Ero Copper Corp. (NYSE:ERO) Q2 2025 Earnings Call Transcript

Ero Copper Corp. (NYSE:ERO) Q2 2025 Earnings Call Transcript August 1, 2025

Operator: Thank you for standing by. This is the conference operator. Welcome to the Ero Copper Second Quarter 2025 Operating and Financial Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Courtney Lynn, Executive Vice President, External Affairs and Strategy. Please go ahead.

Courtney R. B. Lynn: Thank you, operator. Good morning, and welcome to Ero Copper’s Second Quarter Earnings Call. Our operating and financial results were released yesterday afternoon and are available on our website, along with our financial statements and MD&A for the 3 and 6 months ended June 30, 2025. A corresponding earnings presentation can be downloaded directly from the webcast and is also available in the Presentations section of our website. Joining me on the call today are Makko DeFilippo, President and Chief Executive Officer; Wayne Drier, Executive Vice President and Chief Financial Officer; Gelson Batista, Executive Vice President and Chief Operating Officer; and Farooq Hamed, our new Vice President of Investor Relations, who joins Ero in mid-July.

Many of you already know Farooq, and I’m sure you’ll have the opportunity to connect with him soon. Before we begin, I’d like to remind everyone that today’s discussion will include forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. For a detailed discussion of these risks and their potential impact on our business, please refer to our most recent annual information form available on our website as well as on SEDAR and EDGAR. Unless otherwise noted, all figures discussed today are in U.S. dollars. With that, I’ll now turn the call over to Makko DeFilippo.

Makko DeFilippo: Thank you, Courtney, and thank you all for taking the time to join us today. I want to spend some time talking about the important foundational work we’ve been doing over the last several months to illustrate why 2025 is really a year of 2 halves. Early this year, we initiated an operational excellence framework. During the first half of the year, we made significant progress across our operating portfolio, laying the necessary groundwork to deliver safe and sustainable growth in production for years to come. It was a period of significant change, driven by a back-to-basics approach, combined with some major steps forward in strategy and technology across our operations. During this transformation, we refined our operating strategies, improved predictive maintenance, reduced our unplanned downtime, improved our fleet management and dispatch systems as well as hired and integrated new leadership in critical roles all throughout the company.

This fundamental groundwork was necessary and nonlinear. The significant changes we have made across the company are focused on stabilizing operating performance and preparing our organization for the long-term growth we see ahead of us. This work was undertaken while successfully completing the necessary repairs at Tucumã and completely changing the mining method at our Xavantina operations. I am extremely proud of our teams for their effort on Ero’s transformation over the last 6 months, and we are starting to see the benefits reflected in our operating results. Second quarter culminated in the announcement of commercial production at Tucumã and was highlighted by significant quarter- on-quarter increases in production from both Caraíba and Xavantina.

The turnaround at Caraíba and Xavantina contributed to record consolidated copper production and solid financial performance, leading indicators that we have the right teams in place and the right operating framework to achieve our results, but I certainly recognize the first half was not without its challenges. When I look ahead to the second half of the year, I see a different picture. The foundational work we have completed over the last several months is setting us up well to continue building momentum in the coming quarters. Our revised guidance range reflects our expectation that our third quarter will be better than the second, the fourth quarter better than the third and that 2026 will be better than 2025. The way I think about this is that we arrived a bit late to the station, but if you step back with me and look at the second half of the year in isolation from the first, you will see an annualized rate that is closely aligned with our longer-term production outlook across each of our operations, late to the station, but full steam ahead.

Before I turn the call over to Wayne to discuss our financial results, I would like to share a bit of detail on our improved operating performance at Caraíba and Xavantina, the progress we are making at Furnas and how this all aligns with our broader strategy. At Caraíba, we saw a solid turnaround in operating performance this quarter, highlighted by a 25% increase in copper production when compared to Q1. Initiatives that we launched to enhance operating performance and drive efficiencies are delivering results. A few of the behind-the-scenes highlights achieved during the second quarter include a 50% reduction in unplanned infrastructure downtime, record pace backfill rates and a more than 10% improvement across the board in our mobile equipment fleet availability.

