Ero Copper Corp. (NYSE:ERO) Q4 2024 Earnings Call Transcript

Ero Copper Corp. (NYSE:ERO) Q4 2024 Earnings Call Transcript March 7, 2025

Operator: Thank you for standing by. This is the conference operator. Welcome to the Ero Copper Fourth Quarter 2024 Operating and Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. [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 Lynn: Thank you, operator. Good morning, and welcome to Ero Copper’s Fourth Quarter and Full Year 2024 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 three and 12 months ended December 31, 2024. 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; and Gelson Batista, Executive Vice President and Chief Operating Officer. 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, everyone, for taking the time to join us today. As we previously released operating results in February, I thought I would take a moment here to outline our strategy reflect on some of Ero’s achievements in 2024 and set expectations on cadence for 2025. First and foremost, Ero is an incredible business. We have a committed leadership team, a passionate workforce, a diverse portfolio of operating assets and an enviable long-term growth project in Furnas. It is an honor to be stepping into this role at such a pivotal time for the company. There are several moving pieces in our portfolio over the next few quarters, which we will have ample time to address on this call, but our near-term strategy is simple and can be summarized by four steps.

Step one, achieved commercial production at Tucuma; two, deleverage our balance sheet; three, aggressively advance the long-term growth initiatives we have in our portfolio, including our partnership on Furnas; and four, initiate returns to shareholders. So with that said, let’s start with Tucuma. And before diving into the challenges we’ve worked through, I want to highlight some key positives. Since completing the project on schedule last year with a local workforce and doing it without a single lost time injury, our mining operations have continued to track ahead of schedule. The grades from our infill drill program have been higher than we expected, and of particular note, our process plant has consistently achieved at or above design net recoveries and concentrate grades for months now.

I am deeply proud of these achievements. At the same time, I acknowledge we’ve had several challenges that impacted production, both outside and inside our mine gate. External to our operation at Tucuma, we faced a multi-week power outage due to an extreme weather event, as well as extended periods of low power quality, which required intervention. Since resolving these factors, we encountered conventional [teething] (ph) pains as we ramped up throughput volumes. These teething pains can broadly be described as material flow constraints, which range from minor equipment issues such as valve dimensioning, small component and pipe weld failures, as well as more substantial constraints, including damage sustained to one of our three tailings filters, which impacted operating flexibility in that portion of the circuit.

While the dollar quantum for these fixes and adjustments is small on the order of $2 million, each one of these adjustments required dedicated engineering, manufacturing, delivery to our site in Para and installation during a scheduled maintenance period. This is a long-winded way of saying they all required time. Working closely with our operational teams and third-party providers at the end of last year, we developed a plan to implement these changes during two extended periods of planned downtime in January and February. These shutdowns were completed, and I’m pleased to report that we are already seeing substantial improvement with performance strengthening from late February into March. The final repair to our third tailings filter remains on track for completion by the end of Q1.

With these improvements, either completed or on track for completion this month, we are already seeing and expect to continue to see increased plant reliability and throughput volumes and consequently, increasing production beginning in the second quarter. I want to stress this production cadence is aligned with our reaffirmed full year guidance. Switching gears slightly to production cadence at Caraiba and Xavantina for different reasons, we expect Q1 to be the softest of the year as we work to set these operations for long-term success. At Caraiba, as I outlined on our Q3 conference call, we only expect to see the benefit from additional development we are doing at Pilar to emerge over the next several quarters. Mobilization of a second development contractor is well underway.

And if you have any specific questions on how that work is progressing, Gelson can provide details during our Q&A. At Xavantina, we are working to transition the mine to a fully mechanized operation to increase productivity, reduce costs and most importantly, reduce exposure to our workforce, which is our top priority. We have a capital investment cycle occurring at Xavantina this year, which includes the purchase of equipment to complete the mechanization of the mine, ventilation and cooling upgrades, as well as an asset integrity program to ensure that we can operate through the duration of our now extended reserve life. Again, it is worth noting that our full year guidance, including elevated all-in sustaining cost guide for 2025 reflects these investments.

