Ero Copper Reports Record Third Quarter 2026 Results

Ero Copper posts record Q3 results, accelerates debt reduction, and reaffirms strong 2026 guidance.

What the company is saying

Ero Copper Corp. reports record quarterly financial and operating results for Q3 2026, highlighting a 6% sequential increase in consolidated copper production to 18,345 tonnes at C1 cash costs of $2.51 per pound. Gold output at Xavantina rose 23% to 25,258 ounces, with 17,414 ounces recovered from historic concentrate stockpiles at C1 cash costs of $621 and AISC of $710 per ounce. Management, led by President & CEO Makko DeFilippo, attributes these gains to higher sales volumes, favorable metal prices, and operational improvements, including cost savings from the OneEro initiative and effective foreign exchange hedging. The company emphasizes accelerated deleveraging, reducing net debt by $100 million in the quarter and nearly $200 million since 2025, with a net debt leverage ratio now at 0.5x. Ero reiterates its 2026 copper production guidance of 67,500 to 77,500 tonnes and updates cost guidance to reflect inflation and currency pressures, while noting that hedge gains could offset these increases. The narrative is confident, data-driven, and positions Ero as delivering on both operational and financial commitments.

What the data suggests

The disclosed figures show a substantial quarter-on-quarter improvement across all key metrics. Copper production rose to 18,345 tonnes, with Caraíba and Tucumã contributing 9,387 and 8,958 tonnes at C1 cash costs of $2.89 and $2.12 per pound, respectively. Gold production at Xavantina reached 25,258 ounces, including 17,414 ounces from historic stockpiles at low costs, while mined gold was 7,844 ounces at higher costs. Cash flow from operations increased 39% to $191.2 million, adjusted EBITDA rose 39% to $200.6 million, and net income attributable to owners climbed 30% to $116.2 million ($1.10 per diluted share). Adjusted net income was $129.3 million ($1.22 per diluted share), up 48%. Net debt fell to $353.5 million, with available liquidity at $264.1 million, including $114.1 million in cash and $150.0 million in undrawn credit. The foreign exchange hedge program delivered realized gains of $10.4 million in Q3 and $30.3 million YTD, with hypothetical cost reductions if allocated pro rata. Guidance for 2026 remains robust, with copper production expected at 67,500–77,500 tonnes and gold from Xavantina at 75,000–80,000 ounces. Updated cost guidance reflects inflation and currency headwinds, but hedge gains could bring full-year copper C1 costs back in line with original targets. The company completed the 45,000-meter Phase 3 drill program at Furnas more than two years ahead of schedule, advancing permitting and technical studies for a 2027 Pre-Feasibility Study.

Analysis

The announcement's tone is positive but proportionate to the substantial realised progress disclosed. The company provides detailed, audited figures for copper and gold production, cash costs, EBITDA, net income, cash flow, and debt reduction, all showing significant quarter-on-quarter improvement. Forward-looking statements (guidance for Q4 and full-year, cost projections, and capex guidance) are clearly separated from realised results and do not dominate the narrative. The majority of key claims are realised and supported by hard data, with only a minority being forward-looking. Capital intensity is discussed, but the company demonstrates strong cash flow, liquidity, and active deleveraging, mitigating concerns about long-dated, uncertain returns. There is no evidence of narrative inflation or overstatement; the language is factual and supported by comprehensive financial and operational disclosure.

Risk flags

• ●Inflationary pressures and a stronger BRL, partly linked to the ongoing U.S.-Iran conflict, have increased cost guidance for copper and gold production. If these macroeconomic headwinds persist or intensify, actual costs could exceed updated guidance, pressuring margins.
• ●The company’s cost guidance assumes continued effectiveness of its foreign exchange hedge program. If hedge gains do not materialize as projected, or if currency volatility increases, the anticipated cost reductions may not be realized, impacting profitability.
• ●Operational execution risk remains, particularly in maintaining production growth and cost discipline at Caraíba, Tucumã, and Xavantina, as well as delivering on the planned tailings filtration expansion and underground development. Any delays or underperformance could affect both output and costs.
• ●The Furnas Copper-Gold Project, while ahead of schedule on drilling, still requires successful completion of permitting, environmental studies, and metallurgical testwork before a Pre-Feasibility Study in 2027. Delays or negative findings in these technical workstreams could postpone or jeopardize project advancement.
• ●While net debt reduction and liquidity improvements are positive, the company still carries $353.5 million in net debt. Sustained free cash flow generation is required to further reduce leverage and maintain financial flexibility, especially if commodity prices weaken.

