Q4 2024 Nexa Resources SA Earnings Call
Rodrigo: Thank you for joining us today. During this call, we will discuss the company's performance as outlined in our earnings release issued yesterday. We encourage you to follow along with this on-screen presentation through the web.
During this call we will discuss the company's performance as outlined in our earnings release issued yesterday.
We encourage you to follow along with this one screen presentation through the webcast.
Rodrigo: Before we begin, I would like to draw your attention to slide number two, where we will outline our forward-looking statements about our business. Please refer to the disclaimer regarding these statements and their associated conditions.
Before we begin I would like to draw your attention to slide number two where we will outline our forward looking statements about our business. Please.
Please refer to the disclaimer regarding these statements in Bayer associated conditions.
Rodrigo: Now, it is 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.
Now it is my pleasure to introduce our speakers.
Ignacio Rosado: Joining us today is our CEO Ignacio Rosado, our CFO Jose Carlos <unk>, and our senior Vice President mining operations look hard to quit.
Rodrigo: With that, I will turn the call over to Inácio for his comments. Inácio, please go ahead.
Ignacio Rosado: With that I will turn the call over to Ignacio for his comments and also please go ahead.
Ignacio Rosado: Thank you, Rodrigo, and good morning, everyone. Thank you for joining us today as we review our fourth quarter and full year 2024 results. Let's move to slide number three, where we highlight our main achievements for the year. As we close out 2024, we are very pleased with our performance. We achieved the second highest adjusted EBITDA in our history, and for the first time since initiating the investment cycle in Aripuaná, generated positive consolidated cash flow. Our financial position also improved with a notable increase in our cash balance, a reduction in the gross debt, and an improvement in our net leverage ratio from 2.2 times in the third quarter to 1.7 times.
Ignacio Rosado: Thank you Rodrigo and good morning, everyone.
Speaker Change: Thank you for joining us today, as we review our fourth quarter and full year 'twenty 'twenty four results.
Speaker Change: Let's move to slide number three where we highlight our main achievements for the year.
Speaker Change: As we close out 2024, we are very pleased with our performance.
Speaker Change: We achieved our second highest adjusted EBITDA in our history.
Speaker Change: For the first time since initiating the investment cycle in Eddy border generated positive consolidated cash flow.
Speaker Change: Our financial position.
Speaker Change: Also improved with a notable increase in our cash balance by a reduction in the gross debt on unimproved men in our net leverage ratio from 2.2 times in the third quarter to 1.7 types.
Ignacio Rosado: In the fourth quarter, Adjusted EBITDA reached $197 million, a 79% increase from the $110 reported in the same period last year. For the full year, Adjusted EBITDA totaled $714 million. This strong performance was driven by several key factors, including higher by-product contribution, increased zinc prices, lower environmental liabilities, and foreign exchange gains. On the operational front, we continue to make steady progress, meeting our 2024 production and cost guidance, while accelerating both revenue growth and margin expansion. Total consolidated net revenues for the fourth quarter reached $741 million, up 18% compared to the fourth quarter of last year, and a 4% increase compared to the third quarter of this year.
In the fourth quarter.
Speaker Change: Just at EBITDA reached 197 million a.
79% increase from the 110 reported in the same period last year.
Speaker Change: For the full year adjusted EBITDA totaled $714 million.
Speaker Change: This is strong performance was driven by several key factors, including higher byproduct contribution increased zinc prices lower environmental liabilities on foreign exchange gain.
Speaker Change: On the operational front, we continued to make steady Proteus median or 'twenty 'twenty four production and cost guidance, while accelerating both revenue growth and margin expansion.
Speaker Change: Total consolidated net revenues for the fourth quarter reached 741 million up 18% compared to the fourth quarter of last year.
Speaker Change: 4% increase compared to the third quarter of this year.
Ignacio Rosado: In terms of mining production, zinc output decreased by 11% over quarter, while lead and silver production increased by 2% and 1% respectively, driven by higher grades. Copper production saw a slight decrease compared to the previous quarter, but was in line with our mine sequencing plan. Regarding Adipona, I will share more details shortly, but I would like to highlight that the operation made a fully positive contribution to our adjusted EBITDA in 2024. Aripona has been a very challenging project to build. And as previously mentioned, we approve the purchase of a fourth tailings filter, which will enhance utilization capacity, given that the three filters in place have limited capacity and present operational issues.
Speaker Change: In terms of mining production zinc output decreased by 11% quarter over quarter, while it does feel real production increase by 2% and 1% respectively driven by higher rates.
Speaker Change: Goldberg pro the actual saw a slight decrease compared with the previous quarter, but was in line with our mine sequencing blood.
Speaker Change: Like I don't even know the border.
I will share more details shortly but I would like to highlight that the operation made a fully positive contribution to our adjusted EBITDA in 2024.
Speaker Change: How do you point out has been a very challenging project to build.
Speaker Change: And as previously mentioned, we approved our purchase of a fourth tailings filter, which will enhance utilization capacity given the three filters in place.
Speaker Change: <unk> capacity.
Speaker Change: Present operational issues.
Ignacio Rosado: With these four filters, the plant will achieve its maximum capacity. In terms of zinc metal and oxide sales, we saw a minor 1% dip quarter over quarter, though sales increased by 6% year over year. And throughout 2024, we made significant progress in optimizing our portfolio and successfully executing strategic divestment. including the sale of the Moragudo complex, the Pucacaca project, and our non-operational Chapi mine in Peru. These divestments allow us to concentrate on our high-return assets. In line with this strategy, I am proud to announce that the first phase of the Cerro Pasco integration project has been officially approved.
Speaker Change: With these four three liter that plant will achieve its maximum capacity.
Speaker Change: In terms of seeing metal oxide sales, we saw a minor one person deep quantitate over required to those sales increased by 6% year over year.
Speaker Change: Throughout 'twenty 'twenty four we made significant progress in optimizing our portfolio and successfully executing strategic debasement.
Speaker Change: Including the sale of that motor oil complex.
Speaker Change: Polka Cockeye project, although we're known operational choppy mine in Peru.
Speaker Change: These investments allow us to concentrate.
Speaker Change: Our high return assets.
Speaker Change: In line with these just try D. I am proud to announce that the first phase of the salary Busquin integration project has been officially approved.
Ignacio Rosado: This phase includes the implementation of tailings pumping and piping systems and represents an important milestone extending the life of this mining company. I will provide more details later in this presentation.
Speaker Change: This phase includes the implementation of tailings pumping piping systems.
Speaker Change: Represents an important milestone extending the life of these mining complex.
Speaker Change: I will provide more details later in this presentation.
Ignacio Rosado: Now let's move to slide number 4 to discuss our operating performance. Turning to the operating performance of our mining segment, sink production in the fourth quarter of 2024 reached 74,000 tons down 19% compared to the fourth quarter of last year. This decrease was primarily driven by lower output at Cerro Lindo, el porvenir ambasante, as well as the absence of contributions from moral will. These impacts were partially offset by higher production volumes from Aripuana and Atacoyotl. Compared to the third quarter of 24, sink production decreased by 11% mainly due to lower volumes at Cerro Lindo, Basante and Atacocha, however this was partially offset by increased output from Aripuana.
Speaker Change: Now, let's move to slide number four to discuss our operating performance.
Speaker Change: Turning to the operating performance of our mining segment zinc production in the fourth quarter of 2024.
Speaker Change: <unk> reached 74000 tons down 19% compared to the fourth quarter of last year.
This decrease was primarily driven by lower output etcetera, Lindo El Pollo, we need a basanti.
Speaker Change: As well as the absence of contributions from Motorola.
Speaker Change: These impacts were partially offset by higher production volumes from our viewpoint on that approach.
Speaker Change: Compared to the third quarter of 24 seem production decreased by 11%, mainly due to lower volumes that Cerro Lindo by Sunday night that culture. However, this was partially offset by increased output from deep water.
Ignacio Rosado: Sink production was 2% lower compared to the full year of 2023. In terms of our guidance, we met our annual production guidance for zinc, lead and silver, while copper production exceeded the upper range of our guidance. Looking at the cash costs in the fourth quarter of our mining cash costs significantly dropped to 0 cents per pound compared to 44 cents per pound in the same period last year. This sharp reduction was mainly driven by higher by-product contribution, lower treatment charges, and reduced operational costs, partially offset by lower sink volumes in the period. Compared to the third quarter, mining cash costs slightly increased by 1 cents per pound due to lower zinc volumes, which was partially offset by higher product contribution, particularly at Cerro Lindo, due to stronger LME price and lower operational cost.