In parallel, we have started deploying new to Caraíba but well-established technologies in dispatch, tracking and monitoring that are transforming the way we operate. We are shifting our focus slightly in Pilar during the second half of the year to optimize our mining center of mass within the upper levels of the mine. We expect this strategy to result in full year copper production trending to the low end of guidance, but we see this implementation paired with ongoing operational improvements, giving us the ability to enhance our cost control efforts, and we expect C1 cash costs to be in the bottom half of our guidance range for the full year. At Xavantina, we spent the first half of the year setting up the mine for mechanization, a long-term investment that will unlock considerable value for the operation.

We spent some additional time in H1 to get this transition setup right. We worked during Q2 to prepare the mine, prepare our teams, hire new roles that were needed on site, all fundamentally geared to ensure we could do it successfully and safely. The additional time was worth it. Gold production was up an impressive 17% versus Q1, and we expect the full benefit of mine mechanization to flow through our results in the second half of the year as mine tonnages improved sequentially. Our low-profile equipment is working well. The stopes we have mined using mechanized methods have been a definitive success, and we see a clear pathway towards meaningfully increasing production volumes from Xavantina over the next several months. At Furnas, we completed our Phase 1 drill program in early July and have maintained 8 drill rigs on the project to ensure we can complete most of the Phase 2 drill program, an additional 17,000 meters by year-end.

Our Phase 2 program includes a greater proportion of extensional holes to depth and we are already seeing strong signs of success in this program. Technical work streams to support the preliminary economic analysis for Furnas are ongoing, and we remain on track to complete this study during the first half of next year. To briefly recap, we are delivering on our 2025 strategy. We set out this year to improve our existing operations, achieve commercial production at Tucumã, delever our balance sheet, aggressively advance long-term growth initiatives at Furnas and initiate returns to shareholders. We are well on our way. I was in our offices and on site last week in Brazil, and I am proud and thankful for the work our global leadership team is doing to achieve these objectives.

To ensure we have sufficient time for Q&A, I will leave it there and pass the call to Wayne, who will provide more detail on our financial results.

Wayne Drier: Thank you, Makko. Our strong financial results were driven by record consolidated copper production and favorable metal prices, contributing to adjusted EBITDA of $82.7 million and adjusted net income attributable to owners of the company of $48.1 million or $0.46 per share. Our liquidity position remains solid at $113 million, including $68.3 million in cash and cash equivalents and $45 million of undrawn availability under our revolving credit facility. During the quarter, we deleveraged our balance sheet by paying down $10 million of our revolver and $9 million of our copper prepayment facility. Combined with stronger EBITDA compared to the first quarter, these actions lowered our net debt-to-EBITDA ratio from 2.4x to 2.1x.

With higher production levels projected in the second half of the year, we expect to accelerate the deleveraging in the coming months. As part of our foreign exchange hedge program, our total notional position at quarter end was $240 million, consisting of zero-cost collars with a weighted average floor and ceiling of BRL 5.53 and BRL 6.52 per U.S. dollar, respectively. These extend through June 2026. While the real to dollar exchange rate has remained largely within our collar range for the quarter — the previous quarter, we did record a modest realized gain of $0.2 million during the quarter. I’ll now pass the call back to Makko for some closing remarks.

Makko DeFilippo: Thank you, Wayne. Before we move into the Q&A session, I want to take a moment to reiterate our commitment to delivering on our strategy at Ero. With operational improvements well underway and the commercial production of Tucumã behind us, we expect to continue our deleveraging path, further advance our long-term growth initiatives and position ourselves to initiate shareholder returns. With that, I’ll now turn the call back to the operator to open the line for questions.

Q&A Session

Operator: Our first question is from Dalton Baretto with Canaccord Genuity.

Dalton Baretto: I want to start by asking about Tucumã. Your disclosure says that you ran at about 75% of design capacity in the last 2 weeks of June. Just wondering if you can give us a July update and also sort of highlight what kind of assumptions went into the updated guidance?

