Q2 2024 Nexa Resources SA Earnings Call

Speaker Change: [music].

Operator: Good morning and welcome to Nexa Resources' second quarter 2024 conference call. All participants will be in a listen-only mode.

Good morning, and welcome to Nexstar resources second quarter 2024 conference call all participants will be listen only mode. Because you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Operator: If you need assistance, please signal a conference specialist by pressing the star key followed by zero. This event is being recorded and is also being broadcast via webcast and may be accessed through the Nexus Investor Relations website, where the presentation is also available. After today's 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 the star, then two.

This event is being recorded and is also being broadcast via webcast and may be accessed through Nexus Investor Relations Web site, where the presentation is also available.

After todays presentation, there will be an opportunity to ask questions. You ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Speaker Change: Please remember that the participants of the webcast will be able to register via website questions simply type. Your question in the box and click send and that will be answered soon I would now like to turn the conference over to Mr. Rodrigo camera and Sun.

Operator: Please remember that the participants of the webcast will be able to register via website questions. Simply type your question in the box and click send, and that will be answered soon. I would now like to turn the conference over to Mr. Rodrigo Camaronsano, Head of Investor Relations, for opening remarks. Please go ahead.

Rodrigo Camera: Head of Investor Relations for opening remarks. Please go ahead.

Rodrigo Cammarosano: Good morning, everyone, and welcome to Nexa Resources' 2nd Quarter 2024 Earnings Conference. Thank you for joining us today. During the call, we will be discussing the company's performance as per the earnings release that we issued yesterday. We encourage you to follow along with this on-screen presentation on the web. Before we begin, I would like to draw your attention to slide number two, where we will be making forward-looking statements about our business, and we ask you to refer to the disclaimer and the conditions surrounding those statements.

Speaker Change: Good morning, everyone and welcome to Nextera Resources' second quarter 'twenty to 'twenty four earnings conference call. Thanks for joining us today during.

Speaker Change: During the call we will be discussing the company's performance as per the earnings release that we issued yesterday.

Speaker Change: We encourage you to follow along with its own screen presentation through the webcast.

Speaker Change: Before we begin I would like to draw your attention to slide number two where we will be making forward looking statements about our business and we ask you to refer to the disclaimer and the conditions are right.

Speaker Change: The state.

Rodrigo Cammarosano: It is now my pleasure to introduce our speaker. Joining us today is our CEO, Ignacio Rosado, our CFO, José Carlos Del Valle, and our Senior Vice President of Mining Operations, Leonardo Coelho. So now, I will turn the call over to Inácio for his comments.

Speaker Change: It is now my pleasure to introduce our speakers.

Speaker Change: Joining us today, he's a repeal Ignacio rosado, our CFO Jose Carlos no value in our senior Vice President of mining operations Leonardo Felipe.

Speaker Change: So now I will turn the call over to Ignacio for his comments.

Speaker Change: Please go ahead.

Ignacio Rosado: Thank you, Rodrigo, and good morning to everyone. Thanks for joining us today to go over our second quarter results for 2024. Please, let's move to slide number three, where we will begin our presentation with the main highlights of the quarter. Let me start by saying that we had a strong second quarter.

Ignacio: Thank you Rodrigo and good morning to everyone. Thanks for joining us today to go over our second quarter results of 'twenty 'twenty four.

Speaker Change: Please let's move to slide number three where we will begin our presentation with the main highlights of the quarter.

Ignacio: Let me start by saying that we had a strong second quarter results.

Ignacio Rosado: We have been witnessing positive momentum from commodity prices since the end of the first quarter, which has been sustained throughout the second quarter. Our solid operational performance and financial results reflect our commitment to our strategy and our focus on executing our priorities, as well as our efforts to optimize key investments and initiatives. In the second quarter of 2024, consolidated net revenues were $736 million, up 27% quarter over quarter, mainly due to higher LME prices and increased smelting sales volume. Year over year, net revenues were up by 17%. Adjusted EBITDA in the second quarter of this year was $200 million, 64% higher compared to $123 million in the last quarter.

Ignacio: We have been witnessing positive momentum from commodity prices from the end of the first quarter, which has been sustained throughout the second quarter.

Ignacio Rosado: This performance was attributed to higher by-product contribution, higher sink prices, and increased smelting sales volume. Compared to the second quarter of last year, adjusted EBITDA increased by 180% from $72 million. Our net leverage ratio in the second quarter of 2024 was 2.72 times versus 3.75 times in the first quarter of this year and 2.83 times in the second quarter of last year. These results reinforce our commitment to our strategy and our healthy and steady business fundamentals.

Ignacio: Our solid operational performance and financial results reflect our commitment to our strategy and our focus on executing our priorities.

Speaker Change: Well us our air force to optimize key investments on initiatives.

Speaker Change: In the second quarter of 'twenty 'twenty four consolidated net revenues were $736 million up 27% quarter over quarter, mainly due to higher Ele me prices, an increase its melting and sales volume.

Speaker Change: Year over year net revenues were up by 17%.

Speaker Change: Adjusted EBITDA in the second quarter of this year was $200 million, 64% higher compared to the <unk> hundred 23 million in the last quarter.

You spent four months was attributed to higher byproduct contribution higher zinc prices an increase its melting sales volume.

Speaker Change: Compared to the second quarter of last year.

Speaker Change: Adjusted EBITDA increased by 180% from 70 to meet you.

Speaker Change: Our net leverage ratio in the second quarter of 'twenty 'twenty four was two point 72 times versus 375 times in the first quarter of this year and two point 83 times in the second quarter of last year.

Speaker Change: These results reinforces our commitment to a restrike E on our healthy and steady business fundamentals.

Ignacio Rosado: Now, let me talk about the operational performance of ARIPUANA. Throughout April, May, and June, the plant increased utilization rates, delivered stable concentrate quality, and improved metallurgical recoveries that contributed to a solid-adjusted EBITDA. In June, we achieved a positive operational cash flow generation. These factors confirm the transition of Aripuaná to an ongoing operation. I will dive deeper into the key drivers of ARIPANA later on in the presentation.

Speaker Change: Now, let me talk about the operational performance of our D point now.

Speaker Change: Throughout April may and in June the plant increased utilization rates delivery stable concentrate quality unimproved metallurgical recoveries that contributed to our solid adjusted EBITDA.

Speaker Change: In June we achieved a positive operational cash flow generation.

Speaker Change: These factors confirmed that drives he's shown on slide you point out too one ongoing operation.

Speaker Change: I will dive deeper in the key drivers of what you point out later on in the presentation.

Ignacio Rosado: Let me also emphasize that our Cerro Pasco integration project continues to advance on all fronts, and we expect its approval in the upcoming months. Our brownfield exploration program in the second quarter advanced towards expanding our portfolio and aimed to add an increase in the life of our mine. That said, our drilling strategy for this year is on track. We are focused on near mine expansion, brownfield, and infield drilling. As previously disclosed, we announced the divestment of our Moragudo operation at the beginning of April, and on July 1st, we announced the closing of the sale transaction. Under these conditions, mining activities ceased at the end of April.

Speaker Change: Let me also emphasize that our separate Busquin integration project continues to advance on all fronts.

Speaker Change: We expect its approval in the upcoming months.

Speaker Change: Our brownfield exploration program in the second quarter advanced steelworks, expanding our portfolio.

Speaker Change: <unk> to add increasing the life of our mines that said our drilling a study for these year eastern truck.

Speaker Change: We are focused on near mine expansion brownfield and infill drilling.

Speaker Change: As previously disclosed we announced the divestment of our tomorrow with the operation of that beginning of April and on July 1st we announced the closing of the sale transaction.

Speaker Change: Under these conditions mining activities ceased at the end of April.

Ignacio Rosado: The sale of Moragudo is an important step in our portfolio optimization, which is a central part of our strategy to improve cash flow generation and return. This focus allows us to concentrate our efforts on our most attractive operations. Additionally, in April, we concluded important transactions in line with our liability management strategy. These transactions included extending our debt profile through the issuance of new debentures and bonds, as well as conducting tender offers. This strategic move allowed us to optimize our financial structure, diversify our funding sources, and enhance our liquidity position. Jose Carlos will provide more detail on this topic in his presentation.

Speaker Change: The sale of Motorola you said, an important step in our portfolio optimization, which is a central part of our strategy to improve cash flow generation and returns.

Speaker Change: This focus allows us to concentrate our efforts on our most attractive operations.

Speaker Change: Additionally in April we concluded an important transactions in line with our liability management is Friday.

Speaker Change: These transactions included extending our debt profile through the issuance of new debentures and bonds as well as conducting tender offers.

Speaker Change: This is rather you move allowed us to optimize our financial structure diversify our funding sources and enhance our liquidity position.

Speaker Change: Carlos will provide more detail on this topic in his presentation.

Ignacio Rosado: Now let's move to slide number four to discuss our operating performance. Regarding the Operating Performance of the Mining Segment, Sink production reached 83,000 tonnes in the second quarter of this year, up 2% year-over-year, primarily due to higher sink average grades, particularly at Cerro Lina. Compared to the first quarter of this year, zinc production decreased by 5% due to lower volumes from the Peruvian mines and the absence of contributions from Morro Agudo in May and June of this year following the sale of this asset.