Speaker Change: Zinc production was 2% lower compared to a full year of 2023.
In terms of our guidance, we met our annual production guidance for zinc lead and silver Wild Colbert production exceeded the upper range of our guidance.
Speaker Change: Looking at the cash cost in the fourth quarter.
Speaker Change: Our mining cash cost significantly dropped to zero cents per pound compared to 44 cents per pound in the same period last year.
These sharp reduction was mainly driven by higher byproduct contribution lower treatment charges.
Speaker Change: Reduce operational costs.
Surely upset by lower zinc volumes in the period.
Speaker Change: Compared to the third quarter mining cash cost is slightly increased by one cents per pound due to lower zinc volumes, which was partially offset by higher protocols Tribune.
Speaker Change: Particularly at Cerro Lindo due to a stronger ele me price and lower operational costs.
Ignacio Rosado: For the full year, our cash costs remain in line with our updated 2024 guidance, which we revised down by 64% in October 2024. These results reflect our disciplined cost control measures, operational improvements, consistent execution of our mining plans, and foreign exchange gains, particularly from our Brazilian operations. Our cost per run of mine in the quarter was $44 per ton, a 6% decrease year over year. This improvement was mainly due to lower maintenance and personal expenses, reductions in energy and material costs, along Foreign Exchange Games. These benefits were partially offset by lower treated ore volumes following the cessation of mining operations at Moraul.
Speaker Change: For the full year, our cash costs remain in line with our updated 2024 guidance, which we'd revise down by 64% in October 2024.
Speaker Change: These results reflect our disciplined cost control measures.
Speaker Change: Operational improvements consistent execution of our mining plans and foreign exchange gains, particularly.
Speaker Change: For our Brazilian operations.
Speaker Change: Our cost per run off mine in the quarter was $44 per ton a 6%.
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Speaker Change: This improvement was mainly due to lower maintenance and batesville and expenses with actual genie energy and material costs alone.
Speaker Change: Foreign exchange gains.
Speaker Change: These benefits were partially offset by lower treated ore volumes following the cessation of mining operations at Morro.
Ignacio Rosado: For the full year, cost per run of mine averaged $46 per ton, remaining within our guidance range.
Speaker Change: For the full year cost per run of mine averaged $46 per tonne remaining well within our guidance range.
Ignacio Rosado: Now let's move to slide number 5. Turn into our smelting segment. Total sales in the fourth quarter reached 152,000 tons and increased by 6% year-over-year. This growth was primarily driven by higher production volumes at Cajamarquilla and a sales backlog from the third quarter, which resulted from demand adjustments in our domestic market. Compared to the previous quarter, total sales decreased by 1% mainly due to reduced production at Tres Marias, especially for zinc oxide due to lower demand. In 2024, Total sales amounted to 591,000 tonnes in line with the mid-range of our annual guidance and relatively stable compared to 2023.
Speaker Change: Now, let's move to slide number five.
Turning to our smelting segment.
Speaker Change: Total sales in the fourth quarter reached 152000 tons and increased by 6% year over year.
Speaker Change: These gross west primarily driven by higher production volumes appear high Mucky Oh.
Speaker Change: And saves the backlog from the third quarter, which resulted from the minor adjustments in our domestic market.
Speaker Change: Compared to the previous quarter.
Speaker Change: Total sales decreased by 1%, mainly due to reduced production at risk by D S, especially for zinc or Skype.
Speaker Change: Due to lower demand.
Speaker Change: In 2024.
Speaker Change: Sales amounted to 591000 tons in line with the mid range of our real guidance and relatively stable compared to 2023.
Ignacio Rosado: Looking at costs, consolidating smelting costs in the quarter was $1.26 per pound, up from $1 per pound in the same period last year. This increase was mainly due to higher raw material costs driven by increased zinc prices and lower TCs, as well as higher operating costs. These effects were partially offset by higher sales volume and favorable foreign exchange variations. Compared to the third quarter, cash costs increased by 8%, mainly reflecting higher zinc prices, which impacted concentrate purchases and lower by-product contributions. However, these effects were partially offset by lower operational costs and foreign exchange gains. Our conversion cost for the 4th quarter was $0.30 per pound compared to the $0.29 per pound in the 4th quarter of 2023.
Speaker Change: Looking at costs consolidated Dino smelting costs in the quarter was <unk>.
Speaker Change: One dollar Twenty's expert sainsbury bounce up from $1 per pound in the same period last year.
Speaker Change: This increase was mainly due to higher raw material costs.
Speaker Change: And by increased zinc prices are lower disease, as well as higher operating costs.
Speaker Change: These effects were partially offset by higher sales volume and favorable.
Speaker Change: Foreign exchange variations.
Speaker Change: Compared to a third quarter cash cost increased by 8%.
Speaker Change: Mainly reflecting higher zinc prices, which impacted concentrate portrays.
Speaker Change: No way byproduct contribution.
Speaker Change: However, these effects were partially offset by lower operational costs for Ada exchange gains.
Speaker Change: Our commercial growth for the fourth quarter was 30 cents per pound compared to the 29 sainsbury bout in the fourth quarter of 'twenty three.
Ignacio Rosado: This slight increase was mainly due to higher variable costs, but partially offset by lower energy expenses at Cajabarquilla, favorable foreign exchange variations, and increased sales volume. Compared to the third quarter, conversion costs decreased by 6 percent, driven by lower variable costs, including energy expenses and maintenance expenses, along with foreign exchange gains and lower third-party expenses. It is worth highlighting that both conversion costs of $0.30 per pound and cash costs of $1.15 per pound remain within our guidance range for the year.
Speaker Change: This is like the increase was mainly due to higher variable costs, but partially offset by lower energy expenses up about how 'bout key a favorable foreign exchange variations on increased sales volume.
Speaker Change: Compared to third quarter conversion cost decreased by 6% driven by lower variable costs, including energy expenses.
Speaker Change: Maintenance expenses, along with foreign exchange gains and lower third party expenses.
Speaker Change: It is worth like highlighting that both conversion costs of 30 cents per pound.
Speaker Change: Cash cost of $1.15 per pound remain within our guidance range for the year.
Ignacio Rosado: Now, let's move to slide number six, where we will begin discussing adipona. In the fourth quarter, Aripuana reported higher production of zinc, lead and silver compared to the third quarter of 2004, while copper production declined, driven by lower grades in the period. Adjusted EBITDA remains positive. The quality of concentrates remains stable and within commercial specifications, while metallurgical recoveries perform close to or at target levels. Additionally, the TALC-related challenges faced in the third quarter were effectively addressed. The feed rate remains stable, contributing to the overall performance. In November, we conducted a scheduled five-day maintenance shutdown to replace the mill lining.
Speaker Change: No.
Speaker Change: Move to slide number six where we will begin discussing our deepwater.
Speaker Change: In the fourth quarter.
Speaker Change: To your point, our reported higher production of zinc lead and silver compared to third quarter of 24, while copper production decline driven by lower grades in the period.
Speaker Change: Adjusted EBITDA remained positive.
Speaker Change: The quality of content rates remain stable.
Speaker Change: Within commercial specifications, while metallurgical recoveries performed close to or at target levels.
Speaker Change: Additionally, the talc related challenges faced in the third quarter were effectively address.
Speaker Change: The feed rate remain stable contributing to the overall performance.
Speaker Change: In November we conducted a scheduled five day maintenance shutdown to replace the mill liner.
Ignacio Rosado: Additionally, above average rainfall during the period led to an 8% reduction in treated ore volumes compared to the previous quarter. During the quarter, we also approved the acquisition of a fourth tailings filter. A critical step in enhancing our filtering capacity and supporting full production. As previously disclosed, this investment will significantly improve operational efficiency. We expect that filter to be delivered and installed in 2025 with commissioning plan for the first quarter of 2026. Looking at the full year 2024, Aripuana significantly improved its performance. Annual zinc production increased by 43% compared to 2023, while copper rose by 24%, lead grew 106%, and silver production more than doubled, growing 114%.
Speaker Change: Additionally, our above average rainfall during the period led to a 8% reduction in treated ore volumes compared to the previous quarter.
Speaker Change: During the quarter. We also approved the acquisition of a fourth tailings filter.
Speaker Change: Critical step in enhancing our filtering capacity.
Speaker Change: Supporting food production.
Speaker Change: As previously disclosed D C investment will significantly improve operational efficiency.
Speaker Change: We expect that filter.
Speaker Change: To be deliberate and Instyle in 2025 with commissioning plant for the first quarter of 2026.