We are excited about the future prospects for the Xavantina operations and see considerable potential for further growth. For both of these assets, we expect softness to be isolated to the first half of the year as these changes are implemented and expect the impact to be the most evident during the first quarter. Again, our guidance ranges reflect this. With that backdrop, let’s discuss the second step of our strategy, deleveraging the balance sheet. There are two key points to highlight here. Firstly, we see a clear pathway to an inflection as Tucuma production ramps up, and we expect a fairly significant deleveraging to occur with the achievement of commercial production. Near to medium term, we are targeting a normalized net debt leverage ratio of 1.5 times.

And while the pace of achieving this milestone will be influenced by copper price, we are confident that the quality of our assets and consolidated operating margins will support our ability to meet this objective. Second, regarding overall liquidity, we remain well positioned as Tucuma round the corner and the recent expansion of our revolving credit facility, which Wayne will touch on. The next two steps of our strategy, advancing long-term growth and shareholder returns will emerge over the coming quarters. While long-term growth remains a priority, we intend to pursue shareholder returns more proactively once we make meaningful progress on deleveraging our balance sheet. Touching on Furnas quickly. We have five drill rigs on site right now, and expect to complete the 28,000-meter Phase 1 drill program by midyear and the majority of the 17,000 meter Phase 2 drill program by year-end.

In parallel, we are advancing key technical work streams, including a geotechnical program, hydrogeology studies, as well as additional metallurgical test work on the high-grade zones we are drilling. We are also progressing initial mine and infrastructure layout designs to support a preliminary economic assessment, which we expect to complete in the first half of 2026. We have a great partner on this project in Vale Base Metals, and we are very encouraged by the results we are seeing thus far. 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 financial results reflect record copper production in the fourth quarter, as well as improved metal prices and stronger operating margins for the full year. These factors contributed to cash flow from operations of $60.8 million for the quarter and $145.4 million for the full year. Adjusted EBITDA for the quarter and year were equally strong at $59.1 million and $216.2 million, respectively. During the fourth quarter, we experienced increased foreign exchange volatility, particularly around the U.S. presidential election. This included significant fluctuations in the U.S. dollar to Brazilian real exchange rate and the real ended the year at over 6 to the dollar. As a result, we reported realized losses of $5.9 million for the quarter and $8.2 million for the year on foreign exchange hedges we implemented in late 2023 to mitigate the risk of the real strengthening against the U.S. dollar during Tucuma’s construction and ramp-up.

At quarter end, our total notional foreign exchange derivative position stood at $390 million, consisting of zero cost collars with a weighted average floor and ceiling of BRL5.43 and BRL6.49 per dollar, respectively, extending through the end of 2025. These realized foreign exchange losses impacted adjusted net income by approximately $0.06 per share for the quarter and $0.08 per share for the year. As a result, adjusted net income attributable to the owners of the company was $17.4 million in the fourth quarter or $0.17 per diluted share and $80.4 million for the full year or $0.78 per diluted share. Our liquidity position remains strong at approximately $90 million at year-end. As noted, in our financials, we further enhanced our financial flexibility shortly after year-end by amending our existing credit facility to support our expanded operating footprint.

This amendment increased total commitments from $150 million to $200 million extended the maturity date from December 2026 to December 2028 and secured a 25 basis point reduction in the applicable margin on drawn funds at certain leverage ratios. As a result, our pro forma available liquidity at year-end was $140.4 million. I’ll now pass the call back to Makko to share some concluding remarks.

Makko DeFilippo: Thank you, Wayne. Before we move into the Q&A session, I’ll just quickly thank our global management team for all the hard work we have put in over the past several months. We have reorganized our business, made substantial operational improvements across our portfolio and are well positioned as ever to execute on our vision for Ero. I look forward to delivering continued progress in the quarters ahead. Now, I’ll turn the call back to the operator to open the line for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] The first question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi. Good morning. A couple of follow-up questions on the ramp-up at Tucuma. I guess the first one, are you still experiencing intermittent power outages that’s impacting the mill? Or is that now pretty much settled out?

Makko DeFilippo: Yes. Thanks, Orest. We — I guess we outlined on our last quarterly conference call, we’re still working to implement a longer-term solution. So we’re still seeing some oscillations in power quality. I would just note that the adjustments we made at the end of last year have significantly improved our plant’s ability to accommodate that volatility. So to put that into context, last year when we were experiencing the interruptions in power quality, we were having between 15 and 20 mill power trips per day, which, as I’d like to say, was a bit like trying to run a marathon with your shoelaces tied together. Since we made the changes late last year, we’ve experienced just a handful of month, so significantly reduced.

