Ero Copper sees busy 2026 as Furnas PEA nears

Brazil-focused miner Ero Copper (TSX, NYSE: ERO) is doubling down on drilling at its Furnas gold-copper project as it works on a preliminary economic assessment due to be released in the first six months of 2026.

Ero completed about 50,000 metres of drilling at Furnas this year as part of a first wave of exploration, and next year’s exploration program should be of a similar scale, CEO Makko DeFilippo said. Of the 66 drill holes that comprised the first wave, only one didn’t intersect mineralization, he said.

“We will continue to invest heavily at Furnas,” DeFilippo told The Northern Miner in an interview last week. “Our return on investment for exploration there is very high, and it will become clear in the PEA why we’re so excited of investing there.”

Ero’s PEA for Furnas will be based on the first 28,000 metres of drilling, the CEO said.

Catalyst-driven

As it exits an intense investment phase that included about $300 million to build the new Tucuma open-pit copper mine in northern Brazil, Vancouver-based Ero is gearing up for a busy year, DeFilippo says. The Furnas PEA will be the main catalyst in “a very catalyst-driven year for us,” DeFilippo said.

Located in Para State, Furnas sits about 190 km northeast of Tucuma and about 50 km southeast of Vale’s (NYSE: VALE) Salobo operation. It has access to extensive regional infrastructure, including paved roads, a power substation and a nearby Vale railroad loadout facility.

Furnas is covered by an earn-in agreement that Ero signed with the Brazilian multinational in July 2024. Under the deal, Ero can earn a 60% stake by completing several exploration, engineering and development milestones. Vale will keep an 11% free carry interest on future construction capital.

An investment decision on Furnas is not expected before at least three years, following the completion of a definitive feasibility study, Ero says in an investor presentation on its website.

Three operations

For now, Ero is producing copper at two of its three operations: Tucuma, which began commercial production in July, and the company’s flagship Caraiba mine, in Bahia State. A third operation, Xavantina, produces gold and silver.

Ero expects to churn out between 68,000 and 80,000 tonnes of copper and 40,000-50,000 oz. of gold this year. Copper production has more than tripled from 20,100 tonnes since the company went public in 2017.

Ero is spending about $300 million to build a new external shaft at Caraiba – which, when completed in 2027, will be the second deepest in Latin America. The new structure will allow crews to access a higher-grade part of the orebody.

Oversized facility

Another Ero priority in 2026 is to step up exploration at Xavantina. Located in Mato Grosso State, Xavantina has an oversized processing facility that forces Ero to operate it only 15 to 20 days a month because there isn’t enough feed from the mine to keep it open non-stop, the CEO says.

“In 2025 Ero made a big investment to make the mine 100% mechanized,” DeFilippo said. “That has allowed us to increase production volumes, and we are looking at ways to better utilize the installed capacity. That obviously involves exploration drilling. I would expect there to be a bigger push at Xavantina given the potential that we see there.”

Those projects are why DeFilippo says he’s content to shun acquisitions and won’t even think about investing elsewhere.

“We’re in a great position to grow the company with what we have today,” he said. “I don’t feel a huge amount of pressure to get more projects. I think we stand to be a very high-growth company over the next several years.”

Geological potential

Brazil’s geological potential and legal framework are two key reasons to keep operating in the country, the CEO adds.

“Brazil is a great place to make an investment,” he says. “You go where you have geological potential and where you have a strategic advantage. When I put that Venn diagram over Ero, it’s the reason that we have continued our strategy to grow in Brazil. We are pretty bullish about the country, irrespective of what happens in the broader political spectrum.”

Since Ero entered Brazil almost a decade ago, “we have had both political parties in power and different state and municipal governments,” DeFilippo adds. “The common theme across political spectrum is the recognition that Brazil stands to be an outsized contributor in providing critical minerals to the world.”

Supply constraints

Copper’s recent run-up is unlikely to end anytime soon, DeFilippo says. He cites declining grades, supply disruptions and a dearth of new large-scale copper projects as key support factors.

Comex copper futures rose 0.8% to $5.56 per lb. Tuesday morning, their highest since late July. That took their gain since the start of 2025 to almost 38%, putting them on course for their largest annual gain since 2009. 

“A decade ago when we started the company, we were talking about demand, demand, demand,” DeFilippo said. “When I look out on the horizon today it looks much more like a structural supply problem. There aren’t that many assets that are going to move the needle. Obviously there are brownfield expansions, but when you go through that list it’s pretty thin.”

“When you look at what’s happening in the industry and what we’re hearing from our customers, we don’t see that supply tightness alleviating any time in the immediate future.”

Ero shares fell 0.7% to C$36.65 Tuesday morning in Toronto trading, giving the company a market value of about C$3.8 billion ($2.8 billion). The stock has gained about 85% since the start of the year.