Ero Copper Corp.

Thank you for standing by. This is the conference operator. Welcome to the AeroCopper First Quarter 2026 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. To join the question queue, you may press star then one on your telephone keypad. If you do need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Farooq Ahmed. repeat investor relations. Please go ahead.

Thank you, operator. Good morning, and welcome to AeroCopper's first 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 three months ended March 31st, 2026. A corresponding earnings presentation can be downloaded directly from the webcast and is also available in the presentation section of our website. Joining me on the call today are Marco DiFilippo, President and Chief Executive Officer, Wayne Dreyer, Executive Vice President and Chief Financial Officer, Jelson Batista, Executive Vice President and Chief Operating Officer, and Courtney Lin, Executive Vice President, External Affairs and Strategy. 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 CDAR and EDGAR. Unless otherwise noted, all figures discussed today are in U.S. dollars. With that, I'll now turn the call over to Marco DiFilippo.

Thank you, Farouk, and good morning. These days, it is difficult to know exactly what each morning's news will bring, so let me start by saying I appreciate all of you dialing in for this. Before diving into the quarter, I wanted to share three observations on the back of several weeks of travel throughout Brazil, New York, Boston, comparing notes with Wayne from Sesco, and a recent trip to Washington, D.C., all of which have implications for our sector and are highly relevant for Aero. First, we see broad enthusiasm for copper backstopped by tight supply and a serious lack of quality development assets at a time where there is a structural shift occurring across the copper demand landscape. Second, sector-wide cost inflation is not only topical, it is a ground truth reality. While we are better inflated than many of our peers, and I'll come back to that shortly, we're not immune from it. Third, and perhaps most relevant for our business, is that Brazil is getting a lot of attention. The world has woken up to Brazil's deep capital markets, its economic diversity, resource production capacity, and its relative strategic positioning in an increasingly complex world. Capital inflows into Brazil have, unsurprisingly against this backdrop, resulted in a considerable strengthening of the Brazilian real against the US dollar, which has a direct impact on our business. These observations matter because a lot of our work and strategy over the past year has been focused on making sure that Arrow is as well positioned as possible to benefit from these copper market tailwinds, advancing our long-term growth strategy while protecting our bottom line from cost and currency pressures. I see this happening in three ways. First, our operating portfolio prominently features the right mix of commodities at the right time in the sector, and we are developing an extremely high-quality long-term asset in Ferdat. Second, our operations do not rely on sulfuric acid. A considerable portion of our production base is from underground, and we operate in Brazil, where power is majority source from renewables. There are well-established local supply chains, and diesel is subsidized. Third, with Brazil in the global spotlight, initiatives we undertook last year, particularly around foreign exchange rate risk management, are serving to offset cost impacts from the rapid strengthening of the BRL we have seen so far this year. Circling back to Q1, from my perspective, this is the first quarter that shows our portfolio of investments and risk management in action. It shows where those investments are delivering and where there is more progress to come. Before I turn the call to Jelson and Wayne to cover the details on our Q1 performance, I want to offer some perspective on what a difference a year makes. Looking back on the last 12 months, our consolidated copper production is up nearly 40%, and gold sales volumes, when including gold concentrates, are up 77% year-on-year. Quarterly revenue and adjusted EBITDA over the same period are up 110% and 100% respectively. Our focus on debt reduction has resulted in year-on-year decreases in net debt of approximately 70 million, while our leverage ratio has reached targeted levels of one times, down markedly from approximately 2.4 times this time last year. Most importantly, over the past year, we have put considerable focus on transforming safety across our operations. A few weeks ago, while in Brazil, I was with our teams at Tucumã to mark a significant milestone. Four years without a lost time injury representing more than 11 million hours worked from the moment we first broke ground. This milestone is rare in our business. I am cognizant it was earned shift by shift, and it belongs to our entire organization, past and present. Operationally during the quarter, our minds tracked largely to plan. Across our copper operations, Q1 production and cost performance have us well positioned against full year guidance. At Javanchina, Q1 was the trough quarter we expected due to necessary ventilation and cooling investments as we advanced that operation forward. With that work substantially completed by the end of April, we expect to see mining rates and throughput show a step change increase in the second half of the year, supporting full-year gold production and cost guidance. Jelson will speak to this in more detail. As Wayne will discuss, our financial results in Q1 were bolstered by strong copper and gold prices, while our foreign exchange risk management program helped to mitigate some of the external cost pressures we are seeing elsewhere across the sector. With that, and to ensure sufficient time for questions, I will turn the call over to Jelson, who will walk you through our operational performance, our production outlook for the remainder of the year, and an update on key projects.