Bottom line

Ero Copper’s Q3 2026 results confirm strong operational momentum, with record copper and gold production, sharply improved cash flow, and accelerated debt reduction. The company’s financial disclosures are detailed and credible, with realised gains in production, profitability, and liquidity. Updated cost guidance acknowledges real inflation and currency risks, but management’s hedge program and operational initiatives provide partial mitigation. The Furnas project’s rapid drilling progress is a long-term positive, though its economic impact will depend on future technical and permitting milestones. Investors should focus on Ero’s ability to sustain production growth, control costs amid external pressures, and deliver on near-term Q4 guidance. The most important takeaway is that Ero is currently executing well on both operational and financial fronts, but ongoing macro and project execution risks remain.

Announcement summary

(TSX:ERO, NYSE:ERO) Ero Copper Corp. reported consolidated quarterly copper production of 18,345 tonnes in concentrate for Q3 2026, a 6% sequential increase, at C1 cash costs of $2.51 per pound produced. Gold production from the Xavantina Operations totaled 25,258 ounces, up 23% from the previous quarter, with 17,414 ounces recovered from historic gold concentrate stockpiles at C1 cash costs of $621 and AISC of $710 per ounce. Mined gold production was 7,844 ounces at C1 cash costs of $1,892 and AISC of $3,607 per ounce. Cash flow from operations reached $191.2 million, up 39% quarter-on-quarter, while adjusted EBITDA was $200.6 million, also up 39%. Net income attributable to owners was $116.2 million, or $1.10 per diluted share, a 30% increase from the prior quarter. Adjusted net income attributable to owners rose 48% quarter-on-quarter to $129.3 million, or $1.22 per diluted share. The company reduced net debt by approximately $100 million during the quarter and nearly $200 million since the beginning of 2025, bringing net debt to $353.5 million. The net debt leverage ratio improved to 0.5x at quarter-end from 1.2x at December 31, 2025. Available liquidity increased by $82.3 million quarter-on-quarter to $264.1 million, including $114.1 million in cash and cash equivalents and $150.0 million of undrawn availability under the senior secured revolving credit facility. The foreign exchange hedge program generated realized gains of $10.4 million in Q3 and $30.3 million year-to-date, which, if allocated pro rata, would reduce full-year consolidated copper C1 cash costs by approximately $0.15 per pound and Xavantina's full-year C1 cash costs and AISC by approximately $50 per ounce. Consolidated copper production guidance remains at 67,500 to 77,500 tonnes, with Q4 expected to be the strongest quarter. Updated consolidated copper C1 cash cost guidance is $2.25 to $2.45 per pound, reflecting inflationary pressures from the ongoing U.S.-Iran conflict and a stronger BRL; with hedge gains, this would be $2.10 to $2.30 per pound. Total gold from Xavantina is expected to be 75,000 to 80,000 ounces, including approximately 45,000 ounces from historic stockpiles and 30,000 to 35,000 ounces of mined production. Xavantina C1 cash cost and AISC guidance for mined gold production is $1,650 to $1,800 and $3,300 to $3,600 per ounce, respectively, or $1,600 to $1,750 and $3,250 to $3,550 per ounce with hedge gains. Capital expenditure guidance remains unchanged at $285 to $330 million. The company completed the 45,000-meter Phase 3 drill program at the Furnas Copper-Gold Project in Q3 2026, more than two years ahead of schedule, satisfying the exploration component of the earn-in agreement with Vale Base Metals. Key technical workstreams at Furnas, including permitting, hydrogeological and environmental studies, and metallurgical testwork, are advancing in support of a Pre-Feasibility Study expected in 2027. Caraíba Operations produced 9,387 tonnes of copper at C1 cash costs of $2.89 per pound, a 12% quarter-on-quarter increase in production. Tucumã Operation produced 8,958 tonnes of copper at C1 cash costs of $2.12 per pound, with modular tailings filters scheduled for installation and commissioning in Q4. Xavantina Operations increased gold production and recovery by 23% quarter-on-quarter, with gold sales up 47% to 24,957 ounces. Financial highlights for Q3 2026 include revenues of $348.0 million, gross profit of $169.6 million, EBITDA of $195.8 million, and cash, cash equivalents, and short-term investments of $114.1 million. Year-to-date cash flow from operations was $421.9 million, with capital expenditures of $222.3 million and interest, lease, and finance payments of $63.2 million, resulting in $136.4 million of cash available for deleveraging, of which $132.0 million was applied to debt principal repayments. The company declared commercial production at the Tucumã Operation effective July 1, 2025.

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