Speaker Change: Looking at the full year 2024 by deep, but not significantly improve its performance.
Speaker Change: Zinc production increased by 43% compared to 2023.
Speaker Change: Colbert rose by 24% led grew 106% on seed production more than doubled growing 114%.
Ignacio Rosado: This performance is attributed to the commitment and hard work of our team.
Pittsburgh hormone. He said debuted at two that could mean minute hi ward of our teams.
Ignacio Rosado: Let's move to slide number seven to discuss the latest advancements in the Cerro de Pasco integration project. On this slide, I would like to highlight our progress with the Cerro Pasco integration project. As we have discussed in previous calls, this project has the potential to unlock substantial value for Nexa. During the quarter, we made important strides across multiple work fronts, including the approval of the tailings pumping system, a crucial step in enhancing operational efficiency. This phase involves the construction of a tailings treatment plant at El Porvenir and the building of a 6 km tailings pipeline to connect El Porvenir plants to the Atacocha tailings storage facility.
Speaker Change: Let's move to slide number seven to discuss the latest advancements in the salary Pasco integration project.
Speaker Change: Well this is light I would like to highlight our progress with our Cerro Pasco integration project.
Speaker Change: As we have discussed in previous calls these.
Speaker Change: This project has the potential to unlock substantial value for next.
Speaker Change: During the quarter, we made important strides across multiple work fronts, including the approval of the tailings pumping system, a crucial step in enhancing operational efficiency.
Speaker Change: These facing both deco and traction of our tailings treatment plant at El Pollo, we need and the building of a six kilometre tailings pipeline to connect LPL radial plants to the Dakota tailings storage facilities now.
Ignacio Rosado: The detailed engineering has been completed and construction is set to begin in the second quarter of 2025. Beyond the tailings pumping system, phase one includes investments to raise the El Porvenir tailings dam, which is already underway, as well as future investments to increase Atacocha's tailings storage capacity. The ultimate goal of this phase is to significantly extend the operational capacity of the tailings storage facilities, ensuring the long-term sustainability of operations at the Cerro Pasco. Meanwhile, studies of Phase II, which includes the underground connection of the mines and the El Porvenir shaft upgrade, are progressing well. We expect these studies to be completed by the third quarter of 2025.
Speaker Change: Detailed engineering has been completed.
Speaker Change: On construction when he said to begin in the Sip from Guadalajara for 2025.
Speaker Change: Beyond the tailings pumping system phase one includes investments to raise dial perennial terrorism, which is already underway as well as future investments to increase at a courthouse tailings storage capacity.
Speaker Change: The ultimate goal of this phase is to significantly extend the operational capacity of the tailings storage facilities and ensuring the long term sustainability of operations at the Cerro Pasco complex.
Speaker Change: Meanwhile, as studies or phase two which includes the underground gold lakeshore with my minds and El Porvenir shaft upgrades are progressing well.
Speaker Change: We expect these studies to be completed by the third quarter of 2025.
Ignacio Rosado: Now moving to slide number eight, where I will provide details on our exploration app. As explained in the previous slide, the strategic rationale of the Cerro Epasco project includes the importance of the tailings storage capacity. AIMING TO EXTEND THE ASSET'S OPERATIONAL LIFE SIGNIFICANTLY. The connection of the underground mines of Atacocha and El Porvenir. And the upgrade of the El Porvenir ore shaft. The execution of these milestones will enable to access to a substantial volume of high-quality mineral resources from the Atacocha underground mine, significantly enhancing the asset's flexibility, increasing its mineral base, and extending the life of the mine complex.
Speaker Change: Now moving to slide number eight where I will provide details on our exploration upside.
As explained in the previous slide the strategic rational of the Cerro Pasco project includes the importance of the tailings storage capacity.
Speaker Change: Aiming to extend the assets operational life significantly.
Speaker Change: Co nature of the underground mines of at our courtyard and airport rainy.
Speaker Change: On the upgrade of the airport related or shaft.
Speaker Change: The execution of these milestones will enable to access to a substantial volume of high quality media resources from the attack coach underground mine significantly enhancing the athlete flakes, you really the increasing needs mineral base.
Speaker Change: And extending the life of the mine complex.
Ignacio Rosado: Furthermore, our exploration focus remains steadfast on the integration target. This area boasts high geological potential and presents a promising and highly attractive upside for the project. We aim to unlock additional value and ensure long-term success for the Cerro Pasco company.
Speaker Change: Furthermore, our exploration focus remains steadfast on that integration target.
Speaker Change: D C area boasts higher geological potential presents a promising and highly attractive upside for that project.
Speaker Change: We aim to unlock additional value and ensure long term success for the Cerro Pasco complex.
Ignacio Rosado: Now let's move to slide number 9. On this slide, I would like to emphasize the continued progress of our exploration program. Our 2024 plan has yielded positive results across both brownfield and greenfield activities. At Cerro Lindo, the exploration program remains focused on expanding known ore bodies southeast of Cerro Lindo, with drilling targeting the extensions of the mineralized zones in ore bodies 8b and 8c. In Aripuaná, efforts were concentrated on the Mazatlan-Duba target, aiming to identify new mineralized areas. In Basante, the brownfield exploration program continues to focus on expanding the mineralized zones near the mine. Finally, at Cerro de Pasco, as mentioned before, the exploration program delivered notable results, particularly around the integration target.
Speaker Change: Now, let's move to slide number nine.
Speaker Change: Well this is like I would like to emphasize that continued progress of our exploration program.
Speaker Change: Our 'twenty to 'twenty four Brent has yielded positive results across both brownfield and greenfield activities.
Speaker Change: Cerro Lindo the exploration program remained focus on expanding known ore bodies southeast of Cerro Lindo with reading targeting the extent the extensions of the mineralized zones in ore bodies H B E T.
Speaker Change: In Eddy border efforts were concentrated on the massaranduba target aiming to identify new mineralized areas.
Speaker Change: Even by Sunday that brownfield next.
Speaker Change: Parisian program continues to focus on expanding that mineralized zones near the mine.
Speaker Change: Finally, our federal de Pasco as mentioned before the exploration program delivered notable results, particularly around the integration.
Jose Carlos Del Valle: I will turn the call over to Jose Carlos Del Valle, our CFO, who will walk us through our financial results. Jose, please go ahead.
Jose Carlos: I will turn the call over to Jose Carlos <unk>, our CFO.
Speaker Change: Who will walk us through our financial results.
Speaker Change: Please go ahead.
Jose Carlos Del Valle: Thank you, Ignacio.
Speaker Change: Thank you Ignacio good morning, everyone I will now continue with slide number 10.
Jose Carlos Del Valle: Good morning, everyone. I will now continue with slide number 10. Starting with the chart on the upper left, we can see that total consolidated revenues for the fourth quarter increased by 18% year over year. This was mainly driven by higher metal prices, except for lead, and higher smelting sales volumes. These gains were partially offset by lower net premiums. Compared to the third quarter of 2024, net revenues grew by 4%, supported by higher zinc, silver and gold prices. For the full year 2024, Consolidated Net Revenues reached $2,766 million, an 8% increase compared to 2023. This growth was mainly driven by favorable metal prices, higher copper and lead sales, and higher silver and gold payables from our mining operations.
Speaker Change: Starting with the chart on the upper left we can see that total consolidated revenues for the fourth quarter increased by 18% year over year.
Speaker Change: This was mainly driven by higher metal prices, except for led and higher smelting sales volumes.
Speaker Change: These gains were partially offset by lower net premiums.
Speaker Change: Compared to the third quarter of 2024 net revenues grew by 4% supported by higher sync silver and gold prices.
Speaker Change: For the full year 2024, consolidated net revenues reached 2760 $6 million, an 8% increase compared to 2023. These.
Speaker Change: This growth was mainly driven by favorable metal prices higher copper and lead sales and higher silver and gold payable from our mining operations.
Jose Carlos Del Valle: Moving on to profitability, our consolidated adjusted EBITDA for the fourth quarter reached $197 million, reflecting a strong 79% increase year-over-year. This performance was primarily driven by higher by-product contribution, increased metal sales volume, higher sink prices, and foreign exchange gains. Compared to the third quarter of 2024, adjusted EBITDA also grew by 8% as the impact of higher sink prices was partially offset by higher variable costs. For the full year 2024, Consolidated Adjusted EBITDA totals $714 million, a significant 76% increase compared to 2023, making it the second highest annual adjusted EBITDA in Nexa's history. This was mainly supported by favorable metal prices, foreign exchange benefits, higher by pro contribution, and ongoing improvement in both operational and financial matters.