Thank you, Marco, and good morning, everyone. As Marco said at the outset, the work we have done across our operations is starting to come through in the numbers. At Caraiba, meal throughput in Q1 exceeded 1 million tons. I would highlight this is the only second quarter in the history where we have achieved that level, with the first being Q4 of last year, following the completion of our debottlenecking program. Copper production declined from Q4 on lower head grades, reflecting planned stop sequencing at Pilar, and reduced ore feed from the Surubi open pit, where heavy-than-average rainfall in January and February constrained mining rates. Caraiba's C1 cash cost for the quarter of $2.79 per pound reflected these operational dynamics, as well as the impact of a stronger VRL. Looking ahead at Caraiba, we expect process tones and grade in Q2 to be broadly similar to Q1, with strong production in the second half, driven by a normalization of mining rates and access to deeper and higher grade benches at Sudo B, as well as higher grades and tonnage from Pilar and Vermelhos due to planned stop sequencing. Q1 cash costs are expected to decline in step with high grades in the third and fourth quarters, supporting our reaffirmed full-year cost guidance. At Tucuman, copper production decreased modestly from Q4 on lower process grades, partially offset by higher throughput. Tucuman C1 cash cost for the quarter was $1.97 per pound, in line with our expectations as well as full-year guidance. Looking to the balance of the year at Tucumán, we expect process tons to increase from Q1 levels, with process copper grades projected to moderate. As a result, production is expected to be slightly weighted towards the second half on higher throughput, with C1 cash costs expected to be relatively stable for the year, supporting our reaffirmed full-year guidance at Tucumán. With respect to 2Command's tailings filtration circuit, we have two initiatives on the way to unlock further capacity and increase overall throughput. First, as you know, we have placed orders for three new modular tailings filters. We continue to expect delivery of these units on site during the third quarter and for them to be operational during the fourth quarter. We are in the process of adding additional filter plates to each of our three existing filter presses, which the fulfillment of orders placed this time last year. The expansion of our existing installations will result in the increase in the capacity of each installed filter press by approximately 7%. Taken together, these two initiatives are expected to meaningfully increase Tucuman's total tailings filtration capacity and allow us to achieve a significant increase in planned throughput as we exit 2026. To reiterate, while there continues to be potential for these two initiatives to deliver throughput benefit in later part of the year, they are not reflected in our 2026 guidance. At Cervantina, This quarter was transitional as we completed necessary upgrades of our ventilation and cooling infrastructure required to support higher mining rates going forward, particularly as the mine gets deeper. While this investment impacted first quarter gold production and costs, we expected Q1 to be the weakest gold production quarter of the year due to the critical infrastructure work alongside additional ground support investments made to enhance operational performance beginning in the second quarter. Looking to the remainder of the year, we expect mining rates and throughput to pick up through the end of Q2 and maintain high rates in Q3 and Q4. As a result, We expect 60% to 65% of Savantino's production to be in the second half, with costs declining significantly from Q1 levels and allowing us to maintain full-year operating production and cost guidance at Savantino. We also sold approximately 4,300 ounces of gold and concentrated Q1. Concentrate sales volumes declined from Q4 due to the rainy season, which impacts our ability to dry the material before transporting to port. We expect gold concentrate sales volumes to benefit significantly from the drier condition we are experiencing now. Currently on site, we have approximately 12,000 tons of concentrate in the drying phase. as we have outlined on page nine in our results presentation. While we are now firmly in the dry season, we are in the process of finalizing the installation of an industrial dryer and a mobile filter press to proactively support continuity of concentrate sales through the next rainy season. With that, I'll turn the call over to Wayne to walk through our financial results.

