We came across a bullish thesis on Ero Copper Corp. (ERO) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on ERO. Ero Copper Corp. (ERO)'s share was trading at $14.83 as of Dec 4^th. ERO’s trailing and forward P/E were 78.05 and 4.32 respectively according to Yahoo Finance.

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Since June, the copper market has seen some price consolidation, with Ero Copper (ERO) experiencing a notable decline, dropping from $21.42 to $15.31. Despite this setback, Ero's fundamentals remain intact. The company is generating operational cash flow but is heavily investing in growth capital expenditures, with an expected EBITDA of around $180 million from copper and $120 million from gold. However, Ero's capex projections exceed $300 million for 2024, including exploration costs. This aggressive investment strategy aligns with the company's exploration-focused model, which was identified as a key risk in earlier analyses.

Looking ahead, Ero’s Tucuma Project, which is expected to ramp up copper production from 10,000 tons in 2024 to over 50,000 tons in 2025, offers a compelling growth catalyst. At current copper prices of $4 per pound, Ero's EBITDA for 2025 could increase by around $160 million, leading to a projected 2025 EBITDA of approximately $460 million. This implies a market capitalization of $1.5 billion, making the stock relatively expensive compared to peers like Hudbay Minerals (HBM). However, Ero’s exploration upside, particularly with the Tucuma Project and its potential to deliver significant growth in a favorable copper price environment, adds an element of high-risk, high-reward to the investment thesis. Furthermore, political risk in Brazil, where Ero operates, may decrease with the upcoming 2026 elections, potentially creating a more favorable environment for the company.

Despite its current challenges, including price volatility and ongoing investment in exploration, Ero Copper's prospects remain appealing. The company's mix of copper and gold production, combined with its exploration potential, provides diversification that could shield it from copper price fluctuations. The recent decline in the stock price, along with the improved balance sheet, makes Ero a more attractive investment opportunity now than it was six months ago. With copper's long-term fundamentals still solid—driven by increasing demand and constrained supply—Ero is positioned to benefit from this broader market trend. At current levels, Ero represents a reasonable buy, especially for investors seeking exposure to both copper and gold, with a potential upside as the market continues to digest the company's growth trajectory and the ongoing evolution of its exploration portfolio.