource/reserve estimates for Tucumã will be released before year-end.

Other Key Points:

• The company completed the 45,000-meter Phase 3 drill program at Furnas two years ahead of the earning agreement schedule.
• Q3 saw a temporary recovery dip at Tucumã due to mill liner replacement maintenance, which has since been resolved.
• Corporate G&A costs will normalize to typical levels once the SAP implementation concludes in Q2 2027.
• Management reiterated the strategic priority of paying down the revolver in Q4 to fully deleverage the balance sheet.