Speaker Change: Moving onto profitability, our consolidated adjusted EBITDA for the fourth quarter reached $197 million, reflecting a strong 79% increase year over year.
Speaker Change: This performance was primarily driven by higher byproduct contribution increased metal sales volume higher zinc prices and foreign exchange gains.
Speaker Change: Compared to the third quarter of 2024 adjusted EBITDA also grew by 8% as the impact of higher zinc prices was partially offset by higher variable costs.
Speaker Change: For the full year 2020 for consolidated adjusted EBITDA totaled $714 million, a significant 76% increase compared to 2023.
Speaker Change: Making it the second highest annual adjusted EBITDA and makes us history.
Speaker Change: This was mainly supported by favorable metal prices foreign exchange benefits higher byproduct contribution and ongoing improvements in both operational and financial matters.
Jose Carlos Del Valle: Finally, it is worth noting that our consolidated adjusted EBITDA margin reached 26% in 2024, 10 percentage points better than in the previous year.
Speaker Change: Finally, it is worth noting that our consolidated adjusted EBITDA margin reached 26% in 2024 10 percentage points better than in the previous year.
Jose Carlos Del Valle: Now let's move on to slide number 11. Looking at the top of the left slide, we can see that in 2024, we invested $277 million in CAPEX, with nearly all of this amount directed towards sustaining activities, including mining development and tailing storage facilities. Our total CapEx investment for the year came in below our revised guidance from October 2024, which had already been adjusted downward by $11 million as part of our portfolio optimization effort. With respect to mineral exploration and project evaluation, we invested a total of $64,000,000 in 2024. Of this amount, $37,000,000 was specifically allocated to mineral exploration and mine development, fully aligned with our annual plan to support ongoing exploration activities.
Speaker Change: Now, let's move onto slide number 11.
Speaker Change: Yeah.
Speaker Change: Looking at the top of the left slide we can see that in 2024, we invested $277 million in capex with nearly all of this amount directed toward sustaining activities, including mine development and tailing storage facility. Our total capex investment for the year came in below our revised guidance from October 20th.
Speaker Change: 24, which had already been adjusted downward by $11 million as part of our portfolio optimization efforts.
Speaker Change: With respect to mineral exploration and project evaluation, we invested a total of $64 million in 2024 of this amount 37 medium west specifically allocated to mineral exploration and mine development fully aligned with our annual plan to support ongoing exploration activities.
Jose Carlos Del Valle: Now let's move on to the next slide where I will discuss our cash flow generation for the quarter. Starting with our $740 million of adjusted EBITDA, net of non-operational items, we can see that Nexa generated a strong operating cash flow before working capital variations, totaling $514 million for the year. From this amount, we paid $175 million in interest and taxes and invested $265 million in total CAPEX across our operation. As part of our liability management strategy, loans and investments had a positive net impact of $98 million. This was mainly driven by our new bond offering at the venture issuance and the BMDS credit line, all executed in the second quarter of 2024.
Speaker Change: Now, let's move onto the next slide where I will discuss our cash flow generation for the quarter.
Speaker Change: Starting with our $714 million of adjusted EBITDA net of non operational items. We can see that makes that generated a strong operating cash flow before working capital variations totally $514 million for the year.
Speaker Change: From this amount, we paid $175 million in interest and taxes and invested $265 million in total capex across our operations.
Speaker Change: As part of our liability management strategy loans and investments had a positive net impact of $98 million. This was mainly driven by our new bond offering I debenture issuance and the B M. D. S. Cradling all executed in the second quarter of 2024.
Jose Carlos Del Valle: Included here is also a cash dividend received from Enercan. These cash inflows were partially offset by loans and financing, lease liability payments, and premium paid on our bond repurchase program, including cash tenders for a portion of our bonds maturing in 2027 and 2028. Additionally, we paid $60 million in contractual dividends to non-controlling entities. Another impact was related to foreign exchange variations which had a negative effect of $11 million on our cash and cash equivalents, primarily due to the depreciation of the Brazilian real against the U.S. dollar. Finally, Working Capital had a positive contribution of $18 million as our initiative to optimize Nexa's working capital cycle throughout 2024 successfully reversed the negative impact seen in the first nine months of the year.
Speaker Change: Included here social our cash dividends received from a narcan. These cash inflows were partially offset by loans and financing lease liability payments and premiums paid on our bond repurchase program, including cash standards for a portion of our bonds maturing in 2027 and 2028.
Speaker Change: Ali we paid $60 million in contractual dividends to Noncontrolling interest.
Another impact was related to foreign exchange fair reagent, which had a negative effect of $11 million on our cash and cash equivalents, primarily due to the depreciation of the Brazilian real against the U S dollar.
Speaker Change: Finally, working capital had a positive contribution of $18 million as our initiatives to optimize snakes us working capital cycle throughout 2024 successfully reversed and negatively impact seen in the first nine months of the Combi.
Jose Carlos Del Valle: Combining all these factors, our total free cash flow generation in 2024 reached $163 million.
Speaker Change: Combining all of these factors our total free cash flow generation in 2024 reached $163 million.
Jose Carlos Del Valle: Now, let's move to slide number 13. As you can see, our liquidity positions strengthened during 2024, which allows us to continue to maintain a solid balance sheet and an improved and extended debt maturity in ROFA. At the end of 2024, our available liquidity stood at approximately $960 million, including our undrawn $320 million sustainability link revolving credit facility. Looking at our debt profile, the average maturity in the fourth quarter of 2024 was 5.6 years, with an average cost of debt of 6.4%. More importantly, as of December 31st, our total cash position was sufficient to cover all obligations maturing over the next five years.
Speaker Change: Now, let's move to slide number 13.
Speaker Change: As you can see our liquidity position strengthen during 2024, which allows us to continue to maintain a solid balance sheet and an improved and extended debt maturity profile.
Speaker Change: At the end of 2024, our available liquidity stood at approximately $960 million, including our undrawn $320 million sustainability linked revolving credit facility.
Speaker Change: Looking at our debt profile the average maturity in the fourth quarter of 2024. It was five six years with an average cost of debt of 6.4% more importantly as of December 31, our total cash position was sufficient to cover all obligations maturing over the next five years.
Jose Carlos Del Valle: In terms of leverage, our net debt to adjusted EBITDA ratio significantly improved quarter over quarter and year over year, dropping from 2.2 and 3.3 times to 1.7 times, respectively. These improvements were primarily driven by higher adjusted EBITDA and by a reduction in net debt over the last 12 months. I want to emphasize that we continuously evaluate opportunities to further optimize our capital structure, diversify our funding sources, and strengthen our liquidity. As I have mentioned before, maintaining a debt maturity profile that is aligned with the long life of our assets, while securing the most competitive financing costs, is always a priority.
Speaker Change: In terms of leverage our net debt to adjusted EBITDA ratio significantly improved quarter over quarter and year over year dropping from 2.2 and three three times to one seven times respectively D.
Speaker Change: These improvements were primarily driven by higher adjusted EBITDA and by a reduction in net debt over the last 12 months.
Speaker Change: I want to emphasize that we continuously evaluate opportunities to further optimize our capital structure diversify our funding sources and strengthening our league wheat.
Speaker Change: As I have mentioned before maintaining a debt maturity profile that is aligned with our long life of our assets, while securing the most competitive financing cost is always a priority.
Jose Carlos Del Valle: In line with this, we always explore strategic initiatives to extend maturities, reduce the average cost of debt, and assess financing alternatives. The goal is to further enhance our financial position and long-term receipt.
Speaker Change: In line with this we always explore strategic initiatives to extend maturities reduce the average cost of debt and assess financing alternatives. The goal is to further enhance our financial position and long term resilience.
Jose Carlos Del Valle: Moving now to slide 14. Regarding the Zinc market fundamentals, it's important to note that in the fourth quarter, the LME Zinc price averaged $3,050 per ton, a 22% increase year over year, and a 10% increase compared to the third quarter. Despite macroeconomic and geopolitical uncertainties, including concerns over U.S. trade protectionism, potential tariff hikes, and risks of trade wars, SIG market fundamentals remain solid, providing positive support for price. These fundamentals are driven by a steel-constrained concentrate supply, which led TCs to remain at very low levels throughout the second half of the year. As a result, global refined metal production decreased by 2% in 2024 compared to 2023, tightening inventory levels even further.
Speaker Change: Moving now to slide 14.
Speaker Change: Regarding the zinc market fundamentals, it's important to note that in the fourth quarter. The let me think price averaged $3050 per ton.