Thank you, Gelson, and good morning, all. Revenue in the first quarter was $263.2 million, up from $125.1 million in Q1, 2025, driven by stronger copper production from both Kariba and Tukuma, higher realized prices for both copper and gold, and the contribution of gold concentrate sales at Savantina. Our consolidated copper C1 cash cost for the quarter was $2.39 per pound, up approximately 8% year-over-year. This increase reflects, in part, a stronger Brazilian real against the US dollar, which impacted our reported C1 costs in Q1 by approximately $0.06 per pound relative to our budgeted $5.40 rate. Real impact was fully offset on a cash flow basis by the $7.3 million realized gain from our foreign exchange hedge program during the period. Page 8 of our results presentation shows the movement of the Brazilian real so far this year against our existing foreign exchange collars, which protects our cash flows below the 554 level. If the real remains at current levels, the impacts on reported C1 cash costs would be offset by an estimated realized foreign exchange gain of approximately $45 to $50 million for the full year. From an absolute cost perspective, we are reasonably well insulated for the reasons Marco mentioned earlier. As you can see on page seven of our results presentation, which lays out our consolidated operating cost structure, the ongoing Middle East conflict has the potential, all else being equal, to add 5 to 10 cents per pound to operating costs if key inputs such as diesel, consumables, road transport, and ocean freight stay at current levels. That said, we are not seeing any supply-related shortages at this time. Turning to earnings, adjusted EBITDA doubled year-over-year to 125.2 million for Q1. Adjusted net income attributable to shareholders was $72.4 million, or 69 cents per share on a fully diluted basis. From a balance sheet perspective, we ended the first quarter with $91.2 million of cash and $55 million available under our senior revolving credit facility for a total available liquidity of $146 million. We continued to deleverage our balance sheet with net debt of $491 million at the end of Q1, an $11 million decrease compared to year-end 2025, and a $70 million year-over-year decrease. Combined with significantly higher 12-month trailing EBITDA, this resulted in a material improvement in our net debt leverage ratio, which decreased to approximately one times from 2.4 times at the end of Q1 2025. Our top capital allocation priority remains the continued deleveraging of our balance sheet. Having reached our target net debt leverage ratio of one times, the $145 million currently drawn on our revolver is our next focus for debt reduction. Beyond deleveraging, we are funding our internal growth projects and, over time, expect to begin returning capital to shareholders. As we advance these objectives, we look forward to providing the market with additional color on our broader capital return framework. With that, I'll pass the call back to Marco for some closing remarks.

Thank you, Wayne. Before we open up to questions, two things I would like to leave everyone with this morning. First, we are focused on executing against our reaffirmed full-year operational guidance. The first quarter was aligned with our expectations, with our copper business achieving approximately 24% of our consolidated midpoint on the full year, which we still expect to be back half-weighted. At Javinchina, we completed a necessary long-term investment in ventilation and cooling and are ramping up concentrate sales volumes now that we are in the dry season. Second, we've now drilled more than 60,000 meters at Furnas, and it's worth reminding everyone that PEA, as strong as it is, only reflects the first 28,000 meters. We are planning a mid-year update on our exploration results since then, plus progress on key PFS work streams. So stay tuned for that. With that operator, we will open the lineup for Q&A.

Thank you. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. The first question comes from Fahad Tariq with Jefferies. Please go ahead.

Hi, thanks for taking my question. You mentioned quite a bit about Brazil and the dynamics there. Can you just talk about what you're seeing in terms of labor inflation?

Yeah, thanks. Thank you for the question. So I think more broadly speaking, I'll give a bit of nuance about our labor negotiations, which happen annually in the fall. those are typically set around the standard inflation rate. So, going back to last year in the fall, we negotiated, on average, a 5 percent increase on labor year on year. If you go back over the last, you know, 10 years, this was historically absorbed by the depreciation of the Brazilian Reiche. Obviously, as Wayne alluded to and we spoke in the prepared remarks, The BRL strengthens significantly, and hence the hedge program that we've put in place to help offset some of that inflation. But 5% was the negotiated rate last year in the fall.

