Q1 2021 Nexa Resources SA Earnings Call
Okay.
Good morning, and welcome to next day resources first quarter 2021 conference call on.
Participants will be in a listen only mode.
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After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Presenters on this call on Mr. Tito Martins CEO of Mexico resources, Mr. Rodrigo <unk> CFO of extra resources and as Roberto Marella head of Investor Relations. Please note. This event is being recorded.
I would now like to turn the conference over to Mr. Tito Martins. Please go ahead.
Thank you good morning, and good afternoon, everyone welcome to <unk> earnings Conference call.
I hope you and your loved ones remain safe and healthy.
Good day, we've been talking about our results for the first quarter of 2021.
But before I begin our presentation I would like to thank our entire team for day, our resilience and commitment to our business, our customers and our host convenience and all of our stakeholders.
Please let's move now to slide three.
Nice to unprecedented scenario with COVID-19 cases in freezing in Peru, and Brazil during the quarter, our commitment to protect and preserve the well being of our people and all the host communities remain our highest priorities.
We have continued to operate.
Oh I reported on.
Logic and progressing with our exploration program.
Our financial performance to recover from the same period, a year ago, and we delivered the third highest EBITDA of our history.
These strong results could not be achieved with adult consumers commuting off our team is designed to transform and Jeff though location discipline.
We ended the quarter in a strong financial position.
Cash about $1 billion and leverage down to 173 times.
Part of the day is all forward financials will be provided by me in his speech.
In March we announced the acquisition of approximately 9% of clinker resources.
<unk> owns 100%.
Roger one of the largest zinc broad some development.
With excellent potential.
We maintain our efforts to build a sustainable business model generating value for all of our stakeholders now please move to slide four.
While this is low you can see our roadmap with regard to ESG.
It's worth mentioning that our commitment with ESG.
Even before the time line presented here.
By nature index as they might income results since day, one committed with this metric.
Average social responsibility is key for our industry and it is core to our strategy.
Last year we.
All materials related to corporate goals and ESG management guidelines.
And during this year, we are working to set clear targets and kpis and enhance our transparency and accountability to our ESG initiatives.
We are also established <unk>.
As relates to all of our executives NOL compensation.
Moving to the next slide please on slide five.
Slide five shows the main projects in our pipeline.
As most of you probably know we have projects in different stages of maturity.
How do you point out is our project on the development and I will discuss in more detail day yet.
Despite some continued relates with speeches on protocols to be observed.
Able to progress with our engineering studies and our exploration program in the first quarter.
Engineering studies, but just felt copper Roger have continued to progress.
In Q1, we conclude the mining finding study, which is a detailed study of mining.
Engineered wood.
On the pre feasibility study.
We remain on hold but the dilution best have continue to price in the first phase was concluded in Q1 with positive results. We are now based on the block models to initiate phase II.
Which is scheduled to begin the third quarter of the year.
Regarding Lady on exploratory drilling was completed at EMEA target and Chief Bounding through awards. We also began to really let you also targets.
Our goal is to confirm the salt to use contingency of the Lady on the past.
With respect to both the SaaS, we have Gary <unk>.
Especially in the Central zone of the project and Scott really at the current Luca started locate solve up on Brasil.
Now I'll just slide six please.
Here I will make some comments about our reported on development.
On structural awards continue to advance and overall physical Provost reached 79% at the end of March compared to 70% in December.
In Q1, we invested $14 million in the project totaling $353 million since the beginning of the construction.
Mine development activities continue to progress in both Rx and minus <unk> stepped on.
Got it anymore.
Regarding our exploration program in Q1, we consider exploratory drilling on the northwest extension of the Bustle boy.
As I mentioned before debt upon on broadcast one of the few zinc projects underdeveloped in the world.
We believe it will be a long life mine operation with competitive costs.
Now I would like to basketball Beth Odell, our head of Investor Relations, who will comment all of our results.
<unk> please.
Thank you Tito with morning, everyone. Please let's move to slide eight.
Beginning with the sharp on your upper left consolidated net revenue quarter, thousands Lanny, one was $603 million.
