Ero Copper (NYSE: ERO) lifts adjusted EBITDA 39% on the quarter but guides costs higher

What happened

Ero Copper Corp. (NYSE: ERO) reported adjusted EBITDA of $200.6 million for the third quarter, up 39% from the second quarter. It raised its full-year copper cost guidance and left copper production and capital spending guidance unchanged.

Consolidated copper production was 18,345 tonnes in concentrate, up 6% from the prior quarter, at C1 cash costs of $2.51 per pound produced. Net income attributable to owners was $116.2 million, or $1.10 per diluted share. Cash flow from operations was $191.2 million. The company calls these record financial metrics and credits higher copper and gold sales volumes and favorable metal prices.

Key numbers

Metric	Latest	Change	Source
Adjusted EBITDA, Q3 2026	$200.6 million	from $77.1 million, +160.2%	SEC 6-K, change calculated by OptimistFi
Revenue, Q3 2026	$348.0 million	from $177.1 million, +96.5%	SEC 6-K, change calculated by OptimistFi
Net debt, Sept. 30, 2026 versus Dec. 31, 2025	$353.5 million	from $501.7 million, -29.5%	SEC 6-K, change calculated by OptimistFi
Consolidated copper C1 cash cost, Q3 2026	$2.51 per pound		SEC 6-K
Full-year copper C1 cash cost guidance	$2.25 to $2.45 per pound		SEC 6-K

Read more: Ero Copper (ERO) company research

Where earnings and debt moved

Revenue was $348.0 million, up from $177.1 million in the third quarter of 2025. Gross profit rose to $169.6 million from $57.4 million. Much of the cash is going to debt.

Net debt fell to $353.5 million at Sept. 30 from $501.7 million at Dec. 31, 2025. The net debt leverage ratio eased to 0.5x from 1.2x. Ero put about 97% of the cash available for deleveraging this year toward debt repayment, or $132.0 million of $136.4 million.

Available liquidity reached $264.1 million. That includes $114.1 million in cash and $150.0 million of undrawn availability on the revolving credit facility. Capital expenditure guidance stays at $285 to $330 million. Capital spending through the first nine months was $222.3 million.

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Where costs moved

The cost line is where the quarter was weaker. Ero raised full-year consolidated copper C1 cash cost guidance to $2.25 to $2.45 per pound from $2.15 to $2.35. The company cites a stronger Brazilian real, inflation tied to the ongoing U.S.-Iran conflict, and delayed third-quarter access to the higher-grade pit bottom of Surubim at the Caraba Operations.

Caraba's third-quarter C1 cost was $2.89 per pound, against $2.32 a year earlier. Tucum came in at $2.12, up from $1.62. That was in line with the prior quarter, as initial OneEro cost savings offset inflation on input costs.

Foreign exchange hedges offset the cash impact of the stronger real. Realized hedge gains were $10.4 million in the quarter and $30.3 million year to date. They are recognized separately and are not in reported unit costs. Spread across production, the gains would cut full-year copper C1 costs by $0.15 per pound, to $2.10 to $2.30, in line with original 2026 guidance.

At the Xavantina Operations, mined gold guidance moved the wrong way. Mined output is now expected at 30,000 to 35,000 ounces, down from 40,000 to 50,000. C1 cash cost guidance is $1,650 to $1,800 per ounce, up from $1,100 to $1,350. The company cites extended first-half downtime for ventilation and cooling infrastructure and lower third-quarter grades.

Total gold guidance is 75,000 to 80,000 ounces, including about 45,000 ounces recovered from historic concentrate stockpiles. Stockpile recoveries rose 47% to 17,414 ounces in the quarter at a C1 cost of $621 per ounce.

Why it matters

OptimistFi has argued that ERO works only if the 2025 step-up proves to be a lasting gain in production and costs, not a one-year windfall. The quarter supports the production and cash half of that view and challenges the cost half.

OptimistFi's calculation shows adjusted EBITDA rose $56.6 million from $144.0 million in the second quarter, while unit costs and cost guidance moved the other way. Two items flatter the quarter. One is gold recovered from historic stockpiles, which is not mined output. The other is hedge gains held outside unit costs.

Copper production guidance also stayed at 67,500 to 77,500 tonnes, so the earnings jump is not matched by a higher volume target. Tucum produced 8,958 tonnes, in line with the prior quarter, as lower grades and recoveries offset better throughput.

What's next

Management hosts a conference call on Tuesday, Nov. 3, at 10:30 a.m. Eastern. The company expects the fourth quarter to be the strongest copper production quarter of the year at both operations, with unit costs falling at both on higher output.

Modular tailings filters are due to be installed and commissioned at Tucum in the fourth quarter. Their benefits are not in 2026 guidance. Ero projects about 15,000 ounces of stockpile gold in the fourth quarter. Copper unit costs inside the new range would support the cost half of the case. A miss would suggest the increase outlasts one quarter.

At the Furnas Copper-Gold Project, the Phase 3 drill program finished in the third quarter. A Pre-Feasibility Study is expected in 2027.

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