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1. Company Snapshot

1.a. Company Description

Ero Copper Corp., a base metals mining company, engages in the exploration, development, and production of mining projects in Brazil.It engages in the production and sale of copper concentrate from the MCSA Mining Complex located within the Curaçá Valley, northeastern Bahia state, as well as gold and silver byproducts.The company also holds a 100% interest in the Boa Esperança property, a copper development project located within southeastern Pará state; and NX Gold property located in Mato Grosso state.


Ero Copper Corp.was incorporated in 2016 and is headquartered in Vancouver, Canada.

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1.b. Last Insights on ERO

Ero Copper Corp.'s recent performance was driven by strong Q2 earnings, with a 40% year-over-year revenue growth to $163.5m and an adjusted EBITDA of $82.7m. The company's operational efficiencies and production gains, particularly in copper and gold, contributed to the positive results. Stifel Canada maintained a buy rating on the stock, citing a potential upside. Additionally, Ero Copper's second-quarter results showed improvements in production, with consolidated copper production being a highlight. The company's strong earnings growth and operational performance are key drivers of its recent success.

1.c. Company Highlights

2. Ero Copper's Q3 Earnings: A Strong Quarter Amidst Operational Excellence

Ero Copper's third-quarter financial results showcased a significant improvement in revenue, driven by a 24% increase in copper concentrate sales at Tucumã, coupled with stronger copper and gold prices during the period, resulting in revenue of $177 million. The company's adjusted EBITDA totaled $77.1 million, and adjusted net income attributable to owners of the company was $27.9 million or $0.27 per share. However, the actual EPS came out at $0.376, falling short of estimates at $1.5. The company's liquidity position stood at $111 million at quarter-end.

Publication Date: Nov -18

📋 Highlights
  • Record Copper Production:: Q3 consolidated copper production rose 20% YoY, driven by 19% growth at Tucumã and 17% at Xavantina, with Q4 expected to be the strongest quarter across all operations.
  • Strong Financial Performance:: Q3 revenue reached $177 million, up 24% YoY, with adjusted EBITDA at $77.1 million and adjusted net income of $27.9 million ($0.27/share), supported by higher copper and gold prices.
  • Gold Production Catalyst:: Xavantina’s maiden inferred gold resource (24,000 tonnes @ 37 g/t) will drive Q4 gold production, with 80% of unsold gold concentrates expected to boost cash flow over 12–18 months.
  • Deleveraging Progress:: $9 million reduction in copper prepayment facility debt in Q3, with plans to accelerate deleveraging in Q4 as cash flow improves from higher production and gold sales.
  • Operational Efficiency Gains:: Xavantina’s mechanization reduced mining costs by 30–35%, while Caraíba’s throughput hit a quarterly record. Labor cost reductions in Brazil offset inflationary pressures.

Operational Highlights

The company achieved record consolidated copper production, driven by increased contributions from Tucumã, up nearly 20% for the second consecutive quarter. At Caraíba, plant throughput levels reached a quarterly volume record, supported by sequentially higher mining rates across all three mines in the complex. The fourth quarter is expected to be the strongest production quarter of the year across all three operations. As Makko Defilippo mentioned, "the operation is seeing a continued ramp-up in production rates and throughput levels, reaching terminal velocity due to a bottleneck in the filtration system."

Growth Prospects

Analysts estimate next year's revenue growth at 45.1%, driven by the company's value-generative projects across their portfolio, including the shaft project at Caraíba, Xavantina's mechanization, and potential expansions at San Antonio. These projects aim to increase production and unlock additional value for the company. With a current P/E Ratio of 15.61 and EV/EBITDA of 10.72, the market is pricing in significant growth expectations.

Valuation Metrics

To understand what's priced in, we can look at various valuation metrics. The company's P/B Ratio stands at 2.71, indicating a moderate premium to book value. The ROE (%) is 20.12, suggesting a relatively strong return on equity. However, the Net Debt / EBITDA ratio is 2.23, indicating a moderate level of leverage. With the company's continued deleveraging efforts, this metric is expected to improve.