Carlos: Now, let's move to slide number four to discuss our operating performance.

Carlos: Regarding the operating performance of the mining segment <unk>.

Carlos: <unk> production reached 83000 tons in the second quarter of this year up 2% year over year, primarily due to higher zinc grades, particularly etcetera Linda.

Speaker Change: Compared to the first quarter of this year seemed production decreased by 5% due to lower volumes from the Peruvian mines on the absence of contributions from Moura will in May and June of this year. Following the sale of this asset.

Ignacio Rosado: In terms of cash costs in the second quarter of this year, it decreased to $0.03 per pound compared to $0.37 per pound in the second quarter of last year. This decrease was mainly due to higher by-product contribution, driven by higher copper and lead prices and lower treatment charges in the period. Compared to the first quarter of 2024, mining cash costs decreased by 24 cents per pound, impacted by lower treatment charges and higher product contribution. The cash costs in the first half of this year performed below the lower range of our guidance.

Speaker Change: In terms of cash costs in the second quarter of this year.

Speaker Change: <unk> decreased two three cents per pound compared to 37 cents per pound in the second quarter of last year.

Speaker Change: This decrease was mainly due to higher byproduct contribution driven by higher copper and lead prices I don't know where treatment charges in the period.

Speaker Change: Compared to the first quarter of 'twenty 'twenty four mining cash cost decreased by 24 cents per pound impacted by lower treatment charges and higher byproduct contribution.

Speaker Change: That cash costs in the first half of this year performed below the lower range of our guidance.

Ignacio Rosado: The cost per run of mine for the quarter was $49 per ton, up 10% year-over-year due to lower treated ore volumes, and up 7% quarter-over-quarter, mainly explained by higher third-party services and higher personnel costs. The cost per run of mine in the first half of this year was within our guidance. Now moving to slide number five.

Speaker Change: The cost per run of mine for the quarter was $49 per tonne up 10% year over year due to lower treated ore volumes on up 7% quarter over quarter.

Speaker Change: Mainly explained by higher third party services on higher personnel costs.

Speaker Change: The cost the run of mine in the first half of this year was within our guidance.

Speaker Change: Now moving to slide number five.

Ignacio Rosado: Regarding the operating performance of the smelting segment, metal sales totaled 148,000 tons in the second quarter of this year, down 1% from the second quarter of last year. However, compared to the first quarter of this year, metal sales increased by 7%, driven by higher production volumes at Caja Marquilla and Llus de Fora. The smelting cash cost in the second quarter of this year was $1.19 per pound compared to $1.12 per pound in the second quarter of last year.

Speaker Change: Regarding the operating performance of the smelting segment metal sales totaled 148000 tons in the second quarter of this year down one person from the second quarter of last year.

Speaker Change: Compared to the first quarter of this year metal sales increased by 7% driven by higher production volumes.

Speaker Change: Yeah, Andrew is the Florida.

Speaker Change: A smelting cash cost in the second quarter of this year was $1.19 per pound compared to $1.12 per pound in the second quarter of last year.

Ignacio Rosado: This increase is mainly attributed to higher raw material costs due to higher sink prices and lower treatment charges. Compared to the first quarter of this year, cash costs rose by 21%, also impacted by higher sink prices and lower TCE.

Speaker Change: D C. Greece is mainly attributed to higher raw material costs due to higher prices and lower treatment charges.

Speaker Change: Compared to the first quarter of this year cash costs rose by 21% also impacted by higher zinc prices and lowered D. CS.

Ignacio Rosado: Our conversion cost was $0.30 per pound compared to the $0.32 per pound in the second quarter of last year due to improved operational efficiency in the period. Compared to the first quarter of this year, the conversion cost was relatively flat. I would like to highlight that both cash costs and conversion costs in the first half of this year performed within our guidance. Now moving to slide number six, where we will start talking about Audit. NET.

Speaker Change: Our conversion cost was 30 cents per pound compared to that 32 cents per pound in the second quarter of last year due.

Speaker Change: Due to improve operational efficiency in the period.

Speaker Change: Compared to the first quarter of this year the conversion cost was relatively flat.

Speaker Change: I would like to highlight that both cash costs and conversion costs in the first half of this year performed within our guidance.

Speaker Change: Now moving to slide number six where we will start talking about already pointed out.

Ignacio Rosado: The solid operational performance of Aripuaná and its improved financials mark an important advance in the second quarter. Our efforts focus on plant stabilization, continuous improved feed and utilization rates, enhancing metallurgical recoveries and concentrate quality, as well as reducing downtime hours. In June, the average utilization rate was 81%, with many days operating above 90%.

Speaker Change: Our solid operational performance of our partner and its improved financials, Mark an important advance in the second quarter.

Speaker Change: Our airports focus on plant is stabilization continuously improved our feet.

Speaker Change: Utilization rates enhancing metallurgical recoveries and <unk>.

Speaker Change: Concentrate quality as well as reducing downtime hours.

Speaker Change: In June the average utilization rate was 81% with many days operating above 90%.

Ignacio Rosado: Pitted ore improved significantly by the end of the quarter, reaching 133,000 tons, a 32% increase compared to March. In July, we expect to treat more than 140,000 tons of ore, and we aim to achieve a target capacity of 160,000 tons per month by September. At current treatment levels, and with improved grades from the LINC and AMBREX ore bodies, we anticipate further production improvements that will continue to improve our margin. Regarding Aripuana's financial performance, we noted a significant improvement in this quarter, with positive adjusted EBITDA for the second consecutive quarter and positive operating cash flow in June.

Speaker Change: Read it or improve significantly by the end of the quarter reach it at 183000 tons, a 42% increase compared to March.

Speaker Change: In July we expect to treat more than 140000 tonnes or four well, we aim to achieve a target capacity of 160000 tonnes per month by September.

Speaker Change: Our current treatment levels and with improved grades from the Linq and breaks ore bodies. We anticipate further production improvements that will continue to improve our margins.

Speaker Change: Regarding the 90 point us financial performance, we noted a significant improvement in the squad.

Speaker Change: With positive adjusted EBITDA for the second consecutive quarter of positive operating cash flow in June.

Ignacio Rosado: These are key milestones that reaffirm the asset-solid program. Looking ahead, we expect further increases in plant feed and throughput rates, improved concentrate rates, higher metal recoveries, and cost reduction. In the next slide, we will provide more details on LiPoNas operational performance for the quad. Now moving to slide number 7.

Raphael: These are key milestones that Raphael the assets solid progress.

Speaker Change: Looking ahead, we expect further increases in plant feed.

Speaker Change: On throughput rates improved concentrate grades higher metal recoveries on cost reductions.

Speaker Change: In the next slide we will provide more details on our report nice operational performance for the quarter.

Speaker Change: Now moving to slide number seven.

Ignacio Rosado: Starting with the capacity utilization in the upper left side, we noted that it performed at 81% in June based on the design capacity. When considering the 90th percentile for the month, the performance was 86%, indicating solid progress in plant reliability. On the upper right side, which shows the plant downtown measure in days of corrective maintenance, we noted a significant decrease.

Speaker Change: Starting with our capacity capacity utilization in the upper left side, we noted that it performed at 81% in June based on their design capacity.

Speaker Change: You can go see there in the 19th percentile for the month or four months was 86%, indicating solid progress in plant reliability.

Speaker Change: In the upper right side, which shows plant downtown measure in days of corrective maintenance. We noted a significant decrease this indicates also an important improvement in plant is stabilization.

Ignacio Rosado: This also indicates an important improvement in plant stabilization. At the bottom of the slide, both metallurgical recoveries and concentrate rates are performing at or near target levels, and in some cases, surpassing those levels. As mentioned earlier, this solid operational performance and improved financial results confirm the full transition to an ongoing operation and mark an important milestone in Aripuaná. Now, moving to slide number 8.

Speaker Change: At the bottom of the slide both metallurgical recoveries and concentrate grades are performing at or near target levels and in some cases, we're passing those levers.

Speaker Change: As mentioned earlier these solid operational performance and improved financial results confirmed the full transition to an ongoing operation on Mark an important milestone in a deep way now.

Speaker Change: Now moving to slide number eight.

Ignacio Rosado: On this slide, I would like to highlight our progress with the advanced technical studies for the Cerro Epasco integration project. As we have discussed in previous calls, this project has the potential to unlock significant value for Nexa. We have made substantial progress across the four key work fronts, completing important steps such as engineering for the underground mine connection and the El Porvenir shaft upgrade. Additionally, we have advanced the engineering studies of the tailings pumping system, which will allow us to pump tailings from El Porvenir to Atacoma.

Speaker Change: Well this is light I would like to highlight our progress with the advanced technical studies for the Cerro Pasco integration project.

Speaker Change: As we have discussed in previous calls this project has the potential to unlock significant value for nexium.

Speaker Change: We have made substantial progress across our four key work fronts completing important steps such as engineering for the underground mining connection on the El Porvenir shaft upgrade.

Speaker Change: Additionally, we have advanced the engineering studies of the tailings pumping system, which will allow us to bump tailings from El porvenir throughout that coach.