Obviously, we still want to put in a long-term solution, which we’ve been working on here and expect that to have that done pretty imminently here. I think as I outlined last — on our last quarter conference call, the investment there is quite small. We’ve finalized the engineering work and are working hard with our third-party provider to put that in place. That installation is off-site. We don’t anticipate any interruption to operations going forward. But again, for the long term, it’s the right investment to make.

Orest Wowkodaw: So is that expected then — should we think about like by end of Q2, that off-site solution is finished?

Makko DeFilippo: Yes. Yes. And as I said, we don’t — so far, what we’re seeing here coming out of the shutdowns in Jan-Feb. We haven’t seen any impact to our progress on ramp-up related to power quality because of the changes that we made in Q4.

Orest Wowkodaw: Okay. And you mentioned the tailings filtration issue, I think, expected to be resolved by the end of the quarter. Anything else that’s notable at this point that we should be thinking about that could impede the ramp-up beyond sort of your normal teething pains?

Makko DeFilippo: Orest, it’s a great question. I — nothing notable that we see now. I mean, I think like all ramp-ups, there’s uncertainty in the pace once we complete the — we jump over the hurdles that are in front of us, which I feel comfortable that we have worked very hard in Q3 and Q4 to identify those constraints. So all I can say is that, there’s nothing notable that we see in front of us right now. However, I would note that we were very thoughtful in putting our guidance range together for Tucuma to reflect some of the uncertainties in resolving these issues. And I’d say so far, things are on track. We’re pretty happy with performance coming out of the shutdowns in Jan-Feb and nothing new or notable that we see right now.

Orest Wowkodaw: Okay. And just one more quick one, if I could. If we start to see some volatility in the copper price and there’s potentially some teething pains on the ramp up, can you just remind us what — sort of what are the order of operations on financial levers that you would pull to try to protect liquidity. And I don’t — I assume that means cutting exploration and others. But I’m just curious on sort of what the pecking order is if required.

Makko DeFilippo: Yes. Look, I mean, I think I said in the call, we’re pretty confident where we’re at. Obviously, copper price uncertainty remains topical. I think the reality is where we’re at now with the expanded credit facility, we feel comfortable that we can execute on our strategy, particularly with Tucuma running the corner here. As you mentioned, we have some levers in our portfolio, particularly around the work we’re doing Furnas, as outlined, we have 40,000 meters of drilling planned this year. Our criteria and under the earn-in agreement we are only required to do 28,000 meters of drilling. So we’ve got quite a bit of flexibility on those work programs. There are some other areas that I think we’re investing for the long term that are really important that we’d like to continue, which is infill drilling and deepening, obviously, working hard to get the shaft completed at Pilar.

Those are all some of the levers we have on the investment side. Again, we’d like to keep those programs going. They’re reflected in our guidance ranges for the year, but certainly some flexibility on that side. We also have, as I outlined, a pretty large investment cycle at Xavantina this year. We continue to be frustrated by the value that we get for that asset in our portfolio, and we have a great partner there. So we could potentially look to isolate that from our CapEx spend for the year. Again, all these longer-term solutions or all these levers, I think, are about dislocations of value and we feel pretty comfortable with where we’re at right now.

Orest Wowkodaw: Thank you. Appreciate the color.

Operator: The next question comes from Guilherme Rosito with Bank of America. Please go ahead.

Guilherme Rosito: Hi. Good morning. Thank you for taking my questions. So I have two questions. First is on the C1 guidance. I just wanted to go over and understand what’s driving the large C1 increase this year, especially as we consider at $570, $575. And you should have some volume improvement throughout the year, especially in second half. So just trying to understand what’s driving? How should we expect C1 throughout the year? And then my second question is on Xavantina. I just wanted to understand [indiscernible] large increase in [indiscernible] this quarter. The C1 increase, but the increase is quite substantialize. So I’m just trying to go through that as well. Thank you.