Outlook

Ero Copper's strong operational performance and growth prospects position the company for continued success. As the company continues to deleverage its balance sheet, paying down $9 million on its copper prepayment facility during the quarter, investors can expect improved financial performance. The expected sale of the full volume of gold concentrates at Xavantina over the next 12 to 18 months should provide a significant boost to the company's financial performance.

3. NewsRoom

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Ero Copper (TSX:ERO): Evaluating Valuation Following a Recent 4% Pullback

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Ero Copper Corp (ERO) Q3 2025 Earnings Call Highlights: Record Production and Strategic ...

Nov -10

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Ero Copper (TSX:ERO) Returns to Profitability, Lower PE Signals Value Ahead of Earnings

Nov -06

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Caraiba

Expected Growth: 4.83%

Caraiba's 4.83% growth is driven by increasing copper prices, strong operational performance, and successful exploration efforts. The mine's high-grade ore and low cash costs also contribute to its growth. Additionally, Ero Copper Corp.'s focus on cost control and efficiency initiatives has enabled the segment to maintain a high level of profitability.

Xavantina

Expected Growth: 4.83%

Xavantina's 4.83% growth is driven by increasing copper prices, strong operational performance, and successful exploration efforts. The mine's high-grade ore and low cash costs also contribute to its growth. Additionally, Ero Copper Corp.'s focus on cost control and efficiency initiatives has enabled the segment to maintain a strong margin profile.

7. Detailed Products

Copper

Ero Copper Corp. is a copper-focused mining company that produces high-quality copper cathodes from its 99.5% owned MCSA Mining Operation in Brazil.

Gold

The company also produces gold as a by-product of its copper mining operations, with a significant portion of its gold production coming from the MCSA Mining Operation.

Silver

Silver is another by-product of Ero Copper Corp.'s copper mining operations, with a smaller but still significant portion of its production coming from the MCSA Mining Operation.

8. Ero Copper Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Ero Copper Corp. is medium due to the availability of alternative metals and materials that can be used in place of copper.

Bargaining Power Of Customers

The bargaining power of customers for Ero Copper Corp. is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Ero Copper Corp. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Ero Copper Corp. is high due to the relatively low barriers to entry in the copper mining industry and the potential for new companies to enter the market.

Intensity Of Rivalry

The intensity of rivalry for Ero Copper Corp. is high due to the competitive nature of the copper mining industry and the presence of several major players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 35.66%
Debt Cost 3.95%
Equity Weight 64.34%
Equity Cost 14.53%
WACC 10.76%
Leverage 55.44%

11. Quality Control: Ero Copper Corp. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Amerigo Resources

A-Score: 6.6/10

Value: 5.3

Growth: 6.4

Quality: 5.9

Yield: 9.0

Momentum: 8.0

Volatility: 5.0

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Imperial Metals

A-Score: 6.2/10

Value: 7.0

Growth: 9.0

Quality: 7.4

Yield: 0.0

Momentum: 10.0

Volatility: 3.7

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NTIC

A-Score: 4.3/10

Value: 6.8

Growth: 5.8

Quality: 5.2

Yield: 3.0

Momentum: 0.5

Volatility: 4.3

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Taseko Mines

A-Score: 4.0/10

Value: 4.3

Growth: 5.8

Quality: 2.1

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

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Ero Copper

A-Score: 3.9/10

Value: 5.1

Growth: 3.4

Quality: 6.0

Yield: 0.0

Momentum: 5.0

Volatility: 4.0

1-Year Total Return ->

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Ivanhoe Electric

A-Score: 3.8/10

Value: 6.2

Growth: 0.8

Quality: 4.8

Yield: 0.0

Momentum: 9.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

34.58$

Current Price

34.58$

Potential

-0.00%

Expected Cash-Flows