Ero Copper’s Tucumã mine in Brazil reaches commercial production

[Redator]

Ero Copper (TSX, NYSE: ERO) said its Tucumã copper operation in Brazil achieved commercial production this week – though at least one analyst was left wondering if the company would be able to hit full-year output targets.

Tucumã produced about 6,400 tonnes of copper in the second quarter, including about 2,000 tonnes during the second half of June, Vancouver-based Ero said Thursday in a statement. Plant throughput volumes should keep increasing by year-end, supporting sequential growth in copper production during the second half, according to the company.

Located in Pará State, in the northern part of the country, Tucumã is projected to produce 37,500 to 42,500 lb. of copper in 2025 – half of Ero’s full-year guidance of 75,000-85,000 pounds. The plant, which achieved first production on schedule in the third quarter of 2024, accounts for about one-third of Ero’s net asset value, according to National Bank Financial mining analyst Shane Nagle.

Given Ero’s first-half copper output of only 11,467 tonnes, achieving 2025 guidance “appears at risk,” Scotia Capital mining analyst Orest Wowkodaw said Thursday in a note.

“While the achievement of commercial production represents meaningful ramp-up progress, the relatively weak second-quarter performance and the negative implications to 2025 guidance is a disappointing development,” he added. “We await the step function improvement in copper production during the third quarter.”

Shares drop

Ero shares fell 3.3% to C$22.93 Thursday morning in Toronto, giving the company a market value of about C$2.4 billion. The stock has ranged between C$13.17 and C$31.73 in the past year.

Following the completion of commissioning of a third filter press and modifications to the process plant, throughput levels at Tucumã exceeded 75% of design capacity last month, Ero said Thursday. Metallurgical recovery rates and copper concentrate grades have continued to meet or exceed design targets, the company added.

Recent maintenance work at Tucumã has helped the company address bottlenecks that were identified in late 2024, Ero said in an investor presentation last month. Higher mill throughput volumes should offset a gradual decline in processed copper grades. The Tucumã mill is designed to treat 4 million tonnes of ore annually.

Tucumã has proven reserves of about 30.7 million tonnes grading 0.89% copper for contained metal of 273,200 tonnes. Probable reserves, meanwhile, are estimated to be about 12.4 million tonnes grading 0.67% copper for contained metal of 83,400 tonnes.

Cash costs at the facility are expected to range from $1.05 to $1.25 per lb. of copper produced this year, according to Ero.

“Given the commercial production at Tucumã achieved by mid-year, we see a significant free cash flow inflection occurring in the second half,” Nagle said. Free cash flow in the second half could top $50 million, which would allow Ero to shift its focus towards deleveraging the balance sheet and supporting capital returns to shareholders, he added.