Ignacio Rosado: Significant progress has also been made on the plant's engineering assessment, which represents opportunities to enhance processing capacity. Support activities, including technical reviews and environmental studies and permits, are also advancing as expected. In March, we issued a technical report on the joint operations of El Porvenir and Atacocha, reflecting some of the benefits of the integration project and resulting in an increase in the reserve base of the Cerro Pasco Company. We are moving forward with the project closely monitoring market conditions and expect to submit its approval in the coming months. Now I will turn the call over to Jose Carlos Del Valle, our CFO, who will present our financial results. Jose, please go ahead.

Speaker Change: Significant progress has also been executed on the plant engineering assessment, which represents opportunities to enhance processing capacity.

Speaker Change: Two port activities, including technical reviews, and environmental studies and Barry meats are also advancing as expected.

Speaker Change: In March we issue a technical report on the joint operations of all part of a need and I think what you're reflecting some of the benefits of the integration project and resulting in an increase in the reserve base of the separate Pasco complex.

Speaker Change: We are moving forward with our projects closely monitoring market conditions and expect to submit its approval in the coming months.

Speaker Change: Now I will turn the call over to whole Chicago sale by our CFO, who will present, our financial results Jose. Please go ahead.

Jose: Thank you Ignacio good morning to everyone I will continue on slide nine.

Jose Carlos Del Valle: Good morning to everyone. I will continue on slide nine. As you can see, beginning with the chart on the upper left, total consolidated net revenues for the second quarter increased by 17% year over year. This increase was primarily driven by higher LME metal prices and increased mining sales volumes, partially offset by lower net premiums and slightly lower smelting sales volumes. Compared to the first quarter of 2024, net revenues increased by 27%, driven by higher LME metal prices and increased smelting sales volume.

Jose: As you can see beginning with the chart on your upper left total consolidated net revenues for the second quarter increased by 17% year over year. This increase was primarily driven by higher alumina and metal prices and increased mining sales volumes, partially offset by lower net premiums and slightly lower smelting sales volume.

Speaker Change: Compared to the first quarter of 2024 net revenues increased by 27% driven by higher metal prices and increased smelting sales volume.

Jose Carlos Del Valle: For the first six months of 2024, net revenues totaled $1.3 billion, up by 2% from the same period a year ago. In terms of profitability, consolidated adjusted EBITDA in the second quarter of 2024 was $200 million, compared to $72 million a year ago. This improvement was mainly explained by higher mining sales volumes, improved performance in our Aripuana operation, higher by-product contribution, lower variable costs, and higher sink rates

Speaker Change: For the first six months of 2024 net revenues totaled $1 3 billion up by 2% from the same period at year ago.

Speaker Change: In terms of profitability consolidated adjusted EBITDA in the second quarter of 2024 was $200 million compared to 72 million a year ago. This improvement was mainly explained by higher mining sales volumes improved performance in our D point operation higher byproduct contribution lower variable cost.

Speaker Change: It's a higher zinc prices.

Speaker Change: Compared to the first quarter of 2024, adjusted EBITDA increased by 64% driven by higher byproduct contribution higher zinc prices and increased smelting sales volume.

Jose Carlos Del Valle: Compared to the first quarter of 2024, Adjusted EBITDA increased by 64%, driven by higher by-product contribution, higher sink prices, and increased melting sales volume. In the first half of 2024, Adjusted EBITDA reached $323 million, up by 58% compared to the same period a year earlier. Finally, it's worth noting that our consolidated adjusted EBITDA margin increased to 27% in the second quarter of 2024, representing a 16 basis point improvement compared to the second quarter of 2023 and a 6 basis point improvement compared to the first quarter of 2023. Now, let's move to slide number 10.

Speaker Change: In the first half of 2024, adjusted EBITDA reached $323 million up by 58% compared to the same period a year ago.

Speaker Change: Finally, it's worth noting that our consolidated adjusted EBITDA margin increased to 27% in the second quarter of 2024, representing a 16 basis point improvement compared to the second quarter of 2023, and a six basis point improvement compared to the first quarter of 2024.

Speaker Change: Now, let's move to slide number 10.

Jose Carlos Del Valle: On the left side of the slide, we can see that in the first six months of 2024, we invested $138 million in capex, with nearly all of this amount directed towards sustaining activities, including mining development and tailing storage facilities. In line with this, our 2024 CAPEX guidance for the year remains unchanged at $311 million. With respect to mineral exploration and project evaluation, we invested a total of $29 million, with $17 million allocated to mineral exploration and mine development to support our exploration activity.

Speaker Change: On the debt on the top left of the slide we can see that in the first six months of 2024, we invested $138 million in Capex with nearly all of this amount directed towards sustaining activities employee mining development and tailing storage facilities in.

Speaker Change: In line with this our 'twenty 'twenty four capex guidance for the year remains unchanged at $311 million.

Speaker Change: With respect to mineral exploration and project evaluation, we invested a total of $29 million with 17 million allocated to mineral exploration and mine development to support our exploration activities.

Jose Carlos Del Valle: Following the typical pattern that we see every year, we expect our investment in these areas to accelerate in the second half of 2024, and thus, we're maintaining our 2024 Guidance for Exploration and Project Evaluation at $72 million. Now let's move on to the next slide, where I will discuss our cash flow generation for the. Starting from the $200 million of adjusted EBITDA net of non-operating items, we can see that we generated a solid cash flow from operations before working capital variations at $133 million in the quarter. We then paid $36 million related to interest and taxes and spent $67 million in total capital expenditures for our operation.

Speaker Change: Following the typical pattern that we see every year, we expect our investments in these areas. So accelerating the second half of 'twenty 'twenty four and thus, we're maintaining our 2034 guidance for exploration and project evaluation at $72 million.

Speaker Change: Now, let's move on to the next slide where I will discuss our cash flow generation for the quarter.

Speaker Change: Starting from the $200 million of adjusted EBITDA net of non operational items, we can see that we generated a solid cash flow from operations before working capital variations at $133 billion in the quarter.

Speaker Change: We then paid $36 million related to interest and taxes and spent $67 million in total capex for our operations.

Jose Carlos Del Valle: Additionally, as part of our liability management strategy, we can see that loans and investments had a positive net impact of $146 million. This resulted from our new bond offering of $600,000,000, a DeVenture issuance of approximately $130,000,000, and a BNDS credit line of approximately $40,000,000. These were partially offset by loans and financing payments, including cash tenders for part of our bonds maturing in 2027 and 2020. Furthermore, we paid $4 million of contractual dividends to non-controlling shareholders. Then we had a negative impact of $6 billion from foreign exchange variations in our cash and cash equivalents, driven by the depreciation of the Brazilian real against the US dollar during the. Finally, in line with typical annual trends, we saw a negative effect of $17 million related to working capital, a significant improvement from the negative $125 million in the first quarter.

Speaker Change: Additionally, as part of our liability management strategy, we can see that loans and investments had a positive net impact of $146 million. This.

Speaker Change: This resulted from our new bond offering of 600 million debenture issuance of approximately $130 million and a b M. D. S credit line of approximately 40 million.

Speaker Change: These were partially offset by loans and financing payments, including cash tenders for parts of our bonds maturing in 2027 and 2028.

Speaker Change: Furthermore, we paid $4 million of contractual dividends to Noncontrolling interest.

Speaker Change: Then we had a negative impact of $6 million from foreign exchange variations in our cash and cash equivalents driven by the depreciation of the Brazilian real against the U S dollar during the period.

Speaker Change: Finally in line with typical annual trains we saw a negative effect of $17 million related to working capital a significant improvement from the negative $125 million in the first quarter.

Jose Carlos Del Valle: As in 2023, we expect this working capital effect to be reversed positively throughout the second half of the year. Combining all these effects, our free cash flow generation in the second quarter of 2024 was $149 million. Now moving to slide number 12.

Speaker Change: As in 2023, we expect this working capital effect to be reversed positively throughout the second half of the year.

Speaker Change: Combining all these effects our free cash flow generation in the second quarter of 2024 was $149 million now.

Speaker Change: Now moving to slide number 12.

Jose Carlos Del Valle: In this slide, you can see that our liquidity remains healthy, and we continue to present a sound balance sheet with an improved and extended debt maturity profile. At the end of the second quarter of 2024, our available liquidity was approximately $794 million, including our Andron Sustainability Link Revolving Crate Facility of $320 million. Regarding our overall debt profile, the average debt maturity in the second quarter of 2024 was 5.9 years, an increase from the 3.7 years reported in the first quarter of 2024.

Speaker Change: In this slide you can see that our liquidity remains healthy and we continue to present, a sound balance sheet with any proof and extended debt maturity profile.

Speaker Change: At the end of the second quarter of 2024, our available liquidity was approximately $794 billion, including our undrawn sustainability linked revolving credit facility of 320 billion.

Speaker Change: Regarding our overall debt profile the average debt maturity in the second quarter of 'twenty 'twenty four was five nine years, an increase from the 3.7 years report data in the first quarter of 2024.