36% compared to the same period, a year ago, mainly driven by higher metal prices.
Adjusted EBITDA stood at $180 million strongly recovering from the $44 million.
First quarter 'twenty Duane S T dimension.
Highest figure in our factory on milestone for us.
This performance reflects not only the increase in metal prices, but also our cost reduction.
And improving their operational performance on next highway program.
I will mention that this number was affected by the impact of approximately $6 million related to the update of an environmental provision for net saves money isn't out there.
On the next slide new discussing further details our segment's performance.
On slides nine and 10.
With our mining segment operating results.
Zinc equivalent production, reaching 130000 tons up 7% year over year, mainly driven by Sony and moving.
No debt mining production was temporarily suspended by mid March 'twenty 'twenty due to the mandatory measures announced the bike sales in government to control COVID-19 spread.
In first quarter, explaining 21, zinc production was slightly higher compared to the same quarter, our yandell, while copper production increased by almost 13%.
As previously disclosed at the quarter production was temporarily suspended did your convenience blockades.
Moving forward, we expect that the Cleveland zinc production in <unk> as a standalone arch mine is expected to remain suspended until the end of the second quarter on.
Frankly, we created our zinc production guidance by 10000 pounds.
That's on guidance for copper and lead and silver are maintained in terms of net revenue, we weighted $255 million in the first quarter of 2021 up 57% year over year explained by higher average LNG prices and inquiries and sales volume.
EBITDA for the mining segment stood at $97 million.
We call them from the negative $17 million in first quarter clinic line.
As you can see on slide 10, Mr. Performance was mainly explained by the increase in volume with a positive variation effect of $12 million followed by market related factors, such as higher prices and lower T. Six with an impact of approximately $18 million.
And higher byproduct credits.
In terms of cash cost as you can see on the bottom right consolidated mining cash cost in first quarter 2021 compared to the same quarter a year ago, Nick weighted by 54% to 24 cents per pound, partly reason by higher byproduct prices and lower operating costs.
Now, let's turn to this mountain segment results.
On slides 11, and 12, we will discuss our smelting segment operational results net sales amounted to 148000 tons, a 2% year over year and now 80% from fourth quarter 'twenty 'twenty due to lower season on them and then.
<unk> remains robust and we expect this amount there sales for improving next quarters. Following typical seasonality does our annual sales guidance is maintained.
Net revenue in the quarter was $467 million, partly driven by higher prices and volumes.
Adjusted EBITDA on Who's Mountain segment stood at $84 million and 36% from first quarter planning Duane.
As you can see on slide 12.
This increase in EBITDA was mainly explained by higher prices higher T fees and the Brazilian real devaluation against U S. Dollar all of which had a positive $25 million impact on EBITDA.
And then squeezing byproducts and the decrease in costs also contributed with an additional $7 million in terms of cash costs on some latest mountain cash costs increased to $1 per pound in first quarter 2021 mainly driven by market related factors such as higher zinc prices.
In fact on the concentrated for change price 30 Party services also had a negative impact in the quarter I will now turn over the call to <unk>, our CFO, who will provide more detail information about our balance sheet mainly please.
Thank you for bad debt.
And good afternoon, everyone I am now on slide 13.
As demonstrated in the upper net scrap.
Our liquidity remains strong and we continue to report a healthy balance sheet with extended debt profile.
At the end of the first quarter.
Available liquidity was $1 3 billion, which includes our undrawn revolving credit facility of $300 million.
As of March 31 day.
The average maturity of our total debt was five three years with an average debt cost of four 7%.
Our leverage measured by the net debt to adjusted EBITDA ratio decreased to 173 times from 229 times, mainly driven by the recovery of our cash generation, replacing a much lower first Q of 2020.
The debt breakdown grafts are shown on the right side of the slide both debt tegra and by currency.
Now moving to slide 14.
For 2021, our investment guidance remains unchanged and.
In the first quarter, we invested $84 million on Capex.
One on project amounted to $40 million, 50% of total approximately.
For the year as previously disclosed we estimate to invest $232 million to further developed.