Makko DeFilippo: Yes. Thank you. So let’s start with Caraiba and C1. Great question. Thanks for raising it. So C1 guidance for the year, I would say, that if you look back at history, partly because of the — of the last eight years, the Brazilian reais, as you quite well know, has consistently depreciated against the U.S. dollar. We’ve been consistently, I’d say, fairly conservative with FX when we put together our guidance for the year. Obviously, with the BRL on the path that it is on now, we expect that to benefit our C1 cash cost relative to our guidance range, which was done in a lower BRL, but given the volatility in diesel prices and kind of where we see our business, we felt comfortable with the range we put forward and certainly, the FX.

The macro environment is highly uncertain right now, and we are pretty thoughtful about putting our C1 cash cost guidance together for both assets. But I would say the biggest drivers are going to be FX, as you mentioned, being substantially more conservative than spot pricing on the BRL. We’re also mining our contribution from the deeper part of the mines increased year-on-year. So that’s driving a bit of additional costs in our business. And then grades as well. So a bit lower grades across the portfolio. A combination of factors there, Surubim and Vermelhos, obviously being top of mind on driving a bit lower consolidated grade. And that all has an impact on our operating margins at Caraiba. Again, I think we’ve been pretty thoughtful about putting the range there and some of the levers that we have in our portfolio that we’re working on.

I think I’ve talked last couple of years about the full potential program that we initiated across the company. We’ve continued to work on that. And I expect to continue to see cost reductions, particularly coming out of this reorganization that we did here in the first quarter. So stay tuned. We’re pretty thoughtful about our guidance range there at Caraiba. On Xavantina all-in sustained costs. A couple of things there. It’s really just — it’s a relatively small operation, so high grade, small tonnage. And when you get fluctuations in grade or volume because of the — just because of the denominator being small, it tends to magnify the impact on all-in sustaining costs in C1. And those are the main drivers there. So I’d say it’s volume related, nothing intrinsic to the asset.

When you look ahead to our 2025 guidance, as I mentioned, the biggest step-up in all-in sustaining costs year-on-year is all the investments that we’re making in asset integrity, mine improvement, and that’s fully reflected in our guidance and in our all-in sustaining cost.

Guilherme Rosito: Great. That’s very clear. Thank you guys.

Operator: The next question comes from Craig Hutchison with TD Cowen. Please go ahead.

Craig Hutchison: Hi. Good morning, guys. I just wanted to circle back on the power [indiscernible] at Tucuma. Can you just give us an explanation or [indiscernible] explanation with regards to what the off-site power solution is? And is there any further work you guys are doing on the on-site power solution, like is there a potential for some standby power point in the future?

Makko DeFilippo: Yes. Thanks, Craig. Good questions. Let’s start with the easy one, and then we’ll get into some technical aspects on the electrical side. But — so on site, no, the answer is no, we’re not considering that at the moment. We don’t think that’s the situation requires alternative on-site energy like generators. Obviously, we could do that in the future, but we don’t see a need. I would say that the windstorm that happened last year, I just want to remind you, not only did it knock out power to operations, but it took up power to 230,000 people in the region. So you’re talking about a major infrastructure outage. It was a unique situation that we certainly don’t expect to happen again. On the power quality, I’m going to say this as simplistically as possible.

If you’ve got questions afterwards, I’m happy to get into the into the engineering aspects. But effectively, there’s two alternatives. We’re looking at both solutions right now to see which one is the most cost effective, given the work that we did on power monitoring. But effectively, it’s a series of capacitors or batteries that — when there’s an over voltage, they absorb energy when there’s under voltage it discharge energy so that everything downstream is experiencing stable power quality, even though it’s coming into that piece of equipment has volatility. That’s a very, very, very simplified way of explaining an electrical engineering problem. But if you’ve got any questions, you can give me a call afterwards, and I’ll explain it in more detail.

Craig Hutchison: I appreciate that. And maybe just one follow-up question for me. Just on Xavantina, you mentioned I think Q1 is going to be a biggest quarter. Is Q1 going to look a lot like Q4 with respect to the grades and throughput? Or should we expect may be slightly lower grade, very higher throughput?