Okay, great. And just staying on the topic of just input cost, the slide is really helpful, so thanks for presenting that. Any issues on supply? So the cost part I understand, but are there any concerns around any of these input supplies coming into Brazil?

No concerns at this time. We monitor that pretty closely. Our organization lived through both COVID and a trucker strike in the past several years, and so we've been able to dust off those playbooks and proactively build up key consumables as a risk mitigation across all of our assets. That's something that we continue to monitor pretty closely. As I said, deep knowledge across the organization, what to do in these type of environments. And so we proactively increased our reserve of imported consumables into Brazil. But, again, we see no issues at this time. Okay, great. Thanks so much.

The next question comes from Orest Wakado with Scotiabank. Please go ahead.

Good morning. The comment earlier about that there's currently, I think, 12,000 tons of gold concentrate drying, is that indicative of what you expect to sell in Q2? And I'm wondering if you could provide any guidance for the year with respect to contained ounces in the gold concentrate.

Yes. Thank you, Oris. Both great questions. We do have 12,000 tons drying. As we saw in our Q1 performance and looking back at Q4, the rate of drying and transportation is a function of the sunny days during the month. As you can see on the slide 9 that we prepared showing average rainfall, obviously May, you know, May, June, July, and August have very low rainfall, on average, you know, less than 10 millimeters, and so we're expecting to ramp up sales volume pretty meaningfully here in Q2. But in terms of giving the exact amount, it's going to be predicated by the amount of sunny days during that time period. So hesitant to do that for obvious reasons. When I look ahead to Q4, as Jelson mentioned and as shown on slide nine, we did make progress on some installations and equipment we ordered last year. to help ensure continuity of deliveries and shipments through next year's rainy season. But again, for reasons that I think everyone on this call is well aware, we're unable to provide forward-looking guidance on concentrate sales. What I can tell you is that we have seen nothing to date in terms of grade that suggests anything different from the resource that we put out on the sampled volume. So we still see you know, right around one ounce per ton or a bit higher as being the benchmark there. So I haven't seen any evidence that the grades are lower. But, again, giving exact delivery schedule and timing still requires additional sampling from the material that we're extracting, and then obviously additional weather, favorable sunny weather to get that support.

Thanks for the color, Marco. As a follow-up, just specifically, as your free cashflow starts to accelerate here, I think Wayne talked about the revolver being the first focus in terms of paying that down. What, you know, can you walk us through your thinking on cadence after that with respect to either debt reduction or capital returns?

Yeah, thanks, Aris. I mean, obviously we, uh, We've achieved our net leverage ratio, as I said, of one times. Obviously, bringing the revolver down further will reduce that leverage even further. I think as we start to think about Furnace and the longer medium-term plans for that asset or that project, we will keep in mind what those potential requirements are. But I would say all things else being equal in this price environment, the free cash flow generation is going to accelerate meaningfully. And hopefully we'll be in a position here, you know, in the not too distant future to talk about our plans for, you know, returning capital to shareholders.

Thanks. Look forward to that.

The next question comes from Stefan Ioannou with ATB Cormark. Please go ahead.

Yeah, thanks very much. Just wondering, is there any updates or color on just how the shaft project's going at Pilar?

Yeah, great, Stefan. I'll jump in and then Jelson can carry on if I miss any details here. Shaft is progressing well. As we discussed last quarter, we've now finalized the completion of the second leg. So we're starting the third and final leg of the shaft, which is a very important connection for us that was completed this year, still targeting the reaching shaft bottom at the end of this year or early into next year. And that's really the critical path for that project. When you look at the surface installation, substantively complete, the underground installation of conveyors and crusher chambers, or the excavations are complete. We're installing that equipment very soon. We're in the process now. And so we're pretty happy with the progress. As I said, a critical path for us is reaching shaft bottom at the tail end of this year, early next year, so that we can transition from sinking into transitioning that shaft over to the operational phase.

Okay, great. Thanks very much, guys.