Jose Carlos Del Valle: In line with our proactive approach to liability management, you may recall that we successfully extended our debt maturity profile at the beginning of the second quarter. This was achieved through the issuance of a new 10-year bond, funding a cash tender offer for part of our existing notes that were due in 2027 and in 2028, while obtaining a six-year term ESG-linked debenture of approximately $130 million and a new credit line from BNDS of approximately $40 million for an eight-year term. As Ignacio mentioned at the beginning of his presentation, these transactions marked a significant milestone for the company. As a result, we now carry an average cost of debt of 6.61%.

Speaker Change: In line with our proactive approach to liability management, you may remember that we successfully extended our debt maturity profile at the beginning of the second quarter. This was achieved through the issuance of a new 10 year bond funding a cash tender offer for part of our existing notes that were due in 2027 and in 2028.

Speaker Change: While obtaining a six year term ESG linked debenture of approximately $130 million and then your credit line from B M. D. S of approximately $40 million for an eight year term.

Speaker Change: As Ignacio mentioned at the beginning of his presentation. These transactions marked a significant milestone for the company.

Speaker Change: As a result, we now carry an average cost of debt of $6, 61%. It is important to mention that as of June 30, our total cash position is sufficient to cover the payment of all obligations maturing over the next four years.

Jose Carlos Del Valle: It is important to mention that as of June 30th, our total cash position is sufficient to cover the payment of all obligations maturing over the next four years. [inaudible] These strategic moves have allowed us to optimize our financial structure, diversify our funding sources, and enhance our liquidity position. The extension of our debt profile is part of our ongoing optimization effort and reflects our commitment to proven financial management and our confidence in the long-term prospects of our business.

Speaker Change: In terms of leverage as measured by the net debt to adjusted EBITDA ratio. This measure decreased from 3.7 to two seven times quarter over quarter.

Speaker Change: The substantial decrease is primarily due to the increase in adjusted EBITDA over the last 12 months and two a reduction in net debt.

Speaker Change: These strategic moves have allowed us to optimize our financial structure diversify our funding sources and enhance our liquidity position.

Speaker Change: The extension part of our debt profile is part of our ongoing optimization effort and reflects our commitment to prudent financial management and our confidence in the long term.

Speaker Change: Aspects of our business.

Jose Carlos Del Valle: Following these transactions, we will remain attentive to market conditions. We continuously evaluate options to maintain a maturity profile that is in line with the long life of our assets and at the most competitive. Moving now to slide 13.

Speaker Change: Following these transactions, we will remain attentive to market conditions, we continuously evaluate options to maintain our maturity profile that is in line with the long life of our assets and at the most competitive costs.

Speaker Change: Moving now to slide 13.

Jose Carlos Del Valle: Regarding market fundamentals, it is noteworthy that in the second quarter of 2024, the LME sink price averaged $2,833 per ton, up 12% from the second quarter of 2023 and 16% from the first quarter of 2024. This increase is primarily due to macroeconomic factors, such as expectations of lower U.S. interest rates and expectations of Chinese government stimulus, and fundamental factors such as a tight concentrate market and low zinc inventory. The LME copper price averaged $9,753 per tonne in the second quarter of 2024, up 15% from the second quarter of 2023 and 16% from the first quarter of 2024, mainly due to bullish fund manager investments, in addition to the macroeconomic factors mentioned a moment ago.

Speaker Change: Regarding market fundamentals. It is noteworthy that in the second quarter of 2024 L. M missing price average $2833 per ton up 12% from the second quarter of 2023, and 16% from the first quarter of 2024.

Speaker Change: This increase is primarily due to macroeconomic factors such as expectations of lower U S interest rates and expectations of Chinese government stimulus and fundamental factors such as tight concentrate market low seen inventories.

Speaker Change: Yeah, let me copper price averaged $9753 per ton in the second quarter of 2024 up 15% from the second quarter of <unk> 33, and 16% from the first quarter of 2024, mainly attributed to bullish fund manager investments. In addition to the macroeconomic factors mainly.

Speaker Change: A moment ago.

Jose Carlos Del Valle: Looking ahead, Zinc prices are expected to remain positively supported by U.S. monetary policy, economic stimulus in China, and the current tight zinc concentrate supply. In the mid to long term, the fundamental outlook for both zinc and copper prices remains positive. Moreover, investments in construction, infrastructure, and the automotive sectors are anticipated to continue to positively impact demand expectations for base metals, while growth in supply is expected to remain relatively low. Now, I will hand over the presentation back to Ignacio for his final remarks.

Speaker Change: Looking ahead seeing prices are expected to remain positively supported by U S monetary policy economic stimulus in China, and the current tight zinc concentrate market.

Speaker Change: In the mid to long term definitely the mental outlook for both zinc and copper prices remain positive. Moreover, investments in construction infrastructure and the automotive sectors are anticipated to continue to positively impact demand expectation for base metals, while growth in supply is expected to remain relatively limited.

Speaker Change: Now I will hand over the presentation back to Ignacio for his final remarks.

Ignacio Rosado: Thank you, Jose Carlos. I would like to conclude this presentation by sharing some important news about our sustainability agenda. As part of Nexa's circular economy initiatives, we completed our first commercial sale transaction in May involving 26.4 tons of waste material from our Tres Marias smelter. This project aims to sell significant amounts of waste from our smelter by developing partnerships and evaluating viable technologies and trade routes for this material. Additionally, in collaboration with the Brazilian Agricultural Research Institute and the Brazilian Micro and Small Business Support Service, NEXA partnered to expand a rural practices project in Basante, Brazil. This initiative aims to enhance the income of 40 selected farmers by introducing new agricultural techniques and market strategies.

Ignacio: Thank you Jose Carlos.

Ignacio: I would like to conclude this presentation by sharing some important news in our sustainability agenda.

Ignacio: As part of an extra circular economy initiatives, we completed our first commercial sale transaction in may involving 26.4 tons of waste material for our today's mighty assay smelter.

Speaker Change: This project aims to sell significant amounts of waste from our smelter by developing partnerships and evaluating viable technologies on trade routes for the for these materials.

Speaker Change: Additionally, in collaboration with our Brazilian agricultural research on the Brazilian micro and small business support service mix up partner to expand our rural practices project in Brazil.

Speaker Change: This initiative aims to enhance the income or 40 selected farmers by introducing new agricultural techniques on market is Fridays.

Operator: This project demonstrates Nexa's commitment to improve local agricultural practices and support community development. Another notable achievement is that Nexa Peru was recognized for the third consecutive year as one of the 16 leading companies in sustainable practices by the Peruvian Stock Exchange for the 2024-2025 period. This recognition reflects Nexa's ongoing commitment to integrating ESG strategies into its operations and Advancing Responsible Mining Practices. These highlights underscore our commitment to operational excellence and transparency, as well as our dedication to creating sustainable value for our shareholders and the communities where we operate.

Speaker Change: This project demonstrates nicks us our commitment to improve local agricultural practices.

Speaker Change: Supporting community development.

Speaker Change: Another notable achievement is that next update was recognized for the third consecutive year as one of the 16, leading companies in sustainable practices by the Peruvian stock exchange for the 'twenty 'twenty four 'twenty to 'twenty five period.

Speaker Change: This recognition reflects <unk> ongoing commitment to integrating <unk>.

Speaker Change: He is your strategies into its operations and advancing to dispose all mining practices.

Speaker Change: These highlights underscore our commitment to operational excellence and transparency as well as our dedication to creating sustainable value for our shareholders and the communities where we operate.

Speaker Change: Yeah.

Operator: Looking at the remainder of the year, we will continue to focus on enhancing productivity, efficiency, and performance across operations and corporate areas, while also prioritizing the safety of our people. We will maintain our discipline, focus on our priorities, including the further improvement of ARIPANAS performance, the development of the Cerro Pasco integration project, delivery on guidance, extending the life of our mines, and consistently improving our cash generation. We believe that Nexa is well positioned to maintain positive momentum. We have an established business with a proven track record and an unwavering commitment to stakeholder value creation. This concludes our remarks. Thank you for your support. Operator, we are ready to open for questions.

Speaker Change: Looking at the remainder of the year.

Speaker Change: We will continue to focus on enhancing prove D V D efficiency and performance across operations and corporate areas. While also prioritizing the safety of our people.

Speaker Change: We will maintain our disciplined focus on our priorities, including the further improvement of our deep on US performance now development of the silver Busquin duration project.

Speaker Change: Delivery on guidance, extending the life of our mines and consistently improving our cash generation.

Speaker Change: We believe that next is well position to maintain positive momentum.

Speaker Change: We have an established business with a proven track record an unwavering commitment to stakeholder value creation.

Speaker Change: This concludes our remarks. Thank you for your support operator, we are ready to open for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star and then two. Our first question comes from Lawson Winder with Bank of America Securities. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: Your question. Please press Star and then two.

Speaker Change: Our first question comes from Lawson Winder with bank.

Speaker Change: Of America Securities. Please go ahead.

Lawson Winder: Thank you, operator. Good morning, Ignacio, and team.

Lawson Winder: Thank you operator, and good morning, Ignacio and team. Thank you for the update as always.

Ignacio Rosado: Thank you for the update as always. I wanted to just start off with your thoughts on the zinc market. That was really helpful, the color you provided.

Lawson Winder: I wanted to just start off with your thoughts on the zinc market. So that was really helpful. The color you provided and that but but just that in particular about some new production coming coming on it and then in Central Africa, Congo, Theres new production.