Sustaining investments, including agency amounted to $31 million in the quarter.
As projects advance, we expect disbursements to increase over the quarters meeting guidance.
In terms of mineral exploration and project evaluation, we invested a total of $14 million in the quarter.
For 2021, we expect to continue our mineral exploration and project evaluation investments and we will maintain our efforts to replace an increasing mineral reserves and resources supporting our business growth.
As we anticipated to the market this quarter, we published our first exploration report.
I encourage all of you to read it and hope that documents provides further clarity on our exploration program strategy and its results.
Turning now to the next slide slide 15.
On this slide we present next with free cash flow generation.
During the quarter, we consumed $80 million of our liquidity.
Scribing, it's further and starting from our $180 million of adjusted EBITDA.
A $13 million gain on working capital, which was more than offset by sustaining capex interest paid in taxes.
Next day has generated $105 million of cash flow before expansion projects during the <unk> period.
After that we invested $52 million and on sustaining Capex, which includes mainly our reported on development approach.
Also we had $42 million from loans during the quarter $6 million of the acquisition of 9% equity interest and Tinker resources $33 million net dividend payments and finally, other non operational impacts of $51 million, including FX.
I will now handle the call back to chip to complete.
Thank you Mike we are now on slide 17.
We will make some comments about the market for the balance.
During the quarter zinc price were up by 29% compared to the same quarter, a year ago, and they're one 5% compared to the fourth quarter up two engines right.
This increase continues to be driven by stronger come on to teams in China and also by a better sentiment towards commodity Xinjiang.
The robust recovery in manufacturing achieved in addition to expectations of global economic growth in 'twenty. One are also supporting just before us.
In terms of seeing supply most of mine as you left on it.
June debt last year with no further production back in Q1 in China on the other Ham so on minus reduced production in Q1 due to the winter season disruptions and Chinese new year, which caused a reduction of concentrates the VW.
This contributes additional pressure was already highly competitive market.
Chinese spot disease.
Please read maps and good work.
<unk> sales are struck the view.
In terms of our hallmark is let them zinc.
Zinc metal demand remained strong exceeding pre pandemic levels, we noticed that demand with golar has been sustained at mostly by construction infrastructure energy and average business sectors.
<unk> demonstrates a strong performance during the quarter.
Looking ahead, we believe the strength we remained at least the first half of the year.
Now please move to the last slide.
As I stated earlier, we record the third highest quarterly result in our history.
We're able to overcome the challenges, we face and deliver a strong performance.
COVID-19 remains a risk factor not only for our business, but for the global GDP recall.
Our health protocols to mitigate the spread on devices remaining place now our operations and projects and we will continue to monitor and evaluate COVID-19 potentially back on our value chain.
In order to navigate in this still uncertain scenario will continue to maintain our capital discipline and cost control.
We believe we have an attracted by the line of projects. Let me have been preparing ourselves to generate long term value building the mine of the future.
Thank you all for your time and let's move on to the Q&A session.
Thank you.
We'll now begin the question answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
And the first question will come from Gabriel <unk> with Credit Suisse. Please go ahead.
Alright, good morning, everyone first of all congratulations on the results and thank you for taking my questions.
My first question would be regarding the natural way program volume.
Said you found additional opportunities in light of the COVID-19 outbreak has been some quarters already they just have been saying that that could unlock additional.
600, 600, I'm, sorry, $60 million in annualized savings right with these additional opportunities. So maybe you could comment on it'll be on why it isn't initiatives were not identified before.
And it would also be helpful. You guys could give us some examples on practical examples of these initiatives. So we can better understand their nature.
And my second question would be regarding the treatment charges. So could you comment on your expectations for <unk> for the rest of the year.
Thank you guys.
Hello. Thank you very much for your question. This is what the roaming.
Next week actually weighted the way, we disclose from right at the beginning of the program, we anticipated 100 foot up to $120 million to day.
End of this year of which we have captured.
Until this first quarter of $105 million right.
The program officially ended too.