Makko DeFilippo: Yes, I expect it to be down quarter-on-quarter. Over we’re in early March here. Team is working still on achieving a good plan. I think there’s a number of factors there that are contributing. Just as a reminder, Xavantina had significant grade outperformance for I think the better part of two years relative to plan, we obviously see that grade coming down just based on the levels that we’re operating. And then some of the, again, renewed focus on asset integrity and some operational changes that we made on procedures and protocols and preparation for mechanized mining. We pushed out some of the pillar recovery that we had in Q1 and that we did in Q4. Those are very high-grade areas. They — we have a [indiscernible] plant that we invested in, that process involves putting paste it and then recovering those hybrid pillars.

And we’ve been very successful at doing over the years, but the timing of that pillar recovery has — tends to influence the consolidated grade quarter-on-quarter. The area that we’ve — the way that we’ve outlined it was Q1 is really about setting up some of those areas to make sure that we can do it safely and effectively. And so I would expect a drop in tonnage as we set that mine for mechanization and do some additional development, change the interlevel spacing and then a bit on grade just because of the timing of that pillar recovery program and some of the additional work that we’re doing there.

Craig Hutchison: Thanks, guys.

Operator: [Operator Instructions] Next question comes from Marcio Farid with Goldman Sachs. Please go ahead.

Marcio Farid: Hi. Good afternoon. Thanks for the time. I don’t feel like you’re going to have a [indiscernible], obviously the focus on Tucuma’s commercial declaration, Caraiba spotlight as well, the leverage improvement. I’m just wondering, I mean, do you need to see all those four strategic pillars or capital allocation drivers can be sold before we take into next steps, either M&A or further partnerships as well. Can you feel that new levels happening before you actually [indiscernible] the next steps, please. Thank you.

Makko DeFilippo: Yes. Thank you. The questions didn’t come in crystal clear for us on our end. So I heard a couple of points in them to address. I probably missed a couple of things. So just let me know what I missed. But I heard you talk about prioritization of those steps and potential M&A opportunities as is relates to continued growth. I’d say, look, our focus as an executive team as a company is on the four steps we outlined. Obviously, it’s critical that we achieved commercial production for Tucuma. It’s the gateway to the next three steps of the strategy. And so, that’s our main focus right now. Obviously, we look at things. We have a corporate development team, some of which are sitting here next to me. I would say that as our stakeholders and shareholders expect us to look at things, particularly when they are in our backyard.

But we’re crystal clear about our priorities. And I’d say that M&A doesn’t — isn’t an immediate focus. But again, obviously, we look at things to see if it makes sense. We think we have an incredible development asset in Furnas. And so, I look at the world through that lens. Obviously, it’s a bit longer term and not producing right now, but it’s a really high-quality asset. We’re doing the work on that project. I think as we — as our technical and operational teams dig in there. I think we get more and more excited about the prospects and what that asset means for our company. We have an incredible asset or incredible partnership with Vale Base Metals on that project. And we expect to continue to talk about what we’re doing here in the quarters ahead.

But I’d say, again, crystal clear focus on the four steps we outlined. Unless there’s a major value dislocation, but hard to see that right now given our priorities. So that was one. I’m getting notes passed to me, but it says would M&A happen before Tucuma delivered, I’d say no. I don’t think we get the value for — yes, no, it won’t happen.

Marcio Farid: Perfect. Thank you.

Operator: The next question comes from Dalton Baretto with Canaccord Genuity. Please go ahead.

Dalton Baretto: Thanks, guys. Makko, congrats on your first call as CEO. A couple of questions from me. I want to start on Caraiba. The second contract or it sounds like they’re mobilized. It sounds like they’re going to be done by the end of Q1. What sort of steps are you putting in place to ensure that once they are done and you’re back to one contractor that you don’t sort of fall behind again?

Makko DeFilippo: Yes. Good question, and thanks, Dalton. I welcome any constructive feedback after the call is over. So on a contractor, maybe I’ll just start out here and then I’ll let Gelson dive in on mobilization and how we’re doing there. I think for — when you go back all the way to our long-term production plans, I think it’s important to note that we always have — in fact, up until 2021, third-party contractor being as part of our operating strategy and our fleet was always the case. When I look ahead on our development rates, we continue to expect about a third of our development in the future to be allocated to a third-party contractor. And when I look over the long term, I expect us to continue to focus on making sure that we maintain and increase development.