Makko DeFilippo: Yes. Thank you, Dalton. Look, from my perspective, just to recap, I think the important thing to note at Tucumã, obviously, we achieved those levels of production in June. When I look at the difference from the first half to the second half and what we’ve been able to achieve, we’ve gone from some clear bottlenecks in being able to achieve design rates to now achieving rates that are at or slightly below where we — where our design rate is, but the requirement today is different. We need to achieve the results more consistently. We’ve been able to demonstrate both in June and July that we can operate at much higher rates. So I think the main take away from us on this call is that the transition from H1 to H2, H1 was about addressing bottlenecks.

H2 is about achieving rates we’ve already achieved, but doing it more consistently. So I don’t want to get into specific numbers about July themselves. But what I can say is that when I look ahead to Q3 and Q4, we’ve been able to achieve the rates during the month for days and weeks. We need to do that consistently over the full quarter, and we expect to continue to improve sequentially through the back half of the year.

Dalton Baretto: Can you comment on sort of what percentage of design you’re assuming for Q3 and then again for Q4, just on average?

Makko DeFilippo: Yes. Look, I think where we get to by year-end, obviously, I think in our original guidance range, we’d assumed that we got to just about design capacity at the tail end of this year. We’re assuming that rolls through now into the first quarter of next year. And so when I look at our projection for Q3, Q4 going in the back half, again, it’s not — it’s in line with what we achieved in the second half of June. So getting to that 80%-ish or so of design capacity by year-end.

Operator: The next question is from Fahad Tariq with Jefferies.

Fahad Tariq: At Caraíba, I’m just trying to reconcile how good the cash costs have been in the second quarter and what the guidance is for the full year. It sounds like production is going to get better in the second half of this year. The optimization improvements, they’re all kind of trending well. I’m just trying to understand, is there a potential for cash cost to come in below the guidance range at Caraíba? Or is there some upward pressure that you can highlight?

Makko DeFilippo: Yes. Thanks. It’s a great question. Look, I mean, obviously, we’re well into our operational improvement program here at Caraíba, and we’re seeing those benefits. We started this journey in the first part of the year with Gelson and our leadership team on site, having some really strong success so far. I think where we see the upward pressure in cost in the second half relative to the first is really the shift in strategy. So we’re seeing a bit lower grades than the first half in the second half, and that’s contributing to a bit of an upward trajectory relative to the first half. I’d say when you look at the full year in context of our original guidance range, we still see that coming at the lower half of the range.

Again, that’s been, I would say, supported by ongoing favorable TC/RC environment as well as elevated byproduct metal prices as well. So for sure, there’s the potential there to be at the very low end or potentially below, but we’re looking at lower grades in the second half of the year, higher throughput volumes. And we expect that for that reason to be in the lower half of the range.

Fahad Tariq: Okay. And then on Xavantina, can you just remind us how grades have been reconciling to the plan, at least in the first half of this year? And how should we be thinking about grades in the second half? Will the mechanized mining result in greater dilution?

Makko DeFilippo: I’m going to answer this in 2 parts. So we’ve spent the time to set up the mine, as I said in the opening remarks, to ensure that mechanization could deliver results successfully and safely. We’ve mined several stopes so far. Our dilution of stopes has actually been less than what we experienced in manual mining. And so we’re really, really pleased with the progress we’re seeing there. I’d reiterate it’s only a handful of stopes. We have many more ahead of us for the balance of the year, but the initial start on that program has been a definitive success. And we see grades in line with our expectations for the full year. Obviously, we had a bit of a softer Q1 in terms of grades, but going into Q2 and certainly what we’re seeing in Q3 and Q4, we expect grades to be in line with our expectations and the overall block model.

Operator: The next question is from Orest Wowkodaw with Scotiabank.

Orest Wowkodaw: I wanted to ask a couple of questions similar vein to Dalton here. Just coming back to Tucumã, can you give us an update on what the remaining bottlenecks are in terms of the operation running at steady-state throughput for longer periods of time? It sounds like you’re still somewhat in the stop-start phase, if I heard your comments earlier. And just curious again, if you’d provide any kind of throughput number for July to give us a sense of progress?

