Financial Data and Key Metrics Changes - Ero Copper reported record copper production in Q4 2024, contributing to cash flow from operations of $60.8 million for the quarter and $145.4 million for the full year [24] - Adjusted EBITDA for Q4 and the full year were $59.1 million and $216.2 million, respectively [24] - Adjusted net income attributable to owners was $17.4 million in Q4 or $0.17 per diluted share, and $80.4 million for the full year or $0.78 per diluted share [26] Business Line Data and Key Metrics Changes - The company achieved commercial production at Tucuma, with production expected to increase in Q2 following improvements in plant reliability and throughput volumes [15][14] - At Caraiba, production is expected to be soft in Q1 due to ongoing development work, with benefits anticipated to emerge over the next several quarters [15][16] - Xavantina is transitioning to a fully mechanized operation, which is expected to impact productivity and costs in the short term [17] Market Data and Key Metrics Changes - The company experienced increased foreign exchange volatility, particularly with the Brazilian real, leading to realized losses of $5.9 million for Q4 and $8.2 million for the year on foreign exchange hedges [25][26] - The total notional foreign exchange derivative position stood at $390 million, with a weighted average floor and ceiling of BRL5.43 and BRL6.49 per dollar, respectively [26] Company Strategy and Development Direction - The company's near-term strategy includes achieving commercial production at Tucuma, deleveraging the balance sheet, advancing long-term growth initiatives, and initiating returns to shareholders [8][21] - The partnership on the Furnas project is a key long-term growth initiative, with significant drilling and technical work planned [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges at Tucuma, including power outages and material flow constraints, but expressed confidence in the ramp-up and production cadence [12][15] - The company remains focused on deleveraging its balance sheet, targeting a normalized net debt leverage ratio of 1.5 times [20] Other Important Information - The liquidity position remains strong at approximately $90 million at year-end, with pro forma available liquidity at $140.4 million after recent credit facility amendments [27] - The company plans to pursue shareholder returns more proactively once meaningful progress is made on deleveraging [21] Q&A Session Summary Question: Are you still experiencing intermittent power outages at Tucuma? - Management confirmed that while some oscillations in power quality remain, improvements have significantly reduced the frequency of power trips [34][36] Question: What is driving the large C1 increase this year? - The increase is attributed to foreign exchange rates, deeper mining contributions, and lower grades across the portfolio [51][56] Question: Can you explain the off-site power solution at Tucuma? - The off-site solution involves capacitors or batteries to stabilize power quality, with no immediate need for on-site generators [63][66] Question: What steps are being taken to ensure contractor performance at Caraiba? - The company is closely monitoring development sufficiency and expects to maintain and increase development rates with the second contractor [88][90] Question: What form will shareholder returns take? - Discussions are ongoing, but the focus remains on achieving commercial production and deleveraging before finalizing return strategies [102]
Ero Copper(ERO) - 2024 Q4 - Earnings Call Transcript