Obviously, the deepening that we have over the years we’ve been doing additional development there. And so, all I can say Dalton for assurance is that on the development is that it’s something that we track on a monthly basis development sufficiency. It’s something that we’re focused on increasing this year, obviously, with the second contractor coming in. And yes, it’s part of our strategy going forward. It’s reflected in our guidance, and I continue to expect it to be reflected in our guidance going forward. So maybe I’ll just hand the call over to Gelson for an update on mobilization.

Gelson Batista: Thanks, Makko. So just to clarify on the second contractor, they’re finishing what we call, on the job training. It’s like a 45-day process, is actually that we do regularly on site. They are in process of finishing that. We hope that we finished that by the end of the — of this month. We’re talking about like 290 people, right, and a large fleet. This is a very good contractor has been benchmarking the equipment check. Looking at what you asked about how we’re going to make sure that the performance of this contractor will be aligned with our expectation. I think there will be work in separate areas. We’ve been operating in various areas where we’re improving conditions on the infrastructure side, which, of course, impacts the contractor also checking very carefully about the conditions of the equipment that they bring in on site, the previous contract that we have in there, they actually did a pretty good month in February so far from what we’re waiting for them.

Mostly related to equipment availability and quality of the equipment also the people. So we’ll be working very closely with all the operations and the contractor putting this together moving forward. So I expect that, yes, there will be a transition period there, but we expect this development rates that we increase further.

Dalton Baretto: Great. Thank you for that, Gelson. And then maybe I can switch gears to Tucuma. Makko, I know you said that you’re almost there or pretty much there on the recovery front. On the throughput side, I know you’re taking sort of multiple scheduled shutdowns. But when the mill is up and running, can you give us a sense for how it’s doing and what sort of the cadence or shutdown is over the next sort of weeks and months?

Makko DeFilippo: Yes. Thanks, Dalton. Yes, as I outlined, again, pretty much from the day that we turned on that plant. We’ve achieved recoveries and concentrate grades above our design targets. I think you see that pretty well in Q4 with approaching 89% recovery, obviously, pretty high grades as well, 2.2% or close to it. I think there’s a couple of things that are happening right now, Dalton. Obviously, we can’t see these shutdowns in Jan-Feb. We’re in the process of increasing production volumes on the front of the plant. I’d say one of the realities is that, even if you look at Q4, 2.2% copper through the plant, that’s about 2.5 times to 3 times above the life of mine average feed. And so, where we’re seeing really strong performance, I would say, is the back of the plant, particularly our concentrate filter, which is operating near.

It’s currently coming out of the shutdown, it is operating near its design. And obviously, recoveries in concentrate grades are hanging in there. So when I think about the front of the plant and what throughput volumes we’re achieving there. It’s probably less relevant to the overall total contained copper in the system, and that’s where I feel like the performance is — we’re seeing really strong performance. So day-on-day, we’re increasing. Obviously, we don’t expect — well, I would hope, but we’re not expecting the life of mine average grade to remain at 2.2% copper. So what we’ll be doing over the next couple of weeks and months is ratcheting down the grade and increasing throughput volumes, And we expect overall copper production to maintain somewhat stable from what we’re achieving right now.

Again, this is relatively early days. We just came out of a shutdown in late February, seeing very strong performance. We hope it continues. Let’s see how we go here. But yes, pretty excited about what we’re seeing overall.

Dalton Baretto: Great. Thanks for that Makko. And then maybe if I can ask one last one. It was interesting to hear you talk about starting to initiate capital returns, particularly given the great profile at Tucuma. I’m just wondering if you could give any thoughts on what form that would take. Are you leading more towards buybacks, maybe a small dividend, but supplementary depending performance? Just any thoughts there?

Makko DeFilippo: Yes. Thanks, Dalton. I think it’s a bit too early to talk about the playoffs. We’re focused on getting to come up and running, delevering the balance sheet. I think the — obviously having discussions with shareholders on what form that looks like. But let’s get through steps one and two of the four step program and then have a discussion about what the — what that four looks like.

Dalton Baretto: Great. Thanks, guys. That’s all from me.

Operator: This concludes the question-and-answer question. I would like to turn the conference back over to Makko DeFilippo for any closing remarks. Please go ahead.

Makko DeFilippo: Yes. Thanks, everyone. I really appreciate you joining this morning. If you’ve got any questions, our team is always available, and we look forward to catching up in just a couple of months here. Thanks, everyone.

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