Speaker Change: 22% increase year over year, and a 10% increase compared to the third quarter.
Speaker Change: Despite macroeconomic and geopolitical uncertainties, including concerns over U S trade protectionism potential tariff hikes I risks of trade wars seek market fundamentals remain solid providing positive support for prices.
Speaker Change: These fundamentals are driven by a still constrained concentrate supply, which led T. Six to remain at very low levels throughout the second half of the year.
Speaker Change: As a result, lower refined metal production decreased by 2% in 2024 compared to 2023 tightening inventory levels even further.
Jose Carlos Del Valle: Since the beginning of the fourth quarter, spot TCs in China have slowly started to recover, as illustrated in the lower part of the slide. However, they remain at historically low levels, continuing to pressure smelter margins due to higher raw material content. Looking ahead, we believe these market conditions are unlikely to ease in the short term, leading us to expect continued price support for Moving now to slide number 15. During the last quarter, the LME copper price averaged $9,193 per ton, up 13% from the fourth quarter of 2023, but marginally down by 0.2% compared to the third quarter of 2024.
Speaker Change: Since the beginning of the fourth quarter spot Tcs in China have slowly started to recover as illustrated in the lower part of the slide.
However, they remain near historically low levels, continuing to pressure smelter margins due to higher raw material costs.
Speaker Change: Looking ahead, we believe these market conditions are unlikely to east into short term, leading us to expect continued price support for sake.
Speaker Change: Moving now to slide number 15.
Speaker Change: During the last quarter, the <unk> copper price averaged $9193 per ton up 13% from the fourth quarter of 2023, but marginally down by 0.2% compared to the third quarter of 2024, despite macroeconomic challenges copper the minus six.
Jose Carlos Del Valle: Despite macroeconomic challenges, copper demand is expected to remain resilient in the short term, driven by strong activity across the energy, technology, and infrastructure sectors globally. As for silver, the LME price averaged $31 per ounce in the fourth quarter, up 35% year over year and 7% quarter over quarter. Short-term fundamentals for silver are also positive, largely driven by concerns over future silver availability. Since the majority of silver is produced as a by-product of other metals, the industry is dependent on new mine projects to come online. Nexa is a significant global silver producer, producing 12 million ounces in 2024.
Speaker Change: Specced it to remain resilient in the short term driven by strong activity across the energy technology and infrastructure sectors globally.
Speaker Change: As for silver, Yeah, Lemme price averaged $31 per ounce in the fourth quarter up 35% year over year and 7% quarter over quarter.
Speaker Change: Short term fundamentals for silver are also positive largely driven by concerns over future Silveira levied.
Speaker Change: He is a majority of salaries for use as a byproduct of other metals. The industry is dependent on new mine projects to come online.
Speaker Change: Next is a significant global civil per user producing 12 million ounces in 2024 looking ahead copper and silver prices are likely to remain volatile as markets react to shifts in U S trade policy and China's economic stimulus measures.
Jose Carlos Del Valle: Looking ahead, copper and silver prices are likely to remain volatile as markets react to shifts in U.S. trade policy and China's economic stimulus measures.
Ignacio Rosado: Now I will hand the presentation back to Ignacio for his final remarks.
Ignacio Rosado: Now I will hand, the presentation back to Ignacio for his final remarks.
Ignacio Rosado: Thank you, Jose Carlos. As we conclude today's call, I want to highlight the recent adoption of our new dividend policy. This policy is designed to enhance transparency, provide consistent returns to shareholders and maintain the financial flexibility needed to support our growth target. In 2024, both Standard & Poor's and Fitch reaffirmed Nexa's investment rating with a stable outlook. Additionally, last November, Standard & Poor's assigned Nexa Recursos Mineraes, our Brazilian subsidiary, its first-ever rating, also investment-grade, with a stable uptrend. This rating underscores the expectation of resilient operations in Brazil in the coming years. Last week, Standard & Poor's conducted its annual review and once again reaffirmed Nexa's investment rating, maintaining a stable output.
Ignacio Rosado: Thank you Jose Carlos.
Ignacio Rosado: We conclude today's call I want to highlight the recent adoption of our new dividend policy.
Ignacio Rosado: This policy is designed to enhance transparency, providing consistent returns to shareholders and maintained our financial flexibility needed to support our growth targets.
Ignacio Rosado: In 2020 for both standard <unk> Poor's, and Fitch reaffirmed Nicks us investment grade rating with a stable outlook.
Ignacio Rosado: Additionally, last November and standard and Poors assigned Nixer Records shows me that ice our Brazilian subsidiary its first ever rating also investment grade with a stable outlook.
Ignacio Rosado: These rating underscores the expectation of resilience operations in Brazil in the coming years.
Ignacio Rosado: Last week standard <unk> Poor's conducted its annual review and once again reaffirm Nicks us investment grade rating maintaining a stable.
Ignacio Rosado: This recognition highlights our commitment to the financial discipline of the country.
Ignacio Rosado: This recognition highlights our commitment to the financial discipline of the company.
Ignacio Rosado: I also want to emphasize that in 2025, safety will remain a top priority. We are fully committed to strengthening our safety culture and continuously improving our protocols to ensure our employees' well-being. 2024 was a year marked by resilience and innovation, and as we move into 2025, we expect revenue growth supported by positive contributions on pricing and volume expansion. Our disciplined approach to capital allocation remains unchanged. We will prioritize CAPEX investments in enhancing production capacity, extending the life of our mines, and ensuring long-term sustainable growth.
Ignacio Rosado: I also want to emphasize that in 'twenty to 'twenty five safety will remain our top priority.
Ignacio Rosado: We are fully committed to strengthening our safety culture.
Ignacio Rosado: Continuously improving our protocols to ensure our employees' well being.
Ignacio Rosado: 'twenty 'twenty four once a year marked by a resilience and innovation and as we move into 2020 five.
Ignacio Rosado: We expect revenue growth supported by positive contributions from pricing and volume expansion.
Ignacio Rosado: Our disciplined approach to capital allocation remains unchanged.
Ignacio Rosado: We will prioritize.
Ignacio Rosado: Capex investments in enhancing production capacity extended the life of our mines uninsured in long term sustainable growth.
Operator: Before I close, I want to express my gratitude to our exceptional team of dedicated professionals and our shareholders for their trust and support. Thank you for your attention, we truly appreciate your engagement and now look forward to your questions. Operator, please open the line for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone. If you are using a speakerphone, please pick up your handset before pressing the button. To withdraw your question, please press star then T. You also may send questions via chat at the webcast platform.
Ignacio Rosado: Before I close I want to express my gratitude to our exceptional team of dedicated professionals and our shareholders for their trust and support.
Ignacio Rosado: Thank you for your attention we truly appreciate your engagement and now look forward to your questions. Operator. Please open the line for questions.
Ignacio Rosado: We will now begin the question session.
Speaker Change: To ask a question you May press star.
Ignacio Rosado: That's one.
Ignacio Rosado: Tom.
Ignacio Rosado: If you are using your speakerphone, please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Ignacio Rosado: You also made some question.
Speaker Change: At the webcast platform.
Speaker Change: Yeah.
Camilla Barder: The first question today comes from Camilla Barder with Bradesco. Please go ahead.
Speaker Change: The first question today comes from kind of a target.
Speaker Change: Please go ahead.
Speaker Change: Okay.
Camilla Barder: Hi, good morning. Thank you for the opportunity for making my questions. I have two questions. The first, just some follow-ups on Aripuanã. You mentioned you expect higher contribution in terms of EBITDA and free cash flow from Aripuanã this year. So, I was just wondering if you can share any quantitative estimates on that. And on the tailing filter, do you have an estimate on CAPEX for the future? And after it's implemented next year, how much potential do you see for a capacity increase in Aripuanã? And the second question here on Cerro Pasco, as you mentioned in the call, the project is moving ahead.
Hi, good morning.
Speaker Change: Uh huh.
Speaker Change: Possible.
Speaker Change: So why not.
Speaker Change: You mentioned your higher contribution in terms of rabobank because flow program.
Speaker Change: So I was just wondering if you saw any frankly.
Speaker Change: And then on the total field, Sir you have an estimate on.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Superman here.
Speaker Change: How much more comfortable with Cooper going crazy.
Speaker Change: And the second question, Yeah, so possible.
Speaker Change: Turning to call it a project more hot alright.
Camilla Barder: First phase was approved and second phase studies should be concluded in the second semester. So, I'm just wondering if you can share any additional details on the project, CAPEX, if you see any risk for startups, and more details on finance, it would be helpful.
Speaker Change: Hum carbon to be concluded in the second.