Lawson Winder: Just ask in particular about some new production coming on in Central Africa and the Congo. There is new production. Just your thoughts on whether or not that would be a concern of yours as you look out to the second half of this year and then 2025, as that asset starts to hit run rate capacity.

Speaker Change: Your thoughts on whether or not that would would be a concern of yours as you look out to the.

Speaker Change: The second half of this year and then 2025 is that asset starts to hit a run rate capacity.

Rodrigo Cammarosano: Okay, Lawson. It's Rodrigo here. Thank you so much for your question. Yeah, I mean, we expect, and we have been following the possible new production very closely. We know that some mines are about to put more concentrate on the market in the coming months, including Arequan or mining Arequan. But we keep our view that this is not going to be enough to somehow offset the tight concentrate market that we are seeing right now.

Lasso Rodrigo: Okay Lasso Rodrigo here. Thank you so much for the question Yeah. I mean, we expect we havent falling the possible new productions very globally.

Speaker Change: We know that some awesome minds are about you look more constant breaking the market in the coming months, including 91, I'll remind you that upon that but we are we would keep our revealed that this is not going to be enough to somehow offset the tight concentrate market that we are seeing right now so as a consequence, we may still see.

Rodrigo Cammarosano: So as a consequence, we may still see, in terms of fundamentals, based on the supply and demand rationale, we may see positive support for zinc pricing in the following months. Of course, just like we said, and also mentioned in the, sorry, Jose Carlos mentioned in the presentation, we may see some volatility, especially driven by the U.S. elections and expectations of Fed rate cuts. But we keep our review; we are very confident in the fundamentals of zinc, not only in the short term but also in the medium and long term.

Speaker Change: In terms of fundamentals based on the supply demand.

Speaker Change: A rationale we may see a positive support for zinc pricing in the following months of course, just like we said it not to mention the sorry, what was that kind of mentioned in the presentation. We may see some volatility, especially driven by <unk>.

Speaker Change: The U S elections.

Speaker Change: I guess your expectations on fed rates good.

Speaker Change: But we keep our review we are very confident.

Speaker Change: So all in the short term, but also in the mid long term and are and we will keep following this.

Rodrigo Cammarosano: And we will keep following this possible new production that should come, as well as monitoring the Chinese market very closely. So, as everybody knows, China is another important player in the zinc industry, and it's important to understand what's happening in terms of the production and the consumption of zinc concentrate in China.

Speaker Change: As possible new production that should come as well with monitoring the Chinese market very closely.

Speaker Change: Everybody know.

Speaker Change: Another important layer in the zinc industry and it's important to understand what's happening in terms of the production in the in the <unk>.

Speaker Change: Assumptions have been concentrated in China.

Ignacio Rosado: And thanks again for the question. Yeah, I guess.

Speaker Change: And thanks again for your question.

Ignacio Rosado: And just to add to what Camaro is saying, Lawson. Regarding the smelters, you know that the TCs are so low now that in some cases we have negative TCs and the premiums as well, that most smelters are not making money. In our case, we are in privileged markets; we are in Peru and Brazil, so we are very close to the producers of concentrate. But it's a very tight market. And in the cycle, when you see that, you see that this couldn't last.

Speaker Change: Yeah, and just to add.

Speaker Change: Two what come out I would say.

Speaker Change: Russell.

Speaker Change: Regarding the smelters, you'll know that disease.

Speaker Change: The Tcs are so low now.

Speaker Change: In some cases, we have native Tcs and premiums as well that most of the smelters are not making money.

Speaker Change: You know our gauge where we are in regulated markets. We are in everyone. In Brazil. So we are very close to the producers of culture right.

Speaker Change: But it's a very tight market and in the cycle when you'll see that you'll see that.

Speaker Change: This could last.

Ignacio Rosado: Many months. So, we know that some smelters are making money and are trying to keep up with the market, but this is not sustainable. So we believe that zinc prices have to go up, because otherwise the scarcity of metal is

Speaker Change: Many months, so we know that they're not making money are going to keep up with the market, but this is not sustainable so we believe that.

Speaker Change: Zinc prices have to go up because otherwise.

Speaker Change: Cash at the moment that will come in the coming months.

Lawson Winder: Okay, thank you very much for that color. It's very helpful. If I might, I'd also like to ask about capital allocation.

Speaker Change: Okay. Thank you very much for that color very helpful.

Speaker Change: I might I'd like to also ask you about capital allocation and breakthrough.

Lawson Winder: Go ahead, Lawson.

Speaker Change: Yeah go ahead go ahead Lisa.

Lawson Winder: Yeah, if I could just ask about capital allocation and how you guys are thinking about making a decision on investment. In the Cerro Pasco expansion versus paying down debt and the continued ramp-up of Aripuana, I guess Aripuana, you're now expecting that to be EBITDA positive going forward, so does that now provide some additional flexibility with capital return? And then what's the timing on the decision around Cerro Pasco

Lisa: Yeah, if I if I could just ask you about.

Lisa: Capital allocation and how you guys are thinking about.

Lisa: Making a decision on it.

Speaker Change: In.

Speaker Change: In the.

Speaker Change: Cerro Pasco expansion versus paying down debt and the continued ramp up of our appointment I guess already won yet you're now expecting that to be EBITDA positive going forward. So that does that and I'll provide some additional flexibility with our capital return and then what would the timing isn't around that Cerro Pasco.

Ignacio Rosado: Yeah, so very good questions. Aripuaná is starting to make some money, and for the rest of the year, as we were saying, throughput capacity is going to be 80-90% of our target. And with the production that we have based on stable recoveries and good quality concentrates, we will start accumulating cash in Aripuaná. So it will not longer...

Speaker Change: Yeah. So.

Speaker Change: Good questions.

Speaker Change: The burner is you're starting to make some money on.

Speaker Change: For the rest of the area. So we were saying.

Speaker Change: Throughput capacity is going to be 80, 90%.

Speaker Change: All of our targets.

Speaker Change: With our broad action that we have based on stable recoveries on quality of concentrate we will start accumulating cash and then you called out so it will not longer.

Ignacio Rosado: The project was initially planned to be a cash deficit mine. However, building a lip on that was really difficult because we spent a lot of money on this project. And that has been translated into a very high growth in debt. So part of the capital allocation that we want is that our priority is to reduce this gross debt. We believe that in the second half of this year and beginning 2025, we will start bringing in more cash flow, and part of that cash flow is going to go to pay down debt, okay?

Speaker Change: Our cash deficit.

Speaker Change: However.

Speaker Change: Building on the bond that was really if you go because we spent a lot of money in this project.

Speaker Change: A part of that has been translated into a very high gross debt.

Speaker Change: So part of that capital allocation that we won is that our priority is to reuse these gross debt.

Speaker Change: We believe that in the second half over here and it starts in 2025, we will start.

Speaker Change: Bringing more cash flow.

Speaker Change: And part of that cash flow is going to go to pay down debt. Okay.

Ignacio Rosado: Part is going to go to pay dividends as well because we are a company that pays dividends. It might not be the case this year or probably the first quarter of last year, but long term, we pay dividends, and then we will invest in growth. PASCO is the most advanced project that we have. We have two operations.

Speaker Change: Is gonna go to baby as well because we are a company that baby.

Speaker Change: He might not be that case, this year or probably the first quarter of last year, but long term, we baked in union and then.

Speaker Change: We will invest in growth.

Speaker Change: Score is the most.

Speaker Change: Advanced projects that we have.

Speaker Change: Torque ratios, we have two operations there. So it is an overhang there because.

Ignacio Rosado: So, it's a no brainer because, as we said before, there is a lot of potential in the intersection of the two mines. And we will unlock the potential of Atacocha that today has resources but cannot be converted into reserves because we cannot access them. And by using the infrastructure of El Porvenir, we will access them. The capex for this is $150 million. We will approve this in the coming months. I'm trying to say that probably before the year ends.

Speaker Change: As we said before.

Speaker Change: Is a lot of danger in the intersection of the two mines and we will unlock potential of a courtyard.

Speaker Change: Resources cannot.

Speaker Change: Be converted into reserves, because we cannot access them by using the infrastructure of authority, we will accept that.

Speaker Change: The Capex for these 150 neither.

Speaker Change: We will approach this in the coming months I'm trying to say that.

Speaker Change: Broadly before the year end.

Ignacio Rosado: And probably the bottleneck here is the pumping system that will pump tailings from El Porvenir to Atacocha, so we extend the life of the mine of the dam. Yeah, it is probably the first bottleneck, and we will have to approve the equipment to buy because the lead times are long. We will approve that in the last quarter of this year and finish engineering of the shaft, finish engineering of this tailings dam facility, and advancing with the permits. The idea is that this $150 million is going to be funded with our own cash.

Speaker Change: Broadly the bottleneck here you say is that you.

Speaker Change: The pumping system that will bump dating from it.

Speaker Change: Our culture has always been.

Speaker Change: Life of mine.

Speaker Change: Yeah. He is.

Speaker Change: It's probably the first bottleneck and we will have to approve equipments to why because the lead times are.

Speaker Change: Long.