Makko DeFilippo: Yes. Thanks, Orest. Good question. I’d say definitely not stop start, I wouldn’t characterize it that way. I think where we’re — again, looking at the first half and differences in the second half of the year, we’re seeing rates that we need to achieve. We’re seeing those routinely and regularly. But when I think about the second half and the remaining hurdles we need to go through, we’ve been operating this plant for a year. Our objective now is on — is really geared towards preventative maintenance so that we can ensure consistency of operating performance. So when I look at our best days and weeks, they’re well ahead of where we need to be going in the tail end of this year to achieve our guidance, but we need to do that for the entire month and then the entire quarter.

And so that’s really what we’re seeing now and our big focus. We’ve deployed some additional resources. We’ve got support from Caraíba and our teams there to be able to ensure that we can do that in the second half. So again, distinctly different for the first half of the year. We had fundamental bottlenecks that need to be addressed. Those were piping valves, some of the pumps that we need to switch out. We made those changes. Now we’re really into the operational consistency phase of the operation.

Orest Wowkodaw: Okay. And any comments on throughput for July?

Makko DeFilippo: No, Orest — no comments on July.

Orest Wowkodaw: Okay. Maybe just shifting gears. I apologize if I missed it, but I didn’t — I don’t think I saw anything in your disclosure about the shaft sinking at Pilar. Can you just give us a quick update there? Is it tracking on schedule, on budget? Or where are things at on that?

Makko DeFilippo: Yes. Great question, Orest, and thank you for asking. The shaft project is going really well. At the end of June, we’re about 700 meters below surface. So roughly halfway, I think, at this point, end of July here, roughly halfway down. Obviously, CapEx is tracking well with our expectations, and we expect that to be operational in 2027, which is reflected in our longer-term outlook for Caraíba.

Operator: The next question is from Ralph Profiti with Stifel.

Ralph M. Profiti: Makko, I want to ask a question on Caraíba. The contribution from the Surubim pit. Just wondering what — how much of that was in the second quarter numbers? How much of that is planned for the second half of the year? And when you talk about mining tonnage sort of outperforming, is this a haulage distance issue? Is this drill and blast optimization, something on grade control? Just wondering where that outperformance is coming?

Makko DeFilippo: I think the question on outperformance is yes to all those things, to be fair. There’s been a big focus on operational excellence. The team has been doing an incredible job there, again, not just on the maintenance side, but also a review of all our block designs, ventilation improvements, consistency of our haulage fleet, lots of small improvements that are contributing to those gains. Surubim is a great question. I think as everyone on this call knows, Surubim is an important contributor to our production profile in the second half of this year and next year. So we certainly see those benefits coming in as we get to the — as we’ve gone through now for the last 18 months through the final pushback, at least what we know today, the final pushback with the Surubim operation and now getting into some of the higher grades and those become increasingly meaningful to our production profile in the second half of this year and then also in 2026.

And that’s aligned with our long-term strategy. It’s important to the overall value of Caraíba hasn’t changed. Again, we’ve been on a journey there at Surubim for the last few years since we opened that operation back up. And now it’s really the period where we get to generate the returns on that pre-stripping that we’ve done for the last several years.

Ralph M. Profiti: Okay. Great. And how has the power situation demand…

Makko DeFilippo: Sorry, cut out on this end. I know the question is about power, but the second half of that question was completely cut out for us on this end. Can you just repeat that?

Ralph M. Profiti: My apologies. Just wondering how the plant is responding to the incremental power draw requirements.

Makko DeFilippo: At Tucumã, yes, we don’t see any bottlenecks. As I said on our last conference call, we don’t see any barriers with respect to power at Tucumã. Again, really the main focus for us is on preventative maintenance and making sure that we can achieve consistent performance.

Operator: The next question is from Bryce Adams with Desjardins.