Speaker Change: So I'm just wondering if your costs are on the Orbis genomic panel project Hopper.
Speaker Change: Yes.
Speaker Change: Money comes online it will be.
Camilla Barder: Thank you.
Speaker Change: Thank you.
Unknown Executive: I think of business as a business of paper and pencil. Right? I think that's how I see it. We don't know yet if there are more than one or two.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Hello.
Operator: Pardon me, this is the conference operator. I believe our speaker lines are muted.
Speaker Change: Pardon me. This is the conference operator, I believe our speaker lines are needed.
Jose Carlos Del Valle: So, Alejo, if you can listen to me now, I was telling you that the total capex of PASCO is around 140 million dollars, 85 million dollars comprises the implementation of the pumping system of El Porvenir to Atacoche. What happens here is that the life of mine of the tailings dam of El Porvenir is getting towards the end of its life of mine. So the idea is to pump all these tailings to the Atacocha Dam that has many, many, many years going forward. This is, as I said, a project cost $85 million, and the rest of the CAPEX comprises the interconnection of the two mines in the underground.
Speaker Change: So I don't know.
Speaker Change: You can listen to me I was I was telling you a total capex of a basketball is around $140 million $85 million comprises the implementation of the MPS.
Speaker Change: <unk>.
Speaker Change: And what we need to attack.
Speaker Change: What happens here is that the.
Speaker Change: The life of mine on the tailings dam of Wellbore.
Speaker Change: Getting towards the end of its life of mine.
Speaker Change: So the idea is to bump all these tailings to the attack or shutdown that has many many many years going forward.
Speaker Change: This is as I said, a project goes to 85 million.
Speaker Change: Yeah.
Speaker Change: And the rest of that Capex comprises the interconnection of the two mines in the underground.
Jose Carlos Del Valle: This is very important because it will allow us to access all these resources that are in Atacocha. A that we will be able to extract them through the infrastructure of El Porvenir. And for that, not only we need the interconnecting the two mines by. Rams, but also upgrading the shaft of El Porvenir to accommodate also the ore of El Porvenir. So this project is a between two and three years, we already approved the pumping, as we said, this pumping is going to be a for two years, we are starting the civil works in the second quarter.
Speaker Change: This is very important because it will allow us to access all these resources that are in our culture.
Speaker Change: That we will be able to extract them through that infrastructure or in port Neal.
Speaker Change: And for that not only we need the interconnect impact connecting their demised bye bye.
Speaker Change: Rams, but also upgrading the shock of import when you walk away at all your.
Speaker Change: <unk>.
Speaker Change: These project E C between two and three years, we already approved a bumpy as we said these pumping he's going to be a four two years, we are stuck in the seaweed works in the second quarter.
Jose Carlos Del Valle: of the pumping and we already ordered some equipment so in the next year this will finish and then in parallel this upgrade of the shaft and interconnecting the mine will come probably in 2026, depending on how the studies go.
Speaker Change: Over the bumping a and we are we're really already some equipment. So.
Speaker Change: In the next year. These will finish and then in parallel a D C. A R.
Three of the shaft and interconnecting the mind, we'd come April in 2026, depending on how these studies a goal.
Jose Carlos Del Valle: That is regarding Cerro Epazco. Regarding Anifona, it's very difficult to project EBITDA or cash flow. Yeah, because it will depend on prices. I will tell you. The Aripana project has been a very difficult one to implement. I mentioned this many times. There were several factors that involved the a some a flaws on the on the implementation of the project, COVID, an isolated area to develop this project, etc. So, the project in 2024 really advanced in terms of operational performance. But the problem is that we have mainly a bottleneck in the tailings field. because the capacity of the three filters that we have is not taking us to 100% of the product.
Speaker Change: That is a regarding et cetera, but really anybody not is very difficult to project EBITDA or cash flow, yeah, because you will depend on prices.
Speaker Change: I will tell you is.
Speaker Change: The idea born up ROIC has been a very difficult one.
Speaker Change: To implement I mentioned these many times.
Speaker Change: There were zero factored that in ball.
Speaker Change: <unk>.
Speaker Change: Some a loss on the on the implementation of the project <unk>.
Speaker Change: Isolated area.
Speaker Change: To develop these projects et cetera.
Speaker Change: So the project in 'twenty 'twenty four really.
Speaker Change: In terms of operational performance, but that probably means that we have.
Speaker Change: Mainly a bottleneck in the tailings a filters because that capacity of the three filters that we have is not taking us to 100% of the product. So to give you an idea we gone in the other IC soon we can.
Jose Carlos Del Valle: So to give you an idea, we can, in the dry season, we can, have 140,000 to 150,000 tons, but the capacity could be 170,000 to 180,000. So we, you don't know this until you stabilize the operation and we started to see that only in June, 2024. Having said that, in October, we're starting to do all the tests to order a different filter. It's a filter that is from a different provider. It's a more automated filter, and the capacity of the four filters is much higher than the rest of the three. So, the idea is, we ordered already that filter, it's not an easy implementation because it's a new area and that has a lot of civil works and infrastructure.
Speaker Change:
Speaker Change: 140 to 150000 tons.
Speaker Change: <unk> capacity.
Speaker Change: Would be 170 to 180.
Speaker Change: So we we you don't know these until you have stabilized the operation and we started to see it as only in June 'twenty 'twenty four.
Having said that in October we are starting to do all of that base, who are there definitive theater is a filter that is where my deeper and provider is a more out dmitry, it's either under capacity of the four field. There is much higher than the rest of the three.
Speaker Change: So the idea is we already are already that filter is not an easy implementation because it's a it's a.
Speaker Change: A new area and that has a lot of CVD awards in infrastructure.
Jose Carlos Del Valle: So, towards the end of the year, we will have the filter in the area, and then the commission, as we said, is going to be doing the first quarter of next year. With this additional filter, We will achieve the capacity. So when we tell the market that, let's say, the projection on production on Aripuana has delayed a year, this is mainly because of... And I mean, it's difficult for us to digest this, because these were filters that were ordered many years ago. These were filters that don't have a capacity and didn't perform. Yeah. But the good part is that in 2026, we will be at full capacity and having all this upside on exploration and on the research that we have today, this new mine is going to be very profitable going forward.
Speaker Change: So towards the end of the year, we will have the field there in the area and then a <unk> as we said is going to be a.
Speaker Change: Doing the first one.
Speaker Change: Next year with desalination on field there.
Speaker Change: We will achieve it.
Speaker Change: Capacity, so when we tell the market that.
Speaker Change: Let's say the the.
Speaker Change: Projection Umbro action or 90, BARDA has the linear year.
Speaker Change: D C is mainly because of this.
Speaker Change: And I.
Speaker Change: I mean, it is difficult for us to digest. These because these were filters at where are there. Many years ago. This would filter that Dol conflict capacity and you didn't perform yeah, but the good part is that in 2000 Twenty's. These we will be at full capacity and having all these off site on.
Speaker Change: Exploration.
Speaker Change: On the reserves that we have today.
Speaker Change: These these new mine he is going to be very profitable going forward. So we have to look for work.
Jose Carlos Del Valle: So, we have to look forward at IPUANA, as I said, it was a difficult project to build, but we are towards the end of these stages, and 2026 is going to be much better than this year. What I can say in this year is that we will have positive cash flow, and the EBITDA is going to be positive as well, and we believe that it's going to be higher than in 2020.
Speaker Change: I did point out as I say it was a difficult project.
Speaker Change: But we are towards the end of these of these stages in 2026 years, whether it'd be a much better than this year, what I can say in this year is that we will have positive cash flow on the area that you guys would I be positive as well.
Speaker Change: We believe that these will not be higher than in 2020.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Carlos de Alba: As a reminder, if you would like to ask a question, please press star, then 1 to join the question. The next question comes from Carlos de Alba with Morgan Stanley.
Speaker Change: As a reminder, if you'd like to ask a question. Please press Star then one to join the question queue.
Speaker Change: The next question comes from Carlos de Alba with Morgan Stanley. Please go ahead.
Carlos de Alba: Please go ahead. Yeah, thank you very much. Good morning.
Speaker Change: Yes. Thank you very much good morning, I guess I just.
Carlos de Alba: So just to confirm what you just said at the end of the last answer, do you expect Adipona to have positive EBITDA in 2025 and be higher than 2024? Did I get that right? Yes, yes. And this is, this is a, I would say a simple mathematics. No, we will have a higher production. The costs are still high because we are not diluting fixed costs in this throughput, a limitation of the throughput, but the costs are going to be lower than in twenty-four, the production is going to be higher, capex should be similar. The new filter is costing us fourteen million dollars, more or less.