Speaker Change: We will approve that in the last quarter it'll be here, finishing engineer he knows the job, finishing engineering of these.

Speaker Change: Yeah.

Speaker Change: If that means some facility.

Speaker Change: On advancing with a better means we.

Speaker Change: It help us approve on an official basis is projecting that us in the next four months, but the idea is that would you say this $150 million is gonna be fun with our Oh gosh.

Ignacio Rosado: We have some possibilities of advancing sales of lead, etc., etc. We will communicate that. But so, in summary, bringing down the debt..., paying some dividends going forward. The cash flow is accumulated, and we bring in a PASCO in the next, I mean, approve that in the next month. This project will last three, two to three years. But it is the most important project that we have to bring in more cash flow later on. So that's that's more or less where we are.

Speaker Change: We have some a plus he really diesel on or off.

Speaker Change: Advancing sales of led et cetera, et cetera, we will communicate up but so in summary.

Speaker Change: Bringing down the debt.

Speaker Change: The pain sudden divisions going forward.

Speaker Change: Wow.

Speaker Change: The cash flow is accumulated.

Speaker Change: I'm, bringing.

Speaker Change: Pascal.

Speaker Change: In the next day.

Speaker Change: Proved out in the next months this probably last three two to three years.

Speaker Change: But it is the most important point that we have to bring more cash flow later on so that's more or less where we are today.

Speaker Change: Yeah.

Operator: And the next question comes from Carlos de Alba, with Morgan Stanley. Please go ahead.

Speaker Change: And the next question comes from Carlos de Alba with Morgan Stanley. Please go ahead.

Carlos de Alba: Yeah, good morning Ignacio, Carlos, and Rodrigo, maybe I should follow up on Cerro de Pasco before I ask a question about Aripuaná. So just to confirm, the $150 million capex that you mentioned is for the entire project? or just for the first stage. Okay, no, no, no, his entire project because. I can give you a call on that if you want; please go ahead. Yeah, can you talk a little bit about the CAPEX for the various PASCO integration projects in total and if there are different stages, if you can add color to that and the pace of disbursement?

Speaker Change: Good morning, Carlos and I don't know.

Speaker Change: Just.

Speaker Change: Maybe following on on Saturday basketball Ah Ah I ask a question on reporting on so just to confirm that 150 million Capex that you mentioned is for the for the entire project.

Speaker Change: But just for the first of the state.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: I can't give you color on that if you want.

Speaker Change: Go ahead.

Speaker Change: Yeah, you can can you talk a little bit about our capex for southern Nebraska integration project.

Speaker Change: In Tata and if there are different stages.

Speaker Change: You can add color to that and and the pace of these bars I mean, because I think you mentioned that.

Carlos de Alba: Because I think you mentioned that it could take potentially three years to complete the project. So if you can give us a little bit of color on the total CAPEX and maybe the pace of disbursements over those three years, that would be great.

Speaker Change: Could take potentially three years to complete the project. So if you can give us a little color on the total capex and maybe the pace of these bars mines are in those three years that'd be great.

Carlos de Alba: perfect. So, the three years has two components. One is the permit because we need a modification of a... Publication of Studies for the Integration of the Two Minds.

Speaker Change: Perfect. So so the three years has two components one is betterment.

Speaker Change: Because we need a modification or not.

Speaker Change: Yeah.

Speaker Change: Or is it gives you one of the studies for the integration of the two mines.

Ignacio Rosado: The two mines are now connected, but we will have to connect them at a lower level; it's two kilometers. And we will have to extract the mineral from Atacocha through the Forvenir shaft. So that will take time; that takes at least two years, so that is our response. The other restriction is the pumping system. No, we have four components in this project. The pumping system that pumps tailings from El Porvenir to Atacocha is key. Why?

Speaker Change: The mines are now connected but we would have to connect them at a lower level at least a two kilometer and we would have constructed from a courtyard Rudolf already yourself.

Speaker Change: So that that will take time that takes at least two years, so so that but that.

Speaker Change: That is a risk ratio the other restriction is the pumping system no.

Speaker Change: We have core components in these projects.

Speaker Change: The pumping system.

Speaker Change: Pumps tailings chrome and perennial throughout our culture.

Speaker Change: T y.

Ignacio Rosado: Because the El Porvenir tailings dam will finish in three years, so to continue exploiting perennial plants, we will have to pour that tailings into Atacocha. The engineering of that project takes us to probably $80 million; we are finishing that, and we will need to start buying the equipment because they have a long lead time. That project itself is $80 million. I'm going to probably demand two years, those 80, so it's 40-40, 24 and 25, okay?

Speaker Change: Uh huh.

Speaker Change: And perennial tailings dam will finish in three years, so we switched to continuous blogging already and we will have two board.

Speaker Change: That leads into a package.

Speaker Change: The engineer of that project.

Speaker Change: They've got to go on the $80 million were finishing that.

Speaker Change: We will need to start buying the equipment because they have long lead time.

Speaker Change: That project itself is $80 million.

Speaker Change: It went out probably demand.

Speaker Change: Two years.

Speaker Change: He knows what its called before the 24 and 25 okay.

Ignacio Rosado: Then we will have to upgrade the shaft. The shaft of El Porvenir is a very efficient one. We don't need to upgrade all of the shaft. There are some parts that are in good condition and are very reliable.

Speaker Change: Then we will have to upgrade their shop, the shaft or at quarter end.

Speaker Change: It is a very efficient one.

Speaker Change: We don't need to operate all the shop.

Speaker Change: There are some parts that are in good conditions are very reliable.

Speaker Change: We are assessing that and that might cost between $15 million to $20 million okay.

Ignacio Rosado: So we are assessing that. And that might cost between 15 to 20 million dollars. Okay. Then we have to build a water management plant because it goes into the tailings. [inaudible] The integration of the two minds.

Speaker Change: And then we have to go build a I want their management plan because.

Speaker Change: Gross.

Speaker Change: And that could cause in the North Dakota, especially RV that could cost us between 20 and $25 million and a raise.

Speaker Change: Integration.

Speaker Change: The integration of the two mines, yeah, and all of that development of that.

Ignacio Rosado: And all the development of the mines to, let's say, extract the mineral is sustaining capital expenditure that is not considered in this project. So 80 for the pumping, 20 for the water management, 15, 20 for the shaft, and then the remaining. Okay, so this is, more or less, a very straightforward project. And what is the beauty of this?

Speaker Change: The mines.

Speaker Change: Let's say.

Speaker Change: I mean, it is sustaining capex that is not consider considering these protein. So 84, the bond being 24 that what their mind management.

Speaker Change: Is it in 'twenty two for me or to the shop and then the remaining four to integrate the two mines, but you know there is a lot more capex that he's saying okay. So this is this is more of a this is a very straightforward project.

Speaker Change: That is the beauty of this.

Ignacio Rosado: The NSR of El Porvenir today has an NSR of $100-$110 per ton, okay? So by extracting Atacocha, the idea is that we extract minerals and that's in resources. So it has a lot of, of hundred.

Speaker Change: The MSR.

Speaker Change: And borrowing at two eight.

Speaker Change: Zero 100 at $110 per ton okay.

Speaker Change: Okay. So by extracting attack on term.

Speaker Change: The idea is that we struck me in there.

Speaker Change: That's in resources.

Speaker Change: Oh, sorry.

Speaker Change: Over 150, or so our mix is going to be give us a higher in stock, but the most important bar is that the ink in the integration.

Ignacio Rosado: So our meat is going to give us a higher NSR. But the most important part is that in the integration, we have a lot of potential with grades and minerals so that the NSR is above $200. Okay, we don't even have resources there, it's only potential. So once we build all these four components and in parallel, and we will communicate that probably next year, we will start drilling these intersections so we can bring all of the high-grade minerals and change the mind of the plan to have more positive energy.

Speaker Change: We have a lot of danger with great mean at all that the MSR is above $200. Okay. We don't have even resources there is only bought danger.

Speaker Change: So.

Speaker Change: Once we build all these four components and in parallel we will communicate that probably next year, we will start drilling. These intersections. So we can bring all of the high <unk>.

Speaker Change: And grade mean it.

Speaker Change: And change that I might not have a plan to Uh huh.

Speaker Change: Positive NPV.

Ignacio Rosado: This is more or less where we are finishing engineering, and I guess towards the end of the year we will probably announce the pumping system, and I will say at the beginning of the next year we will announce all the components of the project and how we are going to treat this, So this is more or less the context of this Cerro de Pasco case.

Speaker Change: Is it.

Speaker Change: And more or less where we are finishing in engineering and eye gaze and towards the end of the year, we will we will announce probably be Florida.

Speaker Change: Pumping system.

Speaker Change: I would say at the beginning of that over the next year, we will announce all the components of the project and how are we going to accrete them.

Speaker Change: So this is more or less.

Speaker Change: Context of these separate.

Speaker Change: Do you have a basketball game.

Carlos de Alba: Thank you for the caller. And so the total capex is indeed $150 million, right?

Speaker Change: Greg Thanks for the color and so the total Capex is indeed 150 million right yes.

Ignacio Rosado: Yes, it's total garbage. I mean, it might change a little bit. Yeah, probably because of the engineering. For more information, visit www.fema.gov.