Last September and we didn't want the market to mix on new initiatives that could arise later after this the force number was disclosed.
On the efforts that we did this is a continuous process so that dynamic process and we intend to incorporate in our in our culture here in the company with initiatives that came on during the period from September last year to December.
Sure.
<unk> estimated to be reaching up to $60 million.
And Thats why we are dividing sometimes it might.
It might get.
But this is why we did it so that we can have different.
Different controls over the amounts we are we are.
Really.
Seeing which was the impact during the periods ever since December and probably in the second quarter, we have an additional net figure to disclose to you.
This is what we have from numbers initial.
Initiatives come from all sorts of activities within the company. It can be efficiency programs in terms of our financial flows it can be a procedures in terms of how we spend our capex, how we analyze how we analyzed projects in terms of being one after the.
Are they are not doing everything altogether. So there are many efficiency.
Aspects that are being pursued.
Really caused the gains debt.
You are seeing so the $60 million debt additional initiatives were the ones that were not.
On.
Initially anticipated on or work caused by the other initiatives that were contributing to $120 million. So this is a continuous process and you will be able to follow throughout the year.
Okay.
Dresses your question and two to address the SEC.
Hi, Gary I'll. Thank you for your question regarding do you see as well.
As you probably know the benchmark was set lasdun on months ago and now it's a 159.
It's interesting to mention that we.
You will see this is a very low level in Asia.
Average Tc is in Asia right now.
On AED 99, Pete.
For total.
In our case.
As we've said before we have what we call the brief contracts so.
Most of our Pcs on.
Animal basis on only affect by.
On all contracts are all net debt by one thirds.
When the new benchmark ascent.
Yes, usually on.
Our dcs with our suppliers.
Good day.
Staying the ranging between 5% to 10%.
Below or above the benchmark the negotiation on a individual basis.
We have to see what's going to happen next year because.
Christine or not this situation in Asia, mostly in China. I mean, this is very low very low level, Jim actually have any impact on the smelters.
Our expectations are.
They dropped the very fast away I mean coming down from 300 to 159 is huge it's a huge difference I don't think we ever saw anything like this in any way.
In our case, we have been a bit because we are balancing between mining and smelting.
We have to see how it's going to be reactive and that's the net next year.
Thank you and the next question will come from Jackie <unk> with BMO capital. Please go ahead.
Thanks, very much. Thanks for taking my question I guess I wanted to ask you about the investment that you made in pink.
Can you tell us a little bit about your rationale.
For that investment is there something that you're planning to do to work more closely with Tinker going forward or is this really just.
The investment and if so is it.
Should we just think that this is the best use of your of your cash for now or.
Yes, Theres no alternative growth projects in your own company like what what how should we be thinking about this.
Hi, Jack Thank you for your question.
Yes.
Basically what happened is it falling with Citigroup.
On the yoga project specifically to attract.
Tracking one.
I mean.
On our interest in using investment.
No.
Up to now has to be has to be.
D C.
<unk> two <unk>.
Potentially follow up the project.
Of course in the future we have on our pipeline on projects, but in the future we have the obligation to pay attention to different projects.
Most in our area of influence right. So yeah.
When you look at the pipeline of projects to be developed in Peru.
A clear day or not many.
Bayou jewel of feed that belong to us.
One on chew that belongs on the continent. Many so.
As a follow up and see.
If there is a lot of opportunities in the future with them.
So far is just a follow up you would see an investment it was on a lot of significant one right. So.
So it was.
<unk> approach I would say.
Got it got it so are you thinking that.
That might be something that.
Would be would make sense to acquire but in the future and you just start using the investment as a way to monitor it.
Right now just to away to monitory.
I cannot say debt, we've got we're going to have we do something else or not not today.
Would not be appropriate.
But we are not on a percent.
Sure, what we're going to do that.
Got it okay and maybe just.
More broadly can you talk about what next few or what your view is of the political landscape in Peru right now.
And specifically on the on the presidential runoff election.
This is an excellent question.
Because to be honest with you everybody was really surprised me.
First of all.
Uh huh.