Bryce Adams: Also following on from Dalton’s questions. I too was hoping for some more color on July Tucumã numbers. If you can’t talk to the mining and milling rates, can you talk to how much stockpiled material you had on site as of June? And were you drawing on or adding to the stockpiles in July?

Makko DeFilippo: Yes. Thank you, Bryce. Good question. With respect to stockpile, yes, our mining rates have obviously trended above where we needed to be since we started the pre-stripping. We slowed down mining rates a bit in Q2 just because the stockpile volumes that we have available are so significant. And in July, we started now again to really add to that stockpile. So we’re still in that 1.5 million to 2 million tonne range, which is where we’ve been basically since we started production or at least got through the tail end of last year. So that stockpile volumes remain the same. We expect the second half of this year to build a bit more of additional stockpile as we increase mining rates. And again, that’s aligned with our long-term strategy at Tucumã.

Operator: The next question is from Anita Soni with CIBC World Markets.

Anita Soni: First time I’m asking a question on your call. I just wanted to get an understanding on Caraíba, the magnitude of the grade decline that you’re expecting in the back half of the year. So currently, the first half is averaging 1.22% and trended up a little in Q2 from Q1. So does it — is it in a similar kind of range band, like will we get down to 1.1%? Or is it 1.2%, 1.15%?

Makko DeFilippo: Yes. Great. Thank you, and thanks for the question. I appreciate first time hearing your voice on this call. So thanks for asking. I think 2 things are important when you look at the plant throughput and grade profile at Caraíba in the second half of the year. Number one is that Surubim becomes an increasingly important contributor to our mix of plant fleet feed. Surubim has a lower average grade than our underground mines. It’s high margin, especially the second half of this year to next year, but that will drag down overall blended throughput grades in the second half of this year. Our guidance range assumes on a full year basis will be somewhere between 1.1 — or sorry, yes, 1.1% and 1.2%. So you can run through the numbers in the second half of the year based on that. But I think the most important distinction is that you’ve got this increasing contributor of Surubim to our overall mix, which is lower grade than our underground operations.

Anita Soni: Okay. And then what are you targeting for the exit rate on the throughput at the — I think you mentioned 80 — was it 80% throughput of the nameplate capacity?

Makko DeFilippo: Yes. If I look at where we’re projecting to exit at the end of the year, as I said, we’ve closed out June achieving more than 75% of our target capacity. When I look at our days and weeks, we’ve achieved well beyond that. Really, the objective here in the second half is to do that more consistently day on day, week on week and quarter-on-quarter. If I look at the normalized exit velocity at year- end, we expect to be above 80%. So I think the main message here is our revised guidance range considers that we have continued improvement, but it’s not outside of the range that we’ve already been able to demonstrate we can achieve.

Anita Soni: Okay. Can I move to a question on Xavantina? Could you — in the technical report, and I can’t see it explicitly stated, but can you remind me what the nameplate capacity of the mill of the processing plant is there?

Makko DeFilippo: Yes. The design capacity, it’s disclosed in our tech report around 300,000 tonnes of ore. So it’s still a small plant overall, and we expect to still have roughly — even though we’re seeing increased volume quarter-on-quarter, we expect to use an increasingly — increasing share of that capacity, but still not at full design rates by year-end.

Anita Soni: And how do you see that ramping up going into 2026?

Makko DeFilippo: Yes. Look, we’re doing that work now. It’s a great question. 2026, we just kicked off our budget process this week. What I can tell you is that we’re very excited about Xavantina for 2026 and the work that our teams are doing there, but it’s a bit too early to talk specifically about how we see that coming in. Obviously, we — if you look at the second half of this year and the annualized rate that’s implied in our revised guidance range and you look at that, it’s still 50,000 to 60,000 ounces of production. And so we’re pretty happy with what we’re seeing in the second half of this year, and we expect that to continue into 2026.

Anita Soni: And I’m sorry if I missed it, but was — could you explain why the recovery rates went down at Xavantina this quarter?