Speaker Change: I mean, it might change a little bit yeah brought me because all the engineering, but it won't be a.

Speaker Change: My theory, you want.

Carlos de Alba: And then moving on to Aripuana. So now that the operation, the mine has graduated to an operating mine, would you start disclosing costs for Aripuana and stop making the adjustment on the EBITDA for the ramp-up expenses? That's the idea; that's the idea. We have now moved to an operation, and we will need to start disclosing that as well. Yes, that's the way it works. And would that start in the next quarter or until 2025?

Speaker Change: Right, Okay, and then moving onto a sort of at the core.

Speaker Change: Oh, sorry, so now that the operation of the mine has graduated to no brain Oh brain.

Speaker Change: Mine.

Speaker Change: When would you start disclosing cost for already borne out and stopped making the adjustment on the EBITDA for the ramp up of expenses.

Speaker Change: Yeah, Yeah, Yeah, Yeah. We we have now moved to an operation we will need to start disclosing that as well, yes. That's that's that's the way it has buoyed from known.

Speaker Change: And would that start and end in the next quarter or until 2025, no not next week.

Ignacio Rosado: No, no, next quarter. The idea is that in the third quarter, we start doing that.

Speaker Change: The third quarter, we started doing that.

Carlos de Alba: Okay, any color that you can, you know, any advance that you can give us now, or should we just wait until you report the third quarter?

Speaker Change: Okay.

Speaker Change: Any color that you that you can you know.

Speaker Change: Any advantage that you can give us now or should we just wait until you report the third quarter.

Ignacio Rosado: I think we have to wait. I think we have to wait because, yeah, we don't we don't know the prices. Okay, sounds good. Thank you.

Speaker Change: I think we have to wait.

Speaker Change: Because yeah, we don't we all know prizes.

Speaker Change: Okay sounds good thank you.

Operator: And the next question comes from Camilla Barder of Rodesco EDI. Please go ahead.

Operator: The next question comes from Camilla Barder of Rodesco EDI. Please go ahead.

Speaker Change: And the next question comes from Camilla BARDA with Bradesco E. D. I. Please go ahead.

Speaker Change: Okay.

Speaker Change: Hum.

Camilla BARDA: Two quick questions on my side.

Camilla BARDA: Catholic.

Speaker Change: Maybe you can say, but could you talk about that.

Speaker Change: Yeah.

Speaker Change: And secondly, you kept up.

Speaker Change: Yeah unchanged.

Speaker Change: Great to hear.

Speaker Change: Could you provide some more color.

Speaker Change: I'm glad you see costs evolving.

Speaker Change: Mike.

Speaker Change: Yeah.

Jose Carlos Del Valle: Hi Camilla, thank you for the question. Jose Carlos here.

Speaker Change: Like I mean, I think the question Jose Carlos here.

Speaker Change: I'm not sure if I heard everything well, but I also have to give it a shot at the first one wasn't related to Capex for next year, if I heard correctly.

Jose Carlos Del Valle: I'm not sure if I heard everything well, but I'll try to give it a shot. The first one was in relation to CAPEX for next year, if I understood correctly. And we were obviously always looking beyond the current year, and we had an expectation of what CAPEX should be. We're finalizing or fine-tuning the projects, and the numbers of all the different priorities that we have. So we don't expect a significant reduction in CAPEX.

Speaker Change: We are obviously always looking looking beyond the current year and we have an expectation of what a oh, what capex should be we're finalizing or fine tuning the projects.

Speaker Change: Number so.

Speaker Change: Different priorities that we have so we don't we wouldn't expect a significant reduction in capex I think it should be somewhere around where we are today or 2024.

Jose Carlos Del Valle: I think it should be somewhere around where we are today in 2024, somewhere between, you know, in the low 400s. So I don't expect a significant variation on that. We have a number of projects and investments that we have to make, mostly sustainable, but things that have to happen in 2025. And can you please repeat the second question you mentioned? I think it was related to cost, but I don't know if there was a specific question. I just heard cost, but if you could please clarify.

Speaker Change: Somewhere between in the low to <unk> in the low four hundreds.

Speaker Change: So I don't expect a significant variation on that we have a number of projects.

Speaker Change: And investments that we have to make mostly sustaining that things that have to happen.

Speaker Change: 25.

Speaker Change: Can you. Please repeat the second question you mentioned I think it was related to cost, but I don't know if there was a specific question I just heard cost, but if you could discharge.

Speaker Change: All right.

Jose Carlos Del Valle: It was cut to the second half. For the second half. Okay, sure.

Speaker Change: He wants to talk to the second half.

Speaker Change: What's sort of a second half okay sure as we mentioned in the earnings release, and I think we mentioned in the presentation as well.

Jose Carlos Del Valle: As we mentioned in the earnings release, and I think we mentioned in the presentation as well, we feel good about the cost levels that we are having, mostly within guidance. So, for now, we're keeping our cost guidance, and we don't expect that, you know; we're not expecting right now that we will make a change. Obviously, things can change, but we feel comfortable that we are being able to be within the guidance that we provided, mitigate the impact of inflation that is still there in all of our operations, so always finding ways in which we can compensate for the pressure that we see in some of the inputs and in third-party services. So, for now, we're keeping things the way they are, and we expect that we will be within the guidance.

Speaker Change: We feel good about the cost levels that we are that we are having.

Speaker Change: Mostly within guidance.

Speaker Change: So we for now we're keeping our cost guidance and we don't expect that.

Speaker Change: We're not expecting right now that we will make a change or is the in.

Speaker Change: Things can change, but we feel comfortable that we are being able to you within the guidance that we provided.

Speaker Change: We mitigated the impact of inflation that is that is still there in all of our operations always finding ways in which we can compensate for it.

Speaker Change: The pressure that we see in some of the inputs and third party services. So for now we're keeping things the way they are and we expect that.

Speaker Change: We will be within the guidance.

Speaker Change: Okay. Thank you.

Speaker Change: Sure.

Operator: And the next question comes from Oris. Wauwedao with Scotiabank. Please go ahead.

Speaker Change: And the next question comes from fourth.

Speaker Change: Well without with Scotiabank. Please go ahead.

Oris Wauwedao: Hi, good morning. Two questions. Sorry, could you just clarify? Did you say that we should anticipate CapEx for 2025 around $400 million, mostly sustaining? Did I hear that correctly?

Speaker Change: Hi, good morning, two questions sorry, Peter could.

Peter: Could you just clarify did you say that we should anticipate capex for 2025 around 400 million, mostly sustaining did I hear that correct.

Jose Carlos Del Valle: Now, what I said was that we shouldn't expect a significant variation from what we have in 2024, and the guidance that we have for 2024 is $412 million, so something in that same range.

Speaker Change: Oh, what a what a what I said was is that we shouldn't expect a significant variation from what we have in 2024 and the guidance that the guidance. We have for 2024 is $412 million or something in that in that same range.

Speaker Change: Uh huh.

Speaker Change: Sure.

Jose Carlos Del Valle: [inaudible] I'm sorry, just to clarify, because in this calculation that Jose is mentioning, we consider the CAPEX, which our guidance for this year is 311, mostly sustaining. We expect this level to be the same next year.

Speaker Change: Oh I'm sorry, just to clarify are we in this calculation that Jose is mentioning we consider the capex, which is our guidance for this year is 311.

Speaker Change: Mostly sustaining we expect this level to be the same next year the difference for the poor hungry because this is also including the some of the expenses that we consider together when evaluating the total capex internally here at NASA, but in terms of the Capex.

Jose Carlos Del Valle: The difference for the 400 is that Jose Carlos is also including some of the expenses that we consider together when evaluating the total CAPEX internally here at Nexa. But in terms of the CAPEX, to compare with the guidance for this year, it's 311, and we expect the level to be the same next year. Also, considering a scenario, which is pretty much what we have right now, but if we approve the Cerro de Paz integration project, we may increase this, The capex, the total capex, because we're going to include the investment that we have to do in Cerro de Pasco next year, according to what Inácio explained.

Speaker Change: Compare with the guidance for this year.

Speaker Change: It's 311, and we expect the level to be the same next year.

Speaker Change: So considering that scenario, a which is pretty much what we have right now, but if we approve the Pos integration project.

Speaker Change: We may increase.

Speaker Change: Hum.

Speaker Change: The capex the total capex because we were gonna to include the investments that we have to do is say who the possible next year. According to what I've explained. So these $400 million of combination of the Capex plus some operational expenses that we oh, sorry, and operation expenditures that we have that internally, we consider escape it.

Jose Carlos Del Valle: So, this $400 million is a combination of the capex plus some operational expenses that we have, not sorry, operational expenditures that we have that internally we consider as capex, just to clarify and make sure that there's no misunderstanding. Yeah, thank you.

Speaker Change: To clarify.

Speaker Change: And make sure that Theres no.

Speaker Change: Yeah. Thank you.

Speaker Change: Notifications.

Operator: We've previously heard some discussion about trying to diversify into copper and potentially looking at some copper acquisitions. Is that still on the table from a strategy perspective? Yes, yes, that's on the table.

Speaker Change: Yes, Thank you and just secondly, I'm just wondering we previously heard some discussion about trying to diversify into copper.