Listening to what the candidates have had on the boost senior right now.
Scares everybody for sure.
He has very radical positions.
When the matter is our business specifically on mining.
But at the same time, we have to consider debt democracy in Peru has been well established.
The law works very well, we already know that.
This candidate meals, you will not have the Congress on his side because the Congress has them.
More center approach.
So as long as the.
The situation did foremost situation prevails, we should not be worried about what was going on.
And by the way, it's just too early to say that he really will be on we've seen in the past change.
Changes at the last minute.
Peter's election. So so we have to just wait to see if you ask anybody in Peru today, roughly think about situationally on leading there.
Lots of different opinions.
But bush.
Everybody agrees debt considering being ahead of the pools as a huge surprise really huge surprise yeah. It can change.
Okay.
We'll wait and see that's probably that's probably all we can do thanks very much Jill.
Thank you Jay.
The next question will be from Isabella Vasconcelos with Bradesco BBA. Please go ahead.
Thank you good morning, I have two questions on my side the first one.
You were talking about demand exceeding our pre pandemic levels on the whole market.
My question is regarding inventory throughout the chain.
Stocking already supporting.
<unk> already or has the process.
He hasn't yet.
And the second question on day reporting their project.
Seems to be making good progress.
Is there any possibility of anticipating our debt.
They're not really thank you.
Hello, Hello, Isabella Thank you for your questions.
Regarding demand no we are not seeing any balancing the stocks Delaware.
There wasn't a restocking some time less half.
Six months, but what we're seeing today is really demand and demand is strong not only the hallmark day management strong everywhere.
If we have a.
The drop in demand.
Latin Americans day, I'm sure that we would easily sell anywhere in the world.
Why it's happening.
It's a huge impact from the incentives provided by the different governments not only my term but everywhere.
And when you look at the situation in the U S and China.
Clearly the incentives are working.
For based on Matt those are really strong.
I don't see visitation changing.
At least for the next six months.
I remember the last call we have seen that we were sure that demand was strong for the first half now we already can see what's going to happen in the third quarter and it looks at this stage.
It remains pretty much. The same you may have for example, Brazil suddenly.
Demanding less material, but it will be compensated by the other country. So, but we are not concerned about what's the.
This chart shows us today.
In terms of any point on anybody is doing well.
Despite the difficulties we are still facing with COVID-19.
You have to remember COVID-19.
It's located in a very remote area. So we had to implement a lot of different protocols and measures.
Got it you get people.
Uh huh.
Safe.
Just to give an example, we have more than 3000 people right now working on our site in Oklahoma.
A lot of people.
Working together in a CD with the 25000 people is total population so more than 10% of that.
People.
In our reported are working for us so our involvement with them.
With the debt.
Oh, sorry.
To implement measures was huge due respect we anticipate no I would not say that I think.
Maybe if we were not facing the difficulties with COVID-19.
This addition will be different and do we could try to anticipate but given what we have today I don't think we are on schedule and we expect to be honest, yes. Thank you.
Alright. Thank you. Thank you take care.
And the next question is from August <unk> with Scotiabank. Please go ahead.
Hi, Good morning, Tito I was wondering if you could give us some more color on how the operations are bearing.
Given the COVID-19 situation in both Peru and Brazil.
Specifically I was wondering theres a comment in your release about.
That the Kerr Mcgee as smelter I guess some of the fee that you were anticipating in Peru has been.
I think shut down I'm, just wondering if that's COVID-19 related or.
How the mines and smelters are handling the supply chain right now.
Oh Hello ours. Thank you for your question.
Now to explain how we are operating in Brazil.
We are not we do not we have protocols in all of our sites, we try to have on site.
The number of people that are.
The minimum number of people.
Administrative people, they're not on working on on our highest they are working from home and we have the operators.
They follow specific protocols, we have implemented active.
Did you mean on debt.
100% of our people have been best on time to time, which you gave us.
More assurance that we would not have problems with the disease is generally the contamination.
Internally.
We also.
We start to make some specific growth programs with the families off on employees exactly to educate them on in and having them.
Uh huh.