Speaker Change: Just to confirm what you just said at the end of the last answer and respect that you point out to have positive EBITDA in 2005 and be higher than 2024.
Speaker Change: Did I get that right yes.
Speaker Change: Yes, yes, and this is this is a I would say is simple mathematics, nor we will have a higher production that goes.
Speaker Change: There is still high because we are not diluting fixed cost.
Speaker Change: This throughput.
Speaker Change: A mutation of the throughput that goes by that costs are going to be lower than that in 'twenty. Four actually is one of the higher capex should be similar.
Speaker Change: Newfield, there is costing us a $14 million more or less yes, but yes with these prices.
Carlos de Alba: Yeah. But yes, with these prices and the approach. We believe that EBITDA and cash flow should be higher than what we have.
Speaker Change: And in that process.
Speaker Change: We have.
Speaker Change: Capex, yes, we believe that EBITDA and cash flow should be higher than in 2024.
Carlos de Alba: Alright, makes sense.
Speaker Change: Alright makes sense all right. My second question is regarding the dividend policy I just want to make sure.
Carlos de Alba: My second question is regarding the dividend policy. I just want to make sure that I get what it means basically is to a minimum of 20%. So not a minimum, but a 20% of free cash flow with a minimum payment of $0.08 per common share. And so basically, if I just look at our forecast of cash flow operations, minus CAPEX, that amount of free cash flow times 20% is what you would pay. Is that right?
Speaker Change: That I get.
Speaker Change: What it means basically ease to a minimum of 20% so not a minimum but at 20% of free cash flow.
Speaker Change: With a minimum payment of eight cents per common share and so basically if I just look at our forecast of cash from operations minus capex.
Speaker Change: That amount of free cash flow times, 20% is what you would pay is that right.
Jose Carlos Del Valle: Yeah, I'm going to turn to Jose Carlos so he can explain better this. Jose Carlos, please.
Speaker Change: Yeah. It was it got a little Smoky gameplay has entered this Jose Carlos spacing.
Jose Carlos Del Valle: Sure.
Jose Carlos Del Valle: Hi, Carlos. Good morning. Yes, the minimum is eight cents per share. So what we wanted to do is, well, first of all, as you know, we have this new policy that we have already approved, and it's eight cents per share so that we put a floor on the payment, but in a way that is transparent and more predictable. And the idea would be to pay 20 percent based on the cash flow that we that we generate. So we pay 20% on that free cash flow that internally we call pre-event, but you would have a more predictable and consistent dividend flow over the years.
Speaker Change: Sure Hi, Carlos good morning.
Speaker Change: Yes, the minimum is $18 per share.
Speaker Change: What we wanted to Louise parcel, we have this new policy.
Speaker Change: We have already approved.
Speaker Change: <unk> per share. So now we put a floor under the union Damian that in a way that is transparent and more predictable and the idea will be debate.
Speaker Change: 20% based on the cash flow that we generate each year, which is basically after sustaining.
Speaker Change: So we made 20% on that that free cash flow that internally, we call pre event.
Speaker Change: You would have a more predictable and consistent even though over the years.
Jose Carlos Del Valle: Take this out of 2024. Okay. So, basically, it's the cash from operations minus your sustaining capex, 20% of that. Right. Okay.
Speaker Change: Thank you.
Speaker Change: Even before.
Speaker Change: Okay. So basically is the cash from operations minus your sustaining capex, 20% of that right. Okay.
Jose Carlos Del Valle: Well, and what is the sustaining capex that you're expecting for 2025? This year we are about 270 in 2025 is that plus what we have on Cerro del Pasco because at the end of the day the tailings pumping system is part of a sustaining capex. If I remember correctly it's about 330 so that will be a slight change compared to the capex that we have in 2024 and obviously what we have to take into consideration is that is that we don't know what prices are going to be in 2025 but assuming that assuming that we have prices that are similar to 2024 and based on the improved performance that we expect from Maripuana and the continuous improvement from our operations we expect a positive strength in our cash flow generation going forward so therefore that should benefit the NWO.
Speaker Change: And what is the Capex and the sustaining capital that you are expecting for 2020 five.
Speaker Change: And this year, we were about to say D. E. In 2025 is that plus what we have on settlement.
Speaker Change: One of the data.
Part of.
Speaker Change: It's <unk>.
Speaker Change: If I remember correctly is about 330.
Speaker Change: That will be.
Speaker Change: Change compared to the Capex that we haven't been in before.
Speaker Change: And obviously, while we have to we have to take into consideration is that.
Speaker Change: We don't know what prices are going to be.
Speaker Change: So I mean that would mean that.
Speaker Change: We have prices that are similar to 2024 and based on the improved performance that we expect from any partner.
Speaker Change: This improvement from our operations, we expect a positive trend in our consideration going forward.
Speaker Change: And therefore that should be.
Right.
Jose Carlos Del Valle: So the total sustaining capex expected in 2025 is around 330 million. Right, I can I can double I can confirm that number. But yeah, it's around that name.
Speaker Change: Fair enough and then so the total sustaining capex expected into 'twenty five is around $330 million.
Speaker Change: Right again, I can double either confirm that number.
Speaker Change: It's around that neighborhood.
Rodrigo: This is Rodrigo here, just confirming the sustaining CapEx for 2025 is going to be $316 million, right? This is the number that we released in our guidance on the beginning of February.
Speaker Change: Alright, great.
Speaker Change: Sorry. This is rodrigo here, just confirming that the sustaining capex for 2025 is going to be $316 million right. This is the this is the number that we released in our guidance on the beginning of February.
Jose Carlos Del Valle: And then my last question is on working capital. Obviously, big swings throughout the year. How should we think about working capital in Q1, Q2, Q3, Q4, just given how significant the volatility is? Yes, I can comment on that, Carlos. We don't expect a different trend from what we saw in 2024 and 2023. There is a seasonality in how our working capital behaves throughout the year. But on average, going forward, I would say that it will be safe to assume that working capital effects should be close to neutral on an annual basis. However, we would still see that volatility quarter to quarter as we have seen.
Speaker Change: 33600.
Speaker Change: Zero, Okay, 316, $3 16, okay through Onesies, Okay. Good alright, excellent and then my last question.
Speaker Change: He is on working capital that are obviously big swings throughout the year.
Speaker Change: How should we think about working capital.
Speaker Change: In Q1 that Q2, Q3, Q4, just given how significant the volatilities.
Speaker Change: Yes, I can comment on that we don't expect a different trend from what we saw in <unk> or 'twenty three.
Speaker Change: There is a.
Speaker Change: Seasonality.
Speaker Change: In power.
Speaker Change: Working capital behave throughout the year, but on average going forward I would say that it will be safe to assume that working capital should be close to neutral on that on an annual basis. However, we would still see that volatility quarter to quarter.
Speaker Change: In the last three years.
Carlos de Alba: Thank you very much, Ignacio, Carlos and Rodrigo.
Speaker Change: Okay. Yeah, that's clear thank you very much Ignacio Zagato Sandler O'neill.
Speaker Change: You're welcome.
Speaker Change: Yeah.
Operator: We will now take questions from the webcast.
Speaker Change: We will now take questions from a lot of time.
Operator: I'd like to hand the call back over to Robby. Thank you, operator. We have some follow up questions from the audience here in the web. So I would start with The one well, Ignacio already mentioned about the forest filter in 91 nuts or does one question from Henrique from Morgan Stanley. So, in terms of adding more color and why the developing the forest filter and also, I believe this is what's already answered.
Rodrigo: Like to hand, the call back over to Rodrigo.
Speaker Change: Thank you operator.
Speaker Change: We have some follow up questions from the audience here in the lab, so I would start with.
Speaker Change: The Wawa Inacio already mentioned about the fourth utility 94 knots or does one question from me Hagen for Morgan Stanley. So in terms of adding more color on why the developing the fourth filter and also I believe disease was already answer.
Henrique: So, and there's another question, one question from Hernan Kuzlik from MetLife. So, what should we expect in terms of cash flow generation for 2025 and what are your plans for capital?
Speaker Change: And there is some other question one question from Harrington.
Speaker Change: He usually for Metlife. So why should we expect in terms of cash flow generation for 2025, and what are your plans for capital allocation.
Unknown Executive: Unknown Executive, Lawson Winder, Carlos Alba, Rodrigo Cammarosano, Nexa Resources S.A. If you remember from 2024, we were within guidance. So on those aspects that we control, we expect that we will have better performance and depending on prices, if prices are better, obviously that will translate into better cash flow generation. So the expectation is...