Speaker Change: And potentially looking at some copper acquisitions is that still on the table from a strategy perspective.

Ignacio Rosado: Yes, yes, that's on the table. And the reason behind it is that we are... Let's say a very competitive company in terms of underground mining. We believe ourselves that one of our competitive advantages is underground mining. And we already have some Copper in our portfolio. We have Copper in Cerro Lindo and now in Aripuana. So we are looking for projects that are similar to those that have higher copper content. Why is that?

Speaker Change: Yes, yes, that's one that they were on the reason behind is that a.

Speaker Change: We are.

Speaker Change: Let's say.

Speaker Change: A very competitive company in terms of the underground mining, where we really view ourselves that our one of our competitive advantage is underground mining.

Speaker Change: We already have some copper in our portfolio, we have co brings several ingo I mean.

Speaker Change: Now how.

Speaker Change: How do you point out so we are looking for projects that are similar to those.

Speaker Change: How about higher copper content.

Speaker Change: Why is that.

Ignacio Rosado: because we have the advantage of exploiting that type of deposit. However, copper is more resilient than zinc, for certainty. I mean, if you look at the volatility of copper, it's much lower than zinc. And given our advantage, if we focus more on copper, our cash flow volatility is much lower, and will be lower as well. The fundamentals, on the contrary, are very important, as is the big one. So yes, the idea is that we bring more copper into our portfolio for the coming years.

Speaker Change: Because we have the advantage of it.

Speaker Change: Exploiting that type of deposits.

Speaker Change: Corporate is more resilient balancing of course, I mean, if you look at that.

Speaker Change: The volatility of Coker is much lower than the zinc.

Speaker Change: And given our band, but we focus more on Goldberg, our cash flow volatility is whether it'd be lower as well.

Speaker Change: The mental her corporate are very important as they are same.

Speaker Change: England. So yes, yes. The idea is that we bring more corporate into our portfolio.

Speaker Change: For the coming years.

Speaker Change: Thank you.

Operator: There are no further questions from the phone. I will now transfer it over to Mr. Rodrigo to read questions from the webcast.

Speaker Change: There are no further questions from the phone I will now transfer it over to Mr. Rodrigo to read questions from the webcast.

Rodrigo Cammarosano: Okay, thank you, operator. We have a couple of questions from the audience on the webcast. So, I'm going to start with a question from Mr. Luis Ordonez. The question is, do our expectations that higher production levels and metal prices will continue in the coming quarters? And also, can you jump in? Yeah, yeah.

Rodrigo Camera: Okay. Thank you operator, we have a couple of questions from the audience on.

Rodrigo Camera: The webcast, so I'm going to start with a question from Mr. Luis <unk>.

Mr. Rodrigo: The question is.

Speaker Change: And do our expectations that our higher production levels and metal price would continue in the coming markets.

Speaker Change: And also can you can jump in.

Speaker Change: Yes.

Ignacio Rosado: Yeah, what we try to focus on is reliable production, reliable control of costs, and unreliable control of capex, no? So I can tell you that we are on track to achieving that.

Speaker Change: Yeah.

Speaker Change: Well, we try to focus is is is unreliable production.

Speaker Change: Our controlling of costs unreliable controllable capex no.

Speaker Change: So.

Speaker Change: I can tell you that we are on track to achieving that.

Ignacio Rosado: Second half of the year in the guidance that we gave. The levels of EBITDA, influenced by prices, are going to remain similar to those of the second quarter, but, you know, volatility is there, and we don't know. If projects remain, it might be the case that we might have these foreign areas of EBITDA, but we don't know that. But what we can confirm is that we are committed to our targets for production costs and CAPEX, which are the main components of EBITDA.

Speaker Change: The second half of the year in the guidance that we gave.

Speaker Change: We gave.

Speaker Change: The debt levels of EBITDA are influenced by prices no. Our view is that prices.

Speaker Change: Are going to remain similar to those.

Speaker Change: The second quarter, but you know volatility is there and we don't know.

Speaker Change: If prices remain it might be that Dave that we might have these when there is a theory, but we all know that.

Speaker Change: We can confirm is that we are committed to our targets for production cost and capex that are the main components.

Ignacio Rosado: Thank you, Ignacio. Following up the question from Luiz, we also have another question from Luiz. Do you, does Nexa have a guidance target or targets for the net leverage? I assume this is by the end of this year. Yes, thank you.

Speaker Change: Okay. Thank you and also following up the question from Elyse. We also have another question from Luis <unk>.

Luis: Do you does next have a guidance or target or targets for the national average I assume this is by the end of this year.

Jose Carlos Del Valle: Yes, thank you. Thank you, Rodrigo. And thank you, Luis, for the question.

Speaker Change: Yes. Thank you. Thank you Rob and thank you for the question.

Jose Carlos Del Valle: I will talk in general because we have mentioned this before. We have a conservative approach to this. And obviously, in a mining company that has to go through different cycles, you're subject to changes in some factors that you don't control. So you have to take that into consideration when setting a target. In the first quarter, we had high leverage, exactly because of that, because prices were low. And in the last 12 months, our EBITDA has suffered because of these low prices.

Speaker Change: I was talking in general because we have mentioned this before.

Speaker Change: Our conservative approach to it and obviously in a mining company that has to go through different cycles.

Speaker Change: Subject to changes in some factors that you don't control. So we have to take that into consideration with safe sitting authority in the first quarter, we had a high leverage because of that because.

Speaker Change: Prices prices were low and.

Speaker Change: In the last 12 months, our EBITDA has suffered because of low prices.

Jose Carlos Del Valle: As Aripuanaco starts contributing to our results, and we have prices that are more in line with fundamentals, this leverage level is already coming down in a material way. And, as Ignacio mentioned, one of our main objectives is to bring down the gross debt. And as much as we accumulate cash, we will focus on bringing down the gross debt. So that combination will help us continue to reduce our leverage until we bring it down to levels below one and a half times, which is something that we feel more comfortable with. And if our short to medium-term target is to have it back below one and a half.

Speaker Change: We're not going to start contributing to our results and we have prices that are more in line with the Minto.

Speaker Change: This leverage level is already coming down in a material way and as Ignacio mentioned it.

Ignacio: One of our main objectives is to bring down the gross debt in as much as we accumulate cash we will focus on bringing down the real estate cycle.

Ignacio: The nature of that will help us continue to reduce our leverage until we bring it down to levels below one and a half times, which is something that we feel more comfortable with.

Speaker Change: And if our.

Speaker Change: Short short to medium term target is to have it.

Speaker Change: Below one five times.

Speaker Change: Okay.

Rodrigo Cammarosano: Yeah, those were the questions from the audience. So we are the operator. We are all set. I would like to thank you so much and hand over to you now.

Speaker Change: Yeah. Those those were the questions from the audience. So we are operator, we own all set here.

Speaker Change: Yes, I would like to thank you so much in hand over three months.

Ignacio Rosado: Okay, thank you very much for the time. Again, in this quarter, I just want to reiterate that we are very focused on. I'm trying to start reducing our gross debt. We are very happy with the advancement of ADIPUANA. ADIPUANA has been a very, very difficult project. And now we are towards the end of the ramp up and starting to make cash flow. Adipona is a mine that is going to give us very good surprises in the coming years because it's a long-life asset with a very good net smelting return.

Speaker Change: Okay. Thank you very much for the time again.

Speaker Change: This quarter.

Speaker Change: Just want to reiterate that we're very focused on.

Speaker Change: The.

Speaker Change: Achieving guidance on production costs, Capex and trying to start reusing or gross that we.

Speaker Change: We are very.

Speaker Change: Happy with the advances.

Speaker Change: I think one of the highest in a very very difficult for you from you on that.

Speaker Change: Now we are towards the end of the ramp up and they started making gaslog.

Speaker Change: <unk> is a mine that is going to give us very good surprises.

Speaker Change: And years, because it's a.

Speaker Change: So it's a long life asset with very good.

Speaker Change: There is nothing in return.

Ignacio Rosado: We are very confident that PASCO will come in the next three years. So, with all of our minds, Pascua, Nipona, Cerro Rindo, and Basante, the priority is to extend the life of the mine and have stable cash flows going forward given our operational guidance. In the case of the smelters, given the location and given the market that we face, they are stable smelters. Even in these difficult situations, we are making money.

Speaker Change: We are very confident that basketball Guy I mean.

Speaker Change: In the next three years.

Speaker Change: So with all of our mines bus quad or not.

Speaker Change: Several haynesville on Sunday.

Speaker Change: Our priority is to extend the life of the mine and harvest. They were cash flows going forward given our operational gaiam in.

Speaker Change: In the case of the smelters.

Speaker Change: Given the location and given the market that we face.

Speaker Change: They are stable even in these difficult situations, we're making money.

Ignacio Rosado: So the idea is to keep that in mind going forward. Thank you very much, and we will speak to you soon in the next three months. Have a good day.

Speaker Change: So are the idea is to keep that in that.

Speaker Change: Going forward. Thanks.

Speaker Change: Thank you very much and we will speak to you soon in the next three months.

Speaker Change: A couple of days.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: Conference has now concluded. Thank you for attending today's presentation you may now.

Speaker Change: Yeah.