Makko DeFilippo: Yes. Look, Xavantina, we have a mix — the deposit itself there has — it’s a composition. It’s a quartz vein that has carbonaceous material in it. Our recovery rates can be variable depending on how much carbonaceous material we get in there. Again, I think that’s a temporary reduction, and it does happen from time to time, but we don’t see that continuing through the rest of the year.

Operator: The next question is from Guilherme Rosito with Bank of America.

Guilherme Rosito: Can you guys hear me all right?

Makko DeFilippo: Yes, we can. Thank you.

Guilherme Rosito: So, my first one is maybe broad and you touched a bit on that in your opening remarks. But if we look at Ero Copper’s history, you guys always delivered guidance. And now for the past 2 years, you had to revise it downwards. And I know you touched a bit on that. But as you look back, what are the main lessons you guys are taking from this experience? What do you think were the challenges? And what are you learning? And how is that changing how you guys are thinking about Furnas and how you develop that project? Then my second question is to Wayne. Now that Tucumã commercial production was finally declared, next step is starting to return cash to shareholders and cash returns. So what do you think is a reasonable time line to expect you guys starting to starting the actual cash returns?

Makko DeFilippo: Yes. Thank you. Two zingers there. Appreciate the question. Look, it’s a fair one on guidance, and I appreciate the question. There’s a couple of things that I think are really important to note. In this transition that happened this year, we made a lot of changes all throughout the organization. The depth and extent of those changes to be — as I said in my opening remarks, obviously arrived a bit late to the station where we had hoped to be at the outset of this year. I think there’s a couple of things that took a little bit longer, particularly at Xavantina and Tucumã. Those are for different reasons. When I look at what happened at Xavantina in this past year, again, I’m really proud of the decisions we made.

We want to make sure that we could perform safely and consistently. And so we took a bit of extra time there than original plan. And I think those results will be demonstrated clearly in the second half of the year. At Caraíba, a little bit different, right? New teams coming on board, looking at the operating strategy, how can we improve performance there. And as you see, that’s had an impact on guidance, but again, improving margins to help offset that. And then at Tucumã, look, this is a notoriously difficult time to get projections right. I think we’ve come a long way in achieving stability and consistency of operating performance. We addressed the bottlenecks that we had in the early part that were associated with design. And we see those bottlenecks as being behind us.

I think if you look at the capacity of our organization, and I’m looking at our site leadership team on site leaders around this table. If you look at what we’ve been able to do at Xavantina and Caraíba this year, we have the capacity in our organization to achieve excellent operating performance safely to improve our maintenance performance, and that’s why we’ve got some comfort going in the second half of the year on guidance. And yes, look, I appreciate the question. I think there’s been a lot of changes in our organization in the last 6 months. Really happy with the leadership team that we’ve assembled and what we’re doing here. And again, I think the updated guidance reflects our commitment to consistent operating performance to doing it safely and being transparent and realistic about where we’re at.

One important thing to note is that the high end of our guidance across the board is still at the low end of our prior guidance. We certainly see scenarios where that’s achievable if things go extremely well, but we’re looking at the realities that we faced in the first half of the year and flowing those through. So I think our — to answer your question directly, I think the updated guidance range that we’ve put out now reflects a lot of the feedback and learnings that we have over the last year. So I hope that answers the question. Yes. And then the last piece of that, the question that you asked me, just going through the notes here is how does that impact how you think about Furnas. I’d say it doesn’t. Furnas is still a development project fundamentally.

We’re in our drill program. We’ve been able to execute to our expectations. We expected that we’d finish our Phase 1 drill program by the end of June, and we did the first few days of July. So right on track with our expectations there. And Furnas really is going from the drilling phase now into the PEA, and we’re pretty happy with that timeline that we have in terms of coming out the first half of next year with that. So I hope that answers your questions. If you’ve got any more than happy to take that conversation offline and have a more in-depth discussion. Go ahead, Wayne.