The next question comes from Mateus Marrera with Brandesco BVI. Please go ahead.

Hi, thank you for taking my questions. First question on our sales versus production gap for copper specifically. I noticed that sales for the quarter came above production figures for both Caraiba and Tucumana. I was just wondering how should we think about the gap between sales and production going forward? That's the first question.

Thanks for the question. And look, obviously sales and production for us do on a quarterly basis vary slightly. You know, if you look at the volume of concentrate we produce, it's not as significant as some of the larger copper producers. So we sell in 10,000 ton lots. And so depending on the timing of when we invoice and we close a lot, You can see some inventory buildup. We did have inventory build in the back end of Q4, which was sold early in Q1. So, you know, that timing will always vary just depending on how we assemble our lots. I mean, obviously, we try our very best to sell everything we produce, but sometimes it's just the timing just doesn't work.

Okay, that's clear. And then moving to Tacoma, I mean, Regarding the tailings filtration capacity at Tacoma, how has that been progressing? You previously shared that the equipment has been ordered and was in manufacturing. I'm just wondering if there are any updates there.

Yes. Jelson spoke to equipment is being manufactured. We still expect delivery here in the third quarter. That remains on track. So we're doing work on site now to prepare for those deliveries. And we expect them to be operational in the fourth quarter. I think the most probably salient point for this call is that, you know, that is not reflected in our full-year guidance. And I think we've made that abundantly clear. But to stress, it is not included in our full-year guidance. But so far remains on track to be operational in the fourth quarter. As I said in our last quarterly call, it's very important that that equipment is operational for 2027.

not included in 2026 guidance okay that's clear thank you very much the next question comes from dalton barretto with kenneth continuity please go ahead thanks good morning guys uh mako i thought i heard you say in your comments that your travels took you through washington dc and i'm wondering if you can add some context around that you know so what sort of discussions you're having given that your assets are in brazil Anything that you can wrap around that? Thanks.

Yeah, thanks, Dalton. I was in D.C. As you can probably imagine, being an operating company, a well-established operating company in Brazil, and the focus on diversifying supply chains across the Western world, including Canada and the United States, there's a big focus on investments into strategically aligned countries. You've seen the US government and the Canadian government enact critical minerals programs. We were invited to participate in a discussion around that. I think at this point, Dalton, there's not much more to say than that. I think the reality is it's an exciting time to be producing copper. It's exciting time to be producing copper in Brazil, to be building a business in Brazil. We take the relationships with our government partners in Brazil, Canada, and the U.S. very seriously. And so we're invited to participate in critical minerals events. We show up in force to do that.

Got it. Thanks for that. And then just I wanted to ask about Paranapanema and how they're doing these days and whether, you know, given the rise in shipping costs and, you know, everything that's going on, whether that's becoming, you know, an option to place more concentrate there. Thanks.

Look, it's interesting. PMA is its own organization. They're working through some of the challenges they have. Obviously, it's a public company, so they disclose what they're doing there. I think the reality in today's market is that the attention on PMA is really one that's more strategic in nature. For our business, the change in global TCRCs uh, has, you know, offset the cost benefit of, of shipping locally to, to the local smelter. And so I think when, when you're looking forward at the future of PMA and there continues to be a lot of interest, um, in, in ramping up that operation, I think it's really around the strategic nature of that asset being one of the few smelters in the world. And one of the few smelters, um, in the Western world. So as I said, we continue to monitor what happens there. We don't see it as being a huge benefit or impediment to our businesses in any way. Obviously, it's down the road from us, so we'd like to see, you know, continued movement and progress on that. And as I said, there's quite a bit of interest in getting PMA back up and running full steam ahead. We closely monitor the situation there. Thanks, Marco.

The next question comes from Guillermo Rosito with Bank of America. Please go ahead.

Thank you. Can you guys hear me?

Yes.