Being careful about above the contamination so.
No.
We had some depot contaminate, mostly because they go back home in India.
With others, but we were never.
Affected in Brazil in the case of Peru is a little bit different because we have.
Darn chips.
So people move to the mines.
14 days then they go back home for seven days, so we have to debt everybody who comes in.
After seven days with debt then again.
At some point last year, when we came back to production after the Lockdown Peru.
It took us almost a month on a half to reach 100% production because we had a lot of good.
<unk> that's a positive.
This is not happening anymore despite low.
The level of initial year seen in Peru.
Fortunately.
Our protocols and the.
<unk>, we provided about the disease worked well.
The number of contaminated deeply in our in our operations.
<unk> reduced we are also with the active testing there.
Things are volume well in general.
The cadence of the second question about kind of mosquito machina.
Okay.
My only comment on Qdoba visual part is will we the last three years, we were using some cosigned material fall do you run on Iran. You as I stated on the smelter in.
Peru.
It has been a liquidation on for the last 10 years, the Peruvian government tried to sell it.
Sometimes those 10 years.
We're successful with that because I think it has some issues labor disputes and other things.
They had planned a maintenance shutdown at.
The end of February we knew that but when they were returning to operate.
The adjusted force them to not withdrawn it looks like the general joining wants to speed up the liquidation process.
I personally I don't see it.
Last longer I think debt because we are talking about more than 2000.
Jobs.
At risk right now with the <unk>.
Is this stoppage so I think sooner or later they should return how it affect us.
It has not affected yet and I don't think we will affect because we have.
Are there alternatives to bringing on additional material not only from.
Suppliers of concentrate but also.
Strong.
Producers are bauxite.
<unk> is my theory.
Either in Brazil in the U S on in Europe. So we should keep the level of production we have guided being.
Based on bid day understanding that this material will be available.
Thank you.
Thanks, Pedro and just getting back to Jackie's question about Peru.
Political scene, there make you rethink any of your future growth projects in that country like could we see you shift more of.
I have an allocation of priority to Brazil versus Peru order.
Okay.
Mark it's premature yet.
As I said before we believe that the law suit we should do so we're not we're not of course there are concerns about.
Very.
Bottom left us.
Police politician but.
When you look back Peru has had president's along the last two decades from last fall right on center.
Yes.
They'll always always was stronger than that and as I said, the Congress has a lot of Arlington.
The features last year too presence right. So yes.
And this Congress is not supporting the last is so we should have more.
More.
This stable behavior from the future price if he is elected.
So this is not time actions premature to decide about anything.
Okay. Okay.
Thank you just one more follow up if I could I noticed on your flight of projects.
Page five of your presentation that Florida canyon's not on there.
Just wondering if that.
Whats happened there or if that's just been pushed out from a timeline.
I speak longer.
Just because part of that gain is not yet considered as a project in.
And this is due to the phase of drilling.
Campaigns are going well.
Some time last year, we had three interrupted because of the COVID-19, but now you're back.
And on the.
When it turns to the.
Great.
The root of the cell one Danny it's become.
Rio project.
But we are we are rely on debt still still looking at them.
Just adding to that because this is what the eagle.
It's not from the presentation, but its on the earnings release on page 27, So that you can have.
Yes.
Good.
And is the expectation here that as Ara partner reaches completion around the end of the year that we should anticipate one of Mel just trial or sponsors.
To move forward, giving given the feasibility stage of Orion.
We are having this visibility study of measured straw.
Given the delay we have in any point.
So even the COVID-19 had some impact in the project because we were not allowed to access the area for some time.
So that's why we are.
A little bit late with the sell through of much stock, but the idea is actually to spend less.
The rest of the year.
Trying to Derisk the project.
The budget shows.
She was a good return we should be approving needs to be implemented I would say the beginning of next year. Soon after we have finished their diploma.
Well thank you.
We still have not concerns, but we still have some things to be address it.
In order to Derisk the project.
If everything goes as we expected we should we should be starting implementation next year might be on.
Yes.
<unk>.
Thank you.