Speaker Change: Well, thank God, you a granular one yeah yeah.
Speaker Change: Yes.
Speaker Change: Somehow Orient dress.
Speaker Change: The cash flow question in I mean, without knowing exactly what prices are going to be our expectation is that our peripheral mine is going to continue to improve.
Speaker Change: Even though we won't have the.
Speaker Change: Has been asking for it yet.
Speaker Change: There is an expectation that our pro forma.
Speaker Change: We'll be better we always have.
Speaker Change: All stand.
Speaker Change: Uh-huh initiative too.
Speaker Change: Throw in our costs.
Speaker Change: Remember.
Speaker Change: Four we were within guidance.
Speaker Change: So on both aspects that we control we expect that we will.
Speaker Change: Better performance.
Speaker Change: Prices are better obviously that will translate into better cash flow generation. So the expectation is.
Jose Carlos Del Valle: In terms of capital allocation, I think we have mentioned before that we have a very clear strategy of obviously first focusing on extending the life of mine of our mine. Secondly, I would say the reduction of gross debt is not just a matter of reducing leverage or net debt, but also reducing gross debt so that we can also reduce our interest expense obligations. And then we also have this newly approved dividend policy so that we can also provide a consistent return to shareholders over time. So I would say that those are some of the things that we have done.
Speaker Change: In terms of capital allocation.
Speaker Change: I think we have mentioned before that we are not really a three year strategy.
Speaker Change: The first.
Speaker Change: Focusing on extending the life of mine all of our minds.
Speaker Change: Secondly, I would say the reduction of gross debt is not just a matter of reducing leverage.
Speaker Change: And also we'll be using gross nets.
Speaker Change: When we use our interests.
Speaker Change: It's on the Asia and then we also have the newly approved a dividend policy. So that we can also.
Speaker Change: Right.
Speaker Change: A consistent return to shareholders over time, so I.
Speaker Change: I would say that the Philippines.
Speaker Change: Okay.
Jose Carlos Del Valle: Okay, thank you Jose.
Jose Carlos: Okay. Thank you Jose will have one question from Omar.
Omar: We have one question from Omar. from a compass group.
Speaker Change: From a complex group so they're actually.
Omar: So actually, there are three questions. The first one, is there any other assets you are willing to sell? The second question is regarding Aripuanã, what is the cost of the additional filter and when do you expect the plant to work at nameplate capacity? And the last question is to comment on the status of magistrate project. Yes, so as we said, We sold mostly all the assets that we wanted to get rid of because there were no transformational assets, there were small assets for us. And a part of the strategy is to make sure that we that the four minds that we have get developed.
Speaker Change: Actually there are three questions. The first one is there any other assets you are willing to sell.
Speaker Change: The second question is regarding 91, not what is the cost of the additional filter and when do you expect the plan to work at the nameplate capacity sorry, the plant to work at nameplate capacity.
Speaker Change: And the last question is to comment on the status of our <unk> project.
Speaker Change: Yes.
Speaker Change: As we said.
Speaker Change: We saw mostly all all the assets.
Speaker Change: We wanted to get rid of because there were no transformational assets they were small assets for us.
Speaker Change: On the part of the strategy is to make sure that we the four mines that we have.
Speaker Change: Get the Belo increase the life of the mine.
Ignacio Rosado: In addition, we increased the life of the mine. And we operationally executed them in the best way possible. But that growth will come from a new project that we have to look for in terms of M&A, has to be a advanced brownfield project or a producing mine. As we said before, mainly copper and zinc.
Speaker Change: We operational.
Speaker Change: Executed them in the best way possible.
Speaker Change: But that growth will come from our new projects that we.
Speaker Change: I have to look for in terms of M&A.
Speaker Change: It will be a brown could advance brownfield project or a producing mine.
Speaker Change: As we said before.
Speaker Change: It.
Speaker Change: Mainly copper and zinc.
Ignacio Rosado: So we are not willing to sell any other. I already said that the additional cost is 14 million dollars, the full capacity will come in the second quarter of next year.
Speaker Change: So we are not willing to sell any order.
Speaker Change: Yeah, we're not or I already said that the additional cost is $14 million.
Speaker Change: The full capacity.
Speaker Change: In the second quarter of next year.
Ignacio Rosado: And regarding Magistral, as we know, the mayor was disapproved, the Environmental Impact Study was disapproved. It was disapproved because the community, we had problems with the community, especially in the pandemic, that blocked all these roads and all these areas, and there were some buses not allocated to Nexa. Now we are negotiating with ProInversión, that is the entity from the government, on what are our next steps. and this is going to take some months. Having said that, we are still very interested in Magistral, but Magistral, as we already said also in other calls, is a project that has to compete with other projects that we might have in our radar because, you know, we want to make sure that we build the most profitable mine.
Speaker Change: I mean do you have any.
Speaker Change: You said as we know that the EMEA was these approved environmental impact study was approved it wasn't it was these are Bruce because that community.
Speaker Change: We had brought in with our community, especially in the pandemic.
Speaker Change: Blocked all these a rose in all these areas and there were some losses not.
Speaker Change: Allocated to mix.
Speaker Change: Now we are negotiating with the marine vessel that is aimed at improving the government or what are our next steps.
Speaker Change: And this is going to take some months.
Speaker Change: Having said that we are still very interesting in my view Australia.
Speaker Change: My your style as we already said also in the other calls is a project that has to compete with other projects that we might have in our radar because you know.
Speaker Change: We want to make sure that we build the most brokerage our mind. So my used truck has to compete in that regard we will update the market in this.
Ignacio Rosado: So, Magistral has to compete in that regard. We will update the market in these conversations and negotiations with the authorities. And we believe, as I said, that they will come in the next. Thank you, Ignacio.
Speaker Change: Conversations and negotiations with the authorities.
Speaker Change: And we believe as I said that.
Speaker Change: They will come in the next months.
Speaker Change: Thank you and also will have a one question from Rodrigo Marietta from ASB data. So based on the guidance provided at the beginning of February.
Rodrigo Murieta: We have one question from Rodrigo Murieta from AFP Integra.
Rodrigo Murieta: So, based on the guidance provided at the beginning of February, El Povinir and Atacocha for the midterm are including part of the PASCO integration project mineralization in the guidance. Rodrigo, thank you for the question. We are not considering yet the mineralization of the integration area. The guidance considers only the reserve base that we have currently. and you expect to publish some resources by this year and to convert into reserve by next year. And then you can assume a part of it in our.
Speaker Change: <unk> got a culture for the mid term.
Speaker Change: Our including a fire.
Speaker Change: Part of the possible integration project mineralization in the in the in the guidance.
Rodrigo: Hi, Rodrigo Thank you for the question.
Speaker Change: We are not considering yet.
Rodrigo: As each of the integration area.
Rodrigo: Guidance.
Rodrigo: So there is only their reserve base that we have currently in your.
Rodrigo: We expect to publish some resources bye bye this year and to convert into reserve by next year and then then you can assume apparel fit in our plan.
Rodrigo: Okay.
Rodrigo: Yes.
Rodrigo Murieta: Thank you.
Rodrigo: Okay.
Operator: This concludes our question and answer session.
Rodrigo: This concludes our question and answer session.
Ignacio Rosado: Now we will hand the call over to Ignacio for his final remarks. Thank you. Thank you very much all for attending this call. We appreciate very much your interest in the company. We had a very good 2024 year, regardless of the problems in Aripuanã. We still believe Aripuanã is going to be a fantastic mine going forward. We're very committed to our challenges, to achieve our challenges for 2025. 2025 is going to be still a challenging year, but we have a very important group of people committed and clear in the strategies that we have to follow.
Jack: Now I will hand, the call over to Jack you for his final remarks.
Jack: Thank you. Thank you very much all for attending this call and we appreciate very much your interest in our company.
Jack: We had a very good 2024 year.
Jack: Regardless of the programs you already point out.
Jack: I still we still believe anybody is going to be.
<unk> mine going forward.
Jack: We're very committed to our challenges to achieve our challenges for 2025 2025 is going to be still a challenging year, but we have a very important group of people committed and gear industries that we have to follow.
Ignacio Rosado: Thank you very much and we look forward to speak to you in the next, in the closing of the first quarter of 2025.
Thank you very much and we look forward to speak to you in the next in the in the in the close in the first quarter of 2025 have a great weekend.
Operator: Have a great week.
Operator: The conference has now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: You may now disconnect.
Jack: Okay.
Jack: Yeah.