Wayne Drier: Sure. Thanks. Guilherme, in terms of your second question, obviously, I think we’ve had a slightly slower start to our ability to deleverage our balance sheet and build up cash reserves. So I think we’re still very thoughtful about that. We’d like to see the deleveraging continue through the end of the year. We obviously have robust discussions with our Board around when is the appropriate time to start considering shareholder returns. But as I said, I think we would like to — the main — the first focus is obviously to get the balance sheet back to where we want it to be. And I think that’s going to be the priority through the rest of the year.

Operator: The next question is from Craig Hutchison with TD Cowen.

Craig Hutchison: Just one question for me. Just on Caraíba, one of your initiatives to control cost was to focus on Pilar’s mine fleet on the upper levels of the mine to reduce haul distances. I was just wondering how sustainable this is? Is this something you can achieve for the next couple of years? Or is it more focused just on this year alone?

Makko DeFilippo: Yes. Thanks, Craig, for the question. We certainly see the opportunity with the drilling that we’ve done in the upper mine, the nonavailable resources to continue this strategy over the next couple of years until the shaft comes online. I think there’s the balance to be had there between some of the higher grades we have in the deepening, some of the continued development — as you know, Craig, we — operating flexibility for Pilar was always part of our strategy, and we’ve been really happy that over the last 6 months to a year, the work that we’ve done with mobilizing a second development contractor has afforded the opportunity to look at some of these strategies and think differently about our near-term plans.

Again, I think overall, we certainly see the potential to continue there. Taking these operational initiatives and looking into the future, irrespective of whether we’re mining in the shallow parts of the mine or the deeper part of the mine, the work that we’re doing now on maintenance, predictive maintenance, people tracking, dispatch systems, getting back to basics with some of the technology that Gelson and the team are implementing, those will benefit all areas of the mine. So whether we’re mining the shallow part of the deepening for the years to come. And I think that’s really the key theme for me is this operational framework that we put in place early in the year, our teams have worked really hard to achieve the results that we’ve been able to achieve.

We still see a pathway for improved performance. And that’s our focus for the next 6 months and 18 months. And obviously, those will benefit our performance greatly when the shaft comes online in 2027.

Operator: The next question is from Matthew Murphy with BMO.

Matthew Murphy: I have a follow-up on Tucumã. You’ve mentioned a few times just the push for consistency, preventative maintenance. Wondering if you can add any color about which areas of the mill need the most attention. I think you had some work on the tailings filter last quarter. Anything else you can flag that needs focus at this point and how you’re addressing it?

Makko DeFilippo: Yes. As I said, year into the operation here, our main focus areas, and I’ll let Gelson add if he’s got any color to add here. But our main focus areas at Tucumã, obviously, the filter presses an area of additional attention and preventative maintenance routines. Again, we’ve got 2 filters that have been operating for a year, one that’s been operating only for a short period of time, given that it was down for a significant portion of the ramp-up. And so making sure that we’ve got the systems in place and the people in place and teams in place to be able to do that. And then also on the crushing and conveying systems, right? Those have been operating for a year and making sure that we’ve got consistency of performance there.

When I look to the milling and flotation side, we’ve had a really strong performance there in terms of throughput rates, recoveries have all been good. So we see less of a focus, I’d say, more at the front of the plant. Obviously, we assume lower availability for our crushing and conveying systems overall, but still need some attention points there to address. Gelson, I don’t know if you have anything to add on that.

Gelson Batista: No, Marco, thank you. I think you hit there. Asset management strength and optimization on the predictive maintenance. I think these are key aspects across the board on the entire plant and the areas that you mentioned on the crushing and conveying and of course, the filter.

Operator: The next question is from Orest Wowkodaw with Scotiabank.

Orest Wowkodaw: Actually, my question has been answered.

Makko DeFilippo: Thanks, Orest.

Operator: This concludes the question-and-answer session. I’d like to turn the conference back over to Makko DeFilippo for any closing remarks.

Makko DeFilippo: Yes. Thank you for joining the call, everyone. I appreciate the time on a Friday before the long weekend for those dialing in from Canada. Just a reminder that all of us are available for any follow-up questions, and we’ll chat soon. Thank you very much.

Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.