And once again as a reminder, if you'd like to ask a question. Please press Star then one.
The next question comes from Carlos de Alba with Morgan Stanley. Please go ahead.
Yes, Thank you very much everyone and I hope youre doing well.
Couple of questions. If I may 1st one is on on.
Youre seeing.
<unk> cash calls on mining cash cost.
They can they come out at 2024 cents on.
The guidance for the year steady three how do you feel about the guidance are you being conservative.
What because of COVID-19 and I know that matters, maybe the reduction in.
Zinc production.
On a little bit on the conservative side.
On the cost guidance, but if you could elaborate a little bit more on on what you see in the coming quarters.
Will be very useful and the second question.
Yes.
We can get a little bit more color on how youre seeing the situation.
On the metal purchase from third party net in Brazil.
Complement what the company is medicines that are producing given the strong demand. Thanks a lot.
Thank you for the question. This is what it is on the mining cash cost.
About being conservative at all its just that.
There are three elements there one on.
Which is the efficiency program debt.
<unk> was the brand over on that way, but the permeates all of the procedures that we have.
<unk> for our share of it we have a higher byproducts prices, which impact positively the mining cash cost and also the FX devaluation, especially in Brazil, but also in Peru recently it was more recent it's much more about the Brazilian currency devaluation, which are highly impacted.
You look at the day.
The graph that we included in our presentation, we kind of highlight the market related effects, but there's.
Also our fair share of our internal growth.
Processes.
Net sales.
So could you.
Repeat the second question please.
Our debt.
Alright.
Yes.
Yes, the math that we are quite well basically what happens with volume.
We were surprised by the low the level of demand we have on some of our main customers on.
Our our contracts they have a range for volumes on an annual basis.
And because of that.
At the end of the day, we have to bring on some metal thrown abroad actually bought his strong zone.
On Mexico.
Got a relevant amount, but was just to balance the stocks.
Just to give an example, we started a year.
Stops below our regular levels because of the demand we're having.
I don't know if you could explain what Youre question answers your question.
Yes.
Do you think that that will continue.
In the coming months I hope it continues.
Because we make money, we make mining that debt.
I said that in the last call.
We're able to produce more or we would sell it on me.
We are not foreseeing a major change in the market at least for the next I would say three six months.
It's good it's really good.
And then so in general the market must be quite tight in Latin America, because group on Mexico says mentor has had a fire in first quarter sales.
Sales of refined metal were lower than expected.
So they are still just ramping up.
You probably are experiencing very good.
Premiums in the Echo on the call region right through.
Yes.
It is important to mention.
Half of what we produce we sell in that zone right.
And have we explore some other places. So every time, we have this excess demand we actually reduce.
What we sell to.
Outside of Latam.
Fair enough. Thank you for your total there you wonder what it that day.
Okay.
Okay.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Tito for his final remarks. Mr. Martins. Please go ahead.
Thank you.
No.
Well I'm not I'm.
Not repeating myself, but I would like to tell you. We are very confident about 'twenty. One if you look back on the last three quarters, we managed through two phase two could be difficulties.
And then we deliver on what we were planning to deliver.
So second half of last year in the first quarter of this year in terms of operations performance we're on.
We're really very good.
Despite the challenges we are still facing has to do with COVID-19. Some issues, we had in <unk> with the strength of Archie.
Some difficulties with the local community at the beginning of the year.
We managed to overcome now.
On the deliver what we had planned on.
Of course market is healthy price are good we are not foreseeing a price coming down to the levels, we saw last year.
Towards that we should see price.
Uh huh.
Ringing ranging between the beginning of what we saw at the beginning of the year on what we are seeing today.
As I said demand has been the main reason for that.
So yes on the incentives debt.
The different economies in the world are providing to the to the business. So we are confident about the year.
The message here is hope to talk to you next quarter at the same the same goods guar is good performance.
Once more thank you for being.
Being here with us.
On my sales may include Roberto.
Investor Relations teams are available anytime you want to speak with us.
Good day.
Well the Macchiato to say stay healthy thank you.
And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].