Perfect. So thank you for taking my questions. So my first one is on the cost. Marco and I know You guys mentioned when it was very clear with the sensitivities and hedges, so that's really appreciated. But as we look to all the trains that we started in the first quarter at a high level, higher than we were expecting for 17, for instance, which I understand is according to plan, and our BRL is 490. We have pressures from potentially chemicals, fuel streets. I'm just wondering, when you look to the distribution of probabilities, Does it make more sense for us to expect costs closer to the higher end of your C1 guidance versus the midpoint? And then my second question is just maybe if you could comment a bit on the discussions around the mine shift law here in Brazil, what has evolved, what not. As we are approaching elections, do you think there's still time for any change to be made until this year, or is it now a next year story as elections are approaching and we don't have any climate to prove anything? Thank you.

Yeah, thank you for the questions, both very good ones. On the cost side, look, I think, you know, when it comes to costs being elevated in Q1, particularly at Javanchina, but also at Kariba, you know, I would point to the second half waiting. So we do expect all of being equal for costs to fall back down in line. Javanchina being the biggest outlier, but again, almost pure denominator volume based when you look at the impact of C1 versus the full year guide. As Wayne outlined and as we've shown on slide seven, I believe, of the webcast presentation, the implied impact on diesel consumables that are diesel-linked right now at steady states is about $0.05 to $0.10. That's part of the reason that we do provide a cost guidance range is there's uncertainty around those. With respect to the BRL, your guess is as good as mine. In fact, it's probably better than mine at this point. I think what we can say is that we've protected our business against a floor of 5.54, and that's really the most important message for the BRL. Again, all else being equal and ignoring foreign exchange, given that 5 to 10 cent impact that we're seeing, notwithstanding the various gives and takes, both on byproduct credits and on FX. I think it's reasonable to assume that we'd be trending at present moment towards the high end of the cash cost guidance range. But again, we have a number of months ahead of us, and it's a very, very volatile time. So I think it's really too early to give a clear steer one way or another, but we do see costs coming down pretty meaningfully as production volumes ramp up in the second half of the year. On shift change, so for For context, for the rest of the people on this call, there's a movement happening in Brazil right now and some legislation being proposed in Congress to eliminate the six by one shift schedule. And what that means in practical terms is that most of our operators, like all industrial operations in Brazil or most industrial operations, operate six days on, one day off, and on a six-hour shift basis. So the proposal is to, I would say, more closely align with conventional shift schedules, meaning that towards eight hours, that incremental underground time would be a... a gain for us. I think it would be a gain for our workforce, quite frankly. It's one of those rare opportunities where you have a proposal at the federal level that is good for companies, good for our workforce. In fact, when you look at what we've done over the last 12 months, all of our surface operations operate on 12-hour shifts. We've made some of those changes within the last six months. And the feedback from our operators has been fantastic. And so we'd really like to see that legislation get passed during change. Obviously, there's a few roadblocks and hurdles to that getting passed. So difficult to say whether it's this year or next year. But given the positive momentum that we're seeing, not only within our own operations, but Brazil more broadly, we're hopeful. that that shift change gets implemented or that legislation gets passed. Again, not including our guidance, so it's more of a longer-term benefit. But again, when I look at the continuity of shift change, I look at the feedback from our employees where we have made those changes and moving people to a four-day on. four-day off rotation has just been such a positive change, not only for operations, but also for quality of life for our workforce. So really love to see it happen. Again, I think it would be a nice boost to productivity, but we're not relying on it for our guidance for this year.

All right. Thanks, Michael. If only I had a good guess for the Bureau. But thank you for asking that question.

If you do, please let us know.

The next question comes from Anita Sonny with CIBC. Please go ahead.

Hi, Marco and team. Thanks for taking my question. I think that most of them have been asked and answered, but I just wanted to get a little bit of detail on the grade profile at Zaventina into the back half of the year. I just want to understand how those costs will come down from the level that they were in Q1.

Yeah, thank you, Anita. The main difference we see is really in the two halves. So stronger grade, second half. I think really when you look at the first half, it is really about the change in volume from Q1 to Q2. But we expect grades to be relatively similar with a step up in the second half. I would say full year, still very closely aligned with reserve grade. So we don't see a major delta in terms of overall reserve. grade for this year's production. Obviously, that depends a lot on sequence. We've got, in aggregate, close to a million ounces of reserves when you include the resources, when you include all categories. So there's a lot of material there relative to our one-year production. But we see grades this year, full year on a blended basis, being fairly well aligned with our reserve grade.

Okay, and then just in terms of the recovery rates, is that kind of the level at around 81%, or would that also improve into the back half of the year? Just trying to get an understanding of our recovery.

Yeah, thank you, Anita. We see that improving for a couple reasons. First quarter, we did replace some equipment that was aging in our operation, so we put in a new falcon concentrator, gravity concentrator, that we expect to increase performance, and we were seeing that. We also are getting a little bit higher throughput volumes, which tends to stabilize the operation, and also a little bit higher grades. So, you know, when we look out to the rest of the year, we see recoveries normalizing in the high 80s of this grade profile. While that may be different from prior years, say that obviously depends on the amount of organic carbon that's coming in feed. So we see the high 80s for this year as being the right number to look at on a normalized basis.

Okay. And then as you go into next year, would it climb to, say, the 90% or is that a high 80s where we should have it?

Yeah. Look, we're putting in considerable effort this year to improve operations. I think our target still remains, you know, low 90s. That's For sure, we're still our target. We have a few initiatives ongoing to help achieve that. And I would say stay tuned for that. We hope to be talking around some of those objectives and plans at Gev and Sheena on our capital markets day in the fall.

Thank you very much.

The next question comes from Emerson Vera with Goldman Sachs. Please go ahead.

Hello, good morning, team. Can you hear me?

Barely, to be honest.

Is it better now?

Yes, just speak slowly and I think we'll be able to, it'll come through.

All right, all right. Thanks for the time, guys. So just on Chabanchina, I just want to to understand what is your guys' expectations for good prediction comparing to the guidance. I mean, it's pretty clear that grades should improve as well as throughput because you're getting access to the higher steps, right? But even so, I mean, the change in prediction should be quite material to deliver on the low end of the guidance. So I'm just trying to understand here if you guys think that 17-year-old production is now more secure to the low end of the guidance. So this is the first question. And just a second one, on Tucuma, I mean, it's also pretty clear that we should see an improvement in second Q, but just looking at, I mean, it doesn't have, but just looking at second Q specifically, I mean, what are your expectations for throughput in grades? given that, I mean, grades should decline particularly by the second half, but on the other hand, throughput should also improve. So, just specifically on tech and Q for Tukuma and on challenging as a good prediction and guidance, please. Thank you.

Yeah. So, when we think about Jeb and Sheena, I think it's important looking at throughput volume, and I hear what you're saying on the step up. I would look at Q4, really the second half of last year in terms of throughput volume and what we achieved there as being aligned with our expectation, obviously a little bit of a step up given some of the work we're doing now in development. When I look at the second half of April into May and the development rates that we're achieving, as well as some of the productivity in preparing stoves and having better access to higher grade. We still see ourselves firmly within that guidance range. So I understand the nature of the question. If we felt the guidance was at risk, then obviously we'd be talking about a different guidance range. So we still feel comfortable with where we're at, particularly looking at the second half of April. and the first few days in May here. So I hope that addresses the question on Javanchina. At Tukama'a, in terms of grade, when I think about the full year, I think you used the word material decrease in grade, but we're looking at a fairly elevated grade profile for the whole year. So we were 1.66 in Q1. A full year average, we're still looking around 1.4. So, you know, you can look at the rate of decline there, and I would argue that it's still very high grid across the full year.

All right. Very clear. Thank you.

This concludes the question and answer session. I would like to turn the conference back over to Marco DiFilippo for any closing remarks. Please go ahead.

Thank you, everyone, for joining us this morning. Thank you for the questions. As always, we appreciate the thoughtful dialogue. We're available for any follow-up questions, so please feel free to reach out to our investor relations team directly, and we will make ourselves available as needed as always. Lastly, just a reminder that we have our Aero Capital Markets Day, September 14th, that we are hosting in Sao Paulo and look forward to seeing many of you there. Thank you again. Have a great day, everyone.

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